Tuesday, July 25, 2006

June Existing Home Sales Data Shows Declining Market

The National Association of Realtors just released their June 2006 existing home sales data.
Existing-home sales were down modestly in June, and home prices were up slightly from a year ago, according to the National Association of Realtors
Sounds pretty decent. Hold your horses there are many negative numbers in this month's data.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops declined 1.3 percent to a seasonally adjusted annual rate of 6.62 million units in June from an upwardly revised level of 6.71 million May. Last month'’s sales were 8.9 percent below the 7.27 million-unit pace in June 2005.
Home sales last month were down basically 9% compared to last year across the US. In the bubble markets the decline is even greater.
The national median existing-home price for all housing types was $231,000 in June, up 0.9 percent from June 2005 when the median was $229,000.
Technically the .9% increase in the median sales price for existing homes is 'up.' In real dollars, adjusted for inflation, the median sales price has declined from June 2005. Let's look at housing inventory or housing supply.
Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.
Nationally, inventory up is 39.1% year over year which is a fast pace. In most bubble markets, inventory is exploding. Home sales:
Single-family home sales eased 0.9 percent to a seasonally adjusted annual rate of 5.81 million in June from an upwardly revised 5.86 million in May, and were 8.2 percent below the 6.33 million-unit pace in June 2005. The median existing single-family home price was $231,500 in June, up 1.1 percent from a year ago.

Existing condominium and cooperative housing sales fell 5.5 percent to a seasonally adjusted annual rate of 805,000 units in June from a pace of 852,000 in May, and were 14.6 percent below the 943,000-unit level in June 2005. The median existing condo price was $226,900 in June, down 2.1 percent from a year earlier.
In real dollars the median sales price of both condos and single family homes declined year over year. The numbers for the condo market, for both pricing and number of sales, were weaker then the single family housing market. As the bubble bloggers have been saying, the condo market is more bubblicious then the single family housing market. Looking regionally:
Regionally, existing-home sales in the Midwest were unchanged in June, holding at a level of 1.52 million, and were 6.2 percent lower than a year ago. The median price in the Midwest was $175,000, which is 1.7 percent below June 2005.

Existing-home sales in the West also were unchanged, at an annual pace of 1.41 million in June, and were 17.1 percent lower than June 2005. The median price in the West was $342,000, the same as a year ago.

Existing-home sales in the South eased 2.3 percent to a pace of 2.57 million in June, and were 5.5 percent below June 2005. The median existing-home price in the South was $191,000, down 0.5 percent from a year earlier.

Existing-home sales in the Northeast declined 3.5 percent to an annual sales rate of 1.11 million units in June, and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.
This what GAIN Capital had to say in their comments about the existing home sales numbers:
Looking at the breakdown of existing home sales data two key points emerge: 1) inventory of homes for sale has increased to 6.8 months from the 9-year high of 6.4 months in May; and 2) the average price increased only 0.7% MoM, the smallest increase in a long time and well below the 4-5% annual increase over the last six months. So despite the smaller than forecast decline in June existing home sales, the underlying market foundation is likely eroding more quickly than expected and this points to outright average home price declines in the coming months as inventories of unsold homes continues to increase.
Here is More Information data:

National Existing Home Sales (pdf)
Existing Condo & Coop Data by Metro Area (pdf)
"Buyers Market With Plentiful Supply"’: NAR (The Housing Bubble Blog)
NAR: Existing-Home Sales Flattening, Prices Cooling (Calculated Risk)

The NAR chimed in on their findings. NAR President Thomas M. Stevens from Vienna, Va., said opportunities have opened for home buyers:
"Relative to the five-year housing boom, this year is a buyer'’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it'’s a good time to buy a home."”
In the bubble markets prices have doubled to tripled what they were just five years ago. It is always a good time to buy according to the dribble from the National Association of Realtors. They have lost their credibility by cheerleading homebuying at near peak prices.

160 comments:

  1. When the numbers are beginning to go -ve the NAR is starting to use the Month-Over-Month numbers in headlines which are smaller than the year-over-year numbers.

    When the numbers were +ve they were using year-over-year cause they were much bigger than the month-over-month numbers.

    This is desperation and a deliberate attempt to mislead buyers.

    ReplyDelete
  2. Now is the time for buyers to start just repeating the refrain:

    No thanks, just lower the price.

    SELLER: How about I make your payments for a year?

    BUYER: No thanks, just lower the price.

    SELLER: I'll cover the closing costs.

    BUYER: No thanks, just lower the price.

    SELLER: These free crabs sure look tasty!

    BUYER: No thanks, just lower the price.

    SELLER: I'll lease this car for you for two years!

    BUYER: No thanks, just lower the price.

    SELLER: Well, I'll just rent it out at an absurd rent, and if it sits empty, that's o.k. because I'll make it up next year when the market comes back.

    BUYER: Best of luck. Call me back if you LOWER THE PRICE. In the meantime, I'm going to drive my new car down to the crab feast, all paid for with the savings I get by renting rather than paying your inflated price.

    A Redskins fan

    ReplyDelete
  3. Redskins Fan: Lower the Price

    Homeowners: Get a job and save money so you can afford something nice, you lazy idiot.

    ReplyDelete
  4. What do you call a "Homeowner" with an interest only mortgage, and flat or declining home prices?
    "A Renter paying 2.5X market Price!"
    Still think only renters are throwing monwy away?

    ReplyDelete
  5. I can afford a lot of nice things with my savings, because I haven't paid an inflated price for a house.

    Have fun fixing the pipes in your banks'- err, I mean "your"- house this weekend. I'll be being "lazy."

    Oh.... and lower the price.

    A Redskins fan

    ReplyDelete
  6. "What do you call a "Homeowner" with an interest only mortgage, and flat or declining home prices?
    "A Renter paying 2.5X market Price!"
    Still think only renters are throwing monwy away? "

    Let me know when your landlord "rents" you the right to exclude him from your home.

    ReplyDelete
  7. "Homeowners: Get a job and save money so you can afford something nice, you lazy idiot."

    RENTER : You owners pay the high price of owning, we will continue to save by renting from you at a 50% discount.

    ReplyDelete
  8. An interest only mortage at a fixed rate would mean the homeowner's rent decreases each year as inflation goes up.

    How long is your rent locked in for? Mine's locked in for 7 years. And I can't see why I'd ever pay it off.

    ReplyDelete
  9. "RENTER : You owners pay the high price of owning, we will continue to save by renting from you at a 50% discount. "

    Till I raise the rent, kick you out, etc.

    ReplyDelete
  10. No problem, always somebody else willing to rent to me. Thanks for the offer though.

    ReplyDelete
  11. Go ahead and raise the rent. Rents are determined by the market, not by some flipper's desire to cover their ridiculous costs. If you are charging a non-market rent, I will move.

    By the way, since I am a renter and we are talking about getting kicked out of places, please enlighten me as to what happens when you don't pay taxes or HOA dues on your bank's- err, I mean, your- home.

    A Redskins fan

    ReplyDelete
  12. "Till I raise the rent, kick you out, etc."

    Till the bank comes and forecloses your home.
    May be I will buy it for pennies on the dollar then.

    ReplyDelete
  13. "Go ahead and raise the rent. Rents are determined by the market, not by some flipper's desire to cover their ridiculous costs. If you are charging a non-market rent, I will move.

    By the way, since I am a renter and we are talking about getting kicked out of places, please enlighten me as to what happens when you don't pay taxes or HOA dues on your bank's- err, I mean, your- home.

    A Redskins fan "

    See, that's the difference. I hold up my end of the bargain, nobody can kick me out of my house. You I can kick out any time I want.

    As for your market, every reputable source says rents are skyrocketing right now. Your "Renters Windfall Bubble" has burst.

    ReplyDelete
  14. "Till the bank comes and forecloses your home.
    May be I will buy it for pennies on the dollar then. "

    It won't, because I pay my bills on time. You, on the other hand, are vulnerable to whim.

    ReplyDelete
  15. gee anon, really on the "Kick You Out" theme. I imagine you have not kicked anyone out as you would know that:
    1. You have to give notice you are kicking renter out
    2. Put up with a legal challenge to not kick them out
    3. win legal challenge, but have to wait 6 months until said renter can legally be forced out, then sheriff comes to do the kicking out. No rent collected for those 6 months.
    That what usually happens in the real world.

