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Homes Sales Worse Than Anticipated

triciae
16 years ago

Well, this just isn't good news at all. But, I guess it's not something that surprises any of us here...doesn't say anything that anecdotically we don't already know.

Drop in U.S. Home Sales, Prices Likely to Accelerate (Update3)

By Kathleen M. Howley

June 6 (Bloomberg) -- U.S. home sales and price declines in 2007 are going to be steeper than earlier forecast, slowing economic growth, the National Association of Realtors said.

Sales of previously owned homes probably will tumble 4.6 percent to 6.18 million and the U.S. median home price likely will fall 1.3 percent to $219,100, the Chicago-based trade group said in a report today. A month ago, the association said it expected 2007 home sales to decline 2.9 percent and home prices to slide 1 percent in the first price drop on record.

A 14-year high in the number of homes for sale in April is sapping consumer confidence during a time of year that traditionally is the strongest for real estate purchases, said Lawrence Yun, an economist for the trade group. The ``sluggish'' spring market will help to shave more than a percentage point off U.S. economic growth in 2007, he said.

``People are looking, but they're not buying,'' Yun said in an interview. Real estate agents report ``an increase in traffic at open houses, but people are taking their time because inventory is so plentiful.''

Sales of new houses probably will drop 18 percent this year, matching last year's decline, the association said in the forecast. Builders probably will sell 860,000 houses, down from 1.05 million last year. In 2005, a record 1.28 million new houses were sold.

Housing Inventory

New-home inventory dropped to 6.5 months in April, the lowest of 2007, after reaching a 16-year high of 8.1 months in March, the Commerce Department said in a May 24 report. Sales of new houses account for about 15 percent of residential real estate transactions.

The inventory of existing homes for sale in April, measured by the estimated time it would take to sell them all, was 8.4 months. That was the highest since August 1992 when it was 8.6 months, Yun said.

Home resales probably will grow to 6.41 million next year, and new-home sales likely will increase to 901,000, the real estate trade group said. The current quarter probably will be the bottom for the existing home market, while new-home sales likely will trough in the fourth quarter, according to the report.

The U.S. economy probably will expand at a 2 percent pace this year, compared with 3.3 percent in 2006, Yun said. Unemployment probably will match last year's rate, at 4.6 percent, according to the forecast.

``Because of reductions in home sales and new home construction, the economy will expand at a subpar pace in 2007,'' the report said.

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net .

Last Updated: June 6, 2007 13:05 EDT

Staglation is, IMO, already upon us. As Americans, we forget to take into account commodity demand in other countries thinking the world's economy runs on American spending. Today, China is rapidly catching up. They are sucking up many raw commodities keeping demand high so we have inflation even though we've got sinking demand at home.

If I were a buyer under no time restraints, I'd hold off until spring '08 & take a look. With inventory this high, I disagree with NRA that prices will bottom this quarter.

Tricia

Comments (46)

  • triciae
    Original Author
    16 years ago
    last modified: 9 years ago

    Duh, that should be "stagflation" & not "staglation".

    /T

  • berniek
    16 years ago
    last modified: 9 years ago

    NRA - National Rifle Assoc.
    Don't you hate it when you can't edit?
    Might be interesting to compare notes end of this year using these figures.

    Here is a link that might be useful: NAR U.S. Economic Outlook June 2007

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  • triciae
    Original Author
    16 years ago
    last modified: 9 years ago

    Ahhh, sheeesh...lol

    Yes, I hate that we don't have an edit function. Whattsup with that, anyway? We're supposed to be the largest community on the web. Didn't NBC buys us a few months back? They're in the dulldrums...bigger problems than an edit button for GardenWeb, I guess.

    Tricia

  • chisue
    16 years ago
    last modified: 9 years ago

    Just about everyone is saying the real estate turn around won't happen until 18 mos. from now. Builders are selling inventory (after reducing prices as much as 36% -- development 40 miles outside Phoenix).

    The ARMs that were new in 2006 won't be finished readjusting upward for many months. Foreclosure rates are up and people who used to "qualify" for those zero money down, etc. mortgages don't qualify anymore. There's a glut of houses on the market, new and old, in most of the USA.

    Much to the dismay of the stock market bulls, the Feds are not looking at lowering rates -- maybe standing pat, maybe evern RAISING them.

