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January 05, 2008 Evaluating Return on Real EstateFrom the Wall Street Journal: Posted at 04:59 PM | TrackBack May 07, 2007 Moving & Relocation: David Lereah Comes To Jesus
In what should come as a surprise to no one, the former #1 real-estate shill is revising his economic forecasts downward as he hustles out the door: "We're in a real estate recession," said David Lereah, chief economist for the National Association of Realtors, who surprised many this week when he announced he would leave the Chicago-based trade group on May 19. "I'm projecting the first [nationwide] price drop since the Great Depression," he said. "We're going to have negative home prices in 2007." The article already quotes my boy David Lereah Watch, but CenterBlue also gets a few well-deserved shots in: It’s because of assholes like this that I despise economists. So many of them prostitute themselves to the highest bidder by putting out economic bullshit spin and painting rosy pictures that even people like myself who are untrained in economics but read a lot can see right through. Absolutely. The fact that a bunch of people in different professions could so clearly see what so-called "economists" could or would not says volumes about the overratedness of that profession. Lereah was paid to say and do whatever necessary to ensure people bought homes in the market, and that included fudging figures, facts, and stats to make his point. The guy is a charlatan, a buffoon, a liar, and a fraud. Worse, he's not even denying any of it: In characteristic cheerleader style he demurred when asked whether he ever felt pressure from within NAR to skew forecasts in a positive direction."You'll have to talk to me about that in two or three weeks," Lereah said. "I work for NAR now." In other words, as long as they're signing his paychecks he'll say what he has to say. Who's going to bet that as soon as he's out the door, he'll be shilling for a book that explains why it's a great time to rent? (I don't remember if it was someone at Marinite's blog or Keith over at Housing Panic who made that hilarious image, but kudos to you in any event.) Posted at 01:58 PM | TrackBack April 09, 2007 Moving & Relocation: The Suburban PoorTwo interesting articles on the changing face of urban and suburban demographics of note. First we have a report from the Drum Major Institute on the middle-class squeeze of New York City. The basic upshot is that the city is getting way too expensive, and costs are rising far past the meager increase in typically middle-class wage levels for individuals and families alike. Once they're stuck at their economic level, they are more apt to stay there, and just as apt to flee the cities looking for cheaper places to live. Housing-related excerpt: The last decade of housing policies had a significant impact on the city’s middle class, for both good and ill. Affordable housing construction under Mayors Koch and Bloomberg benefited the city’s middle class, according to our respondents, while the weakening of rent control legislation and the prevalence of subsidies for luxury real estate development harmed middle-class New Yorkers. Second is an essay from the Nation on the increasing numbers of suburban poor. Excerpt: In fact, however, the gentrification of many urban neighborhoods, from Brooklyn to San Francisco to Washington, has forced many working-class residents out. In a reversal of the classic migration story, many of these displaced residents have fled to the suburbs, lured in part by the growing pool of mostly low-wage jobs there--cleaning homes, mowing lawns, staffing restaurants, strip malls and office plazas. Alan Berube, co-author of the Brookings Institution study, says the "decentralization of low-wage employment" is one of the main factors driving suburban poverty rates up. It makes sense when you think about it--the gobbling up of every last square plot of land and development of McMansions and the like subsidized an entire new class of indentured servants. Now that the bubble is failing, the richer are moving back to increasingly-gentrified cities, while the poor are quite literally left behind. One has to wonder if they'll take over those empty homes and turn them into multi-family dwellings. It's totally Kunstlerian, and a frightening glimpse of where we might be headed. Posted at 04:58 PM | TrackBack March 18, 2007 Moving & Relocation: The End Of Exurbanism
Progressive blogs such as Firedoglake and the American Prospect's TAPPED are tackling the issues of explosive population growth, the failures of mass transit, and the need for better urban planning and development in the wake of the foreclosure tidal wave and the collapse of the subprime market. This is nothing but a good thing to me. With gas prices creeping above $3 a gallon again, consumer and food prices rising in tandem, and thousands (if not millions) of Americans facing the dark side of excessive sprawl, McMansionitis, and developers' push to build at any cost, the time is ripe for a major change in how we view home ownership. The "housing nightmare" will push many people out of their shitbox homes in the middle of nowhere and force them to not only live with less, but to reassess what a lifestyle spent in pursuit of conspicuous consumption really means. Is it worth it to have that 3,000 square-foot palace when you can't afford to pay your bills, and your family eats Ramen noodles and sleeps on mattresses just to make ends meet? We need housing close to the city centers that supports the people who keep our cities running--doctors, policemen, nurses, firemen, janitors, etc. Urban planning, smart use, and the like are absolutely no guarantee of solving the problems we face. But we need to look at housing and home ownership in a different way if we're going to escape the endless cycle of boom and bust that ensnares far too many and crushes their dreams. Posted at 07:15 PM | TrackBack March 12, 2007 Buying & Selling: Photoshopping Listing Photos?
