Jim Cramer: “Seattle, and 10005 are the only two. Maybe Montgomery County in Maryland. Three. That’s it.”

Got to love Cramer, although he’s a little much to take sometimes. I don’t necessarily agree with him all the time and in this case, I don’t at all.

DJ: If everyone on this board agreed on everything, it sure wouldn’t be as thought provoking. Calling someone names who doesn’t share your belief, or maybe shares it, but not to the same extreme… I appreciate the schoolyard namecalling and look forward to more of it… it sure adds to the conversation.

spare me the holier than thou act…

I enjoy this site, but I’m beginning to think that there’s a growing contingent that has as much ostrich syndrome as the real estate agents do.

What a load of crap. What exactly have you researched?

Is Brittney Spears actually a man? Or is she a block of wood? The truth is somewhere in between.

Is Bob Dillon the greatest president of the world? Or is he a mechanized gorilla? The truth is somewhere in between.

Will all homeowners tap miraculously equity from their homes for all time? Or will they all be paying 120% of their income towards property taxes? The truth is somewhere in between.

My point; that’s a worthless comment that people make when they don’t have a clue and they don’t want to actually do any research.

TJ: All I’m saying is, I agree with you. I’m fine with the equity cushion that I built based on the crazy market around me. Did I put money in to gain that 30% (on paper)? No. Therefore, if it drops a little (on paper) oh well. I’m here for a while and if it gets really bad, maybe I’ll see a 10% loss off what I paid for the place… consider that the cost of enjoying living in my own home.

WreckingBull: thanks for the freudian analysis. I’ll look into that and get back to you. I’m always up for a deal… that’s why I’m here… trying to get a pulse on the market. However, everyone here needs to do a little research outside this board once in a while too so they can formulate an opinion of their own. Its easy to get bogged down with the ‘facts’ that are being presented. Watch many michael moore movies lately?… better watch with an educated eye, or just drink his koolaid… your choice.

I’m thinking the ‘truth’ is somewhere in between.

Now that I have sold my place to a greater fool, this blog is more interesting to me. But for the life of me, I don’t understand why people like Big Spenda waste their time here if they are in fact comfortable with their finincial decision of home ownership.

Why the incessant need to defend your decision to buy? Is something nagging at you from the inside?

Sounds like you are happy with the situation with your house / home. If that’s the case, I agree that it wouldn’t make sense to sell right now, unless, as you mention, you are attempting to play the market (sell high / buy low). My point being, simply, is that a homeowner doesn’t really realize any gain until he sells. Paper gains based on increased evaluations are worthless until converted, right?
You’re not one of those who believe home equity loans are like free cash are you?

So you can realize the gains. If you don’t move, downsize, or take on more debt (HELOC) then you’re not realizing any gain. So go and get a HELOC and realize those yummy gains.

Alternatively, try and picture how other people’s situations may differ from your own. Close your eyes and just imagine for a second. That’s right… Other people…

Imagine you’re someone that is not in the housing market. Perhaps a first time buyer, or someone who moved from another state (like me!). Would you buy right now?

It’s not a question of “shall I sell, rent, and then buy”. Sometimes, other people have other situations, and the question is more like “given that I’m a buyer, should I buy now, or in the future?”

…..unfortunately, as they sat on the sidelines for the past 4 years, they failed to capitalize on the 30% gain that many owners enjoyed….

Judging by current market conditions, I would recommend that you put your house on the market RIGHT NOW to realize that 30% gain. Unfortunately, it appears that you will be competing with all of the other speculators for those buyers that can still qualify for a loan.

For the record, you will see prices revert back to the norm. The only real questions right now are how long, and in what form it will take. Will they drop 80% and we have a depression? How about 20% coupled with massive inflation? Or maybe 5% inflation a year an prices are stagnant until 2020?

Pick your poison.

The only way the bubbleheads are ‘right’ about predicting a collapse is if we see a drop that wipes out all the gains the market made for the past 4-5 years. Otherwise, you weren’t ‘early’ you were ‘wrong’.

….it’s more fun to pretend that the people who predict the collapse of a structure built on a rotten foundation are somehow “wrong” by being early.

