01-23-2008 21:00
Three Notes on Housing
1) One part of the story that does not get much play is the demographic story on real estate. (Note graph.) Baby boomers will try to cash out of homes to fund their retirement. Now, that effect will vary by region, because oldsters will want to live in warmer or drier climates............ Perhaps we should turn New Orleans into a haven for retirees.
2) Housing prices down by another 25-30%? Sounds too severe to me, but markets do overshoot, particularly illiquid markets.
3) Even when recourse is available, lenders often find it not worth their while to pursue those who "mail in the keys." There are many who are giving up on their homes, and rationally so, ...................... Well, we wake up from dreams and face reality. Given the slipshod nature of the lending, many banks will not pursue for recourse. You can't squeeze blood from a stone.
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Dear David:
I love your 3rd note. Exactly what I have perceived and argued with real estate professionals who favor a short-sale approval from banks. Please see my article at:
A Funny World (16): Why ASK Lender's Mercy? Why Don't You Do Lender a Favor? activerain.com/blogsview/316104/A-Funny-World-16
I believe, I am an optimist who always says "tomorrow will be better" as Annie sang. But as to your 2nd note, I am unable to get your point cross. Housing prices go down 30% will be too much for you? Common, give me a break!
The price cut, more than 30% off the peak is here NOW in the most California areas. What do you expect where it shall go from the present point of time? If you anticipate now is the housing bottom, yes, you could say it would go North. But I doubt you would. I believe you are going to say it heads toward South as you put in your first note.
Certainly, you may have a good reason to say: "you get my idea wrong. I am using the year of 2000 as the base year." Well, everybody can have different stats compiled by different data. Just as Zillow.com counts a forced "foreclosure" as a volunteer "sale" and includes them into its area sale figures as normal transactions at its website.
Homes being foreclosed are growing steadily and strongly while the normal transaction is rapidly shrinking, if not down to zero. The former foreclosure SALES offsets the reduction or disappearance of later's numbers and even makes sales numbers look better and rosier in the end. No wonder Zillow.com has sales figures bigger than other websites and its Zestimate of housing price are too high in some cases. What can I say?
Here is a piece of brief quoted from Judy's housing tracker, for your reference:
Home Prices Coming Down In Area
Arthur Broslat of Re/Max Palm Realty in Port Charlotte said there is a sizable local inventory of "relatively new" homes... selling for 40% of what they went for three years ago: "I'm showing a... home in North Port that was selling for $250,000 in 2005. Now, you can get it for $130,000 to $150,000." Jason Painter of Program Realty LLC in Port Charlotte, who specializes in Cape Haze real estate, said home prices there "are off a good 35%." (Sun Herald, Jan. 22nd)
I believe housing price is mainly a reflection of other economic factors. In Detroit, the city is losing half the population in the past 10 years. They have unemployment rate of about 10% or higher. How could we expect its housing price remaining the same. Withot job, falling is a natural destiny. Consider it lucky we don't see a new ghostdown "Detroit" as we see those in AZ.
Japan experienced a 80% housing price cut in the first three years of the past 17 years. Her housing market seems stabilized now at the bottom. But who knows what can happen if the decisive economic forces lose momentum further from now.
Will American housing market perform better? Please let me share what you've got.
Auction Offers
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Enclosed herewith is a post for you guys' reference:
As I said in the main article:
Homes being foreclosed are growing steadily and strongly while the normal transaction is rapidly shrinking, if not down to zero. The former foreclosure SALES offsets the reduction or disappearance of later's numbers and even makes sales numbers look better and rosier in the end. No wonder Zillow.com has sales figures bigger than other websites and its Zestimate of housing price are too high in some cases.
My question is: As I know, Zillow.com reports a "foreclosure" as a "sale." Now comes Trulia. How do we know NAR, Shiller index collect their data for sales number sensibly, even I know everyone uses different methods? (p.s. I will say misleading is too strong, but it is safe for me to say: "to have the public confused." And believe me a decent professional appraiser won't be trapped. He or she will take it out of a comp. research.)
Misleading Listing [p.s. from Parick.com]