Sorry, but I'm NOT buying the r.e. proclaimed, "It's a buyers' market" rhetoric! This is just one more sales tool to entice buyers back to the table. Attractive homes I've looked at are up 50% in the last two 2 years alone, & now they're being offered at a 5% reduction from a meteor high price based on one nearby comp home sale (to a no-money down option-arm buyer). This is hardly a buyer's market, YET. The buyers market will start when sellers get scared, real scared. I'd like to see EVERY potential buyer first ask, what's happened in 3 years to warrent me paying an ADDITIONAL 50% (or even 10%) for this house? If that 50% is $300,000, what's that come to with interest? For what? What really happened is "THE FRENZY's OVER". Now the second question becomes, do I want to live here for the next ten years, because it's unlikely in a few years they'll be anyone left to by that house from you.
The ten year yield's quickly given back 15 basis points, that's going to give us another week of mtg. rates that are too low for the associated risk. And the game goes on.
Somewhat OT -- I suggest starting a thread on the CME Housing Futures that will begin trading tomorrow. CME Group - Home These instruments are based on the Case Shiller indexes that track same house sales and should avoid the inaccuracies of the median price metric. Unfortunately, the indexes have a two month time lag the price for accurate data. Futures contracts will be available out one year. I think these instruments may have an interesting knock-on effect in terms of price discovery for the real estate market. Who will want to offers todays price for a house when a publicly listed one year out futures contract indicates a price decline of, say, 10%. It will be interesting to see how much backwardation there is the contracts, well see next week.
Hmm, what? 6% commissions are standard in the Pacific Northwest and washer/dryers come with the house, certainly they did with my condo. That neither of these were true in Las Vegas suggests that that market was pure speculation to begin with, if you are going to flip the unit in a couple of months why bother having a washer installed.
I have said it before: exposure varies. A lot. I would not take any story out of Las Vegas or Phoenix as meaning anything other than a bunch of speculators simply made the wrong bet on where to invest the hot money. Now articles about more mature high end markets (SF or LA) carry some weight, but corrections in Go Go markets mean much less.
Appliances are a selling point. Unless your buyer is a couple thousand miles away and couldn't care less about the laminate and the exact view of the golf course.
I looked at the real estate section for my neighborhood to see if there appears to be any real drop in prices, and I don't think so. I'm with Bailey here; it's going to be a while before we have a genuine "buyer's market." I know I'd be loathe to give up any increased value in my house if I were a seller ... but who can afford to buy at these prices? The state median may be $325,000, but the Boston area median is closer to $400,000 to $500,000.
Bruce Webb, apparently you missed the significance of the phrase before "6%" - BUILDERS ARE OFFERING these commissions to realtors. In my neck of the woods (vicinity Chattanooga) where building's not so extreme, a lot of builders don't sell through realtors, and those that do allow realtors a piece of the pie only give them 2-3 percent. Again 'around here', the argument is that under normal circumstances there are really two realtors splitting the commission (6-8% depending on realtor), so offering less is really only offering the realtor his/her "normal" share.
So if the builders around here start offering realtors 6% commissions, they're doubling the realtor share.
Danielle DiMartino 5/22/06 Dallas Morning News comes pretty close to the problem: "the root cause of the housing bubble the credit binge." She explains,
"Only 1 of 53 banks surveyed by the Fed thru April said it tightened lending standards. About 10% had gumption to loosen standards further."
Today, DiMartino shares BB's caution to his lenders: "We are not saying you shouldn't make these loans. What we are saying is that they need to be done the right way."
So, only 1 in 53 has tightened mtg. lending policy while 5 in 53 have actually loosened it, inventories & foreclosures are rising fast, and arm resets are about to kick in big-time. And, BB sees no urgency to do more than issue another round of "cautions" to his banks. It's pretty obvious the Fed's not worried about housing - YET.
