and does this surprise anyone? The tales of posters here verify the data provided in the article...But a slow down in new construction NEEDS to happen to clear out the exisitng inventory,so this is not a bad thing...

You're right, qdognj. But, I have to chuckle remembering Greenspan last year muttering something about a "soft landing" in residential real estate. And, we'll have to see where the bottom actually forms. So far, prices are not down significantly. The market may prove Greenspan right afterall? It'll be interesting to see what May's existing home sales numbers come in at...wouldn't surprise me to see the NAR adjust their forecast for the fifth time this year.

Frankly, I don't see a turn-around starting until we clear Election '08 & a resolution (or, at minimum a Plan?) for Iraq. I believe people will just sit tight as we near campaign season. There's a lot of uncertainty in the economy as well as the geo-political arena.

Tricia

the only problem i see with waiting is the possible(and likleyhood) of interest rates continuing to increase...So the savings one may get from waiting could be diminished somewhat by increased interest rate costs...

So far, prices are not down significantly.

Yeah, sellers are holding firm on their prices, unfortunately they are also holding on to their property.

terriks,

Yep, and that's one of my biggest concerns. I'm afraid a few people will start making large price drops & panic the market into a free fall. I'd much rather see sellers drop prices in an orderly manner. You're right though...sellers are holding tough, decluttering, & upgrading like it's 2005. There's way too much inventory for that to hold even not factoring in an increase in interest rates. Something will have to break the current tension to get houses selling again & that's likely to be price drops. Personally, I think we need to see a drop of 20%-25% off the top before we can start looking for a bottom. I'm hoping that prices begin dropping quickly come early fall & we can start moving out all this built-up inventory next spring.

Tricia

Not what I need to hear! I've been working my butt off so this place will 'show like a model'(condo will be sold), and am going to stay positive. 'It only takes one buyer' has been my mantra, and i'll also be in the category of lower priced housing, so am hoping that will work in my favor. The fact that it's a condo could be the drawback, but there are a lot of single people in SD who don't want the hastle of a yard. That's my ace in the hole! ;o)

patty_cakes

patty cakes, you are right, it does only take one buyer and if your home really stands out they will pick yours! I believe that in this market home condition must be perfect, and price competitive. Those are the homes that will sell.

triciae,

"I'm afraid a few people will start making large price drops & panic the market into a free fall."

I seriously doubt you would ever see a "free fall" in real estate since it is not a commodity. In a declining commodity market a rush to sell usually creates a "free fall" from panic selling. Panic selling occurs by traders that have to make a decision in seconds or minutes on whether to hold or sell. Clearly the time it takes to sell real-estate causes a more level headed environment. Furthermore, unlike commodities, people live in homes and can simply decide to stay put and ride out the market, since the chance of a homes value going to zero is extremely remote. If my neighbor sells his home at at really low price, I am not going panic and try to sell my home. That isn't to say that people won't get desperate and sell low, but the impact of that does not equally effect all other properties since in most cases no two properties have the same characteristics (location, condition, design, upgrades, etc). When I sell 10k shares of IBM at the bid, I have just lowered the price of all IBM stock for that split second in time. Others may join suit and rush in to sell even lower, or they may totally ignore my sale and move on. When someone sells a home low, there are many things that have to be understood to know if that low price was just an outlier or the start of a new trend. Since real estate sales happen in days not seconds there is ample time to properly analyze each sale.

Since real estate markets are local its really hard to predict any kind of national trend and say it applies to everyone everywhere. In my market, I don't expect to see it turn around until 2010 or 2011. I think we will bottom out in 2008/9, provided we can remain Hurricane free. One CAT 3 or better and all bets are off.

"The drop in starts was led by a 20 percent slump in the West. Construction also fell 1.6 percent in the South. Starts rose 16 percent in both the Northeast and Midwest."

The part that I noticed says "Starts rose 16 percent in both the Northeast and Midwest."

This is still mostly a regional problem, not a national one.

"The part that I noticed says "Starts rose 16 percent in both the Northeast and Midwest."

This is still mostly a regional problem, not a national one."

