FWIW - Housing not facing bust, just normalcy: experts

From Roto-Reuters:

By Patrick Rucker
WASHINGTON (Reuters) - While the U.S. housing market is drifting down from stratospheric levels, the sector is just returning to normal and is not poised to crash, several economists and industry leaders told lawmakers on Wednesday.
“True housing busts are a relatively rare event,” Federal Deposit Insurance Corp chief economist Richard Brown said at a congressional hearing on the housing market.
In a recent study of past housing trends, the bank regulator concluded sharp drops in housing markets are most often linked to “episodes of severe local economic distress.”

With wages and employment still strong, Brown said, a real nationwide housing market crisis was not likely.
Mounting evidence of sharp slowdown in the long-hot U.S. housing market prompted the Senate Banking Committee to call in experts to talk about the implications of a potential “bubble” bursting.
Sales of new homes in July were down 22 percent from a year earlier, while existing home sales were off 11 percent.
The slowdown has put a damper on home price gains, which have flattened out considerably after several years of double-digit growth in many parts of the country.
Noting the dramatic change, Democratic Senator Charles Schumer of New York mused: “To paraphrase Shakespeare: Is there a bubble or isn’t there a bubble? That is the question.” Continued…

My view of most bureaucrats when asked tough questions:

Looks like to me they refused to tackle the real reason people aren’t buying houses right know. Over $2.00 a gallon gas prices. Yes, gas prices may be falling but until it gets down to a price people are comfortable with, home buyers are gonna put that next home on hold.

Just my 2 cents, Don’t get me very far anymore.

I think the slowdown in prices will continue. I read a story yesterday about default rates are starting to climb. Mainly due to all the ARM loans hitting the first adjustment period. I don’t know for sure how many ARM’s have been written in the past 5-7 years but think the number is much higher than before. That is the only way some people can “afford” their mini mansions. Most people didn’t prepare for this day and are getting caught with their pants down. Especially with a doubling of their automotive gas bills.

If I remember correctly, the loan on my other house would have been due next year. Given the rate I had and the current rates, I believe it would have jumped about 1.25 points.

Those who got an ARM loan so they could “afford” the house, as opposed to those who know how to use the ARM effectively, will be in for a rude awakening when their rates adjust.

Slowdown has not happened here yet and hopefully won’t.

I’m not real big on Wikipedia’s frequent oversimplifications, but if you’re thinking that “over $2.00” per gallon gas is unreasonable, and you’re holding your breath for a housing market resurgence based-on any substantial “drop” in retail gasoline prices (or the price of any other petroleum derivative), you’d better HURRY and read-up on peak oil.


Some folks are “enjoying” $2.60 - $2.75/gallon prices for the moment, since “driving season” is over; but if you are thinking you’ll EVER see gas prices at $2.00/gallon again, you should definitely position yourself right in the fireplace firebox just after midnight on December 24th-25th, and look-up, and wait.


I’m rather enjoying the $2.11 gas in the nearby Twincities MN area and it continues to fall each day for the last 3+ weeks.:D:D:D:D

The driving season is over and the demand for Ethanol which was in short supply has eased so the price will probably continue to fall for a while yet.


A Humbling Lesson for** Realtors’** President

By Sandra Fleishman
Washington Post Staff Writer
Saturday, September 9, 2006

He, of all people, should have known better.

The president of the National Association of Realtors, Thomas M. Stevens of Vienna, admits he didn’t follow his agents’ advice when the real estate market started to cool. That, he says, is why his old house in Great Falls has now been on the market for a year at the price of $1.45 million.

“What I should have done,” confessed the senior vice president of NRT Inc., parent of Coldwell Banker Residential Brokerage, “was listened to my agent and cut the price by $50,000 to $100,000 early on, and the property would have sold last October.” Or, even better, he said, “I should have listed it a month earlier,” when the market was only just beginning to lose air.

Now Stevens, like so many other home sellers in the Washington area and around the nation, is waiting for a buyer in a market that has totally reversed course since a year ago. With two or three times the number of properties listed this year as last in some neighborhoods, agents are urging sellers to lower their expectations, put on their best face and offer incentives such as closing cost help.

Stevens does have a better excuse than most for not paying attention. He’s been on the road most of the year as head of the 1.3 million-member real estate organization, the nation’s largest trade group. And when he’s at his current home in Vienna, “I’ve been downtown lobbying.”

He and his wife, Lindy, were also preoccupied in the past few years with remodeling the home they now live in, a 100-year-old farmhouse called Windover House. They bought that property in 2001 for $1.3 million. It’s now assessed at almost $2.8 million, a testament to the hot market.

The Great Falls Colonial that’s for sale was the Stevenses’ previous house on Woodleaf Lane, their first home after they married. They bought the two acres of land in 1979 for $49,500, and took out what now sounds like a high-interest construction loan. Stevens remembers how unnerving those days were: “Rates went all the way to 19 percent, and my wife said we would not be able to afford to buy. . . . But we grabbed a 12-and-a-half percent loan and we thought we had struck gold.”

Stevens said that when he set the price for the four-bedroom, 3 1/2 -bath Great Falls property, his agents, Gail and Terry Belt of Coldwell Banker Residential Brokerage in Vienna, warned him that he might be high. And they have continued to remind him about the shifting market.

“They sent the letter telling me the listing was approaching a year” and that the price needed another look, he said. “They’re doing their job as agents. I’m not doing my job as a seller.”

But, he noted, in his defense: “Who knew last September how long this down trend was going to continue,” after so many years of climbing upward?
When asked how long sellers should expect a sale to take these days, Stevens said 40 to 60 days would be typical. And if a house hasn’t moved by then, he said, “You need to adjust the price. . . . But I didn’t do that. And my house is still on the market.”

© 2006 The Washington Post Company