In May 2006, the median sales price for new homes sold in the US was 235,300 which was down 4.3% from April 2006 when the median sales price 245,900. The average sales price also declined, falling 2.6% from 302,200 to 294,300 between Aprill and May 2006. Please note these are the preliminary numbers which are subject to revisions.
Sales of new one-family houses in May 2006 were at a seasonally adjusted annual rate of 1,234,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.6 percent (±13.1%)* above the revised April rate of 1,180,000, but is 5.9 percent (±10.8%)* below the May 2005 estimate of 1,311,000.
The median sales price of new houses sold in May 2006 was $235,300; the average sales price was $294,300. The seasonally adjusted estimate of new houses for sale at the end of May was 556,000. This represents a supply of 5.5 months at the current sales rate.
Calculated Risk has an excellent post on this data. A commentator, called PrivateBanker, wrote this astute comment on Calculated Risk's post "Sales are up are because of skewed reporting numbers and the fact that home builders are offering everything imaginable in incentives to unload their inventories. Don't people see this as a major warning sign?!!!"
Posts
The standard errors on those point estimates are so huge as to make the numbers meaningless!
ReplyDeletewhat about the revised data?
ReplyDeleteOnce again, the bubbleheads lose.
ReplyDeleteLower median and average sales prices on new homes doesn't equal lower median and average sales prices across the board. The figures could reflect all the new construction condos being finished. (I.e., the market is responded to increased prices by fabricating more affordable housing.)
ReplyDeleteI suspect Builders might be stealing sales from existing
ReplyDeletehomes resale market, by offering incentives and free
upgrades.
One existing home, and a similar New home for about the
same price but 20-30K(just a guess) in upgrades and incentives.
Buyers are more likely to pick the New Home.
Builders are a lot more perceptive to the market conditions
than the individual sellers. And are adjusting accordingly.
After all they are in the business of selling homes.
It will be interesting to see what the NAR resale numbers
look like for May, which I think are due later this week.
"Once again, the bubbleheads lose."
ReplyDeleteYou are forgetting one thing, not all of the US of A is participating in the housing bubble. Is Cumberland MD bubblicious?
Or Raleigh? Or Atlanta? Or Columbus? In fact, I'd say that the majority of housing units in the country did not experience the kind of appreciation the last 5 years that the northeast, florida and parts of the west and all of california did.
ReplyDeleteMost places in the country saw no more than 5% per year.
""Once again, the bubbleheads lose."
ReplyDeleteYou are forgetting one thing, not all of the US of A is participating in the housing bubble. Is Cumberland MD bubblicious? "
Yes, yes. That's what I'm forgetting. Not that you people are idiots. it's Cumberland I'm forgetting.
Anyone watch the recent CNBC special on housing?
ReplyDeleteNOVA Fence Sitter
"Yes, yes. That's what I'm forgetting. Not that you people are idiots. it's Cumberland I'm forgetting."
ReplyDeleteDUDE! You're not getting it. Bubbleheads are not applying their theories on the entire US of A, just the bubblicous cities, like DC, Baltimore, California, Phoenix etc.
wvu_84 said...
ReplyDelete"DUDE! You're not getting it. Bubbleheads are not applying their theories on the entire US of A, just the bubblicous cities, like DC, Baltimore, California, Phoenix etc."
Why wouldn't the conspiracy theories apply across the board? Are the real estate agents more honest in other cities? Does not David Lereah's book get sold there too? Isn't the "cheerleading" the same everywhere?
Or is it more likely that there are fundamental reasons why these urban and areas playing host to professional on the leading edge in some cases and government/military in other cases are becoming more expensive places to live in every way possible ... including housing costs?
Lance,
ReplyDeleteMore expensive places to live in every way possible...BUT WITHOUT A CONCURRENT RUN-UP IN SALARIES???
How many times do people have to explain this to you?
And how many times do I have to repeat that we can't always live where we want to live and in what kind of house/condo we want to live in. When places get more expensive, people learn to make do with less. That is how the market allocates limited resourses such as land. Why do you think people with multi-figure salaries live in 1500 square foot apartments in Manhattan. In brief, you are not guaranteed the same standard of living your parents had even if you are doing the same kind of work. More expensive areas mean less square footage etc. and less lawn (if any) for median wage earners. Put another way, instead of the 3 bedroom rambler in Bethesda that your folks had, you might have to settle for the 2 bedroom condo in the Semanary Road highrise. THAT is what happens in metropolitan areas that are "successful".
ReplyDeleteI think we need to leave lance alone.
ReplyDeleteWhen reason, data and common senses
fail, there is little hope.
