Feedback from yesterday’s data included some of you requesting that I produce a longer-range version of the plot of average, median, and mode. Your wish is my command. Here are those aggregations going back to the beginning of 2007, which is as far back as I have been able to pull detailed sales data:
The mode was floating around the $375,000 mark for most of 2007 and early 2008 before taking a big leg down in late 2008 along with the average and median. Since that time, it was relatively stable around $300,000 until this year, when it dropped to $225,000 for seven of 2011′s ten months that have passed so far.
It was also requested that I plot the standard deviation of sold home prices for the serious data geeks. Ta-da:
Hard to make much sense out of this one with all the noise, but it does seem like it’s been on a bit of an upward trend since early 2009, which would indicate a slight broadening sales across all price ranges, rather than a tightening of sales around the low or high end.
00
The Mode Chart Says It All
Taking a regression analysis approximation with a ruler [just as much lines above as below] and eye balling the trends, its about a 17% downward slope [SWE's estimate].
That pretty much matches the actuals in my SE King County area for homes. The homes went up about 50% peak in 2006-2007 since 2000 and in four years since the peak 2007 year, the past 50% equity gain is just about gone [close to your 40% peak to peak est, Tim, especially adding in the 10% escrow costs to sell]. The since 2000 losses are worse if I add in lost interest paid [approx offset by no rent though] and upkeep [i.e., mine is due for a new roof and interior cosmetic upgrades....that eats the 10% difference up easily].
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What I wanted to see was the flattening of the trend line for the tax credit.
I think this shows it perfectly.
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30-40%? Thats nothing! Getting ready to fly out to the land of the 80% off “sales” ….
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RE: RAY PEPPER @ 3 –
I’m glad you’re here. My contention was that I have always been able to buy a house in Las Vegas, or Phoenix for that matter, for between $95K, and $120K, three bedrooms 1 and half to 2 baths, with a pool.
Those houses started going for $220K, and more, as far out as Henderson, just to be kind.
I don’t think we’ll go below, but as near as I can recall everything went to heck in 1998. I’m thinking that we are going to hit 1998 pricing.
OK, let’s call some of the millions of housing units built in the middle of nowhere dozer bait, but for viable housing, set near job centers, I’m thinking 1998 prices.
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Regarding the above charts.
The first set of downward mean, median and mode prices confirms what I have been thinking. We continue in a price downtrend.
The second chart showing sustained moving average sales is reassuring in a good way, that we are actually seeing continued sales within a decreasing price range that means we are absorbing inventory, that we are actually marking to market?
Is this a bone of good news, that the market is starting to work again?
Do sustained sales mean that the real estate finance sector is breathing some life again?
We have to weigh this on the basis of larger global interests which have turned down once again on the “failure” of the supercommittee and the descent of the next PIIGS country, Spain into election purgatory.
I vote we are in for temporary local price stabilization and not a bad time to buy a place to live. But with a high probability of continued downturn over the next ?? 24 months?
FWIW, I am ready for this miserable downswing to be over. May I leave this movie theatre, please?
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By David Losh @ 4:
In King County?
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By ricklind @ 5:
Don’t leave yet. We haven’t even got to see the bond vigilantes yet, and that’s the best part of the movie!
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This is interesting. We’ve only worked through about 1/3 of looming WA foreclosures.
According to Case-Shiller, prices have fallen back to 1998 levels in Vegas. Could King County be next?
http://www.responsiblelending.org/mortgage-lending/research-analysis/disparities-in-mortgage-lending-and-foreclosures-maps-data.html
Sorry to repeat myself like a broken record, but don’t even begin to look for a bottom in house prices until jobs come back in earnest.
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RE: Jonness @ 8 –
“bottom in house prices until jobs come back ”
Nah- don’t need no jobs. The government is going to give us all houses through kind of a modern homesteading act. Wait for it. Sure, they may be “dozer bait” but they’ll be free!
