Growing majority avoid buying
When you’re in the middle of an investment mania it’s hard to imagine things ever being any different. A couple of years ago a number of Americans thought investing in real estate in cities like Las Vegas, Miami or San Diego was a great idea - if the market stopped going up it would simply stop appreciating as quickly, prices would never go down.
Well after two years of lower sales and slowly dropping prices pessimism has started to overtake the US housing market with a growing majority showing no interest in buying a home anytime soon:
In a vivid sketch of how the sputtering real estate market is causing distress throughout the country, the Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won’t be able to make their monthly payments on time over the next six months.
“This is a great time to buy, but not necessarily to sell,” said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can’t because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.
…
Sixty percent said they definitely won’t buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.
The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling — good if you’re buying a house but bad if you have to sell one.
The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.
Underscoring the public’s unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced — especially in the Northeast — while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners.
Here in Vancouver with our run-up in house prices it’s hard to imagine the majority of residents having an overall negative outlook on investing in local real estate, but it’s happened here before and I wouldn’t be surprised to see it happen again when the market corrects.
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April 14th, 2008 at 4:02 pm
We will probably look at leaving Vancouver in a few years if nothing changes for the “better”, which leaves this BC native rather disgruntled.
April 14th, 2008 at 4:02 pm
Things are looking very precarious right now.
April 14th, 2008 at 4:15 pm
It seems that by the time everyone’s who reads the blog (mostly bears and trolls) has had a chance to vote, we’ve moved onto another topic.
Also, when I access from another computer, I like to see the results without having to vote again
April 14th, 2008 at 4:23 pm
http://www.skyscrapercity.com/showthread.php?p=18834213
April 14th, 2008 at 4:25 pm
The developers will throw in incentives such as cars, or will pay your mortgage x months, years, free car, vacations, etc.
The small time flippers won’t be able to match the hidden price slash and will keep hanging on until the inventory swells.
By the time the greedy fools wake up from their denial, it will be Florida of the North.
I can see a scheme in the works where the developer will give you a free condo, if you finance it through them-”easy terms”, no down payment, and you get a cell phone with it!
April 14th, 2008 at 5:02 pm
The amazing thing I find with all of the bull’s that I’ve run into is that they could care less about any stats/figures/anecdotes you come up with, NOTHING matters as long as the value of their house goes up.
He lives in Coquitlam, so I showed him the inventory graph on PaulB’s site for Coquitlam. Nearly double the inventory of last year. His response? “That inventory is for houses you can’t afford. All of that inventory is for 4/5 bedroom houses.” We couldn’t convince him otherwise, it was quite something. And yes, according to him this is the best place on earth, everybody wants to live here and prices will never drop, BUT they *might* stall for a bit.
The new guy that brought this up also lives in Coquitlam, he owns a house that has doubled in value, but he brought this up because he thinks prices are about to drop. The graph made absolute sense to him since he said the number of for sale signs, especially on condos, is staggering.
April 14th, 2008 at 5:24 pm
April 14th, 2008 at 6:11 pm
April 14th, 2008 at 6:41 pm
April 14th, 2008 at 7:25 pm
.
The coming crash is so damned obvious that it’s no wonder that the glimmer of hope from recent buyers is fading rapidly, and with markets tanking all around us it’s bloody well time for the few remaing fools to remove the blinders and wake up.
Those previous crashes of 81, 90, and 95 all coincided with recessions. It is no coincidence that inventory is growing at an unprecedented rate and the excitement on these forums is approaching fever pitch. There is little doubt that history is ready to repeat.
It’s a perfect storm, and this could be the biggest bust many of us are likely to witness in a lifetime.
April 14th, 2008 at 7:29 pm
is like a rat runs to cross the border
“there go two more young professional high-income earners”
are you kidding?if not why can’t you buy something?
“leave and go bargain hunting states-side”
Oh Really then how much would you sell it for later if you have to?I guess on current market prices and how much would you buy?I guess on current market prices.
“Why the hell would I want a 1/2 million dollar mortgage?”
to save your investment from drowning-do you know? Resteven has sold his house last year and moved to California and bought a place there since than the market went down in that area around 25% in that case the gain he earned over here has gone into the pipe there-A punishment for bitterness towards “the best place on earth”.
“there wil be a flood on the market”
2.5 million people and 13,100 re-sale homes almost 10-11,000 of them are there to trade,to change hands from one-two bed,two-three bed,three-house.
left over 2,000 are listed for new buyers-
Stop complaining-if you can not afford where ever you are just move around to 360 degree find some thing to suit your income.
Those who are selling their homes will never be able to buy back on same and lower than that.
April 14th, 2008 at 7:45 pm
Good to see you back!…I thought you had left wih your tail between your legs. I always get such a kick out of your nonsense posts….I mean the bits I actually understand.
April 14th, 2008 at 7:54 pm
brings out the anecdotes that really tell the
story….. except for the last post.
was hoping satv would be RE roadkill by now!
April 14th, 2008 at 7:59 pm
http://preview.tinyurl.com/6no533
Please don’t use this to forecast the end of the Vancouver bull market, because we have a magic bubble that protects our market from real-world fundamentals.
