Real Estate bubble bust may be worse than Dot Com bubble bust

"Weehouse" in snow.

Creativity at work.

Developers like Hovnanian are crowing about how they're "bullish" about the market. I guess they figure NYC and its metro area are projected to grow significantly and there's still a housing shortage. With all the new Manhattan construction aiming ultra-high-end, I guess developers are looking to Jersey City as the new place for the merely upwardly-mobile.

Still, it's hard for me to believe these units will move very fast in the short term with so many flooding the market at once at the same time that the boom is ending. In the long run these guys probably know what they're doing though and I'm sure they can afford to sit on some vacant units or reduced rents for a few years to wait out the cycle.

There are a lot of small contractors getting fucked - they made just enough money during the 'boom' to take out $400k+ in loans to build a couple of spec houses (or even better, one really big one) and now there are no buyers (in part because of the market, in part because they were dumb enough to think that the relatively-wealthy would keep moving to formerly rural areas once those spots had become extensions of the 'burbs).

http://www.youdovoodoo.com/80sbubble.htm

So I'm guessing that as more people forward stuff like this around the internet we'll probably see some deflation for a little while, followed by a slight "bounce" that will convince enough people that it's not really all over for real estate, followed by more deflation.

Does anyone have any experience or knowledge with buying foreclosed properties? It's gotten to the point in Portland, OR, that the only affordable markets for first time home buyers is either through condos or foreclosures. The other annoying this is that Portland is about the only coastal city that is not experiencing declining prices in the housing market. The whole thing is kind of depressing.

The other annoying this is that Portland is about the only coastal city that is not experiencing declining prices in the housing market.

link please? this is false based on what I've seen (SF/LA/SD/Vancouver).

false for seattle too

The Portland Tribune had an entire issue devoted to it. Also, you can just do searches on Yahoo or anything and see that prices are going down as expected in PDX. The job market is apparently quite healthy and seems to be offsetting any expected drop in median prices.

My friend did this a few years ago. Sold it after two years and a day, or whatever the minimum time is. More because of the neighborhood than anything else. But it was a good investment, though it required a lot of work.

I thought PDX housing had stabilized, at least in the under 300k market. But it's been a few months since I looked.

Yeah, prices have stabilized, but they haven't really been dropping either.

I'm wondering how difficult it is logistically to buy foreclosures. Do the banks allow inspections? Are the down payments higher? It looks like you can save 20 to 40 percent on these deals, but then again, why isn't everybody doing it? Are real estate agents and flippers scooping up all of the best stuff and leaving the public with the crap?

at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.
at least in the under 300k market.

What's your point?

My expectation at the moment is that, although I think prices will ease in the housing market by an average of maybe 15%, there won't be a total collapse of housing prices. Despite speculative froth, most people still live in their houses, so the market tends to get sluggish instead of prices collapsing. Rather, I expect inflation to continue to heat up in food and fuel prices and to spread throughout the economy more and more generally - with no offsetting increase in wages.

The erosion of the dollar will make this trend the worst in the USA, where even the prices for manufactured goods will start to inflate (finally), but the status of the dollar as world reserve currency will mean inflation will spread to the global economy, too. I look for the official inflation rate to go double digit in the USA by 2010.

Just my gut hunch.

don't worry, the amero will save us.

I believe steve shasta might be pointing out that housing has stabilized at what is apparently the new "floor" for urban real estate prices is kind of like saying the music isn't getting any quieter, at least the silent parts.

I'm missing a clause in there but the point stands that the "under 300k market" "stabilizing" is just more sticky-upwards pricing phenomena while buyers continue to wait for the bottom to drop out.

local newspapers bragging about it is a sign the bubble is still at work in your area more than it's a sign of anything else, and yeah sure go ahead and buy something to live in at a fixed rate you can afford but you had better be DAMN sure you aren't interested in real estate as an investment, because if you hadn't been around at the time, 1992 fucking sucked and this is going to only get worse. sup.

If I know anything about market psychology, the bottom will fall out within 24 hours of this thread being revived with a simple 'LOL' after prices have climbed another 30%.

Thanks for clarifying Steve's point.

