Real estate insiders go bearish in blogs

Discussion in 'Economics' started by Thunderdog, Apr 18, 2006.

  1. Real estate insiders go bearish in blogs
    In mostly anonymous postings, agents are reporting big problems in the markets.
    By Les Christie, staff writer
    April 18, 2006: 9:57 AM EDT
    NEW YORK ( - If the secret worries of real estate professionals are any indication, home prices could be heading for a swoon.

    When Brad Inman of Inman News, which tracks the real estate industry and is widely read by industry insiders, recently gave real estate agents the opportunity to blog about market conditions, they almost uniformly described them as bad – and getting worse.

    "Normally, brokers and agents tend to sugarcoat the news; they don't want to affect consumer confidence," says Inman. "By letting them post anonymously, we gave them a way to really share their thoughts."

    Most responded with tales of high inventories, slow sales and languishing prices.

    Here's a sampling of their comments:

    "Portland, Oregon is mixed . . . more inventory, sitting longer. . . . Sellers no longer king." Posted by anonymous.

    "Minneapolis/St.Paul . . . 15 houses per buyer. If we had buyers. Huge inventory in every price range. More foreclosure properties coming on daily." Posted by anonymous.

    "East Central Florida Coastal area inventories up four times year to year and sales down 75%." Posted by Ramon Rivera (Not all bloggers craved anonymity).

    "Some Realtors, Mortgage Brokers & some clients have been more testy than in months previous. Something is in the air." Posted by S. Crowe.

    "Northern Ca. Let's not beat around the bush here. There is a slow down!! Home prices are not going up. Sales are down." Posted by anonymous.
    Inman grants that there could be an element of self-selection, with agents suffering a slowdown more inclined to vent. But usually, comments from posters tend to be very diverse, with no clear consensus. "This round of blogging," he says, "has been conclusive; no one said the markets are great."

    Stat support
    Statistical evidence of a housing slowdown appears almost daily. On Tuesday, the Census Bureau reported that March housing starts were down to their second lowest monthly pace in the past year.

    So far prices have not suffered any notable decline - the median home price nationally in the fourth quarter was up 13.6 percent from 12 months earlier, according to the National Association of Realtors.

    Still, NAR chief economist, David Lereah, is on record predicting price appreciation will drop to the mid-single digits. And NAR has recorded an uptick in inventory, though not enough to be troubling.

    NAR spokesman, Walter Molony, characterizes conditions today neither as a seller's nor a buyer's market. "Probably, balanced is a better word," he says. "There has been a steady rise in inventory since last fall, but, broadly speaking, it's still a little tight."

    Rates are going up
    What argues against any big fallout is that, absent a serious economic crisis in which unemployment spikes or wages plummet, real estate markets generally do not fall very far or very fast.

    But this time markets have to contend with rising mortgage rates - the average 30-year mortgage rate, at 6.49 percent, is now near a 4-year high, lowering home affordability.

    That will have a bigger impact in hot markets, where many buyers would not have been able to afford their purchases without resorting to financing through low-downpayment, low-interest ARMs (30 percent of recent sales or more in some markets). As rates rise, some could face close to a doubling of monthly mortgage payments. And if their home value has fallen, they could wind up underwater, owing more than their house is worth.

    How much potential for disaster there exists can be debated. According to Lereah, the next few years will feature a stable, more balanced, healthier market.

    Even some of Inman's bloggers are not totally bearish. One poster wrote, "Northern CA - oddly enough, higher priced inventory (luxury homes) still moving."

    Another one opined, "Wilmington, NC, market still active, except on barrier islands, where inventory of $300-500K condos over-supplied. . . . good to great condition, well-priced properties move quickly."

    Still, these shaky endorsements come nowhere near the unbridled optimism of a year or two ago.

    As for Inman, he sums up his blog-induced sentiments rather succinctly. "It scares me," he says.
  2. market does not care yet. we had a huge rally in the homebuilder stocks today.
  3. Chagi


    I personally find it amusing every time I read something in the business news that was put out by someone with a vested interest in property markets continuing to be hot (mortgage brokers, realtors, etc.). I hope that at least some of the readers pause to consider the inherent bias of such statements.

    The above said, I live in Alberta, Canada, and the property market has become pretty nutty (largely due to all of the oilsands megaprojects).
  4. Pabst


    Pretty decent rally in everything today. Not as if builders are leading the ralllies anymore.

    I've been in the Miami area all winter. The neighborhood I'm living in has 186 single family homes. About a dozen are on the market. Not a one has sold since I've been here and an additional property hits the market every week or so. While half the offers are of the "high ball" variety (a tear down on the beach listed at 5.4), at least two are at prices where it's obvious the seller is serious. By serious, I mean at "last spring" prices. In fact one home has been lowered from 1.8 to 1.3 and is still unsold. Granted 1.8 was ridiculous and 1.3 is still steep for a 2br albeit 50 yards from the beach. If the market was buoyant a home in that location would of been scooped by now.

    Back home in Chicago there's massive supply in my neighborhood and because of the 10-15% yearly rises in garage fees and assessments, I'd reckon my high-rise condo has seen scant appreciation since 2004. In short I see little signs that the rally in RE is presently in place. That doesn't mean there'll necessarily be anything more than a decent dip but just the same there's clear softness on the reaction off the highs.
  5. Quark


    Check out

    I've been following this guy's blog for a couple months. He was a SoCal mortgage lender before recently taking a new job. It's clear he saw problems coming and actually took action based on his conviction that the boom is over. There's some great info on his site.
  6. Just like "Milk does a body good", brought to you by the California Dairy Farmers.
  7. ElCubano


    The sharks will be in a feeding frenzy..

    Developers have abandoned several projects here in Miami due to increasing construction costs and inventory moving very slow...the mom and pop speculators seem to be drying up in turn making it harder to sell in turn causing liquidity issues which in turn will only mean lowering the other words WATCH OUT BELOWWWWWWWWWWWWW
  8. I've thought about picking up some Miami condos on the cheap as the Bubble bursts over the next few years. Unfortunately, if you get into a building where a lot of the owners are getting crushed, then most of them are not paying their monthly dues. So either the building falls into disrepair or the other owners have to pay for the entire cost. Essentially, what initially seems like a bargain ... may not be. The building I'm currently in is brand new, and the condo board already has contracted a service to try and collect all of the back dues from the speculator owners who haven't paid up.


  9. ElCubano


    the CONDO market has nowhere to go but down IMO, im speaking of the miami area only..I havent seen this many cranes ever. Developers asking buyers to pony up more funds and pulling out of some projects cant be a good sign.
  10. The same is true for Tampa (I used to live in Miami Beach), but I know it's not as bad as Miami. I can count 17 cranes from my balcony, and there's many more that I can't see because my building is in the way. If you head out towards the beach, it's also crane city. The Florida state bird is definitely the "Crane". You knows it's getting bad when half the commericals on TV are for condo or housing developments, and even the city buses have Billboards on them advertising new housing developments. I'm actually going to a condo preconstruction party tonight for the new building that is scheduled to go up next door ... I want some free food! :p

    Of course, I'll be told that the market is awesome, and now is a great time to buy! I've been watching the progress of the new Trump Tower about a block away ... the crane has been there for over two months, but nothing seems to be happening. I wonder if they're having second thoughts about the project?


    #10     Apr 19, 2006