While searching Broadband Reports for some unrelated information, I came across a fascinating thread: The ethics of photoshopping listing photos. As you might imagine, the readers don't think too highly of it. The forum linked to a Matrix post on the topic, wherein Jonathan Miller had this to say: The physical marketing of a property includes showing a property at its best to influence the value, and this can include staging the home through furnishing, lighting and sounds. Those staging efforts don’t bother me because they help the buyer visualize the property potential. The new owner can effect change after purchase. However, the probability of the wires or a water tower being removed after purchase would be remote. That seems to be where the line should be drawn. Honestly, I can't see any justification for altering photos of homes before listing. You're going to see the real deal in any case, and the idea that the seller would expect to get away with such crude fraud seems absurd on its face. Then again, I remember writing about people who bought plots of land via eBay completely sight unseen at the height of the housing boom, so maybe there's an audience for this sort of chicanery. By the way, Adobe is apparently working on antifraud technology for Photoshop, but the commenters for that article aren't terribly impressed either. ;) Posted at 05:22 PM | TrackBack March 02, 2007 Moving & Relocation: Affordable Housing Gets A Victory
In the never-ending refrain of "affordable" housing units being carved up and resold as "luxury" condos (which usually involves just slapping a coat of paint on and boosting the asking price by 10x10 power), it's nice to see a break in the trend. In this case, HUD secretary Alphonse Jackson blocking the sale of Starrett City in New York: Clipper Equity LLC, the real estate company that bid $1.3 billion to buy the 46-tower complex from Starrett City Associates, was told by HUD in a letter last night that the deal would not be approved, a source confirmed.Federal officials decided to stop the sale in part because the price led them to believe the complex could not remain affordable housing for its 14,000 tenants, the source said, reading from the letter. Among the reasons for putting the hammer down on the deal was a pronounced sticker shock and the shady dealings of the major player in the deal, David Bistricer: - Even in the hyperactive New York market, the proposed sale of Starrett City caused sticker shock. Jackson noted that in a neighborhood where apartments are valued around $95,000, Clipper Equity offered the equivalent of about $220,000 for each Starrett City unit. Clipper Equity partner David Bistricer already owns 71 other buildings with 8,792 outstanding violations. Since 1998, Bistricer has been under permanent injunction from offering or selling cooperative buildings and apartments - a statewide ban Cuomo said he intends to enforce. The official HUD statement is here, with more coverage from Bloomberg here. This is another coda to the housing boom era, in a way. It wouldn't have been so long ago that developments like this would have been rubber-stamped and sent on their way with nary a backward glance. It's nice to see government (particularly THIS government) doing its job and sticking up for the little guy for once. Those who follow the trends of affordable housing would do well to check out Housing Finance, whose humble blogmistress Martha Bridegam has done a masterful job of chronicling the ups and downs of this sector for as long as I've been blogging here. ;) Posted at 06:10 PM | TrackBack February 14, 2007 Buying & Selling: BuyWiseRealty Goes LiveBuyWiseRealty.com is an interesting new service that combines the power of the MLS, Google Earth, and Web search tools into a force for good: Did you know that over 85% of homes are not sold through open houses or newspaper ads? That’s right! It’s a fact that 85% of the homes are sold through the local Multiple Listing Service (MLS). The MLS is a data base where Listing Agents list your home, typically offering other agents half of their commission for them to bring their qualified buyers in to buy the home. At Buywise we have a better way. With our Buywise Seller Basic Program, we will list your home on your local MLS for a low one time fee of $500. With the MLS subscription, you also recieve a For Sale Sign and a lock box. You act as the agent and offer a typical 2.5% - 3% buyers agent commission and open up your home to your entire real estate community. BuyWise has also teamed with the mighty Zillow to offer instant home estimates, though as today's WSJ notes, relying solely on Zillow for price valuations is an entirely different sort of gamble. I'm sure Buywise will have its flaws and glitches, but in principle, this is another important step towards reshaping the dynamic of homebuying to give both buyers and sellers more power and influence over the transaction, and keeping more money in their pockets. Read the press release for more info. Posted at 12:56 PM | TrackBack January 24, 2007 Buying & Selling: $335K for 77 Square Feet
That's the price for this rather cozy little abode, located in the heart of London. As the article notes, the price is an example of "location, location, location" taken to the absolute extreme: At more than $4,340 a square foot, the mortgage buys a spot within walking distance of tony stores like Harrods and London's iconic Hyde Park. Originally conceived as a maid's room, the apartment at 18 Cadogan Place hasn't been used for years and is littered with trash bags and crumbling paint...The sale of this dark, mildewy room illustrates the astronomical rise in property values across London, which in the past year has seen average residential property prices increase 22.4 percent, to about $703,000, according to figures released Monday by Rightmove, which tracks the British property market. If nothing else, this is a good reminder that the epidemic of soaring property values--and corresponding lack of affordability--is not confined to the borders of the U.S. alone. I understand that David, aka Bubble Meter, is going on vacation. Maybe he can look into the bubbiliciousness of merry olde Englande while he's overseas. :) Posted at 02:06 PM | TrackBack January 19, 2007 Buying & Selling: Iowa City Opens The MLS
