From Reuters:
Stubborn sellers could harm housing sector
At a recent meeting with her Las Vegas real estate firm’s 200 agents, Joanne Levy told them they needed to deliver a stark message to clients.
They would tell them that unsold homes are at a record level and sellers need to lower their prices.
In other words: the boom is over.
“They want the 2004, 2005 market,” Levy said of today’s clients. “We don’t have that.”
With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets.
Some industry observers fear that bull-headed home sellers could worsen a downturn by driving up the inventory of homes for sale and running off would-be buyers
The phenomenon is likely to touch “the bubble markets where you have a bigger investor share and big appreciation,” said Ethan Harris, chief U.S. economist for Lehman Brothers.
…
Some are investors who bought at the height of the market with a small down payment and big hopes for gains. Others are homeowners who saw their neighbors cash out with a handsome return and will not accept anything below their asking price.“Sellers have not caught up with the reality of the marketplace despite the proliferation of ‘For Sale’ signs,” said Howard Glaser, a mortgage industry analyst with the Glaser Group in Washington, D.C.
“There is a lag period between sellers’ expectations and the reality of the marketplace,” he said, and shaking them out of their high-price fantasy “is more psychology than science.”
…
But those once-hot markets have changed — even if the mentalities of some would-be sellers have not.A homeowner’s blind faith in the price of his or her home could be costly if it flies in the face of reality and prices continue to drop, said Stephanie Madon, a psychology professor at Iowa State University.
“If the homeowner believes the house is worth a lot and refuses to budge, it could become a self-defeating prophesy,” she said.
In the end, stubborn sellers could lose more home value the longer they delay.
Without a doubt.
Sellers are to blame.
Along with RE agents, Fannie Mae, Fannie Mac, Greenspan, bankers, media, and the ignorance of the public.
SAS
of course i would be partial but i believe this quote to be the misconception on the seller’s side that is keeping the two sides from seeing eye to eye:
“If the homeowner believes the house is worth a lot and refuses to budge, it could become a self-defeating prophesy,”
on the other hand as a buyer I know in my case i will not jump at an oppurtunity just because a home has come down say 5-15%. More than want I NEED it to come down a lot more before i would do anything. So of course i would say it is the SELLERS fault.
That other thread was getting hellish! Thus the lock.
oh yeah, throw in China for supplying us with the money…
SAS
I’m going to keep it short and to the point.
Personal attacks, inflammatory comments, and off-topic arguments will not be tolerated. Take these discussions off-line.
Foul language, racist, sexist, or any other defamatory remarks will not be tolerated.
Messages that violate these rules will be deleted.
The housing bubble is an emotionally charged topic, and I understand that our discussions get heated at times. We don’t need to add any more fuel to this fire.
Please help me to keep our discussions on topic and professional.
Acknowledged JB.
Way to go Reuters !!!
Finally someone in News realized that this is worth reporting.
Got it Grim.
As for this topic, right now a little of both, with sellers being the main issue but buyers also digging in their heels. The problem is that buyers don’t really need to buy. They can win the so-called staring contest. I believe at some point buyers mentality will become even worse if sellers don’t start really dropping prices soon – in angering the buyers, they remove what little demand remains, making it even worse when they finally cave.
You know the articles says:
“With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets.”
Do sellers really think that prospective buyers are just keeping their hands in their pockets out of timining the market? OR do they realize that in general people are way priced out of the market?
What will it take (besides 2 yrs to pass) for sellers to start getting real?
We’ve been looking for a year and I can tell you atleast 3 properties that we nearly thought we couldnt live without…. we look at each other with relief that we didnt buy them…. I can say that dealing with real estate agents has been eye opening (not in a good way.)
“Keep Renting, Pay my mortgage for me I love it”
Without getting into nasty comments, and keeping it to a somewhat civil level, what does this mean?
Yes, there are going to be alot of people whom this bubble will not effect at all. Not directly anyways. Indirectly it will.
For the landlords out there, don’t you worry that rents can possibly go down as this bubble pops? It can happen.
I don’t follow the logic? yes, some pay rent, but currently is cheaper than buying…with the difference they can therefore invest in something that is appreciating, rather than a house that will depreciate, in my estimation, 5-10% for the next 3-5 years from the summer 05 top.
Go back to that arbitrage gap.
Btw- I am not a renter. Although if I was young and starting out, I would be. Its a better play right now. If ones financial life is in check, your personal life will be in check (for the most part).
oh yeah… where can one get a good hot dog in Summit, near the train station? I will be over that way tomorrow.
SAS
Countrywide laying off more than 2,500 employees
http://news.yahoo.com/s/nm/20061024/bs_nm/financial_countrywide_jobs_dc
I believe that affordability is what stopping buyers. They simply cannot afford to buy. And the buyers left are Dummies that go in and use a Toxic loan.