Agreed. I haven't seen much of a slowdown here in NJ. As for existing home prices, we are looking for a vacation home at the NJ shore. Prices have been rising, not dropping. It is near impossible to find a decent single family home in these shore towns for under $1 million.

C

Yes, houses are not stocks, but...the increase in foreclosures shows us that not everyone is secure in his home and can just "wait it out". Some people have to move because of other financial problems, mobility issues, or a job transfer.

Rising mortgage rates and stagnant or dropping real wages for the middle class are other pressures. Even tough enforcement of immigration law will have an effect on housing.

caroline - I posted the bulk of this in another thread, but just an fyi from my perspective on the shore. (Take it for what it's worth):

We sold our previous shore house in late 2005 - a 1031B exchange. Anyway, we anticipated our purchase for quite a while and had narrowed our desired area to a very specific few towns on Long Beach Island. I would say that I've been pretty obsessively following this market for close to three years. To say it has tanked would be putting it mildly. For example one house we looked at started at $649,000. I suppose in 2005 it might have been a fair price. After being on the market for over 1 1/2 years it just closed at $532,000. Another that had been listed at approx 600K just sold for 499K. These were not anomalies - they were pretty typical. I have also noticed that the mix of homes sold has skewed way higher. For whatever reason, many more multi-million dollar homes are selling (as a percentage of homes sold.) This has allowed the realtors to claim that prices on the island have increased 6 - 7% over the previous year. It very well may be true that the median price of homes sold is 6 - 7% higher, but comparing like to like, prices are off 10 - 20%. (Maybe more if there are concessions being made that wouldn't show up in the final close price.)

Now that I have sold and moved up NorthEast - as a buyer I'm pretty appalled at what people are asking for their houses. I found a lovely place that would require a huge amount of cosmetic work (it hasn't been updated in years) but these people want to get the same amount as the fully updated house down the block without taking into consideration the real condition of their home and just cause you fixed up the kitchen 10 years ago, there is still that multi-colored 1970s shag in the bedroom and the wallpaper, no bathroom upstairs, etc, etc...

On the other hand, I ran across an obvious "flip" that is priced to sell, it's not perfect, bur pretty darn close - though I'm not too fond of the neighborhood, still in transition - we may get it simply because it is well below our target price and mostly fits what we want, the town is a nice town - or the new construction - the builder just lowered the price by 40K ...

While I prefer an existing home - earth to sellers - I'm finding new construction bigger and a better buy per sq. foot, big dry basements and shiny and clean, new heating systems, new applicances - why do I want to pay a super premium price for your emotional commitment?

Let it go - I did it - I made a good profit - not as much as I would have made in 2005 - but that party is over.

If your house has been on the market with no offers (and it's clean) - it's the price.

If your house is on the market and you've bought another house, and you aren't getting any offers and few lookers, and you've moved out - but you refuse to modify your asking price - more power to you but, I got news for you, even the wealthy don't hang on to a property just so they can get a certain price ... What you have said to me - a buyer with cash in her pocket - is you are not really interested in selling - so keep it - because there are homes coming on the market every day.

Am I picky buyer now? Darn right I am.

Triciae Personally, I think we need to see a drop of 20%-25% off the top before we can start looking for a bottom. I'm hoping that prices begin dropping quickly come early fall & we can start moving out all this built-up inventory next spring.

Egads I hope that is a regional statement! In my market that could account for 10 years appreciation. Even in the last five good years market appreciation was 28% total.

This market is slowly inching away from a seller's market to neutral. There is a 4.5 month supply and 5-7 month supply is a neutral market (some say six, some say five, some say seven ... well you get the point).

I have seen houses sit in my subdivision for a lot longer than 30 days recently. Someone tried to list their 2,300 sq ft ranch for $400K. That was quite overpriced (by about $100K). We had a crummy February - cold, few tire kickers, only VERY serious buyers seemed to be making a purchase. The overpriced house dropped their price $100K and went with a new agent. The sign is still up but they moved yesterday and they are no longer on the MLS. It should be interesting to see what they sold for. Two other colonials priced a bit higher finally sold two weeks ago after listing in March. Looks like the DOM are lengthening, but stuff is certainly selling.

