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A lot of what's being seen in the housing market is not so much dropping of prices as it is a readjustment of prices following years of artificially inflated value.
Sorry, but people got greedy and had asking prices totally out of whack of reality and that's what got the whole housing crisis rolling. Realistically, the housing market, with the exceptions of a few hotspots around the country, is going to take a drive like hasn't been seen for decades if ever in this country.
Tighten down the hatches as this standstill and slideback will only bleed into countless other parts of the economy also. Yes it sound like a "skyisfalling" scenario but realists with side with me....
Again I have to disagree with someone (I hate it when that happens!)
In Charlotte we are NOT seeing a "readjustment of prices following years of artificially inflated value". This is the case in most other big markets like Miami and San Diego - but not in Charlotte. If you do your research you will find we have enjoyed slow, steady growth while other markets were busy overinflating.
In Charlotte we are NOT seeing a "readjustment of prices following years of artificially inflated value". This is the case in most other big markets like Miami and San Diego - but not in Charlotte. If you do your research you will find we have enjoyed slow, steady growth while other markets were busy overinflating.[/QUOTE]
My OP: Realistically, the housing market, with the exceptions of a few hotspots around the country, is going to take a drive like hasn't been seen for decades if ever in this country.
If your facts are correct, Charlotte would fall within my exceptions; otherwise, my consensus remains the same. And keep disagreeing LM, I'm always up for a debate
Last edited by Fallingwater79; 08-20-2007 at 08:01 AM..
A poster on the SC side was nice enough to share this article from The New York Times...and I thought there may be some of you out there that would find it interesting as well.
THis is all amusing so I'll give it to you from a developer builder in several markets...
First...the No doc, liar loans are gone...FOREVER...so the 300K+ home market will continue to swell with inventory..period...more inventory means the basic economics of supply vs demand takes over and prices will drop...however, builders will offer incentives, move-in pkgs, etc to keep the SF price of the home up. This is how it works...we back into numbers based on a market...and the market in general is very SOFT.
Second, depending on your market- and we developers generally have 3 types: starter homes(up to 225K); move-up homes(225-500K) and luxury homes(500K+) depending on the area/location these price ranges can vary, but these are for the Charlotte MSA...each one of these markets has a certain type of buyer....starter homes will always sell based on price, the job market(s) and availibilty of money...if any one of these is soft, the market suffers...so right now, there will be a slowdown in this market due to money being very tight...move-up homes typically require a sale of the existing home, and money availibility...again, with both of these factors being down currently, this market is terrible in this area for sellers...not to mention a large portion of these homes are investor-type second homes and people cannot afford to keep them for long...so the default rate is climbing...next is the luxury homes which are highly dependent on an existig home sale for the potential buyer, as well as the money availibility in the JUMBO loan market...currently a Jumbo is at 417K and has become very hard to qualify for...this is always a tricky market and can buck trends either way...the problem from a sellers perspective is the incredibly high carrying/debt costs asscoiated with these homes, so a sale that takes too long can mean very little profit for the builder...despite what you may think selling a million dollar home is not that comparatively lucrative, and very risky...this is why so many of these homes are actually not spec(ulative) homes, but are actually custom-built/contracted homes...most of the 'luxury' homes I see in the Jumbo loan market are what I call 'market tide surfers'...they are only high-priced because of the location/market...just watch any home-flpper show in the Miami or LA markets and see what a 1500sf 1969-built home will cost you to get in...very few new homes enter the market in the Jumbo loan range, as many developers are aware that this is very risky stuff.
Third, the Charlotte area growth has been dependent on out-of-state buyers relocating to this area after cashing out their homes...this is in line with the investor home market constituting about 40%(yes that much) of the new home market in the past 10 years...essentially people were borrowing money to invest/flip a property in an established area like say Miami or NYC, hoping to flip the house in 6 months or so, after investing in renovations, etc...this was triggerred by the no doc liar loan concept which allowed people to borrow waaaay more than they could afford, but most were expecting to cash out and take the profits...if it worked, it was great, as the home flip shows have shown...but if it doesn't it can be a financial disaster, as is now the case with a large portion of these loans...too many loans have gone to too many investrors, who knew too little about property investing and have risked their ENTIRE financial future on this...many have and will suffer irreparable damage. I have personally had several sales fall through as a result of the no doc loan debacle where the buyer could not get the loan.
FOurth...what Charlotte has to-date managed to do was not see huge growth which could not be maintained, but a steady increase in land prices, property values, and the market...mostly due to it's 'late-bloomer' status...meaning that the new Charlotte suburban regions have allowed expansion and growth with land available, money available an it's desirbale location(s)...these are things which cannot be replicated, nor forced onto any area...they are a matter of circumstance, much like Atlanta..Las Vegas...Broward and Palm Beach counties in Florida, etc, etc where SUBURABN Areas have grown, as opposed to the revamped, investor-heavy markets of say Miami, NY, LA, Chicago, etc, etc where this same suburaban spread trend had already happened and the market is now in the existing homes, and flipped properties.