Here's another example of a regional realtor establishment realizing that they can't control the information flow anymore, so they might as well share it. The Iowa City Press Citizen tells the tale: The new Web site, www.IowaCityAreaMLS.com, lists more than 2,400 homes in the area that are for sale by the association's 440 members. The site is updated daily. I tested the site out, and it works very smoothly, including a security authentication feature and the ability to sort by highest and lowest prices. This is the type of thing realtors should've been doing long ago, but better late than never. Check out the site here. Posted at 05:46 PM | TrackBack January 17, 2007 Buying & Selling: Minnesota MLS Opens Its Doors
Yesterday I talked about efforts to diversify the real estate information flow, but it turned out that this was already happening in a few places. On Monday, the Inman News bloggers reported that Minnesota's MLSs were agreeing to share the wealth: A group of 14 Realtor associations, which represent 10 regional multiple listing service providers and the majority of for-sale property listings in the state, have created a data-sharing system (see Inman News article). The sharing agreement will reduce the need for real estate professionals working in the area to join several MLSs to serve their clients. As far as I know, this extension of data sharing is only for realtors and not for FSBOs and other competitors, so it's not much in the way of progress--but progress it is. Property Hype wonders if this may portend bigger changes on the horizon: With a Justice Department suit against NAR for its MLS policy, changes may be forced. Customers and many real estate business entrepreneurs alike want more access to home listing data, and MLS listings changes may provide that. Indeed. Rather than risk embarrassing details about shady, hierarchical, self-serving business practices coming to light, the industry is diversifying and standardizing to preempt oversight. Dalton's Arizona Homes also points out that this change benefits realtors who often suffer from the same lack of information buyers do: In truth, the MLS is a parochial being... If I want to see listings in any of these areas, I have to search as the public does - through agents’ sites or, if possible, through a public portal provided by the individual MLS.There also is Realtor.com which, as one my sellers discovered yesterday, provides just enough information to be remarkably useless to someone seriously searching for homes. 'Nuff said. :) Posted at 06:35 PM | TrackBack January 10, 2007 Buying & Selling: Homes Still Out of Reach for Most
Reuters reports that despite the vaunted claims of the market being geared to buyers, homes are still too expensive for most to buy: While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace. "The real story is what happened to salaries," Lipman said. "Lower-paid occupations -- such as in retail, or home health workers -- their salaries went up only about 3 percent." It's as I've said many times now: This last housing bubble was a deliberate attempt to leverage greater corporate profit through increased consumer indebtedness. Home prices were pushed to the limit thanks to bottom-barrel interest rates and cheap money, and consumers were deliberately encouraged to buy beyond their means, using toxic mortgage instruments that they didn't understand. Now we're seeing the results--stagnant markets, fearful buyers, frustrated sellers, subprime lenders dying, and foreclosures continuing to increase. Lipman's point about solving the problem (in addition to wage gains): "For the low- to moderate-income individuals that we're talking about, they're not going to be helped by marginal declines in home prices," Lipman said. "The only way to address the problem is to create more affordable units (homes) -- which may mean higher density units, townhouses and condos." And conveniently enough, there's still a ton of unsold condo inventory on the market that fills the bill. Once developers get their minds right and sellers drop prices, those units will move and people who've been priced out of the market can get in the game. I hope. (Image courtesy of The Affordable Housing Institute.) Posted at 12:48 PM | TrackBack November 28, 2006 Credit & Debt: Bernanke And Greenspan Speak
Why is this man smiling? Both the former Federal Reserve Chair and his successor have had occasions to opine in recent days, and if their output is any indication, the level of disconnect from reality is worse than we thought. First we have Alan Greenspan saying that the worst is indeed over for housing, even as the NAR itself was forced to concede otherwise:
