May 07, 2007

Make the case that there is no housing bubble (and crash) in your city

The floor is yours realtor trolls and confused homedebtors...

For the rest of you, tell us how bad your city is gonna crash


Anonymous said...

Any thoughts about NYC, Manhattan? Will it follow the path of SFrancisco? please, advise

Anonymous said...

Uhm, because Lereah and Greenspan said so? No?

unomyname said...

As usual, Philly lags the pack....

Anonymous said...

There is no bubble here because overnight everyone went to med school and now they all make $250k a year. Where is this place? Why Anytown, USA.

traineeinvestor said...

Because supply is not keeping up with demand? Of course I live in Hong Kong where the Hong Kong government appears to have learned the lesson from the last bubble bursting in 1997 which was followed by six years of painful price depreciation - in some sectors prices fell by 60%.

As a monopoly supplier the HK government is effectively keeping the supply of land for development at levels which keep mass and mid market homes at levels which are relatively affordable (especially when compared to the 1990s bubble) but still leave room for some appreciation or depreciation in line with general economic conditions.

It is a very different environment from the bubbles which are either still being inflated or are begining to deflate in some other markets.

keith said...

REALTOR Clown on left: There's never a bad time to buy

Homedebtor Clown on right: I'm not going to sell my home for less than I paid last year

Notice there are no buyers in the picture

Anonymous said...

The house made more every year than i made working, and made half of the amount paid for it every year for 20 plus years if i can find someone like the guy who bought the place across the street to buy it as he did last year???

Anonymous said...

better buy now as the price of the average house in ten years will be multi millions, and the inflation rate adjusted to say, just 2.5 percent??????????/ and the wage at 9 dollars an hour, unless you have govt work, or political patronages

Anonymous said...

Unfortunately, MD seems to be holding up well. There are, apparently, tons of people flocking here for who knows what reason - one of them is the military base and closures realignment. So, we are stealing housing wealth from other states in order to remain irrationally exuberant longer than the rest.

UGH. It's taking forever. There have been some nasty articles in the Baltimore Sun, and more homes for sale, but lots of people seem to still be in denial.

Anonymous said...

Yum! Cupcakes!

Anonymous said...

Manhattan NYC has had it's share of boom and bust cycles. There have been quite severe retractions in the past, notably in the early 80s when prices declined well into the double digit territory.

Clearly, as historical data shows, prices in Manhattan DO come down, and can come down a LOT.

Fast forward to today.

Manhattan has been holding up well, *relative* to the rest of the nation.

Here are some thoughts as to why:

1. More than 75% of apartments in Manhattan are Coops, which require at the minimum a 20% downpayment by the board. In addition, most require proof of liquid assets AFTER paying downpayment and closing costs of at least one year's worth of mortgage/maintenance/tax payments, either in escrow or in a savings bank account. Even for condos, regulations in the City put closing costs at $25-$50k, depending on who pays for the transfer cost (new vs old condo building).

In other words, sub-prime issues won't crop up as immediate problems in the city due to its unique regulations that minimize the risk associated with mortgage loans to unqualified people. It will still affect the city, but in more subtle and indirect ways. This has been evidenced by charts provided by the Post which show that foreclosures south of 100th street is almost non-existent, but is very rampant in the other boroughs, especially Jamaica Queens et al.

2. Still some interest from foreign buyers, mostly European (thank you sinking USD).

3. Local economy (i.e. financial services industry) is still doing well. Key word is still. If there is a large unraveling (thank you super-levered hedge funds and banks working together like 'WinTel'), it could very well have a tangible impact to the local economy.

4. Influx of retiring baby-boomers (aka UES, Beekman and Sutton areas within the city). There has been some evidence of such demographic movement, although the impact is not as clear (i.e. these retirees still need to SELL their house to move into NYC, and that's the hard part).

Any other ideas?

So far, the local Manhattan market has been strong, but activity is slowly unwinding, as it normally does during the cyclical selling season.


Stuck in So Pa said...

"Anonymous said...
Unfortunately, MD seems to be holding up well."

Which doesn't hurt you if you live in PA just above the border and work in MD. Almost everybody that I know works in MD since there is nothing local except minimum wage and/or farm labor.

There is no bubble here, just susceptibility to the ripple out effect. It hurts locally when the overpaid Balt/DC a#sholes shell out way too much for what few spec homes are built in this area. However, the amount of "For Sale" signs this spring may signify that the rush to buy up here may be coming to an end, that and $3.00 a gallon gas!

Matthew said...

Even in TEXAS where there's tons of land, we're having a mini-bubble.

I just got my new property tax assessment in the mail -- here's the juicy part:

"From 2002 to 2007, your appraisal has increased by: 32.5%"

So in only 5 YEARS, in a small Texas town, houses have gone up by 32%?!

Yes, the bubble is everywhere.

Anonymous said...

Austin, TX is still booming. Lots of CA equity refugees think nothing of dropping 2X or more median. Even the small y-o-y sales decline is explainable because last year March and April were abnormally successful months. Flipping is alive and well here, thriving especially in East Austin.

If anyone can point to the same kind of housing crash signs we are seeing in other parts of the nation in Austin, then I'd sure like to see it, because I think this area is lagging 2-3 years behind the rest of the country's housing bubble.

The housing bubble will not end until easy credit completely dries up *and* the markets see there is zero hope of a bailout of *any* party. Neither has happened yet, and I doubt the second condition will ever take place. We will see a bailout of some sort. Mark my words. I'm re-evaluating my defensive positions that hedge my dollar-denominated assets, because the effect of these poor decisions on the dollar will not be pretty. I believe we're already seeing signs of a melt-up in the equities markets.

Anonymous said...

