A change of perception
At a party, new acquaintances react to my profession in one of two ways:
Either they wax eloquent about their real estate war stories or I get treated somewhat like a leper. Among my real friends, the social niceties about my job generally go something like this: “how’s business; it sounds really bad.” or “how’s business; it must be great.”
In January, there was a change. Now my friends and family think that my business must be great. At Thanksgiving and Christmas, everyone thought I must be losing my shirt. Public consciousness is far more fluid than the real estate market.
Housing price increases occur in a delayed reaction to conditions that should stimulate the rise; they fall well after conditions should stimulate declines. Chip Case calls the market “sticky.” It goes up and down like it is swimming through molasses. Real estate price fluctuations take months or years to track. Frequently, one area or town or price range is still rising while others are falling. Eventually, the average goes up or down. The stock market, on the other hand, hiccups regularly. The rise and fall can happen over a few hours, a day, a few days, a few weeks.
So, my friends ask “how is business?” I tell them the same thing that I told them in August and at Christmas and I will again on Super Bowl Sunday: Business is fine. I am happy to see the number of speculators decline, the over-borrowers prevented from financially hanging themselves, and people who really want to buy or trade up getting a better opportunity than they have had for a while.(Those who don’t really want to buy are still sitting on the sidelines, criticizing, as they always do.)
The dropping prices and interest rates are icing on my cake.
I expect I will be saying this over and over this Sunday...go Pats!
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(Those who don’t really want to buy are still sitting on the sidelines, criticizing, as they always do.)
Some sitting on the sidelines are simply too intelligent to catch a falling knife during a record-breaking market decline at the beginning of a recession, especially when banks have run out of capital, writedowns are mounting, underwater homeowners are walking away from their mortgages, and even the chairman of the Fed believes the global financial system has become unstable.
(Those who don’t really want to buy are still sitting on the sidelines, criticizing, as they always do.)
Always do and always will. Believing that one can time the market always fails, wether in stocks or real estate. You dont find out what the bottom is until after we have left it and are on the way back up.
Banks have not run out of capital. Those that do it well are more than funded.
The stories of owners walking away are few and far between. The couple profiled recently on 60 minures made me ill. They dont deserve the right to own. It is a right, a priviledge, not an entitlement.
The Fed is more concerned about a recession than anything else. We are in a global economy, so anything that happens here, will happen abroad. The writedowns are a prime example of this.
Sit and watch, just dont complain next year.
Great stuff Rona, I think it's going to be a huge spring in the wealthy towns as poeple will have money and will be able to get 550k without needing a jumbo. As the lest well off towns loss more and more Tax $ due to forclosers they, will need to get more and more tax money. 10-12k in property taxes for a ranch in ..... may not be that far off. Just like Poland in 1772, partition Southborough, Weston and Andover and many of the Schools would be better off. Come on it's for the kids.
smartmoney, with all due respect, you don't know your facts.
Banks have not run out of capital.
An absurd statement. Countrywide is collapsing into the arms of B of A (after getting a $2 billion infusion that wasn't nearly enough) and shutting off its HELOC outflows, Citi is dependent on massive infusions from foreign sovereign wealth funds, and the industry as a whole is now borrowing its capital reserve requirements from the TAF. Anyone with an Internet connection can check these facts and more easily.
The stories of owners walking away are few and far between.
The Fed--in fact, the Boston Fed--recently released a study published right here in the Globe demonstrating that homeowners giving up on underwater mortgages is the single key driver of the exploding foreclosure rate. Just last week, Fitch rating services released this statement:
Additionally, the apparent willingness of borrowers to ‘walk away’ from mortgage debt has contributed to extraordinarily high levels of early default, which is particularly noticeable in the 2007 vintage mortgages.
Fitch joins a parade of bank CEOs expressing precisely the same worry.
"Sit and watch, just dont complain next year."
Did you say the same thing in 2006 ? 2007 ? I bet this is the bottom right now seeing as though PITI ratios to income and rent are still at historicallt astronomical levels.
This blogger might want to review your comment before posting it.
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