Real estate bubble - already deflating!

[Island Son]

Warren Buffett's AGM address says "significant downward adjustment"
http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/index.htm?cnn=yes

Article from Fortune
http://money.cnn.com/2006/05/03/news/economy/realestateguide_fortune/index.htm?cnn=yes

 

[nycgirl]

In the Northern VA area things are starting to slow down. The high priced condos (300,000-450,000) are moving slowly. The developers are offering all different kinds of incentives, low-no closing costs, 1yr of no condo fees, etc.

 

[heatherrae]

I just moved here to Fl, but I have heard that the real estate market has begun to slow down here.

 

[Razorguns]

it's all spread out. People move in patterns. Cities with booming populkations (la, vegas, fl) have skyrocketing re. Cities where they move from, get a net loss of people. That means the re market takes a hit with real estate, but no one to move into them.

The key to RE is to analyze populatino patterns and build 'in the path of progress'. When there' shitloads of people, and few properties - you're sitting golden.

 

[boxerjake]

Market cycles ... if you could perdict them you would be an instant millionare

Housing prices will always be up in one location and down in another .. it's all demographic . Unless intrest rates skyrocket , in which case alot of people are going to be losing there homes

 

[nycgirl]

Market cycles ... if you could perdict them you would be an instant millionare
Housing prices will always be up in one location and down in another .. it's all demographic . Unless intrest rates skyrocket , in which case alot of people are going to be losing there homes

That's starting to happen. Many people bought homes they really couldn't afford via Variable Rate Loans. Foreclosures are going up across the country.

 

[perp69]

That's starting to happen. Many people bought homes they really couldn't afford via Variable Rate Loans. Foreclosures are going up across the country.

That is what I have been waiting for Good times for real estate investors are coming.

Perp

 

[bran987]

it's all spread out. People move in patterns. Cities with booming populkations (la, vegas, fl) have skyrocketing re. Cities where they move from, get a net loss of people. That means the re market takes a hit with real estate, but no one to move into them.

The key to RE is to analyze populatino patterns and build 'in the path of progress'. When there' shitloads of people, and few properties - you're sitting golden.

wait a minute, you're telling me all I have to do to get rich in real estate is be able to predict the future before everyone else and buy in a market where the population will boom and forecast that there will be an extreme shortage of housing and be able to predict the timing of all these events coming together in a perfect storm of investing magic and I will get rich!??? YAAAAAAAAAY

by the way you misspelled population as "popu-latino", but I'm going to rip that off as a term to describe the latino population, that's awesome.

 

[marshallmadman]

We just bought a house for $3000 less than the current owner paid 15 months ago. The area we bought in is notorious for over-priced real estate in that area.

 

[calveless wonder]

Appreciation has slowed down in the major areas... NY, NJ, FL, etc

Not really deflating, just increasing at a slower pace. The spec investors are now having their actions catch up with them. People can't afford housing and the price per sf. anymore without living really far...at least in major cities because of the incredible appreciation rates.

Manhatten is easily 1k a sq. ft, miami 300-400 a sq. anywhere decent.

Same thing with NJ.

ALot of these preconstruction projects are overestimated as well...the demand is down so alot of peopel are dumping properties alot faster

 

[Creepusmaximus]

Real estate is worth what you can rent it for. If you can rent it out and make money after paying expenses then it's time to buy. Vice-versa applies. I can tell you on Hilton Head Is, SC condo prices are way over their rental price therefore they are over valued right now. Beach front is sky high too. People are trying to get 3 million for an ocean front tear down, not much land. Too high.

 

[gettinripped]

the mkt has all but stopped here in fl. not a bubble bursting only a correction of the kt. which was needed. investors had driven the mkt. prices up so high that everyday buyers were phased out. things will level off soon. for now though, being in re myself it's hard. went from six figures 2 years running to this year not nearly that. good that i paid off many debts while things were kicking. hopefully we'll have a favorable hurricane season and 07 will kick off right.

any other agents here in the fl mkt??