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RE: ricklind @ 5 –
Ya Can Buy a 42 Inch Flat TV for $199 at Best Buy This Black Friday
No one complains about prices going down on food sales either [SWE bought two 28 cent/lb turkeys from WINCO]…why are houses any different????
Its great news, not bad news; especially for first time home buyers, the “Y Generation”…our Seattle area future.
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Speaking of prices……David @ 4:
We all know zillow is at best a dart board guess, but a neighbor of mine now zillow’s at 155k. Paid 310k in June ’07. Exactly 50%. That’s comparable to the latter part of the 90′s price. So I’d say that yes, in fact, parts of the greater Seattle Metro area have retraced to 1998 prices and / or retraced 50%.
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By No Name Guy @ 11:
If you’re going to compare apples to apples,we’d need to know what Zillow valued your neighbor’s house at in June 2007. Knowing Zillow, probably 450.
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RE: softwarengineer @ 10 – Well, the theory is that a house is the main store of wealth for the disappearing middle class. So home owners are seeing wealth vaporize. The result of this loss of wealth is all around us – unemployment, recession, federal and local government deficits, etc.
Of course, falling home prices is good news to the potential home buyer. But as the potential home buyer lives in the same environment of economic decline, he/she is still affected.
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If you shift to condos vs houses there are plenty of 50% or more under peak and 1998 or almost 1998 prices…though most are shortsales or cash only buildings. Even in Kirkland and other prime areas “North of the I-90 Bridge”.
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RE: Blurtman @ 13 –
I Agree Somewhat Blurtman
The problem I see is quantifying how much jobs will be created keeping federal treasury interest rates around 0% [zombie rates, like Japan] in the name of the golden calf housing. I come up nada. But I see lots of jobs created when rents and housing collapse and the extra loot goes to travel, home repairs and automobiles [especially domestic].
I do know the zombie banks today are doing one thing: keeping older boomers in their McMansions workin’ ’til they die….can’t retire on $1M in the bank anymore on 0.5% money markets….another noose around the “Y Generations’ neck”, less retirement job opennings, especially professional paid positions. Also, the fed’s attempts to prop the housing market with interest deductions and Fannie/Freddie bailouts don’t create jobs either, look at the actuals today….but higher interest rates in the retired pockets will spur economic growth as the retired folks spend their retirements….
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By Blurtman @ 13:
And therein lies the problem.
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RE: softwarengineer @ 15 – No easy way out. Consider that the Fed (we?) hold lots of toxic MBS that will become more so with the continual decline in the RE market. I prefer the free market approach. This micro-managed stuff seems to be worse than the disease. There are a good deal of folks that are of the opinion that if we had not bailed out the TBTF banks in 2008, we’d be over it by now. The way I see it, we are jusst kicking the can down the road, as the problem gets larger and larger.
I am mostly in cash these days, but hold some equities. My health and family are the most important things, although I’d like to knee cap a few investment bankers. And being in touch with nature. That is important and a good reason to live in the Northwest.
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RE: Lake Hills Renter @ 16 –
Yes Lake Hills Renter
There in lies the problem….house equity going up or down is a joke [ya need some place to live 'til ya die]; it’s all paper gains or losses….won’t put hamburgers on the plate to retire.
Some bankster crooks out there are screamin’ “reverse mortgages”….like some SB blogger put it so eloquently, “reverse mortgages, we might as well hit the aged over the head and steal all their loot”.
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By softwarengineer @ 18:
Yet so many people here are focused on very short month to month price changes.
Even before becoming an agent I would say that the increase in property values back then didn’t matter, unless you were planning on selling and moving to another area or different type of property, such as when you retire. So for example, if you retired and moved to some place cheap on the coast, those past increases in King County values would help you.
BTW, not sure why you’re so against reverse mortgages. They can be a good option for many elderly people. The main concern is will they continue to fund going forward in the face of declining values.
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OMG MISOS? Apparently this is AFGO, because I can not distill real estate lingo that isn’t from an AFZ.
