Tuesday, July 18, 2006

BubbleSphere Roundup

Vancouver Housing Market Blog has a piece about interest rates in Canada. Excellent blog.

The housing market has significantly declined in Sacramento since last summer. Sacramento Landing is doing a fantastic job in keeping up with the situation. There is a great piece about a desperate seller using radio ads to sell her house.

The Seattle Bubble has a post titled "King County To Middle Class: Rent Or Leave."

Track inventory @ Bubble Markets Inventory Tracking.

BubbleTrack reports on the homebuilders and how they are doing financially.

40 comments:

  1. 12% off the peak in Clarksburg MD?

    It is 480K

    http://www.quickdeliveryhomes.com/qdh_detail.shtml?orderparam=pri&cat=MD&plan_id=32639


    It was 546K

    http://maps.google.com/maps?oi=map&q=22132+Fair+Garden+Lane,+Clarksburg,+MD


    All residence bought at 546K.

    http://sdatcert3.resiusa.org/rp_rewrite/detail.asp?accountnumber=02+03438330&county=16&intMenu=2&SearchType=Account

    http://sdatcert3.resiusa.org/rp_rewrite/detail.asp?accountnumber=02+03438328&county=16&intMenu=2&SearchType=Account

    http://sdatcert3.resiusa.org/rp_rewrite/results.asp?streetNumber=&streetName=fair+garden&county=16&intMenu=2&SearchType=Street&submit4=SEARCH

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  2. "The housing market has significantkly decline in Sacramento."

    With this kind of attention to detail, one would think that you could easily get a job working for NAR.

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  3. People are wearing blinders; I posted an article from the Fredericksburg, VA newspaper that stated subdivisions there had lost 200k in value and nobody even blinked...

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  4. What do you guys want to argue about today?

    I say there is no housing bubble, gas is cheap, and David Lereah should be the next Fed Chief after Ben gets fired...

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  5. All I know is; salaries and wages need to rise while home values drop. The two factors will reach a state of equillibrium eventually.

    IMPORTANT NOTE: Only the salaries of renters will rise. Homeowners will be excluded from any increase in salaries.

    It is said, and so it is done. Amen.

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  6. anon 11:25,

    You forget to include that all homeowners have I/O neg. am. loans and will be financially ruined shortly by an interest rate adjustment.

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  7. Take a look at this.

    http://custom.marketwatch.com/custom/earthlink-net/mw-news.asp?guid={DB6583B8-0609-41C2-8600-EB4E26E5545B}

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  8. We could argue about neighborhoods--where do you go anyway for a good old-fashioned "my hood is better than your hood" rumble?

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  9. How about we rumble at the day job pickup point outside the NOVA Home Depot? That work for you?

    http://tinyurl.com/k94s8

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  10. No, I'm DC-bound, so it'll have to be the day laborer pickup at 14th & P next to Whole Foods.

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  11. Coming soon for many of the renters here...
    http://hipsterdork.blogspot.com/2006/07/arlington-redevelopment-strikes-again.html

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  12. Sorry, can't meet at 14th; I got caught by a Blogger flipping non-existent condos over there awhile back...

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  13. Bubbleheads,
    The market is still holding up. And there have been no serious dropoffs in price yet. Many of the people renting and waiting for the housing bubble to collapse are still waiting. What if this housing bubble isn't a bubble afterall?????

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  14. "What if this housing bubble isn't a bubble afterall?????"

    It certainly is a bubble in real dollars. If prices stabilize in nominal dollars, then we have hyperinflation which is a very serious problem

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  15. waiting for godotJuly 18, 2006 4:40 PM

    "What if this housing bubble isn't a bubble afterall????? "

    A watched pot never boils...The fastest way to make the bubble pot is to go out and buy a nice 1Br condo for about 550k. That should speed things up

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  16. Bubbleheads,
    hyperinflation. Inflation. Deflation. Stagflation. Bubbleheads here have now turned into economists. Not long ago, i didn't hear all the fancy rationalizations. All I heard was that housing prices would fall and fall hard. How much longer before capitulation from the bubbleheads? It's ok to be wrong. The flippers will tell you that.

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  17. I would call the first post a drop off. I looked at those homes in clarksburg, I cant believe they dropped that fast. I am sooooo glad I didnt listen to all of the idiots out there claiming there is no bubble. So why dont you admit you were wrong nate?

    12% off the peak in Clarksburg MD?

    It is 480K

    http://www.quickdeliveryhomes.com/qdh_detail.shtml?orderparam=pri&cat=MD&plan_id=32639


    It was 546K

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  18. But 480 is still a lot of money. And a 12% drop from the high really isn't bad in terms of the overall market. It may be bad for the investor or homeowner.
    There are some bubbleheads on this board that think prices are going to be cut in half. Maybe for condos. But this market is incredibly strong.

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  19. If homes were still selling like they were last summer, housingheads might be justified in taunting the bubbleheads about when the crash was coming.

    The fact that six months of inventory have piled up in about 7 months time shows that sales have hit an (almost)dead stop. Price declines DON'T happen overnight. The psychology of real estate is much slower than that. Why are the housingheads in such a hurry to get there??? This could take years to hit bottom. Last year, you were tauting us about when a slow down would occur. Now that it has, you are asking when prices will decline. Sigh. I suppose we will have to have suicides and 50% unemployment before you will concede defeat.

    If you watch any market show in the AM, you would notice that analysts consider the housing slowdown a done deal. The pain is coming. Saying, "It isn't here yet, so you must be wrong" when it has clearly begun is stupid.