Fifth....too many of the new homes purchased over the last 5 years were hybrid ARMs(2/28,3/27 or 5/1) and many people simply saw that they could not afford to keep there home when the resets hit...another financial disaster that will expand.
After all of this boring stuff my conclusion is this: depending on what market you are looking to buy or sell, depending on the location where you intend to buy or sell will determine the ability to do this...it is no coincedence that the Charlotte area has benefitted from over-priced areas allowing long-time residents of those areas(urban South FL, CA, NY, etc) to cash out and move here, as any realtor will tell you people are moving from OTHER areas into Charlotte...but with the real estate markets suffering NATIONWIDE, and the very vehicle which generated most of this- the no doc loan- now extinct, there will be a major settling of the markets...I honestly feel that this is unprecedented in US real estate history as the no doc loan debacle was a recent invention, and one which will be used to study negative economics for many years to come...when all is said and done, I think only those people who took their money and reinvested in a home which was NOT out of their price range will have benefitted, and we will see thoudands of defaults and foreclosures in the near future...once again, the "too good to be true scenario" has prevailed and the court houses will have auctions by the thousands.
Best of luck to all
THis is all amusing so I'll give it to you from a developer builder in several markets...
First...the No doc, liar loans are gone...FOREVER...so the 300K+ home market will continue to swell with inventory..period...more inventory means the basic economics of supply vs demand takes over and prices will drop...however, builders will offer incentives, move-in pkgs, etc to keep the SF price of the home up. This is how it works...we back into numbers based on a market...and the market in general is very SOFT.
Second, depending on your market- and we developers generally have 3 types: starter homes(up to 225K); move-up homes(225-500K) and luxury homes(500K+) depending on the area/location these price ranges can vary, but these are for the Charlotte MSA...each one of these markets has a certain type of buyer....starter homes will always sell based on price, the job market(s) and availibilty of money...if any one of these is soft, the market suffers...so right now, there will be a slowdown in this market due to money being very tight...move-up homes typically require a sale of the existing home, and money availibility...again, with both of these factors being down currently, this market is terrible in this area for sellers...not to mention a large portion of these homes are investor-type second homes and people cannot afford to keep them for long...so the default rate is climbing...next is the luxury homes which are highly dependent on an existig home sale for the potential buyer, as well as the money availibility in the JUMBO loan market...currently a Jumbo is at 417K and has become very hard to qualify for...this is always a tricky market and can buck trends either way...the problem from a sellers perspective is the incredibly high carrying/debt costs asscoiated with these homes, so a sale that takes too long can mean very little profit for the builder...despite what you may think selling a million dollar home is not that comparatively lucrative, and very risky...this is why so many of these homes are actually not spec(ulative) homes, but are actually custom-built/contracted homes...most of the 'luxury' homes I see in the Jumbo loan market are what I call 'market tide surfers'...they are only high-priced because of the location/market...just watch any home-flpper show in the Miami or LA markets and see what a 1500sf 1969-built home will cost you to get in...very few new homes enter the market in the Jumbo loan range, as many developers are aware that this is very risky stuff.
Third, the Charlotte area growth has been dependent on out-of-state buyers relocating to this area after cashing out their homes...this is in line with the investor home market constituting about 40%(yes that much) of the new home market in the past 10 years...essentially people were borrowing money to invest/flip a property in an established area like say Miami or NYC, hoping to flip the house in 6 months or so, after investing in renovations, etc...this was triggerred by the no doc liar loan concept which allowed people to borrow waaaay more than they could afford, but most were expecting to cash out and take the profits...if it worked, it was great, as the home flip shows have shown...but if it doesn't it can be a financial disaster, as is now the case with a large portion of these loans...too many loans have gone to too many investrors, who knew too little about property investing and have risked their ENTIRE financial future on this...many have and will suffer irreparable damage. I have personally had several sales fall through as a result of the no doc loan debacle where the buyer could not get the loan.
FOurth...what Charlotte has to-date managed to do was not see huge growth which could not be maintained, but a steady increase in land prices, property values, and the market...mostly due to it's 'late-bloomer' status...meaning that the new Charlotte suburban regions have allowed expansion and growth with land available, money available an it's desirbale location(s)...these are things which cannot be replicated, nor forced onto any area...they are a matter of circumstance, much like Atlanta..Las Vegas...Broward and Palm Beach counties in Florida, etc, etc where SUBURABN Areas have grown, as opposed to the revamped, investor-heavy markets of say Miami, NY, LA, Chicago, etc, etc where this same suburaban spread trend had already happened and the market is now in the existing homes, and flipped properties.