    If I HAD to sell NOW, I'd try to get ahead of the curve with a big price reduction. The market will take you there eventually, anyway, (and maybe even lower) so why not take what you can now.

    If I didn't NEED to buy now, I'd wait and see. (Just like I think Tricia can get her Mystic house for less if she waits a bit! What WERE they thinking, calling an auction and putting the floor at what it was listed at??? Bank want to count noses to see who showed up to bid? Found money for the auction operation.)

  • skagit_goat_man_
    16 years ago
    last modified: 9 years ago

    We keep hearing about the market falling but in the Seattle and surrounding areas the prices keep rising by about 5%/yr. Before you list low be sure that your area really has a problem. Tom

  • infodivamary3
    16 years ago
    last modified: 9 years ago

    Don't be quite so smug about Seattle...an article in the Wall Street Journal says that unsold listings are on the rise there, too.

    The basic rule of economics is that price always follows volume--so the price declines will hit Seattle, too, soon enough.

  • marys1000
    16 years ago
    last modified: 9 years ago

    I'm not sure how to go about checking out the rental market but that's where I'm headed. My 90 listing expires August 9th. I am leaving for my new location next week! I do not want to /can't afford to pay a mortgage and rent. If I can rent for a year I will. We will try a price reduction soon - but I'd rather gamle on renting IF I can find a renter (even that is apprently a bad market) than give my house away.

  • skagit_goat_man_
    16 years ago
    last modified: 9 years ago

    Mary, there was just a news story on the radio about the Seattle real estate market. You're right, there's a record # homes on the market. But they keep turning over and the average home value has continued to increase. It's now $469,000. I think that there are 85,000 new people moving to King County (Seattle's County) every year. Can this keep up forever? No, but the realtors are doing well right now. I don't live in Seattle but about 60 miles NW on Whidbey Island. Tom

  • marys1000
    16 years ago
    last modified: 9 years ago

    Gee - I never seem to see Nebraska real estate in news. LOL! The middle of the country never gets any attention. I know there's a ton of inventory, new construction and existing. Other than that I don't know.

  • azmom
    16 years ago
    last modified: 9 years ago

    Anyone knows about the San Francisco housing market?

    A nephew has been saving to buy his first place within the city limit in order to avoid miserable commuting. His realtor told him that the housing market is still hot and he should buy his first place ASAP.

    With the $700K price tag for a starter, it is hard to imagine how the market can sustain like this.

  • try_99
    16 years ago
    last modified: 9 years ago

    Posted by azmom (My Page) on Sat, Jun 9, 07 at 10:20

    Anyone knows about the San Francisco housing market?

    A nephew has been saving to buy his first place within the city limit in order to avoid miserable commuting. His realtor told him that the housing market is still hot and he should buy his first place ASAP.

    With the $700K price tag for a starter, it is hard to imagine how the market can sustain like this.

    If his realtor is so confident about the california market and thinks that it will continue to go up then may be (s)he should buy few properties for investment right now. I am sorry but all the news I have heard or read suggest otherwise. I think it is time to say good bye to that realtor.Saving is always a good thing and if the starter price tag is 700K even I would be nervous...I just can't imaging how much your salary has to be to afford a 700k house with 30 year fixed ....he is doing a right thing by waiting.

    This blog is dominated by californians and majority are like him, saving and waiting on the sidelines. He may find some useful loal information there.

  • C Marlin
    16 years ago
    last modified: 9 years ago

    I am a Californian that sold a house end of 2006 for a 50% increase in three years, just closed on a sale of another this week for more than a $100k than I bought for two years ago at the top of the market.
    I am confident about the market, I also closed on a purchase a few weeks ago for an investment property. I would not recommend savings accounts for the small income they provide, unless one cannot afford a mortgage payment.
    San Francisco is a very small market, limited properties will keep the market up. Employment is good, income is high in San Francisco, $700k is not a lot of money in San Francisco.
    try_99, maybe the realtor is heeding his own advice and is buying investment properties. I am not a realtor, but I think it is good advice.

  • C Marlin
    16 years ago
    last modified: 9 years ago

    Oh, I should add, not any house is a good purchase or investment.
    But, a wise purchase, quality construction, good floor plan, good location, etc, will pay a good return.

