Yeah, but this has happened before...even worse things than 9/11 have happened... But we've never ever ever had a credit bubble like this....
day, first i cannot convince you or others to my point of view; but i can give you some facts and a history lesson. i now own a 35 year old family (mine of course, with 19yrs experience) high end kitchen manufacturing business in arguably the wealthiest area of the united states. i have seen with my own eyes 2 major housing corrections. the last one comprised the s & l crisis in the early nineties. that one was the result of the late go go 80's overspeculation. since things cleared up, we have boomed for the last 15 years for various reasons. when things continued and i felt could not get any better, it all surged more so in 02/03. the banks lent money like no tomorrow. people were building homes, additions,and tear downs you name on every street. i was disgusted when "nobody's" were justifying buying some home's for way more than they were worth. sure, we made a killing; my business is fully automated (hence the time to trade) and beyond debt free with 55 on staff. now here in this very real downturn, all types of building has completely stopped. only the rare custom stuff going on. those geniuses who made money are now after say, 10 wins, are losing it all on 2 houses sitting. that is how it happens everytime. but now, here are how things are different this time......prices went even higher than those past corrections. my proof is how we boomed since the last one, and the fact that we will lay off people for the first time since our founding. this one will be known as the biggest correction in over 30 years. not being a tough guy behind the computer, but what i am saying is all true as i do plan on enjoying (admittedly lucky to be positioned as i am due to smart moves and the age of the business) watching the arrogant people get their asses handed to them. i (as in the past) will be ready to purchase some nicely discounted assets. that is life , and i am grateful to be one who can. so, prices are down way more than 4.5%, and will continue for a while. if you have seen what i have, you would understand.
This has been an interesting thread. Interesting to see some still in denial. RE losses amount to $1 trillion so far. And they are projecting much higher losses in the months to come. 2006 GDP was $13 trillion.
Real estate price valuations fluctuate but real estate stays the same. When the demand increases valuation become high. Right now we are at low point due to reluctance of the average consumer to initiate a real estate buyorder. When and if the stupid consumer is convinced this the best he can get, he will start buying and that will end the real estate down cycle. The average stupid consumer is skeptical about buying a house for now. He has become a wild speculator hoping for prices to fall. But as long as people have jobs, mortgages would be paid and people will have lot less reasons to sell him anything. I am a real estate seller and I can hold off selling indefinitely. We can let these stupid Charlies circle our wagon for a very long time. We live in a house they don't. We pay no taxes they do. That equation will never balance unless they step in our shoes. Hence a stalemate for now.
How are you going to get demand to increase over the 2005 levels where loans consisted of 105's, option arms, no money down 15x stated income loans? 2007 has ended and inventory where I live in Suffolk County,Ny is climbing rapidly. I do not think long island is an isolated case. I wish my forecast was as rosy as yours but it just aint.
Un F'ing believable! Where do you start with this post.... Sure, those buyers will be right back! OWP
%4.5??? Not according to sites like zillow.com which lag what is really happening. More like 9% or more. Were going to keep grinding down like this for a few more years, most likely. Hot areas like san diego are down about 35% from 2 years ago and still falling. Homes often sell up to 20% below the zillow moving average which means they are actually over 40-50% down from 2 years ago. Youre in dream land buddy. This is a crash. Were gonna hit 2005 prices soon enough and then 2004, and we still wont be reverted to the mean. Thing the buyers will be back soon? Sorta like in japan??? Hahahaha.
