I haven't done a housing blog for awhile. The whole scenario is pretty much playing out the way I expected. Besides, I'm beginning to think the commercial boom is even more dangerous.
I am amazed by the relentlessness of the real estate people, their level of denial and spin.
For instance, when it was pointed out that 2000 real estate agents had succeeded in selling less than 100 houses, someone popped up to say that the 2000 figure included all the Central Oregon.
Well, that's different, then. 2000 real estate agents sold more like 150 houses! No worries!
Real estate people constantly refute the bare facts with tiny little fig leaves, and the media says, the emperor isn't naked, he's clothed splendidly!
Whatever.
Gravity will assert itself.
I have a different take on it, anyway. While most of the bubble busters were talking about what a pathetic sales figure 82, or 92, or 102 was, I was completely amazed by the opposite.
There are still 100 damn fools who will pay current prices!
If I walked into a store and every item was discounted, and came back a week later and every item had been discounted again, why would I buy?
Here's how I would do it if I was in the market, and possessed a down payment and knew I could get the credit.
I would watch the daily price changes on the Bend Economy Bulletin Board, and when I noticed that 10 to 25% of the changes were up, I'd start shopping. I'd identify, say, 8 or ten houses I thought I might like, and I would watch to see if any went down in price further. Then, I would make a firm, solid offer at say 15 to 20% below asking price to each of the houses left, and take the one that accepted.
I think you'll have to wait maybe a year, or a year and a half. If you're worried about missing the boat, just keep checking the BEBB.
I can't think of any reason to buy right now. Well, one reason, and it's a lousy one. That you just have to have that one house above all others.
In business, I've learned never to respond to that impulse. There is ALWAYS another opportunity, always another product just as good. To me, this is the height of immediate gratification that you'll have to pay for the 30 years.
If by waiting a year, you can managed to save 20k or 30k or 50k, you will shave years off your mortgage. Years and years. Just fucking wait!
There was a recent article by a NPR correspondent moving to Bend.
He was surprised that it was as expensive to live in Bend as it was Portland. Hey, you accepted a job without checking out the town? Strike One!
Then he went to real estate people for information. No one else was mentioned, no evidence that he spent any time researching the fact himself. Not only real estate people, but Becky Breeze! Who told him: "There's never been a better time to buy!" Strike Two!
Then he goes ahead and buys probably the most overpriced house on the market, a westside 'cottage.' Strike Three!
Maybe the real estate people are right. Maybe this market will just keep rolling along. As long as they have the media on their side, they might just be able to keep fooling people.
Nah.
Monday, December 10, 2007
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From Slate Magazine, Dec. 10, 2007
Worst. Forecasters. Ever?The cockeyed optimists of the National Association of Realtors.
By Daniel Gross
Posted Monday, Dec. 10, 2007, at 5:34 PM ET
A house for sale. Click image to expand.The National Association of Realtors has released its 2008 forecasts
This morning at 10 a.m., CNBC real-estate correspondent Diana Olick hit the gray streets of Washington, D.C., to report the latest housing data from the National Association of Realtors. (Strange, I was able to get the data while remaining inside.) The news? The Pending Home Sales Index, an indicator of future activity, edged up in October, although it was still off 18.4 percent from October 2006. Olick also dutifully reported NAR's annual year-end forecast, which was picked up by the wire services. While the housing market may be in the dumps, said NAR economist Laurence Yun, "Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels."
Economic forecasting is exceedingly difficult. The consensus estimates compiled by the Wall Street Journal and other outfits on measures like GDP growth and unemployment are frequently incorrect. As a profession, economists project growth when a recession is about to start and project recessions when the economy is poised for continued expansion. And as stand-up economist Yoram Bauman puts it, "Macroeconomists have successfully predicted nine of the last five recessions." There are some institutional reasons for this: Many economists are associated with corporations, Wall Street firms, and trade groups, where it doesn't pay to be bearish. Others fall into the trap of extrapolating existing trends into the future. But given the complexity of the contemporary world, the huge range of variables, the unrelenting flow of data, and the fallibility of humans, it's likely impossible to forecast consistently with any accuracy. And it's especially difficult to project economic activity when the economy reaches inflection points—times when the economy is about to go from expansion to contraction, or vice versa.