Unsold inventory of existing homes has been rising during April-May 2007 in Northern Virginia. One owner recently reduced prices $25,000. The extreme units priced high above rents are in danger of price collapse. A couple of months ago it was possible to buy a condo with mortgage payments below area rents, but those low end units are now harder to find as there was some buying action for the discount condos.
With raw materials shortages in stainless steel, copper, oil, natural gas etc. and a weakening dollar, the cost to build a home exclusive of land and labor might increase again.
The cost of cement was rising the past five years.

Cyclical and longer term inflation due to international competition for scarce resources might eventually lead to a bottoming out of housing prices.

Daphne64 said...

Our house valuation (in Kansas City area) when we bought in 1996 was 90k. Now it's 160k. That's a 5.4% annual return - not much over REAL inflation. The neighborhood has not declined as far as I can tell - it's safe, and in a "good" school district.

If you consider that our first mortgage was at 7.875%, and our current one would have been 5.75% without points, it's entirely possible that housing is actually cheaper here.

As far as the local economy, it's doing reasonably well, except for all the recent Sprint layoffs...but those are so recent it wouldn't have impacted prices yet.

The bubble is very real, and may very well cover 80% of the population of this country, but there ARE pockets that have escaped. I would be interested in finding out why.

Anonymous said...

Cape Cod-enormous bubble.

The ultra-rich living next to cranberry pickers, clam diggers and the like. Prices basically staying the same. High foreclosure rates because most people here (the above mentioned cranberry pickers, teachers, etc), thought they might also be able to live here too-ha!

Unfortunately, something will have to give as all of eastern Massachusetts is way, way too expensive and, as uncomfortable as it may make the ol' rich blue bloods around here, these people have to live somewhere. As it is, they are commuting over an hour and a half to get here.

Given this, the housing made available and affordable to most of these honest, hard-working people is bordering on slave labor sheds.

I guess that's it, Cape Cod is now bordering on slavery. It's 2007 and we're back to slavery. The only difference really, is that skin color is not the criteria, but rather making less than, say $85,000/year per household

Kevin Gunn said...

I'm not seeing signs of a real bubble or crash here in the Research Triangle area of NC. My house has appreciated at about 7.5% annually over the last 15 years (but that was with a renovation along the way that added square footage). The population is growing. The housing market began to cool last fall, but only to more normal conditions where houses stay on the market a bit longer instead of selling immediately.

7.5% annual appreciation is good growth, but since the house was completely renovated it isn't ridiculous.

Of course, I think the market in many areas is insane (Florida, Arizona, etc), but my town never saw 30% annual gains, so I don't think we have to far too come down either. Of course, an economic slowdown due to bubbles bursting elsewhere may hurt us, but all-in-all we're in good shape.

Anonymous said...


No bubble since prices did not rise during the "bubble" everywhere else. 700,000 net new residents here since 2000 and even with all that you can still buy a new 4 bedroom/3 bathroom home on 1/4 acre for under $300K in the burbs.

One area where prices will fall somewhat is condos since there is some overbuilding in Buckhead and Midtown. But even that won't fall too mcuh since prices never got to $600K for 400 sq ft studios like in Las Vegas or Miami.

What doesn't go up can't go down.

Batman said...

Edmonton Alberta, Canada. Tripled RE value in about 7-8 years.

Alberta and Venezuela and a few African countries are the only petro producers not in decline.

Province has pop of about 4 million. New projects in recent years value about 10 billion for tar sands development.

Government recruiting workers of all kinds globally. Huge strain on infrastructure with boomtown effect. Meth and hookers also having big boom as 95% male workforce works in remote northern jobsites. Trailers going for 200 grand in Ft. McMurray. Wages going through the roof. Almost all stores have "help wanted signs". Service jobs do not pay enough to support bubbling living costs. Service industry bringing in mostly Asian and latino workers to do work.

There is a shortage of raw materials to build projects. Simple stuff like steel and concrete are starting to blow budgets of projects as they come on line. Very difficult to retain educated workers - headhunting galore.

Dick Cheney has visited twice to make sure we're still gonna give him the oil. Active efforts by US to prevent Chinese investment.

Basically, when the bottom falls out of this one, it will be a nightmare, but it is totally out of phase with the rest of the global slowdown. I say we're toast in about 2010.

Anonymous said...

Virginia is grossly overpriced for a disaster of roads, influx of gangs from the district, and bad drivers. You say a 25k reduction as if it's alot - VA inventory has been exploding since late '05, prices have fallen much MUCH more than 25K - some houses listed have gone for more than 120K below original ask, and they weren't on crack - they were just a few months late.

I got my house for 18% off effectively. If I end up upside down, there are thousands and thousands of people worse-off than I am by a mile.

devestment said...

I live in Los Angeles where there is always work within minutes of home. My town has one of the largest economies in the world and is an international city. People from all over the world come here to buy second and third homes. The last time real estate got sick the film industry kept my business going. My problem is not a housing crash in Phoenix. My problem is finding a big enough tax shelter to impress all my phony ass friends!

YOU may ask “why do I read this site”? Because I love distressed assets at pennies on the dollar, (and I am a smug bastard)!

banshee said...

Hey, Ann Arbor, MI. No bubble here. Prices almost flat for the past 4 years, we paid $105k for a small older house in 1992 and it's probably only worth twice that now. Doubling in 15 years is probably roughly on par with inflation...Granted, we're renting the place out and have been for years, rent covers PITI and the occasional maintenance/improvement like roofs and furnaces...

Anonymous said...

Housing may have hit bottom

"By Dean Calbreath

May 1, 2007

Despite a surge in home foreclosures, the worst may be over for San Diego County's beleaguered housing market, according to a study to be released today by UCLA's Anderson Forecast, one of the state's leading economic think tanks..."

NOTE FROM REALTORS: please do not read any further. Thank You.