He will have to figure this out on his
own, may be the hard(est) way.
He has an MBA. That will get him thru.
Good luck lance.
LANCE
ReplyDelete"Why wouldn't the conspiracy theories apply across the board?"
Housing bubble busting is not a conspiracy theory.
"Are the real estate agents more honest in other cities?"
Every city (bubblicous or not) has honest agents and dishonest agents.
"Does not David Lereah's book get sold there too? "
Every place has people looking for any books on how to make money in real estate. I pity the fool who buys David Leareah's book.
"Isn't the "cheerleading" the same everywhere?"
I don't keep track where cheerleading is happening.
"... including housing costs?"
Any place where they (whoever "they" are) can get away with jacking up prices, they are going to jack up prices. They are going to jack up prices as much as they can get away with. These days oil companies can get away with major jacking-up of gasoline prices.
hey bill,
ReplyDeleteI did, and read the article on So Cal renting.
LA/Orange and surrounding counties ( but not San Diego )
have a somewhat unique situation in their housing market.
The population growth rate in these two counties has been higher
than the housing units growth rate since 2000, source Census Bureau.
So upward pressure on rents can be expected particularly
in these counties. But this is not the case with the rest
of the country. I think So Cal does not represent the situation
of the rest of the country.
Builders in So Cal are building expensive homes, but not
apartments, because the former is a lot more profitable, as
it is in a bubble.
wvu:
ReplyDeleteThe problem is that the Bubblehead Creed views just about every urban and suburban area as being bubblicious, since the term has no exact definition.
And I disagree with your assessment that it's not a conspiracy theory. As many posts on this site have attested, there are many Bubbleheads who do indeed view the rise in housing valuations as being a conspiracy involving real estate agents, the mortgage banking industry, developers, etc.
Fritz
ReplyDelete"As many posts on this site have attested, there are many Bubbleheads who do indeed view the rise in housing valuations as being a conspiracy involving real estate agents, the mortgage banking industry, developers, etc. "
This makes sense. Personally I believe this is nothing more than pure capitalism.
"More expensive places to live in every way possible...BUT WITHOUT A CONCURRENT RUN-UP IN SALARIES???
ReplyDeleteHow many times do people have to explain this to you? "
How many times do people have to explain to you - there HAS been a huge rise in income AMONG THE ALREADY WEALTHY. We can and do afford your so-called "bubble prices." You can't look at DC salaries as a whole. I hate to sound like John Edwards, but there are 2 DC's. There is no "bubble" in anacostia.
"HAS been a huge rise in income AMONG THE ALREADY WEALTHY. We can and do afford your so-called "bubble prices." "
ReplyDeleteWhat wealthy person is going to move into a 600 square foot studio that cost >250K?
"What wealthy person is going to move into a 600 square foot studio that cost >250K? "
ReplyDeleteA young professional person. You don't have to fit a very strict definition of wealthy to afford the $1200/month or so that's going to cost you.
Realtors are now urging their clients/sellers to offer incentives such as paying closing costs, etc rather than lowering prices. Hey-need to make that big commission and counties need that over valued property tax money right. Just wait out the bubble and go for the lower price.
ReplyDeleteAlso, DC radio programs on real estate are going on hiatus due to the soft landing (best new spin in financial engineering)in real estate. Can't wait foe the next rate hike by the FED. The ship is going down with only the rat left on board.
"The ship is going down with only the rat left on board.
ReplyDelete"
Or not. In which case, it will bring me great pleasure to see you try and explain why.
WVU_84,
ReplyDeleteSo it's not a conspiracy, but "nothing more than pure capitalism"? I get it now, it's the system you don't like ... it's not the agents or the sellers or the builders all acting in their own self interests, but rather the capitalist system that uses greed to allocate resources. So, what do you suggest ... some communist or other dictatorial power coming in to do central planning an ensure affordable housing for all? ... some dictatorial power that can force the wealthy to hand over their resources to ensure you get the house you think you're entitled to ... instead of the one in Anacostia that you can otherwise afford?
"You don't have to fit a very strict definition of wealthy to afford the $1200/month or so that's going to cost you."
ReplyDeleteA 250K mortgage along with property taxes and condo fees is going to be $1200/month?
"A 250K mortgage along with property taxes and condo fees is going to be $1200/month? "
ReplyDeleteIt's a $200k morgage, because he has the money to use on a downpayment. So the answer to the question, so revised, is "yup."
wvu_84 asked: "What wealthy person is going to move into a 600 square foot studio that cost >250K?"
