Housing market continues to gain as inventory falls


By iwog   Follow   Tue, 27 Nov 2012, 7:31am   3,685 views   62 comments
In Lafayette CA 94549   Watch (0)   Share   Quote   Permalink   Like (1)   Dislike (4)  

It's even more significant since we should be well into the winter doldrums.

http://online.wsj.com/article/SB10001424127887324307204578128900029337018.html

Sales of previously owned homes were stronger than expected in October, putting them on track to hit their highest annual level since 2007.

Existing homes sold at a seasonally adjusted annual rate of 4.79 million units in October, the second-highest level of the year and up 2.1% from September, the National Association of Realtors said Monday. October's level represented a 10.9% gain from a year earlier and was the 16th consecutive month of year-over-year home-sales gains.

Prices are rising amid sharp declines in the number of homes listed for sale. Just 2.14 million homes were for sale at the end of October, down 22% from one year ago to the lowest level in a decade, according to NAR estimates.

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  1. David Losh


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    23   9:21am Tue 27 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Call it Crazy says

    Overall trend line is DOWN

    You would have to go back further than 2003 to establish a trend line.

  2. iwog


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    24   11:14am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (3)  

    David Losh says

    Call it Crazy says

    Overall trend line is DOWN

    You would have to go back further than 2003 to establish a trend line.

    It doesn't matter anyway. Nationwide real estate trends shouldn't be measured by a single county in New Jersey.

    The market has been essentially flat since 2009 and sharply higher for 2012. If it continues, 2009-2011 was the bottom depending on which region you are in.

  3. dodgerfanjohn


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    25   11:25am Tue 27 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    iwog says

    dodgerfanjohn says

    The spin actually comes from you, correct?

    That is you misrepresent the actual level of inventory in2002 by failing to include new build.

    Inventory has nothing to do with new or old build. Inventory is measured by how many homes are currently available for sale.

    Wow, can you ever stop the bs deflection?

    The graph you posted depicts previously owned homes only.

    However, in 2002 there was a substantial amount of new build.

    Therefore the graph you posted does not accurately support the point you are attempting to make.

  4. iwog


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    26   11:28am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (2)  

    dodgerfanjohn says

    The graph you posted depicts previously owned homes only.

    Yes.

    dodgerfanjohn says

    However, in 2002 there was a substantial amount of new build.

    Which were sold in 2002, therefore are counted as previously owned.

    dodgerfanjohn says

    Therefore the graph you posted does not accurately support the point you are attempting to make.

    The point I was trying to make is that inventory continues to fall and housing starts continue at depression levels. This doesn't look good for lower home prices and may well be setting us up for a large spike next year.

    Honestly I have no idea what you're talking about or what you're trying to challenge me on. You should probably clarify.

  5. tatupu70


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    27   11:29am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    dodgerfanjohn says

    My leaning is that the graph above is failing to include new build which was rather substantial in 2002 and 2003, but is non existent in 2012.
    I would think that might color things in a very different light...that is if there was a very large amount of new build in 2002/2003.
    Supply is supply in my thinking.

    If that were the case, it makes Iwog's point even stronger. More inventory in 2002 means that situation now is even more strongly tilted towards price increases.

  6. bmwman91


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    28   11:40am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    My question is...how long will this boom last before the next bust? 3-5 years? CA will probably see some serious price increases with 60% of foreclosures being cancelled thanks to the Homeowner Protection Act passing. That should buy people at least a year or two of time to "ask for loan mods." If prices increase enough and get buyers that bought at the last peak back above-water, will they decide to sell, thus increasing inventories? It seems plainly obvious that the government and Fed won this round, and prices are going to assume an upward trajectory in the popular coastal areas.

    I just can't tell if I should jump in now and try to get out early enough with some extra cash, or if I should wait it out. Unlike last time, rents won't be cratering because the price-driver is low inventory, so everyone HAS to rent while they wait, which increases demand on the existing supply of rentals.

  7. iwog


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    29   11:42am Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (3)  

    bmwman91 says

    My question is...how long will this boom last before the next bust? 3-5 years?

    10 years. The next real estate cycle supported by low interest rates and the next economic boom supported by a new health care gold rush is already written in the history books.

    They just haven't been published yet.

