The Market is Slow But Real Estate Goes Up Anyway

[hausdok]

The price of homes just never seems to stop going up. This is a condo "cottage." 1 of 4 built around a little courtyard on what used to be a single-family lot that once had a small bungalow on it. It's about 1100 square feet with 3 bedrooms and 1-1/2 baths and is built on a crawlspace. It has a shared, detached 2-car garage and one can't get a vehicle closer to the home than about 25 feet.

There is absolutely nothing high-end or remarkable about this home. Basically a spec-built house on a postage-stamp portion of a shared lot with condominium rules.

And it went for....(drumroll please).....$304,950!!!

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[Brian G]

Jeez. That wouldn't break 80K here.

Brian G.

Remind Me Not to Move [:-crazy]

[kurt]

Depending much on location, that could easily fetch $400,000 around here. Heck, I have customers purchasing POS condo rehabs of old apt. buildings w/no parking whatsoever in lousy neighborhoods for $300,000.

We're approaching the tale end of the price rise phenomenon. Homes will continue to appreciate, but when folks incomes flatten (and they are), and interest rates go up (and they will), the mass of humanity can't afford such prices, and things will moderate.

The bright side is that all those blow dried hair mouss'ed realtorzoids will discover just how worthless they really are. I don't want a recession, but a little justice would be fine.

[kurt]

And, if you wanna read about the next (or current) big real estate mess, check this out....

http://www.eastbayexpress.com/Issues/20 ... ature.html

[hausdok]

Jeez,

After a lifetime of working my butt to the bone for peanuts you tell me I coulda been kicked back on a beach somewhere out of country by now just by scribbling on napkins? Cripes! Where were these schemes when I needed them 30 years ago? [:-spin]

OT - OF!!!

M.

[emalernee]

We build homes that size at Habitat for Humanity, minus the Garage.

Ezra Malernee

Canton Ohio

[hausdok]

Hi Ezra,

I'm sure you do. I should point out that they aren't actually calling this a "house", although that's what it is, it's a condominium. Go figure. The client says she'd downsizing. with only about 4 closets in the house and no room to speak of in the shared garage to store stuff, she'll probably end up renting a storage room someplace. Why don't they build houses with decent storage anymore? Whoops, guess that's a topic for another thread. Forget it.

OT - OF!!!

M.

[StevenT]

In my hometown, homes of that calibre... with no garage, in terribly depressed areas are selling for +$400k. Small (not wealthy), to medium sized developers cannot afford to buy the land in middle to upper middle class neighborhoods to build on. Many older homes with larger properties, in these areas are being relaced with 14'(I think the new zoning laws permit 12') wide attached townhouses, $400k-$650k each, depending upon the area. Imagine, a 3 bedroom home with a parking for 1 car. If the father and mother each have a car, and 3 bedrooms could translate to 2 children, each with a car. In some of these developments, parking is a nightmare. People fight over parking. Imagine what happens when someone has company.

I don't think the price of real estate will ever really come down. Unless someone is desparate to sell, or if they are selling something they bought a long time ago. Even then, I don't think the price will drop enough to consider it a "change in real estate prices". Even then, I think you will have to be in the right place at the right time.

I remember my older brothers argueing with me in 1979, when I bought my first house. An attached townhouse condo, for $59k. They said I was crazy... I wish I had bought 10 of them.

[Jim Baird]

Hausdok,

Thanks for sharing. What it tells me is just how worthless the money is.

Kurt,

"Tale end"...a slip or just a pun?

I don't wish for bad luck either, but our inflated property values make it look like we really are out on a limb.

[kurt]

A slip. I type too fast & never proof read, @ my peril.

The out on a limb part is certainly true. Whole big bunches of folks have been dragging equity out of their homes to the point that they're @ break even if they sold @ today's prices.

There's not much good evidence to show that real estate prices (or any other prices) go down, except in highly localized bubble markets. The problem is, no one is going to be "worth" what they think they are when the time comes to sell. A couple more interest upticks, & the whole shebang is gonna go flat. When things are flat, folks get upset, and when folks get upset......

My economics professor would heartily disagree, but economies perform, for the most part, on how folks feel. For every boom time, one can show economic fundamentals all wrong, and for ever bust, there are fundamentals that are sound. It's usually about folks feelings, specifically, hope. Booming economies are built largely on hope.

I remain hopeful....

[Steven Hockstein]

The spec builders in some of the wealthy towns around here have a 1/3,1/3,1/3 forumula. They buy an old house on a desirable lot, knock it down and build a new house. The lots cost around 1 million dollars, they build a new house for a million and sell the new houses for around 3 million. We are currently designing houses for a guy that does 5-8 houses a year. Not a bad living!!!

[kurt]

That was the formula around here, more or less. For a lot of these guys, they couldn't build them fast enough.

