Unless David Lereah reads this site, I figure nobody would even attempt to deny that the late great housing bubble has popped, and we're on the way down.
Prove me wrong though. Make your case, realtors. Tell potential new home buyers why they should get in right now.
Good luck.
Here's an oldie but a goodie from Mr. Lereah, just to kick a guy when he's down...
“I’m still bullish on the housing sector,” said David Lereah, chief economist for the National Association of Realtors, who admits that he has been surprised by the pace of home sales and price gains. “I don’t think we’re close to balloons popping. The supply is still very lean.”
May 14, 2006
Does anyone, anybody, ANYBODY, want to make a case that the housing bubble has NOT popped?
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45% of Americans believe in a literal interpretation of scripture, 29% still support Bu$hco after disaster # 8,273, 30% still think Saddam was behind 9/11 even after the fabricators of that myth acknowledged their role, of course lots of people live in denial. It's the American way. You can't counter religionist (faith-based) thinking with evidence/proof/argumentation. It just doesn't work.
face it, we live in a country full of morons. or last suckers in.
folks with no financial education or interest, signing their names away on $500,000 condos in Phoenix.
they'll wish they had some financial education in a few more months, after they lose everything.
just too busy with american idol to worry about little things we do. you know, M3, the fed, the dollar, china, oversupply, bubbles, corruption, ...
it's all truly sad. really.
I'll take the bait.....
The housing bubble has not popped.
The median price of houses sold in 2006 will be higher than in 2005. The full year median price has had an increase every year since 1968. Until there is a decrease in median prices over a full year, you cannot say that the housing bubble has popped.
As I've written before, whether the bubble has popped or not depends on what real estate market you're talking about. There wasn't one single bubble nationwide because there isn't one nationwide real estate market. The maxim that all real estate is local holds true.
Take Louisville, CO for example. It's a small town with a cute historic downtown only 15 minutes or so from Boulder and about 35 minutes from Denver. Compared to the previous two years, we're now seeing higher sales volume, higher prices, lower inventory, and lower days on market. Buyers know that Louisville didn't see a bubble from '00 to '05 the way cities along the coasts have. In fact, it's just been rated as the #1 small affordable city to raise a family.
Now, I fully expect that if the (mostly coastal) bubble markets keep deflating, rates keep climbing, and the MSM keeps focusing on upside down homeowners we should see a psychological cooling this summer even in very strong markets like Louisville.
Boulder is already showing the beginnings of what could be a softer summer market, particularly on the high end. Meanwhile the foreclosure situation isn't impacting Boulder as much as some of the surrounding counties.
If the market cools in highly desirable places to live that didn't experience the bubble, I think it's a possible buying opportunity.
The national median price of a home increased an average of 9% a year from 1/01/63 to 4/30/06.
Osman, your certainly are a salesman, unreal.....Your even trying to sell to bubble believers. Sales must be rough to come by. You crack me up man.
nope, no good arguments yet.
especially the stupid "past performance guarantees future performance" post
those realtors. a GED should've taught 'em something
Anon, I'm not trying to sell you on anything, I've simply presented a (requested) contrarian opinion backed up with numbers.
Osman's right. Not all areas are overvalued. There are some that are undervalued compared to themselves in the past. Very very few. But still there are some.
I just came back from looking at some KB homes out in riverside california. Sense I looked at them last. ( about 4 months ago ) They've dropped the prces by 100k. You can look at their little tract map with the little sold signs stuck into it, just when the bubble popped. The houses that closed before Thanksgiving were all occupied, but 85% of the homes completed after that are up for sale. There must have been a lot of people who took it in the shorts to get out of their contracts! Oh Last summer, these homes started at over 780k to 890k
Boooouulder? Last known home of Jonbenet Ramsey? Lovely town. No shortage of yuppie moonbats and starbucks.
It's still not clear that we will see a national decline in housing prices. Apart from the top bubble markets, we may just be looking at flat prices for a few years. I know some HP'ers have a strong view that this constitutes a burst bubble, but I am not convinced. If prices are just flat for a few years, you can buy now and your equity won't disappear. Sure, not a great investment, but if you're buying a home, and the price just stagnates instead of drops, you'll be fine. So no, I am not convinced the bubble has burst outside of the top bubble markets (S. Fl, Phoenix, SD condos, Vegas condos, maybe MA, etc).
The big question for the rest of the country is the economy. If we have a recession, I think you see a national decline. But it is not at all clear that the economy is headed that way; most indicators are generally fairly healthy for now.
No, I am not a realtor, I am a renter and bubble sitter.
The housing bubble has not popped. At least not in Bay Area. There are still bidding wars (believe or not). Why? I think because 60% to 80% of population are not financially educated.
I do predict that bubble will pop next year - in Jan or something like that.
Disclosure: I am not a realtor. I am renting.
Even though I don't agree with Osman, I think he's got bigger balls than anyone I've ever met by sticking to his guns. Even we bubble believers have to admit, if someone ever needed an advocate on their side, they'd be hard pressed to find someone better than Osman. Yes, I disagree with him, but damn I really RESPECT the guy and think well of him.
