Coastal Resort Mrket - How did we get here?

[Bobskunk]

Thanks

I read your report, and appreciate the information. You did pin this on Wall Streeters, and I don't know if that's really accurate. I think they were too busy packaging up the bad loans and selling them to pension funds and the like to actually buy individual properties. We locals, and a lot of people accross the country did a pretty good job of of bidding up the prices without them. They were facilitators and enablers, but I did not really see them dang city slickers down here. I know that I jumped into the fray, fortunately not to the degree of some.

I don't know that I blame Katrina for the selloff, otherwise we would have corrected by now. Our real estate bubble was a big fat overblown balloon, bouncing around in a needle factory. (really a pathetic analogy) It was going to burst eventually, and Katrina was the lucky needle. I remember the same thing happening with the tech bubble in the spring of 2,000. The Nasdaq hit 5048 on March 10, its alltime high, and Microsoft lost its antitrust suit brought by the DoJ on April 10th. That's when it started unraveling. I remember getting in my car on a trip to B.R, and Rush Limbaugh was prattling on about the Clinton administration and Janet Reno killing the stock market. As much as I love blaming democrats for everything, I tried to be objective (unlike R.L.), and concluded that if it had not been that suit, some other straw would have soon broken the camel's back. (Apparently I cannot communicate without an analogy)

 

[Yarmap]

Is SOWAL is this catagory?

What do Boston, Charlotte, Chicago, Cleveland, Dallas, Minneapolis and San Francisco have in common? They're cities where home prices rose recently.

Housing Market Shows Some Signs Of Recovery : NPR

 

[SHELLY]

Housing Market Shows Some Signs Of Recovery : NPR

What do Boston, Charlotte, Chicago, Cleveland, Dallas, Minneapolis and San Francisco have in common? They're cities where home prices rose recently.

What Boston, Charlotte, Chicago, Cleveland, Dallas, Minneapolis and San Francisco also have in common is that year-over-year home prices in those cities are down.



.

 

[30ashopper]

Housing Market Shows Some Signs Of Recovery : NPR

This is such typical reporting on this issue. They don't clarify what the index is and why there are slight variations in price. Seasonably adjusted prices are still declining pretty much everywhere, and will continue to do so for quite some time to come, although the cliff diving we've seen is largely over. Now we are in the bottoming process.

The good news is sales of existing and new homes have bottomed. We'll see typical sales declines moving into the fall, but seasonably adjusted numbers are up, which means inventory is being worked off. Especially for new homes as builders were able to better control inventory compared to the rest of the market. Existing home sales and inventory still have a ways to go. Forecolsures are still piling into our local market which is likely to continue for two years or so.

I still see fall of 2011 as a smart bet for starting a serious search. Price declines will be well entrenched by then.

The big "if" is inflation. We could see a 'W' style bottom in sales, but I am not going to try and predict that. We'll just have to wait and see.

 

[coastal-edge]

This is such typical reporting on this issue. They don't clarify what the index is and why there are slight variations in price. Seasonably adjusted prices are still declining pretty much everywhere, and will continue to do so for quite some time to come, although the cliff diving we've seen is largely over. Now we are in the bottoming process.

The good news is sales of existing and new homes have bottomed. We'll see typical sales declines moving into the fall, but seasonably adjusted numbers are up, which means inventory is being worked off. Especially for new homes as builders were able to better control inventory compared to the rest of the market. Existing home sales and inventory still have a ways to go. Forecolsures are still piling into our local market which is likely to continue for two years or so.

I still see fall of 2011 as a smart bet for starting a serious search. Price declines will be well entrenched by then.

The big "if" is inflation. We could see a 'W' style bottom in sales, but I am not going to try and predict that. We'll just have to wait and see.

Although I believe we all know that this area will come back, it is important to remain somewhat sceptical as to the timing:scratch: (eyebrows lifting?) I still look at the national situation as very fluid. Unemployment is a huge issue and cannot be separated from the current real estate scenario.

As we all also know, it is very difficult for anyone who tries to predict the timing of a comeback, and if you read this Tweet I posted the other day, you'll see that I prefaced it with "Caution"...

NEWS WITH CAUTION: WSJ: Sales of New Homes Post Monthly Rise http://bit.ly/3va7ka **SEE COMMENTS... IS THIS A TRUE "Rise?" http://bit.ly/fnLKQ
​

The comments on those boards can get even livelier than here !
I'm watching closely the repercussions to the large developers as they fight to keep their construction loans viable.

 

[SneakyPete]

From a practical standpoint, I always look at two things when analyzing real estate prices:

1: Can you recoup most (or all) of your mortgage payment in the rental market?

2: Given the average income within the community, what percentage of buyers could afford to purchase your property at the price you're asking?

Some markets are indeed unique where these two questions might not apply, but for the vast majority of markets, they are a TRUE guiding point for investors as to where the prices should fall.

