Bay Area Sales Volume Drops
A reader posted this link to DQ News which shows some big declines in Bay area sales volume, along with big increases in prices.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole. ATTENTION: Backup Blog at: http://thehousingbubble2.blogspot.com/
Saturday, May 14, 2005
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5 Comments:
Definitely a sign of stagnation, a highly anticipated stage before price corrections.
I just come back from lunch in the Cupertino / Los Altos area. It is though to look one way without seeing three or more "Open House" signs.
Occasionally, here in Central Florida, a seller will raise their price when the property doesn't sell. The times I've seen that tactic work are maybe one in 50, and probably for a different reason. Only if a buyer is using a really stupid (or unethical) Realtor, who does not set the search parameters wide enough, would the right buyer miss seeing the right property at the almost-right price. I'd think that very few buyers today do not do their own research on the Net. So the days of fooling anyone by raising the price ought to be long gone. Chip
Things seem to be slowing in the Boston area as well according to
one of the real estate "mags"
err advertising pamphlets.
Sales were about half of what they were a year ago for March, but
unfortunately median sale prices were substantailly higher for most areas as well.
I called a FSBO (for sale by owner) today about a local house.
I asked him to tell me about the house, and he asked me which one!!
I just hope this flattening market causes speculators to start bailng out. Its really awful to see the "American Dream" being destroyed here in Massachusetts.
by these speculators like this driving up prices..
The prices are so insane, that even with a doctorate, I'm priced out of the market here as well.
I'm starting to wonder if we'll see the same sort of exodus from MA that we are already seeing from CA. I know I probably will leave MA if we don't see some sort of correction in the next couple of years.
Lets put it this way... the median income family in MA earns about 60k or so. The median price house
in most middle class towns has gone well into the 400s. Considering tax + PMI the mortgage on this would be 2500/mo.. 30k a year.. half the median household income __before__ taxes.
Absolutely horrifying....
and to think California is worse.
Our lawmakers really need to get speculators out of the market
somehow. Provided that they actually do want to help middle class families out..
This is the same process that occurs when the stock market is topping. The market keeps rising but on the backs of fewer and fewer stocks.
In the late '60s-early '70s, the market pretty much made its top in '68. Most stocks and sectors then began a long decline that lasted until 1982, though the nominal bottom was around 74-75. It was era of what was known as "The Nifty Fifty"---fifty stocks that everyone had to own to the near-exclusion of all other stocks. So these 50 kept ramping while everything else was in the toilet. When these 50 started cracking, it was all over.
In the late 90s, the bull market that had started in 1982 was on fumes. Most stocks and sectors topped in '98 and began their own bear markets. But the market kept going higher and higher? Why? Money poured into fewer and fewer stocks---primarily tech, telecom and dotcom. By 2000, even though the market was much higher than in 1998, the majority of stocks were lower. It was only the tech/telecom/dotcom sector that was going up. But it was going up so much that it carried the broad indexes with it.
The avg Joe thought the the market was healthy---because all he saw were the index prices---but it wasn't.
So it's not surprising to see median home prices continue to rise while sales volume begins to drop off. That's a sign of a top forming.
I've been reading about these real estate seminars which encourage people to buy underpriced properties for no money down. The key to success is in finding owners who---for some odd reason---are willing to part with the RE for below-market prices.
Obviously in an up market, these people are harder and harder to find. And apparently there are so many "graduates" of these seminars that owners in hot areas are being bombarded with phone calls, knocks on the door, flyers on their windshields, etc. You've probably seen them: "I Buy Houses!", "Ugly Houses Wanted!", etc. All these tactics are taught at these seminars that are often promoted via late-nite TV infomercials.
It's a pretty sick business. The whole goal is to identify frail individuals---like the elderly or the uneducated---and try to separate them from their assets.
A few years back, I remember reading about a team of real estate speculators who had gotten ahold of a list of people with various degrees of Alzheimers. They would call them or visit them and try to get them to sign paperwork signing over their homes at fire-sale prices. Though this example is pretty hardcore, what these "seminar" people are doing is more or less the same thing, to a lesser degree.
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