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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 06:57 PM   #21
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by justin
It is definitely "over" in a lot of places, although I don't think a lot of folks in bubble areas think it's over. Although I've thought it is over for over a year now.

By the way, I am real estate investing genius... "Next was Raleigh-Cary, N.C., at $226,300, up 14.5 percent from a year ago". :

2nd highest appreciation in the South.

6th overall I think. Must be all that CA and NY/NJ cash out money flowing in.
Right on point Justin.

I have been sub teaching in wake county and yes the NY and NJ money is fueling the sales in this Raleigh area. However our developer and 12 custom area builders are VERY SLOW these past three months!
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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 06:58 PM   #22
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by jazz4cash
so how are they correlated to residential market?
Commerical real estate investment generally lags residential by a few quarters.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 09:51 PM   #23
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by wab
By 'bad," do you mean a dramatic fast-falling market? Houses don't do that. They are sticky on the way down. If history is a guide, appreciation will first slow, then house prices will go down slowly for several years, then sideways for a few more. At the bottom, they will have overcorrected (i.e., below the inflationary trend line). And then prices will skyrocket with an uptick in economic growth.
The two markets that I know, Lowell, MA and Houston, TX did not behave that way. In Lowell, it was practically a free fall, where price dropped more than 50% in less than 2 years. Houston was almost the same, but not quite dramatic, it took a little longer, around 3 years, I think.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 10:43 PM   #24
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by Sam
The two markets that I know, Lowell, MA and Houston, TX did not behave that way. In Lowell, it was practically a free fall, where price dropped more than 50% in less than 2 years. Houston was almost the same, but not quite dramatic, it took a little longer, around 3 years, I think.
Well, prices would fall quicker with wide job losses or something that suddenly made an area less desirable. But I didn't even see 50% declines in SoCal after the aerospace contraction. I'm sure Houston and Lowell got hit hard with job losses.

Who knows. If the economy picks up, we could even see a rise in prices. It happened in London when banks did well, and it happened in parts of Oz due to the huge commodity bull run.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 11:16 PM   #25
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by mickeyd
RE slump?

If so, they forgot to advise Vanguard REIT Index fund of this fact. Someone is building a mess of new 3000-4000sq/ft homes near me her in south TX, not to mention all of those damn commercial buildings and apartments that they insist on constructing. Must have forgotten to advise those guys also.
Most of Texas is an exception to the slump.. we have not been overpriced as much as other markets... and as someone said, it was about 50 50 on ups and downs... we are building a bunch of branches all other the place, but there are not that many good sites left as everybody is doing the same thing..
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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 11:21 PM   #26
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by Sam
The two markets that I know, Lowell, MA and Houston, TX did not behave that way. In Lowell, it was practically a free fall, where price dropped more than 50% in less than 2 years. Houston was almost the same, but not quite dramatic, it took a little longer, around 3 years, I think.
I was dealing with single family housing bonds at the time... there were whole neighborhoods being repossessed back then... NO sales except for the repos.. and from what I was told by a bond rating agent when he was looking at one of my issues, it was the worst housing slump in US history.. there were more repos as a percent than any other city any time...
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Re: Would you now agree that there is a Real Estate slump???
Old 02-15-2007, 11:42 PM   #27
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by wab
Well, prices would fall quicker with wide job losses or something that suddenly made an area less desirable. But I didn't even see 50% declines in SoCal after the aerospace contraction. I'm sure Houston and Lowell got hit hard with job losses.
True, job losses were the main cause (oil in Houston, and Wang Labs in Lowell). But Lowell was also hit simultaneously with the Boston Real Estate slump.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 03:28 AM   #28
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Re: Would you now agree that there is a Real Estate slump???

San Diego County number of sales down 4.3% Jan 07 vs Jan 06. Median price down 5.6%.

San Diego is leading So Cal on the way down in home prices. LA County is hanging tough with 6.1% appreciation Jan 07 vs Jan 06. Orange County had no change in median price Jan 07 vs Jan 06.

Karevoll of DataQuick: "The market is showing much more resilience than we or anybody thought." I tend to agree with him although -5.6% in SD is nothing to sneeze at.

Here's one I have problems with: "We may have bottomed out and are on the way up. At least for now." This from an economist for a real estate advisory firm in Orange County. He did a little CYA with that "at least for now" part.

I'm continually amazed by all of this stuff in the media about "we've just about hit bottom and things will bounce back in '07." Aren't they looking at the affordability stats? It's going to take some time, some significant time, to get real estate in alignment again IMO.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 08:37 AM   #29
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Re: Would you now agree that there is a Real Estate slump???

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In Lowell, it was practically a free fall, where price dropped more than 50% in less than 2 years.
hah, those were the days ... the Wang Towers sold at auction to a couple MIT grads for $565k. 10 years later they sold for 100m (after dumping 20m into the place).

Same story with the Searles building in Methuen and countless others.

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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 09:06 AM   #30
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Re: Would you now agree that there is a Real Estate slump???

We've dropped 30% and will go another 10% or so before prices get near to reasonable...in one year...no job problems or other stimuli other than the fact that more desirable homes in closer areas to the city became cheaper. Those became cheaper because there was overbuilding. The overbuilding stopped getting snapped up when prices started getting ridiculous and interest rates hit the foreclosure rate.

By the way, the people who bought my wifes old house that we fixed up 2 years ago just went into default on the property. 100% adjustable interest only loan. Apparently a bad idea.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 09:27 AM   #31
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Re: Would you now agree that there is a Real Estate slump???