Then we have Ben Bernanke continuing to fight the last war through his remarks that the housing slide and economic doldrums are bellwethers for inflation, though most of the free world thinks otherwise: One possible outcome is that increases in labor costs will largely be absorbed by a narrowing of firms' profit margins and not be passed on to consumers in the form of higher prices. The fact that the average markup of prices over unit labor costs is currently high by historical standards suggests some scope for this outcome to occur. If higher labor costs are mostly absorbed by firms and not passed on, then workers will see the gains in their nominal compensation per hour of work translated into greater real compensation per hour; in the process, workers would capture a greater share of the fruits of the high rate of productivity growth seen in recent years. The more worrisome possibility is that tight product markets might allow firms to pass all or part of their higher labor costs through to prices, adding to inflation pressures. Even in the face of positive economic indicators such as increased home sales, wage gains, and employment increases, Bernanke still fears Inflation. Why? Because every dime that goes into your pocket is not going into Wall Street's coffers, and he has to keep the titans soothed. It's that simple. For a different perspective on Bernanke's remarks, check out Calculated Risk's analysis. Am I right, and is Bernanke beating the inflation drum to scare the Fed into raising rates? Or is CR right, and is a downturn/recession on the horizon no matter what? Time will tell. Posted at 10:03 PM | TrackBack Buying & Selling: Surprise Rise In Home Sales
It seems elementally simple, doesn't it? Wages go up, home sellers cut prices, and people start buying again. Yet the pundits are mystified and bewildered by such a turn of events, when even Lereah himself admits that the price cuts are doing their job: "As expected, existing-home sales appear to be stabilizing, fingers and toes crossed," said David Lereah, chief economist for the Realtors. Market fundamentals are improving, he said. What's particularly interesting is this line: Sales of condos dropped 4.8% to 778,000. Median sales prices are down 5.3% in the past year to $214,300. Condo sales are down 14.5% in the past year. The inventory of unsold condos rose to 9.1 months. Condo glut, baby. Until that inventory gets moved or converted to rentals or office space, those things will sit like empty shells dotting the landscape. Or unless prices drop, of course. While Lereah and his shills will paint this as everything from "buyer psychology" to population changes, the truth is the truth: It's all about high wages and low prices. Posted at 04:06 PM | TrackBack November 24, 2006 Moving & Relocation: Homeless For The Holidays
I had a wonderful Thanksgiving this year, spent in the company of good friends and enough food to put you in a It's especially important to remember how many people don't have any of the things we take for granted, especially those who are still recovering from the wrath of Katrina: More than 99,000 families in Louisiana and Mississippi are living in FEMA trailers, compared with about 34,000 last November, according to the Federal Emergency Management Agency. This is not a problem that is just going to go away. In fact, thanks to ridiculous amounts of fraud and abuse, it's continuing to get worse. For every story with a moderately hopeful ending like Beverly Carter's, there are thousands who continue to suffer and endure undeserved ruination and hardship. Remember those less fortunate this year, and give support where you can. Network for Good's Katrina Page KatrinaHelp.com's Charity Listings. UPDATE: A commenter reminds me that there's nothing funny about using one tragedy in a humorous light while discussing another. I apologize for the Terri Schiavo crack. Posted at 03:41 PM | TrackBack November 17, 2006 Buying And Selling: Home Construction Hits Six-Year-LowThat's the unfortunate news regarding new home construction for October, as the Commerce Department glumly reports the continuing effects of excess inventory and frightened buyers: The report signaled that the months ahead could be equally bleak: The number of building permits that were issued fell for the ninth straight month, reaching its lowest level since 1997. Those figures, too, are seasonally adjusted....The report deepened concerns that the contraction in the housing market could brake economic growth more sharply than many economists have been forecasting. And it weighed against any hope for a quick rebound. And yet, if you go with MSN Money's take on it, it's merely a sign that the market has hit rock bottom: A private survey of U.S. homebuilders' sentiment ticked higher in November. The National Association of Homebuilders/Wells Fargo Housing Market Index on Thursday got a two-point bump to 33 points in November. The survey hit at 15-year low of 30 in September.And on Wednesday, the Mortgage Bankers Association reported that applications for U.S. home mortgages rose last week to their highest level since January as falling interest rates encouraged more loan refinancing. Now, the question is what kind of loans are homeowners refinancing into? If the terror that is WAGE GAINS is for real, are people taking advantage of their increased buying power to go for traditional fixed loans? And will the relatively positive signs of economic strength be enough to buffet the continuing deceleration of the housing sector? Kendra Todd provides some good advice for a buyer's market, and the Urban Trekker has found some great bargains for under $400,000 in the infamously bubbilicious D.C. housing market. Are these the signs of the end of the slowdown, or just the beginning? Hard to say. Those lower-end prices could be for total fixer-upper s?!tboxes, and there's no guarantee of being able to get into them without utilizing toxic mortgage products. But a year ago, would we have even broached the idea of a buyer's market? I will answer this with a quote from the guru of all things housing bubble, Ben Jones: The market is overbuilt, and the only cure for that is time, not rate cuts. Word. Posted at 01:50 PM | TrackBack November 04, 2006 Buying & Selling: Is Now A Good Time To Buy?