  • try_99
    16 years ago
    last modified: 9 years ago

    Posted by cmarlin20 (My Page) on Sat, Jun 9, 07 at 16:23

    I am a Californian that sold a house end of 2006 for a 50% increase in three years, just closed on a sale of another this week for more than a $100k than I bought for two years ago at the top of the market.
    I am confident about the market, I also closed on a purchase a few weeks ago for an investment property. I would not recommend savings accounts for the small income they provide, unless one cannot afford a mortgage payment.
    San Francisco is a very small market, limited properties will keep the market up. Employment is good, income is high in San Francisco, $700k is not a lot of money in San Francisco.
    try_99, maybe the realtor is heeding his own advice and is buying investment properties. I am not a realtor, but I think it is good advice.

    I hope you are joking. 700k is a LOT of money no matter where you are in US. On top of that the buyer is a first time buyer considering it as a starter home.

    Just did some rough calculations on the back of the envelope with conservative tax and insurance estimates...for a 30 year fix with 20% down with the assumption of 30% of your income goes towards the mortgage..you have to earn atleast 190K annualy...WOW!

  • triciae
    Original Author
    16 years ago
    last modified: 9 years ago

    This is from the California Building Industry Association's webpage, February 16, 2005...

    "A recent survey conducted by the Public Policy Institute of California found that 77 percent of Californians are concerned that the cost of housing will prevent the younger generation in their family from buying a home in their part of the state. One in three says it places a financial strain on their households today. And despite rising home equity, only 23 percent say it's very likely that they could find a new home in their area that they could afford.

    As a result, one in every four Californians says the cost of housing in their part of the region is forcing them to seriously consider moving - to another part of the state or away from California altogether."

    Based on the above, it would seem that many people in California believe $700K is a LOT of money.

    This is from Wikipedia:

    "Connecticut is the richest state in the United States of America, with a per capita income of $28,766 (2000) and a personal per capita income of $43,173 (2003). Its median household income is $53,935 (2000), ranked second in the country, and its median family income is $65,521 (2000), the highest in the country. The median value of an owner-occupied housing unit is $166,900 (2000), ranked sixth in the country.

    Stereotyped as a bedroom community of New York City, home to the wealthiest of the upper class, and a haven for the preppy lifestyle, Fairfield County is the fifth richest county in America, best known for its "Gold Coast", one of the richest areas of the nation if not the world; the nine towns that comprise the "Gold Coast" have a median household income of $155,655, almost four times higher than the American national average. Rowayton, a village in the urban city of Norwalk, has the highest per capita income in the county, and the state as well. The average household income is more than $255,000. The New York Post has dubbed the southwestern "Connecti-Cash" panhandle the "epicenter of American wealth." With their close proximity to New York City, these communities, most notably Greenwich, are what make Connecticut famous for its wealth and prestige."

    CALIFORNIA RANKS #14.

    This is from one of those Cost of Living Calculators:

    "To maintain the same standard of living, your salary of $150,000 in Stamford-Norwalk, Connecticut should increase to $204,636 in San Francisco, California

    Stated another way, it's 36.4% more expensive to live in San Francisco, California than Stamford-Norwalk, Connecticut."

    The housing part of the cost of living breakdown between CT & San Francisco is 191.8% of national mean for CT & 348.6% for San Francisco.

    If the people of CT, as the wealthiest people in America, would need to make 36% more to live in CA...something is very wrong in CA.

    Based on this, I find it very difficult to believe that $700K is not a lot of money even in San Francisco. Maybe, it's not to you but it might be possible that you are not representative of the average. IMO, it's a bit demeaning to many hard working Americans to say that $700K does not represent a lot of money to the people of San Francisco.

    Tricia

  • patty_cakes
    16 years ago
    last modified: 9 years ago

    I'm probably in the minority, but i'm going to throw caution to the wind(the one always mentioned at the end of triciaae's posts)and ignore the naysayers, and will be listing ASAP. Most things in life are a gamble~getting maried(/will it work?, having a baby/will I make a good parent?, buying a new care/will I change my mind? What's happened to the 'sheer pleasure' of positive thinking?