ReplyDeleteI know lots of wealthy folks doing that. They are going to school or just want an extra place in the city so that they don't have to drive back to McLean late at night, or whatever. $250K for an apartment is pocketchange for lots of folks around here. Why would you buy yourself a bicycle when you could afford a car? Maybe 'cause you wanted a bicycle for your current needs. Your interest in what others SHOULD want is bordering on communism ... Just like your beliefs that people are entitled to affordable housing. In the real world, no one is entitled to anything.
The only rat are those who speculate on a need. Pure Capitalism is not about bubbles - its about the profit motive and meeting luxury demand at a reasonable profit margin
ReplyDeletewvu_84 said...
ReplyDelete"A 250K mortgage along with property taxes and condo fees is going to be $1200/month?"
Like I said, that is pocket change to lots of folks ... no need for a mortgage. In the building where I used to live, some couple from California paid $250K (back in '99) for a 2 bedroom for their daughter to live in while she was going to school in DC. They rented the second bedroom to a roomate and got some income out of that. I don't know if they had a mortgage or not, but (1) if they did, the roommate's contribution would have deferred that (2) buying this property was cheaper than paying a dorm room or other rent for the daughter (especially after factoring in the roommate's contribution), and (3) the value of this unit has more than doubled in the time they have owned it. It would have been irresponsible for them to have NOT bought this unit and instead paid rent for the daughter ... And we didn't even go into the tax savings they must have enjoyed. (The father is a surgeon.)
The condo was in Kalorama off of Connecticut Avenue. And what does its location have to do with anything? Yes, the contribution would definitely offset the cost of the purchase. Even if only say $700 or $800 per month, it is still $700 or $800 to be pocketed. Sorry, but your question indicates to me that you really aren't very good at handling money. And who was talking about the future. I was talking about the past. Situations and circumstances change and you need to adjust for them. That's where the being good with money comes in. Like the other poster said, Anacostia is not experiencing a bubble right now is it. If I were looking to buy today (which I'm assuming renters hoping for a bubble to burst are doing), and I had little to put down, I would without question look in some place like Anacostia or other less-developed places. In all seriousness, from what I know of Anacostia, it will someday be a relatively expensively place to live. Just like Georgetown was a slum in the 30s and people with foresight went in and transformed it into what it is today, the same will occur with Anacostia. Anacostia is close to the Capitol and downtown, and has some of the best views around. Mark my words, in our lifetimes, we will see this become another Chevy Chase. But I know the Anacostia solution won't work for Bubbleheads ... at least not the ones posting lately. You have a sense of entitlement. You dismiss the money that a roommate can bring in, you think you are too good to go in and fix up a place in Anacostia, and you feel the system should be fixed to give you a house where you want it and at the price you want to pay for it. Frankly, all this is clear evidence to me that you'll never have what you want because you don't understand the most people earn these things ... they aren't given to them. And wishing on a 50% discount on current prices is no different than wishing on a star. But I guess it's easier than actually working for what you want.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeletedogg,
ReplyDeletewhat doesn't kill you, makes you stronger.
This comment has been removed by a blog administrator.
ReplyDeletesorry ... i type too fast and don't proof read until after i post ... so, here it is finally!
ReplyDeleteDogg,
Your calculations don't account for the downpayments most people received from selling their old homes. take the condo i mentioned earlier that was bought for $250,000. let's say it had been bought with 20% down (i.e., $50,000), that means that if they sold it for $550,000 last year, they would have had $550,000 - $200,000 mtg - $40,000 commissions & other costs = $310,000 to use as a downpayment on their next purchase. Most people with the median income are people "moving up". They would be ready to pay more per month. SO, in this example, the people might take that $310,000 and put it down on a house costing $800,000 or $900,000 ... and with interest rates being lower last year than in '99 (5.5% vs. 7.5%, end up having monthly mortgage payments only something like $800 or $1,000 a month more ... BUT, not have a $400/month condo fee to pay. So, for something like $400 or $600 a month more, these folks have moved from a condo into a house ... fairly easily. Even more easily than it first appears when you figure out the federal and state tax savings (28% + 9 % for those of us in DC). Yes, I agree it would be far more difficult for people just starting off to buy their first home with little to put down ... especially since they probably wouldn't even be earning median family income. Life isn't fair. And I'm not saying it is.
"Anacostia is close to the Capitol and downtown, and has some of the best views around. Mark my words, in our lifetimes, we will see this become another Chevy Chase"
ReplyDeleteNo way! Most of the housing stock in Anacostia does NOT have the charm that Georgetown has.
