"We are finding that homebuyers are no longer expecting home prices to decline further, which is...


"We are finding that homebuyers are no longer expecting home prices to decline further, which is creating some sense of urgency to buy now," says KB Home (KBH) CEO Jeff Mezger. A key reason for the Q1 miss is a "spike" in cancellation rates from customers unable to get mortgages, even those already with full loan approval letters. (h/t Joe Weisenthal)

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Comments (93)
  • Leftfield
    , contributor
    Comments (4058) | Send Message
     
    Jeff Mezger goes to full pump mode, which is the default position in the real estate industry anyway. This mysterious "spike" in lender cancellations goes unexplained.
    25 Mar 2012, 10:16 AM Reply Like
  • blueline
    , contributor
    Comments (2542) | Send Message
     
    I doesn't matter what the public expects home prices to do, if you are loosing buyers because they can't qualify you either need to lower the price or stop building.
    With interest rates now starting to rise it will become even harder for buyers to qualify.
    25 Mar 2012, 10:23 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    blueline

     

    If people cannot qualify for a Mercedes Benz does Mercedes lower the price?

     

    Very possible people are shopping beyond their price range. Especially given how far prices have already fallen. If they cannot qualify now there might be something wrong with the borrower and likely they will be the next wave of defaults if they are reaching too far.
    25 Mar 2012, 08:59 PM Reply Like
  • Sheik Rattle Enroll
    , contributor
    Comments (607) | Send Message
     
    Prices are still above average, historically.
    26 Mar 2012, 04:37 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    Prices that appreciate even at a steady pace are always above average historically because you are baking in prices from 50 years ago. Average historical price is not the metric to look at.
    27 Mar 2012, 03:58 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Look at the inflation-adjusted chart by Shiller. Prices are currently still well above historical averages after stripping out inflation for the last 120 years.
    27 Mar 2012, 04:39 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    And, I am wondering, what's the implication that houses are above historical averages?
    27 Mar 2012, 06:01 PM Reply Like
  • Hendershott
    , contributor
    Comments (1741) | Send Message
     
    They're still overpriced?
    27 Mar 2012, 07:28 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    WallStreet Dude:

     

    Not so fast with those numbers.

     

    First Shiller is using an average which means that home prices can stay above the average for decades which is in fact what you see between 1945 to 2011. There are many reasons they might stay above average including that the concept of the index is flawed as the data set is too large and carries time periods that are just not comparable like the Great Depresssion and you are comparing apples to lug nuts. An example of this point is that homes may cost more post WWII because they all started adding garages and other ameneties never mind the Depression was over.

     

    Gathering data and drawing a trend line against an average is not necessarily that helpful as there is not much context. For example if I look at Apple's stock price I might conclude that the price is way too high because it is above a historical average. So what?

     

    Another Case Shiller chart I have seen does not show an average but rather an ESTIMATE for a Median priced home over 40 years and it shows real and nominal prices almost converged. That is wortwhile looking at as an indicator although not perfect either because it is an estimate of Median home prices.

     

    I also like the comparison to rent equivalents.
    27 Mar 2012, 07:44 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    Everybody treats Shiller like he's some kind of God. It's absurd.

     

    It's impossible to compare housing on an inflation-adjusted basis over long time frames because one is comparing apples and oranges. There's no more reason that a home today should be priced relatively like a home of 50 years ago any more than today's cars resemble those on the road in the '30's. The size, quality, features, etc. are all so different that, unless all these variables were going to be "normalized" in some manner, one-to-one comparisons are simply meaningless.

     

    Just plain nonsense.

     

    Instead, look at housing costs relative to rental costs of similar product in simialr time frames. Then, the housing market starts to enter the realm of downright compelling now.
    27 Mar 2012, 10:34 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    "It's impossible to compare housing on an inflation-adjusted basis over long time frames because one is comparing apples and oranges."

     

    Geez how about looking at the actual definition of the Shiller index and drawing your own conclusions rather than arguing against some phantom/straw man position. It compares the actual sales price of a single house when it was first sold compared to its price when it is subsequently sold.

     

    There is a reason why it is authoritative. There is no guesswork involved. If you don't like the fact that prices are down well that's irrelevant to the reality.

     

    Don't like the inflation adjusted index? Ignore it.

     

    http://bit.ly/HiqaSg
    "The Case-Shiller Home Price Indexes are based on observed
    changes in individual home prices. The main unit used for index
    calculation is the price change between two arm’s-length sales
    of the same single-family home. Home price data are gathered
    from local deed recording offices across the country. For each
    home sale transaction, a search is conducted to find information
    regarding previous sales of the same house. If an earlier transaction is found, the two transactions are paired into a “sale pair.”
    Sale pairs are designed to yield the price change for the same
    house, while holding the quality and size of each house constant. A technical description of the methodology is available
    upon request."
    27 Mar 2012, 10:46 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Besides misunderstanding the Case/Shiller data as CW pointed out, you seem to forget that the recent governmental subsidies & stimulus provided to the housing industry have never been as substantial going back 120 years. In fact, the academics consider the rise in home prices relative to broader inflation in more recent decades to be precisely a result of generous government subsidies (Fannie, Freddie, FHA, interest deductions, home-buyer credits, TARP, HAMP, Operation Twist, etc, etc.).

     

    Our government IS the housing industry now. Unless you think the costly massive housing subsidy/stimulus programs are going to be permanent handout programs, like the Medicare Ponzi system, you might want to ratchet down your belief that home prices will continue to stay above inflation-adjusted historical averages.
    27 Mar 2012, 11:42 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    CW

     

    So if there is a lot of house turnover in one part of the country they would be overly represented in the index. Or if only a small % of homes sold in an area then is that really a representative sample especially if there were in a depressed part of that area?

     

    Shiller's work is helpful but this gospel like aura is way overblown.
    28 Mar 2012, 12:09 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    It's not absurd that Shiller is very well-respected. The CAPE PE ratio is one of the few valuation metrics with a decent track record forecasting long-term market returns. His housing price charts are the best in the business. He stuck his neck out and correctly called out the two most devastating asset bubbles in several decades. His warnings were met with condescension and denial, much like the attitude expressed in your posts.