Fifth....too many of the new homes purchased over the last 5 years were hybrid ARMs(2/28,3/27 or 5/1) and many people simply saw that they could not afford to keep there home when the resets hit...another financial disaster that will expand.
After all of this boring stuff my conclusion is this: depending on what market you are looking to buy or sell, depending on the location where you intend to buy or sell will determine the ability to do this...it is no coincedence that the Charlotte area has benefitted from over-priced areas allowing long-time residents of those areas(urban South FL, CA, NY, etc) to cash out and move here, as any realtor will tell you people are moving from OTHER areas into Charlotte...but with the real estate markets suffering NATIONWIDE, and the very vehicle which generated most of this- the no doc loan- now extinct, there will be a major settling of the markets...I honestly feel that this is unprecedented in US real estate history as the no doc loan debacle was a recent invention, and one which will be used to study negative economics for many years to come...when all is said and done, I think only those people who took their money and reinvested in a home which was NOT out of their price range will have benefitted, and we will see thoudands of defaults and foreclosures in the near future...once again, the "too good to be true scenario" has prevailed and the court houses will have auctions by the thousands.
Best of luck to all
Excellent and very true. As I said, the housing market is headed for an unprecedented drop after which the hotspots will even settle out as the influx of newcomers flatlines. The growth in NC has been supported mainly on the selling high in one market and buying low in another and there is a finite number of buyers in said market. Nationwide, we have some insanely skewed house values and things will only be righted when they slide back to center with exception of luxury homes which will remain exclusively for the "richest of the rich money's no object market".....
Last edited by Fallingwater79; 08-20-2007 at 08:55 AM..
Weedydidi: Go with your gut. You can always lower the price later. My family used this idiot realtor for years. We finally stopped using her. She said my parents would never sell their Birkdale home for what they asked and recommended pricing it $15k less...they did ask what THEY wanted, and it sold in a week. This realtor also told my aunt her house in Concord would not sell for her asking price but it did in 14 days, and she said my home would never appraise for the asking price and it did.
Realtors don't know it all. Go with your gut. Besides, if you ask $10k more than you are currently, you give the buyer bargaining room.
And that 90 day thing is BS unless you are in the mid to high 300s and up.
Sorry, but with the market softening, high balling your house is selling suicide...people will look and move on to the lower priced house. Do some homework, check out comps and then make your decision. Looking out for yourself is your best bet and not to knock RE agents, but no doubt, they see what's on the horizon and want to sell quick before it gets any worse.
Years ago when preparing to sell, we interviewed an agent who was "notorious" for selling fast and he was way under what 3 other agents quoted us. Sold the house for 15 thousand more than he wanted to list it.....certainly not in our best interest was he.
Sorry, but with the market softening, high balling your house is selling suicide...people will look and move on to the lower priced house. Do some homework, check out comps and then make your decision. Looking out for yourself is your best bet and not to knock RE agents, but no doubt, they see what's on the horizon and want to sell quick before it gets any worse.
Years ago when preparing to sell, we interviewed an agent who was "notorious" for selling fast and he was way under what 3 other agents quoted us. Sold the house for 15 thousand more than he wanted to list it.....certainly not in our best interest was he.
Unfortunately in this market, people are mistaken if they think that setting a higher price is a smart move. Buyers are extremely picky right now, they have the upper hand and can wait out. Its happened (happening) in other major markets and is already starting to follow suit here.
the smart thing to do would be to set an 'aggressive' price and if your home is as good as you think it is, you'll have a bidding war. The problem is again, people are emotionally attached and think its worth more than what it actually is.
THis is all amusing so I'll give it to you from a developer builder in several markets...
First...the No doc, liar loans are gone...FOREVER...so the 300K+ home market will continue to swell with inventory..period...more inventory means the basic economics of supply vs demand takes over and prices will drop...however, builders will offer incentives, move-in pkgs, etc to keep the SF price of the home up. This is how it works...we back into numbers based on a market...and the market in general is very SOFT.
