Is the Bubble Leaking, Bursting?

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The "housing bubble" I keep hearing about? One blogger is compiling the evidence, and having a sour chuckle at some of the apparent absurdities of the market in its full flowering, or perhaps full decadence. (And yes, you can't say it's "overvalued" without knowing the desires and plans of whoever might want to buy it, and are certain that buying the house would disappoint them.) Any commenter horror tales or victories in the real estate market of late welcome.

NEXT: Better Late Than Never

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  1. I’ve got a bit of both: I sold a house last year in Phoenix because of a divorce, and we doubled our money in 3.5 years. But now I can’t afford to buy here unless I live half way to Los Angeles – and my income is well above average. Which makes me think this local market does happen to be overvalued: how can the market sustain itself when most of the buyers are priced out? Especially in a place like Arizona that has lost and lots of room for new building.

  2. how can the market sustain itself when most of the buyers are priced out?

    Good question, I have the same one about N. VA. Average household income is around 70k, average house price is somewhere around 400k.

  3. I live in suburban Maryland. Last week I got a brochure on my apartment doorstep advertising condos, right next to the pizza coupons and the Chinese restaurant menu. The main point highlighted in the brochure was price. I don’t recall the price, except that it still seemed a little steep. But what struck me most was that this advertising seemed desperate, that they were trying to saturate the market with their message, and trying to acknowledge consumer concerns over price.

    If the sellers are desperate, and admitting that prices are high, then the bubble is about to burst.

  4. This reminds me of all those losers who kept calling for the dot-com crash. Yeah, they “called it” alright. Like we didn’t know. Those dot=com stocks kept right on raging for about another 30-36 months after all the Jeremiah-come-latelies found out what a p/e ratio was and started screaming about the emperor’s clothes. Yeah we know, dickhead. Now shut up about it so we can make some more money while its hot.

    The point of overheated markets is to take advantage of the madness, not to be the first town crier to “call it” and smugly announce its future demise.

  5. Well, apparently it’s not happening in my area. In fact, it’s just the opposite.

  6. I think pricing increases HAVE to slow down, but whether there’s a bubble that will burst depends on the individual market. Here in Tampa, we were probably under market, anyway, so I don’t think anything will happen except that we hit a plateau. Then again, we face the same issue–incomes and housing don’t come even close to matching up.

  7. Well, in my county you cannot find a house/condo/townhouse for under 200k, yet there are developments going up everywhere, many of them being a 2,000 sq ft house on a main road with absolutely no yard or land going for 800k+. I think supply is already past demand, I remember reading the other day that there are more homes on the market now than there ever have been. Houses around here are being discounted by 5-15% already, and many have been on the market for over 6 months. I think the crash is already here, at least I hope so, because I currently rent!

  8. At least with a stock market bubble that you see but buy anyway, you can get out when you see it popping. You have to see it popping though instead of “seeing” a great buying opportunity.

    But with real estate, if you see the bubble popping, how do you sell? It is not like it is a liquid market in the best of times, let alone when “everyone” sees a bubble popping….

  9. I agree that in most markets the prices will just stay stagnant for several years, but around here between 2001-2005 the price of housing as tripled, even quadrupled in some cases. I did my own analysis with historical price increases and inflation rates, most houses here are currently overvalued by at least 40%, I’m guessin their gonna fall soon.

  10. One problem with waiting for the bubble to burst is that crazy mortgages are helping to keep prices high even in increasingly stagnant markets. (USA Today had an article on this point a couple weeks ago.) Sellers don’t feel pressured to cut prices because sooner or later a sucker with a no points, no closing costs, 12% annual negative amortization mortgage will come along and buy that 500 square foot unheated shack for $300,000.

  11. Good question, I have the same one about N. VA. Average household income is around 70k, average house price is somewhere around 400k.

    Mike, there was a piece in the Post in recent months that, in the District (and maybe into the suburbs) only something like 30% of wage earners can afford the median home price. Ridiculous.

    thoreau, I get those at home in Fairfax all the time. It’s interesting that these developers are 1) advertising $300,000+, for 2) an 800 sq ft studio or 1-br condo, 3) in frigging Dulles or farther west as an attractive price point. As if.

  12. I think the crash is already here, at least I hope so, because I currently rent!

    Me too, and the search is pretty damn depressing. We’re not looking for anything extravagant, but can’t find anything decent yet affordable. Condos in the complex that I looked at 4 years ago for $90,000 are now selling for $160,000.

  13. Well, I bought my house 5 years ago for $605, and according to zillow.com, it is now worth $870. Somehow, I don’t see it falling back down below $605 anytime soon… Besides, unless you are looking to buy or sell right now, who cares? Also, once you own a house, it doesn’t matter what the market does – if the price of my house falls, so too will the prices of other houses so, in terms of purchasing power, I haven’t suffered at all…

  14. I live in the DC area and recently submitted a bid for a house. First off, my “buyer broker” made out all the paperwork at the FULL ASKING PRICE without even asking me what I wanted to bid. I told him I was going to go 10K under and he threw a little snit (I should’ve walked out right then and there).

    Anyway, I bid 10 under, and the sellers came back and basically said “fuck you, pay the whole amount, and when we say so!” (I wanted the close closer to my lease expiration so I’m not paying to live in two different places). My buyer-broker put the screws on me big time (these fuckers are real snakes), but I walked. My whole rationale was “if the sellers make 0 concessions to me now, they will make 0 concessions as we proceed”. I refuse to be a patsy to greedy realtors and sellers, I don’t care how fucking “hot” the market is.

    After a couple days, the sellers tried to contact me and took off 5k, but I had enough. To this day, their house is STILL on the market. And the smile on my face cannot be more smug.

    I’m going to rent for at least another year. I’ve staked out single-family home rentals at a thousand plus of dollars LESS a month then what an equivalent mortgage payment would be.

    The DC bubble is probably the strongest in the country for several reasons. But one of the many factors that will pop it is that we are facing a HUGE deficit. As thoreau pointed out, DC is a federal government “company town”. When the company is freezing hiring and possibly considering Reductions in Force, this will drastically affect the buying and selling of houses.

  15. Lemur, even if you aren’t buying or selling a house, there are things that matter. For example, the idiots who bought houses that they usually couldn’t afford with ARMs or interest-onlys are about to be hit hard in a big way. Once their monthly payments become unaffordable, they will attempt to downgrade to something smaller. Market gets flooded, supply>demand, price goes down.