     

    In fact, he's one of the few economists in America who provides useful and predictive tools for governments, financial firms, and investors.
    28 Mar 2012, 12:16 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    Tomas,

     

    "Shiller's work is helpful but this gospel like aura is way overblown."

     

    It is not a question of faith it is a question of actual sales data - when a house was first sold compared to when the exact same house is re-sold. Simple in theory complex in operation.

     

    Why not read the link?

     

    It is a list of FAQ's on the Shiller index and I am sure all of your questions will be answered.

     

    This is not an index constructed on opinions, it is constructed of actual sales prices and therefore along with Corelogic is the best source we have for changes in home prices in the US which explains why the FED follows both.

     

    "What are the weights used to derive the national index?
    The national index is calculated as the weighted average of
    the nine single-family Census Division indexes. The weights
    used are the Division’s value of housing stock as a share of the
    national value of housing stock. The data come from the Decennial Census for 1990 and 2000. The 1990 data are used for
    index data prior to the first quarter of 2000. The 2000 data are
    used to weight the index points from the first quarter of 2000
    until the present."
    28 Mar 2012, 12:17 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    WS

     

    I know I did not misunderstand CS data that I commented on because I looked at their definitions.

     

    My view is that CS gives a rough idea of the housing market but once you get close to long term equilibrium with rent equivalents and nominal and real prices converging you are inside of a range of stable home prices. And you see the home prices moving sideways now.

     

    IMO gov subsidies is not as big of a problem as government guarantees. That is a huge issue because lending becomes risk free and that drives more and riskier loan volumes.

     

    I am more interested in this thread just talking about putting CS in perspective.
    28 Mar 2012, 12:17 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    A home 100 years ago had horse hair plaster and no insulation.

     

    If anyone wants one I will build it for you for less than $100K.
    28 Mar 2012, 12:20 AM Reply Like
  • Stilldazed
    , contributor
    Comments (3419) | Send Message
     
    Does that include the outhouse and well pump?
    28 Mar 2012, 12:21 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Are you trying to tell me that the beautiful 100-year old Victorian houses in cities like San Francisco are junky compared to modern houses? (Those Victorian houses typically sell for more per square foot than modern houses in the same neighborhoods.)
    28 Mar 2012, 12:33 AM Reply Like
  • Stilldazed
    , contributor
    Comments (3419) | Send Message
     
    Nope, but they are heavily remodeled. Even have indoor plumbing and electricity.
    28 Mar 2012, 12:42 AM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    CW:

     

    Let's just take Shiller's definition of "same-house" comparisons. Then, I'll ask, if that's so, how does one calculate one-month aggregate prices changes that genuinely represent "same houses," unless the population being examined were all bought one month previously and sold the next month?

     

    The answer is that that's not what really happens, as such a defined population would represent a very skewed set of homes, probably distress sales, not the market. Instead, a complex set of interpolations are made in an attempt to normalize data, since the "same homes" bought and sold were all bought and sold in varying time periods. This introduces a lot of assumption and methodology biases of its own.

     

    Furthermore, Shiller includes foreclosure sales, which absolutely skew median data and distort what the non-foreclosure market really looks like. The more foreclosures that hit any population in a measurement period, the more likely the prices will be lowered. This doesn't necessarily represent what's happening in the overall market and more than that old saying about a guy standing with a foot in boiling water and another in ice is comfortable, on average.

     

    I mention this not to discredit the usefulness of Shiller, but to suggest that, like stock trading algorithms, it's just one system and method to examine the data, isn't foolproof and should not be viewed as sacrosanct.
    28 Mar 2012, 04:34 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    Tack,

     

    "The answer is that that's not what really happens, as such a defined population would represent a very skewed set of homes, probably distress sales, not the market. Instead, a complex set of interpolations are made in an attempt to normalize data, since the "same homes" bought and sold were all bought and sold in varying time periods. This introduces a lot of assumption and methodology biases of its own."

     

    Like I said everybody should just read the FAQ's and you will get a picture of how they handle the "foreclosure and distress sales".

     

    You are not the first person to raise these issues.

     

    You can believe what you want about the validity of the data, that's your choice, but the world uses it to make decisions so ignoring Case-Shiller data is a bad choice in my opinion.
    28 Mar 2012, 11:04 AM Reply Like
  • wyostocks
    , contributor
    Comments (9112) | Send Message
     
    conventional....and tack
    Case-Shiller data is just one more data point in the decision making process. Nothing more or less.
    28 Mar 2012, 11:07 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Yes, the inclusion of foreclosures in the Shiller data lessens the median home price. Nonforeclosures are roughly 30% higher in price than similar foreclosures, and they are the only hot part of the single-family market, in aggregate. To me, this implies that the nonforeclosures have even more room to fall when the market reaches equilibrium. For nonforeclosures the pricing based on price/rent ratios or Shiller averages are still too high.

     

    All the home price bulls are figuring a recovery in the market is underway. I haven't heard one person mention what will happen to home prices in the next recession. Are homes going to counter the next recessionary trend? Good luck with that idea.

     

    The recession is 3 years behind us. Historically, the average economic cycle expansion/contraction lasts an average of roughly five years--less in periods following financial crisis. We're already 3 years into expansion with China and Europe faltering.

     

    It seems like optimism has replaced realism--probably due to the booming stock market rally.
    28 Mar 2012, 12:39 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    Why do you think that a recession must follow in only three years? There's nothing especially extended about a three-year period.

     

    Also, one must consider the combined effects of two critical issues, which affect both the economy and the markets: 1) liquidity and 2) fear.

     

    As regards the former, there is a vast sea of underutilized capital out there, variously residing in cash, Treasuries, gold, mattresses, etc. Markets get overbought and "squeaky" when liquidity is weak and mostly all deployed to equities. We're lightyears from there, now.