David,
ReplyDeleteHave you seen pictures of what Georgetown used to look like? I don't think it always had a lot of charm ...
http://en.wikipedia.org/wiki/Image:Georgetown_wa_dc_1862.jpg
That is one picture. I have driven through large parts of Anacostia. There is some charm but not much. Don't forget Barry Farms public housing projects are right there.
ReplyDeleteAgreed that the terrible housing projects will need to come down. I believe many have already been taken down such as the one that made way for the new development named for former Mayor Washington. (I don't know the name ... saw it in the paper.) Above all though, this area has a close-in location and great views of the Potomac, the Mall, etc. It is basically overlooking the federal city ... so I think the potential is there for it to be a close-in suburb like Chevy Chase ... (not a Georgetown 'cause like you said, the buildings don't have than kind of old charm.)
ReplyDelete"
ReplyDeleteAt $72K, the max a person can afford without any down, no debt, etc. at 6.5% is $266K."
Why do you people always ignore the fact that this city is divided into rich and poor? There is no "average" DC resident.
"the max a person can afford without any down"
ReplyDeleteThis says all you need to say about bubbleheads. They're a bunch of losers who will never scrape together a down payment.
http://timothyellis.googlepages.com/nohousingbubble.html
ReplyDeleteYay! It's back - Lance's fantasy site....
http://www.msnbc.msn.com/id/8436383/
ReplyDeleteLance,
You contend that home prices in DC are justified because of how wonderful DC is. How do you address articles like this one - where there were bidding wars in Compton or Harlem?
what lance describes with his condo -> house
ReplyDeleteexample. That exactly what this bubble is.
A greater fool theory in practice.
Does he know how this pyramid scheme ends?
Lance sounds like one of those funny perma-bulls. I was bullish on housing my whole life until last year. Now I'm a bear. The facts justify my change in opinion. Nothing can go up forever without a fundamental reason. I suggest Lance should study other property bubbles in history to get a clue. They've been occuring since the time of the bible. If you can't be a housing bear with inventories the way they are, then you are blinding yourself.
ReplyDelete"If you are smart enough, you'll know that you'll just have to add the down payment to the max amount you can afford on $72K/yr... As long as there are people in denial, have a great time paying top dollar for homes that should be worth 39% less."
ReplyDeleteShould be if "dogg" were meant to afford a house, you mean. Why don't you address the point, "dogg"?
Should be if "dogg" were meant to afford a house
ReplyDeleteNo. It meant people with Median income should be able
to afford a Median Home, without exotic mortgages.
Sorry, but I think it's funny how everyone reads into what I say that I think prices will continue to rise forever ... I've never said that, and I don't believe it. I have specifically said that in the short term (2 - 3 yrs?) I think condo prices are going to go down by as much as 15% on average and house prices stay where they're at, again on average. I also feel that each and every one of us has to look at our own special circumstances --- and resources ---and do what is right for us individually. There are no out-of-the-box solutions for our housing needs that apply to all of us equally. For example, if you don't have a down payment, and don't earn near the median income, and don't like what your salary will buy you, then buying is probably not for you ... now or even 2 or 3 years down the road. On the other hand, if you have the resources (such as equity or cash in the bank) and you find a place you like, waiting for the "never going to happen" 50% decline in selling prices is probably not a good idea. Yeah, you might wait a year and maybe the place will still be for sale and maybe you'll get it for 15% less than you would now ... which will lower your mortgage payment by something like $50/month. You could probably do better by just looking a little harder NOW and spending 20% less on a similar but different property from the one you are looking at... and still save the $50/month or more.
ReplyDeleteI have also been making one more very important point that I don't believe the bubbleheads are grasping. When we talk about prices going up or going down, we are talking about the price of the average house or the price of the median house going up or going down. We are not talking what will happen to the price of any specific house. And that is a big difference. Average houses aren't real or in any specific location. For example, the average house in this area for the average family in the 1970s would have been in a place like Bethesda. I don't think anyone today would consider houses in Bethesda average ... or for average income people. They might instead think of Gaitherburg ... which in the '70s was still very much farmland. So, just because you buy an "average" house today and prices for the average house 2 years from now are 15% lower than they were now, it doesn't mean that your house is worth 15% less. It could instead mean that people are buying further out of town, or buying more condos.
lance, you present nothing new or intelligent.
ReplyDeleteAll you are doing is articulating the mentality
and psychology that has created the bubble in the
first place.
Thats all you are doing.
You give no reason for a 15% condo decline
and no decline in SFH.
My guess is because you have bought a home(s),
and not a condo(s).
The other problem is your "MBA Tunnel"
ReplyDeletevision of the Housing Market.
