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Thread: U.S. Housing Prices in Freefall

  1. #1

    U.S. Housing Prices in Freefall

    Sorry to be the harbinger of bad news again, but this is really important.
    http://thehousingbubble2.blogspot.co...ry-prices.html

    U.S. Average Sales Price
    Dec '04 $284,300
    Aug $295,000
    Sep $299,600
    Oct $291,400
    Nov $286,000
    Dec '05 $272,900
    That's a 9% fall from the top in September, and a 4% fall year-over-year. That's it for this bubble economy.

  2. #2
    Cyburbian AubieTurtle's avatar
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    But how are people going to pay off their credit cards and buy more chinese crap from Sprawl-Mart when they are upside down in their house and unable to cash out any "equity"?

    In other news, James Kunstler was found dead today. Apparently he laughed to death after seeing the start of the housing bubble collapse. (just kidding about him kicking the bucket)
    As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron. - H.L. Mencken

  3. #3
    Cyburbian
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    Quote Originally posted by jaws
    Sorry to be the harbinger of bad news again, but this is really important.

    That's a 9% fall from the top in September, and a 4% fall year-over-year. That's it for this bubble economy.
    Home price trends vary dramatically from one region to another, and sometimes huge variations are found between communities a few miles apart. For example, home prices almost tripled (up 195%) in Sea Isle City, New Jersey, from 2000 to 2005. During the same time period, prices in nearby Woodbine increased only 45%. Likewise, the economic outlook is different in different regions. Compare the recent history of and near-term outlook for, say, Detroit and San Diego.

    For people worried about what is happening in their neighborhood, dwelling on national figures is useless. The problem is the mainstream media has been blabbing for years about a housing bubble and forthcoming crash. Their predictions have been spectacularly wrong, yet they carry on and amazingly some people are still listening.

    I am considering moving to Weehawken, Hoboken, or Jersey City, New Jersey. The 3 towns are located straight across the Hudson River from midtown and downtown Manhattan. Home prices increased >20% in each of these municipalites in 2005, compared to 2004. I think home prices will continue to increase in these areas.

    For people who care, here are the fundamental drivers behind why home prices will increase >10% in Weehawken, Hoboken, and Jersey City:

    1. Wall Street employment increasing quickly

    http://www.osc.state.ny.us/press/rel...06/011106a.htm

    “Employment in the securities industry in New York City totaled 174,000 jobs in November 2005, 8,700 more jobs than a year ago.”

    2. 2006 bonuses are highest in years

    http://www.osc.state.ny.us/press/rel...06/011106a.htm

    “Bonuses paid by Wall Street firms grew by an estimated 15.5 percent in 2005 to reach a record level of $21.5 billion, compared with $18.6 billion in 2004 and the previous record of $19.5 billion in 2000.”

    3. Weehawken, Hoboken, and Jersey City apartment buildings are full, rents are beginning to rise rapidly

    AvalonBay owns more than 1,000 apartment units in their northern New Jersey region, mostly in Jersey City and the remainder in nearby Edgewater. AvalonBay’s figures are the most reliable indicators of the Hudson County waterfront apartment market, in my opinion.

    AvalonBay just reported its northern New Jersey rents increased 8.4% in the 4th quarter of 2005, compared to the 4th quarter of 2004. This increase was the 2nd highest of AvalonBay’s 16 regions, and northern New Jersey rents are now the highest in AvalonBay’s portfolio. AvalonBay also reported 4th quarter 2005 occupancy of 97.4% in its northern New Jersey region – a significant increase over 4th quarter 2004 - demonstrating its northern New Jersey apartment buildings are effectively full.

    4. Demand for owner-occupied housing in Weehawken, Hoboken, and Jersey City is the strongest ever, and new supply opening in 2006 and early 2007 is mostly sold out already. Unlike Miami and Las Vegas, nearly all buyers are owner-occupiers, not investors.

