Comments on: The "Bell Curve Of Doom" Is Ringing For Recent Home Purchasers http://housingdoom.com/2008/03/27/bell-curve-of-doom/ Sat, 11 Feb 2012 07:12:54 +0000 hourly 1 http://wordpress.org/?v= By: manfre http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11138 manfre Sat, 29 Mar 2008 00:59:10 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11138 tc, I am in the San Antonio market. Been here since Sept 2007. What is your take on the local RE market and how long have you been in San Antonio? Thanks. tc, I am in the San Antonio market. Been here since Sept 2007. What is your take on the local RE market and how long have you been in San Antonio?

Thanks.

]]> By: twist http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11137 twist Fri, 28 Mar 2008 12:31:59 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11137 Aaaaudio- If you go to Realtor.com and do a search for homes under $5,000 in Detroit, you will have 1,368 matches. I believe the cheapest home is $250. I made the mistake of showing my son, and now he wants to buy some $500 home just for the heck of it. I don't know enough about Detroit neighborhoods to know if I would dare live in any of them, but some of them look pretty decent. You should check out what $500K will get you- almost any mansion in town. I spent a lot of time looking at Detroit homes, and the scariest part was how very difficult it was to find an OO home for sale- I'd guess that 95% of the listings I looked at were lender owned- and I checked a number of price brackets. Detroit has lost a third of its population since the 1950s which has created their surplus. While I don't see Phoenix turning into Detroit any time soon, the worrisome thing for Phoenix is that the number the economists kick around is that one in three jobs in the Valley is tied to RE in some way. If RE were to come to a standstill, what does that do to our economy? I'm not predicting homes for $250 [<em>Although I'm not betting against them either in some of the far reaches of say Pinal County.</em>] but I believe there is still a big downside risk for home prices should the economy worsen significantly. Aaaaudio-

If you go to Realtor.com and do a search for homes under $5,000 in Detroit, you will have 1,368 matches. I believe the cheapest home is $250. I made the mistake of showing my son, and now he wants to buy some $500 home just for the heck of it.

I don’t know enough about Detroit neighborhoods to know if I would dare live in any of them, but some of them look pretty decent. You should check out what $500K will get you- almost any mansion in town.

I spent a lot of time looking at Detroit homes, and the scariest part was how very difficult it was to find an OO home for sale- I’d guess that 95% of the listings I looked at were lender owned- and I checked a number of price brackets.

Detroit has lost a third of its population since the 1950s which has created their surplus.

While I don’t see Phoenix turning into Detroit any time soon, the worrisome thing for Phoenix is that the number the economists kick around is that one in three jobs in the Valley is tied to RE in some way. If RE were to come to a standstill, what does that do to our economy?

I’m not predicting homes for $250 [Although I'm not betting against them either in some of the far reaches of say Pinal County.] but I believe there is still a big downside risk for home prices should the economy worsen significantly.

]]> By: aaaaudio http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11136 aaaaudio Fri, 28 Mar 2008 05:02:45 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11136 I have to say the homebuilders models I sit at on Saturday every now and then has decent traffic here in Gilbert/Chandler . It is priced a little high at around $125 a sq ft and I feel that is why they aren't selling. I did a search on my old neighborhood in Glendale AZ today and since I sold in Feb 08' for 216k (1543 sq ft) 1983 the comps are now at 193k Most selling for 175k avg -WOW what a one month plunge. I was thinking about Yossarians statement and wondering if that could really be true? Twist have you seen that? I have to say the homebuilders models I sit at on Saturday every now and then has decent traffic here in Gilbert/Chandler . It is priced a little high at around $125 a sq ft and I feel that is why they aren’t selling. I did a search on my old neighborhood in Glendale AZ today and since I sold in Feb 08′ for 216k (1543 sq ft) 1983 the comps are now at 193k Most selling for 175k avg -WOW what a one month plunge. I was thinking about Yossarians statement and wondering if that could really be true? Twist have you seen that?

]]> By: twist http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11135 twist Fri, 28 Mar 2008 03:31:05 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11135 Russ- I'm still watching the prices in my old Gilbert subdivision. My landlady bought the house I was renting in March 2005 [with an Option ARM] - then tried to sell it for 42% more in 2006. She tried to sell it off and on for the next couple of years always at a price that would have worked six months before, but never priced it right for the current market. She listed it again when I moved in December- for I think about 23% more than she paid for it. Once more, she rented it out rather than lowering the price. As an agent, you'd think she'd know better, but so far the reality fairy has passed her by. Russ-

I’m still watching the prices in my old Gilbert subdivision. My landlady bought the house I was renting in March 2005 [with an Option ARM] – then tried to sell it for 42% more in 2006. She tried to sell it off and on for the next couple of years always at a price that would have worked six months before, but never priced it right for the current market. She listed it again when I moved in December- for I think about 23% more than she paid for it. Once more, she rented it out rather than lowering the price.