     

    As regards fear, people can only sustain a disposition of fear and restraint for so long. After they're told the world is ending for months, years even, and it doesn't happen, they finally decide to go back outdoors and smell the fresh air. They start buying things, both that they needed and postponed and that they want and are no longer willing to be "scared out of." This kind of return-to-mormal behavior isn't easily abated unless some new, dramatic, large-scale, undeniable, negative event occurs. They're no longer willing to be deterred by ominous punditry. (And, keep in mind, as I have repeated elsewhere many times, the economy is driven by those who are successful and have money/jobs, not by the unfortunate on whom the media keeps the spotlight 24/7.)

     

    That's more or less where I see things moving, now. People are spending money, again. Construction is ramping up, again. Increasing revenues in many areas of business support this. As for the market, there is starting to be greater numbers of people who are now kicking themselves for missing the rallies, rather than feeling so smart about being in cash. Consequently, any downside moves will be buttressed by buying, sooner rather than later, because there are more folks who want a pullback, so they can make purchases, but they won't be all that patient, so buying support will arrive early, not late.

     

    In any case, that's what I surmise, so I see no reason to go into any radically-defensive mode unless a new major crisis, real or imagined, can be fomented successfully.
    28 Mar 2012, 12:55 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Margin interest in brokerage accounts is approaching the last two peaks (before big market declines). You incorrectly think you are contrarian. You are, in fact, Mr. Market.
    28 Mar 2012, 01:52 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    No, I thought I was contrarian when I loaded up on financial preferreds in 2009Q1. Now, I think the debate is much more centered, not one-sided pessimism, but it's a far cry from overweighted with "irrational exuberance." How to do I know that? Because, as they always say, watch what they do, not what they say, and, presently, money flows are still wildy overweighted to cash, bonds and gold, and equity volumes remain unimpressive.

     

    This, in fact, is the ideal environment fo value players, such as I. Slow, disbelieving churning higher.
    28 Mar 2012, 07:39 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    OK I will throw it in. You are a hard bargainer.
    28 Mar 2012, 10:49 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    I bought a pretty good chunk of WFC the day before it bottomed in March 2009. But I completely acknowledge that it wasn't my astute thinking that made it a good buy, in hindsight. It was speculation and luck. I was lucky our government bailed out the TBTF banks, otherwise my buy would have ended up like Bear Stearns and the other insolvent walking dead banks that didn't get their hand in the crony federal government's cookie jar in time to keep their doors open.

     

    You seem to believe that mom & pop will someday charge back into the market to let you know that the market is overvalued. It hasn't happened after a 100% bull market. Are they waiting for the market to gain 150% or 200% before they dive in?

     

    The market is not cheap on a valuation basis if you understand market history going back more than 20 years. The headwinds are arguably among the worst in the last 50 years.
    28 Mar 2012, 10:50 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    We'll just have to agree to disagree.

     

    The market usually makes money for a minority of people, not a majority, so when I see disproportionate amounts of capital anywhere but equities I tend to think that will prove to be in error. To that extent, you can call me a contrarian. I've made my bones by being far away from the crowds.

     

    Markets have big tops and are overvalued when capital allocations are exactly the reverse of now, when everybody and their grandmother is "all in" and there's no money left outside to buy shares from anybody who may wish to sell. That's when selling can start an avalanche because liquidity is nonexistent. Now, we have all-time record liquidity and more folks each day who think that maybe being all in cash, bonds or gold hasn't been such a swift play and are itching for a pullback to enter on a dip. This kind of situation prevents any huge meltdowns because there's too much money available to make buys. This is also confirmed by the lackluster volumes in stocks, even as prices have risen.

     

    Apparently, I must not understand valuation history because the market is nowhere near highs, either of a trailing- or forward-P/E basis. You'll have to be more specific about "headwinds," not just say the word.

     

    P.S. You didn't have to be lucky with WFC, or any other financial. You just had to load up after TARP was announced, not guess whether it would be.
    28 Mar 2012, 11:01 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    CW

     

    I pulled my information from Shiller's index and his definitions. He has several different indexes or charts he creates so perhaps you are looking at a different one than what I looked at.

     

    Shiller is providing numbers the best he can. He is not providing context or commenting on other variables that drive home prices. Even if you are matching pairs the differences in the local economy over a decade can be profound like in Detroit.

     

    And if this was so precise then how do they explain that home prices have been above the average since 1945?

     

    Again I don't mind Shiller's work as it is directional but it is a big dump of data and I am not burning incense when I read it. My prior points still stand.
    28 Mar 2012, 11:55 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    You can read many interpretations by searching the web. Many government programs made home purchases easier and cheaper after the war. One biggie is that Fannie and Freddie took the risk away from Bank lending. This turned out to be a monumental blunder that was a big part of the market meltdown.
    29 Mar 2012, 12:06 AM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    There is no correlation between the market's 12-month "forward P/E" and market performance in the next 12 months. There IS correlation between 10-year cycle-adjusted P/E and performance.

     

    Perhaps you should do more research instead of repeat the commentary of the analyst/salesmen parading through CNBC.

     

    Witness 2007, when the forward P/E was modest--until the predicted "E" turned out to be massively wrong when the actual earnings and losses were tallied up.
    9 Apr 2012, 07:12 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    The real buying, selling, and holding decisions are much more influenced by capital flows, i.e., where money is and isn't. When money is overallocated to bonds, cash, and gold, it doesn't take a rocket scientist to realize that the danger is on the exit side. Conversely, when buying volume in equities has been lackluster, there aren't legions of folks nervously waiting to exit. Actually, there are lots more folks, now, who wish they'd bought and hope there will be some, any, pullback, so they can make a few buys. This shift is palpable, if budding, and is reflected most of all in the rather sleepy VIX. Down days don't instill panics, any longer.

     

    You originally said markets are overvalued, but you provide no criteria for supporting that contention. Now, you want to talk about forward P/E, as demonstrating how 2007 was misleading, but, again, 2008 happened, not because of P/E's, but because the entire world was fully invested in equities, and there wasn't any liquidity to absorb anybody who wished to sell. This produced a rapidly building downside cascade.