The National Association of Realtors is pulling out all the stops with a glossy campaign urging readers to buy NOW, because the worst of the bubble is behind us. Or something. No less an authority than Kendra Todd agrees, particularly urging us to take advantage of people caught upside down by toxic loans and are in foreclosure. No, really read this advert: Now's the time to jump back on board the wagon for pre-foreclosures, foreclosure properties and distressed home sales. When everyone thought home prices would rise forever (and it's amazing how short people's memories are, isn't it?), many buyers abused interest-only, adjustable-rate "creative financing." Now they're "underwater," owing more than their home is worth and unable to make rising payments. Take advantage. (Emphases added.) So we have a self-proclaimed "highest producing REALTOR" telling buyers to deliberately target properties on the market because the previous owners got jerked by The Adjustable Rates Of Doom--the very same lending vehicle that powered the housing boom, bubble, and bust in the first place. What would The Donald say? I am of the mind that any potential owner that has done their research, negotiated smartly, and--most importantly--has saved and invested enough to put down for a 30-year-fixed loan--can buy in this market. But the problem is the same problem that we've had for the last five years--buyers are being enticed to put money down for properties far beyond their market value, using lending instruments that will cost them far more money in the long run. I'm not as bearish about the market's chances as some of my estimable fellow bloggers--it IS possible to buy into this market and survive IF you're smart. But I'm not drinking the Kool-Aid either. For there to be serious reinvestment in housing, prices need to come down and stay down, inventory has to be moved off the market, and our savings need to improve dramatically. That's still years off, if ever. Posted at 06:08 PM | TrackBack October 18, 2006 Buying & Selling: Ghost Towns
MyDD pointed the way to this speech from the president of the San Fran Federal Reserve. Most of it is typical boilerplate, but scroll down to her comments on the housing market, and things start to get really interesting: Of course, housing is a particularly interest-sensitive sector, and, as we know, it already has shown clear signs of cooling. Frankly, the pace of it has been a little surprising. Nationally, housing permits are down noticeably—by more than 20 percent—from a year ago. In addition, inventories of unsold houses are up significantly, sales of new and existing homes are off their peaks, and surveys of homebuyers and builders are showing much more pessimistic attitudes....According to some of our contacts elsewhere in this Federal Reserve District, data like these are actually "behind the curve," and they're willing to bet that things will get worse before they get better. For example, a major home builder has told me that the share of unsold homes has topped 80 percent in some of the new subdivisions around Phoenix and Las Vegas, which he labeled the new "ghost towns" of the West. Though the situation isn't that bad everywhere, a significant buildup of home inventory implies that permits and starts may continue to fall and the market may not recover for several years. While builders remain hesitant to cut prices so far, and instead offer sales incentives, price cuts at some point in the future seem almost inevitable. Almost? As Agent Smith was wont to say, "It is inevitable." As long as you have all that excess inventory sitting out there untouched and unwanted, the market is going to have to tolerate lowered prices. No one's going to buy if homes are worthless thanks to glut. Of course, the situation won't be helped by arrogant homebuilders who insist on continued development even when it's becoming clear that no one is buying: "In the builders' eyes, there's no excuse for having a house standing there," said Jonathan Dienhart, director of published research at Hanley Wood Market Intelligence, which follows the building business, in California. "They're doing everything they can to stop standing inventory from increasing any more." Man, these days people can't hold on to the homes they have. What makes you think they're going to be splurging for more sh$tboxes unless the price is right? Posted at 02:23 PM | TrackBack October 12, 2006 Moving & Relocation: The End of Suburbia?
Two interesting reports came out today that deal directly with the housing market. The first is the Federal Reserve beige book, which surveys data in key economic sectors from around the country. The report is mostly positive in a moderate sense, but when it comes to housing, the outlook darkens considerably: Nearly all Districts reported that housing market conditions continued to soften, though several noted that activity increased in some markets. Most Districts reported higher home inventories, and several said that homebuilders and sellers continued to offer incentives to attract buyers....Rent increases were reported by New York, Minneapolis and San Francisco, with Dallas indicating that pricing power was shifting to landlords. That squares with the typical end of a housing bubble--as owners scramble to get affordable housing in a balloon market, landlords play OPEC and decide to jack the prices of rentals up to whatever they can get away with. The second bit of news is a report from the Center for Housing Policy that finds the costs of high commutes outweigh low mortgage payments for residents in the 'burbs. If you think you're getting a deal by owning vs. renting, you may be, but the costs of gas, car maintenance, tolls, bus passes, etc., can wipe all of that out. More about this from Brad DeLong. This is the price of the exurbian exodus. People are so desperate to have land and own a home to use as a bank that they'll willingly sacrifice hours upon hours in long commutes, spend tons on gas, and end up even further behind the 8-ball than when they started. As DCist notes, this could be solved by workforce housing and better public transportation, but the elephant in the room is still overpriced homes. Prices have to fall, not only for a sustainable future for the homebuying economy, but for the sake of maintaining lifestyles for people who may not want to give up their lives being stuck on the toll road. Read yourself some Kunstler and see if you're willing to make the change. Posted at 05:56 PM | TrackBack September 24, 2006 Hurricane Housing: Rita Amnesia
