[Floridamex]

Originally Posted by Shores9

Nomoresubways – Hey subways - must be NYC

I think you’ve got near 100%.

IMHO the inventory buildup and subsequent decline breaks out something like this:

1 – normal [reasons for] list and sell activity; Job relo increase/decrease in family size, divorce, death etc. There are some who will have to sell regardless and will always be a part of the normal housing cycle. FYI in unfavorable conditions even some of these sellers will hold off or withdraw

2 - Cashing-out (as you put it) – These sellers will either sell or withdraw and re-evaluate their plans. They don’t necessarily have to sell but if they got the right price they would move on. However because they are not forced to sell they are not a reliable gauge of inventory.

3 – investors. For several years investors have been buying and flipping or buying and adding to the rental units. Only recently have they made a significant move to sell and as a result inflate inventory. I suspect they can’t hold a substantial negative cash flow for long and they will soon have unwound their positions. This inventory will have been absorbed not to be replaced (not at least at previous levels)

4 – Builders. Builders do have excessive inventory because of decisions to build made 1, 2, and 3 years back. They have been adjusting now for the past 8-12 months and have been heavily incenting deals to move inventory already in the pipeline at one stage or another. They have also been cutting staff and in some cases selling land. Clear signs that they intend on building less homes. For the large public companies this is simply inventory control, no different than Coca Cola, Toyota, Home Depot, or Macy’s Right now the sale is on. It wouldn’t be something I’d buy just because there’s good deals around but if I needed a house – that’s a different story

The glut of inventory will be gone in 6 months and will be back to normal levels (6 months supply being normal) – inventory of re-sales has peaked nationally at just over 7 months supply from 4.5 months in 05

At the same time buyers who have been bubble sitting will return and everyone will be happy - except for the eternal pessimists on this board.


Optimist or not – Buyer or Seller HAPPY THANKSGIVING EVERYONE

The glut of inventory will be gone in 6 months is silly.Optimist but Silly. New homes will flood the market for months. For each sale of a home, 20 new homes hit the market right now in south Florida. Free cars and all the perks should help, But over all the RE party is over and we’re waiting to see how bad the hangover will be. Its way to early to call the market. The peak was only December 2005 at look at the change in 11 months. Will the fed leave a few beers in the fridge for the morning?

[Nomoresubways]

Have you seen what some of those homebuilders are doing to sell their houses before the year is up? Look at Lennar! I'm not going to comment on what type of price I got but let's just say I couldn't resist. From now until the end of the year I guarantee you could probably just about name your price on any of those inventory homes these homebuilders have sitting around. They are not building any more homes without having a solid contract on them, trust me. Especially the large publicly owned companies have been whipped, beaten and hung out to dry. They want to pay their subcontractors, chew off a little of the fat they've made from the past few years and recoup for the next swing.

And yes, there are people out there who want to sell their houses simply because they want to pull in some of the profit they've made off them, especially the speculators.

Finally, let's not forget that spring is the absolute busiest time for buyers because they plan to move during the summer so that their kids can change schools cleanly and not in the middle of the school year. With interest rates still low, at some point people are going to realize that they may not want to wait any longer to buy.

So basically, if Shores and I are correct, the people who will benefit are those who have disposable income to snag up a second home at dirt cheap prices, or those who are moving from up north or other areas where the equity they've built up over the last 5 years allows them to almost pay cash for one of these giveaway inventory homes. And yes, that absolutely hurts those who have purchased in the past year or two. It also does nothing to help Floridians who waited to buy a home and now cannot afford the prices they've reached, even after the last year of price adjustments. I do see that as a huge problem and local government is going to have quite a time rectifying that. We face the same exact problem on Long Island where I am from. People just can't afford to buy houses anymore.

[SunnyDog]

Anyone out there consider that some people "waiting to buy" are waiting so they can save up a 20% down payment and grow their incomes to be able to take on a mortgage plus all the carrying costs associated with buying? "Waiting to buy" for when you can actually afford it makes sense, right?, considering that we're now seeing the people who bought no matter what with creative financing so they "won't get left out" are getting their rears handed to them. The gotta have it now mentality can backfire, but the current instant gratification mentality has made working, scrimping + saving for a home obsolete--why save or wait when there's 80/20 loans available?

[Dee2e]

Originally Posted by SunnyDog

Anyone out there consider that some people "waiting to buy" are waiting so they can save up a 20% down payment and grow their incomes to be able to take on a mortgage plus all the carrying costs associated with buying? "Waiting to buy" for when you can actually afford it makes sense, right?, considering that we're now seeing the people who bought no matter what with creative financing so they "won't get left out" are getting their rears handed to them. The gotta have it now mentality can backfire, but the current instant gratification mentality has made working, scrimping + saving for a home obsolete--why save or wait when there's 80/20 loans available?