The way the US Economy is built on/around
the Housing Market, is something you don't
comprehend.
You have only known the up-cycle in your
lifetime. You have to see the past booms
followed by busts to get a clue.
Most of us here have.
"You give no reason for a 15% condo decline and no decline in SFH."
ReplyDeleteSimple, lots of condos are in construction now ... ready to go on the market. Very few new houses are being built in DC or the inner burb other than "in fill". The slew of condos that will hit the market at the same time will cause prices to fall. You won't have the same situation with houses. I.e., I am not basing my belief in the lowering of prices based on a bubble. I agree that the run up in prices has ended and we are having a "soft landing" where the market is returning to normal. The bubble is based on tow premises that I don't believe are valid. (1) Flippers will have to deeply discount their properties because their rents can't cover their expenses. It's been over a year since flippers realized that price increases had ceased. If they were going to dump their properties, they would have already done so. Also, I think I read that even in a market as saturated with flippers as DC, sales to flipper only made up 15% ... i.e., even if they dumped ALL they had to dump (which would be highly unlikely), the effect of such a dump on price would be minimal at best, (2) second reason for bubble theory (which I also don't agree with) is that home buyers of last few years overextended themselves with funny financing so that they could afford more than they really could afford. When rates rise, they will have no choice but to sell all their homes in unison ... thereby making all prices tank. This is nothing more than hopefull thinking by individuals who want to see others suffer so that they can profit at their expense. It is mean spirited at worst, and just based on exageration at best. Where do I start to debunk this. Should I point out that the percentage of total homes that are represented by those sold in the last couple years is so infinitismally small that even if all owners of all properties bought in last 2 years defaulted, it would have no visible effect on prices in general. That 1/2 of 1% of all homes bought in the last couple years just aren't significant in the scheme of things. Also, our home-loan lending industry is one of the finest in the world. Having learned from the lack of controls and oversight back in the 20s, in today's controls and oversight see to it that very very few buyers who bought won't have been qualified to carry whatever their payments are capped at. I.e., when people get qualified for their loans, they get qualified using the highest interest rate that the loan can ever go to. For example, even if loan rates are 5% when someone buys and rates in general rise, the increase is capped at something like 10% ... and it is that 10% that the buyers would have been qualified at. And I don't believe for a moment that we have a substantial amount of loans out there where the lender was either fraudulent or just simpley didn't verify application information in accordance with either the law or good business practice. I could go on and on as to why the bubbleheads' chickenlittle beliefs are based on complete misunderstanding of many many things ...
Well even I am convinced lance is a mouth piece of
ReplyDeletethe housing complex.
Get your facts first. Per NAR, the homes sold were as
6.17M in 2003, 6.77M in 2004 and 7.07M in 2005.
And there are about 125M Homes in the US, per the Census
Bureau.
That makes over 10% of all homes sold in the last two
years alone.
But I must congratulate you on your articulation of the
bubble mentality and how ill informed you are.
I think I will rest my case now.
The day you actually understand what inflation is,
and what causes it, I will talk to you again.
The Fed is repeating the same exact things it did
in the 1920's. Only at a much much bigger scale.
Good Luck with your misinformation and your future.
Bubble Believers
ReplyDelete- Robert Shiller (Yale professor that predicted the dot.com bust)
- Warren Buffet (http://money.cnn.com/2005/05/01/news/fortune500/buffett_talks/ Munger specifically cited the DC area)
- George Soros
- The Economist
Bubble Denial
- Harvard Consortium (in a study paid for by builders, realtors, etc.)
- David Lerah (condo investor)
- People who bought last year
- Lance
Anonys:
ReplyDeleteDo you prefer patting on the head, the back, or the tooshie to validate your financial and housing decisions? Because based on all that you all have posted, that's about all you are looking for on this site. You're not looking to debate ideas and bubblehead theology. You're looking only for an echo chamber to agree with you that you are savvy financial wizzes for not owning. And this site has become overwhelmed with posters looking for this back-patting and not for substantive discussions.
Let's see, I think the first post accusing me of being a real estate agent will appear within 10 minutes.
"You're looking only for an echo chamber to agree"
ReplyDeleteOh yeah. Then why do you still hang
around here.
Nobody here will miss you if you left.
Because I would miss out on some free entertainment from nimrods with wharped ideas. although I must admit, I frequent this site far less than I used to, mainly because it is becoming a Bubblehead Cult, and not a discussion forum.
ReplyDeleteIt is not a "Bubblehead Cult," the housing cheerleading sqauad is the cult.
ReplyDeleteThe bubbleheads for the most part have been right while the housingheads keep on changing their tune.
