Well, in my particular neighborhood in Memphis, I’ve been keeping an eye on what’s been happening. Kinda hard to generalize since if you go one block in one direction you’re into an older up-scale neighborhood (larger houses, decent lots, etc.) but go in another direction and you have small ‘cottages’ with bars on the windows.
That being said though, so long as the asking price is reasonable houses have been selling relatively well (the more reasonable the price, the quicker they’ve sold: a few I only saw the sign up for not quite a month). I know of two houses where the asking price was way too high and they languished, eventually coming off of the market.
One of them put a ‘for rent’ sign out front in the past month, and I noticed this past week it was down. Haven’t seen any signs of activity to suggest someone is moving in however. I’m guessing this was a situation where house-flippers bought it (as it had been on the market about a year or two ago) and misjudged the market (and/or got greedy). This is in stark contrast when compared to the house next to me: that one was flipped rather quickly and successfully within the past year.
The other has been on and off the market for at least five years, each time with a different real estate agency. At this point I rather doubt he’ll find an agent willing (or insane enough) to take the listing so his next attempt(s) will probably be FSBO. However, at his asking price unless suddenly half the homes in Memphis are wiped out (or any other drastic action that pushes the area into an extremely hot housing market) I very much doubt it will sell.
<< When tempted to fight fire with fire, remember that fire departments generally use water. >>
I have some friends in the county and my work-mates are Baltimore County, Howard County, Mont. Co, Fred Co., Harford Co. and even Alexandria VA. I’m hearing similar stories from everywhere.
Another article in the NYT today about how the slowing housing market is now becoming a drag on the economy, and even job growth could be slowing.
An intersting quote. . .
[quote=David Leonhardt]
For much of the last five years, housing — along with health care — was also one of the only reliable generators of jobs. From the start of 2001, when the Fed began cutting its benchmark rate to steady a faltering economy, until early last year, the housing sector added 1.1 million jobs.
The rest of economy lost 1.2 million jobs over the same period, according to an analysis by Moody’s Economy.com.
Substantially slower here - Fairfax County VA. Our subdivision of 5000ish homes (includes townhouses, condos, detached houses) has over 100 units on the market and many of them have been on the market for months. Two houses are for sale on my street of 21 houses, one has been on via FSBO for over a year now (I think the owners screwed up - they had it through a realtor last year, it never sold, and they went FSBO; should have gone through a different realtor or lowered price or something). The other one has taken a price drop and has still not sold. People are resorting to things like “If you buy our house at list price we’ll give you a Mercedes!”.
One other house on my street did manage to sell, with a price drop, but there’s actually a glut of detached houses in our subdivision. Which is a far cry from 4 years ago - when we bought, there was precisely one detached house on the market in our subdivsion.
I don’t really care, for myself - we bought 4 years ago when the market was insanely hot and our house would still probably sell for appreciably more than we paid, plus we got a fixed-rate mortgage, and plan to stay here for a long time, so we can ride it out. I really feel sorry for the folks who overpaid, and/or have to sell now - they’ll lose their shirts.
But, my followup question would be “what is demand determined by?”
You could argue that for a while the demand has been artificially inflated by creative mortgaging schemes and speculation, not something more fundamental, like a booming job market.
Some accounts have the boom in Arizona created by Californians using their equity to buy second houses as investment properties. The demand was created by their own speculation, not really a strong local demand. What’s left when there are no greater fools to sell to? A huge payment on a house that you are driving the price down on by renting out.
Toronto: everybody and their brother are buying condos, and the builders just keep putting up more residential skyscrapers downtown–30, 40, 50, even 60 storeys. Residential amenities like grocery stores and hardware stores are moving back into the downtown area as well. These people are working downtown.
The ones who aren’t buying condos downtown are buying houses way out in the suburban sprawl and driving to jobs in the burbs… but condos are popping up in the burbs as well: Mississauga has accumulated quite a cluster of skyscraper condos.
Because of all these condos, the rental morket has opened up. Landlords are offering incentives like a month’s free rent or a new LCD TV.
But the financial papers are starting to look over their shoulders nervously at the US housing bubble and wondering how bad the pop will be.
Which brings me to another point. A lot of young singles and young couples these days are buying condos or other in-town properties. I suspect their decision to shun the suburbs may be based in part on the ever-escalating cost of commuting. That and just plain old herd mentality.)
This may mean that people who own suburban properties far from employment centers may get left holding the bag when the market shakes out.
I agree. What with the rising cost of gas these days, the places near train lines, etc, are doing well.
This is what I fear may happen to my friends who bought in the exurbs and drive in to the northern burbs to work. They are rural enough to try to farm, have chickens, etc, and their plans are to become more independent, but in the meantime they have to keep things going and they are struggling. They are totally dependent on their cars–there’s only two buses a day past their place–and they’ve been having major car trouble.
I’m thinking of buying them the new battery-backed sump pump they need as a birthday present because I rent in the inner suburbs and I have no debt and a lot more resources than they do in some ways, even though they make three times what I do.
But if they can get past these intital troubles, get debt paid off, repair their infrastructure, get crops growing, and get in better physical shape so they can bicycle the four kilometres into the nearby town, they’ll be in better shape than city-dwellers if power supplies go wonky or fuel becomes scarce.
I have some friends in the county and my work-mates are Baltimore County, Howard County, Mont. Co, Fred Co., Harford Co. and even Alexandria VA. I’m hearing similar stories from everywhere.
Another article in the NYT today about how the slowing housing market is now becoming a drag on the economy, and even job growth could be slowing.
An intersting quote. . .
Trunk, FYI, all that link took me to was a page that informed me how I could track news that was important to me. It didn’t have the link at all.