Do “MAI” and “Mode” and “MSA” actually mean something?
Will someone point out the Bubble Glossary and Acronym Page?
TIA
BBL
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RE: Kary L. Krismer @ 19 –
I See Where You Are Coming From Kary
The problem today is very complex and one case can’t be compared easily to another. For instance, today, the Seattle Y Generation youth are facing globalization lower wages and a high unemployment rate to boot, meaning mom and dad aren’t getting rid of their adult kids like they used to….they need their McMansion in Seattle, the whole family does.
Another twist is where ya gonna go when you need a nursing home and good ones aren’t cheap….spending your housing equity on a reverse mortgage steals from your inadequate longterm disability money. Of course you may die before that happens, but at least your Seattle house money stays in the family, not in some bankster’s safe.
Now, if you face foreclosure due to on-going large unpaid medical bills…..the reverse mortgage may be your only way to stay off the streets. But beware Kary, there’s fees [I heard like $30K] just to get the contract started and the bigger kicker, they decide when your house needs remodeling and you pay or contract default….I’m sure you have seen the legal restrictions and could advise your client in a financial emergency if just plain selling the house with no horrifying contract restrictions [and renting an apartment instead] is a much better alternative to get quick cash.
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RE: softwarengineer @ 21 – There are clearly some pitfalls to avoid (via due diligence), so I’m not saying reverse mortgages are good for everyone. I’m just saying they are a good option for some. Almost certainly a better option for someone old enough to qualify than a HELOC, if a loan is necessary.
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By findalittlehome @ 20:
I don’t see MAI or MSA used in this post or the comments, but I assume you’re referring to the sidebar charts on the front page. In that context, MAI stands for “Market Action Index,” which is a measure of market activity created by Altos Research.
MSA usually stands for “Metropolitan Statistical Area” – http://en.wikipedia.org/wiki/Metropolitan_Statistical_Area
Mode is a statistical term: http://en.wikipedia.org/wiki/Mode_(statistics)
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By softwarengineer @ 18:
These charts are scary. Next leg down coming to a neighborhood near you? And the banks have learned nothing. I just got an out of the blue phone call from my mortgage service provider trying to talk me into a refinance – never mind the fact that I’m $20k underwater. Maybe it has to do with the new HARP legislation. Or maybe we are in a death spiral of moral hazard.
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Can we get real for a second…recent articles are indicating that a significant part of the PNW population is desperate to leave and at some point it will. Pregnancies are at an all time low. Mexican nationals are reverse migrating back south.
What we might end up with is an Empty Quarter here. Seriously, I’m thinking that the Duwamish will be building longhouses along the Green River in a decade or two.
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RE: Ira Sacharoff @ 12 –
In June 07 they were calling it 297. BUT…that’s the current iteration of their plot. I recall that it was higher at some point. So, using that, its not quite 1/2 off their purchase price. But getting darn close.
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RE: Blurtman @ 17 –
“This micro-managed stuff seems to be worse than the disease. There are a good deal of folks that are of the opinion that if we had not bailed out the TBTF banks in 2008, we’d be over it by now. The way I see it, we are jusst kicking the can down the road, as the problem gets larger and larger.”
Ding ding ding….we have a winner.
Compare and contrast:
Iceland (default, wipe out the debts, move on with life)
to
Greece, Italy, Spain, Ireland, TBTF Banks, underwater home “owners”, GM, Fannie, Freddie, etc.
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RE: John Bailo @ 25 –
Yes, I Had Two Less Advantaged Latino Families Force Leave My Neighborhood
One was evicted by the sherriff and one barely sold out in time….the evicted unit is still unsold, a year and half later. It’s rambler style living room level was horribly flooded with water too…perhaps sabotage by the forced leave family [I'll probably never know]?
The younger kids are mostly gone now too….all that’s left are the old timers with grown kids.
Perhaps our current overpopulation problem will solve itself through chronic economic depression? BTW, American birthrate and new marriages looking for homes were way down during the Great Depression too.