Except that some lenders are cracking down. I closed an 80/20 transaction recently where the interest rates were 9.75 and 14.75. That second is really high. Both have a 3 year hard prepay penalty attached.

[SunnyDog]

Originally Posted by Dee2e

Except that some lenders are cracking down. I closed an 80/20 transaction recently where the interest rates were 9.75 and 14.75. That second is really high. Both have a 3 year hard prepay penalty attached.

Good for them. If you can't come up with the down payment, and if you're one of those that can't even front the closing costs, what are the odds of you being able to pay for any insurance increases/deductibles, HOA increases/special assessments or home repairs down the line?

[Nomoresubways]

Why would anyone want to do that kind of loan? That is insane. I don't think you want to buy with your whole livelihood hanging by a thread like that. It's one thing if the house is going to appreciate double digits every year for the next 5 years but I don't think you're going to see more than a 10% increase in total over the next 5 years. Given what I've read in this forum, I think the only way it makes sense right now to buy is if you can put down 20% and/or have enough slack in your budget to afford insurance/tax increases every year.

[SunnyDog]

Originally Posted by Nomoresubways

Why would anyone want to do that kind of loan? That is insane. I don't think you want to buy with your whole livelihood hanging by a thread like that. It's one thing if the house is going to appreciate double digits every year for the next 5 years but I don't think you're going to see more than a 10% increase in total over the next 5 years. Given what I've read in this forum, I think the only way it makes sense right now to buy is if you can put down 20% and/or have enough slack in your budget to afford insurance/tax increases every year.

\




Hit the nail on the head

[roaring-rox]

Here is web address for the article talking about the decreased prices in 38 states--

http://money.com/2006/11/20/real_est...dex.htm?postve...

[Dee2e]

Originally Posted by Nomoresubways

Why would anyone want to do that kind of loan? That is insane. I don't think you want to buy with your whole livelihood hanging by a thread like that. It's one thing if the house is going to appreciate double digits every year for the next 5 years but I don't think you're going to see more than a 10% increase in total over the next 5 years. Given what I've read in this forum, I think the only way it makes sense right now to buy is if you can put down 20% and/or have enough slack in your budget to afford insurance/tax increases every year.

While I agree with you totally, some people just don't get what those rates mean overall. Many don't want to buy a less expensive home that they could afford at more reasonable rates. Americans are often spoiled. They want it all and they want it now! People often think the government owes them the lifestyle they want. They have no concept of debt and what it means to them overall. Sad but true.

[Shores9]

Originally Posted by Nomoresubways

From now until the end of the year I guarantee you could probably just about name your price on any of those inventory homes these homebuilders have sitting around. They are not building any more homes without having a solid contract on them, trust me. Especially the large publicly owned companies have been whipped, beaten and hung out to dry. They want to pay their subcontractors, chew off a little of the fat they've made from the past few years and recoup for the next swing.

With interest rates still low, at some point people are going to realize that they may not want to wait any longer to buy.

So basically, if Shores and I are correct, the people who will benefit are those who have disposable income to snag up a second home at dirt cheap prices, or those who are moving from up north or other areas where the equity they've built up over the last 5 years allows them to almost pay cash for one of these giveaway inventory homes.

Hey Nomoresubways

I thought NYC – I wasn’t too far off. I was born in Seaford – raised my family in Plainview and Bayville. Worked downtown 15 yrs

Problem for a lot of folks down here is that they’ve never seen this kind of demand nor could they see the kind of value these areas have in comparison to other parts of the country/world.

Tampa Bay specifically Pinellas and even Hillsborough county have a lot in common with Nassau county and you know what the cost is there for what you get! Here they cry about a 1940’s -1950’s built dump going for 200K+ On Long Island (majority of homes built 1950-1970’s) the same dump is 500-600K+ and that’s not in the pricey neighborhoods or on (even near) the water.


Yes no doubt there’s a big adjustment happening in real estate after a massive run-up… its to be expected, but so far that adjustment is more a working off of inventory and localized price corrections than a bottomless free fall. And yes I fell sorry for those [Floridians] who waited and are now priced out but feel worse for those can buy (and afford) now and are waiting as they too will most likely be priced out too. This same story played out in NY CA MA and plenty of other states.

You mentioned Lennar, I know people there. Their fiscal year end is the end of this month and they are doing everything humanly possible to move every inventoried unit. They have already scaled back production and when the inventory is gone so are the deals. They don’t have to build at the same pace as the last 5 yrs. KB, Standard Pacific, Centex – similar stories.