    ReplyDelete
  16. You will continue to pay when the outstanding mortgage
    becomes greater than the market value of your home?

    I dont think so.

    But if you want to, please do so.

    The bank wont let you sell or refinance it.

    And don't think you will be able to kick out
    the renter at your whim.

    You will not be able to meet your mortgage payment
    with an empty house.

    ReplyDelete
  17. What a joke! I guess we know were Bagdad Bob got a job.

    ReplyDelete
  18. "What a joke! I guess we know were Bagdad Bob got a job."

    Yeah. He bought a home and became a realtor.

    ReplyDelete
  19. Such bitterness! All of you!

    Calm down now, and look at the facts. Where I live, and rent, I can't be "kicked out," because as a renter, I enjoy greater protection under the law than does a homeowner. My neighbor, whose housing cost is more than double mine, however, is not protected, should he miss payments on his mortgage. It is he who will be "kicked out," with no recourse.

    But that's beside the point. This is a housing bubble blog, not a blog on the Joy of Homeownership At Any Cost, or Owners are Better People Than Renters.

    So, is there a housing bubble, or not? I think the Housinghead Creed has so badly lost the debate over that question that they are desperately twisting the focus of the discussion and trying to demonstrate that it is best to own, and buy now, even though prices are falling. Ha ha. Good luck with those I/O mortgages.

    ReplyDelete
  20. Va-Investor, I think this thread shows why David cleans those comments up.

    You should thank David for cleaning up those comments, VA. It doesn't do your arguments any good to get lumped in with the angry housinghead anonymous posters.

    ReplyDelete
  21. "gee anon, really on the "Kick You Out" theme. I imagine you have not kicked anyone out as you would know that:
    1. You have to give notice you are kicking renter out
    2. Put up with a legal challenge to not kick them out
    3. win legal challenge, but have to wait 6 months until said renter can legally be forced out, then sheriff comes to do the kicking out. No rent collected for those 6 months.
    That what usually happens in the real world. "

    And you know what happens to that rent after the 6 months are up? I get paid, with interest. And good luck finding your next apartment.

    ReplyDelete
  22. "Me: Real World

    You: Fantasy world with many counterfactual assumptions.

    Me: Rich

    You: Poor

    Me: Work Hard

    You: Lazy"



    You : Greater Fool in a Bubble World

    Me : Real World.

    You : Lazy, dreaming of getting rich by buying home.
    Dont want to work and retire early.

    Me : Smart, not overpaying for a house.

    ReplyDelete
  23. Who pays you the missed 6 months rent with interest? The missed rent fairy from neverland? Really, stop posting.

    I think there are going to be a lot of bitter and angry people over the next few years. Getting burned on the tech bubble was bad, but this is gonna leave a mark on more people I imagine.

    Perhaps the banks will learn that give people with little or no experience with money alot of it, and invariably they will do something stupid with it.

    ReplyDelete
  24. David has deleted at least 3 of my comments today. I thought that one without my name might get posted. Fat chance.

    How is it in the "echo chamber"?

    btw, I still don't consider living in a group house in Silver Spring to be anything but utterly depressing. This was deleted as well.

    ReplyDelete
  25. "Who pays you the missed 6 months rent with interest? The missed rent fairy from neverland? Really, stop posting."

    No, you do. No fairy is going to save you from your obligation to pay the rent.

    ReplyDelete
  26. "And you know what happens to that rent after the 6 months are up? "

    Yes. Without the rent coming in, you could'nt pay
    your mortgage.
    The bank came in foreclosed on your house.

    Good luck getting a credit card after that.

    ReplyDelete
  27. I understand that it is unethical to lie or misrepresent numbers, but come on people, what do you expect NAR to do? They are an INTEREST GROUP that represents a profession (realtors). The purpose of the organization is to promote their industry, and telling buyers that it's a "good time to buy" is in line with those goals.

    Do you people think that the National Teacher's Union should stop arguing for higher pay, even as the quality of educational output erodes?

    Do you think that the American Bar Association would be unethical to say "it's a great time to be a lawyer" even though the number of lawyers in this country is at an all time high?

    I think that a lot of the points about how NAR is factually incorrect, or overly optimistic, are valid points. At the same time, you really need to get a grip and stop painting this group as the equivalent of a terrorist organization. It's a group whose sole function is to represent vigorously the interests of a particular industry. You can hate the industry if you want, but the fact that you spend so much effort yelling at NAR really only shows that it's doing its job well.

    ReplyDelete
  28. "
    Yes. Without the rent coming in, you could'nt pay
    your mortgage.
    The bank came in foreclosed on your house.

    Good luck getting a credit card after that.
    "

    Again, you are fantasizing. I'm posting about reality. I can kick your ass out whenever I want.

    ReplyDelete
  29. I'm watching DC inventory explode by the day and can't help wonder what depth of insanity the speculators will reach before they reveal said desperation publicly.

    ReplyDelete
  30. "Again, you are fantasizing. I'm posting about reality.
    I can kick your ass out whenever I want."


    No you can't.
    Obviuosly you have no idea of the real world.

    ReplyDelete
  31. lingus,

    As far as I know, you have no experience from which to voice an opinion. Please enlighten us.

    ReplyDelete
  32. When eviction proceedings are in action against you, any lawyer or court clerk will tell you in no uncertain terms: DO NOT PAY RENT FOR THE 6 MONTHS WHILE THE PROCESS IS IN ACTION, THE OWNER HAS NO RECOURSE. That is reality. I guess to buy into the idea that real estate should go up 200% in 3 years you would also buy into the idea that an evicyed renter will have bad feelings and pay that rent on time while they are being kicked out. Be thankful they dont trash the place or set it on fire!

    ReplyDelete
  33. "No you can't.
    Obviuosly you have no idea of the real world. "

    It's you who has no idea about the real world. Your lease entitles you to occupy a given parcel in exchange for rent, for a period of a month, 6-months, 1-year, whatever. You're there at your landlord's pleasure, and when he no longer wants you, or you can't pay the rent increases, you're out.

    I own a fee simple absolute, which includes the right to exclude all others, and lasts forever. As long as I make my fixed payments, I can do with my property as I wish, forever.

    You lose.

    ReplyDelete
  34. "When eviction proceedings are in action against you, any lawyer or court clerk will tell you in no uncertain terms: DO NOT PAY RENT FOR THE 6 MONTHS WHILE THE PROCESS IS IN ACTION, THE OWNER HAS NO RECOURSE. That is reality. I guess to buy into the idea that real estate should go up 200% in 3 years you would also buy into the idea that an evicyed renter will have bad feelings and pay that rent on time while they are being kicked out. Be thankful they dont trash the place or set it on fire! "

    False, but thanks for playing.

    ReplyDelete
  35. "I'm watching DC inventory explode by the day and can't help wonder what depth of insanity the speculators will reach before they reveal said desperation publicly.

    "

    I'm sure youre enjoying the inventory DECLINE of late then!

    ReplyDelete
  36. Eviction proceedings vary by jurisdiction. Although self-help is not allowed, Virginia is very pro-landlord. And a deficiency judgement can and will ruin your credit.

    ReplyDelete
  37. Several weeks ago I recall many of the bubbleheads saying, just wait until the June numbers come out, and that these numbers would show price declines.

    Well, I don't see the price declines yet? I see a nearly 1% incease. That's right, an increase!

    Redskins Fan must be getting nervous. Now he has to wait for prices to drop 71% before he can buy a home and vacate his Silver Spring group house.

    I guess now I'll be told that we'll have to wait for next month's numbers. Surely those numbers will reaffirm the bubblehead premise of declining prices?

    David is so deparate to show declining prices that he now is factoring inflation into the numbers!

    (I wonder if bubbleheads are also factoring inflation into those CD returns they're always touting)

    ReplyDelete
  38. "Your lease entitles you to occupy a given parcel in exchange for rent, for a period of a month, 6-months, 1-year, whatever. You're there at your landlord's pleasure, and when he no longer wants you, or you can't pay the rent increases, you're out."