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RE: The Desponder @ 24 –
Yes Desponder
The days of kicking the debt can are numbered. The failure of the emergency federal budget deadlock committee, under Senator Murry, cemented that.
The banks just love it when they get a homeowner on a fresh 30 years of interest payments on a depreciating asset….its like locking in 2% zombie longterm treasury bonds at 4% instead…..can’t beat that, if you’re a bankster.
Speaking of putrid investments, how about that American stock market….Oct 2011 saw it go up 10.5% alone, looks like November’s losses are eating up that Thanksgiving pumpkin pie….perhaps Las Vegas is a better investment?
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RE: Lake Hills Renter @ 16 –
What does the middle class have? What tangible assets do they end up with? Where’s the diversified portfolio?
Most people never look at the investment they have in a family home. Very rarely do people spend the time to work out the return.
We make comparisons to rents, or that we have to live some place, but do you figure that paying interest doubles the price you pay for a property? You end up with something, but do you figure what the price will be when you go to sell? How many people consider the viability of your location, other than by schools? Schools are a great tool, don’t get me wrong about that, I’m asking how many people make a Real Estate purchase with a plan. How long will you stay, how many kids will you have, will you want to trade up, or go all in?
How much do you actually know?
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RE: David Losh @ 30 – The average person doesn’t know that much – he/she are not financial analysts for gosh sakes. But historically the family home has been a store of wealth, and a means to pass wealth onto the offspring.
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By Lake Hills Renter @ 16:
25 years ago there was a commercial for Miller Lite beer where one faction was screaming “More taste!”, and the other faction was screaming ” Less filling!”. The inference was that Miller Lite was both delicious and because it was less filling, you could swill a lot of it down.
It reminds me of the current real estate market ,and for the homebuyer whether the home should be viewed as an investment or just as a place to live.
If it’s an investment, then it ought to outperform other investments like stocks or bonds or CDs or gold, because investment means the financial results are paramount. And investments ought to be thought of as either safe/low risk, or high potential reward. Most houses for sale in the Seattle area right now are neither low risk nor do they have a high potential reward.
So should homes then merely be seen as ” You have to live somewhere?”
No, because if you just “have to live somewhere”, you can generally do that for a lot less money by renting.
So should you just not buy a house right now? It depends. One reason you should buy a house right now is because you want to. Some people don’t like being tenants and the uncertainty that goes along with that. Some people are just happier when something is “theirs”. Some people feel freer when they own a house. 4-5 years ago was a very good time to delay buying because a downturn looked like a slam dunk.Still, if you had the money and you just “wanted to”, as long as you knew what the risk was and were willing to suffer the consequences, who are we to judge?
Now, it’s not as much of a sure thing that the housing market is going to keep crashing. It appears to be closer to the bottom. But there’s absolutely no evidence that home prices are about to start going up either. The risks are still there, and the potential gains appear to be very small, if any. Does it mean you shouldn’t buy a house?
No, it just means that you should be aware of the pitfalls. Should you buy a house? If you want to is as good a reason as any.
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RE: Blurtman @ 31 –
It used to be that you did go to an office with a bunch of old guys who were “selling” you a house. Now people get on line, or shop around more like kicking car tires.
Mortgages got to be easy, house hunting is a kind of past time, and every body is an expert.
Ah, heck, I’ll tell another story, why not.
One of my first mentors was a guy youger than me. He had the office across from the Broker. He had been in that office since he was 21, and started “in the business” when he was 18.
In my first year at that office he was involved in 20 transactions, 8 of which he was personally involved in. He also bought mortgage Notes as his personal income.
You had one chance with him. He would show you three houses, of his choosing, and if you didn’t buy he would decide if you were worth his time. He was a listing agent by trade, but also worked with buyers.
I only worked with buyers, and listed few properties. It was a profession. We all had our things that we did, but we were engaged “in the business.”
When I bought my first house it was like a new education. Then I bought a business, then another house, then sold the business. When working with buyers, and then listing property I had a brighter insight into the process they were going through.