Now, there are guys sitting on inventory of these houses because they just aren't selling like they used to. That great living is getting absorbed by construction interest payments on unsold $3 million properties.

[Bob White]

I'm glad I live where I do ---

$309k wil get you . . .

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Or this 4/2 on 5 acres:

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As Dorothy said -- "It's good to be home."

[hausdok]

I'm calling the moving company this afternoon.

[Steven Hockstein]

Originally posted by kurt

That was the formula around here, more or less. For a lot of these guys, they couldn't build them fast enough.

Now, there are guys sitting on inventory of these houses because they just aren't selling like they used to. That great living is getting absorbed by construction interest payments on unsold $3 million properties.

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The market is still good around here. There is still appreciation of houses in towns with trains to NYC. I am shocked at what people will pay for POS houses just to have an easy commute.

There is a cool website www.zillow.com. You enter an address for a house and it shows a satellite photo of the street and what they houses are worth. Prices are not always accurate but it is still impressive.

[kurt]

Zillow.com is very cool. It's reasonably accurate also.

The market is still very good around here; it's just not over the top whacko w/folks throwing baskets of money @ anything w/4 walls and a roof. Well, wait a minute, now that I think about it, let me take that back; they are still throwing baskets of money @ total pieces of crap.

The only difference is now there are a LOT of folks spec'ing homes; there's some inventory for the first time in years. Before, there was NO inventory; if it was listed, it sold that day.

[mgbinspect]

Well, after the longest and choppiest "off-season" I've ever experienced here in Richmond, VA., things seem to be coming back. I'm mercilessly slammed and doing all the insepctions that I'm willing to.

For as long as I've lived here, you can practically set your watch by the Real Estate Market. It's typically a very dependable and finely oiled machine. A very odd year. Hope it keeps up...

[jseddy]

In my market new builds have fallen off very dramatically over the last year. I see and feel it first hand cause I build(design) a majority of the customs. It seems foreclosures are on the rise. All those Baloon payments are coming due that were set up in the last 10 years and were rather popular. I think we may have a sticky situation in the coming years. Look for lots more houses on the market for unfortunate reasons.

[hausdok]

Markets starting to hiccup here. Intermittent slow periods and then several weeks of intense activity. Was busy as hell for about 7-8 weeks straight and then the phone didn't ring for 5 days. The wife called it several times to test it 'cuz she still doesn't trust the VOIP setup and thought it was down. Then, in the space of 40 minutes I booked enough inspections to keep me busy for the next week. I'm betting everyone kind of stopped looking when the dustup started in the middle-east and then, after a week or so things got back to normal.

This is a weird business. I can tell you that whenever the Fed Chairman has a press conference that it will take exactly 3 weeks for the housing market to respond up or down, depending on what his message is. Makes me wish I could plant a little remote-control thought control chip in the guy's head. I'd have the guy in front of the cameras at least twice a day and all of it would be good news for home buyers. [:-dev3]

Bet it stays steady for the H.I. schools though. Time to open a school - inspections topics only though. Don't want to teach any actual business classes - can't ensure a steady stream of clientelle if I do that. [:-banghea

OT - OF!!!

M.

[kurt]

Starting to see more of those residential construction projects that get the fence around them; halfway built, & then the site goes dead. Hmmmmmm....

Doesn't take a genius to figure it out. When you're talking million dollar mortgages, a tiny uptick in interest rates puts it out of reach. Having been through several boom & bust cycles as a builder, I'm smelling an aroma I recognize.....

[Les]

In this market the cornfield palace market is now officially glutted!

The largest and most active Board of Realtors in this area reports a 60% increase in listings and a 55%decrease in sales. FSBO's are nearly double, but still a tiny fraction of total units sold.

My Dad was a builder starting right after WWII, so us kids knew the real estate market by the size of the supper table. 1958, 1972, 1981, 1994 etc..

My first degree was in Money & Banking and that got me a job as a framer/take-off guy. Lived through 22% mortgage times and a couple of energy crunches and gotta' tell you this cycle has me concerned.

My politically incorrect statement of the day: "Save your money and buy a farm".

[kurt]

Yes, those years. Ouch.

[Steven Hockstein]

Originally posted by Les

.... Lived through 22% mortgage times and a couple of energy crunches and gotta' tell you this cycle has me concerned.

My politically incorrect statement of the day: "Save your money and buy a farm".

I remember in the late 1980's I had a client call me and beg me to do a weekend inspection because his 18% mortgage lock was going to expire the following week and the rates were going up. Can you imagine having an 18% mortgage combined with today's housing prices?

I am concerned that my children will be able to buy their own home. Of course my parents thought I was crazy to buy a 2 bedroom condo for 84K in 1985 because they bought their four bedroom house for 35K.

I had two cancellations today. One was because my price was too high and the other was because someone outbid my client on the house and they lost the deal. The real estate market is weird for sure.