As far as the local real estate numbers... sale prices are up, sales are up monthly vs last year at the same time, however there is more inventory available.

Something wierd happened in just the 3 last weeks in my subdivision... there were about 10 houses on the market, and 7 of them sold. The deal on one fell through, the rest closed. I suspect they went for fire sale prices, as some of them had been on the market since January, but six sales was as many sales as the previous six months put together. Apparently June is a great month to sell in Texas.

mfbenson -- Perhaps something else is at work here. If this is a new subdivision, the sellers may have all purchased at about the same time, using ARMs, which are now adjusting upwards and they have to sell to beat foreclosures. Or, sellers just finally recognized that it ain't 2006 anymore and lowered their prices to fit today's market.

The Bear Stearns bail-out of that failing hedge fund forcing all of those mortgage-backed securities to be marked to market should be interesting...

Anybody except me following this story?

Tricia

Definitely keeping an eye on Bear Stearns. Gotta keep on top of things in this market.

Also watching the ARM reset chart (attached).

Max foreclosures should be about 6 months after the peak of that chart (unless buyers go to 50 year mortgages - ha).

I'm in Austin and the market is good now - about 7-10% appreciation. Not ruling out selling here and buying back into Southern California if prices drop enough out there. I sold in 2004 in California (1 year early, but most importantly, I got out before the drop).

Here is a link that might be useful: {{gwi:2046966}}

My, my, lookie there at that chart! In NOVEMBER things level off. Now, children, do you know what happens in that month? What candidate's White House dreams come true?

It's interesting that New Starts in the midwest are up 16%, when homes are actually depreciating in my midwest neighborhood. I think it's just a matter of time before the starts are down as well.

Today's Chicago Tribune has a column by their housing editor, Mary Umberger. She cites a survey that shows homeowners are still "certain" their houses are worth more in 2007 than they were last year. They also believe their homes will appreciate "signicantly" in 2008. Yes, they see that "some other people" aren't selling at last year's highs...but it's absolute denial out there when it comes to the value of their own homes!

At the end of her column she writes that Experian says homeowners with the worst credit ratings (below 620) are increasingly likely to pay their credit card bills before paying their mortgages. That's a reversal of long-standing behavior.

In the last four years lending to subprime consumers rose 137 percent. Mortgage lending to those consumers grew 58 percent. (per the Experian report)

Not a pretty picture.

Posted by chisue (My Page) on Sun, Jul 1, 07 at 15:11

Today's Chicago Tribune has a column by their housing editor, Mary Umberger. She cites a survey that shows homeowners are still "certain" their houses are worth more in 2007 than they were last year. They also believe their homes will appreciate "signicantly" in 2008. Yes, they see that "some other people" aren't selling at last year's highs...but it's absolute denial out there when it comes to the value of their own homes!

You are absolutely right. There is bubble everywhere in the nation but my city is so unique with such strong job growth and economy that everyone wants to live here. We used to hear similar mantra from our "experts" for florida until now - everyone wants to retire in florida and prices will keep going up so buy now or you will be left out for ever.

Psycology like this is the reason why price on the way down will be sticky and we are long way from the bottom. Our so called "experts" that gets quoted by the MSM will continue calling it bottom every year and when they see that they are proven wrong again they will shamelessly revise their projections by postponding the recovery to next year. Such strategy helps keep from spooking the masses and throwing the real estate market into free fall. They do everything in their power to "manage" the real estate market.

At the end of her column she writes that Experian says homeowners with the worst credit ratings (below 620) are increasingly likely to pay their credit card bills before paying their mortgages. That's a reversal of long-standing behavior.

I do not blame them. You know you are going to loose the home anyways to foreclosure so no point in throwing money away towrads the mortgage. Holding onto credit card is more important at this point.

Not a pretty picture.