    See now you are coming to the real world.

    Exactly. The renter can leave the landlord the same way.
    And then the landlord has to still pay the bank, with
    or without the renter.

    You are making some real progress.

    ReplyDelete
  39. Factor in inflation, and PRESTO, home prices which were up .9% actually DECLINED in real dollar terms this month year over year. If inflation is running anywhere from 3.5% (low) to 7% (high) thats a nice loss on a property, yes? Thanks for the tip anon.

    ReplyDelete
  40. "Factor in inflation, and PRESTO, home prices which were up .9% actually DECLINED in real dollar terms this month year over year. If inflation is running anywhere from 3.5% (low) to 7% (high) thats a nice loss on a property, yes? Thanks for the tip anon. "

    Unless you're buying more real estate, which you insist is down.

    "Exactly. The renter can leave the landlord the same way.
    And then the landlord has to still pay the bank, with
    or without the renter."

    There's always another scumbag renter to take your place. particularly in this market.

    ReplyDelete
  41. My experience in Arlington:

    I'm working through a realtor who also manages rentals for owners in the DC area. When she showed a suitable rental to me and my wife and we agreed that we'd rent it, we began "negotiations". ;).... The owner wanted $2000/month, I offered 1200, she grimmaced and said she'd "run it by the owner but rents are typically non-negotiable." We head back to our corp housing in Crystal City and enjoy a few meals at Legal Seafood to await their response. Next day later, ringggggggg! Hello? "Hi, the owner agreed to $1600/month with an option to buy". I asked her to proceed. "The owner would like to offer you a lease with option at 409k. I laughed and said, "Well Dee, thats mighty generous of your client but I'll pass on the lease/buy unless he's willing to do 120 times rent for a purchase. Oddly enough, her response was like taking a confession for a serial murderer. She began to tell me about a greedy seller she represented who gave up 650k because the seller "knew exactly where to price" her stucco box (somewhere in MD). The seller wanted a 1.4mill price, Dee said no, 890k, the box stayed on the market (on market since Q1 2005)and just sold for 750k, right where Dee (the agent) told her to price it.

    Grab your popcorn and sit back. Watching the greed turn to fear by amateur speculators posing as investors offers more entertainment value than Hollywood will ever provide.

    ReplyDelete
  42. I can't wait to get all this great (free) advice from renters! Pass the popcorn!

    ReplyDelete
  43. "There's always another scumbag renter to take your place.
    particularly in this market."


    Good luck finding him.

    You are at the mercy of (scumbag) renters to not have
    a foreclosure on your property.
    Looks like owner is a bigger scumbag.
    You should be so proud to be a homeowner.

    Buy a few more houses at premium and rent them
    out at discount.

    ReplyDelete
  44. I've been very clear from the beginning that I think real prices will decline a lot, but I would make no predictions about nominal prices. Real prices are declining, as I predicted. (Also, I said that for me personally, most DC area real estate is worth approximately 30% of its *asking* price-- that is not the same as saying I expect nominal prices to decline 70%, WHICH I NEVER SAID).

    As for this "group home" slur being thrown around, I agree that condos are a terrible thing to buy. But renting a group home isn't so bad. If you prefer to rent a single family home, though, there are plenty for rent as well. So whether you live in a single family home or a "group" home, you can rent or buy.

    A Redskins fan

    ReplyDelete
  45. Lynch-a-Bandit - You better be careful in here - there are people lurking who will be OUTRAGED at the very IDEA that a house would EVER SELL for 120 times rent.

    You and I know that's only a wee bit on the bargain side of historical valuation, but be warned.

    ReplyDelete
  46. And hey, VA_Investor, were you ever young? Did you ever live in a group house with a bunch of friends, before you were married? I did - not right for me now, and probably not for you, but one hell of a good time for those in their 20's.

    ReplyDelete
  47. Yeah. There was definitely some mumbling on the other end of the phone but as an experienced RE person, she knew EXACTLY what I was saying and she grudgingly agreed that the condo was worth no more than 240k.

    ReplyDelete
  48. See, that's the difference. I hold up my end of the bargain, nobody can kick me out of my house. You I can kick out any time I want.

    As for your market, every reputable source says rents are skyrocketing right now. Your "Renters Windfall Bubble" has burst.


    Really? I pay my rent on the dot each month, take reasonable care of the property and you're going to kick me out? You won't last long as a landlord in that case. And it's going to be a little hard to 'keep up your end of the bargain' with your bank when your business is bankrupt.

    And you'd have to be a very lucky landlord indeed if you had very many tenants like us. My grandparents had to contend with everything from deadbeats to a motorcycle gang who trashed one of their rentals and disappeared. One of her tenants called up my frail and almost blind grandmother when she was in her 90's and threatened her.

    As for rents-- ours hasn't budged. On the other hand, I hate to see what our tax payments on our (now ephemeral) rise in equity would be if we'd kept our house. Not to mention what our electric bill for the air-conditioning would be like... Our rental has all utilities included.

    ReplyDelete
  49. "Yeah. There was definitely some mumbling on the other end of the phone but as an experienced RE person, she knew EXACTLY what I was saying and she grudgingly agreed that the condo was worth no more than 240k. "

    Yeah, right. That's why it sold for 800k. Moron.

    ReplyDelete
  50. "Desperate renters go to extremes"

    Front page of MSN.com with link to:

    http://realestate.msn.com/Rentals/Article.aspx?cp-documentid=629308>1=8384

    ReplyDelete
  51. I've lived in group house. When I first moved to DC I lived in a Cap Hill group house with 3 girls and a guy. That was a lot of fun, and some of my best memories of DC are of that group house. However, I wouldn't want to live in a group house until someome agrees to sell me a home at 30% asking prices (or after a 70% decline, whichever)

    ReplyDelete
  52. "As for your market, every reputable source says rents are skyrocketing right now."

    I just negotiated my lease downard by $400/month. :)

    ReplyDelete
  53. "I own a fee simple absolute, which includes the right to exclude all others, and lasts forever. As long as I make my fixed payments, I can do with my property as I wish, forever."

    You sound paranoid. I have always enjoyed as much privacy as I've ever needed when renting. Are you afraid the landlord is going to insist on "sleepovers" or something? Sheesh.

    Most landlords are great, happy to keep you so long as you pay the rent on time. And they rarely ask for large increases in rent. What about property taxes?

    BTW, as for group houses, I MISS living that way. I got a roommate just because I like it. And I have the freedom to do this in my apartment, because I can afford to rent a two bedroom, but couldn't if I bought, because I can't afford a two bedroom.

    Choices, to each his own.

    Insecurity is very unattractive, by the way, even in the anonymous world of cyberspace.

    ReplyDelete
  54. On tonight's NBC's Nightly News they are going to talk about the housing bubble and its "possible severe impact". Hmmm... Is there really a housing bubble? Why does the damn mainstream media keep talking about it? They are scaring potential buyers futher and hurt the economy. These damn unpatriotic liberal media I tell ya

    ReplyDelete
  55. I got married 3 weeks after graduation - so, no group house for me. Had my own apartment in college (my parents owned the building). My, then, boyfriend lived in a group house at school. No thanks.

    ReplyDelete
  56. "Yeah, right. That's why it sold for 800k. Moron."

    Why the hostility? If you chose to read the post, the condo is still for sale..... and not selling, and I'm renting it at a third of the cost of the owners carrying costs.

    You're speaking of the lady who insisted her stucco box was worth 1.4mill? Yes, it sold for 750k.

    ReplyDelete
  57. "All landlords lose money hand over fist. Idiot. You're too dumb to have any money."


    The Neo Landlords are too dumb to have any of the money left
    in the next few years.

    I have a lot of money, it is just not in an overvalued asset
    like real estate.

    You are too dumb to understand investing.
    Good Luck to you.

    ReplyDelete
  58. Was looking to rent a condo near Dunn Lorring metro in Virginia; the realtor who showed me the place said the rents in that area have been very competitive because there're many investors (flippers) in the new condo Halstead (which was featured on this blog) couldn't sell their condos and decide to rent them out. I talked to the guy next to the condo and he said he has lived there for almost two years but the landlord hasn't raised rents for fear of losing tenants b/c of all the fierce competitions in that area. I decided not to rent the condo since my current apartment only raised rent 3% and I can't find a one-bedroom that spacious (over 1000 sf) for the same price.

