From RealtyTimes:
2007 Housing Market ‘Won’t Be A Standout’
It’s not surprising reports of doom and gloom in the housing sector aren’t welcomed by those who stake their living on the industry, but that isn’t going to make it go quickly, quietly into history.
As 2006 winds down, experts, forecasters and pundits are trying to put a positive spin on change in the residential real estate market, but the boom-gone-bust may have just begun, according to a new, well-respected forecast.
By 2007, anyone who tried to make sense of 2006 by labeling it a fleeting real estate market correction could be too busy scratching their head and wringing their hands to spin fast enough to avoid egg in their face.
According to the 28th edition of a survey of 600 real estate industry experts, 2007 will remain loaded with uncertainty for the housing market as prices continue to shake out, financing costs grow and more potential buyers find a spot on the fence.
“Let’s just say, 2007 won’t be a standout for the housing sector. Odds favor pricing declines or, at best, stagnant markets,” according to the Urban Land Institute’s “Emerging Trends In Real Estate 2007”.
…
Here’s a look at forecast points.The change will feel more like an elevator moving sideways or slowly slipping down, instead of going up, up, up. Prices are beyond affordability for many buyers, crippled by higher interest rates, energy costs and insurance premium hikes.
Hardest hit will be late-comer speculators, recent buyers forced to sell soon and others who are still playing the real estate game like it’s 2005.
Existing home owners, who have a decade of equity gains to cushion them, should fair well, provided higher property taxes, insurance premium hikes, bad mortgage decisions and energy costs don’t pull them under.
Too much supply in markets dominated by investors will continue to give new home buyers the edge, but bailing investors and mortgage defaults could worsen the so-called “correction.”
“The second home market has … slowed to a crawl … enormous price increases got ahead of themselves.” A growing number of fence-sitters are waiting for that discretionary vacation property to cost less. “The entire psychology has changed.” Over time, however, the baby boomer market will spark more life into second homes, driving up prices. Expect continued corrections in coastal markets and watch for speculators to give up and for over extended owners to get strangled by ARMs.
The condo market will remain a leading indicator, suffering the most anguish. “Especially avoid developing condominiums in saturated markets such as Miami and Las Vegas.”
That may not be the case for certain locations and types of housing developments. Coastal global pathways, including New York, Washington, D.C., Los Angeles, San Francisco and Seattle remain favored investment markets.
“The change will feel more like an elevator moving sideways or slowly slipping down, instead of going up, up, up”
How about more like a boulder, gaining momentum on a steep downward slope, especially in the 4th quarter of 2007. How many homes were taken off the market or are currently being rented (at neg cash flow), waiting to re-list for the spring “rebound”???
I just don’t see prices on multi family houses really dropping to rational levels in my town. Cap rates still below borrowing rates. Can’t tell when if ever this bizarro RE world will start making sense…
“Fed’s Moskow sees rate-hike possibility
Chicago Reserve president sees high inflation bigger risk than low growth.”
http://money.cnn.com/2006/11/16/news/economy/fed_moskow.reut/index.htm?postversion=2006111613
I wonder if this proposed 20% tax cut will apply to primary residences only. If so, we can look forward to a future of lower than normal cap rates in NJ..
jb
I wish that Bernanke shared Moskow and Lacker’s viewpoint.
jb
The tax cut would warrant higher prices but not higher cap rates. Still, I see your logic because in this illogical RE world sellers would use lower taxes to justify disproportionate price increases to buyers who seem to be comfortably irrational. I can’t make heads or tails of this market and thought I’d be able to by now.
NJ is on a global pathway to hell. The politicos in Trenton are starting to salivate over huge deals to transform our roadways into instant cash, the ultimate quick fix to the state’s money problems. Instead of actually cutting your bill, the roads you and I have bought and paid for are about to be auctioned off to the highest bidder?
Say goodbye to whatever quality of life you had on route’s 78, 80, 440 & 95. They will be toast. Can you imagine the commute when these roads go toll?
