I honestly can’t agree with all of Alan’s statements, which if taken in summary declares that a national (if not global) depression is imminent. No housing market, at any time, no matter how healthy, can possibly meet the criteria (as I interpret them) that Alan has put forth:

-buyers have ability to pay 100% cash for property
-buyer’s money is stuffed in a mattress (therefore, not impacted from any national or global downturn)
-all buyers are financially independent (ie, not working and no need to work to meet financial needs)

Having said that, blaming the media is a time honored but useless practice. Even if we are not headed for a global economic meltdown, there are plenty of signs that should give any buyer pause before taking (or attempting to take)the realty plunge:

-The US may already be in a recession, and I don’t see any reason that makes me think that things will improve much in 2008.
-There is no reason to think that the national housing market will rebound in 2008. There are too many looming foreclosures and far too much inventory. There is bound to be a dampening effect on regional markets that are in decent shape – like, perhaps, Conway, AR.
-Criteria for securing a mortgage will be much stricter for the foreseeable future. I would guess that all prospective buyers will need 10% down, full documentation and a healthy FICO score to even be considered. Buyers looking to purchase property that is above the Fannie/Freddie purchase price (ie, $417K) will probably need to have the full 20% to secure a loan.

So I guess I am still on the fence. I think that Conway, AR would make an interesting test case for 2008. Maybe we could agree upon what a “back on track” number would be and measure actual sales against that number.

Anyway, great site – I have been an avid reader of it for over a year.

weepstah

proclaim that you think the NAR is a pathetic joke of an organization with no credibility and you will gain a lot of it.

I thought you did a great job of listing the factors that our causing problems. The “Irrational Exuberance” of the bubble markets mean that they were hit sooner, and will be hit harder than other markets. Non-bubble markets however, had the same wonky financing and in many instances the overbuilding.

An imbalance of supply and demand is going to shift the market, and it doesn’t really matter what causes it. Look at Detroit. Economic factors there have caused a net migration out. No bubble, but more supply, less demand.

In addition, it’s important to look where markets are headed. Even if things aren’t in too bad a shape at the moment, if builders have more supply coming on line than fundamentals dictate, you can figure you are probably looking at problems down the road.

http://www.reuters.com/article/pressRelease/idUS98049+19-Dec-2007+PRN20071219

You anticipate an increase, huh? Then Conway, AR must be an economic mecca de-coupled from the realities of the rest of the country, eh?

I sure hope so, because unless the following factors exist, then you should admit you don’t understand how economics works and stop giving people financial advice:

- No existing homeowners there have adjustable ARMs, interest-only loans, or Alt-A loans that reset

- Buyers there have cash to pay for the entire home purchase price

- Buyers there are all sitting on wealth insulated from equity markets

- Buyers there are not like the rest of the country and are not over-extended on other leverage such as credit cards, auto loans, etc.

- Buyers there are not dependent on jobs for income

- Buyers there don’t mind if their neighborhoods begin to look like ghost towns because of foreclosures and personal bankruptcies, thereby vacating properties

- Buyers there don’t mind global interdependencies causing them to lose equity after they buy their house

The reason that people are hesitant is because the morally bankrupt NAR has been advising them all the way to the poor house, and although I would say most of our country is inherently stupid nowadays, eventually they get the idea.

Could it be the conflict of interest that realtors have? Could it be that every one of your predictions has been erroneous, time and time again? Could it be that anyone with the slightest knowledge of economic theory can see that housing is only at the tip of an implosion? Could it be that people see realtors frequenting blogs making bullish predictions, wondering why they have time to do so and why they are so vested in commenting?

Thank GOD outlets like this exist to protect the unsuspecting public from predators like you.

Also, I think it is news worthy that nationally 1 in 775 homes is in foreclosure; however, only 1 in 2,323 Arkansas homes are in foreclosure. According to, http://realestate.msn.com/buying/article2.aspx?cp-documentid=4734608 .

As we start the new year, I am already seeing an increase in activity and fully expect in our market to be back on track as far as number of transactions in 2008.

Greg Moss – Crye-Lieke Realtors

http://www.GregMossRealtor.com
http://www.MovingToConway.com

you should post this article. It shows that back in 2003 we already were having Congressional meetings abouts ARMs being overused & economists were already warning of a bubble.

& yet, NAR still wants to believe that a turn-around is just a year away…

http://www.chicagotribune.com/business/yourmoney/chi-mon_qtr_gail_0107jan07,1,3923343,full.column?ctrack=2&cset=true

While not forecasting problems specifically for banks, Merrill Lynch economist David Rosenberg was among the economists sounding the early warnings. In September 2004, he said there was a clear housing bubble, and it could turn ugly.

In particular, he raised concerns about consumers overindulging in adjustable-rate mortgages, the loans that a few years later would cause a surge in defaults and undermine the value of the bonds Wall Street created.

When Rosenberg wrote his report, home prices in such markets as San Diego and Los Angeles already had climbed 80 percent, and Rosenberg described classic bubble characteristics: overheated prices, overownership, too much debt, speculation, complacency and denial.

He noted that subprime lending to people with lower credit scores and incomes had risen 25 percent on average throughout the decade, and that lenders could be at risk if people couldn’t make payments or sell their homes in a weakening economy.

“About a third of first-time buyers,” he said at the time, “have strapped on so much mortgage debt that roughly a third now pay at least 30 percent of their after-tax income on shelter, and half of the lowest-income households spend at least 50 percent of their income on housing.”

Citigroup economist Steven Wieting raised similar concerns. And as ARMs became increasingly popular, Morgan Stanley economist Stephen Roach also referred to an “ominous surge in demand for adjustable-rate mortgages,” especially among lower-income people who wouldn’t be able to afford higher payments. Roach noted that from 2001 to 2003, ARMs amounted to about 20 percent of new mortgages, but by May 2004 half of the people getting loans were taking chances on them.

Meanwhile, Yale economist Robert Shiller emphasized to Barron’s magazine that home buyers were making the dangerous assumption that “nothing beats a home as an investment because prices just keep rising.”

The Big Betrayal
No Jobs for the New Economy (or the Old)

How are low paying jobs as waitresses, bartenders, and bed pan changers going to get you that dream house shown in these ads?

http://www.counterpunch.org/roberts01082008.html

Why don’t the scummiest and least honest of all salesmen, Realtors, have to abide by similar rules?

After all, here, they’re clearly pitching the house as a financial investment, talking about rates of return, etc. – I don’t see why they should be less restricted than other investment salespeople, and in fact, given the relatively lower sophistication of a home buyer versus the average stock buyer, I would think the regulation on representations by home salesmen should be more rigorous, not less…

Who are these children in my house? Why are they calling me dad? Where did all this disposable income come from?

Just like the old SNL skit with Tom Hanks where he only has short term memory and cant remember anything after five minutes.

do they really think a few print ads will turn this thing around? anti-spam word: stupid

The latest chalkboard opening on the Simpson’s

“Teacher did not pay too much for her condo”

Now if South Park does a special on realtors.. That’ll be the end….
Imagine everything in South Park driving Escalades but losing their homes…..

OT KB homes just announced a 9.99 4Q writedown