    ReplyDelete
  59. "David is so deparate to show declining prices that he now is factoring inflation into the numbers! "

    Or we could try Lance's approach and taking one zero of the price (ie divide by ten). LOL!

    ReplyDelete
  60. Something doesn't add up.

    What to believe?

    NAR July 2005 report on June 2005 numbers:

    Source: http://www.realtor.org/publicaffairsweb.nsf/Pages/EHSJune05?OpenDocument

    Quote: The median single-family home price was $218,600 in June, up 14.5 percent from a year ago.

    NAR July 2006 report on June 2006 numbers:

    Source: http://www.realtor.org/PublicAffairsWeb.nsf/Pages/06JuneEHS

    Quote: The median existing single-family home price was $231,500 in June, up 1.1 percent from a year ago.


    The major difference is that one of these reports on "existing" SFH and the other is simply median SFH. However, I can't find in the reports something that accounts for the 1.1% climb exactly nor can I find numbers that look to be apples to apples. My guess is that the 2006 June number is only existing home sales because the comparison is more favorable than to include new construction as well. Any other thoughts?

    My $0.02.

    ReplyDelete
  61. Fat and happy with my $1600 rent in a 1500 ft^2 600k home near the beach. Sure glad my money is in those CDs at 5.5%, not in homes costing taxes, HOAs, insurance, and (oh my) mortgage interest. Landlady is nice. Owned since the 70's and hasn't raised the rent in 4 years.

    1% increase YOY. Nice. Lereah will "not be surprised" if we're in negative territory this year. Translation = we're already in negative territory, just the NAR is able to fudge the numbers for now. Just wait for the inevitable "downward revision" of the numbers a few months from now.

    ReplyDelete
  62. Lance is back with his "landlord coming while you're at work" line of attack. Still doesn't work, pal.

    ReplyDelete
  63. Equity Bandit's multiples are not necessarily out of whack. In 2003 I bought a 2br 1ba condo next to a Metro station for 100x rent. I sold it 366 days later for 160x rent.

    100x rent, or rent equal to 1% of cost is the old school rule of thumb for buying rentals from the investor's side. With lower than average interest rates 120x is perfectly reasonable. Or 120x rent is a reasonable offer to someone who's cost is 100x.

    However, the 1% rule does not value real estate, it only identifies good rental investments. That's an important distinction.

    ReplyDelete
  64. I saw the movie "Naked Gun" a few weeks ago on cable. There's a scene where Frank Dreben is chasing a criminal who, through a series of circumstances, lands on a missle that he rides into a fireworks store. As everything is blowing up behind him Lt. Dreben is telling the gathering crowd, "Nothing to see here, please disperse!" That's the picture I see in my head whenever I read a quote from David Lereah.

    ReplyDelete
  65. flipper,

    At 100x or 120x rent, I would be buying property all day long.

    It won't happen as long as interest rates stay so low. As rates rise, prices will decline. But that makes it a catch-22 for the renters wanting to buy.

    ReplyDelete
  66. "Sure glad my money is in those CDs at 5.5%"

    Matching inflation with that great investment of yours. I'd be glad too. Ha ha.

    Have you ever thought how much profit your landlord is making from your rent?? If she's owned it since the 70s there's probably no mortgage. You're paying her $1600 a month in rent, i.e. $19,000 a year. Not a bad return, I'd say, for your landlord.

    You'd need about $375k in your CDs to just to cover your rent (or to match your landlord's rental income).

    Of course, bubbleheads don't plan for the future, so they'll never own a property for 30 plus years or have rental income like your landlord. They're too consumed over the minutia, like a 10% short term drop in prices, to see the big picture.

    ReplyDelete
  67. Just wanted to add a point here, although I do think that we've gotten off topic.

    I live in New York City and have sat on the housing sidelines for the last four years as I watched prices become completely detached from reality. I have the cash to buy but i'm sitting on it for the time being. watching and waiting.

    Earlier in my life, I was in a very bad landlord tenant dispute (I was the tenant) and my room mate and I lived rent free, legally, for two years--without having to pay the money back and getting a payout to leave the building at the end.

    I am a great tenant-I pay on time and take care of my home. My landlord loves me and I know the law inside and out, in the city. My landlord wouldn't evict me but if he tried my lawyers would eat him alive.

    While I'd assume in some places landlord tenant laws are tilted towards the landlord, remember that that's not the case everywhere.

    I also think that "anonymous" was really just venting and is frustrated.

    ReplyDelete
  68. waiting for godotJuly 25, 2006 4:11 PM

    Wow, Why the hostility on this site? Here are the facts:

    1 - Renters need Landlords and Landlords need renters. Without one, the other does not exist.

    2 - Having a bad tenant can be a nightmare...they could destroy your place, have a mental breakdown, and you will be lucky just to get their stuff out of your house, fix the damage, and find a new tenant. The laws make it difficult to kick someone out, and the landlord will not get off without losing money.

    3 - People rent for all types of reasons...to generalize these people makes those who do it seem ignorant.

    4 - If you bought a 500k+ house or condo in the past year, then you are f'd if you try to rent it, and f'd if you try to sell it.

    ReplyDelete
  69. This blog should be re-named the Happiness is Living in a Group Home Blog, dedicated to the premise that true happiness comes from living most of your adult years in a home with other adults. In fact, the NY Times had a story on this phenomenon last week: it was about an adult dorm in NYC where renters could live with other renters under the supervision of house moms. If I was the parent of any of the supposed adults featured in that news story, I would sue my kid for wasting any money I provided for their college education, and then shoot myself for raising such an adult that is still mentally and emotionally an adolescent.

    ReplyDelete
  70. Va Investor,

    Me, too.

    I have a subscription to Fairfax county's online court records system (CPAN) so I can check for lis pen. I'm also checking out SE DC both for existing houses and for lots for constructing a duplex rental. And of course, I'm rooting for all the bubble heads to be correct. But I'm not going to wait for the "bottom" I'm going to purchase as soon as the numbers make sense on the way down and keeping buying until the don't work on the way up.

    ReplyDelete
  71. anon said:
    "Earlier in my life, I was in a very bad landlord tenant dispute (I was the tenant) and my room mate and I lived rent free, legally, for two years--without having to pay the money back and getting a payout to leave the building at the end.

    I am a great tenant-I pay on time and take care of my home. My landlord loves me and I know the law inside and out, in the city. My landlord wouldn't evict me but if he tried my lawyers would eat him alive."

    yeah, great tenant indeed ... LOL ... still writing home and demanding spendng money from mom and dad too I bet. Grow up, and quit using others. Get a real job like the David Lereah guy ... and quit being a leach.

    ReplyDelete
  72. fritz,

    Insults are not arguments. Please present facts not insults launched at renters.

    ReplyDelete
  73. hmmm...Interesting...Anon 12:46 reminds me what I know about NYC housing court (when I lived there, I considered taking my landlord to court for raising rent passed the legal limits): that NYC has a very landlord-friendly court. Still, even in landlord fairyland NYC, there are numerous laws that protect the renter until/if he/she is LEGALLY evicted. Of course, renters need to be informed about the law before they can seek such protections.

    So greedy landlords who frequent this site, here is a tip for you: rent to idiots with little or no knowledge of the law, and maybe you can scam them for life.... Unfortunately for you, none of us bubbleheads on this site qualify as "idiots" (otherwise we would have bought during the peak of the housing boom with I.O. or ARMS).

    --SSH Anon

    ReplyDelete
  74. 120-180xrent is the historical average price even NAR uses. The fact that pricing has been higher or lower will never change the reality that 120-180x rent has and will always be the price point. It makes no nevermind to me either way as the two dwellings I currently own were bought at 105x rent and I will never pay more than 120x.

    ReplyDelete
  75. "Unfortunately for you, none of us bubbleheads on this site qualify as "idiots""


    Very funny. Humor, that's why I read this blog.

    ReplyDelete
  76. Flipper,

    I doubt any of the bubbleheads will catch the bottom of the market. I, too, am buying buildable lots and land - but in an outlying county with waterfront communities.