Here’s the toll road article from today’s Daily Record:
http://tinyurl.com/w2xsa
Nov 17
8:30 AM Housing Starts
8:30 AM Building Permits
Guess I didn’t know that http://www.kannekt.com
was a major….major tool by the RE pundits.
You see their who ALL of their sponsers are?
god damn RE freaks.
ohhh man,
SAS
u still out there Grim ?
SAS
“While the tone isn’t completely grim”
Boy your getting your name all over the place
(-;
KL
2007 will bring another stagnant year of slow sales, falling prices, and more blame put on the media for causing the downfall..
it’s a cycle people.. that’s what happens.. what goes up, must come down, and then back all around again.
KL, you are an agent…correct?
What percentage of RE agents out there are, just doing their job to their ability..being straightforward..etc..etc.. vs. RE agents who are real sharks, who will just blow smoke up your skirt and tell you anything, just as long as you sign that dotted line?
I have been doing some research on lowball offers, and most RE agents I have come into contact with were just arrogant schmucks.
Although, there was this one fellow, seemed to have been in the biz for about 20 years, was really great. I was actually very impressed with his work and thinking about giving him the credit he deserves.
SAS
Don’t hold your breath on property taxes. They won’t go down, ever.
http://www.mcsheriff.org/sales/
The downfall of Whitney Houstons Mendham home
Found this on Craigslist.
Sellers Trying To “Cash In” Post-Boom / Don’t “Buy” Into It…
——————————————————————————–
Reply to: see below
Date: 2006-11-13, 9:48PM EST
Attention Home Buyers! We’re getting close to the end. If you haven’t bought yet, keep on waiting just a little bit longer and you’re going to finally pay a FAIR price for your home.
That bubble isn’t popping – no – it’s got more of a slow leak. I can assure all of you the air is leaking and it’s only a matter of time before the market is completely deflated. Add to that the inflation of the number of foreclosure reports from the poor inexperienced buyers who took out dangerous loans to overpay for their homes, and you will have just found yourself a sweet deal in the long run!
Now don’t be fooled by desperate last minute greedy sellers and builders trying to take a few dollars off their price making it look attractive. Buyers have sellers right where they want them… but not completely just yet.
Continue to wait it out. As hard as it may seem at times, don’t fall into the “last minute desperation trap” where a seller has reduced their asking price by $50,000, but are still ultimately cashing in $100,000 profit (which you would never know) and agents are not going to tell you either. I’m one of those few agents who actually care about people getting a good deal and paying a fair price for a house.
I, a buyers’ agent, am starting to see the deflation more and more now. For every 5 new listings coming on the market, 15 current listings are dropping their prices. The housing inventory is the new bubble and the housing price boom is the bubble that is now deflating.
Sellers, builders, and realtors MUST remember that this market is nothing without you buyers and without your offers coming in the prices MUST fall, which has been happening. It’s really as simple as that. I occasionally test the market by throwing in offers to sellers who I know are trying to hang me out to dry with their over-inflated prices and I’m actually beginning to get calls back when I don’t accept their counters!
Always remember, a real estate market is NOTHING without buyers. Don’t be suckered and pay the over-inflated price that a greedy seller wants you to pay.
If you agree with this posting forward it on to everyone you know in the market for a home. Maybe together you can turn this market in the opposite direction, something that works for the buyer.
this is in or around northern New Jersey
no — it’s NOT ok to contact this poster with services or other commercial interests
this much for a 3 bedroom? wow. Pretty bold move.
“$699000 commuter’s dream, 3 bedroom 2 1/2 bath home”
http://newyork.craigslist.org/jsy/rfs/234110251.html
SAS
A million dollars for a freaking condo, damn, and I thought I have seen it all by now.
ONLY a 1 car garage, a million smacks, and only a 1 car garage. What idiot would buy this shit?
Let me find that idiot, so I can sell him some of my old drawers,,,hehe,,,yeee,,,
“$969000 Summit at High Point Condo OPEN HOUSE Sunday 11/12 2:30-4:30”
http://newyork.craigslist.org/lgi/rfs/232321920.html
SAS
Sorry, I was out discussing theories behind the inverted yield curve..
jb
Found this on Craigslist.
