Lehigh valley real estate (Emmaus, Dallas: homes, buying, construction)

[EmmausRocks]

www.patrick.net

[Stavs]

Originally Posted by EmmausRocks

www.patrick.net

Yes, I understand that there is a website named after a guy named Patrick. That doesnt answer my question though.

[jeffvivian]

Stavs,
Sorry for the delay but here is a 35,000 foot overview of the Lehigh Valley Real Estate Market:

The housing market has softened with longer days on the market for listed properties (I would say its about 90 -150 days) and an increase in inventory (currently I would say about 7 to 9 months) which has contributed to reported 5% (I believe from the morning call/MLS) drop in home values. I would say it is probably deeper then that, I would say home values have dropped about 10-12%.

Unfortunatly the market will not resume its growth/correction until these couple of things happen (In other words here are the 3 main factors to the lag in the market):

1) Financing:
The Financing/Banking industry must steady this credit mess that has shredded the national and local Buyers Pool. It will be very difficult to gain any momentum in any market if we do not have the access to money or funding. Remember that the market depends on every price level - so the first time home buyer who is buying at $150,000, is allowing that homeowner to buy at $225,000, which then allows that home buyer to buy at $300,000 and so on up the later. So if the first block is not in place (meaning first time buyers are not able to get financing then the rest of the blocks are out of place). And although there is money available currently for mortgages, a lot of banks and institutions have over-tightened on financing.

So whether the gov't can agree on a bailout, or we go into a self imposed correction remains to be seen. But depending on that resolution utlimately will determine the depth of the softening effect.

NO LINK NEEDED FOR THIS ONE.

2) Oil and Other Home Utilities Increase (Energy Costs)
This is slowly seeping to a #3 - but monitor this very closely. Oil was a major catalyst in the economic slow down as a whole, with people paying $65 to fill up their cars that left little room to dine out, or buy a couch, or buy whatever. But as the speculation comes out of this market and oil subsequently drops, this will ease some of the fears for home heating costs, which should put a little more confort in the buying decision. The only reservation would be on the PPL rate increase scheduled to take place in 09 or 10. That could a factor that would keep some potential buyers away from the market place.
PPL Hike May Shock Customers; PUC: If Cap Ended Now, Average Monthly Bill Would Jump $71.78 (http://www.istockanalyst.com/article/viewiStockNews+articleid_2526864.html - broken link)

If oil were to jump back up and PPL increases their rates, that could be a drag in the marketplace. By drag I mean this will not stop people from buying but will certainly either have them look closer at the energy of the home or by a less expesive house for affordability sake.

3) Overall Consumer Confidence/ Economic/ Job Confidence (Dual Point)
This is creeping into the #2 spot because there is a growing concern that if the overall economy continues to slow, more jobs maybe lost, which would put mortgages in jeopardy.
Consumer Confidence Index - The Conference Board

Historically who are ones most effected by layoffs as it pertains to mortgages MIDDLE MANAGEMENT and this sector is normally buying homes somewhere in the $300,00 to $400,000 range. So the argument of housing increasing so much over median income is a joke for 2 reasons.

(1) Logically there are more lower paying jobs then they are high paying ones, and the creation of jobs holds true to this thinking. For every X# of entry level personell they need 1 manager. For every X# of managers they need X director. So to make housing sit in line with the affordability of entery level personell is ludicris, impossible, and an extreme risk because there is a lack of equity/cash on hand. Once this personell has saved cash/equity then and is deemed a qualified risk to hand over $150K to, there is a value there -you have worked, saved, sweated, and put up with god knows what else to have something you call HOME!!!!!

(2) In today's society, most, but not all of the time there are 2 INCOMES PER HOUSEHOLD, which creates a drastically different affordability index.


These are not the only 3 factors, but I feel these are the 3 main ones that once they comeback the market will regain its strength. In fact, once the factors comeback, historically you will see a "rush" into the marketplace causing not just a steadying but a slight increase in the marketplace. Lets face it interest rates are still LOW, and if home prices stay the same Buyers can pick up a quick 10% in the marketplace.

SO FOR SELLERS:
You may still be able to take advantage of this marketplace if:
1)you have a good equity position. If you bought more then 4 years ago, and you have a need to move UP to a bigger house... based on general stats of your house at (using round numbers) $200,000 is worth 10% less but the house you buy at $300,000 is worth 10% less you made out by $10,000.00

2) Your buying for long term.
REMEMBER the #1 rule to money BUY LOW - SELL HIGH.

FOR BUYERS:
If you can get qualified from a bank and you are thinking of housing as a LONG TERM investment, and you are secure with your job - now is a great time to buy.

Sorry for the long winded approach to the answer but the questions was a complicated one Stavs

Thanks
Jeff

[fay111]

Great post - I think those 3 points are applicable just about everywhere.