  16. I don’t think the “bubble” will ever “burst” until speculators have a way make money on declining prices. There is no way to really “short sell” the housing market. Any decline in prices currently only benefits “buyers”, which brings more money into the market, which pushes prices back up.

  17. The big test of how good housing pricing really is will come when interest rates finally go up. And when people have tapped out much of their gained equity in home equity loans.

  18. Somehow I knew that a bunch of DC area posters would show up on this thread.
    All I can add is “Yeah, me too”

  19. Slightly tangential, but I think related was a news story on NPR this morning. They reported that consumer credit card debt increased by a large amount in January. From this factoid they went on to draw the conclusion that the economy has rebounded and is currently going strong.

    Ugh. Yeah, consumers getting into ever greater debt is surely a recipe for a long term strong economy…

  20. The giant houses crammed together with about 10 square feet of yard mystify me. I mean I understand why a developer would do that but the appeal for the owner escapes me. I guess since the butterball kids never leave the house anymore a yard is a little quaint, like a swimmin’ hole or playing jacks.

    No housing bubble in Dayton. Lots of foreclosures though.

  21. I live in Baltimore. My wife and I recently sold our house in the city to buy one in a really good school district. We had the house in the city for just under two years, and the price doubled. We were pretty happy, except that we still had to almost triple our mortgage to buy the new place. I don’t really care if my new home’s value doesn’t increase as rapidly as the previous one. I bought into the neighborhood because of the schools, not for an investment. If you want to speculate, try junk bonds and IPOs. If you want a nice place to live, buy a nice house.

  22. Unlike the stock bubble, the housing bubble is a regional phenomenon. Some places won’t see much change, but tohers will get whacked. softness should come soon, but the real shit won’t come till a year or 2 from now when the IOs and ARMs hit the fan.

  23. Brian,
    I grew up around Dayton (went to UD too). I keep telling my wife how cheap it is to live there. I think one of these days we’ll sell our house and move back to Dayton (maybe Oakwood), where we wouldn’t even have to have a mortgage.

  24. Ugh. Yeah, consumers getting into ever greater debt is surely a recipe for a long term strong economy…

    Isn’t one person’s debt another person’s (or businesses) asset?

    Am I thinking right? Is this really a zero sum game?

  25. I’m not doing anything until I get the last installment of my Carleton Sheets course.

  26. “Isn’t one person’s debt another person’s (or businesses) asset? Am I thinking right?”

    The problem is that a large spike in spending on credit tends to be followed by a sharp cutback a few months later as consumers start looking at their creditcard bills. This creates whiplash effects in the economy as retailers overshoot on inventory, manufacturers overinvest in new capital, etc.

  27. I’m in San Diego, and it simply sucks. My wife and I are shopping right now, and I’m about to give up. If I had my way, and my wife weren’t so stuck on “living like normal adults,” we’d be living in an RV parked on the street. Because all the other retards drank the kool-aid and took out interest-only loans, we are basically expected to. And I have to put up with bullshit emails and arguments like this from mortgage agents:
    ?

    I have come up with a solution to get what you want done.

    This requires that you think outside the box.

    You have to think in to the future.

    If you can then read on, if not, then stop here!

    The reason you have not found a solution is because nobody else thinks outside the box like “idiot lender” and I.

    Ok, you with me?

    Purchase Price ?????????????????????????????? $330,000

    5% Down Payment????????????????????????? $16,500

    Impounds (Taxes and Insurance)??????????? $3,600

    Closing Costs????????????????????????????????? $2,700
    Tell the seller you will ask for $330,000, but buy the home

    For $339,900 (3% seller concessions, very common)

    This will allow us to buy your rate down and get a payment

    that will meet your goal.

    We will take the $9900 from the seller, plus an additional

    $6,300. You may be able to pull this out of your IRA and use this to buy your rate down.

    Total funds from you, about $29,100

    We are splitting the financed amount in 2 loans to avoid PMI

    If you are not familiar with this than ask me about it

    80% on the first loan and 15% on the second loan

    The details:

    ?Will you agree that your pay will pay increase in 10 years?

    Do you agree that Michael will probably be making more than 10k in 10 years?

    ?Good, we all agree that will happen.

    The first loan payment??????????????????? $1632

    The second loan payment????????????? $472

    ??????????????????????????????????????????????? ????????? $2104

    ?
    This includes taxes at $2400 per year

    This includes insurance at $1200 per year

    The details: The first loan will be interest only for 10 years

    And principle and interest for the next 20 years.

    The rate will never change and is fixed for 30 years

    So, 10 years after you buy the house:

    Your home should be worth $800,000 to 1.1 million

    You income will also be relative to that as well

    The obvious snake oil here is: the outright assumption that a 330k house will be worth 1 million (cue Dr. Evil), and that my wife’s and my income will most certainly go up! Gosh, if he thinks so, it must make it true! ? Also, that we’re expected to raid our IRAs. And he understates the taxes. Although this was an email from an online outfit, it matches pretty closely the schtick I got from live local brokers.

    ?

    ?

  28. Alright, what’s with the damn funny characters. I sure didn’t put them there.

  29. Massachusetts is a hoot.

    I bought a house in the (cheap, depressed) western part of the state in 1999 for $95k, lived there while I was in school, put less than $8k into it, and sold it two years later for $135.

    Bought a condo in a converted mill for $169k in 2001, didn’t put a dime into it, sold it in 2004 for $279k. Now they’re over $300k. And still going strong, btw. Local and neighborhood urban markets that are undergoing revitalization are remaining hot and attracting redevelopment capital, even as the overall housing market is down 21% from last year.

    So now I’m in a house that cost $375k, and I probably couldn’t get that if I sold it today. But hey, we had enough to put down to avoid PMI, I’m in a 30 year fixed for well under 6%, and we’re not going anywhere for a decade or more. Heck, I might stay until I pay that sucker off.

  30. . Local and neighborhood urban markets that are undergoing revitalization are remaining hot and attracting redevelopment capital, even as the overall housing market is down 21% from last year.

    This is good to point out. January’s numbers for San Diego showed that overall, median prices went up 2% (year on year), but probably a third of individual neighborhoods still had double digit growth. What I envision happening here is a broad evening out, as the “lesser” neighborhoods catch up with the better ones (which have gone up about as much as they can). Of course, when the minimum price even in a bad neighborhood is over 300k, that’s kind of a high initial barrier.