Today marks the one-year anniversary of "the forgotten hurricane," one which wreaked nearly as much damage as her big sister Katrina, and further crippled the Gulf Coast and much of Texas economically and socially. Much like Katrina, the post-Rita cleanup is proceeding faster in some places than others, and there's a great amount of politics and grandstanding involved in the recovery and rebuilding efforts. Many people are understandably angry over what they see as "Rita amnesia," that the damage and destruction from Rita have been overlooked in the political and media focus on Katrina. There is a lot of progress in the recovery, but it's slow and maddening. To me, it doesn't matter which hurricane did what to who. These people are Americans, and it's a crime that our fellow Americans are still suffering under the yoke of the damage wrought a year ago. We should--we must--do better. These people deserve more than to be cast aside as forgotten, and help for them is needed, no matter if it's Katrina or Rita on the check: Overall, Boustany said, the recovery is proceeding well, and local leadership and planning have played a key role in that progress. He said he believes people need to continue to fight “Rita amnesia” as recovery continues. “The further you get from an event, the more people tend to forget about what happened,” Boustany said. Indeed. Posted at 08:27 PM | TrackBack September 12, 2006 Buying And Selling: Tight Squeeze
An insider source in the real estate market sent me an Internet recently saying that their brokerage--based in D.C.--was seeing fewer units on the market and higher sales in August, indicating that they may have hit bottom, and there might be stabilization at current prices in the future. What was particularly interesting was that the "soft" markets listed were in formerly hot areas such as Loudon County, Virginia (recently given the duke as the richest county in America), and that the signs of growth were in neighboring areas such as Fairfax and Arlington Counties, which are still suffering bad cases of condo glut, so I've got a hard time reconciling the idea of a tighter market with all of those ugly developments under construction on practically every open plot of land in the Metro D.C. area. D.C., in particular is tough to use as a bellwether for real estate development, because the influx of government money and contracts drenched in filthy lucre will ensure the region is insulated from the worst of the bubble burst's repercussions. Still, I'll keep my eyes peeled and document the atrocities as they occur. Posted at 01:46 PM | TrackBack September 05, 2006 Buying & Selling: Slow Down
The Office of Federal Housing Enterprise Oversight released its 2nd-quarter Home Price Index Report, and the news is...interesting, to say the least. Among the findings: U.S. home prices continued to rise in the second quarter of this year but the Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina And so on. The report gauges highest price appreciation in Arizona (aka Bubble Market Central), and precipitous decreases in the Mid-Atlantic, heavy decreases in Michigan, and jumps in the Carolinas. All of this makes sense when you look back over the news of the past year. Real estate is going cheap in the Gulf Coast for specuvestors, commercial developers, and business. Michigan's economy is in the toilet. The Carolinas are still the tourist destination of choice for overprivileged East Coasters, even though their overall economic health sucks too. :) One overall point the report makes is that not only are areas with recently high appreciation rates suffering a sudden sharp deceleration, but that they've been suffering a continual slow deceleration since Spring 2005. I'll let the report take it from here: In many states, price appreciation rates have declined rather dramatically. Higher interest Looks like this bustout is going to be anything but soft, orderly, or moderated. More coverage from Reuters, MarketWatch, and The Business Journal. Posted at 07:52 PM | TrackBack August 29, 2006 Architecture & Design: Rebuilding The Gulf Coast
Of the many stories you will be hearing, seeing, and reading this week regarding Katrina and her destructive aftermath, one of the most heartbreaking--and yet hopeful--involves the shape of the rebuilding effort. I think it's fair to say that we haven't seen a need for this level of reconstruction in my lifetime. The scope of the project is almost too mindboggling to comprehend, and the stories being told are at times positive and depressing, and sometimes both. For example, in the focused media coverage on New Orleans, the damage to Mississippi has been glossed over or altogether forgotten, and as the Detroit Free Press reminds us, the Ole Miss is still suffering greatly under the yoke of bureaucracy, frustration, and despair. The state's economy is becoming almost wholly reliant on big-ticket casinos to bring in revenue, but at what price to its character, culture, and tradition? The expertise of architects and designers can be found all over the place in the rebuilding effort, as in the case of Thom Mayne and his maverick designs. Mayne's argument is a good one--play to the strengths of the city and rebuild its potential as an environmental and social landmark, rather than becoming yet another glitzy City-Walk style tourist trap for rich folks. But the devastation remains terrible, and the conspiracy of silence that falls over the rebuilding effort must be broken, particularly if that silence is due to a bored and ADD-addled media. The rebuilding will continue. The Gulf Coast will rise again. But it will take far longer, cost far more, and force many to endure heartbreak and frustration for years to come. There is no quick fix. We need to accept that, and not let this American tragedy slip from our minds. Our fellow Americans who suffered Katrina's wrath deserve no less. Posted at 02:21 PM | TrackBack August 28, 2006 Hurricane Housing: The Flood Gates