"The bubbleheads for the most part have been right while the housingheads keep on changing their tune. "
ReplyDeleteyeah, because of that big housing price collapse that happened. Oh wait ...
"They are in denial. Let's look at a house at 2001 Army Navy Drive in Arlington (for those who know, it's a great area with great schools). It was up on the market back in fall 2005, didn't sell, was taken off the market for a few months, got back on the market near end of Feb. Just recently sold for at least $100K less than their starting price of $799K. Final numbers to be seen when it's recorded. At least the flipper was smart enough to get out quickly and still make a profit. Though I wonder how much profit, since she remodeled the kitchen extensively. "
ReplyDeleteFall 2005 was what you consider the height of the bubble. Try again.
David said...
ReplyDelete"It is not a "Bubblehead Cult," the housing cheerleading sqauad is the cult.
The bubbleheads for the most part have been right while the housingheads keep on changing their tune."
I have no idea what the housing heads were saying 6 months ago as I have only been participating in these forums for the last couple of months ... But so far, everything is panning out exactly as I anticipated when I first thought about the matter some 18 months ago. Prices have spiked, there is a condo glut developing, the real estate market is returning to its normal state where prices are more stable and other than the shortterm small decreases in condo prices that will occur due to a temporary over-supply, homes will by and large continue to appreciate at the normal 4% or 5% appreciation (plus the 3% or whatever inflation rate.) So far THAT is occuring. If I understand the bubblehead position, theirs is the belief that flippers fleeing the market along with recent buyers holding ARMs that they can't afford will cause a sudden complete collapse of the real estate market and evaporation of all current homeowners' equity ... whereupon the bubbleheads can swoop in and profit at the expense of the other aforementioned parties. So far I don't see any of this occuring. I only see occuring what I have been thinking all along will happen. If the market (and house values), suddenly does collapse, then I will have to concede the bubbleheads were right. So far they aren't ... and I am.
"I frequent this site far less than I used to"
ReplyDeleteYep, because you are losing it.
It would'nt be too bad if you kept
coming back through the next year.
We will love to keep telling you
"We told you so"
Dogg said...
ReplyDelete"The sky isn't falling" people are really funny....
They are in denial. Let's look at a house at 2001 Army Navy Drive in Arlington (for those who know, it's a great area with great schools). It was up on the market back in fall 2005, didn't sell, was taken off the market for a few months, got back on the market near end of Feb. Just recently sold for at least $100K less than their starting price of $799K. Final numbers to be seen when it's recorded. At least the flipper was smart enough to get out quickly and still make a profit. Though I wonder how much profit, since she remodeled the kitchen extensively."
Like you said "At least the flipper was smart enough to get out quickly and still make a profit." i.e., the house STILL sold for more than what it was purchased for. Someone lowering their asking price does not equal a house going down in value. It just means there were some greedy people out there asking to much to begin with ... i.e., no tie in to whether it went up in value or not. I could ask $1 Billion for my home, it doesn't mean I 'sold it for less that what I had invested in it, when I end up lowering the price and selling it for $1 Million instead.
David,
ReplyDeleteI'm sorry, but that is a load of Lereah.
Have you missed the plethora of comments on your site by people who believe home ownership is nothing more than renting a home from the bank? Or those who wax eloquently about how car ownership is a much more financially savvy investment than a home? Or those who view the increase in prices over the past 5 or so years to be the result of a massive conspiracy between real estate agents, mortgage banks, developers, etc.? Have you noticed that anyone who does not follow the Bubblehead Dogma is immediately attacked for being a real estate agent? Have you missed the postings by people accusing the real estate agent industry of being responsible for other bubble blogs having technical glitches or going out of business?
This is not evidence of logic or reason. This is evidence of pure emotion driving the train. It is cult-like in that it fits the definition. As Random House defines it: it's a great veneration of an ideal or thing, as manifested by a body of admirers; something that is the object of devotion; a group bound together by veneration of the same thing or ideal. What I see this site turning into is an echo chamber where Bubbleheaders agree with all that Bubbleheaders say and where any disagreement is heretical and must be attacked or suppressed (reminds me of the classic scene in Blazing Saddles where the townsfolk stand up in the church and all agree with one another).
And I also call B.S. on your claim that non-Bubbleheadists have been wrong and constantly changing their arguments. Have some changed their tunes? Sure. But Bubbleheadists have constantly come up with all sorts of new "proof" that the bubble is bursting, usually various reports. Of course, when a more recent report seems to contradict the Bubbleheadist Creed, there are two usual responses: 1) the heretical report is bought and paid for by the housing industrial complex (something many here did in regards to that recent Harvard study); or 2) the report really just further proves the Bubbleheadist Creed because it does (wonderful circular logic that is usually at work by adherents to the Faith).