     

    The current situation is exactly the reverse of 2008, but I assume that you are among those who seem to think they're parallel.
    9 Apr 2012, 08:17 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    "the danger is on the exit side"

     

    This is exactly the type of comment issued from the CNBC guests in 2007 and in the summer of last year. Using single year "forward P/E" as a measure of market valuation and future performance is careless. There is no correlation.

     

    The 10-year Cycle-adjusted P/E does have correlation and predictive power, though it is imperfect and not useful in the short-term.

     

    The Cycle-adjusted P/E is currently at a value that has only occurred in periods followed by large declines. Margins are at all-time highs. Institutions are overly optimistic, retailers are dwindling even after 3-years market highs. Economic headwinds, domestic and international, are huge. Cap gain and dividend taxes will rise significantly in 2013 if Obama is re-elected. Government and Fed Reserve support of the markets is unsustainable.

     

    The cycle adjusted "P/E 10" is currently approximately at the 85th percentile. If we leave out the Tech Bubble, the current P/E10 would be at the 89th percentile. With a little googling, you can learn how well markets have fared in each instance in history when the P/E10 ratio has been this high.

     

    It would be well within the historical norm to see the market 35% lower than current prices within the next couple of years. I'll be very surprised if we surpass 1575 on the SP500 before that occurs.
    9 Apr 2012, 09:15 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    You're so busy quoting forward P/E, which is not the fundamental basis of my investment strategies, that you don't seem to see or address the funds-flow issues, which are paramount. Stop quoting CNBC, which neither of us believe in (I don't even turn on a TV set all day), and think about what the implications are of where funds reside now.

     

    Entirely opposite 2007, we now find funds flows extremely overweighted to bonds, cash and gold. Even now, more money flows out of equity mutual funds and into these other classes. Cash levels are at all-time records, bond yields at all-time lows and gold near all-time record prices from this disproportionate flow of money to these classes, just as it occurred with equities in 2006-2008. How is it that some think only equities can have bubbles?

     

    You're trying to tell me that this demonstrates the risk of equities? On the contrary, the risk now lies in all the over-invested asset classes listed above, and the very fact the equity volumes are low, and that all this purchasing power resides outside of equities is precisely what offers downside protection for equities, just as overly-shorted securities have downside price protection.

     

    Predicting the market with 10-year P/E charts reminds me of others who overlay the SPX with Japan and say we'll follow that, or as was in vogue not long back, showing how corelated the charts looked with the '30's. This is all speculative guess work, but the funds-flow imbalances are very real and don't require extrapolation.

     

    In any case, I invest in very depressed sectors (now, financials, realty sectors and energy), and within those sectors in issues with high yields in their classes. This affords me a very attractive income stream, while I patiently await the cyclical reversal of these classes, which will occur, just as the sun comes up every day. I don't pay much attention, meanwhile, to trying to guess or time macro market moves.
    9 Apr 2012, 10:38 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    I'm not trying to dog you or others, but there are some important incorrect assertions in your comments, also espoused by some analysts in financial media.

     

    Wrong financial ideas often spread like a virus, infecting the masses with bad ideas that can have catastrophic results. It wasn't long ago that Wall Street (and the lay public) believed the myth that home prices in aggregate in America never decline. We now know the damage caused by that widespread belief. For example, you said that "bond yields are at all-time lows". Have you checked the actual history of bond yields rather than read that belief in financial media? In fact, since 1930, the 10-year Treasury yield has been below 2.5% about 15% of the time (primarily in the period prior to 1952).

     

    Wall street myths encourage harmful asset allocations. For instance, people believe that a surge in bond rates is all but certain in future years. History suggests that this might be wrong.

     

    To believe that bond yields must rise just because they are low is a common speculation probably based on the fact that few people on Wall Street have studied financial history before 1950.

     

    For the first time in 3 or 4 months, I see some stocks that will likely provide substantial returns within three to five years. One of the stocks is a small regional bank, another is a small REIT, another is an energy company, a few others are foreign stocks that are sensitive to geopolitics. Unfortunately, they'll almost certainly decline to even lower levels when the current market froth is blown off. Therefore, I'm patiently waiting.
    10 Apr 2012, 05:05 AM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    The perception of rising rates will lead to an increase, not a decrease, in buyer demand. Even with various cancellations and/or non-approvals, home sales will rise, both new and resales.
    25 Mar 2012, 10:33 AM Reply Like
  • bakkbakk
    , contributor
    Comments (280) | Send Message
     
    That's precisely the reason I just bought a home, and the only reason.
    25 Mar 2012, 02:03 PM Reply Like
  • wyostocks
    , contributor
    Comments (9112) | Send Message
     
    Has anyone ever heard a builder or realtor ever say that "now is not a great time to buy a house"? It is always a great time to buy.
    25 Mar 2012, 10:59 AM Reply Like
  • coddy0
    , contributor
    Comments (1199) | Send Message
     
    wyostocks
    Has anyone ever heard a builder or realtor ever say that "now is not a great time to buy a house"? It is always a great time to buy.
    ======================...
    One actually told me on the same day that it great time to buy and it is great time to sell
    25 Mar 2012, 07:28 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    What is sad is the young have soured on real estate just when the price an rates are the best EVER.. And even worse the parents who did there jobs an want to enjoy the later years are stuck with there leeches much longer !
    Currently at record levels !

     

    And, to compound the problem even more.. rentals are more expensive an the best part of new housing is multifamily.

     

    So, add it all up and what does the Gov do.. There giving packages of the bad homes to speculators ,but, they must rent........Go figure.....Their distorting the American dream !

     

    One only needs to look in an old dictionary as see the word "real and the word "estate" Says it all !
    Create wealth and fights inflation better than anything else !