Sellers Trying To “Cash In” Post-Boom / Don’t “Buy” Into It…
Interesting to see buyers agents playing that card.
jb
“Sorry, I was out discussing theories behind the inverted yield curve”
oh man….
you are becoming something I bet you never thought you would… lol.
Better than talking about that dumb Borat.
SAS
Hey SAS (from #16)-
Nice to see some almost-props to a good, solid RE agent. They DO exist.
It takes time to learn the business and how to do the right thing when your goal is to treat it as a profession.
For those looking for some more information on the NAHB homebuilder confidence numbers released today:
http://photos1.blogger.com/blogger/2825/754/1600/NAHB1106.0.jpg
Hat tip to Calculated Risk for the graphing.
jb
(p.s. Just why exactly did the press get so excited over that move?)
Foreigners Slow Buying of Long-Term U.S. Securities
http://www.bloomberg.com/apps/news?pid=20601087&sid=as3.FKsXWdZE&refer=home
Nov. 16 (Bloomberg) — International purchases of U.S. long-term assets slowed in September from the previous month as investors sold Treasury notes.
Toms River, NJ is currently doing Home Re-valuation survey. A house-to-house inspection, the result will be effective in few months.
Good lucks North Dover- Toms River residents… hope your property taxes won`t double !!!
Zillow your prospective house to buy… learn how much the last sold price and the neighbors home price too.
You learn how much is the property tax of that house too.
Don`t be fooled by sellers !!!
“I wish that Bernanke shared Moskow and Lacker’s viewpoint.”
JB.
Bernake is no fool. He knows what’s going on. He just won’t admit it in public to make things worse for housing before the 2008 election.
Read my lips “Zillow is crap”. I see Zillow give prices for homes higher than what they are listed for in MLS.
So I ask all the sellers now…who will buy your house?? Lets say a young couple makes 50k each (that is about $5000 a month for the couple combined).
Lets say your 1940’s cape cod house which you bought for 20k in the 1960s is now on the market for $450,000. Lets say you reduce the price to $400,000. Lets do the math assuming $6,000 yearly taxes:
20% down = $80,000
$320,000 mortgage
$500 monthly taxes
6.25% interest
Total monthly payment = $2470.00 including taxes. Remaining income = $2500.00 a month.
Okay, seems managable…one thing…what about cc debt, student debt, car payments, money for the down payment, utilities, food, etc….not many people in their mid to late 20s have that 20% saved and many have high debt to income ratio. How many actually fit the home buying criteria?
Sorry, but a couple making $100,000 would be out of their minds to buy a $450,000 house.
Just my $0.02USD.
jb
I agree…but you could do it assuming you had no other current or future obligations…
We are one of those ypoung couples, and I can say that your calculations are wrong -first of all no young couple will get 6.25% interest on fixed mortage – it is all at 6.75% right now (if you have ideal credit that is and with 20% down payment.) how long it takes to save 80K – for us it is about 6-8 years IF WE DECIDE TO HAVE NO KIDS… (but that time we will be close to 40 years old.)
In addition, besides taxes there is also upkeep oin the house and higher utilities payment compare to apartment. So real cost of 450K house with 80K downpayment will be right around 3000/month or more. – Impossible to do on 100K/cpouple budget.
AL: where are you getting your 6.75% mortgage rate figure from? Currently rates on 30 yr fixed are much lower…
Not for first time home buyers. Unless you are ready to pay 1000’s in points.
I got a 6.25% mortgage with 0 points (first time buyer)
An interesting article by Garry Shilling.
He is also the author of book Irrational Exuberance.
http://www.2000wave.com/article.asp?id=mwo111706
Robert Schiller wrote Irrational Exuberance.
When is this bubble supposed to burst? I think it’ll be somewhere in the second quarter of 2007, based on all the leading market indicators. Buyers hang on tight. Go see some homes now. You may be suprised at the deal you’ll be able to make for yourself comes March/April 2007. Yes, even in affluent Morris County!