[EmmausRocks]

Ron Paul: This Bailout Won't Be the Last - The Home Front (usnews.com)

So you think the government should not have bailed out any companies during this crisis?
"That would have been the best thing. It would have been painful, but housing prices would have come down sharper and faster, and it would have been over by now. But this whole idea of price fixing—that's what they are doing—has been trying to keep housing prices up and trying to stimulate home building. Well, if you have 100 percent more homes than the market really wants, you can't keep prices up and you can't stimulate home building. If the prices go down, then people will go out and buy homes again. So they should allow the liquidation of debt.

[jeffvivian]

fay,

exactly- once these factors round into place the market will be back to something we all expect.

thanks
Jeff

[EmmausRocks]

Originally Posted by jeffvivian

fay,

exactly- once these factors round into place the market will be back to something we all expect.

thanks
Jeff

How can you flat out lie and tell people the market will be back to something we all expect? History tells the truth and this was the largest bubble in US history. It's making the dot.com crash seem like a disney ride. We're just beginning to witness this crash and it's got years to go.

One of the greatest economist known to man, Robert Schiller, created this chart in 2006. Schiller is of S&P home price index. If this chart can't prove that this realtor along with any other realtor that won't tell you this was a bubble and prices will never be back to what they were during this bubble are FLAT OUT LIARS! 115 years of data


http://graphics8.nytimes.com/images/...aph2.large.gif


Here's Robert Schiller.

Robert Shiller - Wikipedia, the free encyclopedia

Home Page of Robert J. Shiller

[jeffvivian]

How does Mr. Shiller explain the lack of a bubble in the texas, Georgia, and Carolina area?

In fact these markets remain stable and some have even grown over the past year. So if Mr. Shiller as the "dooms-day" prophet, you say he is, I would like to see an explaination on how growth can exists anywhere in a "bubble burst".

Heres the answer: IT CAN'T! REAL ESTATE IS A NATIONAL INDUSTRY WITH LOCALIZED EFFECTS. So markets move at the pace of the "locals"
not the southern Cali, or nevadas, or florida. Yes your stats can be swayed and impacts can be made by these markets, but generalizations DO NOT WORK.

So please drudge up some more propaganda for us to chuckle over....

Jeff

[EmmausRocks]

Originally Posted by jeffvivian

How does Mr. Shiller explain the lack of a bubble in the texas, Georgia, and Carolina area?

In fact these markets remain stable and some have even grown over the past year. So if Mr. Shiller as the "dooms-day" prophet, you say he is, I would like to see an explaination on how growth can exists anywhere in a "bubble burst".

Heres the answer: IT CAN'T! REAL ESTATE IS A NATIONAL INDUSTRY WITH LOCALIZED EFFECTS. So markets move at the pace of the "locals"
not the southern Cali, or nevadas, or florida. Yes your stats can be swayed and impacts can be made by these markets, but generalizations DO NOT WORK.

So please drudge up some more propaganda for us to chuckle over....

Jeff

Of course it's propaganda, WHY DO YOU THINK WE ARE IN THIS CRISIS RIGHT NOW? I think you need to educate yourself a little bit or just WATCH THE NEWS!!!! It's because of HOUSING!!!!!!!!!!!! The bubble market did hit ATLANTA, CHARLOTTE, GREENSBORO, TRIANGLE AREA, ASHVILLE, HOUSTON, DALLAS.

You prove my point that you are a rookie realtor without much general knowledge. Progaganda is when realtors put signs on route 78 claiming, "Prices of real estate double every ten years".

[EmmausRocks]

September 21, 2008

Why The Bailout Plan CAN'T Work


Here is the justification for The Plan:

If the plan works, it will attack the central cause of American economic distress: the continued plunge in housing prices. If banks resumed lending more liberally, mortgages would become more readily available. That would give more people the wherewithal to buy homes, lifting housing prices or at least preventing them from falling further. This would prevent more mortgage-linked investments from going bad, further easing the strain on banks. As a result, the current downward spiral would end and start heading up.

Sorry, if houses are overpriced because of the bubble, then they are overpriced. This idea that people are not buying houses that cost $300, $400, $500, $600,000 because banks can't lend them the money is just preposterous! Even if a bank can lend the money, they can't lend the money because TOO FEW PEOPLE MAKE ENOUGH TO QUALIFY. The other day I showed that you have to have an income of $12,000 a month to buy a low-end house in the San Francisco Bay Area.
The idea that you can stop housing prices from falling back to where they should be is like the idea that you could have stopped the stock of golfballs.com from falling after the dot com bubble. I worked at a company where the stock went up to $35 a share for no reason, and then after the crash the stock went back to WHAT IT WAS WORTH: five cents a share.
You CAN'T prop up the price of house ABOVE WHAT THEY ARE WORTH. This is why the bailout plan can not work.