I actually sought out his web site because so many of you harshly demonize him. Based on his postings on this site and his photo on his site, he appears to be a very respectable and professional guy.
I've seen some very mean spirited comments on this site directed to him and I think it's totally out of line. As a result, I actually visit this site less than in the past because of that and all the political and religious attacks.
The housing bubble is real, but not because a bunch of morons who hate religious people or those with traditional values, say so.
I think this site is now comprised mostly of whiny liberals instead of the professionals that have historically contributed here. The only thing that now makes this site interesting anymore are the pictures, which is a brilliant strategy : )
The area's i'm familiar with have not been declining in price. i don't look at so called official #'s but i look at the area's myself by traveling there or people who live there. here are the place's prices are still going up utah, seattle bainbridge island, maui(where i live), reno, austin, socal which includes san fernando valley, valencia, pasadena,west la culver city, thousand oaks, also last week i was in socal between corona and temecula visit a new golf community and those crap houses were still selling and the 40,000 golf membership was increasing daily, another area increasing steadily is boise id. So all you bser's try to dispute this. be honest, i dont think prices should be this high but when have massive amount of realtor hard selling people house will continue to sell. have you ever been to a time share presentation, if anyone really looked at the #'s they would know its not worth it but if you've been to maui every hotel has become time share. The point is if people are getting sold the bs it's going to take some serious rate hikes or something significant to get price declines.
sorry anon, prices in the valley are going down month to month, with April's numbers just out. One by one the others will fall too, just a matter of time
Ther are sold sign still in LA
David Lereah and the NAR are nothing but puppet propagandists for their masters, the National housing industry. There are a lot of powerful interests which want to perpetuate the continuing rise of Home prices. Local Governments for the rising property taxes, all current homeowners, developers, the entire RE complex, all politicians of both parties( most of whom own homes), The Chinese, The home-improvement industry, all contractors, illegal alien construction workers and their apologists(left-wing activists), All the big city newspapers, ect. They do not care that millions of recent borrowers will soon be in over their heads and drowning in debt. All these powerful interests are betting that the Federal Governmnet will somehow come to the relief of distressed homeowners thru passage of legislation, maybe thru mitigation of the just -passed Bankruptcy law. I have heard of some cities/municipalities doing just that, I think Charlettsville or some other southern city passed local legislation granting some type of assistance/relief to its poorer citizens who took out subprimes and went into foreclosure.
Im not buying. When I am buying it either has popped or I won the lotto.
I surender. Osman, Take my money.
Veritas Faust: That's a pretty cool story.
I haven't had a verbal fight with anyone yet. They have all agreed that prices will drop (in CA) or at least are on the fence ("flat prices").
I believe we will see national declines because once all the coastal markets are in true panic mode, it will sway many middle states. We are likely two years off before getting to this point. (e.g. Colorado might have an okay market for years.)
Certain parts of Colo may have an "ok" market for years and others may struggle. The big threat to Colo prices isn't the coastal bubbles imploding. It's the high rate of foreclosure in certain counties including Arapahoe, Adams, Weld, and Denver. As the local papers have noticed, this rash of foreclosures is oddly coming at a time of relative economic strength for Colorado. Usually foreclosures come when the economy keels over. The greater blame seems to lie in a unregulated mortgage industry. Colo is one of only two states that doesn't regulate mortgage brokers.
"no national housing bubble"
Take all those soothing words, pointing at the 150k homes in Ohio and Iowa which are slowly appreciating at 4-5%.
The still low "US median home price".
Blah blah.
What really matters? The money of course.
Those "individual areas" of bubbledom, like oh, Florida, DC area, and California----that happens to be a hell of a lot of people. California is the biggest state in the country.
And if you have a high percent decline from an outrageous price---that's a buttload of money evaporated and people in huge problems.
This amount IS significant, even on the national scale, even though Old Horse Neck, Nebraska didn't have a housing bubble.
Also consider the tremendous merging of all the banking institutions----who will be owning these "junk mortgages". It ain't George Bailey's Local Thrift Savings Bank any more---it is Mega Money Corp who owns things even in the small locations.
As their balance sheets rot, lending and capital will evaporate from the unbubble heartland just as it will from Phoenix Condo Hell.
so......the general consensus here is that the housing bubble has NOT popped on a national level?
if it has popped on a NATIONAL level, someone please provide me with hard evidence.......
Me: Renter
Place of residence: Arizona (scottsdale)
Education: Grad degree from Pac 10 school
Plans: Move out of here to someplace with better job prospects
Hope: To buy a place where I can live for at least 4 or five years....longer if possible
Any suggestions?
last anon.....that is why "median" is a good indicator.....it figures in home sales from the WHOLE country, not just AZ, FL, CA and NV..........
no bubble here in Old Horse Heck mid-America
Keith,
From judging the comments here, some of your readers have no class, judemental, mean-spirited... and I liken them to vultures/pit-bulls.
The way they attack Osman or someone that offers a different perspective on the housing situation is a reflection of their ignorance and narrow thinking.