     

    PS. Brought to you by " soap box communications " smiles
    25 Mar 2012, 11:40 AM Reply Like
  • berylrb
    , contributor
    Comments (2371) | Send Message
     
    DaLatin, right on, I work with quite a few families that are former empty nesters, and that's the number one concern how to get their kids to leave for the second time.
    25 Mar 2012, 05:22 PM Reply Like
  • montanamark
    , contributor
    Comments (1455) | Send Message
     
    its not just kids who are living at home. I know of numerous families who have had their son or daughter move back in with a spouse and or children. the 50 and 60 somethings are carrying a heavy burden of helping their children in a variety of ways from housing to student loans to car payments to insurance, etc.
    There are many 'kids" who have 4 year degrees and are getting paid like they they work at McDs. Its a sad state of affairs for young people and their parents
    25 Mar 2012, 07:46 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    DaLatin

     

    Thank you for a voice of reason. The only way prices drop much further is if we go into a depression and then nobody is going to care about much of anything. People waiting now for a better day are in most parts of the country just plain stupid.
    25 Mar 2012, 09:02 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    TVP, 3 months ago I bought my neighbors house in Henderson Nv. He paid 379K an I bought it for 70K... I probably will never set foot in it and might not go to my house either,but, i bought it and am thrilled. I am having the back wall knocked down so the back yard is doubled and my niece's roomate has a sister to rent it and she is a doctor. I can't think of a better place to put the money !

     

    Time will heal all wounds and 7 minutes from the strip an good schools !
    25 Mar 2012, 09:12 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    I agree. I assume the dirt under the house is worth that much.
    26 Mar 2012, 01:21 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    "...sense of urgency to buy now," says KB Home (KBH) CEO Jeff Mezger."

     

    I guess that explains the cancellations. Talk about a non-sequitur.

     

    Anyway, if people can't qualify for mortgages at low interest rates, what possibility do they have of qualifying at even higher rates?

     

    We get just the whiff of an increase in mortgage rates in the last couple of weeks and the refinancing and purchasing indexes showed a very noticeable downtrend.

     

    When you factor in the transaction costs of purchasing a home (10-15% of the purchase price) and the ongoing costs, is it any wonder that people are cautious now that the psychology of ever-rising prices is broken?

     

    Houses are very expensive to buy and sell (unlike an stock) so the urgency to make a massive financial decision requiring a 20% down investment has lead to second thoughts. The era of buying houses (no money down, interest only, no income) like they were a new couch is gone in my opinion.
    25 Mar 2012, 11:52 AM Reply Like
  • mike mohr
    , contributor
    Comments (452) | Send Message
     
    Housing doesn't matter because they are pumping stocks. Once stock crash they pump housing.
    25 Mar 2012, 11:53 AM Reply Like
  • grecodp
    , contributor
    Comments (5) | Send Message
     
    I just spoke to a real estate broker the other day. When things were bad she said so. Now she says things are booming. This is in RI with the 2nd highest unemployment rate, 11%, in the country, with the state in financial distress and more than a few cities on the verge of bankruptcy. I don't really understand it but I believe her
    25 Mar 2012, 12:00 PM Reply Like
  • Hendershott
    , contributor
    Comments (1741) | Send Message
     
    Prices not declining is not necessarily the same thing as prices rising.
    25 Mar 2012, 02:14 PM Reply Like
  • anonymous#12
    , contributor
    Comments (545) | Send Message
     
    If prices continue to drop it is a win for the middle class. Lower prices means more affordability.

     

    Banks don't want that to happpen, they want to keep the games of pretend and extend. Ensuring higher asset values in their books which enables more leverage, thus more profits.
    25 Mar 2012, 02:51 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    12
    " Banks don't want that to happen "

     

    gees ...Who wants it to happen ? Millions more home owners will go underwater if the prices keep ticking down and more will walk away. The entire thing can still mushroom and take a major leg down.

     

    A wave of property tax rebate hearings too.....
    That will keep State an local Gov job layoffs going and those jobs have pensions an pay closer to the mean than the HD or MCD an WMT jobs..
    Gov revenues will sink and we will need to print more for politicos to pay there voters to keep there jobs...... And the beat goes on !
    Lets hope nobody thinks as you do....
    25 Mar 2012, 02:57 PM Reply Like
  • ESF22
    , contributor
    Comments (5) | Send Message
     
    It's likely the new houses aren't appraising high enough thus the potential buyers fail to get financed unless they can come up with a lot more money down. In my area, the cost of new construction is much higher then the cost to purchase an existing home and it is the short sale/foreclosure sales that are bearing heavily upon appraised values. Why should an appraiser value the new construction substantially higher then a 5 year old foreclosure, in some cases built by the same home builder, that sells for 1/2 the cost per square foot?
    25 Mar 2012, 02:57 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    ESF22,

     

    That is a profound insight. Exactly correct.

     

    The appraisers can no longer ignore foreclosures/distress/... sales, now that they make up as much as 40% of sales. This is not an ephemeral or transitory issue since the current and future pipeline for these types of sales is still pretty strong.
    25 Mar 2012, 03:05 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    ESF & CW:

     

    The more profound effect is due because, in their infinite wisdom, of "reform" the geniuses in Washington made appraisers directly liable for their work, rather than being able to be shielded with subjugation clauses by the banks. The unintended (why this wouldn't be obvious, one can only guess) consequence is that all appraisers have an incentive to err on the downside, and as their compensation is not tied to laon complettion, they have absolutely no incentive to have appriasals even meet fair value and expose themselves to the usual legion of American ambulance-chasing attorneys.

     

    In effect, they've legislated lower prices.

     

    http://bit.ly/GPftHf
    25 Mar 2012, 03:55 PM Reply Like
  • davidbdc
    , contributor
    Comments (3194) | Send Message
     
    But what is "fair value"?

     

    And shouldn't appraiser's be held accountable for their work? And shouldn't they have to take into consideration all sales types when valuing a piece of real estate?

     

    In most locations there are simply more homes available for sale than there are buyers..... and that means prices should fall.... and as prices fall appraisals should be lowered as well.

     

    It might lead to people buying homes based on what its worth to them to live in that house/land instead of some magical number that someone they've never met says its "worth". And that would be a good thing IMO.
    25 Mar 2012, 04:23 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    The "market" for any home is the price on which a willing buyer and willing seller are in concurrence. It cannot be adjudicated by any "expert," any more than some pundit can tell you whether a particular stock is over or undervalued. It's simply an opinion, nothing more. Any of the bank, buyer or seller should be free to accept or disagree with it, and without threat of lawsuit.

