Oh gosh, you don't offend me......I have been a commercial real estate broker/developer/speculator since early 70s in Houston I have seen and lived through a couple of major bust.... Caused by increasing interest rates and increasing unemployment..... But I am in commercial which is different but is affected by the same factors as residential.....but people don't NEED an office building or warehouse like they do a home In the mid 80's Houston lost something like 250,000 jobs that begin with oil and reverberated outward to all businesses. The oil companies had gotten very blotted over the years with a lot of "middle managers" that were not needed to find oil. Oil went into a nose dive and the companies really started cutting employees ....by the 1000's...lots of mergers, smaller companies simply went away.. Housing took a huge hit....people couldn't sell to anybody as everyone was in same shape..... But that was a huge loss of jobs....we don't have that in the US today.... Also, keep in mind, these homebuilders are STILL MAKING MONEY...just not as much as before....they have real earnings... The sky is not falling......we may see a flat housing market for a few years....so what.....homes are meant to be long term.. SteveD
Now that's a bit more honest. and yes Houston was a screaming buy after the oilfields bust as was Exxon stock. But are you buying now?
This comes under the "For What it's Worth" category. I live in the wine producing region of Northern California. Yesterday I signed a lease to rent a brand new 4 bedroom, 3 bath home with every extra you could want (granite, hardwood, etc.) in a very desirable neighborhood. The seller/broker was thrilled for us to enter into a 15 month lease at $2350 per month...this home is valued at $800,000. I'd sign a lease like that for the rest of my life on those terms. My area has rentals available ALL over town and that inventory is just beginning to increase as we start into the traditional selling season. We haven't hit bottom yet by a long shot. Take a look at your local "craigslist.com" real estate section to see what's going on in your area. The shock and awe of this situation should start to register with sellers very soon.
Steve: Thanks for that gracious and honest response. Our views may not mesh, but they may not be quite as divergent as either of us may have first presumed. I'd buy you a beer anytime. Cheers.
<i>"Then the realtors are quoted as saying, "it is only temporary, etc." and then the subprime lenders start to get shaken out..."</i> Coincidental I read this. Yesterday I took a 1/2 day drive thru the area just to break the doldrums. Passed thru several small towns in the process. Three completely different mortgage brokers who'd been in business for a few years are gone, commercial spaces now vacant. These were the places most locals got their 2nd mortgage loans, mobile home loans, etc. Now I notice three of them bit the dust since first of this year. Budding trend?
Here is the problem: When Houston was in the dumps; a real depression.....foreclosures everywhere.....then the lenders started going under.....not one Texas bank survived intact That alone is an amazing fact.....Texas had no branch banking...all folded like a house of cards... But, NO ONE had any money to buy anything.....no loans to be had......one is just trying to survive day to day....no interest in "swooping in" , LOL....it was brutal..... Who cares if you can buy a shopping center for 60% of building cost....no tenants....we were too close to the disaster to be able to see any future.....most of us are still very risk averse, including me...... Houston is unique in that we do not have zoning and we have miles and miles of buildable land......very tough to make a real cash flow on most properties.....build and sell No state income tax.... real estate tax kills the cash flow aspect of most deals, but especially in rent houses...... To answer a question: No, I am not a buyer of Houston housing as I believe that single family houses are to live in....we don't get a lot of ups and downs here for reasons above.. Retail, I think is soft, apartments are amazing to me....they are building but I don't understand the numbers....very expensive land.. I think a lot of people are looking at an elephant through a key hole.....just don't see the bigger picture.... It has made me a better trader.....I have no problem in taking a stop loss....LOL SteveD
What did housing do in Silicon Valley after the dot.com bust? That would be a recent example of what might happen..... Anybody here get a great deal on a house???? Also, I think the risk averse aspect of the 80's for the oil companies has been partially responsible for the high price today... They will never take the risk again......memory is long....oil has to be priced for them to make money.... Also, we have a different attitude now..... Old bumper stickers: "Let the bastards freeze in the dark" SteveD
I talked to a guy that worked for a very large national builder here in Atlanta. He had just gotten laid off. He was an accountant with them. He said that they couldn't give the homes away. I asked him if they were to the point where they would entertain offers, like small builders or homeowers do and he said yes most definitely. I worked for a big builder once. It is unheard of for large national builders to come off the list price of a house directly. For this builder to be willing to do that is very interesting. Atlanta's economy is booming like never before and rates are super low too. For housing to be so slow here under these conditions speaks volumes for how bad it could get if rates go up or there is a disruption in the local job market. John