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So we keep hearing about this bust, the bad market...but really interested in the RE perspective..is it really that bad..or just media hype?
I live in NY and want to move to closer to the city..and I see no decline..lots of homes on the market (that are overpriced to begin with)....and yes, I do see them reducing their prices with catchy ad slogans ("reduced" for quick sale, owner says present all offers...etc etc)...and they are reducing by 40k..but still, since the house was so high to begin with...for those of us locals who knew what a particular subdivision went for 5 years ago..they are still wayyyy above what there starting price should be.
And hence the cycle continues, buyers are waiting, sellers are still not budging and then you have this media hype.
I think sellers are budging or are finally starting to budge. In markets like yours it was not fair to prospective buyers w/the crazy appreciation in RE over the past 5-7 years. Prices will come down "revert to the mean" whether sellers want to believe it or not.
Ask your local realtor how many homes are on the market in their MLS. I live in florida in a small community and have been monitoring the MLS inventory of resale homes for the last couple of years. Two years ago our MLS had 1706 homes on the market. Today there are 7626. That's a big difference ! There are also fewer buyers because the "speculators" who were flipping property have also left the market. Land is hardly selling because builders don't need lots if they can't sell the homes they have.
When the inventory starts to drop by 5-10% we will be on our way out of the slump. Until then it is a Buyer's market. People may be sticking to their "asking price" but they are taking less than they used to. In our market they used to take 97 percent of the asking price. Today they are taking 85-90 percent. Homes are on the market longer, but not as long as you think. That's because many sellers take their homes off the market when it doesn't sell after 6 months or so and decide not to move. Those who HAVE to move are lowering their prices and taking any deal that looks remotely good.
Ask your local realtor how many homes are on the market in their MLS. I live in florida in a small community and have been monitoring the MLS inventory of resale homes for the last couple of years. Two years ago our MLS had 1706 homes on the market. Today there are 7626. That's a big difference ! There are also fewer buyers because the "speculators" who were flipping property have also left the market. Land is hardly selling because builders don't need lots if they can't sell the homes they have.
When the inventory starts to drop by 5-10% we will be on our way out of the slump. Until then it is a Buyer's market. People may be sticking to their "asking price" but they are taking less than they used to. In our market they used to take 97 percent of the asking price. Today they are taking 85-90 percent. Homes are on the market longer, but not as long as you think. That's because many sellers take their homes off the market when it doesn't sell after 6 months or so and decide not to move. Those who HAVE to move are lowering their prices and taking any deal that looks remotely good.
Jim, is the volume of transactions still pretty high by you or have they slumped also?
In my opinion mom2gurls, we haven't really reached the "bust" yet. And as far as people complaining that the media is "hyping" the situation, I actually believe the media is doing a ****-poor job of telling the public how bad the market really is (fundamentally). But that's mainly because the standard media doesn't have the economic and business background training to understand it, so they gloss over it and go for the big headlines.
As some others have said, there is a lot of "meat" to the market slowdown that you are missing by just perusing the MLS listings and looking at "for sale" signs in your neighborhood:
1) Home prices in your area, are they going up or down? Keep in mind that the MLS data for home prices DOES NOT include massive incentives being thrown at buyers to motivate them. So home prices in many markets are probably 5 - 10% overstated in my estimation.
2) Inventory levels, are they going up or down? Most markets in the U.S. have far more inventory today than a year ago (some 5 - 10x more), even if home sales are still moving.
3) Because of the record number of homeowners tapping into the home equity lines to finance college, buy cars, buy rental units, pay off credit card debt, etc., they don't need to sell at their original purchase price of their home to be "upside down" on their mortgage. Hence the astounding spike in foreclosures even in red hot real estate and jobs markets like Nevada and Phoenix.
4) Massive number of layoffs in the home building and mortgage industries. Just since August 1st of 2007, 25,000 people in the mortgage industry in the U.S. have been laid off (more than 1/2 of those in the past week):
It's also estimated that the construction industry has shed as many as 160,000 jobs this year alone in the U.S., but it's difficult for the government to track because they are not on "payroll" (many are independent contractors).
So I don't think the market slowdown will be visible to the naked eye, except maybe you'll start to see more homes that appear to be vacant with bank possession postings on the windows. Although in some areas, it may seem like every other home is for sale.
And areas without the spike in upward appreciation like the Midwest will see less (although still be affected by) movement one way or the other. Our houses are taking longer to sell but there was less of the incredible increases seen by places such as Las Vegas, Sacramento, etc.
Our issues seem to be more the fraudelent loans/appraisals, declining neighborhoods due to crime, small towns losing population, etc.
How close to the city are you talking about? I think that there's already been some price correction in areas of Westchester and Queens further from Manhattan. If you go to the Long Island forum, there's a thread about the situation there, sounds quite bad. Manhattan is so far still going strong and there are a number of factors supporting the market there, such as limited supply, foreign money coming in etc. If you go to urbandigs.com, there's some interesting reading about it. Of course it's difficult to predict what will happen in the next few years.
It is a buyer's market only if they can qualify for a loan and that is getting more and more difficult. Lenders generally want to see large down payments and good credit and a good loan to value ratio.
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watch the inventory levels