I’m just saying that there are thousands of people like me who are addicted to real estate. It’s the conclusion that I came to that it is an addiction. You don’t just pick it up one day, do it until you buy then put it away.
As much as you think you’ll ever know about the purchase, and sale process of Real Property there are people out there that can actually contribute to you making solid decisions.
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RE: David Losh @ 33 –
Real estate IS an addiction! Unlike crack or heroin, there’s no lethal dose. But it can be a much more expensive addiction than crack or heroin, and like crack or heroin, people take up selling the stuff in order to maintain their habit.
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RE: Ira Sacharoff @ 32 – Investment and store of wealth are not the same thing at all. You can store your wealth in a savings account if you want to. No one would consider that an investment. Most folks, except perhaps the SB blog readers, don’t perform IRR calculations when they buy a house. ABout half do not invest in the stock market, and many that do are on 401k autopilot. As home ownesrhip had been the American dream, the only excess cash a lot of folks had went into the mortgage payment. The house then became not only a place to live, but a store of wealth that could be passed on. The mortgage was held by the local bank, which invested in the community. Securitization and casino gambling has resulted in the predation of normal working class folks. It really is time to kill the investment bankers.
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RE: The Desponder @ 24 –
The bank is not crazy in this case. Are you and the bank not better off with you paying a lower interest rate and possibly paying down faster so you are no longer under water? Also, if you are not yet in financial trouble you may be able to hang on longer until the economy turns around.
Unfortunately many on this board buy into the idea that your word has little, to no value and think this is throwing good money after bad.
If nothing else by lowering your payment you have more money to spend on more Chinese goods thereby stimulating their economy.
Also, the broker, appraiser, escrow officer, currier and many others get some work thereby stimulating your local economy.
What do you have to lose? Continuing to pay your obligations will help to slow or stop that “moral spiral” you refer to.
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RE: Born Here, Done That! @ 36 –
What it does is start the amortization process all over again, reaffirms the debt, creates a new debt instrument, and retires, “makes good,” the old debt instrument.
It’s a benefit to the bank, and debt markets. That is truly kicking the can down the road.
The house value is still under water, you are just adding about $4K in refinance fees to that fact.
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RE: Ira Sacharoff @ 34 –
Very correct, and well put. It does feed the habit, it is expensive, and extremely high risk. However there were many agents who I talked with in 2005, 2006, 2007, as well as Real Estate addicts, who told many people about the coming crash, because they had seen it before.
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RE: Born Here, Done That! @ 36 –
David’s post in #37 gets to the heart of it. I already refinanced a year ago to get a much lower interest rate to pay down principle faster.
I think it is a moral hazard, though, because in order to qualify for my refinance last year my unit was appraised for $90,000 over the price of an identical unit on the market at that time. It worked in my favor, I think, but it was clear the brokers were going to do whatever necessary to get their fees and pass that mortgage on. Unless HARP is behind this latest effort to get me to refinance, I should not qualify because of market value. It would be another case of falsifying value in order to perpetuate payments over a longer period of time and reap the processing fees. If it is the case that this attempt was backed by HARP (it could be, Fannie owns the mortgage) I still think it demonstrates moral hazard because it is a way for banks to reap processing fees and pass the risk onto the public purse – as we talked about in some posts a few weeks ago.
Generally speaking, though, I think it is a little shady to call me up a year after I refinanced to ask me to do it again. My interest rate is 3.25%, they can’t lower the rate so much that it would pay for itself. I worry that even after the debacle of the past ten years the banks have learned nothing because they have not seen real consequences.
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RE: Blurtman @ 35 –
Just to be clear here, you’re not suggesting that we round up all the investment bankers and execute them, right?( Except for maybe three or four, just to set an example?)
What you really mean is that you’d like to kill investment bankING, not investment bankers, right?
I wouldn’t mind seeing a lot of them unemployed. I’d rather see bakers and plumbers employed, and investment bankers unemployed. Bakers and plumbers do things that are useful. Investment bankers just know how to screw people.
