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Real estate slowdown evidence...
Old 12-12-2005, 05:56 AM   #1
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Real estate slowdown evidence...

I don't pay too much attention to the froth in the RE market, I have always assumed it would slow down eventually...but finally got some personal evidence that, at least in my area, the slowdown is at hand. 3 years ago we wanted to do some renovations on the house...I made lots of calls to architects, contruction firms and other tradespeople...at least 1/2 never returned my call, and those that did were not available any time soon....so I gave up and decide to do w/out for a while. (No way I beg people to work for me).

Last Saturday I decide to make some calls again for an upcoming kitchen remodel...called 3 local builders; all of them returned my call w/in 24 hours, one came by the NEXT day to discuss it with me, and the other 2 are coming w/in the week...this is an AMAZING change. Not only did all 3 three all agree to come by and talk, all of them have time to start THIS winter....last time I made calls EVERYONE was scheduling *at least* 6 months out.....

Good news for me I guess...bad news for builders around here.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 07:45 AM   #2
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Re: Real estate slowdown evidence...

Don't cry for builders or real estate buyers. The former have enjoyed a boom in business for several years, while the latter are using significant equity from their former homes to either upgrade or pay cash for a new place. Neither is hurting one bit.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 08:07 AM   #3
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Re: Real estate slowdown evidence...

I can see evidence of the boom slowing down around my area. One problem we've always had though, is that the houses are old and modest, almost shacks compared to some of the mcmansions going up in nearby neighborhoods. Most of our value is in the land. But anyway, my neighbor next door had her place on the market in 2004. She was asking $439K but soon bumped it to $459K. No bites. She put it back on the market over the summer, but this time her realtor talked her into bumping it up to $485K! For a Sears and Roebuck kit home that's 80 years old! Now admittedly it's a nice house, large 1+ acre lot, in ground pool, 2 car garage, in-law apartment, and beautiful landscaping. But it's also old, close to the road, and is a lot of maintenance. Anyway, she gave up when the contract with the realtor ran out in September, and decided to just stay put.

The next house down from her, which is around 85 years old and nothing special about it, except the 4 1/4 acres it was sitting on, was bought by a builder who wanted to tear it down and put up new houses. He paid around $470K back around Feb/March. And then the environmental department stepped in, and where he originally planned to build 6 McMansions, now he can only build 3, because the ground is so low and is considered wetlands. So it's just sitting, and I have no idea what's going to happen to it.

Up the street there's a modest 3 br/2ba cape on 1/2 acre for sale. They started off a few months ago asking $350K. They've dropped, bit by bit, to $345K, $340K, and now at $329K. There's another Sears & Roebuck home on a flag lot across the street from me, which has sat vacant now for over 2 years. It got foreclosed on in early 2003, and was pretty trashed at the time. A guy bought it in August 2003 for around $145K, and I thought that was too much at the time! I had made an offer of it for $100K back in May '03, at the recommendation of my agent. This guy did a major renovation to it, and it's probably about 95% done, but it's just sitting, empty. I've never seen it get listed, so I don't know what's going on...whether the owner is holding onto it to see where the RE bubble goes, or if he ran out of money to do the renovations, or what.

So, at least in my little world, things do seem to be slowing down a touch.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 08:42 AM   #4
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Re: Real estate slowdown evidence...

The entire San Francisco bay area has been under siege with the real estate bubble for the last 5 years. I'm starting to see inventory (yes, I watch MLS listings in my spare time --> I know I need to get a life), moving at a much slower pace. I'm also seeing price reductions happening in certain areas.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 10:52 AM   #5
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Re: Real estate slowdown evidence...

farmerEd,

Not sure about this, but you may be seeing the effects of a seasonal market re: builders. Usually (around NC at least) the builders slow down significantly in the winter. Spring, summer and fall make up for slack times in winter, but they'll pick up small inside jobs (like kitchen remodels) during the cold months when outside construction might be more difficult (water or ground freezes solid, concrete/mortar/paint/caulk freezes before it cures correctly). I imagine NE probably has a longer "winter" period of unfavorable building conditions than NC.

Around March (or so) things really start picking up, business-wise.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 12:27 PM   #6
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by cube_rat
... I'm starting to see inventory (yes, I watch MLS listings in my spare time --> I know I need to get a life), ....
Humm, that is an interesting activity.* In a year or two DH and I intend to down-size again.* Maybe I should start doing searches of both the sell and buy markets periodically and print them out.* That would give us a good picture of asking prices, and a clue or two about market activity.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 12:38 PM   #7
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Re: Real estate slowdown evidence...

My stepson is a contractor, in the past couple of years he had his houses sold before the foundations went in. The project he's working on now had 3 of 5 sales fall through because the potential buyers couldn't sell their homes. This is in the southern NH area where property is/was selling like hotcakes. He doesn't sell McMansions, just a nice sized house on a 2 acre lot for about 350. He even said the other day that things are slowing down some.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 02:20 PM   #8
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Re: Real estate slowdown evidence...