As Gorsnak indicated in his post, property values and the market in Saskatchewan as a whole has remained strong. We have seen some appreciation in interest rates, but not yet significant enough to cool the market.
When I first read about the US market in reverse amortization and interest-only mortgages I was surprised at the risk that those buying houses with these types of mortgages were willing to take, relying on a continuing climb in housing prices and a continuing stability in interest rates. It seemed to me to be pretty risky speculation since it seemed reasonably foreseeable that the in the face of change of either/both of those factors, the debt owed could easily exceed either the value of the property or the amount of payments that the homeowner could carry leaving the homeowner in a pretty untenable situation.
Also, as I understand it, there is no protection in the US that would prohibit the mortgagee from seeking full payment of the debt if it exceeds the value of the property. Is that right? In Canada this is an area of provincial control, and in contrast in Saskatchewan there are several protections for home owners, the philosophy of which extends back to the depression of the 30’s. Amongst these, in Saskatchewan, the mortgagee is limited in debt realization against home owners to the property itself and cannot pursue an unsecured balance.
People are starting to realize what it costs to heat a 5000 sq. ft. house in Minneapolis, and what it costs to cool one in Phoenix.
From that blog. . .
7000 sq ft? That’s somewhere in between absurd and obscene.
Believe me, I don’t get any sort of schadenfreude out of this – no one was rubbing my nose in it when these houses were selling – but I’m not overly sympathetic either; I’m no fan of conspicuous consumption (who is?). But, I do find the stories interesting. . .kind of like I find a Category 5 hurricane interesting.
Sorry, it requires “Times Select”. It’s not super reading. . .just an article that says that about 15% of the economy is housing related, and the economy of the last 5 years has been propped up by housing, and is now being dragged down by it
I think your understanding is correct. You can’t underestimate how much pressure there was on people here to get a house. People were really feeling that if they didn’t buy a house NOW (like in 2004/5) that they would NEVER be able to get one, and realtors and mortgage brokers either didn’t understand or didn’t care what they were doing to get people to take mortgages.
I’m not sure. If I’m not mistaken, one of the facets of the change in bankruptcy laws last year was that if a person declared bankruptcy, they could still get their wages garnished AFTER the bankruptcy. It was seen at the time as a grand slam for the credit card companies, but if it’s applicable (and I don’t know enough to say that it is) it could come back to get people in terms of this.
[note: I’m sort of speaking as if it’s a certainty that the burst is upon us. That’s just my language for sake of discussion. I don’t presume to KNOW what housing or the stock market or gold or the price of donuts is going to do over any short-term period.]
The talk around my way re #2 is that in 10-20 years we’re going to have a mammoth glut of houses, but chances are nobody’s going to be able to afford to buy them.
I’m in east suburban Cleveland, in an area where most suburban city names end in the name “Heights.”
In my middle-class suburb, filled with middle-end houses mostly built between 1920 and 1955, almost NOTHING is selling. NOTHING. Home prices near me range from $120K to $170K, and some “for sale” signs on my block have been there for nearly six months. Two of my neighbors tried to sell, but gave up and stayed. The house across the street from me has been empty for two months so far.
Really, the only place where homes are selling in my suburb is the far southeastern end, and that’s only because a new Orthodox synagogue is under construction there.
If I wanted to, I could buy a nice house now in Shaker Heights for around $200K, or $150K if I went south of Van Aken Boulevard.
Goofy mortgages? Ha! Even at the height of the bubble, most mortgages around here were 15 and 30 year fixed-rate conventional loans.
We bought in Calgary just before the boom hit - our house has doubled in value on paper in the 2.5 years we’ve been in it. We bought an underpriced fixer-upper as part of a five-year plan, to fix it up, sell it for a modest profit, pay off some debts, and buy a slightly larger, slightly nicer, slightly more expensive keeper house. That plan has gone for poopy for now, for the forseeable future here, because, like Alice mentioned, we can’t afford to re-buy. Oh well - we have a solid house, in a good neighbourhood, close to two schools, shopping, and great bus routes and major roads, with a relatively-small mortgage at a very low interest rate. Things could be much, much worse.
I keep wondering if people are going to start going back to SK soon. I’ve certainly thought about it myself.
I think that there’s actually a mini-trend of that happening already, featherlou, of returnees in their late 30s to early 40s who have established their careers, started having children and decide to return to Saskatchewan. I have two current colleagues and one recent who all did exactly that.
It’s awfully tempting to me - sell my house for big bucks, move back to S’toon and buy a house for half of what I sold for, no more dealing with traffic that’s lousy and getting worse by the day, no more dealing with the big-city attitudes that Calgary is rapidly growing, no more dealing with the pressures of living here and racing with all the rats…
Thank God for all the new people downtown… We have a nice 1800’s house downtown and are fed up with having to drive to suburbia to get parts and groceries… Lots of people are complaining that Maple Leaf Gardens (the empty hockey arena) is being turned into a giant grocery store, but I say bring it on!
The number of condos going up around here is absolutely insane. But you can’t blame people for wanting to live downtown. I can walk out my front door and be at a subway station in less than 2 minutes. When I lived in the Bay Area my commute by car was over an hour and a half each way!
In the interests of being helpful (hey gotta try to lure people home when the opportunity arises!) here you go with an MLS link for Saskatoon for houses starting at $100,000. In Saskatoon, personally I’ve always been fond of the Nutana area with its proximity to Broadway, the river and the University.
I have to admit, there is something EXTREMELY attractive about the idea of selling your house and buying a new one outright with the profits. Life without debt? I…I wouldn’t know what to do with myself.