But within the fraternity of financial and fiscal forecasters, the seers at the National Association of Realtors—longtime chief economist David Lereah and his successor Lawrence Yun—may be uniquely ill-equipped to deliver sobering forecasts. They work for a trade group whose mission is to buck up the spirits of real-estate brokers. And real-estate brokers—who live to sell, promote, and market—are constitutionally disinclined to hear anything but good news. Indeed, as I noted last summer, Lereah's penchant for putting out positive spin on dismal housing numbers inspired a blog and led critics to dub him the Baghdad Bob of real estate. Lereah has moved on. But Yun has picked up where he left off.
In addition to claiming that the sun is shining brilliantly even as rain pours down from the heavens in a mighty stream, Lereah and Yun have also hazarded optimistic, educated guesses about the future. In February 2005, Lereah published a book that is my candidate for Longest Title Ever: Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue To Climb Through the End of the Decade—And How To Profit From Them. Naturally, the boom busted soon after publication, and property values began to descend.
Clearly, the housing market encountered an inflection point in 2006, with housing prices and activity peaking. But you wouldn't have known it from looking at NAR's December 2005 forecast for 2006, in which the group said existing-home sales would fall 3.7 percent to 6.84 million and new-home sales would fall 4.8 percent to 1.23 million. Modest declines after an impressive multiyear run. Instead, as the data from December 2006 show, existing-home sales for 2006 fell to 6.47 million, down 8.6 percent (more than twice the rate forecast), while new-home sales fell 17.8 percent to 1.06 million. Last December, the 2007 forecast was once again guardedly optimistic. "Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards," said Lereah. For 2007, existing-home sales were "expected to rise steadily from the current cyclical low and reach an annual total of 6.4 million, which would be 1.0 percent lower than this year's total." NAR wasn't so sanguine about new-home sales, however, projecting they would fall 9.4 percent in 2007 to 957,000. But once again, the forecasts were far too optimistic. As NAR reported today, existing-home sales are projected to come in at 5.6 million for 2007—a fall of 12.3 percent, not the 1 percent fall projected last December. New-home sales for 2007 should amount to 788,000—down about 25 percent from 2006 and far below the projection made a year ago.
For next year, NAR projects existing-home sales will rise ever so slightly to 5.7 million, and that the median home price should rise 0.3 percent. New-homes sales, however, are expected to continue to fall sharply, to 693,000, which would represent a 12 percent drop. The forecast presumes that for the largest chunk of the market—the existing-home-sales market—the bottom has come, and it sits poised at an inflection point. It's possible. But the tendency of housing professionals to call the housing bottom for the past two years—again and again—has been pretty dismal. The good folks at NAR aren't the worst forecasters ever. That title goes to the two guys who, in 1999, projected the Dow Jones Industrial Average would hit 36,000 in three to five years. But given the recent history and the slope of the trend lines, it's probably prudent to prepare for the worst rather than hope for the best.
The reason the local media won't be able to deny reality, is because the national news is still covering it.
Doubt Slate gets much of its revenue from real estate listings....
Duncan, Read the following press-release issued by Tetherow last week carefully, note today teh BULL ran this press release. First all there are NO 'homes' @ Tetherow, but the title says that Home-Sales are good!
Home Sales News is Not All Bad; Oregon Development Closes on $12 Million in Homesite Sales in One Month
Tetherow's Success Defies Real Estate Trends
BEND, Ore.--(Business Wire)--If you think all of the news coming out of the housing industry is
doom and gloom, think again. A new development near Bend, Ore., closed
on 19 homesites in one month for a value close to $12 million or about
$631,000 per lot.
Internationally famous golf course architect David McLay Kidd and
his wife Jill recently closed on the first homesite at Tetherow, a new
700-acre golf resort community near Bend in central Oregon. They were
joined by 18 more buyers in the last month.
Do you remember over a year ago, becky was claiming that the Plaza was sold out, and she was turning people away.
Tetherow is trying to create the same shortage on homes, that don't exist, go up to Tetherow and look around all that's up there is a little green, and lots of mud and asphalt.
The BULL prints the Tetherow Press-Release verbatim, and then says this proves that home-sales in Bend are bucking national trend.
Again, no homes sold @ Tetherow, what sold was a few locals bought the best lots on speculation for a little down, in fact we don't even know yet if only one person might have paid $500 for the right to buy all the lots.
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