April 14th, 2008 at 8:03 pm
i used to do those in the pool until i was permanently barred from swim class…..
April 14th, 2008 at 8:12 pm
Yes, we became bitter, and that is why we should better go before turning sour.
And no, we won’t wait for the crash, because even if it goes down 30%, it will still be too expansive. And do not run the numbers for us: we are willing to repay our mortgage in 6-7 years. Period. (btw, we want a nice house with a yard).
April 14th, 2008 at 8:25 pm
I lived 5 years in California, and it’s nice, but I find it all too consumerist. Maybe I haven’t spent enough time on Robson lately.
Did I see that Ozzie Jurock video right? Did he say that the 800k median was for all of Vancouver - from Mission to the West End, with a median W.Ender now $2mil and and E.Ender $1.2mil. Holy shoot.
April 14th, 2008 at 8:28 pm
There was no recession in 95, nor was there an RE crash - rather a slow bear market throughout the late 90’s. Many sectors of the BC economy were doing very well, particularly high tech and film making. Really as the US goes so goes BC and the US economy was growing strongly at the time.
Prices started falling in 95 simply because they had gotten too damn high - supply outrunning demand. Real prices in 95 were very close to the peak reached in 81.
A definite contributing factor was the reversal of immigration from HK and the HK RE bust in the late 90’s (so much for the “running out of land” argument) which resulted in the repatriation of a lot of HK money from Vancouver RE.
I know a lot of people didn’t like Glen Clark and I’m not a fan of his either (one big reason being he was responsible for bringing the 2010 Olympics to Vancouver, which to a large extent has enabled the current RE mania), but the BC economy did grow during his tenure.
April 14th, 2008 at 8:47 pm
Arbitrage, I leave the polls open rather than set an arbitrary time to close them. I’ve added a ‘polls’ category that lists all the stories with polls attached - you can view it here:
category/poll
I’ll look into making a page that just shows the poll results, but that will take more time and may not happen if it’s too complicated or time consuming.
April 14th, 2008 at 8:57 pm
polls
April 14th, 2008 at 10:49 pm
Isn’t this backwards? If the market is falling, how is it “good if you’re buying”? Frankly, it’s better to be selling than buying since you can sell your house today and buy it back in the future for less.
But maybe I’m just not the sharpest tool in the shed.
April 14th, 2008 at 10:51 pm
Over the weekend we were visiting a sunny, warm place. Yup, Edmonton had a heat wave Sat/Sun. We went for a nice look around the neighborhoods south of the university. Decent houses selling for mid 300s, really quite nice stuff in the mid 400s. My friend is looking to move up to one of these houses. His realtor completely acknowledges that prices are falling because inventory is very high compared to last year (although she still thinks he should buy fairly soon because “it could change”). I’ve been up to Edmonton a couple times before for work. Didn’t get a proper look around until this time. Seems like a decent enough place and has an economy that I can understand. Maybe vancouver’s worth a 10-20% premium for the weather, but 100% mark-up seems like a lot.
April 14th, 2008 at 11:40 pm
There are a lot of good reasons why Edmonton has been historically cheap and I don’t think they’ve gone away.
April 15th, 2008 at 5:29 am
It’s all changed. Western Canada, and by extension, Edmonton, is now the center of the Universe.
Apparently China and India are all we need.
Read Diane Francis new book!
And you do believe everything she says don’t you?
What ulterior motives would she have in promoting the mining and oil sector?
April 15th, 2008 at 8:28 am
Personally as I’ve said before prices are approximately 3x what they should be and when the crash happens prices should drop to around 1/3 of current levels. 10% or 20% is a fool’s game, that would have been just like buying a year or two ago when prices were already over double any sustainable level.
April 15th, 2008 at 8:29 am
“Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.
But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.
Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.”
April 15th, 2008 at 9:03 am
To be realistic, unless you have a lot of hard cash, you cannot buy real estate during a downturn. Financing would be more difficult and banks won’t lend you money.
April 15th, 2008 at 9:23 am
you can if you have 20% down, solid credit and a 6 figure plus income… you have to remember that in times like the bank are desperate for decent clients as those without have dried up/gone away/declared themselves bankrupt.
April 15th, 2008 at 9:31 am
April 15th, 2008 at 9:31 am
“This blog is full of bears, who missed the train.”
That’s OK, the train is on a loop track you see, so it’s better to wait comfortably than to kill yourself running behind the train to hang on and be dragged for a few miles before either being pulled under the wheels or dumped in a ditch when you can’t hang on any longer.
Relax, get a magazine, enjoy some sun. The train will be back and I hear if you buy at the right time you get a really good discount on tickets!
April 15th, 2008 at 10:23 am
April 15th, 2008 at 10:24 am
So if the market turns there will be little to stop it on the way down.
Not very comforting.
