Is The Real Estate Market At A Bottom?

Discussion in 'Economics' started by cstfx, Sep 14, 2007.

  1. cstfx

    cstfx

    Has the market hit bottom? Many builders are beginning to tout the bottom of the real estate crisis, that the recent sub-prime crisis has shaken out the weak players and we are in for an extended period of consolidation (i.e. relatively no price movements up or down)

    And yet, starting today, we have one of the nations largest builders having a sale this weekend with up to 100k off the price of a home in selected markets. While most HB's have refrained from actually cutting prices to spur sales, substituting large incentives instead, for fear that it would knock out the legs of an already trembling market, this is the first time this cycle that we are seeing a significant mark-down in prices from a major HB.

    Is this an omen of the market for the next few years? The last time we had this type of crisis, they were auctioning off condos/townhouses for up to half the original asking price? Maybe we are headed back to equilibrium, finally!

    http://money.cnn.com/news/newsfeeds/articles/djf500/200709121548DOWJONESDJONLINE000798_FORTUNE5.htm
     
  2. They have been calling a bottom for how long now? Wishful thinking.

    When were are done reverting to the mean in about 4-6 years ill start calling a bottom. We are still way outta whack.

    Here is a good example of why things are still just stupid high. Wages have barely moved. As soon as they are done shutting down all the creative loans, there will be no one left to buy. Prices will have to come down to meet what people can afford. Rewind to 2003 prices.

    http://drhousingbubble.blogspot.com...enius-today-we-salute_13.html?ref=patrick.net
     
  3. builders are building smaller homes in order to attract new buyers....what do you think that signals???
     
  4. Arnie

    Arnie

    I think you need to see inventory levels drop first. We've never had this many homes for sale.......EVER!

    Builders are offering all kinds of incentives (read: price cut).

    Sub-prime is history. That's gonna shut out a whole lot of first time buyers. If they can't buy, who are extsing HO's gonna sell to, to "move up"?

    Rates on Jumbo loans are 75-100 basis points above the average for conforming loans. I think a lot of those potential buyers will wait for rates to come down.

    A normal housing cycle is more like a decade, not a year or two.
     
  5. maxpi

    maxpi

    Builders are not the smartest money around. They believe their own hype long into the down cycle typically. Eventually the reality of unsold inventory and business losses is evident to them and they go do something else until things pick up again.
     
  6. cstfx

    cstfx

    I don't think everyone needs a 3500 sq/ft home. The route that new homes have traversed this past decade (from "Levittown" communities to mcMansions) has definitely added to this price inflation. And a return to more modest living environment would probably help return prices to equilibrium. You can argue that house size has nothing to do with the inflation of prices, but when it comes to real estate, there is a herd-mentality that sets prices people were asking for as well. When you hear that a 2 bd condo in NYC costs 1.2MM, then you come to expect that is the price you can get, even tho your space may be 200 ft less than the quoted one. A cheaper, smaller house will help.
     
  7. It signals even more problems for people who are holding homes they wish to unload that are priced out of the market :p



     
  8. A lot of homebuilders need to go under first.
     
  9. S2007S

    S2007S

    There wont be a bottom for at least 3 years, expect another 10% drop in housing prices over the next 6-12 months.
    Some areas that are overvalued will see a 25%-40% drop in prices.
     
  10. S2007S

    S2007S


    I think 1 or 2 may go under in the next year or so.
     
    #10     Sep 14, 2007