I know.

chisue I tried looking up the article you are referring above but was not successful...but I did find another interesting piece with a feeble attempt to "manage" the market and calm the masses...to give you the gist... this particular piece does acknoledge the huge spike in foreclosures/REOs and short sales in the region...but get this here is the kicker... at the same time it tries to downplay their significance and tries to calm the masses by saying how foreclosures/REOs/short sales are anomalies and such "special events" should be ignored by agents and appraisers while deciding the "fair market" price of other houses in the neighborhood...LOL..got a good laugh out of it.

Here's a link to the Chicago Tribune article.

Yup, I must agree about sellers being in denial & keep listing higher than 2005, rather than lower.

I happened to stop in at an Open House today.
I couldn't believe the price. I thought the house was overpriced by a minimum of 100k.

Where are these people getting their prices?
A house with a steep driveway(a minus), built in the 1940's with some updates selling for more than you can have one like that built. Those people updated what they could, but it still didn't have anything great for 600k.

Those people are going to say that we have a housing slump. I will be watching this property, just because I tell DH what a house is worth & so far 8 for 8, I am right.

I started this game when we were getting ready to sell. Now, I love watching & calling a price & watching it go through pains, until its priced where it should be.

Posted by terriks (My Page) on Sun, Jul 1, 07 at 19:31

Here's a link to the Chicago Tribune article.

thanks terriks.

People are lowering but no one is buying anyway. Not sure what everyone is waiting for

saphire -- I'd be waiting to see what the fallout is going to be from the housing slump! LOL Seriously, I'd be waiting to see what's in my pocketbook at the end of this mess, plus the nation is "on hold" until after the Presidential elections

I can bet you any amount of money you wish that my house is worth more than it was last year, and even more than 2005. Remember the golden rule with those blanket statements - all real estate is local.

muddbelly, you might be right about your house. Unless my memory has completely failed me, Texas has already had their real estate slump. Every since the '70s-early 80s boom/bust...Texas home appreciation rates have been lagging & barely plodding along. It's about time you guys catch a break. Owning a home in Texas has not been a great investment for the past twenty years, or so.

/T

All depends on the location (and buyer's eye). I do not consider 10% per annum barely plodding - more like realistic/healthy. Homes are still 30% undervalued vs. salaries here in DFW, so you are correct in the pure investment aspect. But it sure is nice to have a big beautiful house, pool, yard, and still have money for the maid...

10% a year is way outside historical norms and totally unsustainable.

Our home in Dallas just sold in two weeks and for very near our asking price. Our daughter and her husband just sold their home that they had owned for only two years and they made a very, very hefty profit.

In Dallas, both residential and commercial real estate is HOT, HOT, HOT!

Hmmmmm

Here is a link that might be useful: And The Good News Is......

I'm seeing what I call the "split level halcyon"-when all of a sudden there's a glut of splits on the market because people have stopped buying them in my hot neighborhood and are waiting for the more desireable 5-4-doors because they're now within reach.

Nobody ever "wants" a split level in my town but often it's the only house priced within reach for this school district.

I just saw one come up under 300 and I think that's the first time since 2004 that I've seen it.

Bad time to have a less than desirable house in a less than prime location...

Triciae: Hmmmmm

Here is a link that might be useful: And The Good News Is......

Probably the good news for Texas is that like in my area, housing is relatively affordable. The last five years brought a total of 28% housing price increase in my area (supposedly) and we are still a bottom 5 market for pricing. The WNY area also projects a rise in prices and sales.

My crystal ball doesn't tell me whether or not any of this will come to pass. I do know that we never had the great ride-up of the last few years so no big-crash either. This market is moving towards neutral (away from a seller's market), but it is not a buyer's market.

I always take statistics with a grain of salt - lies, damn lies and statistics. Hearing from people currently selling is an interesting barometer - their house looks horrible, no showings, overpriced = their market is slow or their house is a showcase, underpriced, sold in a week = their market is hot. It is all relative.

It might be because we are having a VERY hot weekend. It might be that a lot of people are on vacation, or are taking an extended 4th of July break. It might be that the demise of print ads has arrived. Or, it might be that there's no market right now.

Fact is, for the first time in my memory, there is ZERO display advertising from realtors in the Sunday Tribune Real Estate Section. No "Open House" ads. No ads, period. (There are display ads by builders.)

