From SmartMoney.com:
Extreme House-Selling Strategies
By Aleksandra Todorova
IT’S A TOUGH TIME for home sellers. While the media competes for the direst gloom-and-doom real-estate-bubble headline, crowded open houses and bidding wars are becoming a quick-fading memory. Homes prices are down, and so are sales.
In September, the number of existing home sales fell a whopping 14.2% compared with the same period last year, according to the National Association of Realtors (NAR). In the third quarter of 2006, the median single-family-home price fell 1.24% on a year-on-year basis, marking the first average quarterly home-price decline since 1989. There are currently 3.75 million homes for sale in the U.S., nearly a million more than buyers had to choose from at the same time last year.
That’s all good news for home buyers, who for the first time in years can afford to be picky about the home they choose and finicky about the price. But what about sellers? “If you don’t have to sell right now, don’t do it,” says NAR spokesman Walter Molony. “But if you need to be in the market, be realistic about the competition. Buyers are certainly aware of it.”
Adding insult to injury are economists’ predictions that real-estate prices will continue to fall. “We’re anticipating that the market will bottom out toward the end of next year,” says Celia Chen, director of housing economics at Economy.com. A housing report recently issued by Economy.com predicts a 3.6% average nationwide drop in 2007. “It will get a little bit worse before it recovers,” Chen predicts.
“It will get a little bit worse before it recovers,” Chen predicts.
3.6% average might not sound like a lot, but to home equity dependent boomers that’s a lot of pudding.
Homeowners the higher end zone… 6% drop, watch out. I think gas pumps better have the Patron Saint of Unleaded (St. GW) planted upsidedown under them.
A little worse? It was six years of insane, laughable price increases and we’re supposed to believe that a one year decline of approximately 5% total will be the bottom?
So, does that mean houses will increase by 4% to 5% in 2008 and beyond? I’d like someone to ask that question.
Wasn’t it just a matter of months ago the “experts” were prediciting “normal” price appreciation again as the market was “stabilizing”?
And what about the 1 trillion (that is $1,000,000,000,000) dollars worth of mortgage resets that will occur in 2007 alone? Did the “experts” somehow forget that?
Uh, trillion has 12 zeros? Wow. It looks like so much more written out like that.
I think we need Congress to pass a law that every time a politician, including the President, uses a term for dollars in print, that number must be written out exactly as a number. You know, 8th grade level and all that, for example:
“My fellow Americans, the current Federal Deficit is $8,589,718,637,017.06, and I look forward to your vote of support next week.”
Holy..did you ever sit for 5 seconds and hit refresh on that page?
http://www.brillig.com/debt_clock/
“And what about the 1 trillion (that is $1,000,000,000,000) dollars worth of mortgage resets that will occur in 2007 alone? Did the “experts” somehow forget that?”
That’s one of the items on my “reasons to continue to wait this out” list. I need to see how all the novice investors holding multiple properties and no-doc, low-doc, IO, neg-am loans hold up for a few years in the face declining RE values. I don’t wish anything bad on anyone, but I’m not putting my hard earned cash on the line until all this speculative “fluff” is worked out of the market.
Mortgage rates plunge
By Holden Lewis • Bankrate.com
Nov. 2, 2006
Mortgage rates plunged this week, and hardly anyone took advantage.
Business is dead, a mortgage broker laments, and the latest stats from the Mortgage Bankers Association bears out that assessment. The MBA says mortgage applications fell 3.3 percent last week and are 11.2 percent lower than the same week last year.
All while rates were rushing downhill as fast as a toboggan after a blizzard.
http://www.bankrate.com/nltrack/news/mtga/Nov0206_mortgage_analysisa1.asp
HMM not good – go to MSNBC buisness page – first three links:
U.S. productivity slows to a standstill
Wage pressures mounting, likely raising inflation concerns
Jobless claims jump in latest week
But data still point to a relatively healthy jobs market
Stocks pull back amid inflation worry
Dow industrials dip below psychologically-key 12,000 level
So what was that about housing having minimal effect on economy???
I recently moved from Kansas (yes, Kansas) to NJ. I am trying to get a feel for the market here.. and it’s scarier than what I hear in the news.
I am looking for a house in South Brunswick area. Can anyone comment on the state of the market in this area compared to the rest of NJ (especially east bruns. and north bruns.)?
Sellers in s.bruns. still appear to be holding it high. The low-ball numbers that Jim Grim released for october do not have a single listing in s.bruns and just one in east. bruns.
living in the s.brunswick area. take out
a handgun permit.
So…we’ve had appreciation of 50 to 100% or so in the “Hot” markets (approx 70% of the country)over the last 3 to 5 years but now that sales are falling, down 30 to 50% in most markets,the experts expect prices to fall by 3%….5%?????
Did I miss something? Was the law of supply and demand repealed?
Why didn’t any of these experts predict the drop in sales we are now seeing? Why should we believe anything they say now? Can anyone show me where any “expert” “economist” whatever predicted that unit sales would be where they are today? Again, Why should we believe anything they say now?
I am not an expert but I am an experienced investor. I am 55 and I bought my first investment house at 19, and I figure I have flipped at least 350 homes. I’ve lived through the ups and downs and I did predict a substancial drop in sales by 2nd, 3rd Q OF 2006. I said that in March of 2004. I have lived this before
Further I predict prices will drop 30 to 50% in the “Hot” markets int the next 12/18 months and will be stagnant for the next 3 to 5 years.
I am not an expert. I do a lot of research and I’ve seen this before, but…..not this bad. This is a train wreck. Speculators, crazy lending practices.
Coming Attractions: Massive lawsuits (against banks, appraisers, mortgage companioes, realtors, developers etc), an “S&L” type banking crises, and most likely a recession, probably not real bad, but bad enough.
Real estate appreciates approx 3% per year, compounded over time. Go back to the last sane year, probably 2000, price a house, follow this formula and that is where that house will go.
Works everytime. Incidentally, we are facing probably the best opportunity to get fabulously wealthy in Real Estate in any of our life times.
You figure it out. I already have.