Also, I'm talking about buying a foreclosed house to live in, not purely as an investment.

x-post

get an appraiser and a building inspector to look at anything. the appraiser will tell you a lower number, the real estate agent may tell you an even lower number than that (they only get paid if they move things) and the mortgage broker will cry because they really need you to take it for the posted price or they're going to miss the payments on THEIR adjustable rate.

the building inspector will be able to tell you if the thing was even built to code in the first place and may be able to give a ballpark figure on any improvements that need to be made in order to get it up to code.

It's great in Ireland... for ages it was "OH NOES House Prices are rising, the government must do something", but now suddenly it is "OH NOES House Prices are falling, the government must do something". Which is it, guys?

The other annoying this is that Portland is about the only coastal city that is not experiencing declining prices in the housing market. The whole thing is kind of depressing.

VISIT ONE NEW YORK CITY ;__;

(xpost)

yo, and the NYC metro area is STILL the land of $800K cape cods, and $500K+ piece-of-shit vermin-infested walk-ups that were crackhouses in the not-too-distant past condo conversions & luxury condos across the street from the PJ's.

shit ain't popped yet.

Yeah, I guess not. WTF - these "national" predictions don't seem to be jiving with any markets, it seems.

Well, I'm not sure what you mean by that - the national predictions jive pretty well with most places in the country.

As for NYC, I've heard a variety of explanations, all of which probably contribute - strong earnings and bonuses for wall streeters, demand is international, prices have long been too high for sub-prime loan folk, there's been a shortage for a long time, etc.

Strangely, I'm not seeing much evidence that the continued boom is spilling over into Jersey City (new condos are moving at a moderate but not especially impressive pace here), though it may be preventing a steeper decline. I guess New York is New York for most people.

in England: Mortgages eat up half the wages of some first-time buyers
http://business.guardian.co.uk/story/0,,2118670,00.html

in the US: Sales of existing homes drop to lowest level in 5 1/2 years
http://business.guardian.co.uk/story/0,,2118081,00.html

asking prices

selling prices

not the same thing

that's deep

I spend nearly half my wages on rent :( I'd be happy to spend half on a mortgage, at least then I'd own the bastard place.

at this point i don't even care if a property loses some value. i just want my rent money back at the end.

Countrywide loses http://www.latimes.com/business/la-fi-countrywide27oct27,0,4849832.story?coll=la-home-center.2 billion in the third quarter.

Whoa, that's ugly. Anyway, the link works.

Countrywide, the nation's largest mortgage lender, said it was now focusing on plain-vanilla mortgages. Those are safer and salable if far less lucrative than exotic loans had been at the giddy heights of the housing boom.

Ya think!

Rolling US Economy Into The Shitbin Thread

Thanks, I was trying to remember the title of that!

ILX, i present for your review a picture of angelo mozillo, the CEO of countrywide:

http://latimesblogs.latimes.com/laland/images/2007/05/24/mozilloreutersfacing_right.jpg

who's about going to become as ubiquitous as kenneth lay, dennis kozlowski, and bernie ebbers (though infinitely less pasty than any of the foregoing).

my bad, it's moziLo (only one L, not two):

http://images.forbes.com/media/lists/12/2007/7G33.jpg

Hahah, out of central casting or what?

his father was frank sinatra, and his mother a lobster.

Harry Belafonte called; he wants his skin back.

Are there any reliable statistics on how many foreclosures/defaults stem in part from outright fraud or malfeasance on the part of mortgage brokers? This is a part of the equation that I don't hear discussed often enough - usually this just gets turned into a debate over whether or not the borrowers should be "held responsible" for taking loans they couldn't afford, and I'm wondering what percentage of borrowers were literally swindled into taking those loans.

you'll likely never find a valid number on that, unless somebody wants to do a really intricate survey on it for their socioeconomics dissertation or something

and even then of course said research would have its methods excoriated by the banks

agreed with Tombot -- there's no method to quantify mortgage fraud on the part of mortgage brokers of which i am aware (maybe insurance companies have some in-house metrics, but i don't know if that's true at all and even if it is whether they're at all accurate for the market as a whole). it may be something that one would have to make a rough guesstimate based on (a) insurance claims related to such fraud; and (b) revelations from either private law suits or governmental actions related to such fraud.