     

    This is one of the fundamental problems with today's society. Too many expect everything to be 100% safe, foolproof and, of course, somebody else's responsibility if the deal turns out worse (but not better, of course) than expected. Why not have an "appraiser" for everything? No auto purchase unless the appraiser matches what you're willing to pay. And, if the car disappoints you, of course, sue him. Or, maybe, an appraiser for the steaks you buy at the market, who can attest they're "really" prime or choice.

     

    The constant departure from individually-made decisions and responsibility there for leads to a society of nincompoops and malcontents.
    25 Mar 2012, 04:52 PM Reply Like
  • ESF22
    , contributor
    Comments (5) | Send Message
     
    Appraisers should be liable for their work. Appraising is not rocket science but you are probably right in that appraisers will likely err to the downside before the upside. At this point, the low selling prices of distressed properties are dragging down valuations for straight sales and new construction. The main point is that low appraisals as a result of distressed property sales are going to cap the prices that new home builders can charge. This will compress margins and/or make new home construction sales nonviable in some areas. As CW pointed out, this will likely continue for several years.
    During the peak it was insane. Every area had their hit men and if you, the appraiser, didn't find the value, you wouldn't receive any future work. I purchased a number of properties at this time, knew who to call for the loan to value ratio, meet the appraiser and helped with the pictures for the bank. I had agents tell stories of appraisers adding extra bedrooms or SF to the house to meet the price.
    The Washington appraisal reforms are better then the previous madness.
    25 Mar 2012, 05:02 PM Reply Like
  • ch_walek
    , contributor
    Comment (1) | Send Message
     
    What are reasons buyers couldn't obtain mortgages even after having approval letters?
    25 Mar 2012, 02:57 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
     
    Appraisals not supporting the required LTV.

     

    See above.
    25 Mar 2012, 03:06 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Their approval letters were written by their mothers.
    25 Mar 2012, 04:55 PM Reply Like
  • berylrb
    , contributor
    Comments (2371) | Send Message
     
    Interesting, like CW said LTV, but we're talking the buyer, so they must be making offers on homes that appraise too low?
    25 Mar 2012, 05:31 PM Reply Like
  • mmgood
    , contributor
    Comment (1) | Send Message
     
    Real Estate "professionals" always spin the "their" business climate. I'm convinced that they are taught and coached to NEVER admit the market is bad and ALWAYS talk it up in the spirit of self/financial/profess... survival. You want to believe a salesman or your lying eyes? The numbers don't lie just the sales people who stand to gain. I have nothing against realtors or brokers or lawyers or...It's just the nature of their business to "carry the flag" for their cause.
    25 Mar 2012, 02:58 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    CEO's are well-payed to say optimistic things about their company:

     

    "In 2007, current President and CEO Jeffrey Mezger received an estimated $21.9 million in total compensation, including a $6 million discretionary annual bonus."

     

    KB homes has not had a profitable year since 2007, and the total accumulated net loss is well over $2 billion since 2007.
    25 Mar 2012, 03:23 PM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
     
    Consider the source - of COURSE it's a good time to buy! To the realtors and home builders, it's ALWAYS a good time to buy.

     

    Worthless.
    25 Mar 2012, 04:12 PM Reply Like
  • Flarben
    , contributor
    Comments (9) | Send Message
     
    Nonsense. Just because prices aren't plummeting doesn't mean they won't decline further. Insurance and taxes, maintenance/repairs are all very expensive. Also many of us need the flexibility to relocate quickly. I know I do in order to move ahead in this economy. People need to stay mobile and the single-family home is an anachronism for large numbers of us. Who needs it?
    25 Mar 2012, 04:20 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    Nope, not going to happen because the cost equation for renting versus buying has now flipped and gets worse by the day. The laws of economics will soon exert their inexorable influence.
    25 Mar 2012, 04:54 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    The unseen cost of buying a house now is that you will have a leveraged illiquid asset that might depreciate another 20%, thereby wiping out your equity and even putting you in the hole. The "renting is more expensive than buying" sales pitch is a load of bullocks--assuming you know how to do a real cost analysis.
    25 Mar 2012, 04:59 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    WSD:

     

    Do you and the rest of the perpetual-gloom crowd realize that home sales volumes have been increasing for months and that prices have finally trended up in many of the hardest-hit areas? Do you think if you just throw out "20% decline" that that somehow lends factual credence to it? Why stop there, just say houses could decline to zero, no matter the rental rates and inflation.

     

    There's no "unseen" cost of buying a house that's any different than it ever was. When the economy gets really rolling, and all that extra idle capital starts flowing and affecting monetary velocity, we'll have even more inflationary pressure than many whine about now, and, guess what, those rental rates will rise quickly, and all those "astute" folks avoiding buying houses at low costs (record affordability, in fact) and historically-low fixed rate mortgages will be left holding the bag, on the wrong end of the deal, once again.
    25 Mar 2012, 05:09 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    Do you and the perpetual real estate bugs realize that prices fluctuate seasonally, as well as with interest rate movements, tax policy, weather, and so on? It's an industry sales-pitch myth that homes have record affordability. The record affordability pitch ignores the huge debt level of the median household, plus it ignores the fact that median household income is 7% less than 1999 after adjusting for inflation.

     

    Home prices will not likely keep up with broader inflation. Banks don't like to give new mortgages to people with underwater houses or high existing debt. Plus, home prices have not even reached the 120-year Shiller inflation-adjusted average (thanks to all the temporary government handouts to the housing/banking industries).