There's a new poll out that claims Americans are not at all sure we can handle another disaster. Of course, one of the major reasons the gov't response has been and continues to be so ineffectual is because FEMA got shrank from a full Cabinet agency and put in the hands of a man who thought horse grooming was key preparation for disaster management. Katrina tore away any preconceptions people have about the nature of race and class in this country. I still shudder to think of some of the horrific things I saw heard, said, and done. But that horror pales alongside the everyday dramas and trials people who survived the catastrophe have to deal with. It's important that we read the stories of people like the Forrest family, or the residents of Plaquemines Parish. Read these words, know these are Americans just like you and I, and do what you can to help. For these people, Katrina is not over, and will not be over for a long time to come. Posted at 12:19 PM | TrackBack August 23, 2006 Buying And Selling: The Good, The Bad, and The Ugly
Someday, if I'm still one of the mighty bubble blogerati, I'll be writing a post that starts with "Today's NAR report showed steady, stable appreciation in home prices in a solid market..." Today, unfortunately, is not that day: The National Association of Realtors reported Wednesday that sales of existing homes and condominiums dropped by 4.1 percent in July from June to a seasonally adjusted annual rate of 6.33 million. That was the lowest level since January 2004. The latest snapshot of housing activity was weaker than analysts anticipated. Economists were forecasting the pace of sales to fall to 6.55 million. The only thing more fragile than market data right now is David Lereah's reputation. How does this guy continue to get quoted without any sort of challenge or authentication of his opinions as fact? I do credit Jeannine Aversa with a little more snark in the article, at least. The Mortgage Bankers' Association reported another slight easing in mortgage rates, though as Calculated Risk noted, the stats look anemic in light of last year's performance. Still, rates are still tremendously low, and this might encourage shaky buyers to give it a whirl. Then again, if yesterday's portents of doom and gloom from the Fed are any indication, things may be getting much worse before they get much better: A Federal Reserve official's warning about a possible resumption of interest rate hikes rattled Wall Street on Tuesday, wiping out most of an early advance. The comments by Chicago Fed President Michael Moskow unnerved investors looking to revive last week's rally after having collected some profits Monday. Retailers and other sectors dependent on consumer spending were weak after Moskow said, "Some additional firming of policy may yet be necessary to bring inflation back into the comfort zone within a reasonable period of time." .....Do ya feel lucky? Well, do ya, punk? Posted at 02:44 PM | TrackBack August 22, 2006 Buying And Selling: Bad News Travels
"But...but...real estate prices always go up! David Lereah said so!" There's a lot of interesting information you can get from the news of Toll Brothers' third-quarter profit drop: "The housing market is getting weaker much faster than anybody expected," said Alex Barron, senior housing analyst with JMP Securities in San Francisco. "What's hurting Toll is just the fact that they build luxury homes. Luxury homes are very discretionary. People who want to live on the golf course, they can do so today or they can wait a year. There's no hurry." That doesn't seem to make sense, does it? If luxury homeowners have no difficulty waiting for a home, then why is Toll Bros' having so much trouble meeting expectations? Particularly if they only build homes when there are orders in the queue? Seems more like the people who Toll Bros. caters to are getting much more bearish and not as willing to commit to big-ticket purchases...or maybe Toll was relying far more on flippers to move product than they are willing to admit. Then you have the news that Lowe's is advertising bad tidings for the remainder of the year: But orders for new homes have slowed in recent periods and sales of existing houses are slowing from record levels, putting pressure on sales at Lowe's and larger rival, The Home Depot Inc. Increased gas prices have also affected business, Chief Executive Robert Niblock said. "Near-term pressures on the U.S. consumer have led to a more cautious outlook for the balance of the year," Niblock said in a prepared statement. With less discretionary spending due to maxed-out levels of consumer debt, stagnant wages, and a cooling housing market, the ripple effect is spreading beyond the realtors to the home improvement industry now. Then the contractors, then the builders, and on and on and on... Posted at 03:24 PM | TrackBack August 21, 2006 Buying And Selling: Upside Down Down Under
And now for the flipside of unusual spikes in trends, we have a distinct decline in Australian housing prices: A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market. A sharp-eyed fellow housing blogger tells me this is a bellwether for what will happen to American housing prices, and I can't disagree. All the fundamentals are in place--overextended families with too much consumption and too little savings, fluctuations in home prices caused by too much inventory, and the looming spectre of bankruptcy, foreclosure, and default due to the resetting of ARMs homedebtors can't afford. If nothing else, this is a grim-but-good reminder that things aren't necessarily better in other countries. More about this from Ben Jones and Housing Panic. Posted at 02:28 PM | TrackBack Moving & Relocation: Crime & The Cities
An interesting article from Reuters on increasing trends in violent crime in unexpected places: From Kansas City, Missouri, to Indianapolis, Indiana, places that rarely attract notice on annual FBI crime surveys are seeing significant increases in murder. Boston, once a model city in America's battle against gun violence, is poised to eclipse last year's homicide tally, which was the worst in a decade. One thing that doesn't get mentioned is how the areas with dramatic increases in crime tally up with increased housing prices and shifts in demographic movement. This is a total bulls$*t theory, but I wonder if crime is on the rise in areas with higher income demographics from home purchases. If people are moving to smaller cities to find affordable homes, and other cities are attracting wealthier folks who can afford to live downtown, this might explain the spike in crime. Criminals go where the money is, after all. It doesn't explain the increase in violent crime fully, but that could definitely be attributable to lack of resources to combat domestic crime, weakened gun laws, income disparity, etc. I don't think the spike in crime is attributable to any one thing, but a combination of many things, and income gaps created by patterns of home purchasing may be one of them. Posted at 02:05 PM | TrackBack August 17, 2006 Housing Market: Condomania