It's peaked on Oahu according to sales & price statistics, but I don't know if that's seasonal or the end of the bubble. The realtors are screaming "Sell now, call us to ask how!!" but I think that's their advertising hype. We won't know for sure until next spring whether it'll take off again or stay flat.

Local contractors, however, are still working their assets off. One of my tae kwon do buddies is living on Kauai for six months (at company expense, including interisland flight coupons) because Kauai's contractors can't handle all the work.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 04:24 PM   #9
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Re: Real estate slowdown evidence...

All the real estate brokers I know have told me it is taking much longer to sell homes today than it did just a year ago and that many people are taking their homes off the market because they can't get anything close to asking price.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 05:01 PM   #10
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Re: Real estate slowdown evidence...

Not in Calgary. The economy is on fire and builders/contractors can't keep up with the demand.

We were lucky enough to find a contractor to develop our basement that was referred to us personally and was able to squeeze us in as a favour. Homes in our area are selling in less than a week and the biggest obstacle sellers face is finding another home to buy due to the shortage. Local builders have even starting putting caps on the number of new homes they're building due to the shortage of skilled labour.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 05:05 PM   #11
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by Calgary_Girl
Local builders have even starting putting caps on the number of new homes they're building due to the shortage of skilled labour.
Smart move!!!
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Re: Real estate slowdown evidence...
Old 12-12-2005, 06:20 PM   #12
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by retire@40
All the real estate brokers I know have told me it is taking much longer to sell homes today than it did just a year ago and that many people are taking their homes off the market because they can't get anything close to asking price.
It's the interest (rate), stupid. Basic psychology. If you think you
missed the low mortgage rates, it makes you that much more
reluctant to buy. No one likes to think they could have had a great
deal and now must "settle".

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Re: Real estate slowdown evidence...
Old 12-12-2005, 06:43 PM   #13
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by MRGALT2U
It's the interest (rate), stupid.* * * Basic psychology.* If you think you
missed the low mortgage rates, it makes you that much more
reluctant to buy.* No one likes to think they could have had a great
deal and now must "settle".
It can't be because of the mortgage interest rates because those rates have not gone up (yet).

I think it's more because of "irrational exuberance" in the real estate market.

People think their real estate today MUST be valued 20% higher than it was last year because real estate has been going up 20% every year for the past 5 years.* They don't understand that it isn't the seller that determines the value of their real estate, it's the buyer, stupid.

In the meanwhile, rents have been going down.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 06:53 PM   #14
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by retire@40
It can't be because of the mortgage interest rates because those rates have not gone up (yet).
I don't know which rates you're talking about. We refinanced six months ago at 5.375% through our credit union; today that loan is going for 5.875-6%.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 06:59 PM   #15
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Re: Real estate slowdown evidence...

Which is still much lower than the 8.25% I got in 2000...
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Old 12-12-2005, 07:00 PM   #16
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by Nords
I don't know which rates you're talking about.* We refinanced six months ago at 5.375% through our credit union; today that loan is going for 5.875-6%.
I don't see this either. Everywhere I look mortgage rates have increased.

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Re: Real estate slowdown evidence...
Old 12-12-2005, 07:07 PM   #17
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by Have Funds, Will Retire
Which is still much lower than the 8.25% I got in 2000...
We started at 8.5% in Aug 2000 and refinanced that four times. Made a profit every time.

We shoulda signed up for the "buy three get one free" frequent-refinancer program.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 07:08 PM   #18
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by Nords
I don't know which rates you're talking about.* We refinanced six months ago at 5.375% through our credit union; today that loan is going for 5.875-6%.
Rates have been in the 5.5 to 6.0 range for a while. *I'm talking about increases in the 150bp to 300bp range that should give real estate a KO punch. *I'm surprised we haven't seen this increase yet, but I think it's coming in the next year or two.
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Re: Real estate slowdown evidence...
Old 12-12-2005, 07:53 PM   #19
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Re: Real estate slowdown evidence...

Which may give the froth some time to dissipate...
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Re: Real estate slowdown evidence...
Old 12-13-2005, 07:33 AM   #20
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Re: Real estate slowdown evidence...

Quote:
Originally Posted by retire@40
Rates have been in the 5.5 to 6.0 range for a while. *I'm talking about increases in the 150bp to 300bp range that should give real estate a KO punch. *I'm surprised we haven't seen this increase yet, but I think it's coming in the next year or two.
I think a lot of the pain has been delayed because 1) long term rates really haven't moved up much and 2) there has been a lot of questionable innovation (Option ARMs, etc.) in the mortgage marketplace. I don't know what it will take to shift #1, and apparently neither does the Fed. #2 will change and very possibly pretty soon, since there are some impending regulatory changes coming. Either that, or a loose mortgage lender will suddenly have very public portfolio problems and the markets will run away from screwy mortgages. You can imagine what that will do to RE, especially in the worst bubble markets.
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