     

    Here's the Shiller chart. Perhaps you can see how a 10% decline is likely, and a 20% decline is easily possible in light of the terrible macro fundamentals:

     

    http://bit.ly/GNJ8PM
    25 Mar 2012, 05:32 PM Reply Like
  • Hendershott
    , contributor
    Comments (1741) | Send Message
     
    Unseen....or not emphasized....real estate taxes, insurance, maintenance, periodic painting, termites, dry rot, replumbing, roof replacement, landscaping cost etc....it's not just the mortgage, or even the mortgage and the taxes....and the taxes will rise if the value rises....been there a lot.....happily renting now...it's still cheaper.
    25 Mar 2012, 05:35 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    BTW, I'm not perpetually gloomy. I'm just not ignorant of the facts beneath the headlines. I'm quite optimistic about multi-family housing and self-storage rental markets for the next 5 or 10 years. It's the single-family home market that has rotten fundamentals, in spite of what the cult-of-homebuyers keeps blathering each year.
    25 Mar 2012, 05:36 PM Reply Like
  • davidbdc
    , contributor
    Comments (3194) | Send Message
     
    I think these are the same people that in 2006 thought housing prices would go up 25% per year..... EVERY year!!!

     

    Homes and real estate galore around where I'm at and its not going to change until prices take a real beating and get down to the point where folks are paying with cash.
    25 Mar 2012, 04:25 PM Reply Like
  • Tack
    , contributor
    Comments (16183) | Send Message
     
    david:

     

    You must live in an unfortunate area because already prices in the worst-hit markets, like Florida and Arizona are rising and the cash investors have already discovered that the distress deals are mostly gone.
    25 Mar 2012, 04:55 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    You need to do more research. Many parts of Florida and the Southeast are still declining and the distressed inventory is rising. Don't forget that a large number of Einsteins in Arizona were the most egregious bubble buyers at the peak of the market. Don't be excited by little upticks in the market. Real estate speculating is a lifestyle in many of the sand states. I suppose it beats working--until you're broke.
    25 Mar 2012, 05:13 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Don't forget Vegas. get off the strip and it makes Florida an Az look wonderfulllll

     

    And cities like Cleavland an Detroit.. There bulldozing houses an leaving one or two per block.. it's all good ! Bulls control the news !
    25 Mar 2012, 05:21 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    "We are finding that homebuyers are no longer expecting home prices to decline further, which is creating some sense of urgency to buy now," says KB Home (KBH) CEO Jeff Mezger.
    ----

     

    This statement reminds me of the red-shirts at Circuit City who used to impatiently say, "You better get this computer now before the prices go up!!"
    25 Mar 2012, 04:28 PM Reply Like
  • billddrummer
    , contributor
    Comments (1761) | Send Message
     
    And look what happened to Circuit City.
    25 Mar 2012, 06:15 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Don't many people use Best Buy as AMZN's showroom ?
    25 Mar 2012, 06:22 PM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1124) | Send Message
     
    Panic buying in real estate, what a lie if I ever heard one. Somebody should panic buy my property. Never met an honest real estate person. Definitely I will now plunge into their crap companies.
    25 Mar 2012, 04:32 PM Reply Like
  • neutrinoman
    , contributor
    Comments (700) | Send Message
     
    False dawn: new home prices are probably close to a bottom. But existing home prices have another 10% to drop, roughly. More wishful thinking.
    25 Mar 2012, 04:40 PM Reply Like
  • montanamark
    , contributor
    Comments (1455) | Send Message
     
    we live in a new age where everything is judged by polls. it would be nice to go back to the time when things were judged by reality - what is actually happening. it seems the MSM is consumed with "feelings"
    and desires
    25 Mar 2012, 07:48 PM Reply Like
  • billddrummer
    , contributor
    Comments (1761) | Send Message
     
    And that, my friend, explains what happened to the "dislike" button on this site.
    26 Mar 2012, 08:26 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    The current median home selling price is heavily dragged lower by foreclosures. Non-foreclosures often sell at roughly 30% more than foreclosures.

     

    Current median home prices are roughly 10% higher than the Shiller long-term inflation-adjusted average home price. So if you toss out the bargain basement prices of foreclosures bought by landlords and other investors, the median price of non-foreclosure homes might currently still be 20-30% higher than the historical average price.

     

    Most people do not have the time or patience to buy a foreclosure, so the realistic median price of homes is far higher than the statistics suggest for typical home-buyers. The Shiller historical average prices were not heavily influenced by a huge percentage of foreclosure sales.

     

    Bottom line: When the federal subsidies of banking and real estate fade away, and when interest rates rise to reasonable rates to reflect the genuine risk of holding a mortgage, and when the next recession strikes--home prices will likely be much lower than currently.

     

    I will be surprised if a couple of well-known national homebuilders, including possibly KB Homes, are not in bankruptcy before the market reaches a bottom.
    25 Mar 2012, 11:16 PM Reply Like
  • NIRP
    , contributor
    Comments (402) | Send Message
     
    Been in the business for 20 years. I forgot more than what you people think you know. Property is always relative to location. Prices can only be supported by income. Houses use to be worth what one was willing to pay......now worth what the bank is willing to lend or appraise for. Places like Cleveland and Detriot are tearing down causes houseing is beyond utilitarian point. But both are having financial issues because they counted on property taxes. Since loosing industry and they lost payroll tax income all that was left for was sales tax and property tax. This is a big problem for the country and will continue to be one. I like many others found it is better to be self employed and minimize your tax burden....that is less for Govt. and I don't have to deal with their regulations or collecting taxes for them. Prices look better in a lot of areas because there is less foreclosed properties on the market....it makes it look better than what it is. Sales are down and will continue. Remember they jacked the market up with not just low interest rates but the amount of moneythat people put down. They had more buyers with 5%,3%,and 0 down interest. They are still doing it now......I know that is how I have sold my houses in the last 3 years and I always pay the 6% twards buyers closing cost. Appraisals are whats killing me and others. I have had the same house appraise withen a couple monthes for a difference of 30k and in a 100k area that is a lot. I do business in Cleveland suburbs. I can buy nice brick homes with1500 square feet built in the 1950 for 20k. Don't want them. Many are buying them for rentals.....ok if you like chasing your money and having a tenent for 3 months to a year for most. They don't want to mow lawns or pay for utilities and wait till you see the cost for their repairs after they leave.....ha ha ha. I have three more to sell....wish me luck. What is funny is the realtors that are doing short sales are mad because there houses are appraising for more than the sales price and the bank won't do the deal.....I know I'm a former realtor, deal with them all the time. Wait till they put all the back log of houses on the market and see what that does to prices. Housing is relative to location and incomes + condition and what the bank will lend for and cash buys for less. Incomes in America are comming down. Its a world economy. You can make up the rest as you like.
    26 Mar 2012, 08:11 AM Reply Like
  • billddrummer
    , contributor
    Comments (1761) | Send Message
     
    You speak much truth (two glasses of cheap red notwithstanding).