    Whether the market is certain or uncertain, there's only one neccessity, ONE buyer. And another thing, I live in CA, and $700K IS a lot of bucks. Especially when you're not *really* getting your moneys worth as in other states. ;o)

    patty_cakes

  • C Marlin
    16 years ago
    last modified: 9 years ago

    I find it very difficult to believe that $700K is not a lot of money even in San Francisco. Maybe, it's not to you but it might be possible that you are not representative of the average. IMO, it's a bit demeaning to many hard working Americans to say that $700K does not represent a lot of money to the people of San Francisco.
    I did not mean that $700k is not much money, I meant that $700k is not an outrageous purchase price in San Francisco. The median home price is $790k, so the nephew would be paying under that. Yes, it is a lot to pay for a house, but that is the market price, my point is, I don't believe that market will drop much if any, therefore it may not be smart to wait it out. I have no idea the individuals income, but I do know many people there do earn high salaries. Many people do earn $190k or more, yes that is a lot of income, to me also, I earn nothing, I don't even work.
    I'm sorry if my point was interpreted to say that $700k is not a lot of money to hard working Americans, that is not my intent.
    People do pay $700k or more for their first home, it is not for me to judge an individual's choice to do that.
    Only saying San Francisco is an expensive city, obviously people do have the money and the desire to pay the price or the market would drop.
    patty_cakes, how do you determine what a $700k house is worth?
    Our marketplace does determine that in every state. It appears that land value is higher in CA, therefore, you get less for you money in CA, but it is probably worth it to most Californians, or they will leave the state as others already have.
    Ask people in San Francisco, most of them would not live anywhere else.

  • berniek
    16 years ago
    last modified: 9 years ago

    Many people on this board don't seem to understand that $700k in certain markets is not much money for a SFR home. Welcome to the real world of real estate.
    How many vacant acres are there in SF to develop? Why do so many people don't care what the cost is to live there? Why do so many people want to live there? If you don't understand why that is, you don't know SF.

  • triciae
    Original Author
    16 years ago
    last modified: 9 years ago

    Well, I'm a native Californian. I'm aware of the usual array of excuses why CA real estate is so expensive. I also know that $700K is still a LOT of money of MOST Americans. I'm not quibbling with whether the price point is common or not for a starter home. My complaint is in the inference that $700K is pocket change to the people of San Francisco. It's not. Many people in San Francisco are "house poor" & the city has a high rate of creative financing to even get folks into a house. Neither are signs of a sustainable housing market.

    /T

  • eal51
    16 years ago
    last modified: 9 years ago

    Well, I'm a CT resident for 34 years now. Originally from the great tax state of NY. So here's my take on "homes sales."

    Despite what some of the "experts" say, we have seen this before. The mid 80's brought a price boom in CT with house prices doubling or more in a three to four year period. I didn't complain, my house doubled in value. Then the market went stagnant until the mid 90's. This was the typical "correction period" after a growth period. In economics, it's called the law of supply and demand. Low supply - high prices: high supply - lower prices.

    Real estate prices increased until last year. No big surprise here. The slow down was predicted in 2004. Now we're in a correction period again. Mortage rates are above the 6% marker, but not by much. Rates will drop below the 6% mark and sales will pick up. It could be another year before that happens. The built up inventory will disappear.

    We sold in 04 with a nice healthy profit and bought a house that needs some serious TLC. We purchased the house well below market value because of no curb appeal and no proper care and maintenance of the house. My house, in a "bad" market, has increased in value.

    And for those in Frisco, your $700K starter home price will buy you a beautiful 4 bedroom, 3 bath colonial in northern Fairfield County. And you will probably have 2 to 5 acres of land to go with it. Just like the one we own now.

    And to all those pushing the panic button on real estate prices, take a "chill pill." We are in a normal housing cycle. And as usual, the "experts" have great tendency to eliminate relevent historical data. It doesn't make good copy for them.

    Enjoy the journey.

    eal51 in western CT

  • marys1000
    16 years ago
    last modified: 9 years ago

    Eal51 - sounds like you have been in one general area for a long time where you get to decide when to move to play the market. Your advice to
    And to all those pushing the panic button on real estate prices, take a "chill pill."

    Is pretty hard for those of who have to move around due to our professions. Buying high and selling low is both beyond are control and hard not to get upset about.

