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In fact, many places all over the country aren't cratering, but the media kept covering the ones that were as if that was the entire story. Just like all those foreclosures. Last I heard (which was this past week), 96% of the mortgages out there are being paid on time and are not in danger - but it's the 4% that are getting the big splash, and that makes everybody scared.
The media is just reporting what industry experts, such as the Mortgage Bankers Association, are saying. These are record numbers - shouldn't they be reported?
And who cares how many people are paying their loans when the 4% foreclosure rate is enough to kill most of the companies holding the loans. It's like saying "well, I have terminal brain cancer, but the other 96% of me is healthy". Technically that's true, but it's not an honest evaluation of the situation.
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I'm not blaming the media exclusively. I'm saying that, by what they choose to cover, they are making a problem into a MUCH worse situation than it had to be and creating panic that doesn't need to be there (well, until the self-fulfilling prophecy kicks in and the panic they created causes a smaller problem to turn into full-blown disaster due to people reacting out of fear). I've acknowledged that it's their job to get eyeballs for the ads in their newspapers and on their websites, and this is part of the problem (journalism just ain't what it used to be, it seems, in too many areas). But that doesn't mean that they can avoid responsibility for the exacerbation of the problem that they cause.
I disagree here. The media has consistently been behind in reporting this, not ahead of it. They're reacting just like everyone else instead of leading the panic.
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Which is why I said they should be required to print two positive articles, about anything, for every negative article they print. (And not positive filler articles, but equal world count.) I think it would be very interesting to see how things went and if they could generate a positive self-fulfilling prophecy by doing that.
Why make them go out of their way to find useless positive news if the important stuff really is bad? It's not their job to spin the RE market for your benefit. If you need that, read NAR press releases. You'll see how far believing those has gotten people.
The reasoning behind requiring them to print two positive articles (about anything, you'll note I said) for every negative one is to counteract the "the world is ending" spin (to use your word) that is put on everything by focusing so heavily on the negative. Rather than "spin", it's a suggestion to bring some balance (which, once established, could be maintained by one positive for every negative story - it's just so far out of whack now that it needs to be weighted heavily towards the positive).
There's lots of good news out there; no need to go out of their way to find it. It's all a matter of what you choose to focus on.
Yes, the sky is falling is more exciting news. Not just for the media to report, but for some people to hear. Some people, in fact, find it addictive - the adrenaline and all. Which makes it great for garnering eyeballs to pay for ads; not so great for the people who are looking to journalists for factual, unbiased reporting. Those of us who are have to dig deep to find it, and most people won't do that; they just believe the very tiny bits that they're told are the whole story.
Remember, this started with my saying that those who believed that what they're told by the media is "the truth, the whole truth, and nothing but the truth" are naive. A wise man once said there are three kinds of lies, lies, damned lies, and statistics. Lies can be told even with facts, if you're selective enough about the ones you choose to present.
The reasoning behind requiring them to print two positive articles (about anything, you'll note I said) for every negative one is to counteract the "the world is ending" spin (to use your word) that is put on everything by focusing so heavily on the negative. Rather than "spin", it's a suggestion to bring some balance (which, once established, could be maintained by one positive for every negative story - it's just so far out of whack now that it needs to be weighted heavily towards the positive).
This is basically the same thinking that the government is currently having, and is exactly the opposite of what should be done. It is not good, in the long term, to prop the industry up. Delaying the pain only makes the pain worse when it inevitably comes.
Yes, without a "balancing" viewpoint, the market will sometimes have oversold and undersold swings where supply and demand get out of whack. (Incidentally, I don't remember any agents trying to put the brakes on when houses were selling like hotcakes, and at ridiculous prices, which makes this discussion at the present moment seem kind of self-serving.) But trying to manipulate the market because one doesn't think that it's direction is "right" or "good" is a recipe for a larger disaster affecting a larger group of people.
I'm not blaming the media exclusively. I'm saying that, by what they choose to cover, they are making a problem into a MUCH worse situation than it had to be and creating panic that doesn't need to be there (well, until the self-fulfilling prophecy kicks in and the panic they created causes a smaller problem to turn into full-blown disaster due to people reacting out of fear).
Unfortunately, this is not simply being caused by a lack of confidence. In fact, that is a relatively small part of the problem. The problem is with the lenders and the hangover that they are having from the long party that recently ended. If it was simply a question of buyers not having confidence, the bailout package would have been structured in a much different way.
Because the wealthiest people in the world invest in real estate, stock, etc when the market is low. Then, when the market turns upwards (which it always does) you don't look quite as dumb as those who wait until the market is hot to buy and regret buying at a higher price when it turns downwards for a brief period.
Followers are usually the ones that get burned.
Exactly!!! When the crowd spends, save. When the crowd saves, spend.
Rent on the same home isn't cheaper than mortgage + taxes + insurance, and maintenance is also figured into the rent. Otherwise, landlords would be going out of business right and left and would have been for as long as there've been landlords, because you can't run a business at a loss that way. Those are the costs of doing business (purchasing the "equipment" you need to run the business - in this case, the house - and maintaining it). The very cheapest rent you could get has to cover all of those, with no income for the landlord at all.
I'd like to interject one little item.
If you block real estate into a group, or a commodity-Then yes, as a whole-Now may not be a good time to invest in real estate.
But-if you look at properties on a per item basis-Then yes-Now is a fantastic time to buy-And will continue to get better.
Bill
It's in Deerfield, IL, listed as a "contender" for Money Magazine's 2007 Best Places to live. On a busy road, but set back on a nice piece of land with mature trees. I don't think it's in foreclosure, since I don't see it online for that. I do know it was purchased pre-bubble, because there are no previous sales records with the Lake County Assessor's office online site.
I do not work the area but am close enough. I see no sign of financial distress. It's a challenging location. This pup has been for sale for 471 days. It's a classic mid century 3 bedroom ranch home. It looks like it's value is tied to the land, given immediate area tear downs and intentions for more.
It appears that the original ask was based on a closed comp of another larger and better located property that closed, last year, at $775K or so the tax records show. A builder bought it with plans to do a custom build, approaching $2MM. It's not clear if the builder went ahead with a spec house, or not.
Comparing the original to the current ask is not the best way to get the pulse of a local market. Sellers can and often do ask prices that have nothing to do with the reality of the market, any market, at any time.
Rent on the same home isn't cheaper than mortgage + taxes + insurance, and maintenance is also figured into the rent. Otherwise, landlords would be going out of business right and left and would have been for as long as there've been landlords, because you can't run a business at a loss that way. Those are the costs of doing business (purchasing the "equipment" you need to run the business - in this case, the house - and maintaining it). The very cheapest rent you could get has to cover all of those, with no income for the landlord at all.
This house is also available for rent for $2800 a month:
Rentals - 328 MARSHMAN, HIGHLAND PARK, IL, 60035 - Realtor.com (http://www.realtor.com/rentals/search/listingdetail.aspx?zp=60035&ml=3&mxp=27&bd=4&typ=4 0&sid=96a3ad433fe64f719728a6b0192fb4fc&pg=3&lid=11 03622793&lsn=26&srcnt=31#Detail - broken link)
I think the "individuality" that Bill Hitchcock mentioned with reference to markets vs. specific properties also applies to renting. Some rentals are a good deal, others not so good.
There are a lot of accidental landlords out there right now.
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