Keepin' It Real Estate: The Sellers Are Coming - Be Very Afraid
By Andrew Jeffery May 21, 2009 2:10 pm
Getting to the "bottom" of the housing market.
Chances are, at some point in the past 3 years, you’ve heard that nagging voice in the back of your head - the one that whispered, “sell, sell, sell.” You watched as prices tumbled and buyers evaporated like morning dew. But then you opened the paper, and there, in plain black ink, you saw that virtually everyone in both mainstream and financial media called this the worst time to sell a house in over 80 years.
What’s a seller to do?
The days of holding are past. The time to sell is upon us.
After a seemingly endless cascade of truly horrific news out of the US housing market, the last few months of quasi-positive data have proven to be a much-needed respite from the storm. Sales activity is up, price declines are moderating, and confidence appears to be returning to the market. That ever-elusive bottom in housing, despite being widely misunderstood by the vast majority of commentators, could finally be upon us.
Imagine you own a home. What would you do?
It’s only logical that given (perceived) renewed strength in the housing market -- driven by lower prices, rock-bottom interest rates and generous tax rebates -- buyers are wading back into the fray.
Of course, conventional wisdom says it's indeed a great time to buy. The National Association of Realtors, that cheerleading mouthpiece and chief lobbyist for commission-hungry real-estate professionals everywhere, concurs. The National Association of Homebuilders -- a group representing the likes of Toll Brothers (TOL), whose CEO, Robert Toll, and his brother Bruce pocketed more than $770 million during the boom -- says we’re experiencing “some of the best home-buying conditions of a lifetime.”
After years of abysmal conditions in which to sell a home, finally, there’s some demand and confidence returning to the market, they tell us. Willing and able buyers are pouring back into the market. And as they do, sellers -- buoyed by newfound confidence -- are prepping their homes for the market. Washington, the media, and indeed, the financial markets are focusing on the demand side of the housing equation. Meanwhile, back on Main Street, far away from contrived efforts to prop up the housing market with spin, the sellers are coming.
What comes next won't be pretty.
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Reply
2009-05-21 14:18:01
You may be right...
...but how about some data to back up your point rather than just vague speculation?
2009-05-21 14:45:44
data
You can see it in their eye. That is all you'll ever get. That why a free-market is king.
I was trying to go thru the refinance process yesteday, and the guy made a comment like "gov money is the only game in town". Now that might sound normal to those more experienced in mortgages and loans origination, but it cut to why there are no buyers.
There are no buyers because there aren't enough savers. Thus the financing has to come from the gov (maybe thru their zombie banks); but that means that the money isn't real it is created by the gov.
There will be no bottom until there are real savers of $; not just entities that can create $. What is a price of a house/business when no real people can buy it with just savings.
It is a long road ahead, but the truth hurts. I know. Or I speculate that I know.
I was trying to go thru the refinance process yesteday, and the guy made a comment like "gov money is the only game in town". Now that might sound normal to those more experienced in mortgages and loans origination, but it cut to why there are no buyers.
There are no buyers because there aren't enough savers. Thus the financing has to come from the gov (maybe thru their zombie banks); but that means that the money isn't real it is created by the gov.
There will be no bottom until there are real savers of $; not just entities that can create $. What is a price of a house/business when no real people can buy it with just savings.
It is a long road ahead, but the truth hurts. I know. Or I speculate that I know.
2009-05-21 14:56:20
You may be right...
Good point.
Perhaps polling real estate agencies and totaling all the contracts for the past 4 years that expired without a sale. Add to that their estimate of how many people didn't even try to sell their house because of market conditions.
Would you trust them to report anything (or accurately). I think most people's gut would predict a lot of sellers -- hard to imagine a flood of buyers to match. Folks still being foreclosed won't be in line to purchase any time soon - nor those losing jobs at a rate of 600,000 / month.
Pent-up supply greater than pent-up demand for a long time to come. Of course every time is a great time to buy if you ask a home builder or real estate agent.
Perhaps polling real estate agencies and totaling all the contracts for the past 4 years that expired without a sale. Add to that their estimate of how many people didn't even try to sell their house because of market conditions.
Would you trust them to report anything (or accurately). I think most people's gut would predict a lot of sellers -- hard to imagine a flood of buyers to match. Folks still being foreclosed won't be in line to purchase any time soon - nor those losing jobs at a rate of 600,000 / month.
Pent-up supply greater than pent-up demand for a long time to come. Of course every time is a great time to buy if you ask a home builder or real estate agent.
2009-05-21 17:27:38
Mortgage brokers have recently figured out how to take advantage of the new government real estate money. Speculators are beginning to pick up inventory, cleaning it up, finding a buyer (with a decent credit score) and moving it out. Of course, this may just mean that FNMA, etc. end up with additional toxic paper. Troubling.
2009-05-21 18:56:16
oh, yes...
...very nicely done ending:
"Washington, the media, and indeed, the financial markets are focusing on the demand side of the housing equation. Meanwhile, back on Main Street, far away from contrived efforts to prop up the housing market with spin, the sellers are coming...
