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Old 07-26-2007, 01:38 PM
 
289 posts, read 1,038,122 times
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Out of touch with realty reality

What, me worry? Most Americans don't seem to believe there's a serious housing slump.

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continues at:

Out of touch with realty reality - Jun. 21, 2007

Last edited by scirocco22; 03-01-2008 at 04:44 PM.. Reason: copyright issues
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Old 07-26-2007, 01:44 PM
 
Location: Issaquah, WA
818 posts, read 3,693,017 times
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Quote:
Most - 55 percent - are confident that their homes continued to increase in value compared with a year ago, according to a nationwide telephone survey conducted this month by The Boston Consulting Group (BCG), a business and management strategy firm.

The overconfidence of homeowners doesn't jibe with the findings of most home-price indices, which point to lower median single-family house prices of about 2 percent nationwide.
2 percent nationwide. So, according to asik's graph, Las Vegas housing is depreciating at 5x the national average!
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Old 07-26-2007, 01:51 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 38,127,294 times
Reputation: 2661
Quote:
Originally Posted by asik View Post
graph.aspx.gif (image)

LV prices are going down, down, down.
Graph is nonsense without specifics of what it purports to track. For instance the SFR resale market in Las Vegas has been very close to flat for median price over the last 18 months. Down perhaps 1.7% in that time. Presently at $305,000 down from $310,000. The average price is up substantially as the expensive sector has held up better than the middle. There are some markets that show more decline than that. Sun City Summerlin for instance is clearly down 5% over the last six months. But that was the first decline since 2000 or before.

Where is it going?...just chugging along like it is. The inventory is stabilizing and will begin to drop shortly. Does not mean much as it will come back up in the spring. I would expect some weakening of price but not very much...maybe 2 or 3 per cent by year end. Then will come spring and we will see if this has run its course or we go on in the doldrums for another year.

And don't give me the "RE Agent BS" line. Hell the RE Agent are all charging around like mad to get the prices down...anything to increase velocity. This silly belief that RE Agents want the prices high is just idiocy...RE Agents care about sales velocity and not much else. Sellers are holding the line on price...not their agents.
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Old 07-26-2007, 02:05 PM
 
Location: New York, NY
307 posts, read 926,935 times
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Quote:
Originally Posted by olecapt View Post
And don't give me the "RE Agent BS" line. Hell the RE Agent are all charging around like mad to get the prices down...anything to increase velocity. This silly belief that RE Agents want the prices high is just idiocy...RE Agents care about sales velocity and not much else. Sellers are holding the line on price...not their agents.
Real estate agents are currently telling buyers, this is a good time to buy. They say that every year regardless of price. Always trying to give the impression that prices are about to go up and you will miss the boat. That was true pre 2006, it hasn't been true for the past 2 years and it's unlikely to be true in the 2 years ahead. You are correct that agents want to move properties, regardless of price but the fear factor they try to instill in the buyer is a bunch of BS these days and buyers know it.

Real estate is like any other investment, prices go up and prices go down. Prices couldn't be sustained at the rate they increased between 2000 and 2005. Now you get the 10 years squeeze out, 3 years down, 3 years flat and 3 years up to get back to where they were in 2005.
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Old 07-26-2007, 02:24 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 38,127,294 times
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Quote:
Originally Posted by SHEPNYC View Post
Real estate agents are currently telling buyers, this is a good time to buy. They say that every year regardless of price. Always trying to give the impression that prices are about to go up and you will miss the boat. That was true pre 2006, it hasn't been true for the past 2 years and it's unlikely to be true in the 2 years ahead. You are correct that agents want to move properties, regardless of price but the fear factor they try to instill in the buyer is a bunch of BS these days and buyers know it.

Real estate is like any other investment, prices go up and prices go down. Prices couldn't be sustained at the rate they increased between 2000 and 2005. Now you get the 10 years squeeze out, 3 years down, 3 years flat and 3 years up to get back to where they were in 2005.

You just don't know any good agents. Poke around here a little bit and you can see what I tell buyers.