They will also justify their position by saying that they were “right” for x number more months, implying that they are experts at timing the market.

Does your Queen Anne condo tracking account for listings that were canceled, then immediately relisted under a different MLS# with a price drop? I don’t think this is an ethical practice, but it does happen (and did for one condo a friend-of-a-friend is trying to sell on Queen Anne). Is there a simple way to catch this?

Although it should be noted that today’s price on TOL is after a 2:1 split which occurred on July 8th, 2005, just after the Cramer article. So the comparable price of TOL is really $44.70.

Still proves the point though. Like I said, the guy is a financial entertainer. And that article you posted was flat-out entertaining.

“Bubbleheads, Admit Defeat by Housing

By Jim Cramer
RealMoney.com Columnist
6/16/2005 10:11 AM EDT

As Toll Brothers (TOL – commentary – Cramer’s Take) cruises through $100, it’s time to hold the bubbleheads accountable. Who are the bubbleheads, in my book? Those are the people who have told you to bet against housing and to be worried about the speculative boom in homes.

Here’s where I am coming from. All day, I listen to and read people who say that housing’s got to roll over, that these companies can’t work, that it is just a matter of time. Then I look to see what’s been outperforming these stocks. Is it drugs? I don’t think so. Financials? Nah. Techs? Nope, not at all. Now I want to know when those who have warned us incessantly or told us it can’t last will get their comeuppance.

One thing we know about being a bear: It’s a loved sport. You always sound so professorial, so logical. The cynics in journalism — a cynical profession by nature — love to interview the cynics. But at what point are the cynics wrong and not just early? When Toll is at $200? Is that when they are defeated? $300? It’s an interesting question. [CCG: How about $22.35, where it is now?]

I think that if you are going to prognosticate, you have to be willing, at a certain point, to say, “Well, I was wrong about that one.” If you can’t do it, you aren’t prognosticating; you are a doctrinal prisoner of a dogma that’s not working.

That’s where we are now, with Toll at $100. We must be willing to hold these people accountable for being wrong.

Or we should just stop caring and keeping score at all.”

http://www.nationalreview.com/kudlow/kudlow200506201040.asp

“Larry Kudlow
NRO Economics Editor
June 20, 2005, 10:40 a.m.
The Housing Bears Are Wrong Again
This tax-advantaged sector is writing how-to guide on wealth creation.

Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.

None of this has happened. The Federal Reserve has effectively mopped up excess cash and calmed inflation expectations [CCG: This must be why gold has tripled]. That’s why bond rates are hovering around 4 percent, with most mortgage rates about a point higher.

Meanwhile, the homebuilders index has increased 76 percent over the past year, with particularly well-run companies like Toll Brothers up about twice as much. The bubbleheads missed all this because they haven’t done their homework. If they had put a little elbow grease into their analysis, they would have learned that new-housing starts for private homes and apartments haven’t changed much during the past three and a half decades.”

Actually, no elbow grease was required. One drop of common sense was all it took. Of course, when you’re a paid troll like Kudlow, it’s more fun to pretend that the people who predict the collapse of a structure built on a rotten foundation are somehow “wrong” by being early.

I wonder who they think should be “held responsible” for the bagholders who listened to their cheerleading of effortless credit bubble wealth?

We wouldn’t want to be hypocritical, now, would we, and ask not to be stereotyped while still stereotyping others, right?

Now when have I ever done that? And why would I unfairly stereotype house owners when I intend to become one someday? I think you are just wishing I was hypocritical so you could have something to attack.

House Prices in America by Median Price and Valuation

I tried your calculator, but it didn’t let me put in negative appreciation, so I couldn’t get a true monthly cost for our market!

I was up there in July. I counted 10 construction cranes in downtown Bellevue. It reminded me of Shanghai in the 90s.

What stereotype is that exactly? I think if you ask anyone on this blog, they will list a number of types of homeowners they know of. Retirees who are free and clear, empty-nesters who are nearly paid off, families making reasonable payments and living in nice neighborhoods, flippers, baby bombers who have pulled out money and will not be ready for retirement, yuppies in affordable condos, yuppies who over-leveraged because they were told it is the only way to get ahead, etc.

