FLASH: Real Estate fund manager expects a 50% fall in home values for inflated coastal markets

Are Arizona and Nevada close enough to the coast Ken?

For anyone thinking of buying a home today in San Diego, Miami, Tampa, Naples, Phoenix, Vegas, Boston, DC, Sacramento and a few others - unless you're getting 50% off of the peak bubble price, don't even think about it.

And nice to see an expert talk about the 800-pound gorilla in the room - that incentives are cuts in value just like price cuts are.

"I expect a 50% decline in the inflated coastal markets.... [When] homebuilders' conference calls talk about the concessions they make in the form of extras at no cost to the buyer, they can be 20% to 30% of the house price. So the full 50%... may come in other forms"

- Kenneth Heebner, manager, CGM Realty Fund, September 2007

Instead of slashing house prices for all to see, desperate builders go crazy with incentives, and increase the blatant realtor bribes

Got a few thousand homes that nobody can buy anymore, that are still insanely overpriced? Well, seems like the best thing to do at that point is cut the price, right? As in drastically cut the price?

Nope, not if you're a desperate new homebuilder. If you simply slash the price, then you've essentially "Marked to Market" (there's those damn three words again) your entire inventory of unsold homes - and also those of your competitors. And then it would be clear to everyone that the game was over.

So what are they doing? They're blatantly distorting the "median price", and are out trying to move dead inventory with crazy incentives, which in my book is simply mortgage fraud as the home is wildly overappraised versus true value. Plus they're paying bribes to realtors to steer unsuspecting sheeple into overpriced sh*tshacks. Yup, gotta love those meaningless NAR ethics.

Here's some of the incentives: No payments for X months. We'll pay your property tax and home insurance. Free cars. $100,000 upgrade packages. Pools. Garages. Closing costs. Flooring. And hookers & cocaine (well, not yet, but just wait)

And don't forget, in the middle of all this, there's blatant collusion and pricefixing now amongst the homebuilders... FLASHBACK: Here's Hovnanian's desperate CEO a few days ago, in complete violation of price fixing statutes:

"Raise prices," he said. "Buyers aren't buying because they think you're going to lower prices again. There's interest but there's fear. Raise prices 3-4 percent. And quit giving discounts.''

Here's the article on incentives. So remember, when you hear the NAR and US Government numbers on housing median prices, just laugh. And laugh and laugh some more.

Perks, Price Cuts Become More Lavish As Developers Grow Increasingly Desperate; Would You Like a Pool With That?

With the housing market looking increasingly frail, home builders and real-estate agents are going to new extremes to attract buyers, dangling lavish incentives and slashing prices.

Builders generally try to avoid outright price markdowns, in part because it angers prior home buyers who don't want prices in their subdivisions forced down.

In markets such as Denver and Seattle, builders are increasingly willing to pay agents substantially larger commissions -- as much as 4% of the home's sales price, up from 1.5% or less -- to help unload inventory homes

Associated Press lead: "Housing market may be worse than stats reveal". HP: "No duh. Glad we could help"

Here's the AP version of HP's thread the other day "FLASH: Lennar tells us what new homes are REALLY selling for, and it's ugly. Really ugly"

NEW YORK (AP) - Here's a scary thought about the housing market: Things may be far worse than what's already being revealed by the troubling government and industry statistics.

At issue is what goes into sales price data and what does not. When those numbers are crunched, many of the incentives that sellers are using to lure buyers - including cash rebates - aren't being included.

That suggests prices may be falling faster in many markets than is now being reported. The same goes for how the mortgage-application indexes don't account for the implosion of lenders. That could have the effect of masking a slowdown in demand, which is why the housing market could be in for rough sailing much longer than most anyone anticipates.

There certainly has been plenty of bad news, but it might not even be giving a full picture of how difficult things really are.

For instance, the Commerce Department reported last week that the median sales price of new homes fell 0.9 percent in May from a year ago, after tumbling 10.9 percent in April.

But those numbers don't include the thousands of dollars in lavish incentives like plasma televisions, pool installation and closing costs that sellers are increasingly using to woo buyers. That means a home selling for $600,000 gets reported for that price even though all those extras technically are reducing the net sale price.

Sales incentives at Lennar Corp., one of the nation's biggest builders, averaged $43,700 a home in its fiscal second quarter, up from $24,700 in the same quarter last year. And it isn't just builders piling on the incentives - it's spilling over to the existing-home and foreclosure market, too.

"In effect, they are reducing the new sales price but that is not showing up anywhere in the actual sales data," said Peter Schiff, who runs the investment firm Euro Pacific Capital Inc. in Darien, Conn.