Didn't even know there was much of a bubble up there. If it can get bad in Minnesota, imagine Tampa, or Miami, or New Jersey etc, where things got out of hand. The farther it flew, the faster (and harder) it'll fall
Isn't it funny that EVERY paper runs to the biased president of the realtor association for the reaction / quote. How about a homeowner? How about a professor? How about a bubble blog author? Geeze!
If you're trying to buy or sell a home in the Twin Cities, you've likely noticed the housing market winds are shifting. It's good news for those looking to buy a home.
New data says homeowners put up "for sale" signs at a record pace in January. The new numbers mean each buyer in the Twin Cities has about six homes to choose from compared with just over four last year at this time.
Todd Shipman, a realtor and the president of the Minneapolis Area Association of Realtors says, "There's thirty percent more homes on the market that came on as new listings in January than the previous year."Shipman says this record number of January listings means more choices for buyers. "We're finally tipping the scale," he says. "This is the market buyers were looking for three years ago."
February 12, 2006
Minnesota: January home listings hit record high
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Wow! Home values to rise another 6-8% this year. Wish I could short that comment.
A huge rise in inventory with no buyers is the classic first signal of a faltering market that usually takes a decade to unwind. Sellers are in denial, and still believe their homes are worth what an agent told them. Those that are not forced to sell will simply take their properties off the market, while the desperate ones will do whatever they can to escape - lower prices to the point they owe, then default if they haven't sold yet, flooding the market with foreclosed properties. This will cause the values of ALL propertes to adjust down.
The downward adjustment takes several years to play out, after everyone has shed the denial and come to accept the new, lower, more realistic values of their properties. Then properties will languish in that range for a half-dozen years or so, and bargains can be had everywhere by astute buyers. Nobody will be buying real estate as a sure-fire investment opportunity, although that is probably the best time to do so.
From the article: "But he adds it's still not a buyers market."
These realtors shold put their money where their mouth is. With all the "soft landings" and "temporary corrections" and "no bubble in our area" lines, why don't these spinsters buy up a few properties in their area today and report back in a year.
It's the same in Wisconsin. Madison has a glut of houses and condos. Late last year, Real Estate agencies Lost 20% of their slow sales to a FSBO company. Recent article in Milwaukee paper states Home Listing DWARF Sales with over 3,200 units available. Between Taxes and New Service Fees..."Buy a Home in Wisconsin - and RENT it From the State" is becoming Reality. http://www.jsonline.com/story/index.aspx?id=400756
"Sellers are in denial, and still believe their homes are worth what an agent told them"
I believe it is in the realtors best interest to deflate the bubble in a hurry - a stagnated market means no transactions ergo no Lexus lease payments...
When the bargains abound in a few years, whatever realtors are left will not be driving a Lexus.
The tastes in vehicles of choice for real estate agents will be changing over the next few years. Here are projections for favorite vehicles in 2009:
1. 1961 Ford Falcon station wagon
2. 1968 Chevy Nova sedan
3. Bicycle
4. 1962 Chevy Corvair
5. 1969 Ford Pinto
6. Skateboard
7. 1970 Dodge Charger
8. 1984 Air Jordans
How LONG CAN YOU TREAD the Dangerous Cold Dark Waters of DEBT and Negative Cash Flows Mr Speculator and Flipper? I'm Gonna put on the Popcorn and have a Beer to Watch you Dodge the Icebergs while I Chuckle and RENT for a year or TWO!
I didn't think the Pinto came out until 1970.....he he, they'll be driving the prototype with 2-cyl engine.
Does anyone else remember when realtors used to drive common man cars? Now they're all in the uber-luxury and expensive SUV's.
It's a classic bubble when everyone is quitting their tried-and-true jobs to become mortgage brokers and realtors.