     

    I've seen dandy homes in the Atlanta suburbs (brick facade, 2500 sf, full basement of 550 or so, .75 acre lot, 2 or 3 car garage) list for $60,000 and get no offers because the unemployment rate in Fulton County is 12%. Nobody can qualify for a mortgage because people don't have the down, the credit or the reserves to make a bank believe they'll actually stay in the house and make the payments each month.

     

    Those folks who used to own have a foreclosure on their credit history--banks won't touch them for another mortgage.

     

    New homebuyers don't have the down payment because their parents are just as strapped as they are. (Remember when parents used to give the happily married couple the down as a wedding present? Well, nowadays the parents are trying to keep their own roof over their heads.)

     

    Investors aren't interested because they can't rent the houses for enough to make them cash flow positive.

     

    So the homes sit, month after month, with security patrolling the neighborhoods to keep vandalism down, with neighbors driving by saying "Is the bank going to do anything with that place?", as they watch the weeds grow in the yard, the realtors' signs get battered by the wind and rain, and wonder whether their own house is worth what they paid for it just a few years ago.

     

    What's the answer? I truly don't know. My house went through a foreclosure in 2007, sat on the market for nearly two years, sold to a buyer with no money down (government program), and now he's upside down about $50,000.

     

    It's a shame, really. The American Dream isn't.
    26 Mar 2012, 08:38 PM Reply Like
  • NIRP
    , contributor
    Comments (402) | Send Message
     
    That is correct Bill. I just sold a land contract I had in Cleveland for 15K. It wasn't worth getting stuck with it. The tenant as I would call her had 2 bankruptcies and a foreclosure and she paid when she wanted to. Better to sell it for 15k than to put 25K into the property and end up selling it for 40K. Complete rehabs down the street are going for 65K on special Govt programs (incentives))). Those houses are like new. To make my house look like that would cost me 40k in material with me doing the work. Most people making statement here don't realize the cost of materials.......More than what the house is worth. That goes for better areas as well. That's what happens when your dumb enough to pay 150k for a parcel. Bought a double in this better area of Cleveland for 65K back in 1994. My 30 year FHA mortgage with principle interest and insurance payments came out to 185k for 30 yrs. on a 1929 house. Sold it for 90k 4 yrs later. I can buy it now for 10k. and in 1990 that house could have been bought for 5k. Tack can make what ever comments he wants as I stated....its about income,location,condit... Been to Florida to look at property. Can buy 5 year old 3500 sq. ft. with 3 car garage in gated community for 120k use to sell for 350k. You have to be able to afford the taxes and maintenance cost....not just the mortgage. In some areas of the country property taxes are more than the mortgage. Most people coming out of apartments don't consider cost such as paying for heat and water and sewer and garbage collection. Lawn mowers,gas,weed wackers,repairs like roof,furnace and so on and there is many more. I'm moving in with my girl in an apartment. Will consider owning agian if my out of pocket expense to live there is less than 5k a year. Otherwise the apartment management team can cut the lawn,plow the snow,clean the gutters,replace the furnace,bring me new appliances and so forth.
    Met a smart man that lived in an appartment for 20 years. All the money he saved by not owning a house made him a lot of money in the stock market. The statements wallstreetdebunker has made are all right on......smart man.
    27 Mar 2012, 04:52 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    User

     

    Antecdotes does not make a market. I have two large homes going up next to me right now. What does that mean overall? Not much but it makes one go back and look at the numbers rather than personal stories.
    28 Mar 2012, 12:24 AM Reply Like
  • NIRP
    , contributor
    Comments (402) | Send Message
     
    TVP,
    Its my business I look at the numbers weekly and yr on yr and quarter on quarter. I use the MLS. I look at these property.....100's. I buy them sell them and finance them. I haven't made a living at it for 20 years by not knowing what I'm doing. Still making money in the business. Don't look at houses just in my state either. Why don't you go buy and sell a couple hundred properties than come and tell me all about.
    28 Mar 2012, 01:18 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    User

     

    Damn. I better go tell the people next door they should have called you first before dropping $800K on a new home.

     

    Realtors are the most antecdote driven people I know. If they were not we would have never had the bubble. Your comment reflects the point.
    28 Mar 2012, 10:54 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (3973) | Send Message
     
    I got involved in various types of real estate in the early 1980s and I've even helped a family member do a couple of major refurb flips (that I did not encourage). Most amateurs get into real estate deals because it looks easy. It's not easy, unless you're lucky and the market is rocketing up. It's a lot of work and headaches. I know several very smart real estate pros who have had their heads handed to them on several occasions--because of litigation, bad tenants, changes in tax laws, city hall bureaucrats, lender problems, etc.

     

    I'm shocked that so many amateurs are jumping into the landlording game--especially with single-family rather than multi-family. I've joked that landlording is the ghetto of the investment world. By that I mean that you've got to be tough, have street smarts and watch your back to succeed. It's not enough to "run the numbers" and jump in the game.
    28 Mar 2012, 11:04 PM Reply Like
  • billddrummer
    , contributor
    Comments (1761) | Send Message
     
    Thanks for reading, and for pointing out something most renters don't consider: The cost of ownership means taking responsibility for the things the landlord used to do. Instead of calling the management office, you have to go to Lowe's for that new garbage disposal when you forget that you're not supposed to put knives in it while it's running.

     

    And when the hot water heater floods your garage, you go back to Lowe's.

     

    When the property tax bill comes, you have to pay it. Same as the water bill, sewer bill, trash bill and HOA dues.

     

    I used to be a homeowner. I don't miss it.
    31 Mar 2012, 11:11 PM Reply Like
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