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RE: David Losh @ 33 – Jesus, David you don’t know how to a tell story worth sh**. Was he gunned down by the fricken bankers? Or was it Bush? Cheney?
I kid, I kid.
I’m blessed to have a young daughter for which I have to create tons of stories. My respect for JR Tolkien was essentially flushed down the toilet years ago (no thanks to this stupid website)…
I’m taking serious pain from this idiot (too sober to list the URL) who insists that the OWS movement is driven by stupid college kids driven by SOMETHING (he can’t quite identify *what* they would be driven by (but George Bush II would Not Approve).
Oh, what the hell:
https://lewwaters.wordpress.com/2011/11/22/another-look-at-the-pepper-spraying-cop/
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RE: Ira Sacharoff @ 40 – Hmmm… Let me think about that one and get back to you.
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RE: The Desponder @ 39 –
It sounds to me like you knowingly took part in a shady deal last year because you were able to benefit.
The broker might not have realized how low your rate was. He may not have pulled your file but remembers your house didn’t qualify last year … oops it did.
Or you may be right, just another shady deal so he can make a few more bucks. This is how they learned to screw the rest of us while they drove the bubble, raising my taxes to the point I had to sell and move to a lesser home, with lower taxes. And you were party to it!
BTW, taxes are now low enough there that I can afford to move back, since the value is where it should have been all along.
Apparently you are doing what you can to stay current as are others with a higher rate that can be helped as you were last year.
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By softwarengineer @ 28:
Forgive me if this has been discussed before:
One aspect of the housing bubble I often ponder is the relation to the baby boom generation. The boomers were perfectly positioned to ride the unprecedented wave of US expansion into the economic vacuum left after WWII. While flawed economic and social policies were perhaps the primary enabling factors with regard to the bubble, I contend that timing and demographics also played a critical role. It’s no coincidence that the bubble occurred at the same time the boomers entered their post-child-rearing, peak earning years. If I may quote a cliché, it really was a “perfect storm.” Conversely, I content the boomers’ imminent withdrawal from the workforce will further exacerbate the decline in real estate prices beyond what might be expected during a “typical” correction. The demographic and economic gap left in their wake is really quite staggering. The stagnant salaries of the remaining wage-earners can sustain neither their social benefits (SS, Medicare), nor their inflated real estate valuations. I don’t want to fall into the classic trap of selectively seeking out data that already supports my hypothesis, but I can’t help but notice how the nicest homes in my area are overwhelming owned by 60-something empty nesters. I’m pretty sure I know what will happen when their expenditures rise above their retirement incomes, SS defaults, and they’re ready to move to singlewides in Florida and, eventually, nursing homes.
Tim, feel free to come up with some nifty graph that illustrates my point. Thanks ;)
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Forgot to add: I think 1998 prices are entirely possible, even 1994 prices if the current downturn persists.
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RE: Andy @ 44 –
I don’t believe you can blame this bubble on the boomers. We bought, we gained equity, we bought-up. Some of us even bought down years ago as the generation after us thought they would be able to do the same and paid us more than our property was worth. They got over exposed. The market drew back and many of them walked away. Unable or unwilling to hold on to a loosing position.
The middle class these people grew up in no longer exists.
Tim, what is the average age of those in default?
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By Born Here, Done That! @ 46:
BHDT:
I’m not saying I “blame” the boomers. What I am hypothesizing is there’s a correlation between the bubble and the boomers’ economic peak as wage-earners. I’m also hypothesizing that the downturn in real estate valuations will be exacerbated by the boomers’ departure from the workforce, the corresponding economic burden of their entitlements on those that follow, and the inevitable need to sell off their assets to cover expenses in what could be a high-inflationary environment.