And I would also point out that for some it is a good time to buy. If you are already fixed up in a rental that meets your needs and no other requirements are driving you it is a good time to sit tight.

However if you have kids about to enter school or simply need long term stability or you are discerning about which neighborhood you wish to live in it may be a good time to buy.

I also suggest watching the interest rates. I see no great problem for the remainder of this year but the belief that it is coming is pretty widely held. If that starts I would buy. A 1 percent interest rate hike is worth a 15% price drop for a leveraged buyers. And there are not going to be 15% price drops.

You might also learn that RE Agents come in two categories. RE practioners and Salesman. Salesmen are well salesmen...so be careful who you choose.
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Old 07-26-2007, 03:00 PM
 
Location: Henderson, Nevada
515 posts, read 1,830,573 times
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Quote:
Originally Posted by olecapt View Post
Sellers are holding the line on price...not their agents.
Agreed. From my own situation;
After having my home on the market for 30 days and not one showing my realator advised us to lower the price by 10k from 299,000 to 289,000. Not wanting to do so, so soon made us keep the price where it was. Three weeks later we turned down an offer for 285,000 thinking that 15k under asking price was too drastic. Then six months later we sold for 265,000 and we were so happy to get ride of it.
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Old 07-26-2007, 08:13 PM
 
Location: Wherever my feet take me
272 posts, read 1,508,135 times
Reputation: 442
If it were just the effects of the real estate bust and its ancillary businesses the picture would be bad enough, but there is more lurking out there getting ready to hit the economy and it's not good news.

Check out this blog story I came across today: 'For all practical purposes the markets are closed right now'
Quote:
While you've certainly heard of the big drop in the Dow Jones in the past two days, and probably heard that the housing market keeps on getting worse, the most ominous news are actually coming from a distinct part of the financial markets - leveraged debt.

That particular market, as suggests the quote I used in the title of the diary, is undergoing a dramatic change in mood as bankers, which had been bending over backwards to lend ever more money at ever more favorable conditions have suddenly decided that this was not a good idea and are brutally turning off the taps. Deals such as the huge $12 billion financing for the purchase of Chrysler by Cerberus have been cancelled - or, to be more precise, the syndication of these deals has been killed, which means that the client will still get the money, but the banks that structured the deal initially and underwrote the loans (i.e. they committed to lending the money) won't be able to share that risk with others on the market and are stuck with it. For those deals already underwritten, the victims are the banks that did the deal; for deals not yet underwritten, the client won't see any money.

That market matters, as it is the one that has been feeding the private equity boom, i.e. the increasingly aggressive purchases of companies by funds which were able to bid high prices precisely because they could find cheap and easy finance. That boom had fuelled the increase in stock market prices (with the price of targeted companies aften jumping on such deals, and many others going up on speculation that they could be purchased) and in the price of many other assets - simply because buyers had lots of money.
Read the rest here: http://www.dailykos.com/story/2007/7/26/175633/277
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Old 07-27-2007, 02:50 PM
 
85 posts, read 207,869 times
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The problem isn't just the greed of sellers and buyers.

It is a "perfect storm" of events that could last for years.

Seller problems
1. Due to constant flipping at 100% financing, no down payment purchases at 100% financing, and easy cashout deals in 2003-2006 at 100% financing....most sellers have little or no equity.
2. Slight price downturns due to foreclosure and builder sell-offs have lowered this low equity even further.
3. Even if they wanted to lower prices, sellers cannot sell below the value and lose money after paying realtor commissions out of pocket.

Buyer Problems
1. Incomes have not kept up with home prices. It is next to impossible to qualify for a loan at today's higher rates. Without "cheating a bit", a person making 90,000 a year could only legitimately qualify for a 280-320K home at best if they had little other debts...expensive car payments and forget it....your loan guy was forced to lie a bit...
2. Mortgage brokers cheated extensively in 2003-2006 with "liar loans". Federal watchdogs are making sure "liar loans" Stated income/no documents loans are being phased out rapidly in 2007.
3. Subprime mortgage are vanishing. Three times in this month alone, subprime vendors have pulled back the loans and raised rates to 11% percent from 2006 7.5% loans. NEARLY 30% of potential buyers have disappeared overnight as a result of this pullback.


