Coworkers argument that house prices won’t fall…

[citydweller]

bsrsharma, regarding your comment,

“1. 80% or so of homes sold after about 2002 have explosive ARMs.”

does anyone know the total number of homes that have been sold since 2002? In other words, if 100,000 sales were made in the past 5 years, then that would mean there are 80,000 with explosive ARMs.

I’m just trying to get a feel for how many homes in S.D. are in trouble. I realize we would need to add to that number the homeowners who have HELOC’d themselves into trouble.

BTW, I live in a gated complex in Mission Valley and when I got home today there was a Notice of Trustees sale taped to the entrance gate. I wish I had a digital camera, I would’ve posted a picture of it.

[PerryChase]

Ray, commodities prices are down from the boom years.

As demand drops, commodity prices drop as well.

Here are the prices for lumber. Look and compare to 2004 prices.
http://www.nahb.org/generic.aspx?genericContentID=527

When construction slows, constractors cut their profit margins just to keep their crews busy. That happens every time in every downturn.

Construction costs are going down, not up.

It sounds like you’re bringing up the replacement cost of buildings argument. Well, there are plenty parts of America where houses have droped below replacement costs. In Detroit houses are selling below the cost of building a new house so the cost of land is actually negative. But there are still no buyers.

As far as entitlements go, they are part of the cost of land and have nothing to with the physical buildings themselves.

[PerryChase]

Ray, commodities prices are down from the boom years.

As demand drops, commodity prices drop as well.

Here are the prices for lumber. Look and compare to 2004 prices.
http://www.nahb.org/generic.aspx?genericContentID=527

When construction slows, constractors cut their profit margins just to keep their crews busy. That happens every time in every downturn.

Construction costs are going down, not up.

It sounds like you’re bringing up the replacement cost of buildings argument. Well, there are plenty parts of America where houses have droped below replacement costs. In Detroit houses are selling below the cost of building a new house so the cost of land is actually negative. But there are still no buyers.

As far as entitlements go, they are part of the cost of land and have nothing to with the physical buildings themselves.

[PerryChase]

Ray, commodities prices are down from the boom years.

As demand drops, commodity prices drop as well.

Here are the prices for lumber. Look and compare to 2004 prices.
http://www.nahb.org/generic.aspx?genericContentID=527

When construction slows, constractors cut their profit margins just to keep their crews busy. That happens every time in every downturn.

Construction costs are going down, not up.

It sounds like you’re bringing up the replacement cost of buildings argument. Well, there are plenty parts of America where houses have droped below replacement costs. In Detroit houses are selling below the cost of building a new house so the cost of land is actually negative. But there are still no buyers.

As far as entitlements go, they are part of the cost of land and have nothing to with the physical buildings themselves.

[SD Realtor]

Rad – The hardest thing about my job is that so many many sellers I meet are blinded by emotion. It really is a touchy subject and I am sure most everyone here has run into similar conversations with other friends and coworkers. In fact, in social settings I pretty much don’t give my thoughts unless I am asked.

I think that there is some merit about the majority of sellers are not distressed is losing steam everyday. The simple fact is represented in the short sale monitor. It is undisputable that the percentage of distressed sales verses the total homes for sale is growing EVERY WEEK! The only caviot to this argument is that the distressed sales will grow at different rates in different zip codes in my opinion.

At any rate, in the long run you will be proven to be correct. Just don’t rub it in.

SD Realtor

[SD Realtor]

Rad – The hardest thing about my job is that so many many sellers I meet are blinded by emotion. It really is a touchy subject and I am sure most everyone here has run into similar conversations with other friends and coworkers. In fact, in social settings I pretty much don’t give my thoughts unless I am asked.

I think that there is some merit about the majority of sellers are not distressed is losing steam everyday. The simple fact is represented in the short sale monitor. It is undisputable that the percentage of distressed sales verses the total homes for sale is growing EVERY WEEK! The only caviot to this argument is that the distressed sales will grow at different rates in different zip codes in my opinion.

At any rate, in the long run you will be proven to be correct. Just don’t rub it in.

SD Realtor

[SD Realtor]

Rad – The hardest thing about my job is that so many many sellers I meet are blinded by emotion. It really is a touchy subject and I am sure most everyone here has run into similar conversations with other friends and coworkers. In fact, in social settings I pretty much don’t give my thoughts unless I am asked.

I think that there is some merit about the majority of sellers are not distressed is losing steam everyday. The simple fact is represented in the short sale monitor. It is undisputable that the percentage of distressed sales verses the total homes for sale is growing EVERY WEEK! The only caviot to this argument is that the distressed sales will grow at different rates in different zip codes in my opinion.

At any rate, in the long run you will be proven to be correct. Just don’t rub it in.