    5. Interest rates are peaking

    The Fed is signaling an end to rate increases this summer, and the bond market is predicting that rates will be falling in late 2006.

  4. #4
    Cyburbian Michele Zone's avatar
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    Quote Originally posted by jaws
    That's it for this bubble economy.
    Hot damn! If it totally collapses with a very loud crashing sound, I might be able to afford a house of my own sometime in my life time.



    MZ, ever the optimist.

  5. #5
    Quote Originally posted by jtmnkri
    1. Wall Street employment increasing quickly

    http://www.osc.state.ny.us/press/rel...06/011106a.htm

    “Employment in the securities industry in New York City totaled 174,000 jobs in November 2005, 8,700 more jobs than a year ago.”

    2. 2006 bonuses are highest in years

    http://www.osc.state.ny.us/press/rel...06/011106a.htm

    “Bonuses paid by Wall Street firms grew by an estimated 15.5 percent in 2005 to reach a record level of $21.5 billion, compared with $18.6 billion in 2004 and the previous record of $19.5 billion in 2000.”
    That's all part of the bubble too. Where do you think they got 20$ billion for Christmas bonuses? The stock market was crap that year, so it's certainly not by "allocating capital efficiently." Fed credit filtered through Wall Street to mortgage buyers, and Wall Street kept a cut. When the mortgage buyers are no longer buying, those Wal Street kids making 100,000$ in bonuses fresh out of business school are going to end up out on the street, just like their dotcom predecessors.

  6. #6
    Cyburbian chukky's avatar
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    Quote Originally posted by Michele Zone
    Hot damn! If it totally collapses with a very loud crashing sound, I might be able to afford a house of my own sometime in my life time.



    MZ, ever the optimist.

    I thought exactly the same thing when I saw the thread .. given that we've seen phenomonal growth in Brisbane.

    Chukky is always looking on the bri-ght si-de of li-fe da de da dum

  7. #7
    Cyburbian Michele Zone's avatar
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    Quote Originally posted by chukky
    I thought exactly the same thing when I saw the thread .. given that we've seen phenomonal growth in Brisbane.

    Chukky is always looking on the bri-ght si-de of li-fe da de da dum
    A (locally) depressed housing market has worked to my benefit on a couple of previous occasions. I will be perfectly happy if it does so again.

  8. #8
    Cyburbian abrowne's avatar
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    I'm not concerned about housing value for personal effect... I don't own, and my parents home is not to be sold any time in the near future (and we have a small level of debt). What I'm more worried about is the aggregate of all this lost value and what effect it will have on the market, inflation, and cost of living.

  9. #9
    Cyburbian Michele Zone's avatar
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    Quote Originally posted by abrowne
    I'm not concerned about housing value for personal effect... I don't own, and my parents home is not to be sold any time in the near future (and we have a small level of debt). What I'm more worried about is the aggregate of all this lost value and what effect it will have on the market, inflation, and cost of living.
    "The shallow end of the pool empties first."
    From what I have read, crashes, depressions, etc. weed out weaker companies and only the strong survive. They also weed out a lot of extraneous, frivolous stuff. It can be a tonic for an economy that is ailing from the kind of excess that many people routinely accuse America of having. In The Great Depression, women's and children's clothing sales took a hit but people still needed clothing. Cars took a major hit but bicycles had higher sales as people turned to bikes as basic transportation (not sure that would be as feasible today). Second-hand stores thrived. Anything which was cheaper, longer-lasting, had less spoilage, etc. did well while frivolous expenses took a nose-dive. (As one example: I think french fries and onion powder got their start in The Great Depression.)

    That isn't to say people don't suffer. They do. But I am reminded of a comment that still rather haunts me: I read one man's explanation of the cyclical nature of economic upturns and downturns. His opinion was that people get lazy in good times and work harder when times get tough, then get lazy again they are too fat and happy again. I have no idea how to study or test that idea, but it makes enormous sense to me.