Perhaps you should make clear what it is exactly that you want this blog to be: an echo chamber or a place for reasoned discussion and debate.
So proof of the bubble explosion is that someone bought a house for A, listed it for A x B, but sold it for a lesser amount of A x C, although they still made a very sizeable profit.
ReplyDeleteThis hardly looks like proof of a bubble implosion. It looks like a person bought a place, listed it for too much, re-listed it for a lower amount, and still pocketed a very nice profit. In other words, it looks normal.
Proof of a bubble implosion would be the person listing it for 800k, then re-listing it for 700k, then re-listing it for 600k, etc., all the way down to having to list it for well below their original purchase price, so that they are selling for a major loss.
Now THAT would be proof of a bubble implosion. If you can find multiple examples of that in multiple locations, then you would have much stronger support for your argument. Instead, you cherry pick a few examples and hype them up. But upon closer examination, that cherry picked example doesn't support your general contention.
fritz,
ReplyDeletewhat you say is very true, however the more i see these cult-like reactions occur, the more convinced i am that my message is getting through. it's sort of like when a very religious person turns to their rosary beads or meditation or whatever as a means of escaping "temptation". Logically, they know what they are hearing is correct, but their unquestioning "faith" leads them to engage in activities that allows them NOT to think about the truth being slowly revealed to them. In the end though, truth usually wins out as one can only be in denial for so long before the mind wakes up from the self-induced trance.
Dogg:
ReplyDeleteActually, many ARE saying that housing prices will collapse to pre-2000 levels. You must have missed the plethora of posts on that issue. As well as the multitude of posts on how we're on the verge of a major economic depression (Bubblehead fanatics) or a significant recession (David's oft-stated view).
A drop to 2004 levels is, I think, generally reasonable. It also wouldn't cause a recession, but neither would it afford that golden opportunity for those who post here about how they will swoop in once prices drop 50%.
Dogg:
ReplyDeleteI'm glad you're not gulping down the Bubblehead Kool-Aid like others who post here.
But can you reconcile a view of "impending doom" with your belief that prices will drop to "2004 levels"? Those two statements simply can't be reconciled. If it drops to 2004 levels, then some will definitely feel pain b/c if they sell immediately, it could be at a loss. But most wouldn't feell much pain at all. So how does that equal "impending doom"?
I too agree with the possibility of a return to 2004 levels for the metro area in general (i.e., some areas such as neighborhoods like Shaw won't drop back down to there because in 2 years there have been substantial fundamental changes to the neighborhood itself.) HOWEVER, I also think this return to 2004 levels will be brief in that the normal increase of 4% to 5% (plus inflation) will soon resume. Since I believe we are entering a period of high inflation, that factor will mean nominal price appreciation of something like 4%-5% PLUS inflation to the tume of at least 4% - 5% which could mean yearly increases in nominal price of anywhere from 8% to 10%. So, 2005 prices will return with a few years ... and the market will continue at the normal 4%-5% plus inflation for a medium period down the road.
ReplyDeleteI don't think anybody here suggests that the current
ReplyDeleteslowdown is the ultimate proof of bubble busted.
This is a precursor to an impending bust. It will
still be a year before most markets start seeing
a 15-20% decline.
And then as things turn south, 50% decline in the
next 4-5 years, is what I think will happen.
DC_TOO
ReplyDeleteyou're reverting to the "he must be a real estate agent if he doesn't buy the party line" is EXACTLY what I and Fritz were discussing. Thank you for illustrating it so wonderfully!
Dogg:
ReplyDeleteSee the post immediately above yours.
dogg:
ReplyDelete"Now, people who bought large new homes scattered between small homes in higher crime areas/low scoring schools, will lose out the most."
THAT is dependent on what people's expectations were and WHAT the local government is doing to meet those expectations. For example, in the District few people have illusions about being in a good school district other than in select upper NW neighborhoods. So,they didn't buy there assuming that was a given. Now, current mayorial candidates are making fixing the schools their top priority in their platforms, so if it happens that will be a bonus to those who bought in marginal neighborhoods fully expecting to send their kids to charter or private schools or move out before school age is reached. But it not happening won't cause a devaluation in price cause it was never expected to begin with. Your statement might apply to places like Alexandria where there is at least a reasonable expectation that children can get a decent education in the public school system.