If you feel like people on this board are stereotyping, it is because that’s how you expect to be treated, not because it is actually happening.

The reason that only the over-leveraged owners are mentioned is because we already know the people who aren’t will be fine. Rather, we attempt to keep attention focused on the 30% of people who are at the most risk and who influence the market.

Ditto for the stereotype of all home owners you see on this and other bubble blogs. We wouldn’t want to be hypocritical, now, would we, and ask not to be stereotyped while still stereotyping others, right?

I am hearing the same thing anectodally, but I don’t have the experience to put it in context.

D

Title companies are laying off or going on mandatory 32 hour work weeks to save jobs. This hasn’t happened at this time of year since the early 1990s.

maybe because you just moved here or you have 3 kids and you want those kids to go to a nice school and renting a 4BR house in the burbs just doesn’t cut it when your wife is used to her granite counters and you like your workshop in the garage…(ie. you like having a ‘home’.)

[sarcasm]Yeah, because if you’re not renting it from the bank it’s not a home. And you totally can’t rent nice homes.[/sarcasm]
I was just in the market for a rental home and found just as many if not more “nice” houses for rent. We had a hard time finding lower end homes for rent.

The stereotype of rentals (and renters) being crappy is old and tired. That kind of stuff isn’t seen as truth anymore except on realtors’ blogs.

2. which leads me to my second point, the music has stopped and where lots of people are today is where they will remain. They don’t want to take a loss and they have no reason to. There are many who will not make it through the winter (since they were depending on rising house prices to refi), so maybe those houses will get knocked back to 2005 or 2004 prices. In the mean time, a few on the sidelines will scoop those up and be happy that they finally got their house. I wouldn’t expect them to be selling anytime soon after that either.

3. why buy now? maybe because you just moved here or you have 3 kids and you want those kids to go to a nice school and renting a 4BR house in the burbs just doesn’t cut it when your wife is used to her granite counters and you like your workshop in the garage…(ie. you like having a ‘home’.) So maybe you sold your other place and you have a downpayment that is made of money that came from increased realestate value (most people that bought a house more than 7 years ago have a good amount of equity by now)…. so maybe you think to yourself, what the heck… renting isn’t an option at this point and the with the money I made on my last place, i’m ok with taking a 10% bath.

http://www.zillow.com/Charts.htm?chartDuration=5years&testAds=false&zpid=49116497

Repo’ed at $565,000, for sale: $551,000

it’ll sell, lender repo’s are priced to sell. But lender’s aren’t stupid. They sell for what they can get.

Sadly, my search doesn’t catch everything in the county, e.g., I see signs for places that aren’t in my results, but I’m hoping it is somewhat representative if not spot on accurate. If I change it, new data won’t relate to old so I’m sticking to it.

Already, there are some Whatcom Flippers in Trouble. Examples:

Bought for 357k on 8-26-2006, now for sale at $7000 less than that:
http://homes.realtor.com/search/listingdetail.aspx?lid=1084314875

Bank owned?
Trustee sale to Novastar Financial for $294,660 last spring, currently for sale for $224,900:
http://homes.realtor.com/search/listingdetail.aspx?lid=1086101409
Loss = $69,760

Sold 8-8-2005 for 674k, currently listed for $649k representing a 25k loss:
http://homes.realtor.com/search/listingdetail.aspx?lid=1084595698

And there are lots of people with houses just on the cusp of a loss — surely these will also result ing a loss once all costs of selling are included.

planned Condo conversion goes back to Apartments.

Nobody wants to catch the falling knife. Just like how people bought to avoid being “priced out forever” a nominal drop in price will be met by most buyers who are not stupid with “lets wait until it drops more”. Unlike sellers, most buyers do not need to buy a home immediately. It is usually just a lifestyle upgrade, and therefore can be put off indefinitely in the face of falling prices, especially if making the wrong decision means you may lose the down payment you saved up for years. Since a few weeks ago you actually need one of those now, hence Seattle sales dropping 50% this month.