April 15th, 2008 at 10:35 am
All homes________Mar-07_____Mar-08___%Chng
Los Angeles____$540,000 $440,000 -18.50%
Orange________$629,000 $506,000 -19.60%
Riverside______$420,000 $306,250 -27.10%
San Bernardino_$369,000 $265,000 -28.20%
San Diego_____$490,000 $395,000 -19.40%
Ventura_______$566,750 $430,000 -24.10%
SoCal________$505,000 $385,000 -23.80%
Source.
April 15th, 2008 at 10:52 am
Presented without malice…just a sigh of resignation
April 15th, 2008 at 11:31 am
.
.
jadeeast said:
“so if the market turns there will be little to stop it on the way down”
I love it! a priceless response to alum’s attack on bears by claiming that “unless you have a lot of cash, you cannot buy RE during the downturn”….where do these idiots come from?
BTW, no question about “if”, the market is turning RIGHT NOW.
April 15th, 2008 at 11:34 am
Well I can tell you that the lenders were more than happy to extend financing on the usual terms back in ‘83, and of course that was the biggest RE bust since the great depression.
But I do hope you’re right about your prediction, because I’m going have a doozer of a down payment for my next purchase. I kind of like the sound of “take it or leave it”.
April 15th, 2008 at 2:05 pm
April 15th, 2008 at 2:19 pm
Otherwise, as long as prople have jobs and there no massive layoffs (as in the US), a crash is not on the horizon.
April 15th, 2008 at 2:24 pm
Except in the US the cart went before the horse. That is, the depreciation started BEFORE the recession (which is only now becoming apparent), which is just now starting to cause layoffs. I think we’ll be seeing the same thing here.
Look at all the other markets that are deflating now. The sole reason for the pop has been the reaching of affordability limits, the exhaustion of demand and the general change in psychology.
Just because you can throw a ball real high in the air doesn’t mean gravity no longer applies.
April 15th, 2008 at 2:31 pm
This is where the bulls get it wrong. Many of the bears I know:
a.) Have great jobs with solid incomes that make them a good lending risk in any economic climate.
b.) Simply haven’t bought because they are perhaps more cautious/responsible with their financial commitments or can’t swallow the crap that can be bought at current overvalued prices. Many I know personally have also stayed debt free during this entire bubble.
and…
c.) Have a solid downpayment saved ready when the time (and price) is right and the mortgage they choose to take on makes more sense against their debt/income ratio.
Lending practices (way back when
used to based on some level of risk assessment. Too bad we got away from that huh? Its not going to be the bears that have trouble finding financing….I’ll bet my nestegg on it.
April 15th, 2008 at 2:31 pm
2008-04-15 14:19:25
There might be a period of slow price appreciation. I will only imagine a price drop if there is a pressue from lenders calling their mortgages.
****
Thanks Alum,
I will be sure to base the largest purchase of my young life on what you “imagine”…
April 15th, 2008 at 2:38 pm
“There might be a period of slow price appreciation. I will only imagine a price drop if there is a pressue from lenders calling their mortgages.”
You see, the problem I have with statements like this is that historically;
A) that’s what is said in nearly every bubble near the end.
and B) There are reams of evidence to contradict you and yet you present no evidence to support your case.
Which leads to the conclusion that you are either;
A) Completely deluded.
or B) Hoping to trick others with your shenanigans because one way or another you make money from the housing market.
April 15th, 2008 at 2:57 pm
Lemmings who haven’t done their due dilligence and buy to “make easy money” deserve as much consideration as any unsophisticated buyer who goes and leverages $500k on Oil futures without doing their due dilligence simply because they heard Billy ,from down the street, did it and made big money.
This talk of protecting buyers when they are trying to capitalize on the free market seems silly to me.
Krissh, please stick around as the prices crash 40% this year, it’s going to be fun reading your perception of what’s happening.
If you can understand this question explain what is going to happen when 75% of the newly completed units hit the market as the demand for these new units hits a ten year low.
Try to stay on topic
Cheers!
April 15th, 2008 at 2:59 pm
Sure their IT, film, tourism, agricultural and other industries, as well as their general economy is not quite developed as ours, and they don’t have the population base we have.
Maybe what will keep the bottom from falling out of our market will be the acute land shortage and the huge population we have compared to California.
April 15th, 2008 at 3:01 pm
April 15th, 2008 at 3:03 pm
Brilliant!
It’ll be interesting to see what krissh’ll say to that!
April 15th, 2008 at 3:19 pm
Probably something like this:
They have terrorism and errfquake, and too many illegal alien. Also too much sun and smog. Gas price too high, you have to take car everywhere, we have great public transit and new Canada line! If you live downtown, you can walk - no gas bill!
April 15th, 2008 at 3:30 pm
bdk: maybe the Olympics? Maybe the old lie- “we don’t have subprime” maybe because we grow good pot, because the weather and the soil is perfect in BC? (although it is grown indoors).
Whatever the explanation it will be interesting and quite scientific.
April 15th, 2008 at 4:09 pm
April 15th, 2008 at 4:13 pm
Imagine if they started making movies or decided to get into high tech, they might even give our weed and condo-based economy a run for its money. Fortunately it’s way too sunny so they don’t have the focus to do real work down there.