As an agent, you’d think she’d know better, but so far the reality fairy has passed her by.

]]> By: tc http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11134 tc Fri, 28 Mar 2008 02:13:00 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11134 LOL. Funny misunderstanding. But seriously I think something's going terribly wrong out there. I had a huge increase in showings on my house when I lowered the price 16% in January, but ever since the begining of March traffic has almost ground to a halt. Like worse than December - BEFORE the price cut! And we never really had much of a boom here in San Antonio. I think the bust is accelerating. LOL. Funny misunderstanding. But seriously I think something’s going terribly wrong out there. I had a huge increase in showings on my house when I lowered the price 16% in January, but ever since the begining of March traffic has almost ground to a halt. Like worse than December – BEFORE the price cut! And we never really had much of a boom here in San Antonio. I think the bust is accelerating.

]]> By: Russ http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11133 Russ Fri, 28 Mar 2008 02:12:42 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11133 The peak date range varies. With rare exception, closings in November/December '05 and January '06 largely represent the highest sales prices for particular models in the NW suburbs of Phoenix: North Peoria, Surprise, parts of Glendale. They did not drop dramatically at that point, but the number of sales dropped and inventory rose (stating the obvious, I know). Prices dropped when the rare sales took place. What I find interesting are the knife-catchers that are now in foreclosure. One house that I looked at sold after many months on the market and closed in January 2007. It sold for about 20% below the late 2005 peak. It had been built in 2004 and never lived in. The buyer apparently had not heard of the housing bubble ending and must have thought that it was quite a bargain. It was still priced well over the 2003 and 2004 retail builder prices for the same model in the same subdivision. I saw the same house re-listed a few months ago as an REO. It closed again a few weeks ago at about 35% below the peak. The peak date range varies. With rare exception, closings in November/December ’05 and January ’06 largely represent the highest sales prices for particular models in the NW suburbs of Phoenix: North Peoria, Surprise, parts of Glendale. They did not drop dramatically at that point, but the number of sales dropped and inventory rose (stating the obvious, I know). Prices dropped when the rare sales took place.

What I find interesting are the knife-catchers that are now in foreclosure. One house that I looked at sold after many months on the market and closed in January 2007. It sold for about 20% below the late 2005 peak. It had been built in 2004 and never lived in. The buyer apparently had not heard of the housing bubble ending and must have thought that it was quite a bargain. It was still priced well over the 2003 and 2004 retail builder prices for the same model in the same subdivision. I saw the same house re-listed a few months ago as an REO. It closed again a few weeks ago at about 35% below the peak.

]]> By: twist http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11132 twist Thu, 27 Mar 2008 23:29:03 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11132 Agnostic- Now you're right there- Doom'R Us! Agnostic-

Now you’re right there- Doom’R Us!

]]> By: agnostic http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11131 agnostic Thu, 27 Mar 2008 23:15:50 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11131 twist, Ha, I'm talking about their use of the word "doom"! twist,

Ha, I’m talking about their use of the word “doom”!

]]> By: twist http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11130 twist Thu, 27 Mar 2008 22:23:39 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11130 Agnostic- I checked with my resident expert, who says he's confident that quoting one paragraph in this manner falls under "fair use". I've never had any complaints for using material in this manner- and I often get thank yous from writers who appreciated the traffic. [<em>Even when I'm criticizing them, which I'm not in this case!</em>] Agnostic-

I checked with my resident expert, who says he’s confident that quoting one paragraph in this manner falls under “fair use”. I’ve never had any complaints for using material in this manner- and I often get thank yous from writers who appreciated the traffic. [Even when I'm criticizing them, which I'm not in this case!]

]]> By: agnostic http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11129 agnostic Thu, 27 Mar 2008 20:39:47 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11129 twist, (Quarter-seriously) That looks like copyright infringement to me! twist,

(Quarter-seriously) That looks like copyright infringement to me!

]]> By: AZSALUKI http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11128 AZSALUKI Thu, 27 Mar 2008 18:36:08 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11128 These writedowns are going to be MUCH worse than the banks are reporting. Here's how it works...for financial reporting purposes securities are categorized into trading, available for sale, and held to maturity. Companies are required to "mark to market" any securities that fall into the first two categories (which is what we are talking about with these writedowns). Held to maturities can be carried at book value. Now the game starts. There is no "true" market value so the banks start by nominally writing down the value of the securities (as little as possible as to not decrease profits). Then the auditors come in. The particular firm, or even the particular partner on a given audit plays a huge role in the final numbers. As the auditors, they are ultimately responsible for coming up with a "reasonable estimate" of the value of the securities. There can be a bit of back and forth, but the auditor puts their firms stamp of approval on the final financials. If a bank gets a conservative firm or audit team, it gets a fairly realistic set of financials. It was a different situation, but as we saw with Enron, if the bank gets a creative audit team....well....NOBODY knows what their financial position really is. These writedowns WILL BE much larger than have been reported. And don't be suprised if we see another large CPA firm (Arthur Anderson) take a fall along with the banks!! These writedowns are going to be MUCH worse than the banks are reporting. Here’s how it works…for financial reporting purposes securities are categorized into trading, available for sale, and held to maturity. Companies are required to “mark to market” any securities that fall into the first two categories (which is what we are talking about with these writedowns). Held to maturities can be carried at book value.