  31. joe: the problem with selling your house and smugly declaring how much you “made” ignores the fact that you have to live somewhere. If you live in the Bay Area for five years, own a home, and move to North Dakota when you sell it, you made out like a bandit. But if you stay in the Bay Area, then you have to buy a new home in the same overheated market you just sold your old home in. It’s very possible to make a lot of money in real estate and end up homeless at the same time.

    You haven’t “made” any money in a casino until you cash out. I paid 105,000 for a 676 sq ft home in a Twin Cities suburb (from 1957; they don’t build them this small anymore) in 2000 which I am told is now worth over 150,000. But I couldn’t afford to buy any other house in the area if I sold this one. I work two blocks away and I’m not going to move, so basically I’m stuck with whatever the market does unless I want to sell and rent a similar-sized apartment for 700 a month a few blocks away.

    You might calculate the lowest possible value of your property by calculating the mortgage a renter could pay with his rent for something similar. That’s the point at which it makes no economic sense to rent. By that logic, my home wouldn’t really go below 90-100,000.

  32. We’re still in the slow season, so it will be very interesting to see how things pick up during the spring months.

    As I’ve said, in the DC area, I’ve seen houses sitting on the market for MONTHS. Last year, you rarely saw a “for sale” sign that didn’t have an “under contract” card on it. Buyers were pissing their pants in bidding wars, and doing stupid, asinine shit like waiving inspections. I blame these morons as the primary reason why houses became “overpriced”. And the fucking banks for their total bullshit, gizmo loans.

    People in this country have absolutely no fucking clue on how to negotiate, and lack half a brain cell to walk away from a bad deal.

  33. My inlaws bought a two bedroom apartment 10 blocks from Columbia University in 1998 for 250K. At the time I thought they were nuts, it’s a nasty neighborhood with a housing project right there on the corner, but they wanted to live in Manhattan.

    In 2002 they sold that palce for 500K and bought a three bedroom in the same neighborhood for 500K. I was telling them to think about a nice house on an acre somewhere upstate but they insisted they liked the diversity of the area, even with all the car side windows they’ve had to have fixed.

    They are now selling that place through a broker for 1.2 million. No bites yet but the broker thinks it’ll be sold in a couple of months.

    Turns out I’m the one who’s nuts!!!

  34. You might calculate the lowest possible value of your property by calculating the mortgage a renter could pay with his rent for something similar. That’s the point at which it makes no economic sense to rent.

    My question then is, is it smart to rent when mortgages are so out of line with rents, or is it still, as they like to say “throwing money away”? My wife and I are currently paying $1000 a month. Buying a house would cost us an extra $1000 per month, for something about the same size and most likely crappier. Sometimes I feel like we’re better off waiting it out, sometimes I think we’d be chumps becuase although it’s calmed down, prices and interest rates continue to creep up.

  35. “Isn’t one person’s debt another person’s (or businesses) asset?”

    Well, being in debt means one of two things for your future(this is true even if your income increases, which median wages aren’t): 1. You spend less on present consumption than you would have, as you are also paying for your past consumption (debt), or 2. You declare bankruptcy.

    In case 1, economic growth is going to slow in direct proportion to the amount of present consumption consumers forgo to pay off debt. In case 2, the so-called asset of the creditor goes *poof*, with a neat ripple effect when enough vanishing occurs.

    Again, only tangentially related to the housing market, but the same logic is at work. Houses are not investments as long as they are your primary residence. They are consumer durables. And going deep into debt on them will only result in one of the above two scenarios.

  36. Dead E:

    Keep the faith, man. With the money you’re saving on rent vs. mortgage, you can save up for a nice, fat downpayment later.

    Plus, you’ll have money to do nifty things like buy food. And maybe a vacation every once in awhile.

    My strategy: rent for at least another year, and in the meantime bone up on finding and bidding on forclosed properties. We’re going to see a lot of them. Mark my words.

  37. Yes, renting is throwing money away, but paying mortgage interest, property tax, and upkeep is also throwing money away. So the question is, do you throw more money away by renting or buying? I bought a condo in San Diego in 2001 because it was the cheaper option at the time, but that’s certainly not the case now.

  38. The DC bubble is probably the strongest in the country …. one of the many factors that will pop it is that we are facing a HUGE deficit…. DC is a federal government “company town”. When the company is freezing hiring and possibly considering Reductions in Force, this will drastically affect the buying and selling of houses

    Only in our wildest fantasies.

    Well, ok, second wildest fantasies.

    Also, if you look at the 10 fastest growing job markets in the country, three of them are in NoVa (Sterling, Ashburn and Leesburg). Apparently the federal bloat is just drifting westward.

  39. I keep hearing that rents haven’t increased as fast as mortgages. Ha ha ha – I’m going to assume that’s not the case here in NYC, where the rental market seems as overheated as always to me. Oh, and I’m amused at signs on new condos popping up everywhere: the prices are rising so fast they just slap a new sticker over the price rather than get a new sign. “400K” becomes “500K” becomes “600K” in the wink of an eye.

  40. It was interesting to see what happened when interest rates were so low. People either opted for “bigger house” or “smaller payment”. Not having debt sounds like a wonderful thing to me, and I already have enough “stuff”. But thanks to the sheer number of people who want more stuff, my house is in demand even though I’m not supplying it. I’m sure it won’t be that way forever. I have a feeling most people in my neighborhood opted for “bigger house” judging my the number of teardowns going on. I’ve had 2 unsolicited offers for my house in the last year.

    I’ve managed to refi to the point where I’ll have the 240K small-house-on-a-large-lot I got completely paid off over 14 years. Six years ago the large lot was not a selling point, in fact I think it worked against it because the demand for large yards isn’t there (I don’t want the large yard either, but I took it because it cost less than the houses on the smaller lots). Now my large yard has people salivating picturing the 3000 sf house they can put on it and still have a decent-sized yard. I’ve been tempted to sell and buy a house 40 miles out with cash but moving is a pain in the ass and I really haven’t found a neighborhood I like as much as my present one. In ten years I may change my mind, and maybe the market will too and I’ll regret not selling now, but in nine years I won’t have a house payment and I know I won’t regret having zero debt.

  41. I bought a 25 year old townhouse in Manassas, VA in 2004 in the low 200’s. Sold it a year later with about 34% appreciation (maybe more like 25% if you take out some of the upgrades that went into it). I sold it because I was moving to Wichita for a new job. The house I bought here cost ~55K less than I sold the townhouse for. It has about 2.5 times the square footage, easily 10 times the lot size, and is brand-spanking new. God Bless the Bubble!