Second, depending on your market- and we developers generally have 3 types: starter homes(up to 225K); move-up homes(225-500K) and luxury homes(500K+) depending on the area/location these price ranges can vary, but these are for the Charlotte MSA...each one of these markets has a certain type of buyer....starter homes will always sell based on price, the job market(s) and availibilty of money...if any one of these is soft, the market suffers...so right now, there will be a slowdown in this market due to money being very tight...move-up homes typically require a sale of the existing home, and money availibility...again, with both of these factors being down currently, this market is terrible in this area for sellers...not to mention a large portion of these homes are investor-type second homes and people cannot afford to keep them for long...so the default rate is climbing...next is the luxury homes which are highly dependent on an existig home sale for the potential buyer, as well as the money availibility in the JUMBO loan market...currently a Jumbo is at 417K and has become very hard to qualify for...this is always a tricky market and can buck trends either way...the problem from a sellers perspective is the incredibly high carrying/debt costs asscoiated with these homes, so a sale that takes too long can mean very little profit for the builder...despite what you may think selling a million dollar home is not that comparatively lucrative, and very risky...this is why so many of these homes are actually not spec(ulative) homes, but are actually custom-built/contracted homes...most of the 'luxury' homes I see in the Jumbo loan market are what I call 'market tide surfers'...they are only high-priced because of the location/market...just watch any home-flpper show in the Miami or LA markets and see what a 1500sf 1969-built home will cost you to get in...very few new homes enter the market in the Jumbo loan range, as many developers are aware that this is very risky stuff.
Third, the Charlotte area growth has been dependent on out-of-state buyers relocating to this area after cashing out their homes...this is in line with the investor home market constituting about 40%(yes that much) of the new home market in the past 10 years...essentially people were borrowing money to invest/flip a property in an established area like say Miami or NYC, hoping to flip the house in 6 months or so, after investing in renovations, etc...this was triggerred by the no doc liar loan concept which allowed people to borrow waaaay more than they could afford, but most were expecting to cash out and take the profits...if it worked, it was great, as the home flip shows have shown...but if it doesn't it can be a financial disaster, as is now the case with a large portion of these loans...too many loans have gone to too many investrors, who knew too little about property investing and have risked their ENTIRE financial future on this...many have and will suffer irreparable damage. I have personally had several sales fall through as a result of the no doc loan debacle where the buyer could not get the loan.
FOurth...what Charlotte has to-date managed to do was not see huge growth which could not be maintained, but a steady increase in land prices, property values, and the market...mostly due to it's 'late-bloomer' status...meaning that the new Charlotte suburban regions have allowed expansion and growth with land available, money available an it's desirbale location(s)...these are things which cannot be replicated, nor forced onto any area...they are a matter of circumstance, much like Atlanta..Las Vegas...Broward and Palm Beach counties in Florida, etc, etc where SUBURABN Areas have grown, as opposed to the revamped, investor-heavy markets of say Miami, NY, LA, Chicago, etc, etc where this same suburaban spread trend had already happened and the market is now in the existing homes, and flipped properties.
Fifth....too many of the new homes purchased over the last 5 years were hybrid ARMs(2/28,3/27 or 5/1) and many people simply saw that they could not afford to keep there home when the resets hit...another financial disaster that will expand.
After all of this boring stuff my conclusion is this: depending on what market you are looking to buy or sell, depending on the location where you intend to buy or sell will determine the ability to do this...it is no coincedence that the Charlotte area has benefitted from over-priced areas allowing long-time residents of those areas(urban South FL, CA, NY, etc) to cash out and move here, as any realtor will tell you people are moving from OTHER areas into Charlotte...but with the real estate markets suffering NATIONWIDE, and the very vehicle which generated most of this- the no doc loan- now extinct, there will be a major settling of the markets...I honestly feel that this is unprecedented in US real estate history as the no doc loan debacle was a recent invention, and one which will be used to study negative economics for many years to come...when all is said and done, I think only those people who took their money and reinvested in a home which was NOT out of their price range will have benefitted, and we will see thoudands of defaults and foreclosures in the near future...once again, the "too good to be true scenario" has prevailed and the court houses will have auctions by the thousands.
Best of luck to all
So true and coming from someone in the business. Hopefully people will start to understand how bad things will get.
There are a ton of RE agents out there..... alot of them are greedy and selfish just looking to make a quick buck, but the ones who actually do have your best interest in mind are worth there weight in gold.
This lender issue is actually a good thing in the long run.... Of course Lenders wanted to push the envelope on what someone can borrow, cuz the more people can borrow the more money they will make. It is a business after all.
There are alot of things that went into this problem, investors borrowing interest only loans hoping to be able to flip for a profit before their term chagnes, hombuyers borrowing money with an 2,3,5 year arm in which they can't afford after the term changes. In the end its all about money management... I think the lenders have learned there lesson here and will be more conservative on what people can borrow. But when this is worked out the markets will be in a very stable and healthy place.
Seeing that the Charlotte market has not crashed like other places, I believe this borrowing issue will be corrected in THIS market relatively quickly and thus creating a market which is stable. There are going to be a higher rate of foreclosures and the market for the 500k - 800k market will slow (which is what we are seeing) but this is all in the correction of this market. But since we havent had the huge spike in home prices upward... IMO I dont see a huge spike downward in prices..... this market is not that volatile.
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