When Prices drop 25-30% there will be buyers Why cuz they will be able to afford it, but unfortunately mucho inventory going to continue to build in the next 12-18 months.
Many of the so called buyers making bids now are Dreamers themsleves with very little money and really cannot afford.
Bleed’em Dry…
Bob
I was a bit surprised that this piece came out of Reuters.
jb
From the piece on Countrywide above:
Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.
…
The company had already reduced staffing by 847 people from July to September, ending the quarter with 55,564 employees.
“Gross layoffs will exceed 2,500 employees,” Sambol said.
…
Last week, Washington Mutual, the No. 3 mortgage lender and largest savings and loan, said it has cut 9,742 jobs, or 16 percent, this year.
In May the parent of Ameriquest, which lends to people with weaker credit, set plans to lay off 3,800 employees, or one-third of its workforce.
wow, I beat Grim to the punch.
write that one down. Guess I still got it.
;)
SAS
Hey Grim, what really raised my eyebrow about WaMu was that they cut their in-house appraisal staff. In a down market, that’s the last thing I would have done. That changed my position on WaMu.
the reality is that most people involved in the buying and selling of homes don’t really think about it too hard. so finding some group among them to blame is really the wrong way of looking at it.
I think it is funny that Realor were the ones who: Fueled the buble with Real estate never goes down” – and now they are saying: “Stubborn sellers” well of course they are stubborn because the same realtors told them so.
So if i am to pick someone to blame I would pick realtors – they will cause the bubble to pop faster or they all loose jobs to self-serving web-sites. Really – appraisal – scam in which you can get any # you want, Realtor – does 30 hours he spends on your house (in bubble time it was 1 -5 hours/house sold) really worth 18000$??
Anyways it is meaningless to Blame anyone – thats just the reality.
But remember my opinion – realtors willl make the crash a lot worse.
elaborating:
sellers want to get what their neighbors got. they don’t know/care what is happening in the rest of the world.
buyers want to buy as much house as the bank will let them. it seems pretty obvious that cautious, prudent first time buyers are about as common as bowler hats these days
realtors are your local PTA president. they are not experts and know nothing more than your neighbor’s anecdotes
who do you blame among these groups?
folks, I can’t believe you let this grim lies person bait you. Even his posting name is calculated to piss people off. He always posts the same b.s.
I’m a landlord too, and I’ve done well over the years but I respect and appreciate the people that have rented from me, they are my clients. This guy is basically trashing and insulting his clients. And as Pat pointed out, it’s not that great being a landlord. When you see him post, just skip over it, he wants to get a reaction.
Nobody’s worse than the builders to be honest. How you can offer the same new construction for 100% higher than what you offered it for five years earlier when your costs have been the same and inflation has been stable and still look at yourself in the mirror is beyond me. Plus you get so greedy like Kara and HOV that you overbuild and over expose your books to those land contracts, don’t go crying in the press when it all blows up in your face and you have to declare bankruptcy.
does anybody else see that 06 spring prices were 10-20% over 05 prices?
this is what ive been seeing. which means sellers have to drop 10-20% just to get back to 05 prices.
i can see why real estate doesnt drop that fast and takes a good 5 years to get to the bottom
anon i have seen it. the particular section i am looking in, sellers are 15% over 05 prices. No these places arent moving at all today. Turns out these properties have more than doubled in four years. This protracted sellers hold out will futher cause inventory to pile up and eventually send the sellers chasing down a price that will actually sell their home.
Off topic but am looking for input (schools, community, QOL)on the Caldwells.
“Nobody’s worse than the builders to be honest. How you can offer the same new construction for 100% higher than what you offered it for five years earlier when your costs have been the same”
I’m not a builder but my understanding is that construction materials have risen dramatically in the last 5 years due to international demand – there was a worldwide housing boom. Land costs have also risen along with all other real estate. On the other hand, I am sure that their asking prices have risen much more than their costs.
this is when buyers and the good folks at the mortgage company become the problem. Please let me know if this is taboo. that is to copy paste discussions from other threads. This one was comes from someone that has no idea what kind of alligator is lurking in her finances.
“I think we got screwed by our mortgage guy in regards to our first home purchase. My hubby & I both had credit scores of 780/760 but no money down – so he recommened an 80/20 loan the first one is ok but the 2nd is a 15yr Home Equity Fixed rate that balloons after 15yrs but is amortgatized over 30. After doing some research on the web it seems like in 15years when the loan is due we will have hardly paid anything? Is this right…you would still owe more than half the balance? what is this..and what can I do about it if it wasn’t explained to me by this mortgage guy…Thanks in advance…”
Existing home sales numbers tomorrow.
http://biz.yahoo.com/c/e.html
FOMC statement tomorrow as well.
