Sunday, August 5, 2007

Looking for the silver lining.

Umm, maybe they're right. Maybe people want to live here beyond any other place. Maybe they'll be able to sell their high priced home in California, so that the housing prices look attractive here.

Maybe they'll be like the guy over on the Bend Economy Bulletin Board who had good credit and funds for a downpayment, who shopped for a season making bids for houses, and finally on the fourth try caught one. (which was much cheaper than a year ago.)

Maybe enough rich and retired will just ignore the surrounding economic climate and buy the house they want, even knowing they could get it cheaper in a year.

Maybe the developers really know what they're doing. They've mapped out exactly how many houses they can afford to build; how many to start, how many to finish. Maybe these destination resorts are marketed correctly, and the rich and not-worried-about-their-next-paycheck people will just ignore the housing downturn to buy their luxury condo.

Maybe the vast majority of real estate agents are doing it as a lark; and the real professionals will continue to sell enough houses to keep their offices open. Maybe the economy in Bend is indeed diversified, and there are oodles of people making their money online, tele-commuting, "non-placebound." Or working in small high-tech companies we haven't heard about. Maybe the softening of the market won't create a giant hole in the middle where all the contractors, real estate agents, mortgage houses, banks, title companies, insurance companies, home decor, plumbing, electric and roofing, fence builders, landscapers, etc. etc. used to be.

Maybe the national economy is so resilient, that it will shrug off the housing downturn, and so we'll just keep getting those folk from out of town.

Maybe the commercial building will carry the building trade through the downturn and won't be affected. Maybe the Fed will get so worried about credit climate that they'll step and help (without creating another wave of inflation.)

Maybe the people who moved here already have so much liquidity and equity that they can see their houses decline in value without worrying about it. They live in Paradise!

You know, I just couldn't summon the enthusiasm to do more than these lame maybes....

1 comment:

Anonymous said...

Regarding the 'buyers'.

Over 75% of home-owners believe their home is worth what they paid, and 50% believe it is worth more, this statistic has been solid the last several years. When asked about their neighbors house they're much more negative.

Over 50% of home's right now that MUST be sold by folks that have bought a new house aren't selling. The number #1 problem right now for Builders is the buyers cannot sell their existing house.

The mortgage finance business is shutting doors nation-wide. Soon there will be nobody offering mortgages for refinance or new purchase. Government will step in to guarantee loans in order to create credit. Investors in mortgage bonds currently want to sell, nobody wants to invest in new funds that will only be worth pennys on the dollar. It will take a few years to get back to bank finance home mortgage where there is NO risk to the bank.

Friday +$400k loans went to 8%, and its going to be higher, because all home loans are now considered to be high risk.

The future is +20% DOWN, and +8% interest, this will take MANY buyers out of the market, especially in a negative appreciation market.