Deceptive Flyer from Mortgage Broker

Deceptive Flyer from Mortgage Broker
(click on image for larger version)

Two More Housing Bubble Sites

Bay Area Real Estate Bubble Blog - Most excellent blog. It is a shame that this blog was not added to my blogroll earlier as Doug has been blogging since January 2006.

Bubble Pics -"housingbubblepicturesharing." View and upload the most bubblicious images. Please note this site is just getting started.

Bubble Meter is in Lockdown Mode

Bubble Meter Blog is temporarily in lockdown mode as someone(s) is posting dozens and dozens of obscene comments. Lockdown mode means that most of the recent posts are no longer accepting comments. I may have to change comment mode to where I have to approve all comments. Any suggestions would be appreciated

Blog Rules: In order to create a more perfect blog, these are the rules that will be followed. Additional rules may be added as necessary.

1) I shall be the final decision maker as to what comments are acceptable on this blog.

2) Any personal insults directed at me or commentators on this site will be deleted. Calling me or others 'stupid', 'moron', 'pathetic' is NOT allowed. Ad Hominem attacks are not allowed against me or commentators. [However, one can call a particular comment 'pathetic', 'moronic' etc if they give a reason.]

3) Any comment that is entirely unrelated to the post is highly likely to be deleted. [If the post is about foreclosures and you comment about conditions in the Chinese prison system].

4) Any comment which uses foul language such as 'f*ck', 'sh*t' or is obscene is highly likely to be deleted.

5) Commentators often ask for more evidence when I post. This is acceptable. Please bear in mind that I have a full time job and can't answer everyone's questions or requests. Attacks against me for not responding to a question or comment are prohibited.

6) Statements that clearly are false will be deleted. [China has less land mass then Singapore. Or everyone in China is wealthy.]

7) If there are any questions regarding blog rules please email me at bubblemeter@gmail.com.

Chicago Housing Market

The Chicago area housing market is quite fascinating. According to the OFHEO 1Q 2006 Report the 5 year price appreciation for homes in the Chicago area was 51% and the one year rate stood at 10.5%. Chicago's price appreciation rate is strong but not stratospheric like many metro areas in California or Florida. Like many other parts of the country job and wage growth over the past five years has been anemic (weak). The Chicago area economy has been stronger in then other large Midwestern cities like Cleveland or Detroit. In the Chicagoland area, as some call it, the price appreciation rate is quite varied depending on the neighborhood and type of property.

Chicago-area sales of existing homes and condos fell 14.5 percent in July compared to the same month last year, but median prices rose 2.6 percent, according to the Illinois Association of Realtors.

Nevertheless, single-family home sales in the Chicago area fell by 18.6 percent in July compared to last year at this time.

Even with the Chicago-area single-family home sales falling, median prices rose 4.2 percent, to $285,000. (Daily Herald 8/24/06)

Recent condo conversion, Barry Place in the Lakeview neighborhood.

So what will happen with housing prices during the coming years?

Overall I do not think the Chicago metro area is a bubble market. The typical housing unit is unlikely to decline in price by 20% in real dollars during from its peak price within 3 years of peak price. However, condos especially in the city itself are likely to fall by over 20% in real dollars. Certain 'hot' neighborhoods that have experienced very strong price appreciation may fall more then 20% in real dollars over the course of 3 years. Chicago, is certainly not bubblicious like San Diego, nevertheless declining real dollar prices will be a reality for the Chicago metro area in the coming years.

Senate Square Condos in Washington, DC

View from Congress Street in Washington, DC of Senate Square condo development.

Prices:

• Studios: 230K - 340K
• 1br: 340K - 500K
• 1br / den: 400K - 730K
• 2br: 470K - 980K
• 2br / den: 600K +

New Condos in Downtown San Deigo

New Condos in Downtown San Deigo

Average American is Waking Up to The Housing Bubble

Newpaper box in Washington, DC

Washington Times headline 'Home prices fall; sales plummet'

Tropical Storm Ernesto Aims For Bubblicious Miami

How about those construction cranes building condos in the Miami area?

Personal Bubble Stories

A friend who is involved in coordinating housing redevelopment projects in gentrifying parts of Brooklyn was busy blaming Bernanke for raising rates so high. He said work is slowing. I pointed out to him that historically, short tem interest rates are still on the low end.

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A recent college graduate wants to buy a newly built 1br condo to live in an inner suburb of Washington, DC. He was thinking of buying one for about 280K. He was pleased that the price had come a bit from last summer's peak.

I asked him "How long do you plan to live there?"

He: "About 10 years"

Me: "10 years? Don't you want a family and children and all well before then? In 10 years you'll be 35."

He: "Ok maybe 5 years"

Me: "What do you think the 280K condo you are considering buying will be worth in 5 years?"

He: "500K"

Yikes! Talk about unrealistic expectations. I politely explained why that would not happen.

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My mom's friend who is involved in specialty homebuilding in the North Shore area (northern Chicago suburbs along the lakefront) has been in the business for a few years. He told my mom that "nothing is selling."

BubbleSphere Roundup

The mainstreaming of the housing bubble view is happening quickly. The significant declines happening in many markets across the US is quickly reaching Joe American. During this past week, there were a huge number of reports and stories across the mainstream media (msm).

I have been slacking off recently on my blogging. Here are some blog posts of interest:

At The Housing Bubble Blog there is a great post where people Post Local Housing Market Observations Here. One commentator writes of the, " 'Zillow-gap' in Loudoun Co. — getting larger every month! Homes are being listed for 5-20% below the zillow value!" FYI: Loudoun county is an outer suburb of Washington, DC.

Southern California Real Estate Blog tell us why The Fed Cant Save Housing, even if it wanted to! He turns to history for evidence "Fed Funds rates dropped from 9 3/4 in Feb 89 to 3% in September 92, and California still had one of the worst housing-busts in recorded history in the US. A total drop of 6 3/4%! We currently stand at 5.25%. Not possible to even drop that much this time" Right on!

The National Association of Realtors just released some of David Lereah's 'Greatest' Hits. These are some of the most requested power point presentations by NAR Chief Economist David Lereah and others from the last 12 months. It is was quite a story. In a power point presentation from August's Realtors' Leadership conference in Chicago titled 'Reality Check' (ppt) David Lereah basically has many slides showing how housing prices have become divorced from reality.


Please note that the background for the 'Reality Check' power point shows multiple bubble. Below are some excellent some posts about this issue from my esteemed housing bubble blogger colleagues:

Lereah Mea Culpa? (Paper Money)
The End of the Myth (Paper Money)
Lereah Says "Hard Landing" (Marin Real Estate Bubble)
FLASH: I can't believe what I'm reading. NAR admits US housing disaster underway (Housing Panic)

In David Lereah's presentation he writes "Soft Landing," "Price expected to fall for remainder of year," "Price fall to be limited due to pent-up demand at lower prices," "home prices begin to soften," and that a "correction is necessary."