Now the game starts. There is no “true” market value so the banks start by nominally writing down the value of the securities (as little as possible as to not decrease profits). Then the auditors come in. The particular firm, or even the particular partner on a given audit plays a huge role in the final numbers. As the auditors, they are ultimately responsible for coming up with a “reasonable estimate” of the value of the securities. There can be a bit of back and forth, but the auditor puts their firms stamp of approval on the final financials.
If a bank gets a conservative firm or audit team, it gets a fairly realistic set of financials. It was a different situation, but as we saw with Enron, if the bank gets a creative audit team….well….NOBODY knows what their financial position really is.

These writedowns WILL BE much larger than have been reported. And don’t be suprised if we see another large CPA firm (Arthur Anderson) take a fall along with the banks!!

]]> By: Linenoise http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11127 Linenoise Thu, 27 Mar 2008 16:41:05 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11127 @Yossarian "Hard work has a future payoff. Laziness pays off now." The things your parents never taught you... @Yossarian

“Hard work has a future payoff. Laziness pays off now.”

The things your parents never taught you…

]]> By: metroplexual http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11126 metroplexual Thu, 27 Mar 2008 16:35:10 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11126 Yossarian, Do recall which site? Yossarian,

Do recall which site?

]]> By: aaaaudio http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11125 aaaaudio Thu, 27 Mar 2008 15:34:24 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11125 WOW! That is amazing. I sold my old home of 12 years and stuffed 40k away while I could get what I could. If things get that bad in PHX we all will be in trouble no matter what you paid for your house. Work will be hard to find and it won't matter what your rent or mortgage payment is. WOW! That is amazing. I sold my old home of 12 years and stuffed 40k away while I could get what I could. If things get that bad in PHX we all will be in trouble no matter what you paid for your house. Work will be hard to find and it won’t matter what your rent or mortgage payment is.

]]> By: Yossarian http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11124 Yossarian Thu, 27 Mar 2008 15:12:24 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11124 aaaudio: There was a post on one of the other bubble blogs two weeks ago titled, 'Hundred dollar homes' .. someone had done a RE search for homes at that price point or under.... think it was Michigan. Found a thousand or so, I think. That's what happens when a region loses its job base. Phoenix jobs are something around 35 percent or more RE related. We could be wrong about this, don't know your area, etc..... but.... I would not want to have bought a home in the last three years, period. The Bell Curve of Doom may toll for thee. Me, I've had the same home for 13 years. I take pride in my sloth. aaaudio:

There was a post on one of the other bubble blogs two weeks ago titled, ‘Hundred dollar homes’ .. someone had done a RE search for homes at that price point or under…. think it was Michigan. Found a thousand or so, I think.

That’s what happens when a region loses its job base. Phoenix jobs are something around 35 percent or more RE related.

We could be wrong about this, don’t know your area, etc….. but…. I would not want to have bought a home in the last three years, period. The Bell Curve of Doom may toll for thee.

Me, I’ve had the same home for 13 years. I take pride in my sloth.

]]> By: aaaaudio http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11123 aaaaudio Thu, 27 Mar 2008 14:27:14 +0000 http://housingdoom.com/2008/03/27/bell-curve-of-doom/#comment-11123 Twist, not everyone who bought (including myself)within the last year has negative equity. I do know that the comps have gone down since we bought about 50k but if you know what is happening and purchase right you can get a great deal. We only put down 5% and still have 50-75k of equity left before we come to par. We also refied right after to use existing comps and get the PMI removed...In Oct 07' the house appraised at 495k and now it will barely come in at 445k. Values are slipping fast (we purchased at 360k)BUT, there has to be a point were folks say this is a true value. They will never be free (or will they?) lol Twist,
not everyone who bought (including myself)within the last year has negative equity. I do know that the comps have gone down since we bought about 50k but if you know what is happening and purchase right you can get a great deal. We only put down 5% and still have 50-75k of equity left before we come to par. We also refied right after to use existing comps and get the PMI removed…In Oct 07′ the house appraised at 495k and now it will barely come in at 445k. Values are slipping fast (we purchased at 360k)BUT, there has to be a point were folks say this is a true value. They will never be free (or will they?) lol

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