  8. errc


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    30   12:39pm Tue 27 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    So do you think we will see median house price here in usa of 300k come 2020? Do you see interest rates doing anything other then declining into perpetuity in this ten year boom? Will wages move off their current multi decade flatline?

  9. Call it Crazy


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    31   1:44pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    It doesn't matter anyway. Nationwide real estate trends shouldn't be measured by a single county in New Jersey.

    The market has been essentially flat since 2009 and sharply higher for 2012. If it continues, 2009-2011 was the bottom depending on which region you are in.

    I guess you missed my other chart showing the U.S. data...

    The market has been flat since 2008 except for the "Spring bounces"... and if you noticed, the Spring bounces have been smaller and smaller the past few years...

  10. Call it Crazy


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    32   2:00pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    iwog says

    Don't change the premise you challenged me with. If you think the NAR is lying, post a source that disagrees with them.

    Come on... your smarter than that..... NAR is a "Sales" organization.. they ALWAYS try to "spin" data in their favor. Anyone with functioning brain cells knows that.

    Since this article came out today, I'm sure there will be other ones that will take a closer look at the data...

    Like I said, here is another look at where the "gains" are coming from:

    Bulk Investors and the Real Estate Market
    http://www.acting-man.com/?p=20728

    Investors typically buy lower end properties. Say at an average of $100,000 per unit, the $6 billion to $8 billion raised so far would not even amount to 100,000 homes.

    On the national level, and using the most recent releases, Existing Homes Sales and New Homes Sales combined are coming in at a pace of just over 5 million for 2012. The median price is $178,000 for existing homes and $242,000 for new homes. 100,000 homes would not even show up on the radar.

    As for foreclosures, there are 5.6 million total non current loans in various stages of default. The current estimate for under water mortgages still exceeds 10 million, or about 20% of all mortgages. The Wall Street bulk investors are unlikely to put a dent in the distress property arena for the foreseeable future. In comparison, when the Resolution Trust Corporation (RTC) was dissolved back in 1992 due to the sunset clause, investors cleaned the entire inventory of REOs and loans off the books with just a few auctions.

    On the localiz level, it is a slightly different story. I am going to use three Western metro areas as examples. Phoenix, Southern California and Las Vegas were hotbeds of the subprime bubble and are once again the most sought after areas, this time by bulk investors. Using September data from DQNews, investors purchased 38.6%, 27.3% and 48.5% of all sales respectively.

    Of the aforementioned metro areas, Las Vegas is the most out of whack. There were 4,570 sales in October. 50.2% were sold to absentee owners, 52.5% in cash (43.2% were short sales, 16.7% were REOs) and 36.1% FHA financed. I have never seen a market where over half of the buyers paid cash and over 1/3 of the sales were financed via the FHA, leaving only 14% of sales in the "other" category.

    Here in Southern California, the herd mentality is in full control with buying increasing at all levels. How long will this feeding frenzy last? Will the bulk investors be able to generate enough returns to whet their appetite for more? Will the local investors continue to ride on the coattails of the Wall Street moguls? Will owner occupiers continue to overpay for new homes because the 1%ers are paying cash and squeezing them out of the non-FHA market?

    Stay tuned.

  11. tatupu70


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    33   3:02pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    The current estimate for under water mortgages still exceeds 10 million, or about 20% of all mortgages.

    At what point will you agree that people with underwater mortgages are NOT shadow inventory because if they haven't defaulted by now, they're not going to? Don't you think it's pretty unlikely at this point?

  12. Call it Crazy


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    34   3:06pm Tue 27 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    tatupu70 says

    At what point will you agree that people with underwater mortgages are NOT shadow inventory because if they haven't defaulted by now, they're not going to? Don't you think it's pretty unlikely at this point?

    What do you think of the people who's houses were damage in Sandy will do with their underwater mortgages??

  13. Cheeseus Sonofdog


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    35   3:45pm Tue 27 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Nice chart. It shows the decline in inventory due to the homebuyers tax credit. Then in 2010 inventory started skyrocketing. That was rocket docket, where banks were trying to speed up foreclosures in the court system. Then you see towards the end of 2010 invenmtory started going down. What was that? ROBO-SIGNING SCANDAL. It backlogged foreclosures until this year. Even now, cases are still backed up as banks are made to jump through hoops. Your charts show exactley what is going on. Inventory is not down because of some type of organic growth, but rather due to government intervention. Prices are still absurd and deleveraging hasn't happened. A long way down to go....