  • C Marlin
    16 years ago
    last modified: 9 years ago

    Well, I'm a native Californian. I'm aware of the usual array of excuses why CA real estate is so expensive. I also know that $700K is still a LOT of money of MOST Americans. I'm not quibbling with whether the price point is common or not for a starter home. My complaint is in the inference that $700K is pocket change to the people of San Francisco. It's not. Many people in San Francisco are "house poor" & the city has a high rate of creative financing to even get folks into a house. Neither are signs of a sustainable housing market.
    I do not see the inference that $700k is pocket change to the people of San Francisco, nor do I see "excuses" for expensive RE. Actually I see no reason to complain, we are just addressing facts about the housing market and surmising the future based on these facts. BTW, I don't live in SF, as some may believe.

  • socaldisneydude
    16 years ago
    last modified: 9 years ago

    I was born and raised in Southern California and currently live and work in Orange County, one of the most expensive areas to live in. Even though my parents and family live here I am essentially being forced to relocate out of state due to the fact that my 50K per year salary will never get me a home of my own. My only choices are either stay here and live in an apartment for the rest of my life or move out of CA and attain a home of my own. As much as I would hate to move away from my family I don't really have a choice.

  • saphire
    16 years ago
    last modified: 9 years ago

    I think it is not relevant to the discussion whether 700k is an expensive house in SF. The reality is that is what the current market is asking for a starter house in that area. CMarlin seemed to be making the point that he believes the market in SF will continue to sustain price increases and the same starter house will only appreciate in value. This seems to directly conflict with the date that Triciae is advancing that there is a general market slowdown occuring

    Personally I stopped looking about a month ago in NY for personal reasons unrelated to the economy but also because I did get spooked and could not shake the feeling that the house I was looking at might be had for 20% less in a year. It was just a feeling, no idea if it is true

  • patty_cakes
    16 years ago
    last modified: 9 years ago

    socaldisneydude, I have a 40 year old son who knew he would never be able to have a home here(San Diego), so decided to leave also. My daughter/husband moved to Austin, TX a couple of months ago, so that was his 'city of choice'. If you're a 'techie', you can earn almost the same, dollar for dollar, and have a gorgeous home. My son in law makes around $75K and purchased a brand new speck home that the builder had listed at $279K, including $40K in upgrades, and he got it for $239K. My daughter feels lucky to be able to stay home and be a Mom, almost unheard of in CA.

    Good luck to you. Life *is* an adventure, and don't fear change, even if it means uprooting yourself and putting down new roots. Family will visit, or possibly move also. At the moment i'm getting my home ready for the market to 'head out' to Austin myself! ;o)

    patty_cakes

  • muddbelly
    16 years ago
    last modified: 9 years ago

    "Rates will drop below the 6% mark and sales will pick up. It could be another year before that happens. The built up inventory will disappear."

    You sound pretty sure. There is a darker scenario. Our government has decided to run the country on historic amounts of debt by selling treasuries. Mortgages are based on these - mostly the 10 year. China, Saudi Arabia, and other savory characters with tons of excess wealth have bought up trillions worth. If either dumps a significant amount of these notes, interest rates will skyrocket (like high teens). Now, they will have to find a buyer for all those treasuries, which may prove difficult, but we're not really popular in the world right now, so they possibly could find many...

    I don't see a first time home owner being able to to purchase that $700K starter home with a $560K note (after the "mere" $140K down payment) @ 16%. Don't forget those trying to refi their interest only payments that will adjust in the next few years. The tightning of lending standards only exacerbates the situation.

    It is essentially a club. If you owned before the run up, you can afford the new prices because of your equity; your in the club. If you are fortunate enough to make several hundred thousand a year, you too are in the club. If your parents are in the club, they can endow you their money or house when they die - your clubbin'! Those who are not in the club, will not be buying a $700K house. The availability of jobs for those prices is not large. Eventually the club will become very small. I wouldn't feel safe at all in one of those high dollar houses...

    The American Dream used to be: work hard, climb the ladder, make more, buy home -> live the good life. More and more it seems: work hard, climb the ladder, make more, GET LAYED OFF (double amount of money saved in said layoffs goes directly to CEO), and job goes to China -> American worker starts over. No amount of decision making ever justifies 100 million dollar annual salaries. I don't think some of the older generation realizes how commonplace this is today, and why so many good hard working families may NEED creative financing to survice in todays world. The lifetime job is a true rarity in today's economy...

  • triciae
    Original Author
    16 years ago
    last modified: 9 years ago

    muddbelly,

    Can I be your friend?