Cheers
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RE: Andy @ 47 –
My first house increased 50% in two years, 77-79, then was stagnant for a while. I sold it in 87 for double what I paid. My second house increased 250% from 86 to 93; so I had to move. My present house is about 150% of what I paid in 93 after hitting a high of 300%, according to tax assessors and refi appraisals in 08 and 07 respectively.
My feeling about why prices went as nuts as they did —- women in the work force. With two wage earners we thought we could buy twice the house. We got the same house at twice the price. Add to that the Microsoft and DOTCOM money. The true value never changed.
It is only in the last year that I have dealt with a real estate agent who didn’t tell me house values would continue to go up. Even now I hear “the value will go up.” Value never has, just the price. One roof, one house, one home. In order to justify the price we get granite countertops and soaker tubs plus a separate shower with a “rainhead.”
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RE: Ira Sacharoff @ 32 – Remember the ad w/ the frogs: Rrrrrrrrrrrrrrrrrrrrrrrrrrrrainer beeeeeeeeeeeeeeeeer………..
The ad was great, the beer sucked big time….
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RE: Ira Sacharoff @ 40 – Sounds like a great idea!
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RE: Born Here, Done That! @ 48 – Warren discusses the ramifications of the two-income household and basically comes to the same conclusion: everyone starts competing for the best schools and subsequently drives up housing prices.
Someone else (I forget who) argues that the add’l cost of childcare would be better handled by one of the spouses exiting the workforce and raising the children.
Of course, that flies in the face of the financial interests of the Realtors ™ and other vested parties.
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RE: ChrisM @ 41 –
OK, you don’t get the Bush Cheney connection, not a lot of people do, but in a time after Obama it will all be told.
Let me finish the story with the fact I use a Real Estate agent in the purchase or sale of my property. I have a Real Estate license, but I am an addict. It’s best that I get professional help.
Another story about myself is I used to say to a buyer that if it turned out they didn’t like the deal I would buy it from them. One woman took me up on that and sold the property back to me that she had bought on my recommendation. She wanted to invest in a Vegan Jerky operation.
So I bought the house for resale. I put it back on the market for $40K more than I paid. My asking price was $179950. Idiot Real Estate agents would call me up asking the most ridiculous questions. They’d ask if the siding was Blue, or Grey, they couldn’t tell from the pictures. I’d ask if they had seen the house, they’d say no, and I’d say it’s $179950, go take a look at it. An agent told me her buyer wasn’t interested because the hinges on the cabinet door below the sink didn’t work properly. I said it’s $179950!!!!!!!!
I hired an agent in my office, and he sold it the first week end at the Open House. That was money well spent. I had it for like two weeks.
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By Ira Sacharoff @ 40:
If you consider all the wars bankers have financed, the drug trafficking, intentional destruction of whole economies… I think an honest war crimes court could easily execute quite a few.
It’s not just about mortgage fraud and robosigning. It’s a whole lot more. If interested, you can start by googling BCC and see how far and deep that rabbit hole goes.
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By Born Here, Done That! @ 48:
I’ve expressed that same thought about dual income households being responsible for price increases, but it’s not just twice the price. When you have two incomes, discretionary spending can more than double, even if the second income is not the same.
Also, part of the reason for the price increases is what you mention–granite countertops, etc. Because the discretionary spending increased so much, people decided that they wanted to spend that money on a larger house, with more bathrooms and more amenities.
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By ChrisM @ 51:
In many cases that’s correct, but didn’t the number of children decline too?
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RE: Born Here, Done That! @ 43 –
Interesting. Not sure how I was a “party to” your tax woes. I bought in May of 2008 with over 20% down, 5.75% 30-yr, making extra principle payments from the beginning. The big mistake was purchasing with only a 5 year window for living in the home. By 2010 it became clear that I could not catch up without lowering the interest rate and amortizing faster. I refinanced down to 3.25% and am making double principle payments each month with the hope of catching up in 4 years. When the appraisal came back I was surprised – but what was I going to do, tell my broker to throw it out and start the process over again until a lower appraisal came in??? On one hand, I benefited from the obscene appraisal because I got the lower interest rate. On the other hand, that was significant in my decision to try to play catch up instead of just walking away, a benefit to the lender.