  14. iwog


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    36   6:28am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    The problem with your theory is the robo signing scandal didn't stop foreclosures in non-judicial states like California and Nevada, two of the three biggest bubble states.

    Even if you're right which I think is impossible, banks can hold these homes indefinitely while prices are moving up and only help their situation.

  15. tatupu70


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    37   7:38am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    What do you think of the people who's houses were damage in Sandy will do with their underwater mortgages??

    How many houses do you think you're talking about there?

  16. Call it Crazy


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    38   8:24am Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    tatupu70 says

    Call it Crazy says

    What do you think of the people who's houses were damage in Sandy will do with their underwater mortgages??

    How many houses do you think you're talking about there?

    From an article on the Asbury Park Press:

    "Christie said more than 30,000 homes and businesses were destroyed or sustained structural damage during Sandy and that 42,000 buildings sustained lesser damage from the Oct. 30 storm."

  17. tatupu70


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    39   9:01am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    tatupu70 says



    Call it Crazy says



    What do you think of the people who's houses were damage in Sandy will do with their underwater mortgages??


    How many houses do you think you're talking about there?


    From an article on the Asbury Park Press:


    "Christie said more than 30,000 homes and businesses were destroyed or sustained structural damage during Sandy and that 42,000 buildings sustained lesser damage from the Oct. 30 storm."

    OK--so assume 40% of those were owned with no mortgage--now we're down to 18K homes. What is the latest underwater average? 50% of people with a mortgage? Now you're at 9K homes.

    I don't think another 9K homes is going to have a large effect. Maybe very locally. But almost no effect once you're a few dozen miles away.

  18. Call it Crazy


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    40   9:43am Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    E-man says

    I see new construction jobs are being created. Construction suppliers will also benefit tremendously. Insurance companies are the ones hurting.

    So if insurance companies are hurting, who's going to be paying for the rebuilding??? HELOCS???

  19. Call it Crazy


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    41   9:47am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    tatupu70 says

    OK--so assume 40% of those were owned with no mortgage--now we're down to 18K homes. What is the latest underwater average? 50% of people with a mortgage? Now you're at 9K homes.

    I don't think you are even close.... a lot of the houses destroyed are second houses or summer rentals that are big time leveraged and many AREN'T paid off. Many are trying to cover their mortgages with the summer rental revenues.

  20. tatupu70


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    42   10:02am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    I don't think you are even close.... a lot of the houses destroyed are second houses or summer rentals that are big time leveraged and many AREN'T paid off. Many are trying to cover their mortgages with the summer rental revenues.

    I'm just going by averages. If you have better data, please post it.

  21. iwog


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    43   11:07am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    errc says

    So do you think we will see median house price here in usa of 300k come 2020? Do you see interest rates doing anything other then declining into perpetuity in this ten year boom? Will wages move off their current multi decade flatline?

    Wages are going up guaranteed because the baby boomer healthcare boom is going to required skilled and semi-skilled workers by the millions. The amount of money involved is staggering which is why Social Security and Medicare are in so much trouble. Even if those benefits are reduced, the burden will only be shifted to the boomers themselves who as a group are quite wealthy right now compared to workers.

    We are also in the midst of an energy Renaissance in the United States with natural gas nearly too cheap to meter. (your utility company is pocketing the difference) I don't know how long it will last, but the amount of wealth it is generating will also factor into the economy.

    Risk factors include the fiscal cliff brought to you by the Republican party, who both wrote the doomsday expiration date into the original law AND will threaten to kill the economy if they don't get 100% of their demands met. I'm not convinced this will last longer than a year however since 2013 should be an exceptional year for building industries. New housing starts are starting to increase and may spike soon.

  22. iwog


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    44   11:09am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    The market has been flat since 2008 except for the "Spring bounces"... and if you noticed, the Spring bounces have been smaller and smaller the past few years...

    I have no idea what you're talking about. The spring bounce of 2012 was the largest since the boom AND the winter doldrums seem to have missed the curtain call.