Sorry, but I'm NOT buying the r.e. proclaimed, "It's a buyers' market" rhetoric! This is just one more sales tool to entice buyers back to the table. Attractive homes I've looked at are up 50% in the last two 2 years alone, & now they're being offered at a 5% reduction from a meteor high price based on one nearby comp home sale (to a no-money down option-arm buyer). This is hardly a buyer's market, YET. The buyers market will start when sellers get scared, real scared. I'd like to see EVERY potential buyer first ask, what's happened in 3 years to warrent me paying an ADDITIONAL 50% (or even 10%) for this house? If that 50% is $300,000, what's that come to with interest? For what? What really happened is "THE FRENZY's OVER". Now the second question becomes, do I want to live here for the next ten years, because it's unlikely in a few years they'll be anyone left to by that house from you.
The ten year yield's quickly given back 15 basis points, that's going to give us another week of mtg. rates that are too low for the associated risk. And the game goes on.
Somewhat OT -- I suggest starting a thread on the CME Housing Futures that will begin trading tomorrow. CME Group - Home These instruments are based on the Case Shiller indexes that track same house sales and should avoid the inaccuracies of the median price metric. Unfortunately, the indexes have a two month time lag the price for accurate data. Futures contracts will be available out one year. I think these instruments may have an interesting knock-on effect in terms of price discovery for the real estate market. Who will want to offers todays price for a house when a publicly listed one year out futures contract indicates a price decline of, say, 10%. It will be interesting to see how much backwardation there is the contracts, well see next week.
pclema
bailey, I wouldn't buy at these prices - so I agree - its not really a "Buyer's market"!
pclema - good idea! And it will be interesting to see the contract prices.
Best to all.
Hmm, what? 6% commissions are standard in the Pacific Northwest and washer/dryers come with the house, certainly they did with my condo. That neither of these were true in Las Vegas suggests that that market was pure speculation to begin with, if you are going to flip the unit in a couple of months why bother having a washer installed.
I have said it before: exposure varies. A lot. I would not take any story out of Las Vegas or Phoenix as meaning anything other than a bunch of speculators simply made the wrong bet on where to invest the hot money. Now articles about more mature high end markets (SF or LA) carry some weight, but corrections in Go Go markets mean much less.
Appliances are a selling point. Unless your buyer is a couple thousand miles away and couldn't care less about the laminate and the exact view of the golf course.
The Boston Globe says high house prices are starting to act as a drag on the MA state economy: Home costs are called a drag on state growth - The Boston Globe
I looked at the real estate section for my neighborhood to see if there appears to be any real drop in prices, and I don't think so. I'm with Bailey here; it's going to be a while before we have a genuine "buyer's market." I know I'd be loathe to give up any increased value in my house if I were a seller ... but who can afford to buy at these prices? The state median may be $325,000, but the Boston area median is closer to $400,000 to $500,000.
Bruce Webb, apparently you missed the significance of the phrase before "6%" - BUILDERS ARE OFFERING these commissions to realtors. In my neck of the woods (vicinity Chattanooga) where building's not so extreme, a lot of builders don't sell through realtors, and those that do allow realtors a piece of the pie only give them 2-3 percent. Again 'around here', the argument is that under normal circumstances there are really two realtors splitting the commission (6-8% depending on realtor), so offering less is really only offering the realtor his/her "normal" share.
So if the builders around here start offering realtors 6% commissions, they're doubling the realtor share.
Danielle DiMartino 5/22/06 Dallas Morning News comes pretty close to the problem: "the root cause of the housing bubble the credit binge." She explains,
"Only 1 of 53 banks surveyed by the Fed thru April said it tightened lending standards. About 10% had gumption to loosen standards further."
Today, DiMartino shares BB's caution to his lenders: "We are not saying you shouldn't make these loans. What we are saying is that they need to be done the right way."
So, only 1 in 53 has tightened mtg. lending policy while 5 in 53 have actually loosened it, inventories & foreclosures are rising fast, and arm resets are about to kick in big-time. And, BB sees no urgency to do more than issue another round of "cautions" to his banks. It's pretty obvious the Fed's not worried about housing - YET.
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