What comes next won't be pretty...."
backing-you-up-data is avail on calculated risk (among other places and sites) :
http://www.calculatedriskblog.com/
look for the post entitled:
California Bay Area Home Sales: "Robust" and "Anemic" - [excerpt: "...Foreclosure resales accounted for 47.4 percent of all resales last month...."]
ie, if the sellers don't pay heed to what drove the above record sales (low prices on low end models), i think you may be right, it "...won't be pretty."
thanks!
"Washington, the media, and indeed, the financial markets are focusing on the demand side of the housing equation. Meanwhile, back on Main Street, far away from contrived efforts to prop up the housing market with spin, the sellers are coming...
What comes next won't be pretty...."
backing-you-up-data is avail on calculated risk (among other places and sites) :
http://www.calculatedriskblog.com/
look for the post entitled:
California Bay Area Home Sales: "Robust" and "Anemic" - [excerpt: "...Foreclosure resales accounted for 47.4 percent of all resales last month...."]
ie, if the sellers don't pay heed to what drove the above record sales (low prices on low end models), i think you may be right, it "...won't be pretty."
thanks!
2009-05-21 20:14:56
You may be right...
here are some numbers
1. foreclosure notices are at all time highs and continue very strong
2. banks are withholding notices per TARP
3. multiple bids are coming in on AGGRESSIVELY PRICED HOMES FROM BANKS
4. Low end homes are selling quickly - my friend has 10 in escrow and it's been 2 years
5. High end homes are lingering on the market since there is still no financing
6. bankruptcy is growing at a steady 50% annually
7. unemployment is at 16% and rising per the govt report
any questions????
oh, no closing on time as banks are dragging their feet - usually around 10 additional days
I know of a sale which if done will cascade to 2 more sales, however if the bitc*y agent doesn't watch it, we'll cancel and ruin her summer plans
1. foreclosure notices are at all time highs and continue very strong
2. banks are withholding notices per TARP
3. multiple bids are coming in on AGGRESSIVELY PRICED HOMES FROM BANKS
4. Low end homes are selling quickly - my friend has 10 in escrow and it's been 2 years
5. High end homes are lingering on the market since there is still no financing
6. bankruptcy is growing at a steady 50% annually
7. unemployment is at 16% and rising per the govt report
any questions????
oh, no closing on time as banks are dragging their feet - usually around 10 additional days
I know of a sale which if done will cascade to 2 more sales, however if the bitc*y agent doesn't watch it, we'll cancel and ruin her summer plans
2009-05-21 20:18:31
owner carry
I have ventured where no others do
I offer owner carryback on my property
I add the value, get a decent down and offer easy financing
Once I have a note, I take the down money to pay back the credit line
walla!!!
I also make one offer with no counters for my CASH
Sorry banks - the offer made is my best and final
Any questions????
I offer owner carryback on my property
I add the value, get a decent down and offer easy financing
Once I have a note, I take the down money to pay back the credit line
walla!!!
I also make one offer with no counters for my CASH
Sorry banks - the offer made is my best and final
Any questions????
2009-05-21 21:47:09
owner carry
Hi Fred,
When I first got into real estate, back in 1965, there were a couple of guys who bought, for cash, cheap, financed their way out with a new first, soldrty, and carried back a second for their profit. They had over a million dollars in seconds when I knew them - and that was real money then. I don't think they ever lost much on their seconds. Sometimes they had to take a property back and re-sell it. But then income property sold between 5 and 8 times gross.
A retired urologist friend of mine recently called wondering if he should buy a fourplex where he would say he was going to live in the property. The fourplex had been purchased by a couple of real estate dealers who needed the urologist because he didn't already own a house, had an excellent credit score, a good income, etc. The idea was they would all divvie up the more than $300,000 profit to be obtained from the new Fannie/Freddie? financiong. I advised him not to do it, because it was unethical and that he probably wouldn't be very happy if these dealers at some point were deposed by government lawyers and began to tell all. Incidentally, the plan was for them to all walk away from the property after six months, or so.
My instinct is that a good bit of this kind of thing is getting hatched right now.
When I first got into real estate, back in 1965, there were a couple of guys who bought, for cash, cheap, financed their way out with a new first, soldrty, and carried back a second for their profit. They had over a million dollars in seconds when I knew them - and that was real money then. I don't think they ever lost much on their seconds. Sometimes they had to take a property back and re-sell it. But then income property sold between 5 and 8 times gross.
A retired urologist friend of mine recently called wondering if he should buy a fourplex where he would say he was going to live in the property. The fourplex had been purchased by a couple of real estate dealers who needed the urologist because he didn't already own a house, had an excellent credit score, a good income, etc. The idea was they would all divvie up the more than $300,000 profit to be obtained from the new Fannie/Freddie? financiong. I advised him not to do it, because it was unethical and that he probably wouldn't be very happy if these dealers at some point were deposed by government lawyers and began to tell all. Incidentally, the plan was for them to all walk away from the property after six months, or so.
My instinct is that a good bit of this kind of thing is getting hatched right now.
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