  10. #10
    Cyburbian
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    Hmmm so 4% is a freefall now... And since it's a national average, that fall doesn't mean much, specially in the parts where housing prices are and have been going up for ages... So now everybody will be homeless, or lose money if they sell their houses right? It's just a phase jaws... it'll pass. It doesn't rain eternally, but there isn't always eternal sunshine either...

  11. #11
    Quote Originally posted by jaws
    Sorry to be the harbinger of bad news again, but this is really important.

    That's a 9% fall from the top in September, and a 4% fall year-over-year. That's it for this bubble economy.
    Yes, the sky is falling.

    U.S. Median Sales Price
    Dec '04 $229,600
    Aug $240,100
    Sep $240,400
    Oct $237,500
    Nov $226,800
    Dec '05 $221,800
    It's obvious that there are some RE markets that are overpriced, so we may start to see downward-pressure on average and median prices as long-term interest rates begin to rise. However Manhattan, Southern California, and South Florida are hardly indicative of the norm in the United States. You can still find a decent home for under 100k in some markets.

  12. #12
    Quote Originally posted by SkeLeton
    It's just a phase jaws... it'll pass. It doesn't rain eternally, but there isn't always eternal sunshine either...
    The last time this happened was during the Great Depression.

  13. #13
    Super Moderator luckless pedestrian's avatar
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    cool, i can get some work done...

    it's funny, everyone said this moratorium up here would wreak havoc to the real estate market, but all the houses and lots that were for sale before the moratorium are stll sitting there, overpriced...

  14. #14
    Cool, let's hope all those pricks who bought multi-million dollar butcher-blocked condos and McMansions along the coast lose their shirts for driving up prices in the first place and making it unaffordable for anyone else to buy or rent there.

    I have no sympathy at all for these people. Their high-maintenance corporate lifestyle and relentless pursuit of the good life no matter who is hurt in the process makes me sick. They've been tearing down little beach cottages all along the coast from Stone Harbor to the Keys and back up to Biloxi for years and they are the first to cry and whine when the bubble bursts.

    Worse, they make even moderate Hurricanes automatic multi-billion dollar disasters because the areas hit are now so full of these gaudy McMansions, whereas 10 or 15 years ago the areas were empty of had much smaller houses. I hope someday people say "enough is enough" - that they're sick and tired of funding these jerks who turn right around and keep them away from the coast by privatizing the beach or otherwise restricting their access (Kiawah Island, anyone?). Then maybe the elites will be left high and dry and never get a drop of FEMA money if a hurricane blows down their million dollar piece of $hit.

    So here's to the bubble bursting along the coast, and a bunch elitist carnage in it's wake. The big McMansions that block the sunrise or sunset will be taken down and the hotels, apartments, and cottages will be affordable once again.
    Last edited by Super Amputee Cat; 29 Jan 2006 at 6:03 PM.

  15. #15
    Cyburbian Emeritus Chet's avatar
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    Quote Originally posted by jaws
    The last time this happened was during the Great Depression.

    Moderator hat off. Please put a bullet in your head and let us free of your misery. You are single handledly the biggest pessimist nay-sayer do-no-gooder this board has seen in years.

    Is there ANYTHING you can post is that is remotely positive? Or for that matter, remothely related to the core topics of this forum?

    You suck.


    Moderator note:
    (NHPlanner) Mod tags removed.



    Chet yellow carded for misuse of the moderator tags, and for an ad hominem attack.
    Last edited by NHPlanner; 30 Jan 2006 at 12:29 PM.

  16. #16
    Quote Originally posted by Chet
    Moderator hat off. Please put a bullet in your head and let us free of your misery. You are single handledly the biggest pessimist nay-sayer do-no-gooder this board has seen in years.

    Is there ANYTHING you can post is that is remotely positive? Or for that matter, remothely related to the core topics of this forum?

    You suck.
    I report reality. If reality isn't rose-tinted, that's not my doing. If you want to ignore reality, you should cut yourself off from any source of information. There are several people in this thread very interested in the topic. If you're not, just move on.