    I agree with you.

    Tricia

  • galore2112
    16 years ago
    last modified: 9 years ago

    $700k in San Francisco for a starter home and this is still below the median price ?!

    LOL. The (ex)hippies, treehuggers and liberals sure now how to play the capitalists' game. :) :) :)

    Here in Dallas, we are talking

  • carolineb
    16 years ago
    last modified: 9 years ago

    "Eventually the club will become very small. I wouldn't feel safe at all in one of those high dollar houses... "

    I completely disagree. Median income and productivity have been steadily rising. There are more millionares (and billionares) in this country than ever before and their numbers keep growing.

    C

  • marys1000
    16 years ago
    last modified: 9 years ago

    Interest rates keep going up - today's real estate news is all about moving the real estate recover from 2007 to 2008.

    I'm freaking out. Movers come Tuesday. House hasn't had one nibble in over 30 days.

  • C Marlin
    16 years ago
    last modified: 9 years ago

    I completely disagree. Median income and productivity have been steadily rising. There are more millionares (and billionares) in this country than ever before and their numbers keep growing.
    I agree, but it is difficult to persuade a pessimist to see the glass half full.
    Visualizing negative, creates a bad outcome for people.

  • chisue
    16 years ago
    last modified: 9 years ago

    Gee, I don't see the "middle class" growing at all. Its real wage income is stagnating or dropping.

    Yes, we have more "rich" -- what percentage of Americans are "rich"?

    Boomers are increasingly finding they can't afford to retire. A lot of people who think, "Well, I'll just work longer," don't realize that IF they can find jobs, they won't be the higher paying jobs they held before they got...OLD.

    Medical costs are driving inflation, but America is the only first world nation without a national health care system. We'd rather pay more to do the Insurance Tango than cut costs and improve preventive care.

  • muddbelly
    16 years ago
    last modified: 9 years ago

    Triciae - yes!

    carolineb:
    "While the median household income has increased 44% since 1990 it has decreased very slightly when considering inflation." This was for 2005 numbers - I think inflation has taken a much larger chomp since. Meadian household income USA - google it.

    I'm not a pessimist, I am a realist. The increase in millionaires in no way represents the American norm. I simply am pointing out, from personal experience in the trusty healthcare field (where jobs can not be shipped to China (yet)), my observations. I have easily found another position after being layed off twice for making too much money. My salary has stayed about the same for 7 years (with slight increases to almost match inflation). As a manager, I met all performance goals, cultured a happy staff, and even reduced budget targets as needed. Then, the execs decided to cut management, and rehire new, cheaper workers. The result of all these "cost savings" measures was a handful of executives making more money, while everyone else who chipped in was left out (like the American Airlines pilots vs. execs). These "winners" are the new millionaires you speak of. The larger majority saw no such prosperity. That hospital now has deplorable care which I secretly enjoy. The department I am in now is full of former managers in the same position I was. Possibly the most knowlegable group of co-workers I have ever had in 15 years of this vocation. My pay and benefits after 2 years are almost as good as when I was a manager. I am now employed by a state institution, and it's goals are not to enrich its leaders (not directly, at least).

    Don't get me wrong. We are by no means hurting. We have plenty of spending money, and are saving properly for college/retirement (both of us work). I just think that the pathway to generational wealth has become increasingly difficult with the gatekeeper's hoarding it all to themselves. I think it helps, in large part, that DFW has such reasonable housing. I have always been a fiscal conservative. Visualizing glasses will not change the reality. The main problem with unabated capitalism is the insatiable greed of those at the top...

  • triciae
    Original Author
    16 years ago
    last modified: 9 years ago

    Hmmmm, Hmmmm, Hmmmm

    ("England Swings", Roger Miller)

    "One more time around Piccadilly Circus,
    Hey driver...follow that bus.
    Ain't it a shame the way the rich folks work us,
    Everybody's rich but us!"

    Cough, cough, hmmmm, hmmmm...

    ("Greenback Dollar", Kingston Trio)

    "I don't give a damn about a greenback dollar,
    Spend it as fast as I can.
    For a wailin' song & a good guitar,
    Are the only things that I understand..."

    It's hard to decipher the US Census Bureau's numbers because they include things like interest, dividends, alimony, child-support, & other such stuff; but, a quick glance over this tells me that most Americans are not "rich". (Although I'd sure rather be here than any other place.)