    I am somewhat tired of rentals although I will keep what I have forever. I'll buy if I find a steal.

    ReplyDelete
  77. "I, too, am buying buildable lots and land - but in an outlying county with waterfront communities."

    And oddly enough, you don't believe this is speculative behavior?

    ReplyDelete
  78. "Have you ever thought how much profit your landlord is making from your rent?? If she's owned it since the 70s there's probably no mortgage. You're paying her $1600 a month in rent, i.e. $19,000 a year. Not a bad return, I'd say, for your landlord.

    Of course, bubbleheads don't plan for the future, so they'll never own a property for 30 plus years or have rental income like your landlord. They're too consumed over the minutia, like a 10% short term drop in prices, to see the big picture."

    Well, everyone who bought property in the 70s made out well because they bought at the begining of the current asset bull market. That bull market is about to expire.

    They were smart,lucky, and they didn't buy at the top of the market.

    If you believe that the bull market will just continue to infinity and beyond is foolish.

    Most people here are just waiting for the correction, which will come. In what form, I don't know?

    Also, they are far more dangerous agendas at play here than the fate of bubbleheads or homeowners.

    The solvency of this country is one, the security of the *free* world is another.

    ReplyDelete
  79. Anon 1:43,

    You quoted me and said: " 'Unfortunately for you, none of us bubbleheads on this site qualify as "idiots.'

    Very funny. Humor, that's why I read this blog."

    You, however, conveniently forgot to include in your quote the words "(otherwise we would have bought during the peak of the housing boom with I.O. or ARMS)." The latter states my own humble opionion, of course; but it does put my words in better context, as it really makes absolutely no sense to buy AT THE PEAK of a hot market (with I.O. or ARMs!!!), when waiting just a little longer (and saving for a bigger downpayment) get us a relative bargain compared to extremely inflated prices seen last year).

    All your talk about how stupid or bitter we renters are won't change my mind a bit. I KNOW I'm smart.

    Now, I'm off to enjoy the rest of my day away from computers and blogs. See ya!!!

    --SSH Anon.

    ReplyDelete
  80. I don't disagree with you l.a.e.b. At 120x to 180x rent you will always have an average house, too. And that's not a insult, simply a fact. Besides, if you only need 1500sf to live in, why buy 5000sf? If a 20 year asphalt shingle keeps you dry, why have slate? Would you rather have a $600k house in the city or a $300k place in the city and another $300k place at the beach?

    The answers to these questions can differentiate a house from an investment. When I'm buying a rental, it's asphalt shingles and vinly siding. When I'm buying a place to live in, it's a little bit nicer.

    ReplyDelete
  81. SSH Anon,

    The only problem with your statements is that no one knows the peak until after it has past.

    ReplyDelete
  82. flipper said,

    "At 120x to 180x rent you will always have an average house, too."

    No, you will have a house priced at parity with rental rates. The point being made is that the $600K condo/house that rents for $2K/month is way overpriced, by somewhere between $240-360K -- it therefore is doomed to suffer a price decline.

    In other words, why would you buy a condo/house when you can rent it for far, far less??

    ReplyDelete
  83. On a quarterly basis, it looks like the peak was 3Q05.

    My $0.02.

    ReplyDelete
  84. Flipper and Equity bandit - I've said this before and have been accused of "spreading false information," but, you could buy (I did) condos in good, established, NW DC neighborhoods for about 50 times one month's rent in the mid 1990's. A fabulous investment or discount shelter, take your pick.

    I sold in Spring 04 and now live in a not-so-good or established neighborhood. My neighbors bought their house last fall for about 385 times my monthly rent - apples to apples comparison, marginal neighborhood, I/O loan.

    The Housinghead Creed is in for a terrible spanking.

    ReplyDelete
  85. VA investor said...I doubt any of the bubbleheads will catch the bottom of the market.

    We don't have to. We've already done well by avoiding buying at or near the top. Actually, Lance is partly right-- the buy and hold strategy works pretty well (provided that you don't have to sell for any reason)-- except during a speculative bubble.

    Really, figuring out what a reasonable price is and how much you can afford is so easy-- you just use traditional valuation methods that the banks used to use themselves. (In fact, not so long ago, either-- when we bought in 2000 we were approved for just a little over 3 times our annual income.) If you earn an average salary, and the lowest price housing is 6 times your annual salary, you know something is badly out of whack.

    ReplyDelete
  86. Sarah,

    Please compare interest rates in 2000 with those of the "peak" in 2005.

    The price of the house has no bearing on what you can afford. Banks use income/debt ratios - not house prices.

    ReplyDelete
  87. "The price of the house has no bearing on what you can afford."

    In fact it does. If nobody can afford it guess what happens to the price? :):):):)

    ReplyDelete
  88. Anonymous, you obviously have no idea what a lease is.

    When you lease your "fee simple absolute" to a renter, you have bound yourself to that contract.

    You have, in essence, contracted all of your property rights to the renter for the term of the lease. If you don't understand this, you should probably speak to an attorney, because you obviously don't know anything.

    Residential leases don't allow the renter to be kicked out "whenever" you want. Sorry buddy. Neither does statutory or common law.

    You have no clue what you are talking about.

    ReplyDelete
  89. Seeing all these Lereah-ites, desperatly beating the deadest, most discredited of horses, is both disturbing and (thankfully) amusing. It's like seeing people still driving around with "W: The President" bumper stickers. It's as if no amount of evidence will ever convince them of their hysteria.

    Jerkstore

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  90. Also like a small child, who covers their eyes so that others "can't see" them. Logic being that if I cover my eyes long enough, my asset will never depreciate (because I am not seeing it happen/don't need to acknowledge it).

    Jerkstore

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  91. Jerkstore,

    I can only assume that your assets are not in the stock or bond market. You see, there are no guarantees in life. Owning your home in 30yrs is a partial guarantee of a decent retirement.

    We are in the midst of a perfectly "normal" real estate cycle. Those smart or lucky enough to own have the great benefit of historically low interest rates.

    I have no crystal ball and can only guess what is ahead for this cycle based on previous ones. The only ones who will face financial jeopardy (besides those dumb enough to get an ARM) are the ones who have not saved for a "rainy day".

    Everyone who can read knows that you should have an emergency fund equal to at least 6 months expenses.

    ReplyDelete
  92. Va_investor said...Banks use income/debt ratios - not house prices.

    Correction-- that's what banks used to use... They'll get back to it now that prices are heading in the other direction, but in the meantime enormous damage has been done by their indiscriminate handing out of money to anyone who could fog a mirror. Oh, and the wholesale corruption of the appraisal profession by boycotting honest appraisers who refused to 'hit the number' needed for some overgrown child to tap his equity to buy a Hummer.

    I use the 3 X annual income myself, because I've always been unwilling to borrow all that the banks would loan, even when they were loaning more conservatively. After all, in a two income family, all it takes is one job loss to make that house unaffordable if you've borrowed to the hilt.

    ReplyDelete
  93. va: I am in both stocks and bonds. I know I am guaranteed nothing, and I've been wrong -- but I also don't pump wildly. I am also able to be more nimble in stocks. I sold my SFH in NWDC last October due to both a relo and what I saw was too wild a run up. Did I hit the top? Probably not, but I was fortunate to do just fine from my '00 purchase date, in my opinion (and from what I see on zillow etc).

    Jerkstore

    ReplyDelete
  94. Jerkstore,

    I hope "luck and timing" are not the sum total of your plan.

    Sarah,

    Being fiscally conservative is a good thing. Congrats. I could be in 3x the house I have, but choose to have a beach house and many rentals.

    I have no evidence that lenders have backed-off ratios. Appraisal is an Art not a Science. FMV is what a willing buyer will pay a willing seller in an arms-length transaction. Simple as that.

    ReplyDelete
  95. va_investor said,

    "The price of the house has no bearing on what you can afford. Banks use income/debt ratios - not house prices."

    Is this a joke?

    The lender uses FICO scores (and other credit-related factors) to determine the interest rate on the loan -- as such, it is true that the cost of the property is not taken into consideration at this point in the loan approval process.