    Look in the other forums. I'm always on-topic, and I'm often positive as well. Your criticism is completely undeserved. I have the feeling I may have challenged some of your dearly-held beliefs and you think you can restore normality by destroying me. You can't.
    Last edited by NHPlanner; 30 Jan 2006 at 12:29 PM.

  17. #17
    Cyburbian imaplanner's avatar
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    Jaws- citring something from a website called thehousingbubble.com or whatever does not make a real unbiased source. Further- the census data shows that the housing prices in January 2005 to December 2005 are almost exactly the same. There is always seasonal variation in home sales. And looking at the one year variation there does not appear to be a freefall.

    And SuperAmputee cat- I am very shocked by your attitude- while "elitist carnage" would potentially be a good thing- its the people who worked there whole lives or have worked very hard to afford their first house that will be the big losers if something like this happens.

  18. #18
    Cyburbian abrowne's avatar
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    I think predictions of a bubble burst are a bit unlikely. Some regions will have substantial devaluations, some won't, but I suspect the norm will be a gradual cooling off and little loss in value. No spectacular disaster here. Regions with growth boundaries should expect an even less bumpier ride (Toronto, Vancouver, Portland, et al).

    However, I'm writing of a Canadian perspective and we traditionally do not carry similar personal debt loads as many Americans today find themselves with. Interest rate troubles could spell pain for almost every sector.

  19. #19
    Quote Originally posted by imaplanner
    And SuperAmputee cat- I am very shocked by your attitude- while "elitist carnage" would potentially be a good thing- its the people who worked there whole lives or have worked very hard to afford their first house that will be the big losers if something like this happens.
    I don't see it that way necessarily. At the very least the rich will be hurt so much more because they have been so insulated and softened through years screwing people over and living a morally bankrupt, high-maintenance lifestyle, and the lower classes are already used to suffering. The old addage, "the bigger they are the harder they fall" may apply here and it would be just wonderful to see the elitists go bankrupt and lose everything they own.

    We were in Tybee Island, Georgia a few years ago - one of the last unspoiled beach communities in the south Atlantic before the rich Atlanta pricks "discovered" in during the Summer Olypmics. A waitress at one of the restaurants we dined at commented that she was being forced to move because all the elitists were driving up prices of homes, condos, hotels, and apartments. (In fact, the very hotel we were staying at - an old '40s motor court - was being torn down for condos the next year). Anyway, she stated that the only good thing about all this construction was that maybe the builders would overbuild, overextend themselves, and go belly-up if the market became saturated, the prices come crashing down, and the island could be affordable once again for longtime residents and the poor people who just want to spend a weekend there.

    Well it looks like it has taken a few more years than expected, but if the freefall continues, maybe all those speculative assholes who ruined the quantness of Tybee Island forever will be forced to sell at bottom basement prices, and those that live within a more moderate means may be able to move back there, even though it will never, ever be the same.

  20. #20
    Cyburbian chukky's avatar
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    Quote Originally posted by Chet
    Moderator hat off. Please put a bullet in your head and let us free of your misery. You are single handledly the biggest pessimist nay-sayer do-no-gooder this board has seen in years.

    Is there ANYTHING you can post is that is remotely positive? Or for that matter, remothely related to the core topics of this forum?

    You suck.
    I've become curious as to the basis of "mod"-ly critisism. With the 'mod hat off' comment, it sounds like your critisms come from a 'non mod' position, yet it gets the Wrap of The Mod to underline it. Given that jaws doesnt seems to have broken any forum rules, and the highly personal attack on him, whats with the heavy handed offical stamp? Whats the protocol on using mod-tags and not?
    Last edited by NHPlanner; 30 Jan 2006 at 12:29 PM.

