Real Estate - do we still have holdouts?

[Ronstar]

I work for a firm of Civil Engineers and let me tell you the residential market with new homes is dead in So. Cal.

Same here. A few years ago, we had more than a 1000 lots in subdivision design at one time. Now we have one subdivision of around 40 lots. Some of our area's bigger homebuilders have declared bankruptcy and some have closed their model homes and left.

Also, a friend of mine was transferred for his job. His company offered a relocation package where the company would buy his house for the appraised value if he could not sell it. He couldn't sell it for the $330k appraised value, so the company bought it. After 6 months without offers, the company sold it last week for $214k.

 

[blessed]

In the outer suburbs of No. Va. housing is down about 20-25%. However, I think it has further to go. I was in land development and saw this coming, I got out and am happily Fired

 

[Delawaredave5]

Saw a chart somewhere (will try to find and post) which showed housing slumps over the years.

All of them were a 5-6 year "sideways" correction - prices didn't drop much, stayed fairly flat, and inflation "caught up" to get housing market back to reality.

So I would say:

• We'd at least see a 5-6 year sideways correction. This started late 2005 - so maybe time to start looking is 2010.
• This RE market is more "out of whack" than any prior - so that would suggest that this correction will either last longer or have deeper declines, not just sideways action.

 

[CuppaJoe]

Chilling stories on this thread, I voted up up (edit I mean down down-[the first cup of coffee hasn't kicked in]) and away. I think, with the exception of the usual suspects, i.e, the most expensive Zip Codes, it's a sea change for the average Joe. The writing is no longer on the wall, it's running red in the streets--Kidding, even I am not that extreme. It boggles my mind to imagine an entire extended family piling into a single McMansion and scrambling for privacy. Thank god for the iPod, anyone check to see where room divider futures were this morning? Japanese screens?

 

[Marquette]

Bought our townhouse 5 years ago for 263. Highest sale during the last 5 years for a comp unit was 285 with 5k back for closing (so 280ish more or less). We think a realistic sale for ours would be 258-262.

On the other hand, the only offer we've gotten so far after months on the market was 245, which is what the foreclosure across the street went for.

So, no offers... good thing we don't need to actually sell.

I guess I don't know what I'm saying. I picked down but then I've been saying the market was going to go real soft real fast since November 06 (with our awesome timing, we didn't get around to listing until April 07, last good sale in our neighborhood was March 07). I'm a pessimist though so I try and keep my investing philosophy separate from my day-to-day mood.

 

[haha]

Here is an optimistic note from Sam Zell:

"I think Bernanke's reduction in interest rates has been spot-on, because basically we're going to fix the credit markets by creating a big enough spread between the risk-free cost of capital and what's available so that greed overtakes fear and the game begins again."):


Zell  Sees Start of Housing Recovery in the Spring - Real Estate * US * News * Story - MSNBC.com

Ha

 

[figner]

Last week while watching the morning news there were a couple commercials by the National Association of Realtors. Not selling anything in particular, just trying to convince viewers in a feel-good way that buying a house is a good investment. Desperation, perhaps?

 

[Notmuchlonger]

Last week while watching the morning news there were a couple commercials by the National Association of Realtors. Not selling anything in particular, just trying to convince viewers in a feel-good way that buying a house is a good investment. Desperation, perhaps?

Tends to happen when your livelihood is on the line and you are trying to put food on the table

 

[Marquette]

Last week while watching the morning news there were a couple commercials by the National Association of Realtors. Not selling anything in particular, just trying to convince viewers in a feel-good way that buying a house is a good investment. Desperation, perhaps?

They've been running lots of radio ads here on what a great investment a house is. In fact, according to them, "on average, the price of a home doubles every 10 years". So, honobob is on to something. That's about a 7% CAGR, right? That blows a 4% CAGR out of the water.

 

[ladelfina]

So a $250k "average" house today will be $500k in 10 years, and a million dollars in 20 years? Where is the wage/GDP growth to sustain that? They are desperately pumping their own sector.

As is Zell. I'd never heard of him 'til recently. He sounds like kind of a nut.

Zell attributed much of the current economic troubles to fear-mongering and politicking by Democratic presidential contenders Hillary Rodham Clinton and Barack Obama.

ZellÂ* Sees Start of Housing Recovery in the Spring - Real Estate * US * News * Story - MSNBC.com
It's all Clinton's fault!

If you're a farmer and you're getting $25 for your wheat, you're having a great time.

Food shortages = "good times".

There's 10 weeks of global wheat supply, apparently.

Food shortages loom as wheat crop shrinks and prices rise - Times Online

 

[twaddle]

I noticed Zell backed off his recovery prediction for places like Miami. I wonder what his prediction for Detroit would be.