  42. IW,

    While three of the top 10 fastest growing job markets may in in No. VA, I can tell you that most of the jobs are not paying enough to get a mortgage. The average starting salary for someone out of a college at most companies around here is 50-65, experience people might get into the 90s, but at any rate its way overpriced.

  43. While to an extent, housing bubble bursts are a local phenomenon, if a big local market, like SoCal, bursts then banks will raise their rates to make up for the greater market risk and to cover losses. This will lead to higher rates in other regions and slow down purchasing or even lead to foreclosures. With the greater number of loans from national banks, it’s no longer just a ergional effect. A bubble pop in NoVa can be felt cross country.

  44. Is having zero debt a good thing though? I keep my debts way down but I wonder if everyone will get stuck with the housing bubble bill just like we were all stuck for the savings and loan bailout.

  45. I read recently that for the first time since records have been kept, Americans have a negative savings rate. Every spare dime has been spent in the housing boom. Credit cards are maxed out. Money that would have gone into a retirement account is now spent on mortgages that many can just barely afford. Which means they are a layoff or serious illness away from losing their homes. Scary.

    Question for homeowners or individuals with a financial calculator: If a renter pays half as much as he would with a mortgage and invests the difference in mutual funds with a historic return of 10%, who is better off after 30 years? Figure in all the labor and fixups a homeowner would incur in that period as well. Anyone done a study on this?

  46. I bought a modest-sized family home in a new development in the SLC area a couple of years ago for $200 K. Since then the price for a simliar home has gone up by about $25 K; I could make 10% profit if I sold now.

    But selling it is the problem. My neighbor across the street has had her home on the market for over 5 months now, with no buyers. I don’t know if it’s because she’s asking too much, or if the market has suddenly slumped. But it does suggest the market isn’t as strong as some people assume it to be.

  47. This is as good a place as any for me to brag that as of yesterday at 1:30 pm, I am debt-free aside from a $400-a-month house payment (for a condo which we bought at auction and has approximately doubled in value).

    Now, to rack up the student loans again! šŸ™‚

  48. Ed, I’m curious about the answer to that too. I’d like nothing better than to tell everyone around me who pities my preference of renting over buying to piss off.

  49. Is having zero debt a good thing though? I keep my debts way down but I wonder if everyone will get stuck with the housing bubble bill just like we were all stuck for the savings and loan bailout.

    You’re still better off with no debt; if everybody has to pay $10,000 in extra taxes, the guy with no debt in addition to that is better off than the guy with a big tax bill AND a mortgage to keep a roof over his head.

  50. Here’s a website chock-full of schadenfreudey goodness for renters waiting for prices to drop before we buy:

    http://anotherfuckedborrower.blogspot.com/

  51. I work in the mortgage business, and some of the stuff I’ve seen over the last couple of years is very foreboding. Example: Homeowner wants to borrow $650K on a house that my appraiser tells me is worth $400K, maybe. The homeowner took out 100% financing two years ago at $415K. The current lender is an investor that I work with. I asked the investor about this and his response was that a couple of years ago they were a lot less stringent on appraised values. Think about how many people completely leveraged the value of their home based on inflated appraisals. Now think of how many of those people are in negative amortization or interest only loans.

  52. a couple of years ago they were a lot less stringent on appraised values

    The only reason you can’t wipe your ass with an appraisal is that the paper’s too thick.

  53. Rhywun,

    The short answer is everyone’s situation is different.

    I can only speak for myself, but the reason I stopped renting was because the condo I bought was bigger and newer and only about 20% more in monthly payment. And that payment wouldn’t change (except for the association fee, and I was the board president). At the time, rent in my neighborhood had been increasing steadliy and I knew in 3 years it would be roughly the same as my mortgage + association fee. And that was true for about 6 years, then the demand for apartments dropped and now rents in my neighborhood are a bargain.

    But when rents are so cheap, will the landlord keep the building as nice? I’d say about 20% of the apartments in my ‘hood have gone condo now which indicates to me that selling off the units individually would be the most profitable way to sell the buildings because rents are down and fewer people want to be in the landlord business because of it.

    If I were 22 and just out of school, I’d be enjoying the rents now a heck of a lot more than the rents 15 years ago.

  54. Question for homeowners or individuals with a financial calculator: If a renter pays half as much as he would with a mortgage and invests the difference in mutual funds with a historic return of 10%, who is better off after 30 years? Figure in all the labor and fixups a homeowner would incur in that period as well.

    Ed, too many variables. It’s one of those things you can make out to tell anybody what they want to hear.

    Like somebody said above, the only real way you’re making money here is if you bought before the market took off, sold while it was hot, then moved to North Dakota to live like a pimp, to whatever extent that is possible in North Dakota.

    Generally speaking, the rent/buy debate is the same as the “go to college”/”invest what you would have spent on tuition” debate.

  55. preference of renting over buying

    I’m a renter in a very wealthy city (Boca Raton, FL) where the average home price of half a million bucks is well beyond my reach. But I get all the benefits of living here (half a mile from the beach, clean streets, great restaurants, low crime, splendid weather if you don’t count the hurricanes) with none of the property taxes, roof repairs or lawns that require mowing every other day under a tropical sun. Maybe not the best choice financially in the long run, but freedom from a mortgage is of high value. The “dream of owning a home” propaganda is lost on me. I’d rather keep the extra cash and enjoy it while I’m young.

  56. Lots of variables. Here’s some info on the rent v. buy debate.

    http://invest-faq.com/articles/real-es-rent-vs-buy.html

  57. I currently live in No. VA and rent a 1 bedroom apt for 1,000 a month. If I bought a comparably sized condo here, with 20% down, I’d be paying around 1800 a month, plus about 200 a month in home owners association fees. Its a no-brainer. RENT.

  58. The “dream of owning a home” propaganda is lost on me.

    Me too. It’s the same reason I don’t own a car.

  59. Rhywun, how do you get around?

    (Just curious. I now own a car that I plunked down 10K for and have gotten over the 100K mileage mark. Will probably drive until the wheels fall off, or it hits 200K, or whatever. Driving–ok, but any more cash is going to go for a used Cessna, which will probably be just as useful.)

  60. Rhywun lives in Noo Yawk City. You don’t need a car there.

  61. Obviously, I can go on and on about this subject.

    Someone pointed out that people are devoting a huge percentage of their income towards mortgages, and they are a job loss or an illness away from disaster.