  21. #21
    Cyburbian
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    Quote Originally posted by imaplanner
    Jaws- citring something from a website called thehousingbubble.com or whatever does not make a real unbiased source. Further- the census data shows that the housing prices in January 2005 to December 2005 are almost exactly the same. There is always seasonal variation in home sales. And looking at the one year variation there does not appear to be a freefall
    Couldn't have said it better... And I have nothing personal against jaws... it's just that sometimes the discussions in his topics become extreme and it's just like hearing 2 dogs barking at eachother... in the end none of them is right.

    Besides the evidently biased source... If you wanted to say that the last time that happened it was the great depression, I'd like to see that with figures, seeing how the prices fell back then. I doubt that the prices fell only 4%... And besides, Means don't mean much by themselves. And in a US national scale, that information is useless. There's just too much space for variance. It's 8th grade statistics...

  22. #22
    Quote Originally posted by imaplanner
    Jaws- citring something from a website called thehousingbubble.com or whatever does not make a real unbiased source. Further- the census data shows that the housing prices in January 2005 to December 2005 are almost exactly the same. There is always seasonal variation in home sales. And looking at the one year variation there does not appear to be a freefall.
    thehousingbubble blog has been the most reliable source of housing bubble information. Everything posted there is sourced to a legitimate organization, in this case they got the data from the U.S. Census Bureau (corrected).

    The seasonal variation argument makes absolutely no sense here as we are looking at the change from the same month in both years, thus in the same season.

    Quote Originally posted by SkeLeton
    Besides the evidently biased source... If you wanted to say that the last time that happened it was the great depression, I'd like to see that with figures, seeing how the prices fell back then. I doubt that the prices fell only 4%... And besides, Means don't mean much by themselves. And in a US national scale, that information is useless. There's just too much space for variance. It's 8th grade statistics...
    I don't know why you think the Census Bureau is biased (other than being pro-government), or that raw averages could be biased in any way.

    You also need to take another look at statistics if you think this information is useless because its on a national scale. It's the very opposite. If it were only regional fluctuations they would cancel each other out in the stats, but this is a national market event. That's why the last time real estate prices went down nationally was during the great depression, there have been bubbles since but they were only local and didn't show up in the stats.

    I checked the stats available on the Census Bureau's site and there was another 4% decline in prices in 1970, though the stats only go back to 1963 so I can't give you the data on the Great Depression. Have a look: http://www.census.gov/const/uspriceann.pdf
    Last edited by jaws; 29 Jan 2006 at 9:49 PM.

  23. #23
    Cyburbian
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    the thread seems to be rooting for bad results. i don't get it.

  24. #24
    Cyburbian michaelskis's avatar
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    This is short term and is a good thing if your looking to buy!

    Wow, this is an interesting thread. Why is it that housing prices are dropping? Is it just in the suburban and rural areas as they all come up on the market with people moving closer to the cities again?

    I also wonder if this a supply and demand concept? More so, what influence do demographics have on this? Right now some members of the baby boomers are selling their larger homes to try to move into something smaller and more manageable since many of their kids are now done with college, and have families of their own.

    I personally like to see this. The GF and I are talking about buying a home sometime later in 2007 or mid 2008 and with the opportunity for a larger down payment, a 15 year fixed rate, and have a greater equity.

    I don’t see this as “ohhh the end of the world, it is time to sell” as much as “sweet, everything is going on sale!” Much like the stock market, the housing market has gone up and down, but on average both have gone up over the past 100 years.
    Trusting a DC politician with your money is like trusting a hungry dog with a raw steak.

  25. #25
    Cyburbian jmello's avatar
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    Foreclosures in the Boston area rose 32% between 2004 and 2005 (see Boston Globe today). Legal battles are brewing between spec condo buyers in Las Vegas and the builders who can no longer afford to construct the units at pre-construction prices due to increased material and labor costs (see NY Times yesterday). These are two negative signs often cited by doomsday economists.

    I believe that Boston, SF, DC, Las Vegas, Miami and possibly New York will see inventory gluts and falling prices in the next year.

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