9. chevy vega
10. piggyback
Were years away from a crash if that happens. Most state will
have zero gains for a longtime but crash i'm not going to believe until i see it. areas i'm familiar with utah, austin, washington st, socal thousand oaks/ san fernando valley/ santa clarita / pasadena/ventura, simi valley/moorpark, all still doing very well. show me stats of s&s homebuilder where there not still selling homes. Alot of people i know are make good money 90,000 plus in jobs business not related to housing. pharma sales, industrial sales, web security, financial advisors, too many to list. 90,000 being one person of a married couple 150,000 easy combined. If theres not a terror attack or iran issue, bird flu pandemic, which all are unlikely crash will not happen.
This whole mess IS nation wide AND does involve commercial property too.
Just look at loopnet.com and check out commercial property prices in YOUR area! Be prepared for a SHOCK. The artifically low GREENSPAN induced intrest rates caused a real estate MANIA across the board..... YES across the board!!!! Simply put the intrest rates went DOWN and the property prices: BOTH RESIDENTIAL AND COMMERCIAL shot WAY WAY WAY UP!
Areas that were already HOT boiled over in terms of outrageous prices!
In these places, and we all know where they are, it was like pouring gas and oxygen on tiny fire.... IT ERUPED! And Greenspan had the balls to call it FROTH! HA .... he created the greatest asset bubble in HISTORY! GET IT RE ECONOMISTS....
IT CALLED A BUBBLE YOU BASTARDS!
"Were years away from a crash if that happens. Most state will
have zero gains for a longtime but crash i'm not going to believe until i see it."
You fail to understand that 0% appreciation is a crash in itself. If inflation is running 5% (which it is if you include food/energy prices), then you are losing 5% value per year which is within the definition of a crash.
Everyone who expects that housing will be okay with flat prices (I.E. soft landing) needs to learn some simple economics. A dollar today is worth more than a dollar tomorrow. Let's use this example for a $100,000 house that has stagnant prices while inflation is running 5%. (I'll depreciate the house instead of appreciating income which gives a better picture of the value)
Year House Price
1 100,000
2 95,000
3 90,250
4 85,738
5 81,741
...
...
... any guesses what the house will be worth at 10 years?
...
...
10 59,873
So with inflation at 5%, the average house will have lost $40,000 per $100,000 value over 10 years. (approx. 40%)
As a lifelong Minnesota resident - in fact, having lived in this same home my entire life - I'm seeing the second RE bubble now on its downside. I'm suprised so few learned from the first time around.
Back in the early 80s, real estate prices here began surging. In 1978 homes in my neighborhood were assessed in the high $20s-mid-$30s. By the mid-80s the average selling price for homes in this neighborhood was right around $100K. Then the market adjusted: over the next several years the average value declined by 30%. After that low, housing prices began to gradually increase, regaining about half of that lost value by the mid-1990s.
Even as prices rose, homes in this neighborhood _never_ stayed more than a week on the market. By last spring, the average selling price in this neighborhood was $230,000. At about the same time, however, homes suddenly began languishing on the market. We've had one home in this neighborhood listed for an entire year, a couple others for more than six months. And yes, the prices are now falling. Last home sold went for $218,000.
Having lived through this once already, I'm expecting another substantial decrease in value over the next five years, followed by a slow appreciation. But what is making me livid is the city council _still_ jumping to a big developer's tune. They want redevelop a huge area of our neighborhood and jam in 800-1000 above-storefront condos and
townhomes in an area previously built with single-family housing. They're insisting that people will pay $325K-$375K to purchase a condo situated above a pizza parlor or dry cleaners, not acknowledging that a very nice single-family home on a third-to-half-acre lot here sells for considerably less than that now.
I'm afraid they'll force this mega-development through before the reality of the RE market adjustment makes it obvious that it's just not doable. Currently, they're still insisting it's not only doable, but necessary, claiming the population in the Twin Cities will be doubling in fifteen years.
I remember getting stuck with all the empty strip malls as an end result of the 80s RE boom/bust, I don't want to be stuck with a big empty development-turned-housing-project practically in my backyard.
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