The Big Picture | Detroit Housing = ~$0

 

[jazz4cash]

SO, the 78 days on the market might not really be true.... it could be much higher..

From casual observation, I would agree!

 

[dumpster56]

Warren county NJ toll Brothers development. Homes 1/3 to 1/2 acre 2700 to 3300 sq feet built between 1995 -2001 Prices sold units 05 through early 06

499 -539K

Prices sold last three months Nov 07 through Middle of Feb 08 385 -405K

Same houses.

Listings as of today since not much is selling are 385 to 469K with two homes still listed from 15 months ago and still on the market over 550K They may never sell.

Market is in deep trouble.

 

[honobob]

Why the median income means bubkis

Ritz-Carlton Kapalua suites sell for $176M - Pacific Business News (Honolulu):

Forty per cent of the buyers were from international markets! What's the Canadian word for Aloha?

 

[Caroline]

{quote]So a $250k "average" house today will be $500k in 10 years, and a million dollars in 20 years? Where is the wage/GDP growth to sustain that? They are desperately pumping their own sector.[/quote]

hmmmmmmmmmm.

My parents bought their house for 20K in 1965, so in retrospect:

1965 -- 20K
1975 -- 40K
1985 -- 80K
1995 -- 160K
2005 -- 320K

That looks about right, actually. Their house IS worth about $320K now, so maybe 10% isn't that far off, on average. Of course, if you'd told them back at 20K that they'd be sitting on 320K today they'd have laughed you out of the room.

I don't know whether to feel good or bad about this.

 

[Zoocat]

In Boulder County, CO, single family home prices have either gone down or up depending on the town. Over the past year, through 1/31/08, the sales prices in the suburban community of Louisville near Boulder are up 7%. Boulder is up 2.5%. Condos in Boulder are up 5.8% over the same period. But that statistic is skewed because there is a lot of new (expensive) construction. The old stuff is losing value. Denver is a whole other story.
http://www.baraonline.com/news/stats/y2008/index_html/file2/February08stats.pdf

 

[kumquat]

What's the Canadian word for Aloha?

No-mo-snow

 

[ladelfina]

My mom's house bought in 1964 at $24k would be about $240k now. That's 5.34%. Older house in suburban RI in a v. good area esp. for schools. If someone told me they'd pay twice that.. yeah, I'd be laughing (all the way to the bank, if the check didn't bounce).

nice simple calculator
Calculators - Rate of Return

According to this, Caroline.. $20k on 1/1/65 ending at $320k today is 6.62% annualized.

To get an annualized return of 9.93%:
your parents' house would have to sell for $1.2 million today.
Don't think that's gonna happen (but lucky you if it did!).

p.s. this is just price appreciation, so not counting maintenance and prop. taxes, or selling costs, interest costs, etc.

 

[ladelfina]

The Big Picture | Housing: US vs Japan

Ratio of OFHEO house price index to personal consumption expenditures on rent

 

[Rivrider]

No doubt housing is in a slump.

Haven't kept up with local housing prices or sales. There are some houses in my subdivision that been on the market for quite a while. But, there is still plenty of building going on in town, including some pretty big expensive places.

 

[honobob]

No doubt housing is in a slump.

Haven't kept up with local housing prices or sales.

? ?


4% Appreciation my $*ss

 

[virginia]

I have been following comparables of the place that I sold in Hawaii in 2006. (Sold because the place appreciate way too fast, and I was concerned that one day the bubble would burst). Doesn't look like it has burst in Hawaii. Comparables to mine have continue to appreciate (at a much lower level than the previous 5 years). So I'm thinking that if that's any indication of the Hawaiian market, then it must not be too bad.
Meanwhile in Colorado....I was told today there are brand new homes that have been sitting for 2 years waiting to be sold. Those house have dropped by like 40-60k in some cases. I think it was way overbuilt here and will take a while to get caught up. Too many houses, not enough people or money now. I've never seen so many 3 car garages in my life. I never saw a 3 car garage until I was grown and a 2 car garage was for people who were "well off".......

 

[Fireup2020]

My old house in MI that was purchased for $80K back in 1996/97 is currently on the market for .......... $39,900!!!!!!!! At least a third of the homes in this suburb (1104 total properties listed!) are on market for less than $60K...foreclosures and auctions no doubt. Definitely a bit of a slump there.

 

[mb]

Deleted because of double post

 

[mb]

It's hard to tell what is going on in Silicon Valley. There seems to be a lot of contrary indicators and it seems to be highly localized:

- Sales are way down
- Prices in good areas with good schools seem to be holding steady.
- Prices in not so good areas seem to be going down.
- According to Zillow my house has gone up $80k in the last year. But the sales price of a single recent "comp" seems to be driving that so I don't have a lot of confidence in it.

MB