New Home Sales on Thursday and the first look at the Q3 GDP on Friday. The rest of the week should be very interesting.
jb
any guess as to the rate falling, rising or maintaining tomorrow?
i say it will go up a tick.
I would like to see itgo up another quarter pt.
But, being as yellow as this Fed is of late, I think they will hold.
What do you think Grim & others? What is the 10yr saying?
SAS
I know it is sadistic, but it is fun to watch the naked sellers swimming trying to run ashore because there is no tide anymore. We got the sellers by the b@lls.
Let the flippers and greedy sellers burn.
I think so too. Start of year school crowd contribution.
It will take sellers some effort to keep all the 33k+ empty houses in NNJ warm this winter.
I would be pleasently surprised if it did go up, the media is really forecasting no change tomorrow. Are they forecasting or are they hoping. Hmmm.
From Marketwatch:
Centex profit falls as home closings decrease
Centex Corp. said late Tuesday that fiscal second-quarter net income dropped 59% from a year earlier as home builders struggle to adjust to the housing slowdown after years of higher sales and prices.
…
Earlier this month, Centex pre-announced certain second-quarter results, indicating that net orders fell 28% from the previous year on record cancellations and the inability of some buyers to sell their existing homes. The company lowered its second-quarter earnings forecast to a range of 65 cents to 75 cents a share, and said it expected to take write-offs for land options and land-valuation adjustments.
From Marketwatch:
Fixed mortgage rates should stay grounded
Those who anticipate getting a mortgage or refinancing one anytime soon listen up: Fixed mortgage rates aren’t expected to spike dramatically in the next few years, according to a forecast released Tuesday.
Fixed-rate mortgages should remain at about 6.3% to 6.4% through the rest of the year, according to the most recent Mortgage Bankers Association forecast. Rates are expected to rise to about 6.7% by the end of 2007 and to about 6.8% by the end of 2008.
link isn’t working grim.
“Centex Corp. said late Tuesday that fiscal second-quarter net income dropped 59% from a year ”
If the latest trend is to follow, investors will see some postive in this release … before you know it there will be a housing recovery rally!
Sorry about that:
Centex profit falls as home closings decrease
Fixed mortgage rates should stay grounded
From the Sentinal:
Zoners approve Heller’s bid for 85-foot sign
The Zoning Board has approved an application for an electronic sign that is 70 feet higher than allowed by the township ordinance.
Board members voted 5-to-2 to approve Heller Industrial Park’s application for an 85-foot electronic sign on its property near the New Jersey Turnpike.
“When I first started out, I was borderline,” said board member Rosemary Feterek as she cast her vote at the Oct. 17 meeting. “But now I really believe the positives do outweigh the negatives.”
…
“We are going to lose The New York Times plant, and we already lost the Ford plant,” Martin said. “We have to fight as a town to keep the value of businesses coming into town.”
…
“So my concern is why this township would not support a modest application from an industry that provides the largest taxes for Edison Township, and I believe Middlesex County as well,” she said.
…
“Sky trash is just as bad as something that is built poorly that is not following the zoning ordinance,” Takash said. “I think we need to uphold protections to limit nonconforming signs like the one proposed here.”
“Fixed mortgage rates aren’t expected to spike dramatically in the next few years, according to a forecast released Tuesday”
These talking head dilweeds will say anything.
SAS
realtors are your local PTA president
Shit! now I’m in the dog house for that too!
)-:
KL
“Fixed mortgage rates aren’t expected to spike dramatically in the next few years, according to a forecast released Tuesday”
First, it looks like their prediction is based on a presumption that the Fed will hold rates steady. Even if this is true, it doesn’t take into account rising risk premiums. If the bond holders can’t rely on continued appreciation to protect their investment, they should demand a higher return to compensate for risk.
Second, a steady rate environment is a double-edged sword. While rising rates won’t squash the market, it also takes away any sense of urgency buyers might have to get in while rates are still low.
I just got home from the Halloween costume shop. Bought a big blond wig, bright red lipstick, pants suit, high heels, a blue Volvo and sharp vampire fangs. I’m going to the party as Rosie-the-Realtor.
rates will be unchanged. 3rd quarter gdp will come in in the low 2% points essentially bottoming out until possibly the 2nd half of ’07 and that will largely depend on the consumer and housing market.
Even if the FOMC leaves rates the same all they need to do is say they’re concerned about the inflation outlook and it won’t bode well for the spring selling season.