  23. Call it Crazy


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    45   11:17am Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    iwog says

    I have no idea what you're talking about.

    Go back up and look at the chart (total homes sold)... we are at the same level we were back in 2008. The only bounces were the first timer credit in the beginning of 2010 and the normal spring bounces. Draw a line from the start of the chart to the end.... you get a flat down trending line...

    iwog says

    The spring bounce of 2012 was the largest since the boom

    When you add in the big block purchases by the institutional investors this year, you get that larger spike. Time will tell if it can continue like this.

  24. iwog


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    46   11:20am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    Go back up and look at the chart... we are at the same level we were back in 2008. The only bounces were the first timer credit in the beginning of 2010 and the normal spring bounces. Draw a line from the start of the chart to the end.... you get a flat down trending line...

    I'm perfectly aware that the market has been flat, in fact that was my premise in most threads I posted to in 2008,2009,2010, and 2011. All I did was catch shit for it although I was far more accurate than most.

    Investors are perfectly happy with a flat market. They do not become sellers and they will continue to buy as long as rents are stable or rising.

    Rents are rising. The winter slump didn't show up, in fact the market continues to rise in Northern California and elsewhere. Market action is screaming buy right now and there is NOTHING on my radar that flashes danger.

  25. Call it Crazy


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    47   12:31pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    iwog says

    The winter slump didn't show up, in fact the market continues to rise in Northern California and elsewhere.

    Just a hint, we aren't in winter yet..... plus, housing data is usually delayed by a few months...

    Come back in Feb. or March and re-visit the numbers...

  26. iwog


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    48   12:35pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Call it Crazy says

    Just a hint, we aren't in winter yet..... plus, housing data is usually delayed by a few months...

    Yeah except none of that is true and the housing slump usually starts in September and there is plenty of real time and almost real time housing data that shows the winter slump isn't coming.

  27. Call it Crazy


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    49   12:39pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    Yeah except none of that is true and the housing slump usually starts in September and there is plenty of real time and almost real time housing data that shows the winter slump isn't coming.

    Well, you solved it!!! It didn't realize the entire country lives in Santa Clara.

  28. iwog


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    50   12:50pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Call it Crazy says

    Well, you solved it!!! It didn't realize the entire country lives in Santa Clara.

    I said Northern California and just used one of the largest counties as an example.

    From what I hear, much of the rest of the country is showing similar results. Do you have data to refute this?

  29. iwog


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    51   12:51pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    robertoaribas says

    I threw alot of that shit at the duck too, back in those days. I was seriously sure that he got in early, and that the bay area would drop hard... It really never did...

    I think anyone who bought in the last 3 years is going to be very happy in the coming decade. I pretty much dollar cost averaged from 2008 to 2012 with the last property closing in March.

    I think I'm done. I hate bidding wars.

  30. Call it Crazy


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    52   12:59pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    iwog says

    From what I hear, much of the rest of the country is showing similar results. Do you have data to refute this?

    Yea, one of the largest counties on the east coast...
    *

  31. Call it Crazy


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    53   1:04pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    iwog says

    From what I hear, much of the rest of the country is showing similar results. Do you have data to refute this?

    Notice the little upswing on this chart at the end of 2011 before the drop in the beginning of 2012.... will history this year repeat that, we will see...
    *

  32. Nobody


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    54   1:22pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    I see the price of real estate is going up overall. More so here in Silicon Valley. What can I say? We have more Chinese from China here. And they are blind as a bat with lots of cash. And the result is pretty predictable. They are just bringing in their bubble here in Silicon Valley.

  33. CDon


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    55   1:23pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Call it Crazy says

    Yea, one of the largest counties on the east coast...

    I find it interesting how different various markets can be. For example, heres another east coast market 2X the size and about 100 miles South as the crow flies.

    http://www.zillow.com/local-info/VA-Fairfax-home-value/r_4655/#metric=mt%3D34%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D4655%252C53279%252C245345%26el%3D0

    Out there, the idea as to whether the 11 or 12 bounce was the bottom is absurd as the data makes clear, it was a hard bottom in 09, and then a respectable, non bubbly rise in prices for the last 4 years.