    But, the cost of the property is taken into consideration when the debt:income calculation is made. If the price of the property falls under a certain monthly debt level (again, taking income into consideration), the loan can be approved by the underwriter. On the other hand, if the price of the property is too high (meaning, the monthly payment would constitute too high a debt level) the underwriter could not approve the loan by the lender.

    This is the whole point of the loan "pre-approval" process, whereby a potential buyer is given a rough estimate of the maximum price for which he can obtain a loan.

    ReplyDelete
  96. Whitetower,

    The point is that the old 3x income rule of thumb does not apply when rates are one-half of what they were.

    Please reread the comments and then you will understand.

    ReplyDelete
  97. va_investor said...I have no evidence that lenders have backed-off ratios. Appraisal is an Art not a Science. FMV is what a willing buyer will pay a willing seller in an arms-length transaction. Simple as that.

    The evidence is in the huge spike in 'creative financing' in which all consideration for what the borrower can reasonably afford flies out the window. Interest-only, stated income, negatively amortizing loans-- along with the practice of basing estimates of 'affordability' on the low-interest, short-term teaser rate have put the whole financial sector at risk in a way it hasn't been since the Roaring Twenties-- which, by the way, is the last time banks engaged in such reckless lending practices.

    ReplyDelete
  98. This comment has been removed by a blog administrator.

    ReplyDelete
  99. "The point is that the old 3x income rule of thumb does not apply when rates are one-half of what they were."

    According to your logic, lending standards are adjusted as a function of where rates are? I've been in the finance business since 1987 and nowhere is there any written or implied practice of this.

    Please indicate the source of this practice.

    ReplyDelete
  100. Sarah,

    We obtained several 1yr ARMs in the 80's. Qualifying was based on the initial rate. Even FHA had an ARM and they would allow back-end ratios of over 45%.

    Lynch,

    On the contrary, please tell ME when 3 times income was Ever more than a ballpark when rates were 12+ percent?

    I am not "in" finance, but know alot about it. Lending standards have always (to my knowledge and experience) been based upon RATIOS.

    ReplyDelete
  101. Sarah,

    We had friends with a neg.am. loan in the mid-eighties. So your comments about the roaring 20's are misguided.


    p.s. Lynch knows all about finance so you can ask him.

    ReplyDelete
  102. 3x salary or 25% of gross on a 30 year note at 7% is a wash. The long term (we all are subject to history aren't we?)average rate (since FDR) is 7.4%. When is underwriting ever a fine science? It never was nor will it ever be. If it were 100% accurate, there would be zero risk premium.

    ReplyDelete
  103. va_investor said...We obtained several 1yr ARMs in the 80's. Qualifying was based on the initial rate. Even FHA had an ARM and they would allow back-end ratios of over 45%.
    ...
    please tell ME when 3 times income was Ever more than a ballpark when rates were 12+ percent?


    An ARM in a high-interest environment makes sense. When rates are at 40 year lows, on the other hand, qualifying someone on the basis of an ARM is idiotic.

    And 3 X income is what I learned from my parents, long before 12% interst rates were more than a bad dream.

    ReplyDelete
  104. Sarah is right about not having to buy at the absolute bottom.

    Granted by the time a lot of us bubbleheads do buy, all our family and friends will be telling us that real estate is the worst investment that you can make and that we are crazy to buy.

    :)

    ReplyDelete
  105. Sarah and Lynch,

    Neither have disputed my statements. Lynch; when was an applicant ever evaluated on 3 times income?

    Sarah - what were rates when you were given this sage advice from your parents? And what about the roaring 20's and neg.am.? Either one of you can respond.

    ReplyDelete
  106. Five Stages of Grief

    The Palm Beach Post is talking about the five stages of grief.

    Thomas Lawler, a Virginia-based housing consultant, thinks South Florida's real estate market has entered what the respected "death-and-dying" psychiatrist Elisabeth Kubler-Ross called the first of five stages of grief.

    1. "Denial in a previously hot real estate market occurs when a home listed at a high price doesn't sell quickly, even though just a few months ago houses sold in just a few weeks," Lawler says in his July 19 Lawler Economic & Housing Consulting newsletter. "The home buyer says, 'This is weird, but I'm sure it's just a glitch,' and does not alter his or her asking price.
    2. "Anger occurs when, after a few months pass, the house still hasn't sold, and little interest has been shown," he continues.
    3. "Bargaining begins as the home buyer starts to offer a few incentives, agrees to more open houses, starts to fix up the house to make it show better, and actually agrees to lower the listing price a bit.
    4. "Depression starts to set in when the house has been on the market for about four months or so, and the seller realizes that his or her net worth simply isn't going to be as high as he or she thought.
    5. "Finally, acceptance occurs when the seller realizes that homes prices have fallen; that he or she will not get peak price of what is now six months or more ago; and that if he or she wants to sell the home, the asking price needs to be adjusted downward considerably."

    This process takes time, Lawler says, which is why home prices in hot markets that cool fast don't immediately start falling.

    I agree it takes time. Far more time than the four months that Lawler is suggesting it takes for depression to set in. Depression does not set in after 4 months (except perhaps for flippers on the fringes). I think six years is more like it. In Japan it took 18 years. Why can't it take four, six, or even ten years here? It can and it likely will.

    For the most part, we are probably still in the denial phase after 6 months to a year. If each phase lasts six to eight months we are in for a three year collapse. Given that this is basically a national bubble, and the biggest bubble ever, it would seem to me that 5-7 years minimum is more like it. Some people have not even hit the denial stage yet. Those people are still trying to flip, buy foreclosures, or buy the dip.

    It's a long way down from here.
    That is in terms of time, price, and emotion.
    For most recent real estate gurus it will not be a pretty ride.
    Nor will it be a pretty ride for those trying to make a living off of ever decreasing sales.

    ReplyDelete
  107. What is there to dispute?

    You said: "The point is that the old 3x income rule of thumb does not apply when rates are one-half of what they were."

    I said: nowhere is there any written or implied practice of this.

    I proceeded to ask you for a source of this practice and then you changed the subject.

    You can change the subject but you're powerless to change the business cycle.

    ReplyDelete
  108. Hahah, funny. There are posters on this site who think they get 6 months of free rent if their landlord kicks them out of his apartment. Lolol! IDIOTS!

    ReplyDelete
  109. I'm a landlord and I can't arbitrarily remove a tenant. It's a painful process, been through it twice in 8 years, hence we as landlords must perform due diligence before signing a lease.

    In what state can a landlord arbitrarily remove a tenant?

    ReplyDelete
  110. Lynch,

    I am packing for a trip to the Cape to check out a couple of our properties so I don't have time to explain underwriting to you. Peace and have a good week.

    ReplyDelete
  111. "In what state can a landlord arbitrarily remove a tenant? "

    Who said anything about arbitrary? You're a lessee. You can be kicked out in all sorts of non-arbitrary ways.

    ReplyDelete
  112. "I am packing for a trip to the Cape to check out a couple of our properties so I don't have time to explain underwriting to you."

    We're looking forward to your explanations. :):):)

    ReplyDelete
  113. "Who said anything about arbitrary? You're a lessee. You can be kicked out in all sorts of non-arbitrary ways."

    You did. Now what state is it that a landlord can arbitrarily remove a tenant?

    ReplyDelete
  114. va_investor said...Sarah - what were rates when you were given this sage advice from your parents? And what about the roaring 20's and neg.am.? Either one of you can respond.

    Mid '70's? About 7-8% as I recall. It was a little tough buying our first house, of course, since rates had gone to over 10% by then.

    My point about the roaring 20's was how badly that turned out for the 'housing only goes up' crowd back then. I checked a little booklet of historical prices recently and found that the average price of a home in the year of my husband's birth-- '46-- had just barely crawled back to about the average price when my parents were born 22 years earlier.

    My father remembers people laughing at the 'crazy old coot' who had bought up 'worthless' beach property in San Diego during the Depression. That's how sentiment turns. From 'Buy now or you're priced out forever' to 'What kind of an idiot would waste money on a worthless piece of dirt?'

    If you really are an investor, you'll recognize that the time to buy is not when everybody and his brother thinks it's a 'can't lose proposition'.

    ReplyDelete
  115. "You did. Now what state is it that a landlord can arbitrarily remove a tenant? "

    No, I didn't. Guess that means you lose the argument.