    The last time I visited with our financial planner regarding retirement she told me that, if nothing major changed, we could retire in five years at our current standard of living assuming we didn't live past age eighty-seven. She said she preferred to stretch lifespan to age ninety...I said, "Oh, well. We're retiring then anyway". During this meeting she gave me a printout of our anticipated income for retirement & it had a little pie chart at the bottom (in bright primary colors!) that gave various income levels & the percentage of Americans that retire with that amount of income. I was shocked to see that 34% of Americans have less than $20K per year. Less than 10% have incomes over $125K. As a banker, I've known for years that America has a problem brewing with boomers but this was so startling to me...when boomers retire & can't pay their way out of a wet paper bag who's going to support our economy? Boomers did not have enough kids to match their spending spree. In ten years, our economy will look dramatically different than it does today.

    Yes, boomers are inheriting more than any other generation but the numbers my DH brings home for me from the bank say that boomers are spending their inheritances as fast as their incomes.

    /T

    PS We're getting off-topic with this thread.

    Here is a link that might be useful: US Census Bureau

  • marys1000
    16 years ago
    last modified: 9 years ago

    To get back on topic I thought the housing market might be picking up a bit, had a few people come to last Sunday's Open house. But not one person since.
    I'm wondering if people came because they heard about interest rates and were toying with the idea of jumping before they went up. Then went home and thought about trying to sell their own houses and stayed put.
    In looking at similar properties to mine - I haven't noticed any with pending or sold since. I'm moving Wednesday.
    Forecasts for the housing market improving have not been pushed back into 2008 - of course with no idea where interest rates are heading that's just a huge guess.
    But....It seems the summer pick-up has been a bit of bust here. So in summary - the market has not really gotten better here in my midwestern city.

  • rainwater1
    16 years ago
    last modified: 9 years ago

    My husband took a job in Flagstaff, AZ last Oct. We started looking at houses there last Sep. At that time you'd be lucky to get a broken down shack by the railroad track for $175,000. Now we're starting to see nicer places for lower and lower prices. We feel a little pressured by the prospect of interest rates going up but are still waiting. It sounds like some of you agree that this is the best option.

    Off topic again, Tricia, another old song with current relevence:

    Tom Paxton
    "Lyndon Johnson told the nation
    have no fear of escalation
    we are trying everyone to please
    Though it isn't really war
    we're sending 50,000 more
    to help save Vietnam from the Vietnamese"...

    Back on topic, we are fortunate members of "the club". We own a house outside of Prescott, AZ and plan to keep it. I feel sorry for the younger folks who may never be able to own a home. Especially when they can't afford to live where they grew up.

    We'll probably be in Flagstaff for at least 3-5 years. Do you folks recommend renting or buying for that amount of time?

  • berniek
    16 years ago
    last modified: 9 years ago

    For 3 years, I'd probably rent. For 5 years I'd buy.
    I got married in Flagstaff, (when I lived in Sedona/Coconino County).

  • newjerseybt
    16 years ago
    last modified: 9 years ago

    "I completely disagree. Median income and productivity have been steadily rising. There are more millionares (and billionares) in this country than ever before and their numbers keep growing."

    ...due to inflation.
    ----------
    When I started my first job back in 1968 making $2.00/Hr doing labor work, I thought I was making poverty wages. Adjusted for inflation today that would equate to about $17 an hour. Does Walmart start you with $17/Hr with no experience?

    Home sales may also be suffering from the obvious high energy AND high food costs. Anyone notice the large increase in food prices this past year? Bernanke says: ..very little inflation. President says: "..this is not amnesty".

    Is the government losing credibility?

  • bethesdamadman
    16 years ago
    last modified: 9 years ago

    "When I started my first job back in 1968 making $2.00/Hr doing labor work, I thought I was making poverty wages. Adjusted for inflation today that would equate to about $17 an hour. Does Walmart start you with $17/Hr with no experience?"

    Actually, that is a little overstated. According to the Bureau of Labor Statistics inflation calculator, $2.00 in 1968 equates to $11.95 in 2007.

  • newjerseybt
    16 years ago
    last modified: 9 years ago

    "Actually, that is a little overstated. According to the Bureau of Labor Statistics inflation calculator, $2.00 in 1968 equates to $11.95 in 2007."