    Let me add another factor: duel income. I bet that many of these bloated buys are dependent on the contribution of two people. What if there is a divorce? Chances are, there will be. And the deck is stacked against one person taking on the mortgage by themselves. They’re going to have to unload the house.

    Also, I find it interesting that the banks successfully pushed the tightening of bankruptcy protection. At the same time, they’re handing out these 0 money down, interest only, bullshit loans like candy.

    Forclosures, forclosures, forclosures. I’ve heard that banks now are pushing hard in hiring forclosure experts. Once interest rates start climbing higher, we’re going to see these things pop up like dandelions.

    And it’s a domino effect. A forclosed property that is dumped off lowers the property values of the houses around it.

  62. The last few years I have found myself on the surface of the expanding bubble. I don’t know how first time home buyers even have a chance at a decent house in a desirable neighborhood.

    Check out the exponential rise in the last few years:

    -We bought our first house in 1993 in Boca Raton for $150k, sold in 1995 for $185k

    -Bought second house in Dallas/Ft.Worth for $200k in 1995 and sold in 2000 for $260k

    -(Here is where it gets crazy) Bought third house in West Palm Beach for $325 in 2001 and sold in 2003 for $465 (and 6 months later it sold again for $525k and is now around $600k)

    -Bought fourth house in Westminster, CO (Denver/Boulder area) for $570k (that was painful and it was less of a house). But get this — sold just 16 months later for $680 – that’s up $110k in 16 months!!!

    -Finally bought fifth (and hopefully final for a long while) outside of Boulder for $699k.

    If you told me back 1995 that I would own a house that was nearly $700k I would have thought it impossible. I have ridden a somewhat fortunate wave, but it still disgusts me to some extent. As I said, I have no idea how the first time home buyer can do it.

    I had friends who stayed in Texas (which has not experienced as much of a boom) who came straight to Colorado in 2005 and were in absolute sticker shock. If we had done the same, we’d be screwed.

    Right now the market is flat, but it was flat last year too until spring. In the neighborhood we bought in, 6 or so houses had been sitting on the market for better than 6 months. They all went under contract and sold within in a 2 week period.

  63. Russ: I’m in your situation. I bought the smallest, cheapest house available and now it’s financed for just thirteen more years. I used the increase in value over the first couple of years to get out from under the mortgage insurance. When I refinanced, I told the appraiser I didn’t want to pay the mortgage insurance anymore and he nodded and valued the house exactly where it had to be so I didn’t have to pay it. That’s what appraisals are worth.

    Regarding renting versus buying: a lot of people told me when I bought that I could afford a bigger house and I should get it “as an investment.” My mortgage broker told me he could get me approved for a loan about sixty percent bigger than the one I was taking out, but advised against it. “You don’t want to end up ‘house-poor,'” he said, meaning that everything I made would be going into the house. I think that’s an issue to consider when someone is telling you you’re throwing your money away on rent. You might be able to afford a house, but you’re also trapped in it. I noted in an earlier thread that rents went nuts in my area in the late nineties, which was when I bought the house. At that moment in time, rents were high enough that buying made sense. I wouldn’t make that decision now.

  64. If the market crashes, taxpayers are going to get hosed. Big time.

    Here in California Bay Area, over 68% of all new mortgages last year were interest only loans. During a period of historically low rates.

    What happens when rates go up and your house value goes down? You walk away. You default. The bank is left holding the mortgage and must sell your house on the cheap.

    Multiply this during a crash and you’ll see banks hemorrhaging billions. And they’ll go straight to congress asking for a bailout. Gee, I wonder if they’ll get it?

    nmg

  65. “Here’s a website chock-full of schadenfreudey goodness for renters waiting for prices to drop before we buy:”

    “http://anotherfuckedborrower.blogspot.com/”

    Jennifer, thanks for the link. Looks like interesting information, and anyone who can make information about mortgages, numbers, and finance readable gets a bookmark.

  66. Mediageek, check out some of the forums on there. I went browsing last night; there’s one whole forum where people copy ads (from places like Craig’s List) placed by people who apparently bought more house than they could afford and are now desperate to get out of their bad situation.

  67. The next few years could be fun. I can laugh at the people with ARMs and IOs when the repo man pays a visit. Then buy it cheap. šŸ™‚

  68. Another WashDC-area renter here. I live in the Crystal City area of Arlington, and the shitty little 1910s-era houses in my neighborhood that were originally built as summer getaway cottages for DC residents in the pre-automobile era now sell for about $700,000. Lot of teardowns, as you can imagine. But they’ve definitely slowed down in the last six months.

    My wife and I are waiting on the inevitable flood of foreclosures from those folks who decided that the American Dream was worth paying 70% of their income in housing payments.

    To me, it’s real damn simple. If you have to take out some kind of sleazy negative amortization loan to “buy” a house, you can’t afford it. You haven’t “bought” anything anyway, since you’re not building equity. Owning a house makes great financial sense *if you can afford it*. And residential real estate is *not* a good investment vehicle for most people–it’s a place to live. All of these dweebs who bought 2nd and 3rd properties to fix and flip are going to be hurting. Yeah, I’m almost 40 and I don’t own a house. Big f’in deal–I’ll get around to it when I’m good and ready.

  69. Foreclosures aren’t the best thing that can happen for renters looking to buy… but the threat of a foreclosure sure is. I have a feeling a lot of people are going to try to get out of their houses in the coming months, in anticipation of the “pop”. If you paid 250k for your house, you are told its now worth 600k, but everyone on your block has had their houses on the market for almost a year with nobody buying, you may just take 450k…especially if you are being forced to move due to work, etc.

  70. Rhywun, how do you get around?

    What Jennifer said.

    My coworkers go on and on about their real estate woes and car troubles, and they look at ME like I’m an alien. (I work at an insurance company, which apparently causes a genetic predisposition to live in NJ…)

    Anyway, my favorite point made here is the fact that buying a house counts as an “investment” only if you plan on moving to a dump after you sell it. I’ll have to remember that the next time a coworker berates me for renting.

  71. I have a penthouse loft apartment with a parking space and beautiful sunset views for 800 a month. Fuck buying.

  72. Did a quick analysis of the market around here (No.VA). Average house is overvalued by about 230%, yes that means a house that should be 200,000 is selling for about 460,000.