    ReplyDelete
  116. Are you scrolling back and forth trying to find it? Fucking idiot.

    ReplyDelete
  117. Now what state is it that a landlord can arbitrarily remove a tenant?

    ReplyDelete
  118. "Now what state is it that a landlord can arbitrarily remove a tenant? "

    At the end of the lease, all of them.

    ReplyDelete
  119. "Now what state is it that a landlord can arbitrarily remove a tenant?"

    Anonymous said... At the end of the lease, all of them.

    Try again. As a NY landlord, I cannot arbitrarily make a tenant leave the premise. I have to take him to court.

    Direct your attention here:

    To evict a tenant, a landlord must sue in court and win the case. Only a sheriff, marshal or constable can carry out a court ordered warrant to evict a tenant. (RPAPL §749) A landlord may not take the law into his/her own hands and evict a tenant by use of force or unlawful means. For example, a landlord cannot use threats of violence, remove a tenant's possessions, lock the tenant out of the apartment, or willfully discontinue essential services such as water or heat. (Real Property Law §235)

    I guess it's back to trolling for you.

    ReplyDelete
  120. Again, "arbitrarily" is your word, not mine. I guess you won an argument with yourself. Which, I suppose, must be very gratifying.

    ReplyDelete
  121. Right, lynch-- in fact, it's even hard sometimes to get possession of property you've purchased. We had friends who bought a house and then had the sellers decide that they weren't quite ready to move... There they were, paying on the mortgage, practically camped out in their own yard. It lasted only a few months in their case-- but mighty nerve-wracking all the same.

    ReplyDelete
  122. Sarah,

    Nothing like putting a troll in his place huh? ;)

    ReplyDelete
  123. "Right, lynch-- in fact, it's even hard sometimes to get possession of property you've purchased. We had friends who bought a house and then had the sellers decide that they weren't quite ready to move... There they were, paying on the mortgage, practically camped out in their own yard. It lasted only a few months in their case-- but mighty nerve-wracking all the same. "

    In which case the sellers owe the buyers the cost of lodging and storage. Just like a tenant owes a landlord the rent for however long he stays.

    ReplyDelete
  124. "Sarah,

    Nothing like putting a troll in his place huh? ;) "

    You were certainly put in yours.

    ReplyDelete
  125. Yes. Rental law is definitely your area of expertise. ;)

    ReplyDelete
  126. In which case the sellers owe the buyers the cost of lodging and storage. Just like a tenant owes a landlord the rent for however long he stays.

    What someone 'owes' you is often very different than what you get. Chasing deadbeats around the country isn't exactly cost-free.

    ReplyDelete
  127. "Yes. Rental law is definitely your area of expertise. ;) "

    Reading certainly isn't yours.

    ReplyDelete
  128. Hey California Homebuyers: don't forget to tax-reassess on the way down. :)

    ReplyDelete
  129. Anonymous said...

    "Now what state is it that a landlord can arbitrarily remove a tenant?"

    At the end of the lease, all of them.


    Well, it looks like some anonymous poster did agree to the term 'arbitrary'. Must have been a different anonymous...

    ReplyDelete
  130. "Well, it looks like some anonymous poster did agree to the term 'arbitrary'. Must have been a different anonymous... "

    And his "Rental law" (whatever that means) post did not speak to that post.

    ReplyDelete
  131. "You're there at your landlord's pleasure, and when he no longer wants you, or you can't pay the rent increases, you're out."



    "There are posters on this site who think they get 6 months of free rent if their landlord kicks them out of his apartment."

    Guess again. :):):):)





    To evict a tenant, a landlord must sue in court and win the case. Only a sheriff, marshal or constable can carry out a court ordered warrant to evict a tenant. (RPAPL §749) A landlord may not take the law into his/her own hands and evict a tenant by use of force or unlawful means. For example, a landlord cannot use threats of violence, remove a tenant's possessions, lock the tenant out of the apartment, or willfully discontinue essential services such as water or heat. (Real Property Law §235)

    ReplyDelete
  132. "Now what state is it that a landlord can arbitrarily remove a tenant?"

    Anonymous said... At the end of the lease, all of them.

    Try again. As a NY landlord, I cannot arbitrarily make a tenant leave the premise. I have to take him to court.

    Direct your attention here:

    To evict a tenant, a landlord must sue in court and win the case. Only a sheriff, marshal or constable can carry out a court ordered warrant to evict a tenant. (RPAPL §749) A landlord may not take the law into his/her own hands and evict a tenant by use of force or unlawful means. For example, a landlord cannot use threats of violence, remove a tenant's possessions, lock the tenant out of the apartment, or willfully discontinue essential services such as water or heat. (Real Property Law §235)

    I guess it's back to trolling for you.
    "

    HAHAHAHA, lynch doesn't know what the word "arbitrary" means! What a moron!

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  133. Lynch, that quote you keep posting is not relevant to either of the posts you're trying to respond to. All it says is you can't go in physically and remove a tenant. it doesn't say you need a good reason to remove the tenant. And it doesn't say the tenant doesn't have to pay for staying in the property. learn to read.

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  134. Whitewater said:
    "On the other hand, if the price of the property is too high (meaning, the monthly payment would constitute too high a debt level) the underwriter could not approve the loan by the lender."

    The part your missing is that the monthly payment for the same price house can vary wildly based on the interest rate being charged. The monthly mortgage payment on a $400,000 loan at 5% is something like 25% the amount of a monthly mortgage payment on the same $400,000 loan at 20% ... hence why the banks do it on debt ratios and not house prices. And hence why I feel that even if prices drop some extreme amount like 15% - 20%, you're going to find much higher interest rates out there eating up the difference for those who cannot pay cash ... Assuming there is any inventory left after all the cash rich investors like VA_Investor go out there a swoop up these properties waving a nice wad of green bills under sellers' noses!

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  135. A landlord cannot lock you out or throw you out of your apartment without a judge's order. If you are being evicted, Massachusetts law provides you with some protections. You may wish to consult with an attorney.(M.G.L. c. 186, §11 and § 12)

    Oh well....

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  136. lynch is having trouble finding law that, you know, actually supports his point. Oh well ...

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  137. Hmm... sounds like you've hit a nerve, lynch. A dim realization seems to have penetrated and caused a regression to anonymous' true emotional age. If this one holds true to form we'll move from school yard taunts to much uglier stuff. Yawn. I'm going to bed.

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  138. "Sarah in DC said...
    Hmm... sounds like you've hit a nerve, lynch. A dim realization seems to have penetrated and caused a regression to anonymous' true emotional age. If this one holds true to form we'll move from school yard taunts to much uglier stuff. Yawn. I'm going to bed.
    "

    Yeah, it's a nerve alright. Illiterates pretending to practice law offend me.

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  139. This comment has been removed by a blog administrator.

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  140. anon said:
    "
    To evict a tenant, a landlord must sue in court and win the case. Only a sheriff, marshal or constable can carry out a court ordered warrant to evict a tenant. (RPAPL §749) A landlord may not take the law into his/her own hands and evict a tenant by use of force or unlawful means. For example, a landlord cannot use threats of violence, remove a tenant's possessions, lock the tenant out of the apartment, or willfully discontinue essential services such as water or heat. (Real Property Law §235)"

    Yes, the tenant can illegally occupy the property, but via the eviction you reference, they will find themselves and their belonging put out on the street by US Marshalls if they do. I've seen it happen a couple of times ... It's not a pretty sight to see a person's belongings lining the curb for passers-by to casualy walk away with while the distraught and bitter renter is sitting on the front steps of her former home frantically calling family and friends to come help retrieve her and her belongings literally "from the gutter" .... Not a pretty sight at all ...

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  141. If the court decides in favor of the landlord, the court will issue a writ of possession. The writ of possession orders the sheriff to remove the tenant from the rental unit, but gives the tenant five days from the date that the writ is served to leave voluntarily. If the tenant does not leave by the end of the fifth day, the writ of possession authorizes the sheriff to physically remove and lock the tenant out, and seize (take) the tenant's belongings that have been left in the rental unit. This process typically takes six months. The landlord is not entitled to possession of the rental unit until after the sheriff has removed the tenant.

