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A sign we're at bottom?

WestSideBillyWestSideBilly
edited October 2011 in Housing Bubble
http://www.nytimes.com/2009/05/20/busin ... on.html?hp
http://www.marketwatch.com/story/housin ... e-recovery

Seems that builders are in no rush to throw new units at a saturated market. And that we still have a long ways to go.

Comments

  • mukohmukoh
    Billy, starts are a good thing for the market, that means no units coming in at an emergent pace. Builders right now cannot get financing if their life even depended on it which it does.

    The article you are referring to also points out that mainly multi-family construction has plunged, which is a good people who own rental properties of 10+ units. Less new inventory for rentals.

    Here are the headlines from NAHB.

    5/18/2009 Builder Confidence Continues To Rise In May Press Release

    4/15/2009 Home Builder Confidence Posts Biggest Gain In Five Years

    http://www.nahb.org/page.aspx/category/sectionID=134

    May 18, 2009 - Builder confidence in the market for newly built, single-family homes improved for a second consecutive month in May to the highest level since September of 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose two points to 16 this month.

    "Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "You're not likely to get a better deal in terms of mortgage rates than what's available right now. Combine that with the affordable prices, multitude of home choices and $8,000 tax credit for first-time buyers that are now available, and you have a very appealing set of reasons to make a move." etc... etc... etc...
  • WestSideBillyWestSideBilly
    I was being facetious about the bottom.
  • Lake Hills RenterLake Hills Renter
    A friend of mine was going on the other day about how we're past the bottom because a real estate agent friend and an appraiser friend were both talking about how they were busier than ever right now. I threw out some numbers from here about closed vs pending sales, etc but it was all deaf ears. Maybe he's right, but anecdotal accounts are not evidence. When the numbers show it, I'll believe it.
  • ira sira s
    I'm busy too these days. There are a lot of people out there looking at houses to buy. But I'm also not in the camp that we're past the bottom or even there yet. I don't see a straight line downward. look at the charts of some other cities like Boston, and you'll see where they would reverse course for a couple of months and then proceed downward again, and that's what i think is happening here.
    I'm hearing in my dealings with other agents their spiel about vastly reduced inventory, and that's a sure sign to buy before prices shoot up in response to that. Eh. Things don't always work that logically. We had very bloated inventories in '06 but prices continued to rise, long past where I thought they'd stop rising...So...they're right in the sense that price rises will eventually follow low inventory in most cases, but it could be a year or two or three before prices rise, and there's no saying that these low inventories will stay low.
  • mukohmukoh
    ira, the rate we were clipping them off was about 5 times higher though, so a buyer looking at the house saw it sell by morning in '06. The inventory is seriously getting depleted. My friend is looking in Kenmore for $500k or less. Try punching that into MLS for 2005 or newer. Lots of stuff there?
  • davidlosh@davidlosh.comdavidlosh@davidlosh.com
    There's about 20 in Kenmore with that limited scope of search. If you look at cancelled and expired there are more. If you count town houses there are more.

    If you were to just make offers to people I'll bet some one would sell for between $400K and $500K. $450K was the going rate in 2006 and 2007.

    Inventory will never be depleted. There's always more.

    For that matter for the number of building lots, and construction costs down so much, I'll also bet a new house could be pre sold pretty readily in that price range.
  • deejayohdeejayoh
    ira s wrote:
    and there's no saying that these low inventories will stay low.

    Inventories are low?

    kingcosfhinventory2009-04-600x408.png

    They look higher to me than than they have been for 90% of the months this century.
  • ira sira s
    Inventories in some areas, especially in the 350-500 thousand dollar category, are down about 70% from two years ago. That was pointed out to me by a listing agent to convince my clients that they'd better make a full price offer right now.
    A lot of sellers took their houses off the market because they couldn't sell them.
    I've gotten to the point where I don't believe anything anybody says.
  • AlanAlan
    DJO,

    People have short memories. Last years inventories became 'normal' for some people. Last years prices became normal for some people too.
  • EconEEconE
    ira s wrote:
    Inventories in some areas, especially in the 350-500 thousand dollar category, are down about 70% from two years ago. That was pointed out to me by a listing agent to convince my clients that they'd better make a full price offer right now.
    A lot of sellers took their houses off the market because they couldn't sell them.
    I've gotten to the point where I don't believe anything anybody says.

    Inventories were tight like that also here in L.A about a year ago. The 700k homes have now fallen into that category. I expect when the jumbo neg-am loans recast there will be much more in that category. Nicer stuff also.
  • deejayohdeejayoh
    From Aubrey's blog on Tuesday...
    Fear the shadow
    A turnaround in the housing market could bring a flood of new listings, according to Zillow.

    In Zillow's recent survey, 31 percent of owners said they would be at least somewhat likely to put their homes on the market in the next year if they saw signs of a recovery, Stan Humphries, the Seattle-based real estate Web site's vice president of data and analytics, noted in a blog post.

    "This 'shadow inventory' will likely be one of the contributors to a recovery that is more 'L'-shaped than 'V'-shaped," he wrote. In other words, prices hits bottom and then stay there a while, thanks to the inventory influx.