    This is based on the years 2000-2005, with a total of 11% inflation and the historical increase of real estate of .7%.

  73. “Schadenfreudey?” Is that similar in meaning to schadenfreudelicious?

    Tampa used to be one of those places that people moved to in order to cash in on the arbitrage created by insanely overpriced markets and our relatively cheap housing market. Not any more. In fact, how many cities where you’d want to live (with job openings to boot) are left that allow for that opportunity?

    Between “cheap” credit, increased mobility, greater availability of pricing information (to spot arbitrage opportunities as well as growth markets), a desire to put money somewhere besides the stock market, and a number of other factors, housing has gone insane. Once interest rates go up–and they will–the number of people who will be able to afford a home who don’t already own one will be quite small.

    ARMS, interest-only loans, and balloon-payment loans only make things worse, long term. Extending the term beyond thirty years would also be bad, because the slightly lower payment would be offset by the huge hit you would take over the life of the loan (running perhaps into the hundreds of thousands of dollars).

    Look for a great deal of legislation on this, both in the states and at the federal level. “Affordable housing” sells on both sides of the aisle, and that’s something we don’t really have right now. Also, people are going to freak out at the “losses” they will take in the markets that do implode (not all of them will, of course–I expect houses in D.C. to go for “One Billion Dollars” in my lifetime). Legislation will, of course, do at least as much harm as good, so this could evolve into a real crisis. With any luck, we’ll dodge it somehow. Maybe by giving homestead opportunities to people. . .on the Moon šŸ™‚

  74. “Schadenfreudey?” Is that similar in meaning to schadenfreudelicious?

    It’s the just-invented adjectival form of “schadenfreude”.

  75. Anyway, my favorite point made here is the fact that buying a house counts as an “investment” only if you plan on moving to a dump after you sell it. I’ll have to remember that the next time a coworker berates me for renting.

    I plan on arbitraging Southern CT with Southern NH. When you are willing to relocate, the bubble can definitely work to your advantage.

  76. No, no, Jennifer, I wasn’t criticizing, I was endorsing. Although I lack the bitter desire to watch other people suffer, I love the word, “schadenfreude”. And I really like my new word, “schadenfreudelicious”. Which means savoring–as opposed to merely taking delight in–the misfortune of others. Anyway, if I’m coining away, how could I object to your “schadefreudey”?

    German is a fun language, isn’t it?

  77. I plan on arbitraging Southern CT with Southern NH. When you are willing to relocate, the bubble can definitely work to your advantage.

    My suburban DC is going on the market in about 2 weeks. Heading south, where life is better (IMO anyway), slower, and a hell of a lot cheaper.

    So long DC, and thanks for all the money!

  78. I love “schadenfreudelicious” and plan on stealing it.

    I bought my house to live in, so I don’t much care whether prices are rising or falling. I chose to live in St. Paul, an affordable city where my mortgage is less than I’d be paying for rent and the cost of the house was half my annual income. I have a hard time imagining who is buying all these monstrous new houses along busy roads in the far-flung suburbs.

  79. “Affordable housing” sells on both sides of the aisle, and that’s something we don’t really have right now.

    True, but the sales pitch is “affordable housing” while the actual end product is an “affordable monthly payment” (that never ends). Big difference. Isn’t Fannie Mae doing 40-year loans now?

    I’d also like to point out to the free-marketers here, like me, that the amortized home loan is mostly a product of government intervention. Prior to the creation of the FHA, home loans were typically interest-only ballon-payment loans. So before you speak of a housing bubble, first look at the government programs that may contribute to such a thing. They aren’t necessarily a great deal.

    A typical home loan is usually a good deal if the term is 15 years or less, when you’re getting up to 30 years it may not be so good. But to do 15 years you need enough of a down payment and really good credit. For example, the house I grew up in was 80K 20 years ago, and 140K today. But anyone who qualified for a 15-year mortgage probably wasn’t going to buy a house in that neighborhood, with a 20-year mortgage you’d only break even (assuming you put nothing into the house). At 30 years you are likely to lose money. It’s certainly “affordable” housing, but at the rate of growth in that neighborhood, maybe you really can’t afford to live there.

    What I’m saying is that I doubt very seriously any legislation will be enacted that moves consumers toward carrying debt shorter term, the history of government has been to carry debt over longer and longer terms. Look how people buy cars – a car payment is considered a perpetual life-long monthly bill and few people question such a thing now.

  80. This really pisses me off to no end. I googled “schadenfreudelicious” and found that others were using the word before I invented it. How can that be? Time travel? Psychic powers? I’m at an utter loss to explain this.

  81. There are some people in my lab who think that DC area home prices will just keep rising.

    I tried to sell them these awesome tulip bulbs that I have, but they weren’t interested.

  82. Dutch tulips? Why, I’d pay ANY price for those.

  83. highnumber, do you get different appraisals than the owners? Just curious.

    The thing that pisses me off is that these related industries (mortgage lending, appraising, real estate agencies) are regulated in a way that helps them be anti-competitive. I’m seriously surprised they haven’t taken much anti-trust heat for price-fixing or any number of other things.

    And if the govt’s not gonna help with that, they should open the damn thing up so at least I can find my lender/broker/buyer/seller on an open market.

  84. PL-

    Tell ya what: I’ve got this one bedroom home in an inner city neighborhood. Needs lots of repairs. But there are some tulips in the yard. Dutch tulips. How about $500,000? I’m only offering you this low price because I like you.

  85. Try this one, bitches:
    Average price of new homes in Whitefish, Montana: $740,000.
    Median income in Montana: $24,000
    New condo in Polson,Montana, three years ago: $125,000.
    That same condo today: $480,000.

  86. One comment to all the renters who are so pleased with themselves pointing out that the home you buy may go up in value, but then you must turn around to buy another expensive home if you sell to take advantage of your increase in value:
    I purchased a condo in 2000. My mortgage payment (PITI) was about the same as the rent I had been paying. In 2005 I took some equity out of the condo for a down payment on a house. I have retained the condo as a rental property. The rent I collect covers my payments on the condo. So, after buying the condo with no money down, 5 years later I have a total of about $55K equity in the two properties. I live in Oak Park, IL which has seen tremendous growth in value, but has not been rising at the fever pitch that has been seen on the coasts. Here in the Midwest, pragmatism has mostly ruled the day. Obviously, all housing markets are different, but if you have some common sense and remain pragmatic, real estate is a good investment.