 

[calveless wonder]

the mkt has all but stopped here in fl. not a bubble bursting only a correction of the kt. which was needed. investors had driven the mkt. prices up so high that everyday buyers were phased out. things will level off soon. for now though, being in re myself it's hard. went from six figures 2 years running to this year not nearly that. good that i paid off many debts while things were kicking. hopefully we'll have a favorable hurricane season and 07 will kick off right.

any other agents here in the fl mkt??

Not an agent, but i'm a mortgage banker.....

The couple of realtors that i worked with also have had to deal with big income hits too. They're hurting...luckily a bulk of my business in my office is refi so the slow down in the purchase market isn't hurting me.

when are you in FL gettinripped?

 

[gettinripped]

i'm in the nature coast area. hour or so above tampa bay. my appraiser friend says that his biz has slowed too including the refi boom. glad to hear your not in that boat. how about you, what area you in??

 

[bran987]

Not an agent, but i'm a mortgage banker.....

The couple of realtors that i worked with also have had to deal with big income hits too. They're hurting...luckily a bulk of my business in my office is refi so the slow down in the purchase market isn't hurting me.

when are you in FL gettinripped?

refi's haven't slowed?

 

[Creepusmaximus]

refi's haven't slowed?

Probably people in ARM's and interest only loans going into fixed. It's time to do that if you have done so already.

 

[calveless wonder]

Probably people in ARM's and interest only loans going into fixed. It's time to do that if you have done so already.

bingo.......


3 trillion dollars in arm products out there.

 

[bran987]

Probably people in ARM's and interest only loans going into fixed. It's time to do that if you have done so already.

except for the folks who ARM'd themselves into a 0% down and are in houses worth 80% of what they paid who can't refi now! poor bastards.

 

[calveless wonder]

except for the folks who ARM'd themselves into a 0% down and are in houses worth 80% of what they paid who can't refi now! poor bastards.

yeah lol.

i.e. michigan. That state is fucked

 

[Island Son]

http://www.nytimes.com/2006/07/15/business/15money.html?ex=1153195200&en=0eded5947ac6de12&ei=5087

As home prices appreciated from ridiculously high to unbelievably higher, more Americans began using mortgages that allowed them to buy more house for less of a monthly payment. Next year, a large portion of those rates move up and homeowners who opted for the exotic mortgages could find their payments doubled. Talk about bloody. They need to find a way to minimize the pain.

Many will refinance their loans. But for others, whose mortgages now exceed the value of their homes or whose debt payments exceed 40 percent of their incomes, there may be no other solution than to get out of their houses. With the housing market cooling, selling it may not be easy. Some may default on their loans.

With more homes on the market, prices could begin to fall. That reduces home equity — the difference between the amount borrowed and the total value of the home — and could force people whose loans change in 2008 and 2009 to consider selling, further accelerating the drop in prices. Some of those cities with the highest proportions of interest-only loans are also at the greatest risk of falling prices.

 

[Island Son]

In some areas of the country where homes are expensive, these loans were highly popular. In most California cities, as well as in Denver, Washington, Phoenix and Seattle, interest-only loans represented 40 percent or more of all mortgages issued in 2005.

Traditionally, interest-only loans and adjustable-rate loans were used by people who expected to live in a house only a short time, but such loans have turned into “affordability products” as housing prices rose. The interest rate on the loans, while below that of conventional 30-year fixed-rate mortgages at the beginning, resets after 3, 5, 7 or 10 years, depending on the loan. So, homeowners who took out loans in 2004 could find, for example, that their initial 4.25 percent loan climbs to 6.25 percent or 7.25 percent next year.

Someone now paying $350 a month for a $100,000 interest-only loan could be facing payments of $680 both because of the shift to the higher rate and because the borrower would have to start paying off the principal as well as the interest.

 

[bran987]

I read $300 billion of ARM's are adjusting this year and $1 trillion will adjust in 2007.

is that correct? or is it $300 million and $1 billion next year.