This morning I was bitching to a friend who lives in my building about the massive new "condo hotel" conversion going on behind us, keeping us awake at all hours, destroying our trees and sidewalks, and generally serving no purpose. Why, we wondered, were condo developers continuing to put down stakes on massive new high rises and conversions in such a bearish market as this? Who did they think would buy those units? Vinnie Tong from the AP sheds some light on this particular condo conundrum: Hotel-condo projects can be found in different stages of development in cities such as Berkeley, Calif.; Provo, Utah; Pittsburgh and Little Rock, Ark. And they've been proposed for towns as varied as Yankeetown, Fla.; Asheville, N.C.; and West Wendover, Nev. I think the key to the heavy investment spate lies more in the whole "spreading risk around" angle than it does anything relating to New Urbanism. Condo developers can be true shysters--get in, get the deposits, and break out again. The idea of passing on the risk and making a profit enables these folks to lure in citydwellers like the proverbial moths to the flame. I'd probably buy a condo before a home in the burbs, but I'd rent before buying a condo. It seems like it combines all the worst aspects of renting (lack of space, intrusive landlords, nosy neighbors) with owning (property taxes, assessments, hidden fees, HOAs, etc.). Your mileage, of course, may vary. Speaking of New Urbanism, I found a hysterical quote from a discussion at Planetizen that goes even further to explain the condomania: The New Urbanist allegory works because it connects to the complex concerns of middle- and upper-income Americans. They want to be near other people and to have new and different experiences, as long as the other people aren't scary and the experiences seem safe. That's why people who would never ride a bus or walk around on a crowded New York City street are willing to take a tram from the parking lot at Walt Disney World and spend their days in congested and car-free surroundings. I disagree with the guy's thesis, but that IS some funny shit. :) And doesn't that picture actually look like your typical sh%tbox development? I didn't choose the title of this entry for no reason, after all. :) Posted at 05:20 PM | TrackBack August 16, 2006 Buying And Selling: False Profits
And so it came to pass that the Lereah looked upon the land of the housing market and claimed it was good: WASHINGTON - The slowdown in the once-sizzling housing market is spreading, with 28 states and the District of Columbia reporting spring sales declines, led by big drops in former boom areas of Arizona, Florida and California....The Realtors report depicted a tale of two housing markets, with former boom areas experiencing declines and other areas of moderate sales gains during the boom years experiencing strong growth. Of course, those who've been reading Housing for a while know that this is the latest phase of the great leap inward, where exhausted families and exurbanites flee the cities for cheaper homes deep inland, thus pushing those prices up and giving homebuilders a reason to move all that excess inventory. Meanwhile, the cities attract the super-rich, childless, and anyone else with lots of disposable income. Naturally, true housing bubble blogerati do not tolerate the lies of false idols like the Lereah, and so they have crafted some truly wicked punishments for his perfidy: Make him purchase a new-construction condo in South Florida, or a far exurban new Southern California cookie cutter new home for full price, using an an option mortgage with significant pre-pay penalties. And, the condo or house must have a hefty HOA. The punishment fits the crime. Verily, their verdict is vengeance. Posted at 12:03 AM | TrackBack August 14, 2006 Hurricane Housing: FEMA's Stupidity Vortex
Just when I thought FEMA had reached their event horizon of ignorance--the point where they could not possibly get any dumber or more incompetent--they go and surprise me again: WASHINGTON - FEMA will replace locks on as many as 118,000 trailers used by Gulf Coast hurricane victims after discovering that the same key could open multiple mobile homes, the agency said Monday. Some keys could open as many as 50 different locks — causing a security risk in heavily populated trailer parks in Louisiana and Mississippi. Was no one paying attention when these trailers were manufactured or rolled out? Didn't anyone think to check for this sort of thing? Mind you, the sad part is that if you're holed up in FEMAville for the duration, you probably don't have anything worth stealing, but that's not the point. I guess I'm not being entirely fair to FEMA, for as Frank James points out, they probably just assumed they would work, as we all would, but "assuming" is not an acceptable course of action when you're put in the business of protecting people's lives. Posted at 10:21 PM | TrackBack August 11, 2006 Friday Housing News: Katrina, One Year Later
It's coming up on one year since I've been putting fingers to keyboard on behalf of the mighty Housing.Com. While this would normally be a cause for celebration and recognition of achievement, but it's much more somber for me, personally. Not long after I started blogging here, what seemed to be an ordinary hurricane soon blossomed into the worst natural disaster in American history. I know people would like to forget about it, but it's not that easy. The survivors are still struggling with the remains of their broken lives. The opportunities to rebuild are few and far between. The scumbags who couldn't get the evacuation and emergency services right the first time are profiting from their incompetence. And the resources people desperately need are being buried under mountains of red tape and stupidity. I could go on, but it is truly said that pictures are worth a thousand words:
(Some images used courtesy of National Geographic. No challenge to copyright intended.) Posted at 06:10 PM | TrackBack |
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