    Honestly, without looking at it, I would have guessed more markets look like this one, but obviously yours is far different - and I can see while you remain bearish.

    I guess it goes to show as much as many hate to hear it the realtard slogan "all real estate is local" is quite true.

  34. Bellingham Bill


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    56   2:07pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    iwog says

    I think anyone who bought in the last 3 years is going to be very happy in the coming decade. I pretty much dollar cost averaged from 2008 to 2012 with the last property closing in March.

    "Calculated Risk" (Bill McBride) recently said that he thinks the Fed is going to double QE3 rate to $80B/month.

    People don't yet understand what this means. This is a higher-power monetary stimulus than the 2003-2007 housing credit bubble that got us where we are today.

    This wasn't in my thesis per se, but I didn't discount the possibility of aggressive Fed intervention at all, once I thought about it more and saw the 5% interest rate plateau break in 2011:

    http://research.stlouisfed.org/fred2/graph/?g=dgm

  35. Call it Crazy


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    57   3:49pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    CDon says

    I find it interesting how different various markets can be. For example, heres another east coast market 2X the size and about 100 miles South as the crow flies.

    http://www.zillow.com/local-info/VA-Fairfax-home-value/r_4655/#metric=mt%3D34%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D4655%252C53279%252C245345%26el%3D0

    That is an "artificial" market compared to the rest of the country. Your link is the D.C. suburbs.... there's A LOT of government money (ie: D.C. Jobs) that live in that county. It doesn't compare realistically with many other areas that don't have the D.C. money influence...

  36. Call it Crazy


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    58   3:51pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    CDon says

    Honestly, without looking at it, I would have guessed more markets look like this one, but obviously yours is far different - and I can see while you remain bearish.

    The whole state of NJ looks a lot like my chart above... not just that county. NJ has a lot of NY money influence but still continues on the downward trend...

  37. Call it Crazy


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    59   3:59pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    CDon says

    Out there, the idea as to whether the 11 or 12 bounce was the bottom is absurd as the data makes clear, it was a hard bottom in 09, and then a respectable, non bubbly rise in prices for the last 4 years.

    Not happening here in NJ.... these are house prices....

  38. CDon


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    60   4:19pm Thu 29 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Call it Crazy says

    CDon says



    I find it interesting how different various markets can be. For example, heres another east coast market 2X the size and about 100 miles South as the crow flies.


    http://www.zillow.com/local-info/VA-Fairfax-home-value/r_4655/#metric=mt%3D34%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D4655%252C53279%252C245345%26el%3D0


    That is an "artificial" market compared to the rest of the country. Your link is the D.C. suburbs.... there's A LOT of government money (ie: D.C. Jobs) that live in that county. It doesn't compare realistically with many other areas that don't have the D.C. money influence...

    Granted, but this goes back to my point about it being local. Alot of money in DC means prices are up - alot of money in NJ and prices are down.

    And as far as the rest of the country goes, I just did a random sampling on zillow and heres what I found.

    Down
    Pensacola, FL
    Lawrence, KS
    Albany, NY
    Des Moines, IA
    Harrisburg, PA
    Medford, Or
    Indianapolis, In

    UP
    Columbus, OH
    Birmingham, AL
    Burlington, VT
    Knoxville, TN
    Austin, TX

    AND
    Oklahoma City (a rocketship up)
    Minot, ND (a huge "fracking" bubble which would scare the crap out of me).

    So therein lies the problem with taking your local market situation and applying it nationwide. The staggering downturn in Ocean County, NJ is no more representative of the US than is the general uptrend in Iwog's Santa Clara Co., the respectable uptrend in Fairfax County, VA, or the Monumental fracking gas & oil induced bubble being blown in ND.

  39. dublin hillz


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    Dublin, CA

    61   9:44am Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Inventory is definitely down. In the city where we bought at the time of our purchase, there were 13 pages of listings in realtor.com website, now there are only 3 and the total is under 30 listings.

  40. FunTime


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    San Francisco, CA

    62   11:33am Thu 6 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    bmwman91 says

    My question is...how long will this boom last before the next bust? 3-5 years?

    http://www.bloomberg.com/video/ecri-s-achuthan-defends-call-for-u-s-recession-BhnZZoJ3S8GB6V9sFCeeTw.html

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