Yes, I hope other people can get better interest rates and pay down their debt and live happy lives. But if at this stage of the game lenders are still practicing fuzzy math to collect those processing fees then we have learned nothing, and that is dangerous.
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RE: The Desponder @ 56 – By The Desponder @ 39:
Can you follow up on the actual sale of that unit? Did it ever sell, and if so, for how much?
What I’m thinking is it could have been one of those short sale listings where the agent lowers the price every X weeks, days or hours, to a point where the bank would never approve the sale.
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It was the people who bought between 86 and 93 that paid excessive prices for houses that caused my taxes to more than double to 60% of my payment. My wages were basically stagnant for this period so I made the choice to sell.
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It’s likely dual-incomes contributed to the run up in price of everything (not just houses), but employers were also quite happy to hire women and pay them less than men for the same jobs. Throw in divorce and single moms, and you have a counterweight to the dual-income theory.
For a long time I’ve believed that television has played a huge part in driving overconsumption and unrealistic outlooks on personal finance. Multiple generations have now grown up with the flickering screens where nearly everyone has abundance, in movies and tv shows. The Home Alone family had a gorgeous home and an expensive holiday trip. Many ’80s teen movies centered around characters with abundance as objects of desire (16 Candles, Pretty in Pink, etc.). The Brady Bunch had a sweet split-level home and Hawaiian vacations! Even before women entered the work force in larger numbers, June Cleaver had an immaculate suburban home, also Ozzie & Harriet, etc.
The images of “everyone” having so much are highly suggestive. And now we have strata of society with more than anyone could ever need and others who make relatively good wages but can’t afford to maintain the same standard of living they had when they grew up, because wages haven’t kept up with cost of living, and cost of living in the U.S. was driven by higher-income families and a credit bubble.
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By Sweet Pea @ 59:
Nonsense. If that were true, “The Love Boat” would have resulted in the expansion of the cruising industry to the point where there would be dozens and dozens of ever larger ships carrying more and more passengers. ;-)
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RE: Ira Sacharoff @ 40 – ““This struggle may be a moral one, or it may be a physical one, and it may be both moral and physical, but it must be a struggle. Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress.” – Fredrick Douglas
“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” – Louis Brandeis
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RE: Kary L. Krismer @ 57 – The comp. in my building sold for $180k, the price it was for sale at the time. My unit appraised for $270k. The other unit was a short sale, though, so that might have had something to do with it.
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RE: The Desponder @ 62 – Especially if it hadn’t sold or gone pending when the appraisal was conducted. It’s somewhat controversial whether you include short sales at all in comps, but I don’t think there’s any controversy that an active short sale is worthless.
That would, however, be a huge discount for a short sale. So a follow up question: Do subsequent non-distressed sales indicate the bank made a mistake approving that sale, or that your appraisal was wrong?
(FWIW, I’ve been cautioning against relying on refinance appraisals for probably 20 years, but as an agent I have less exposure to refinance appraisals than I did before becoming an agent, so I don’t know if the situation has gotten better.)
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RE: Kary L. Krismer @ 63 – An identical, non-distressed unit sold for $200k in July, about 10 months after our appraisal for $270. Currently another unit is in foreclosure for $170k, and has been on the market for a couple months. I think the appraisal was generous. But before the refi the most recent completed sale was mine at $305k – so the appraisers might have felt like they were in uncharted water, if they decided not to accept the short sale listing.
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RE: The Desponder @ 64 – Thanks for providing the information. I would point out that using the prior sale of the unit being appraised would be very questionable, IMHO. But you’re right about lack of comps putting appraisers in uncharted water.
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@Tim – you might want to relabel these graphs in the future to say “Prices” instead of Sales, since sales measurement is something different. I’m a first time visitor and it took me a few reads to figure out why the description said prices while the graph headlines said sales. Maybe sale prices is better?
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