    Hmmm..My Dads 68 Chevy Impala costs $3,200 back then...
    What does an average car cost now? Quality American made shoes back then were about $12.00. I just bought a pair of high quality American made Carolina shoes for $109.

    My father's house was worth about $45,000 in 68 and was recently sold again for $369,000.

    Cigarettes were $.35 a pack as I recall.

    Candy was $.05 for a large Snicker's or Hershey's bar.

    Gasoline was 27 9/10 for regular.

    Of course we found cheaper ways to make electronic goods and discovered China but the $11.95 figure seems low IMO.

  • marys1000
    16 years ago
    last modified: 9 years ago

    berniek - I'm interested in your 3 vs. 5 yr comment. Is this in part based on region or just generally based on recouping closing costs etc?

  • herus
    16 years ago
    last modified: 9 years ago

    The '68 Chevy Impala doesn't even match a low-priced Korean car today for: safety, comfort, conveniences, gas mileage, reliability (ok, this may be argued) or warranty. The only real advantage that car has is sheer weight and cargo/passenger capacity, but this not as much as its size might imply. So, the comparison is not apples to apples at all. Autos are a very significant part of the CPI.

    Price of cigarettes has been affected as much by legislation and taxes as actual inflation. US demand has fallen, although shamefully, Philip Morris et al continue to cultivate and grow foreign markets for their vile product.

    My point is that item-to-item comparisons, even comparing starting wages for say high school grads, are less relevant than they might appear. So many other factors and environments which interact with these things have changed.

  • terezosa / terriks
    16 years ago
    last modified: 9 years ago

    berniek - I'm interested in your 3 vs. 5 yr comment. Is this in part based on region or just generally based on recouping closing costs etc?

    I'm not bernie, but in the past it was sort of a rule of thumb that you needed to stay in a house about 5 years in order to make enough to cover closing costs, commissions, etc., and not necessarily make a profit. Unfortunately with the recent run up in prices in some areas people think that they should walk away with tens of thousands of dollars after only being in their homes for a couple of years. In fact that was the reasoning that many lenders gave to push the sale of 100%, ARMs and interest only loans. They were telling buyers that in a couple of years they would be able to refinance to a fixed rate because they would have so much equity because of rising prices. With prices NOT going up at such a rapid (and unsustainable pace) many are finding their mortgages have adjusted beyond their ability to pay.

  • rainwater1
    16 years ago
    last modified: 9 years ago

    We weren't thinking of making any money on it, just hoping to save rent money. Renting would probably cost us at least $10,000- $15,000/ year. For my DH it's costing $10,000/yr for a one bedroom apt. When the cats and I arrive we'll need more room and a safe yard for the cats. (They're country kitties and MUST have access to the outdoors if we are to keep our sanity.) We're Forest Service employees and the Govt. will help us with closing costs. (How else can a fire dispatcher afford to move to an expensive town like Flagstaff? And believe me, Flagstaff does need good dispatchers!) So, I was thinking that, unless the value of the house fell by $45,000 or something, we could live there for a bit and save what we'd have spent on rent. It is possible that the price could drop that much. Hard to say.

  • berniek
    16 years ago
    last modified: 9 years ago

    "berniek - I'm interested in your 3 vs. 5 yr comment. Is this in part based on region or just generally based on recouping closing costs etc?"
    I didn't go as much by any "rules", but probably more on a personal preference and the market in general.
    Reading about the Govt. relo benefits would make it for me even more attractive. Even if there is minimal appreciation, the advantages to own far outweigh renting in my mind. Also, 5 years sometimes can turn into 7 or more years, one never knows.

  • markjames
    16 years ago
    last modified: 9 years ago

    In some areas land and home prices more than doubled in a short period of time, then when home prices dropped several percent people were like OMG the sky is falling. Some markets went from bidding wars, and homes selling in a week for more than their listing price back to fundamentals. Now buyers are super fussy, taking longer to buy and are looking at more homes to get the most bang for their buck. That's the way the market should work.

    The last time the market was flat I sat on a couple of my new construction spec homes, and one existing rehab for about a year and doubled my money on the spec homes, and made a modest profit on the rehab. One of the buyers had looked at one of new construction homes when it was substantially less the year before.