Good Article over at RCG

cheapseats

I haven't read the Rainy City guide much, but I was surprised to see the frankness of this article. Flame away if posting another blog link is bad form.

http://www.raincityguide.com/2008/06/23 ... /#comments

I found her argument, the best houses are the only ones selling, which seems to be propping up the per square ft price, to be interesting. It does seem to fit with my personal experiences of house hunting. I also notice that there are very few houses on the market at the moment that I think are great. I am curious if this month will be the tipping point down (in a pronounced way).

sorin

... As for people "waiting", there are a few who shouldn't be waiting. Sellers who think next year will be better for one, especially if they are buying down. Anyone thinking of selling in the next 3 years should bite the bullet and do it NOW!

(A comment by Ardell)

That seems like a fairly significant comment coming from a RE broker, though I think it's also pretty rational. I've noticed inventory going higher the past two weeks in the areas I've been looking at. The good places do sell if priced reasonably. The bad and average stagnate on the market even after numerous price drops.

Robroy

sorin wrote:

... As for people "waiting", there are a few who shouldn't be waiting. Sellers who think next year will be better for one, especially if they are buying down. Anyone thinking of selling in the next 3 years should bite the bullet and do it NOW!

(A comment by Ardell)

That seems like a fairly significant comment coming from a RE broker, though I think it's also pretty rational. I've noticed inventory going higher the past two weeks in the areas I've been looking at. The good places do sell if priced reasonably. The bad and average stagnate on the market even after numerous price drops.

That is actually an incredible statement when you think about it. It tells you where they think house prices are going. And what a lot of people don't realize is that even in a depression, most people have jobs. IOW, things may be going down, but houses are still selling. Quite a few are, actually.

'Course, this doesn't help much if you're already upside down.

sniglet

Robroy wrote:

even in a depression, most people have jobs. IOW, things may be going down, but houses are still selling. Quite a few are, actually

Sure, the world doesn't exactly come to an end in a depression, but that doesn't mean that housing prices won't fall dramatically in such an event. Japan didn't have a "depression", or mass unemployment, yet they saw home prices fall over 80% in the 1990s. Unemployment never topped 20% in the US during the 1930s yet 80% of all urban homes with mortgages underwent foreclosure in that decade, and prices nationwide dropped in the 80% range.

deejayoh

sniglet wrote:

Japan didn't have a "depression", or mass unemployment, yet they saw home prices fall over 80% in the 1990s

To be fair, the quote that Japan saw home prices fall 80% seems to apply primarily to Tokyo. On average, the fall was much more modest - eyeballing the chart below, it looks like less than 30%.

And if you look at the boom/bust cycle - Japan still came out above where they started. And you can't argue that needs to be inflation adjusted if you're going to turn around and talk about japanese-style deflation. No having cake and eating it too. :P

Robroy

sniglet wrote:

Robroy wrote:

even in a depression, most people have jobs. IOW, things may be going down, but houses are still selling. Quite a few are, actually

Sure, the world doesn't exactly come to an end in a depression, but that doesn't mean that housing prices won't fall dramatically in such an event. Japan didn't have a "depression", or mass unemployment, yet they saw home prices fall over 80% in the 1990s. Unemployment never topped 20% in the US during the 1930s yet 80% of all urban homes with mortgages underwent foreclosure in that decade, and prices nationwide dropped in the 80% range.

I'm just responding because I somehow missed your post. I completely agree with you. My previous post was my O'Reiley moment - attempting to appear to be "sensible and middle of the road".

A lot of people don't know this, but even with the low taxes of the day, many people who owned their homes free and clear during the depression lost them to the government because they could not pay their taxes.