I remember when the house behind us sold for three times what we could ever afford to pay, saying, "What is going ON!!?? Who on earth will be buying these [rather modest] homes if those of us with steady, upper-middle-class incomes can't imagine buying them or even renting them?" Red flag! Of course if we had had tons of money to invest we might (maaayyybeeee) have jumped on the snake oil bandwagon. I guess there are benefits to being underfunded.

 

[coastal-edge]

From a practical standpoint, I always look at two things when analyzing real estate prices:

1: Can you recoup most (or all) of your mortgage payment in the rental market?

A whole 'nother can of worms...

That brings up another aspect to the housing market scenario. I studied the "shadow markets" for some multi-family developers in some hardhit markets.

The 2008 National Apartment Report from Marcus & Millichap referenced the ?shadow market? of rentals and their affect on the multi-family rental industry about 37 times. The ?shadow market? generally refers to condos and single-family homes that were originally intended to be sold but have been turned into rentals instead.

For the most part, the report predicts that the competition apartments might face from single-family homes and condos will be offset by the growth of the renter pool due to the housing market. And they are predicting that because of the increased renter demand, that vacancy rates will drop and rents will go up.

Here are some highlights from several hard hit regions:
Las Vegas: ?The surplus of homes purchased by investors will force apartment owners to compete with shadow-rental stock; however, tighter residential lending standards and uncertainty in the housing market will encourage renters to delay home purchases, supporting demand.?

Phoenix: ?The shadow-rental market will cause metrowide vacancy to push higher in the near term, and concessions will likely return closer to historical norms. The renter pool is expected to continue to expand however, as tighter residential mortgage requirements and the resetting of adjustable-rate mortgages create a climate where current renters are hesitant to leap into the for-sale market.?

Sacramento: ?Further strengthening renter demand is the housing market, which may not hit bottom until 2009 or later and is discouraging current renters from making home purchases.?

It never ends. The after affects of buying and lending hit everyone.

In regards to your second point, the housing affordability indexes haven't hit level ground. There has always been a question in my mind as to the sufficient number of available affordable homes for the work force who support this area. Hopefully, more high-tech industry will continue to be attracted here. (this is where the economic development council needs to be focusing more attention). The affordability vs current market are still not in line.

Sorry to go off topic, I couldn't resist.

 

[30ashopper]

Our local market is driven by investment, the state of which is reflected by the stock market and upper income consumer spending. This is a second home vacation market - it'll recover when upper income earners look at their life savings and decide, we have cash to blow. Considering who's in charge in Washington and the tax hikes coming down the pipe in the next year, I'm not optimistic about a robust recovery for the local area any time soon. The buyers the area requires simply won't have the money.

 

[Miss Kitty]

Our local market is driven by investment, the state of which is reflected by the stock market and upper income consumer spending. This is a second home vacation market - it'll recover when upper income earners look at their life savings and decide, we have cash to blow. Considering who's in charge in Washington and the tax hikes coming down the pipe in the next year, I'm not optimistic about a robust recovery for the local area any time soon. The buyers the area requires simply won't have the money.

there...he said it.

30Ashopper...what about the retiree market?

 

[gmarc]

coastal edge you have to understand things about people like shelly. TO HER THE GLASS IS ALWAYS AND I MEAN ALWAYS 1/2 EMPTY. My question to shelly is very simple.lets put the shoe on the other foot and look at your record.you being right about real estate now is not the question but how many years ago did you call for its demise? 10,12,15 years? i'm willing to wager if shelly was in the area in the late 90's she was negative and calling for the bust of the real estate mkt from 1999-2006 and each and every year as it appreciated 20-40% year after year. I know from 1995-2006 i said it couldn't keep appreciating at these incredible rates and sure enough it did. shelly is forgetting about the 1000's who made buckets of money here and KEP IT. remember much of this financing by flippers was 100% loans so in the end the bank is the one who lost not many of the flippers.before this is over banks like regions and suntrust and 1000's of other banks could be mortally wounded.there are awesome deals right now BUT IT COULD BE 5-10 YEARS BEFORE ANYONE BUYING EVEN NOW COULD SEE ANY APPRECIATION. Even after all the damage in places like water color homes don't seem to be selling for less than $300-$350 a square foot .Just like the negativity toward stocks this past year. Sharp traders made fortunes buying all huge dips and those who bought for a trade in feb-march got the biggest fastest returns in history with many stocks rising an incredible 1-4 times in only 5 months. if one was very early they still made good money on most stocks. naysayers on 30-a will never buy no matter how low prices go thinking they will go even lower and 10-15 years from now they'll be saying why didn't i buy.None of us knew the future and can only gloat after the fact that we knew this would happen. Sure all of us in the early 2000's knew this would pop someday but it went on much much longer than any of us dreamt of. In that time of denial by many naysayers people got filthy rich and many did exit with there money in tact. theres 2 sides to every story.