People Asking For Deposits To Be Returned On New Homes

ByLoSellHi · Mar 7, 2007

Quote from Sponger:

You and I share a lot of the same concerns about the real estate market's ability to really change things in the US economy. (by the way, where are you in the US?)

Metro Detroit, one of the hardest hit areas in the country due to auto woes.

Since you are actually in the biz, and have many business contacts throughout the country US I'm sure, I would like to get an insider's reply to these questions:

1) Do you believe that a much bigger decline in RE is only concentrated in the bubble markets that we saw: ie Florida, Southern CA, NYC, Arizona, Las Vegas etc.? Or do you believe it will be felt across the board?

2) Absolutely across the board, with the exceptions of very select pockets of extreme wealth like Manhattan and coastal areas of wealthy California and subpockets of Seattle, where "old money" resides or local industry is incredibly vibrant. In those other areas, local job markets will impact how severe the correction is.

2) Are you seeing weakness across all states and areas? My girlfriend's father is a home builder in Houston Texas where land is cheap and housing costs far less - he hasn't seen a huge change in demand last time I talked to him. But Texas is odd - so much land, a house that would go for for $500,000 in the state of NY can be had for 1/2 in Texas. So I don't know if they are a good barometer.

1) See Number 1 above (Texas is spotty - and certain Texas cities may fluctuate up and down with the fortunes of the energy industry, although most Texas cities have become more diversified since the 80s).

3) Is the real potential weakness yet to be felt until spring/summer sellers hit the market?

3) It will get worse this spring, as a record number of homes are listed, including those that weren't able to sell in the fall.

4) ARMs and IO mortgages are about to reset in a big way - what do you see happening at that point?

4) Subprime borrowers will be devastated. You will see an especially sharp correction in any state with weakening employment and in minority areas.

5) Is the RE news we are getting not being portrayed realistically - is it better than we are being told, worse than we are being told, or somewhere in the middle?

5)Realtors and home builders are spinning it soft. The media is talking about it, but I do not agree with those who claim the media is exaggerating the problem, because the bottom can't be seen yet, and the consequences are so grave to the economy.

You do you a great job of sending along all of the RE news that hits the wire services. I'm sure I'm not the only one who would like to hear an insider's predictions.

Thanks
More...

Sponger · Mar 7, 2007

Thanks for the feedback Bylo. You're in a tough market, that's for sure.

ByLoSellHi · Mar 7, 2007

Don't listen to the BS about commercial being immune.

Commercial is at a top.

I won't say it is as vulnerable as residential, because you're dealing with long term leases, but regarding anything other than triple AAA tenants in great physical locations, commercial properties are vulnerable to an economic downturn, too.

And remember, commercial follows rooftops.

S2007S · Mar 7, 2007

"IF" commercial real estate is at a top which I think it may soon be, it would be good to pay attention to SRS. Trading around 79-80, pointed it out on the other forum around 66 a share when IYR was flying high above 90+. Commercial Real Estate cannot stay hot forever.

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People Asking For Deposits To Be Returned On New Homes

ByLoSellHi

Sponger

ByLoSellHi

S2007S