... yeah i am still waiting to see the last couple I sold in the foreclosure listings.

The last one closed at the proverbial "top" (May 2005) ... sub-prime lender (who has since been closed by the state) who pushed the ole 80/20 on the buyer.

The second note had an interest rate of 11.75% !!! Some how "Happily ever after" does not sound like a good ending to this story.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 09:39 AM   #32
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Re: Would you now agree that there is a Real Estate slump???

The RE agent and the mortgage company/bank did a real disservice to that customer. They paid me over asking price for the place, I paid their closing costs and rebated them the money for the down payment, so they ended up realistically with a 100% financed property. One working at a gravel yard and the other part time doing medical records.

I really wish I had gotten another offer the same weekend, but they'd have screwed up with someone elses property...
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 11:43 AM   #33
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by Cute Fuzzy Bunny
The RE agent and the mortgage company/bank did a real disservice to that customer. They paid me over asking price for the place, I paid their closing costs and rebated them the money for the down payment, so they ended up realistically with a 100% financed property. One working at a gravel yard and the other part time doing medical records.
You've captured the root cause of the bubble right there. Home prices went up artificially. Your selling price had little to do with normal supply and demand, and it was inflated by a kick-back to the buyer.

So, you got a killer price (and pushed up the median selling price). The buyers got to live a bigger house than they could really afford (I wonder if they ever made a payment). Agents all got a bunch of commission. The loan broker got a premium for closing a sub-prime loan. The lender sold the loan to some investor to shed the risk. A giant Ponzi scheme.

Now, housing prices are falling as it unwinds, but that may be the least of it. The subprime industry is imploding right now. And they may be dragging down bigger banks and large investors with them. There is a war on to get lenders to buy back these toxic loans. This is the year things could get really exciting.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 11:45 AM   #34
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Re: Would you now agree that there is a Real Estate slump???

FYI, I downloaded the quarterly summary from the NAR site. That really told the story. Looks like Q2 2006 was the "peak" in many places. YOY % change doesn't yet reflect the peak sales prices in Q2 2006. My guess is Q2 2007 results released some time in July 2007 will show a very significant YOY decrease in a lot of the previously hot markets (like SF bay).

IIRC, SF Bay area is now about $30k less than the Q2 2006 peak median sales price.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 12:29 PM   #35
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Re: Would you now agree that there is a Real Estate slump???

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...toxic loans. This is the year things could get really exciting.
Toxic loans are an excellent description, Wab
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 01:18 PM   #36
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Re: Would you now agree that there is a Real Estate slump???

Quote:
Originally Posted by justin
FYI, I downloaded the quarterly summary from the NAR site. That really told the story. Looks like Q2 2006 was the "peak" in many places. YOY % change doesn't yet reflect the peak sales prices in Q2 2006. My guess is Q2 2007 results released some time in July 2007 will show a very significant YOY decrease in a lot of the previously hot markets (like SF bay).

IIRC, SF Bay area is now about $30k less than the Q2 2006 peak median sales price.
The problem with data today is slicing and dicing within a market. Price movement of condos is different than single family dwellings. Right now they are lumped together.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 01:47 PM   #37
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Re: Would you now agree that there is a Real Estate slump???

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The problem with data today is slicing and dicing within a market. Price movement of condos is different than single family dwellings. Right now they are lumped together.
Brat, just to clarify, I was referring to the NAR's data on Single Family homes and NOT condos. They are reported and aggregated separately by NAR.

Here's the SF Bay data for the last 5 quarters (in $000's):

2005Q4: $718.7
2006Q1: $720.4
2006Q2: $751.9
2006Q3: $738.3
2006Q4: $733.4

Guess I was wrong earler. Only a $18k drop btw Q2 and Q4 2006. Definitely a downward trend over the last 3 quarters of 2006, even though NAR's YOY results indicate a slight increase. That's why I think the downturn will really start to be noticeable in another couple quarters - once the YOY numbers turn negative in a lot more places.

I wonder if seasonality affects this data? Is Q4 generally lower in price than Q2 due to weather?
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 01:48 PM   #38
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by Brat
The problem with data today is slicing and dicing within a market. Price movement of condos is different than single family dwellings. Right now they are lumped together.
You can find a breakdown by type of house and zip code from dataquick:

link
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 02:29 PM   #39
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Re: Would you now agree that there is a Real Estate slump???

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Originally Posted by Cute Fuzzy Bunny
By the way, the people who bought my wifes old house that we fixed up 2 years ago just went into default on the property. 100% adjustable interest only loan. Apparently a bad idea.
Haven't you been looking for a real estate bargain? I realize that prices are still dropping but you know all the players in this tragedy and might be able to infuse a big shot of liquidity in exchange for taking back the title... and dumping it onto the next flipper!

But then I remember that PenFed is just about to start paying you over 6% for doing nothing. Never mind.
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Re: Would you now agree that there is a Real Estate slump???
Old 02-16-2007, 03:43 PM   #40
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Re: Would you now agree that there is a Real Estate slump???

just checked out wab's dqnews link for south florida. reflects what seems to be the case here. my area has gone up about 5% yoy. nice to see, especially since during the bubble this little x-crack town soared so high it made the front page of the new york times. but the inherited house area has gone down about 20%, perfectly reflected in our asking and hoped-for prices, which is coincidentally about 20% off what we probably would have gotten last year.
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