SD Realtor

[GoUSC]

I make a point not to gloat or anything. We are close colleagues and it was more healthful discussion than anything. We have a project on the tables that has 4000 residential units so that’s why we are discussing it. We have another 2 years of entitlement on the project. Before anyone says anything we are looking at 15 year absorption on that residential and some of it is for-rent product.

Anyway he is debating whether to sell his home in Muirlands and buy something bigger or remodel his existing home. I think he bases a lot of his information on what he sees in his market. His neighbor but his smallish house on the market (2000sf) and had 4 full price offers (in the millions) the first week (2 of which were all cash). The simple fact is that while the housing market is falling, there are always extremely rich people out there ready willing and able to buy. I think our conversation today really cemented him to remodel the existing home. The fact is home contractors are desperate for work right now and it’s a great time to get great pricing for a remodel.

Oh in case anyone is interested in seeing our project it is at http://www.quarryfalls.com.

[GoUSC]

I make a point not to gloat or anything. We are close colleagues and it was more healthful discussion than anything. We have a project on the tables that has 4000 residential units so that’s why we are discussing it. We have another 2 years of entitlement on the project. Before anyone says anything we are looking at 15 year absorption on that residential and some of it is for-rent product.

Anyway he is debating whether to sell his home in Muirlands and buy something bigger or remodel his existing home. I think he bases a lot of his information on what he sees in his market. His neighbor but his smallish house on the market (2000sf) and had 4 full price offers (in the millions) the first week (2 of which were all cash). The simple fact is that while the housing market is falling, there are always extremely rich people out there ready willing and able to buy. I think our conversation today really cemented him to remodel the existing home. The fact is home contractors are desperate for work right now and it’s a great time to get great pricing for a remodel.

Oh in case anyone is interested in seeing our project it is at http://www.quarryfalls.com.

[GoUSC]

I make a point not to gloat or anything. We are close colleagues and it was more healthful discussion than anything. We have a project on the tables that has 4000 residential units so that’s why we are discussing it. We have another 2 years of entitlement on the project. Before anyone says anything we are looking at 15 year absorption on that residential and some of it is for-rent product.

Anyway he is debating whether to sell his home in Muirlands and buy something bigger or remodel his existing home. I think he bases a lot of his information on what he sees in his market. His neighbor but his smallish house on the market (2000sf) and had 4 full price offers (in the millions) the first week (2 of which were all cash). The simple fact is that while the housing market is falling, there are always extremely rich people out there ready willing and able to buy. I think our conversation today really cemented him to remodel the existing home. The fact is home contractors are desperate for work right now and it’s a great time to get great pricing for a remodel.

Oh in case anyone is interested in seeing our project it is at http://www.quarryfalls.com.

[SD Realtor]

Yeah I think his point of view is seriously affected by his locale. Not many distressed sellers in that part of the city.

SD Realtor

[SD Realtor]

Yeah I think his point of view is seriously affected by his locale. Not many distressed sellers in that part of the city.

SD Realtor

[SD Realtor]

Yeah I think his point of view is seriously affected by his locale. Not many distressed sellers in that part of the city.

SD Realtor

[Ex-SD]

Tell him to look at this site to get a grasp on what’s happening in the bubble markets around the USA.

http://bubbletracking.blogspot.com/

When distressed owners slash their prices to get out of their financial nightmares or let the house go to foreclosure and the lender takes whatever the market will give them to get the property off their books, the actual selling prices will be the new values for the respective neighborhoods. If someone bought a house in X-area in 2003 for $500k and a similar house sold across the street in 2005 for $625k………..but two or more desperate sellers or foreclosed similar properties in the same neighborhood are put up for sale and close at $400k in the next couple of months, the real value has now become around $400k. That’s the reality of real estate values…….period. It doesn’t matter what someone paid in 1990 or 2006: What is relevant is how much equivalent properties in the same market/area are now selling for.

[Ex-SD]

Tell him to look at this site to get a grasp on what’s happening in the bubble markets around the USA.

http://bubbletracking.blogspot.com/

When distressed owners slash their prices to get out of their financial nightmares or let the house go to foreclosure and the lender takes whatever the market will give them to get the property off their books, the actual selling prices will be the new values for the respective neighborhoods. If someone bought a house in X-area in 2003 for $500k and a similar house sold across the street in 2005 for $625k………..but two or more desperate sellers or foreclosed similar properties in the same neighborhood are put up for sale and close at $400k in the next couple of months, the real value has now become around $400k. That’s the reality of real estate values…….period. It doesn’t matter what someone paid in 1990 or 2006: What is relevant is how much equivalent properties in the same market/area are now selling for.

[Author]

Posts