  87. “But there are some tulips in the yard. Dutch tulips. How about $500,000?”

    I’ll pay double that and in gold florins too!

  88. To the one state,
    In the case with the borrower who had wanted a value of $615K, the borrower had come to me with two appraisals he had ordered from somewhere else. No one would lend on those appraisals because they were completely bogus with comparable properties a few miles away in an area where comps should be under a mile.

  89. If anyone wants to know about over-regulation of an industry, check out Illinois HB 4050:
    As part of some anti-predatory lending program, the state has determined certain target zip codes in Chicago wherein to get a mortgage, the borrower’s credit score, the proposed interest rate, loan program, fees, and other info must be submitted to the state. The state will then decide whether or not the borrower must take a credit counseling class. If the state determines the counseling is required, it is mandatory for the borrower, even they wish to decline. Additionally, because of reporting requirements being forced on title insurance companies, they will no longer insure loans in those zip codes, so in essence, this law has shut down lending in the zip codes they are trying to protect. Go to iamb.org and click on some of the links for HB 4050.

  90. Having bought in at the very rock bottom of the last Ca real estate crash I am delighted with the recovery.

    Trading up can be fun and profitable until you realize you traded your 2,000.00 annual prop tax bill for a 10,000.00 annual tax bill.

    According to my crystal ball demographics will trump almost everything else in forecasting property values in So Cal. So long as demand expands exponentially with respect to supply, price will rise.

    TWC forecasts a leveling off of prices followed by a slight dip followed by a steady slow rise in price beginning in 2009. Forecast not valid in your state.

  91. I tried to sell them these awesome tulip bulbs that I have, but they weren’t interested.

    You have to paint a door and roof on it these days. It isn’t the 17th century anymore.

  92. Keep the faith, man. With the money you’re saving on rent vs. mortgage, you can save up for a nice, fat downpayment later.

    Depends a whole lot on where you live. My wife and I did that for three years and got burned, because real estate in Arizona is going up way faster than my pay check. I wish now we’d bought in sooner, because under those conditions you’re money ahead buying in just as fast as you can manage it.

    It’s all those California refugees swarming in, I swear that’s what’s driving our housing prices up.

    It isn’t the Mexican border we Arizonians need to protect you know.

    Seriously, big trend is that any real estate in the warmer regions is probably going up long term. The baby boomers by and large just aren’t moving to Maine to sit on their porches, munch lobsters and watch bears eat baby moose.

    Outside the sun belt, you won’t see prices going up unless you’re in a big metro area like Noo Yawk City. Oh New Joisee.

    My brother’s in upstate NY, where it easily takes a year plus to unload a house right now.

  93. thoreau — make it $600,000 and you’ve got a deal!

  94. you traded your 2,000.00 annual prop tax bill for a 10,000.00 annual tax bill

    Heh. And I’m perfectly happy to let my rich neighbors do that in order to keep the streets clean and provide the nice palm-tree landscaping in the medians and keep the beaches full of sand. Yep, I’m a freeloader. But I’m not cash-poor.

  95. Screw you, Phil! Gimme them tulips, thoreau. On Billion Dollars!

  96. ONE Billion Dollars.

  97. highnumber,

    Illinois seems to be in panic mode when it comes to regulation. I think it’s all related to the Intercounty Title bullshit (in which I lost a few grand) because the state knew they were going to close them down, but decided to wait a week. Intercounty Title’s fraud was bad enough, but the state farting around on actually enforcing the regulation was fraud in itself IMO.

  98. The idea that banks would get bailed out after pumping out countless bullshit loans really, really pisses me off.

    That is one of the primary reasons (if not THE primary reason) why home prices are so way over-inflated.

    So not only am I priced out of buying a house, I would have to pay for these fuckers after everything’s said and done?

    Left…eyelid..twitching..

  99. Kahn, my wife and I have had to deal with the same thing here in DC. We’re not really renters by choice, since we’re at the stage in life (a little past it, actually), where we’d like to buy, but due to massive student loan debt for both of us coupled with inadequate incomes, we couldn’t get in to the DC housing market 5-7 years ago when it was still semi-reasonable. And, as you say, with 30% rises in prices annually, houses are only getting less affordable for us, even though we are in a better life position now.

    I think the point here, though, is that such increases are simply not sustainable. Arizona might be a special case because of all of the California ‘refugees,’ but here in the DC area, you cannot get into a single-family home within 40 miles of downtown for under $500,000. And while average incomes here are high, they’re not that high. There ARE going to be a lot of foreclosures, and a lot of the flippers ARE going to lose their shirts.

  100. Okay, I’m probably wearing out my welcome on this thread, but this is a subject that really frosts my cupcake, and I’m closing in on the 100th post.

    Here in DC, there are condo buildings popping up like weeds. These assholes have the GALL to advertise 1-bedroom units “starting” at $300K!! They have these retarded “exclusive” parties where people can beg them to be put on the waiting list.

    Oh man, I’m really gonna love it when these goddamned condos tank. They will be the first to go.

  101. but here in the DC area, you cannot get into a single-family home within 40 miles of downtown for under $500,000.

    Well that’s not even remotely true.

  102. worm:

    Oh it’s true. It’s true. Unless you’re willing to live in a neighborhood where talk is cheap, but bullets are cheaper.

  103. MNG-

    Yeah, but what if there are Dutch tulips in the yard? Then that house in the crappy neighborhood is starting to look more like an investment property, eh?

  104. Here in DC, there are condo buildings popping up like weeds. These assholes have the GALL to advertise 1-bedroom units “starting” at $300K!! They have these retarded “exclusive” parties where people can beg them to be put on the waiting list. Oh man, I’m really gonna love it when these goddamned condos tank. They will be the first to go.

    You have to understand just how much money is pouring into this town. I’ve been here 6-7 years, and during that time, the billing rates at the big law firms have doubled, and many of the firms have themselves doubled in size.

    I can only imagine that a similar thing has gone on with lobbyists. Then there’s the endless gravy train of Congress, fattening the wallets of an endless supply of military and government contractors, being paid 10 times what they’d make on the open market for the same work. It’s like a blizzard of money.

    So I’m actually quite surprised you found 300k condos anywhere. They won’t last long, unless they’re in Anacostia or something. I’m seeing condos (probably larger than 1-br), around Foggy Bottom, listing at a million.