"10% a year is way outside historical norms and totally unsustainable."

Not when your way undervalued vs. the rest of the country. I'd say there is quite a bit of room, although not so much with new builds, since they tend to be way out with plenty of cheap land. 10% annual appreciation on $250K (which can still get you a really nice place with profit potential if you know where to look) is a bit different from 10% on $700K, so the perceived "profit" may not be exactly what your thinking as unsustainable...

I saw an article on Omaha on one of the big national websites (USA today?) real estate feature. Highlighted that Omaha was not boom or bust but stable if a little slow. Sort of weird - their new construction market is way overbuilt and sales are still slow. I think the media can really spin things.

Personally I'm feeling like a big crash in the economy is coming. Recession, inflation. I don't think we've seen the war, reconstruction bill. Its going to be freaking nuts. I saw an article that says we have more contractors in Iraq than we do soldiers. Wonder what those contracts are being paid.
I wonder if people sense it coming, like mice in a field with a hawk shadow flashing by.

At 10% per year a $250,000 house would be worth over $400,000 after only 5 years. That does not seem very sustainable to me.

terricks - exactly my point. Two more years and that house is worth 484K - not sustainable.

Triciae, Thanks for reminding me about the article in Tierre Grande. I thought it was very interesting and optimistic at the same time. I enjoyed the related article by the same A&M professor. It's a great magazine, isn't it?

Our area is very popular and always has been, thank goodness. A home on the market in our neighborhood always sells quickly UNLESS it's really dirty and uncared for which is rare. Even so, many people prefer "fixer-uppers."

Bottom line for us seems to be location. We've seen it work over and over. People have their realtors posed to pounce on a house in our neighborhood. We are truly very fortunate.

The very best of luck to all of you trying to sell your homes. It is a real pain in the neck trying to keep everything as neat as a pin for prospective buyers, not to mention the stress!

"Bad time to have a less than desirable house in a less than prime location..."

Or even a nice house in a less than prime location! We've had two offers but one of them turned out to be pretty much a joke, and the other has a sales contingency with absolutely no sign of their house selling anytime soon. Up until that offer put a contingency tag on our listing and after we started mandating drive-bys before making appointments, we had pretty good traffic through the house, but it's dropped off drastically to maybe one a week instead of six or seven a week, sometimes two or three a day.

What's a "5-4-doors"? A lot of what's in our (low) price range is split level; I think they're very unattractive so I would only consider it as a last resort. It would have to be a VERY good neighborhood!

"Yup, I must agree about sellers being in denial & keep listing higher than 2005, rather than lower."

We're priced at almost $50,000 less than our house was appraised for by an independent appraiser in 2005. Ouch. (Thank goodness we didn't take the full cash-out when we refinanced, like the bank was pressuring us to.) But, there's a repo across the road dragging us down; it has "issues" and is even closer to the highway than we are, but it is larger by 500sf, has one more bathroom than ours, and is $14k less. We simply can't afford to drop our price commensurately.

And yeah, the keeping-the-house-perfect is a real drag... we went out yesterday and I said to hell with it, left the bed unmade and dishes in the sink. I just didn't care anymore right then. I have to go get vacuum cleaner bags today, we've gone through an entire package of them since Memorial Day!

5-4 and a door is what southerners call a colonial two story. 5 windows across the front on the second floor, four across the front on the first floor, and a front door in the middle. That's a bread and butter house down here-what everyone looks for first.

Realtors will turn themselves inside out down here to avoid calling split levels "split levels", including listing them as a two story (hey, part of the house has two stories!) and not putting photos up. When I see a 2 story with no photo listed for under 400k in my neighborhood, I *know* it's a split! :))

I had to knock myself out talking friends out of buying a flipped split last year priced 80k higher than any other house (including non splits) on the street. It was so shiny and clean looking that that's what they saw. They instead went with a 5-4-door (brick!) that needed work. This year they saw how much (er, little) that split finally went for and they were *very* grateful. Their realtor, of course, hated me for sinking that deal.