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  20. so my question is when will the ultra expensive condos that were selling for 400K eventually fall to 200K?

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  21. Nathan,

    The market is not holding up according to NAR. 4Q05 down from 3Q05. 1Q06 down from 4Q05 for SFH. If prices stay flat (and they're currently trending down) then 2Q06 YOY will also be down.

    Yes there are better performing pockets.
    That also means there are worse performing pockets.

    2Q06 numbers are due out mid August if NAR continues to make them public.

    My $0.02.

    Source: Source: http://www.realtor.org/Research.nsf/Pages/MetroPrice

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  22. But does that constitute a crash? If condos go from being priced at 450 to 350 (a 100K difference), is that a crash? I would argue that even then, the majority of potential buyers would still be priced out. So let's objectively define what will be considered a crash.

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  23. Housing prices will tumble in about 6 months as long as N.korea, israel, and iran keep causing problems. I think they'll tumble in about 1 year (give or take 3 months) if any of these three world problems are resolved or diffused within the next 3 months.

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  24. yes a 25% drop is a crash. Why? because it would take a decade to recover. Many people would not be able to come to the table with a 100k just to get out of a house. They would rather try and stick or go bankrupt. If you dont think a 25% drop is a crash then you are severly misguided.

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  25. I tend to look at it this way:

    Homes appreciated a little over inflation for the last 100 years. This dynamic came loose around 2001-02.

    I take trend lines in value from 1998-2001 and use that as a base.

    I then add 5% per year for inflationary growth. I also add 20% for "asset appreciation" because I believe online banking competition from the "Internet revolution" allows for greater consumer leverage which leads to higher prices.

    Using 5%/year + 20% lump sum leads me to believe that houses are currently overvalued by as much as 40-45%.

    How to define a downturn then? I haven't thought too hard about defining it but here's a shot:

    To me, a crash would be a reversion to or below the longterm trend line by the end of 2007.

    A hard landing would be a reversion to the longterm trend line + 20% in which numbers drop by more than 20% in a single calendar year.

    A soft landing would be level to a max of 10% decline per year until the longterm trend line + 20% catches up to current prices.

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  26. waiting for godotJuly 18, 2006 5:27 PM

    "So let's objectively define what will be considered a crash. "

    What would a crash look like to you guys?

    To me it would be a 30% price drop, substantial job losses in real estate related fields, and a nickname for the era significant to the situation - ex. "House Bust of '07"

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  27. In the last downturn (late 80's) if you bought at the absolute peak in 1989, it took almost 8 or 9 years to get back even.

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  28. During the 4 years preceding the last peak (85-89) prices increased 50 to 100%. Some of my places doubled in 2 yrs. So I think the price run-ups were quite similar.

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  29. No. It was because you bought low. There has never been a run up this steep before.

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  30. I followed the market, did you?

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  31. va_investor,

    "During the 4 years preceding the last peak (85-89) prices increased 50 to 100%. Some of my places doubled in 2 yrs. So I think the price run-ups were quite similar"

    Prices have gone up between 150% to 200% in the Washington, DC in the past 5 years. This runup is much more then then the last one.

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  32. anon 4:35,

    NONE of my places have gone up that much in the past 5 years except some in florida. Locally, maybe 100% to 130%. Same as the late 80's.

    Do you have examples?

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  33. va_investor,

    "Locally, maybe 100% to 130%. Same as the late 80's."

    "During the 4 years preceding the last peak (85-89) prices increased 50 to 100%."

    Please explain.

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  34. anon,

    I believe I asked you first. Examples of 150 to 200%?

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  35. David,

    Do you have any charts showing prices during the 70's, 80's, 90's and to date?

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  36. The chart from Office of Federal Housing Oversight(http://www.ofheo.gov/HPIMSA.asp?FormMode=Process) shows appreciation in the DC area for 2000-2005 as:

    2000 - 8.7075%
    2001 - 11.7375%
    2002 - 11.8925%
    2003 - 10.43%
    2004 - 19.5975%
    2005 - 24.605%
    2006 (1st quarter only) 21.76%

    Using these numbers a house that was worth $150K in 2000 was worth $408K in the first quarter of this year, or appreciation of 172%.

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  37. That's the thing about two years in a row of 20% appreciation - $100 becomes $144, or $100K becomes $144K...

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  38. Seeing this also makes it pretty clear why that sort of appreciation could never continue.

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  39. 2006 will be flat. Nonetheless, I guess I should redo my f.s.

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  40. Interesting that house prices can go up like the stock market but it doesn't tank like the stock market.
    I bought a townhouse in 1986 in Woodbridge, Va for 75K. To my amazement I saw it's value skyrocket to 110K by 1990. During Fall of 1990 I had to put the house in the market due to a job relocation. At this time massive layoffs were occurring and we were facing war with IRAQ (Kuwait Invasion). In my courtyard alone there were 5 other townhouses for sale. In fact everywhere I looked there were for "sale signs". 5 months later I had to "settle" for an offer 5K less the asking price (of course I was not too distressed). 2 months later I sold and became very interested in financial planning. My point here is there was alot of simularities between now and 1990. Homeowners can't afford to sell their homes significantly less than purchase price, like shareholders can do. I bunked up with someone until I sold the house. Sellers will do whatever it's necessary to minimize loss. I don't expect massive prices declines, maybe gradual over several years. If the US government decided to move everything to Hickory, NC then I would expect massive price declines.

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