The bubble peaked last summer and is in a slow decline at the moment which will accelerate in its decline in the coming months. However, Osman is right is that in some areas real-estate bubble were non-existent and won't be affected much by the downturn like those bubble areas such as Phoenix, SD, SF, LA, Miami, and others.
The impact of this unravelling of the housing market will negatively affect millions of people who got caught up in the mania and were blinded by their greed. Broken marriages, financial ruins and indentured servitude will meet many Americans. Though many people may deserve their financial fate, it doesn't give license to kick them for their misguided decisions.
The target for your anger or outrage should be aimed at Alan Greenspan and the BUSH GOP leaders who allowed this just because they didn't want to deal with the recession after the tech wreck.
It was Allan G who recommended ARM loans for Americans in his testimony before Congress just as he was starting to raise interest rates.
Keith, I think you need to refocus and the changing the blog's attitude because at the moment -- the attitude is mean and that sucks!
When, not if, the next recession occurs and/or interest rates rise to their historical averages of between 8-10%. KABOOM! Until then, it's stagnation hell and the last idiot into some crappy condo conversion in Scottsdale that sells for 200k (real value $70k.)
Any Questions?
"Keith, I think you need to refocus and the changing the blog's attitude because at the moment -- the attitude is mean and that sucks!"
There's some truth to this. There are some bitter people, and others who like to work out their aggression on the internet because it's safe to do it (a lot of them are probably fairly meek types in person).
However, you should also consider that hard hitting exchanges are part of what gives a thread its energy. Extremely polite posts are often kind of bland, uninteresting, and often not any more intelligent than the nasty ones. So it's a fine line.
The bubble isn't only confined to the coasts. Like the first people in this country with the flu, the crazy californians, have spread their disease far and wide. Some east coaster's should also be included. Even the inland areas, like Albuquerque, and Texas, are seeing huge price runups. It's the last gasp of the speculators. It's not that there won't be a slowdown in these areas, it's just happening after the coasts. The reason that the ecomnomic data doesn't reflect what's really going on, is to complicated to contemplate, but I do know that "slowdowns" are usually "unexpected" by all the talking heads on tv. The "soft landing" isn't going to happen. It going to get really ugly, in a year or two.
Here in the New York City area, it seems that for sale signs have sprung up all over and some asking prices have come down here and there but sellers seem to be taking the position that they can wait out the current climate and sell their house for what the neighbors got at the bubble's peak last summer.
Bottom line, if you are a buyer, there is more selection, less pressure, and more bargaining power, but you really can't say that the bottom fell out of the housing market. I think that wont happen until spring of 2007 when sellers see that having held out a full year has only resulted in a less favorable market for them. Then reality will sink in.
If you are a buyer looking to buy a home you should wait until the term "investment property" becomes an oxymoron and interest rates return to simulative levels. I have marked April 2009 on my calendar.
If you have a software or other tech degree look at Huntsville, Al. I suppose financial will also do. There is a big gain coming from BRAC which, if funded, will bring many many good paying jobs in.
I am a SoCal native and like it just fine (except for the bible belt stuff and fat women). Land is cheap, air is clean, Nashville is 90 miles up the road.
Prices in AZ (PHX / Scottsdale) goin down a little bit. Homes just not selling. Plus lots of buyers low balling now which is good. I think prices will go down but maybe not too much. Outlying areas in the valley may see significant decreases because nobody wants to buy an expensive home 40 miles out. I think if PHX hits 55k homes for sale, the fed raises rates again in June and the typically good summer months for sales dry up, sellers are in some trouble. And that's where I come in. I want to buy, (just not used to renting long term anymore)but I want to buy at least $200K below the asking price. I figure if all those conditions happen above (which is extremely possible) I can get to my 200K figure. Better to sell for little or no profit than to foreclose or declare bankruptcy. Prices ran up so much that an original buyer of a home 3 years ago can still make some profit by taking 200K less than the asking price. The investors and flippers will lose out but f*ck them, they are the reason everything got so bad in the first place. Love the fact that I made so much money during this bull market and now it's earning interest while I rent worry free. But all in all I wish the market would have stayed the way it was in 2002. Affordable!
Did a quick review of houses sold in Pasadena< ca in the last 30 days and this market isn't popping. There were just as many sold at asking or above as there were at under asking price. Personally, I think prices everywhere are too high but some people just dont care. Especially when lenders are coming up with more and more creative financing (50yr, 100% option ARM, etc..)
The "bubble" is probably regionalized - Miami, Phoenix, etc..
We all must be patient. The price decreases will come, but before that, many people will have to admit they made a mistake, and that will take some time. Vacant houses are an albatross around your neck. We paid two mortgages for a year, a while back, and it was not pleasant. We had to drop what we were doing many times, to babysit potential buyers, only to have them back out at the last minute. It was incredibly time consuming. Not to mention going over after every weekend, cleaning the floors again ect. Lots of people are going to find out the hard way. Besides, renters trash your property, so that's not a resonable option, unless you get really lucky.
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