  105. Oh it’s true. It’s true. Unless you’re willing to live in a neighborhood where talk is cheap, but bullets are cheaper

    Hmm… that’s strange, because i’m only 15 miles from DC and the houses here go for 350k, and I’m sure there are plenty still under 300. Haven’t ducked a bullet yet.

  106. t:
    Only if they are carnivorous tulips trained not to eat the owner!

    worm:
    The claim was for “single family” homes, which are detached. Not cracker-box townhouses. So you’re saying there are single-family homes in your area for 350K?

    What city?

    I happen to know first-hand that 1) there are now hiring freezes in the federal government and 2) there is a big effort now to dump contracts.

    All of these private businesses are here because of big, fat government contracts. Guess what? The tit is not making any more milk. New contracts are going to be few and far between. And the current ones will dry up and not be renewed.. particularly in the IT field.

    There is a long winter ahead for this area. The salad days can only last so long.

    People have very short memories. Back in the mid-90s you couldn’t fucking GIVE a house away. This is another thing I know first-hand.

  107. I bought a house 2.5 years ago in the SF Bay Area and put a lot of money into it, mostly financed through more debt. I’m hoping the market will bouce back a little this summer because I’m planning to sell. If things do hold out I should make a decent profit, but I won’t be able to buy again. I can’t afford the place I have now and I’m not interested in a condo. But I will be able to completely pay off my student loans, car loans, and credit card debt with some money left over. I’m not stressing too much over being a renter again, because I’ll be in much better financial shape than I was before. But for people with the traditional goal of buying up, the situation must look disheartening right now. Of course, if the worst happens between now and this summer I am screwed, but I really don’t expect that.

  108. There is a long winter ahead for this area. The salad days can only last so long.

    You are right that the rate of increase in home values in this area will eventually slow down; probably to around the more traditional 6% growth. Hey, there could even be a drop or two. But it’s doubtful anyone’s going to see them fall all the way back to pre-2001 prices again, or anything close to that.

    And interest rates aren’t getting lower any time soon. Luckily, I think there are some new boomlets on the horizon. International/global securities funds are looking nice. Hey maybe we can all go around pimping the shit out of them and start up a new dot-com craze! Aren’t we overdue for one? This real estate boom is getting old. I’m bored. Lets find some new pinatas to beat the candy out of!

  109. The idea that banks would get bailed out after pumping out countless bullshit loans really, really pisses me off.

    The banks wouldn’t be pumping out the bullshit loans if they weren’t insured. And it’s Uncle Sucker that’s insuring them. So the bailout was to the buyer when the loan was approved.

    And it’s this “affordability” program that raised priced of homes. If I tried to sell my home and would typically have 4 potential buyers, an FHA insured loan now brings 4 additional buyers. An increase in demand mean my selling price is going to go up. And since I’ll be able to sell higher, I’ll be able to afford a higher-priced home to replace the one I’m selling.

    Under ideal conditions an increase in demand would be followed by an increase in supply. But local legislation limits supply (zoning, smart-growth, etc.) not to mention the fact that construction materials were also skyrocketing in price due to the sudden demand by the Department Of Defense for things like plywood to be used in the Iraq rebuilding…

    In a nutshell that’s the houing bubble – government raising demand and limiting supply. It’s taken several years for supply to catch up with that demand, and things are leveling off without the government trying to increase the demand some more. If the gummint does something to reduce demand, prices will fall.

  110. The Arizona market is really the Phoenix market. The rest of the state has many different dynamics going on. The market overall has softened considerably in the last 6 months. If I owned residential property in Phoenix right now I would sell because I believe there is a very good chance of a serious decline when the ARMs and interest only loans come due. I’m seeing way more listings than solds every day and many price reductions as well. There are a lot of highly leveraged speculators out there who are counting on continued price inflation and a highly liquid market. Those balloon payments are coming due soon and the market is not so robust anymore. Like others have posted here, when the desperation and foreclosure sales start, the pressure on borderline owners becomes unbearable. There is trouble ahead in the metro Phoenix area. Other areas of the state are quite different.
    I’m a home-builder and real estate broker in Northern AZ and up here we expect to see slower sales and flat prices for a time, but the limited supply of private land and steady influx of Californians should see us through this soft spot to continued price inflation before too long. The trick in any market is to buy smart and don’t overextend yourself. Real estate is the easiest business there is to make a lot of money in, you just have to be realistic in your expectations of the market and smart when you buy. For the canny investor, a crash is a great opportunity to pick up property. Here’s a good rule of thumb; if it’s on the MLS it’s probably not worth looking at. I’ve only ever bought one piece of land off the MLS and it was so stupidly under priced I had to bribe (no, not a bribe. a closing bonus…) the listing agent to turn off his cellphone so he could present only my offer to the seller. It would have been a bidding war otherwise. Real estate agents are such principled professionals aren’t they? Remember, if you see a realtor’s lips moving, that means they are lying to you. The whole real estate licensing scheme and especially the “National Association of Realtors” crap is just a flat out fraud against consumers. “Code of ethics” my ass. If you know how to read a legal description and write a valid contract you’re doing better than most so called “Realtors” I deal with.

  111. bm:

    Granted, all realtors I’ve met were snakes and/or incompetant, but I’m curious about you greasing one. What kind of bribe could you offer one that would compensate them for the higher commission they would get from a fatter sale?

    But yeah, they are all liars. The “buyer” broker I had, if we were looking at a property that was on fire, he would go on and on about how much I would save on my heating bill. I’m not joking.

  112. Okay, thoreau, throw in some dot-com shares, and it’s a deal.

  113. One of the things I haven’t seen about the housing market is data on how much homes were originally listed for and what they ended up being sold for. This is more difficult to gather than reporting on the sale price. But it would interesting to see how seller expectations change over time. Then again, maybe it’s a moot point since the realors have been feeding people the self-serving BS about a house being on the market too long hurting it (no, it hurtst he realator; think about it, when was the last time checking up on how long a house was for sale was something you or others did when house shopping).

    As for the bubble, others are right, it’s not about if but when and how. How deep will the drop be in some markets and how sharp will the drop be? That we haven’t seen markets take too huge of a drop isn’t a suprise. There are still potential buyers out there getting nervous that interest rates are going to rise to a point where they won’t be able to afford to buy (seems like a catch-22 but don’t tell them that). So things like that can help keep some things propped up.

    Also, keep in mind that when something like a 6% drop in a year is more than that when inflation is factored in. Also, those single digits drops, especially when inflation is factord in, can end up being 20%-40% in 3-5 years.

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