"I'm curious, let's look for when the last time
ReplyDeletea market went down by 50% and how long it took."
dogg,
It would require a lot more discussion of
the fiat currency systems, Inflation , Federal and
Account Deficits, The Great Depression and so on.
Which we can't possibly do here.
But if you are curious, I can point you to some
reading. You can agree or disagree, it's upto you.
www.kwaves.com
www.dollarcollapse.com
www.housingbubblebust.com
See if you find these helpful.
dc_too
ReplyDeleteYour last post is evidence that you don't even bother to read what others have posted. Neither Fritz or I have said any of the things that you are attributing to us. At best you are taking our words out of context and putting your own spin on them. At worst, you are coming off as someone so incompentent that they can't understand what is being said to them even when it is spoon-fed to them. David is right about your debating skills. At a minimum, in order to debate your position, you have to be sure you understand the position(s) of those opposing you ... and your postings --- like the one above --- indicate that you don't have a clue as to opposing position ... or much else for that matter.
DC Too.
ReplyDeleteLance provides detailed (by bubblehead standards) explanations of his positions, all of which you ignore, and then you resort to your standby "he must be a realtor" responses.
Where does Lance say its a new paradigm this time? I don't see that, why do you make this accusation?
Lance repeatedly says he's forecasting a drop in prices, but you and other bubbleheads ignore this and attack him for allegedly preaching that prices will go up and up. The drop in prices--how far and for how long--is open to debate, and is an issue that is relevant to everyone here. Its too bad you have nothing of reason or substance on this issue.
Your reading and comprehension skills are as poor as your debating skills.
hbb,
ReplyDeleteK-waves? You're citing k-waves? Anyone who suggests k-waves has no credibility. Why don't you just suggest a palm reader?
d in dc,
ReplyDeletethanks for your observations. dc_too either can't read (i.e., understand what is being said) or has ulterior reasons for "spinning" what others have said to discredit them. For example, the word "paradigm" was first used by DC Bubble on his post in regards to a comment that I had made regaring real estate in the District. The comment was something like "DC in 2006 is not the same city it was in 1996." Anyone who is familiar with what has happened in many downtown neighborhoods in DC knows what is meant by this. These once crime-ridden/ lowerclass neighborhoods are now less-crime-ridden strong middle class neighbhorhoods. So, when DC Bubble used the term "paradigm shift" in regards to why these neighborhoods had increased in real value over the last 10 years. Now, fast forward 2 months, and when DC_too sees me posting here, he is suddenly accusing me of having said that there is a "paradigum (sic) shift" occuring in the real estate market where prices will never fall. Aside from the fact that he mispelled paradigm until I corrected him, he also falsly attributed its use to me (vs. DC Bubble) and spinned it to apply to ALL real estate everywhere ... AND to mean it meant I thought prices would rise forever. So, I don't know if he is just dense, or if there is some ulterior motive. Perhaps HE is a real estate agent ... and just looking to make the Bubbleheads look bad.
Take it easy d in dc.
ReplyDeletekwaves.com provides a pretty good
overview of the current state of monetary
affairs.
How much you believe in the K wave theory
itself, is up to you.
No. I dont believe in palm readers.
What credibility do you have?
ZERO.
Other than rants, there is little substance in
your comments.
DC_too:
ReplyDeleteStop wasting previous bandwidth with your vapidness. You spent 5 paragraphs and said absolutely nothing of value or of substance. Let's break them down:
Paragraph 1: Lamely responding to Lance pointing out that you can't spell "paradigm", even though you accuse him of saying there is a new paradigm in DC real estate.
Paragraph 2 & 3: Patting yourself on the back for your prescient warnings. Nothing is said as to whether you may have hurt yourself while patting your back.
Paragraph 4: Babble.
Paragraph 5: Acknowledge that you won't engage in price drop speculation, but then speculate that prices will drop more than people think based on history.
Total number of paragraphs: 5
Total words used: 200
Total substance of all these words: 0.
dc_too
ReplyDeletei guess you are not aware that the grammar and capitalization rules for internet chatter are vastly different from what your 7th grade teacher taught you at the tender impressionable age of 18? or when you finally graduated from grammar school at 21? yes ... its k 2 leave out apostrophes or to spell okay as 'k' or even substitute "2" for "to" ... get with the program man ... or you'll be left behind in more ways that in the housing bubble game way!
"Lance said...
ReplyDeleteSimple, lots of condos are in construction now ... ready to go on the market. Very few new houses are being built in DC or the inner burb other than "in fill". The slew of condos that will hit the market at the same time will cause prices to fall…….."
So,a large inventory of condos will negatively affect prices? What happens when a location has a large inventory of SFH?