Investor Issues

1. The friendly appraiser who would make every house "owner-occupied" is gone. Expect to have to put 20% down on homes you don't intend to occupy. It was easy to flip properties without that 60 grand on a 300K house back in 2005. Wink Wink and 500 dollars got you a new home in 2005 that you never stepped foot in to live....not anymore...
2. Builders will flat out not sell to investors. Expect new developments to give the nth degree to potential investors.

Builder Issues
1. Forward commitments have led to ridiculous inventories of home lots. It will take years to get rid of the inventory.
2. The builder will always undersell the individual and make money. The few qualified buyers left would rather buy a new home for 20% less money than a similar seller home.

It stinks. It is horrible for mortgage people, realtors, construction people, buyers, and sellers.

But it is a perfect storm that will take a few more years to get back together.
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Old 07-27-2007, 05:17 PM
 
Location: las vegas
229 posts, read 813,500 times
Reputation: 56
Terpsandhorns you nailed it. It is more than just a lack of buyers or sellers not wanting to come back to reality. Instead of seeing the median price each month as a yardstick for where the market is at, I would like to see what sellers started at and what they ended up selling for, as well as how long they were on the market. What I've seen is that sellers are generally getting between 10 and 20% less than their asking coupled with several months on the market. Of course there are always exceptions, and I expect that a certain poster or two will provide generalizations as examples to counter this, but anyone who is not a realtor and in the market is well aware that there is more than just a small, single digit decrease in price. You described it best with your "perfect storm" reference. It's unfortunate that this happened, but it was bound to based on the panic buying and financing that took place during real estate's salad days.
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Old 07-27-2007, 06:26 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 38,127,294 times
Reputation: 2661
Default Pretty much nonsense...

I am sitting on 8 official listings and have 4 more in my pocket that will come on the market if and when it turns around. Not a single one is equity challenged. We probably have a sufficient knowledge of perhaps another 100 or so properties involved in a deal we did or in a deal that did not work but where we did the homework to find out the sellers position. Remember trust deeds and other encumberances are public records. The only place we come across equity challenged are on homes bought new or almost new in 2004/2005/2006 and short sales and foreclosures. And only a small part of even the obvious speculator buys are equity challenged. Most equity challenged homes are locally owned and most are owner occupied. The have a big proportion, though not all, bought in the hype period.

Short sales for instance are less than 10% of the present homes for sale. And they are not discounted. The banks continue to price to market. You can offer a deep discount...but they say no.


Next error...higher interest rates.. They ain't. Oh they are above the lows...but not enough to make a difference. This is still an exceptionally good interest rate market.

The "friendly appraiser" never existed. How in the world would an appraiser determine where you are not going to live.

The underwriters are not dumb people. They could figure out what was going on when someone bought their third owner occupied home. The lending institiutions chose to wave their rules...and got away with it for years.

There are around 90,000 lots in inventory. Considering that they need to cover a five or six year period that is probably light. At present standing inventory is under a months supply and will likely have gotten close to zero in the next quarter. Probably good news for the resale market.

Builders never undersell resellers. They in fact get a premium of around 15%. Economically buying new has been stupid for years. One does it for emotional reasons not economics.

The exception is custom homes. But those are so few they have litlle bearing on anything.

As to actual market sales it is very complicated to tell what is actually happening. To do it really well you look only at homes that have sold twice. That is so that you compare the same product to itself.

Practically you can use the MLS solds or the county assessors data base. They give the same answer. The median price has moved little and the average price has gone up. And the median is down only a couple of percent.

Those not in the business always know something else. But that is because they don't or won't see the overall picture.

The funny thing is the belief RE Agents have an interest in keeping price up. That is actually pretty dumb. We care about velocity...the number of sales. Why on earth would we care whether they are up 10% or down 10%. Just so the velocity does not fall to half...as it has done.
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