I for one appreciate hearing real words from the trenches...not clap trap from news orgs. I have been reading the same sort of stuff off the comment sections of real estate blogs, here are just two in as many days. OWP "Comment by Ncineration 2007-12-25 05:10:53 Off topicâ¦. How about a view of the currently nosediving auto sales industry from inside a top Honda dealership thanks to our friend the housing bubbleâ¦. Lets get the introductions out of the way: Iâve been in cars my whole life, I enjoy them. Iâve washed them, driven the piss out of them, and at this point sold them for the better part of a decade. Because of my wide knowledge base and variety of brands Iâve sold for Iâm a used car salesman (Honda new car departments turn out salespeople who are too biased to effectively sell anything else, so they usually hire used salespeople from outside). Iâve always considered myself one of the âgood guysâ in the business. I do a good through job, Iâm not greedy, and Iâm not a drug-addicted kleptomaniac refugee just out of tent-city with 2 DUIâs and no license (this sadly represents many of my past and present coworkers). Over the years Iâve been happy to take home a reasonably good income, which has supported myself and my family just fine. I currently live/work out of Phoenix Arizona (well, one of itâs cities anyway, trying not to get too specific), and everything has been going great for years here, until fairly recently. Now that you know me a bit better, lets get down to the nitty gritty here: Sales are -way- off. Yes, December is usually a very slow month for the car business, but this has been an ongoing problem for the past 4-5 months. Our used car department that typically sells between 150 to 180 vehicles has been managing to sell a signifigantly lower 110-130. This month for example we are currently pacing 105, December of 2006 we managed a strong 152. These sales are split amongst 15 retail used salespeople and 3 used internet salespeople. The number of salespeople is also up year over year from 12 used retail and 2 used internet (typical dealership knee-jerk reaction, more salespeople = less people hit bonuses = smaller commissions = bigger dealership bottom line). To top it off the 3 used internet guys will account for 20-25 of those sales, so weâre talking 75-95 sales split among 15 people. The past 4-5 months have had the same kind of declines, weâre talking 20-30% lower year-over-year. New car sales are also significantly off, but I am sticking to our used department numbers for the moment. We havenât had a HELOC customer in at least 5-6 months guys and gals (for a year or two it seemed 30-50%+ of your customers were paying cash from their home equity line of credit). I havenât had a mortgage broker or real-estate agent in here buying a car in at least as many months. Of course lower sales mean inventory is sitting longer (and we are corporate owned whoâs policy is a vehicle can only stay on the lot 60 days before they send it to auction). This equals -heavy- discounting as a car becomes âold agedâ. 15-20 cars sitting on our front line right now are being sold for losses (well, after dealership âpackâ anyway, which is a fee assessed to cars on the lot to reduce commissions paid to salespeople). A customer might be thinking that sounds great, but it leads to a reduction in what their trade-in is worth as well. When we are selling a slightly used 2007 civic -way- under wholesale KBB you can guess what their 2005 is worth on trade. Itâs a double edged sword, sadly. To put it bluntly, this has caused our profits to drop by 2/3rds. This month we are pacing 40,000$ in used car commissionable gross. Salespeople earn 25-35% of their individual commissionable gross, at this average of 400$/car thatâs 100-140$ (take in mind our average up until the last 4-5 months has ran slightly over 1000$/car commisionable gross for nearly 3 years in a row). And all these things mean the bottom line for salespeople here has dropped massively. Day in and day out Iâm sitting at work listening to coworkers who canât make their bills. Weâve got several people here about to lose homes, people whoâve lost their carâs. These guyâs paychecks have went from decent living wages, to 1200-1400/month. Most everyone here is having a VERY lean christmas this year. People taking their vacation days lately has opted to work instead and just take the pay. People are running out of money and quitting (people who have been here for -years-). And guys, we have it fairly good here, a dealership just up the road shut down due to lack of capitol, salespeopleâs paychecks bounced. There are people all over this autoplex barely surviving. Everyone is hoping things will get better, we are all looking to January for things to pick up. Iâm decidedly pessimistic. Iâm riding out the wave as best I can guys, with savings in the bank, and a low rent payment. All I can say is, the housing bust is not contained. Like us or not, we are suffering, and the pain is going to keep spreading high and low. ------------------------ Comment by ChicagoANT 2007-12-25 11:02:58 I have a relative who works for a major dept store chain and manages the juniors clothing section for several of the stores in her region. She said that sales are at 60% to what they were last year.
southwestern connecticut. additionally, as jd7419 posted without the easy loans, and tighter credit, simple common sense will point the drastically lower real estate prices.