 

[Island Son]

I read $300 billion of ARM's are adjusting this year and $1 trillion will adjust in 2007.

is that correct? or is it $300 million and $1 billion next year.

If you look at the average house prices, $300 million isn't a lot for a population of what, 300 million now? That's probably less than 1000 houses.

 

[velvett]

Prices have not come down here but the market has slowed as far as sales and oddly enough it's a buyers and a sellers market.

I just did some work for a builder, he was putting a spec house on the market in an area in walking distance to a former "affordable housing section" and behind a commercial lost and the railroad.

It was listed at 3.3 mil - 500k lower than two agents suggested and it sold in under 30 days for CASH at 2.9 mil and closed just shy of 3 weeks.

I have to tell you I am utterly dumbfounded by the real estate here.

 

[bran987]

Prices have not come down here but the market has slowed as far as sales and oddly enough it's a buyers and a sellers market.

I just did some work for a builder, he was putting a spec house on the market in an area in walking distance to a former "affordable housing section" and behind a commercial lost and the railroad.

It was listed at 3.3 mil - 500k lower than two agents suggested and it sold in under 30 days for CASH at 2.9 mil and closed just shy of 3 weeks.

I have to tell you I am utterly dumbfounded by the real estate here.

that really is amazing, where are you again?

 

[bran987]

If you look at the average house prices, $300 million isn't a lot for a population of what, 300 million now? That's probably less than 1000 houses.

yeah, I checked, it's $300 billion this year and $1 trillion next year

 

[rnch]

i beg to differ!

real estate is booming in the unflooded historical residential sections in what's left of new orleans. the local newspaper reported a 212% increase in one year's time in some sections of town.

 

[bran987]

i beg to differ!

real estate is booming in the unflooded historical residential sections in what's left of new orleans. the local newspaper reported a 212% increase in one year's time in some sections of town.

so you just have to destroy most of a city to make the rest of the real estate around it increase in value?

 

[rnch]

so you just have to destroy most of a city to make the rest of the real estate around it increase in value?

that's about the ONLY thing that birtch katrina did for the good!

 

[RottenWillow]

Prices have not come down here but the market has slowed as far as sales...

Same here in Atlanta.

My mom is a RE broker/investor and stopped picking up REO's and foreclosures late last Winter. She's been doing this so long she knew things would slow way down quite soon. She was right on that score.

By early '08 it'll be a great time to start picking up properties.

 

[Island Son]

http://www.thestar.com/NASApp/cs/Co...ageid=968332188492&col=968793972154&t=TS_Home

Many observers have seized on the recent dire news from Toll Brothers Inc., the Horsham, Pa., based company that bills itself as "the nation's leading builder of luxury homes." Profits are down. More arresting, the company has substantially reduced its land position, thereby red-flagging its declining confidence in future sales. Robert Toll, the company's chief executive officer, assessed the situation this way: "The speculative buyers of 2004 and 2005 are now sellers; builders that built speculative homes are trying to move them by offering large incentives and discounts; and some anxious buyers are cancelling contracts for homes already being built."

As Paul Krugman wrote in The New York Times: "Pop!"

House sales are falling. Foreclosures are up. See Massachusetts, where foreclosures increased by more than 50 per cent in July from the same period the year prior. See Detroit. See Dallas, where the Dallas Morning News reported last week that mortgage defaults in the Dallas-Fort Worth area are up 30 per cent.

Those holding firm to the belief that housing woes exist only in such pockets could not have welcomed yesterday's news from the Washington-based Office of Federal Housing Enterprise Oversight, which reported the sharpest quarterly decline in home prices since its house price index was launched in 1975. "[T]he deceleration," said director James Lockhart, "appears in almost every region of the country."

 

[RottenWillow]

As Paul Krugman wrote in The New York Times: "Pop!"

I think he's jumped the gun on that. A lot of indicators suggest the crash has actually yet to happen. (one of them being my REIT fund is still gaining )