    "We here at Zillow expect to see a long, drawn-out bottom, with any upward bumps in value tempered by new inventory coming into the market," Humphries wrote. "It's important to note that a lot of these home sellers will also be buyers, so they will help some of the inventory cycle through. But it's probable that some will decide to rent after being battered by declining home prices, or because they are Baby Boomers looking to downsize, so it's likely that this 'shadow inventory' represents more supply than it does demand."
  • Civil ServantCivil Servant
    Lately I've noticed a rising tide of people pontificating on the market bottom who don't have any basis to make the claims they're making. Tuesday I was at a work event and the guy next to me, after I'd revealed in small talk that I was renting, told me that I'd better get on the ball because the bottom was coming in four or five months and after that prices were going to start going up like crazy again. I told him the reasons I doubted this (price-income ratios, supply, Case-Shiller index, etc.) and asked him what statistics he tracked. He conceded that he'd just been talking to some guy on the bus and was repeating what Bus Guy had said. But that was only the most recent example of the same sort of conversation/lecture I've been on the receiving end of, all in the past few months. What does it mean, housing-Zeitgeist-wise, when everyone is a bottom-caller, and when they feel qualified to act in that role no matter how little they actually know?
  • ira sira s
    They used to say that when the bag boy at Safeway starts giving you stock tips, it's time to sell.

    Even if by some fluke bus guy was remotely right and we truly are near the bottom, it's pretty unlikely that we'll see a rapid escalation in prices.
    Take it from me, I don't know anything either.
  • BillEBillE
    Civil Servant, I get that all the time. "Better buy now...prices are down." Then I ask how far prices have dropped from the peak and they can't answer. "I hear sales are picking up." Then I ask them if they know how many of those pending sales are actually closing and they can't answer. I also like to ask them if employment has picked up and I just missed it in the news.
    A few days ago at work someone caught me in a sour mood and gave me the "better buy now" bit. The first thing that came out of my mouth was, "you just watch a ****ing NAR commercial or something?"
  • davidlosh@davidlosh.comdavidlosh@davidlosh.com
    Every year a certain number of people need to buy and sell. Most reasons have to do with children changing schools. There are also some corporate transfers, and people who need to sell, like to settle an estate.

    The biggest buyer pool is people with children and the end of the school year is when people with children make a move. They are motivated, in most cases, responsible buyers.

    In every cycle that I can remember of the last forty years, no matter what the economy, things sell in the Spring. The big difference this year to other time I remember is that the selling season is very limited in terms of time. There was no January burst of activity,

    If we see the market stop in June it will be a very short selling season.

    So people calling a bottom was a sales trick. Sales people like to get motivation up. What I have seen is a steady decline in prices to keep that motivation going. That in itself should indicate there are problems in the Real Estate market place and caution should be used.
  • BillEBillE
    On the topic of people making unfounded claims of a market bottom, I was laughed at yesterday for believing that the local market will drop at least another 3%. Someone was talking up the $8,000 tax rebate and when I pointed out that it's only around 3% on a $250k home it was like I had just predicted that the sun won't come up tomorrow. "You don't really think houses will come down another 3% do you?"
  • ROFLCatDownROFLCatDown
    Last I knew if you kicked a supporting beam out from under something it had bad consequences. Like licking the car jack out from under your car. The car will drop, hit bottom, and stay there. The question isn't whether it will drop, but how far the car has to go to hit the ground.

    At which point the market should stay fairly flat (seasonally adjusted) until inflation picks up and the job market starts to recover... Which neither have happened yet. I imagine we're pretty close to the bottom, but we're still waiting on sellers to realize they missed their opportunity to close sooner and that they're going to have to lower their price if they're desperate to get rid of it... And I've seen several properties adjust downward 10% since July 1st. One had only been on the market about 60 days.

    My "gut" says we're near bottom, but not there yet.
  • RobroyRobroy
    ROFLCatDown wrote:
    Last I knew if you kicked a supporting beam out from under something it had bad consequences. Like licking the car jack out from under your car. The car will drop, hit bottom, and stay there. The question isn't whether it will drop, but how far the car has to go to hit the ground.

    At which point the market should stay fairly flat (seasonally adjusted) until inflation picks up and the job market starts to recover... Which neither have happened yet. I imagine we're pretty close to the bottom, but we're still waiting on sellers to realize they missed their opportunity to close sooner and that they're going to have to lower their price if they're desperate to get rid of it... And I've seen several properties adjust downward 10% since July 1st. One had only been on the market about 60 days.

    My "gut" says we're near bottom, but not there yet.
    Looks like you're not here any more, but I'll keep the thread alive for fun. You posted a very reasoned response. Also, looks like your gut was not only wrong then, but it would probably be wrong now if it told you the same thing.

    It is amazing that the greatest economic collapse in the history of the human race can be accompanied by the real time analysis of the internet that can be examined and critiqued in a world changed so soon after the analysis.
  • RobroyRobroy
    BillE wrote:
    On the topic of people making unfounded claims of a market bottom, I was laughed at yesterday for believing that the local market will drop at least another 3%. Someone was talking up the $8,000 tax rebate and when I pointed out that it's only around 3% on a $250k home it was like I had just predicted that the sun won't come up tomorrow. "You don't really think houses will come down another 3% do you?"
    I'll bet they're not laughing now. :-)

    BTW, we ended up getting the $8k when we bought our home and farm in Kentucky. It was almost 10% of the price and was HUGE. We also didn't even think about the $8k until our mortgage lender brought it up when we were closing. Doh!

    On a side note, we moved from Seattle to that farm last summer. And we refi'd for 3.25% at an INCREASED value. Turns out that people are leaving the cities for the country. There was no big housing bubble in areas like this so this is a fundamental - and slow - price increase.
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