    Hmmm... 6 months free rent? :):):)

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  142. Where does it say that, lynch? Bold the part that says that.

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  143. 6 months free rent, a long slow glacial slide in real estate prices, rising interest rates. Reality in the face of denial sure weighs on the fearful.

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  144. "Of course, bubbleheads don't plan for the future, so they'll never own a property for 30 plus years or have rental income like your landlord. They're too consumed over the minutia, like a 10% short term drop in prices, to see the big picture.""

    I've planned for the future in more ways than you realize. In 4 years, through savings and stocks, I've accumulated $420k plus $120k in IRAs. I've done way above par as far as investments go. I could buy a house or a townhome or two in many markets, today, and not have to take out a mortgage. I've recently gone 100% CDs while I spend the next 6 months realigning my investment strategy. After doing some research I felt there were some big risks ahead for stocks and bonds (forget about RE) that I wasn't paying attention to (I am now!) and decided I needed an extra dose of due diligence and need to keep the head straight through the confusing economic cross winds.

    One thing I can tell you is my cash ain't going towards REI, no sir. That's a sucker's bet big time right now and people are slowly figuring that out. The worst thing in the world is being the last to figure it out. Like being the poor chump who set the high-water mark on JDSU stock. You can tell people are figuring it out by the record and rising levels of unsold inventory coupled with declining sales.

    The amazing thing about saving a large amount of money is you begin to take investment seriously. It's real easy to invest in a spot when the bank gives you 80/20 financing, you don't have any money anyway, and you can lie about your income. But save a bunch of money that counts, and suddenly you get very nervous about the very real exposure you face in your investments. Not saying exposure or investment is bad, it's just you take it more seriously when you have money.

    If REI was so great, why so many people trying to unload? Where are the buyers going? Historically, REI was only a marginal investment from an appreciation standpoint. As an income generator (rents) it's normally decent, but right now it's hideous in most markets. Shake a stick or throw a rock and you will hit an investment that's probably better than REI currently is.

    FWIW my landlord thinks the home is wildly overvalued. She has no intention of selling it, though, as her tax exposure is less than $150k (thanks to prop 13 in CA) and she wants to pass it on to her children and grandchildren someday. And she owns several other properties. All of them are income generators that she owes no money on. She's worth millions. How about that.

    Oh, finally, she thinks current "real estate investors" are off their rockers, and people like you are idiots.

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  145. "6 months free rent, a long slow glacial slide in real estate prices, rising interest rates. Reality in the face of denial sure weighs on the fearful. "

    Yeah, I guess it's fair to say that 6 months free rent is as much reality as the bubble theory.

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  146. Eviction - The only way a landlord can legally evict a tenant is by going through the legal eviction process. A landlord may evict a tenant for the following 3 reasons: 1) Failure to pay rent on time. The landlord must first give the tenant a written notice* demanding that the tenant either pay the rent or move out within 3 days. If the tenant fails to pay or move, the landlord may on the 4th day commence an eviction proceeding in county court. In any case, the landlord must give the tenant a minimum of 90 days to vacate. The tenant may contest the eviction if the tenant thinks there are legal grounds by filing an answer on or before the time set by the court. If the tenant fails to answer or appear on the date indicated in the eviction papers, the tenant will then have 48 hours to vacate or be forcibly removed by the sheriff's department.

    I'll take 3 months free rent.:):):)

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  147. va_investor said...
    “We are in the midst of a perfectly "normal" real estate cycle. Those smart or lucky enough to own have the great benefit of historically low interest rates.”

    So gains made in RE in the last five years have been normal?

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  148. Sarah in DC said...
    “The evidence is in the huge spike in 'creative financing' in which all consideration for what the borrower can reasonably afford flies out the window. Interest-only, stated income, negatively amortizing loans-- …”

    Don’t forget about appraisal fraud.

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  149. Robert,

    He promised to "teach us about mortgage underwriting when he returns from the cape."

    Therefore, he must continue to angrily post under his anonymous moniker. :)

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  150. Lance said...
    “And hence why I feel that even if prices drop some extreme amount like 15% - 20%, you're going to find much higher interest rates out there eating up the difference for those who cannot pay cash ...” Assuming there is any inventory left after all the cash rich investors like VA_Investor go out there a swoop up these properties waving a nice wad of green bills under sellers' noses!

    So, along with “RE never goes down” we add “Interest rates only go up”.

    “Assuming there is any inventory left after all the cash rich investors like VA_Investor go out there a swoop up these properties waving a nice wad of green bills under sellers' noses!”

    Inventory? Lance I find it hard to believe that you would even mention “inventory”. After all inventory means “absolutely NOTHING” in RE.

    Well, since you brought it up. VA_Investor and other speculators are currently eating up all this inventory huh? Humm, let’s check…….Nope, still over 100%+ (and climbing) YOY.

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  151. I expect home prices to drop about 30% spread out over the next 3 years. That will give some state budgets trouble with the drop in propery taxes, but I wonder what they are going to do if it really drops more than that. Some states are probably really dependent on having the extra property tax in their budget by now.

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  152. anon:
    "That will give some state budgets trouble with the drop in propery taxes, but I wonder what they are going to do if it really drops more than that."

    They could stop funding affordable housing programs ... ouch! Our increase taxes on landlords ... Ouch again as those get passed on via increased rents! Or increase the transfer and recording fee as they did in the District when home sales were down ... Ouch for new buyers! Or maybe they'll just go back to pre-2000 spending levels?

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  153. About all this talk about group houses... I live in a "group" house, I share a house with one friend. We're both 20-something young professionals, each making income that's much higher than the median household. We share a house because we're friends and enjoy each other's company (f'd borrowers probably can't relate since they probably don't have many friends due to being constantly bitter), but also because it allows us to invest more money, and get a better return than your house. In a few years, we will buy with a large down payment (unlike you, who aren't disciplined enough to even comptemplate this).

    Obviously, we both make more than enough to afford an "average priced" house here, there is simply nothing available that interests us in our price ranges. I know many, many others in our situation and demographic. Does this mean we will rent forever? No, we are definitely the next generation of home buyers. But we've collectively decided that we don't want your (as in gen x and boomer homeowner) POS tract houses at the ridiculously inflated prices that you think they're worth. All the greater fools that were willing to buy have done so. Now, you are left with those that can't, and those that are too smart to buy. And thus falling prices becomes a self-fulfilling prophecy. Your property is only worth what people can and are willing to pay, and no one can or will pay your inflated prices any longer. Good luck with that IO ARM, I'll pick up one of your "million dollar" tract houses in a few years for a fraction of today's price.

    Go ahead, flame me, I don't care. Let your bitterness show, won't change anything. I'm sitting pretty, you will be homeless in short order. Bah bye.

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  154. He says" "POS tract houses"

    Then says: "I'll pick up one of your "million dollar" tract houses"

    He'd have a solid point of view if it weren't contradictory.

    I always rented my own smallish apt. in the city when I was in my 20's. Same net effect as living in a group house.

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  155. David said...
    fritz,

    Insults are not arguments. Please present facts not insults launched at renters.

    July 25, 2006 1:26 PM


    David: If you want that statement to be taken seriously and not seen as blatant hypocrisy, you would issue the same parental admonishings to members of the Bubblehead Faithful who are quick on insults and slow on facts.

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  156. Fritz said...
    “David: If you want that statement to be taken seriously and not seen as blatant hypocrisy, you would issue the same parental admonishings to members of the Bubblehead Faithful who are quick on insults and slow on facts.”

    Inventory rising, slow sales, prices stagnating:
    http://www.mris.com/reports/stats/

    Now “fritz”, do you have any facts to the contrary?

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  157. Well, robert, there was a thread on that and now it's closed, so I guess David doesn't want us to discuss that story.

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  158. A million dollar POS tract house is still a POS, the fact that it's a million dollars just means it's an overpriced POS tract house. Doesn't mean I wouldn't mind purchasing it, just not at a million dollars.

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  159. Fritz said...
    “Well, robert, there was a thread on that and now it's closed, so I guess David doesn't want us to discuss that story.”

    What’s to discuss? Post the link. Simple as that. No discussion needed.

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