The Fed will tighten, long rate will drop…
http://www.forecasts.org/10yrT.htm
-Sapiens
A contrary view:
I think a lot people here looking for a real estate crash are akin to flippers in reverse. They are people who don’t look at houses/condos as a place to live in … but rather as a place to make money off of. For them their housing is an “investment” upon which they expect to make a monetary return. A homeowner needs to look to minimize his longterm housing expense … and not be overly concerned with how much he can “flip” his home for in the near-term (or even in the medium term.) A homeowner doesn’t flip their home …. They LIVE in it. People here are looking to make short term gains (or avoid short-term loses … which is really just the other side of the same coin.) You can’t seem to see things long-term … In their attempt to make a quick buck (or conversely not have paper losses that they’ll never really see) they are causing themselves to have higher overall housing costs in the long-run.
Response to LDC comment:
I agree with you on several points. Yes, when I purchase my home in about 18-24 months (when I believe the market will hit its low point) I will be making a long-term investment. When it starts to appreciate in value once again I won’t be looking to flip it for short term gains. However, for us first time buyers out there who are going to lay down our hard earned cash and take on a good deal of debt, I’m not willing to watch my 20% deposit evaporate in the next 1 1/2-2 years. I’m not going to pay interest on an inflated house price either, for the rest of my working years. The market is moving downward as sellers can’t wait forever and comps go down. You know what the realtors tell you, “You’re house is only worth what the last 2 comps sold for”! Remember that, all you sellers, watch and weep. I can’t wait till next Spring to watch the next phase of this bubble take effect.
” they are causing themselves to have higher overall housing costs in the long-run.”
IS that right? You going to back that up with anything?
Also, what is your long term prognosis of NJ and the NJ housing market?
In any case, thanks for your input.
SAS
An outsider’s perspective:
You can’t really blame the sellers, buyers lenders, or realtors independent of one another.
It’s sort of like the Fire triangle: it take heat, fuel, and oxygen to make a fire. Remove any one of those and you have no fire.
Same with the bubble. If any one of these four players decided to make their decisions based on economic fundamentals instead of market momentum, then there would’ve been no bubble to begin with. Price growth would’ve been capped by the fundamentals. As far as I can see, all four players share the blame because without all four, there would have no bubble.
I don’t know if this has been posted yet, I haven’t seen it:
http://www.prweb.com/releases/2006/10/prweb458747.htm
LDC said:
“I think a lot people here looking for a real estate crash are akin to flippers in reverse. They are people who don’t look at houses/condos as a place to live in … but rather as a place to make money off of.”
I really don’t thing that is the case at all. For me personally and the way i read a lot of the posts here, many are people that are just trying to buy their first home. We welcome a crash so that it may give us a chance to buy something without signing up for financial ruin. I certainly look at it as a house to live in.
NavyVet i like your analogy with the fire triangle. Think there is a chunk of truth there. I believe it is the buyers now that are removing themselves from the picture and cooling the fire. Buyers have been forced to make their decission.
NavyVet Says:
October 25th, 2006 at 7:33 am
An outsider’s perspective:
You can’t really blame the sellers, buyers lenders, or realtors independent of one another.
It’s sort of like the Fire triangle: it take heat, fuel, and oxygen to make a fire. Remove any one of those and you have no fire.
Same with the bubble. If any one of these four players decided to make their decisions based on economic fundamentals instead of market momentum, then there would’ve been no bubble to begin with. Price growth would’ve been capped by the fundamentals. As far as I can see, all four players share the blame because without all four, there would have no bubble.
Well Current buyers are the ones who DID NOT participated in insane buying frenzy otherwise they would not be buyers??? it nos it right. As well as many current sellers also did not fuel the bubble since they are just selling now…
All they think: if I sell low right now I will not be able to buy comparable house – or my neighbour made a killing and you are telling me I have to sell my house at risk??
So, Both, Current sellers and current buyers are trapped by teh buble – byers simply can not afford existing prices, Sellers – can’t risk lowering their prices too much (what if Market will not fall that much??. Thats why right now luxury homes are selling well – those people do not care for price, and sellers who must sell seling their homes (the way it should be if you do not have to sell – stay in you house) . Thats why, I think, we will see slow and painful grinding downhill, until market comes back to equillibrium.
Mainly, it would mean significant unemployment by realtors/lenders/construction I think current huge # of realtors in ridiculos.
And well,may be construction will finally start hiring Americans instead of dirt cheap Mexicans – if there is high unemployment I hope people will start protesting illegal workers.
Well as far as who to blame -you can not blame sellers or buyers because current sellers and buyers are not the ones who created this mess.
Further to my point of…
“We (buyers/bubble watchers) welcome a crash so that it may give us a chance to buy something without signing up for financial ruin”
… is Glen’s most helpful post
http://www.prweb.com/releases/2006/10/prweb458747.htm
I do not want to be part of that number with my family in tow.
Sellers. Next question.