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NY Times didn't cheer me up today

Posted by hddana (My Page) on
Wed, Jul 20, 11 at 10:30

Today it reports that there were fewer existing homes bought, there are fewer first-time buyers, and that the number of contracts backed out of reached a record, and assorted other bad news about housing.

The DD's house, up for sale since April, with one price reduction, is not getting any lookers to speak of since the first week. Last week's online viewing (except realtor.com) is down from 125 to 25.

We have two lots waiting for the DH to build us some new homes with more land for the grandsons to roam and enough space for us to add rooms so our son can move in with us. Sigh. We are waiting to DD's house sells, then we'll go on the market next spring...or sometime later. This mess is beginnng to affect even pretty good markets.


Follow-Up Postings:

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RE: NY Times didn't cheer me up today

I don't know about the NYT data, but here in suburban DC, well-priced homes in good condition are selling like hotcakes. Our house sold (albeit at a huge loss from money spent on renovations) in 2 days with 4 offers (2 at full price). We fought the same market in Illinois. Anything in good condition that was priced well sold within days of going on the market. The market is telling DD something. Condition or price are the problem. She will need to make a choice. Sell at a lower price or wait to have room for her sons to roam. In our case, it was worth reuniting our family to take the big loss on our house.


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RE: NY Times didn't cheer me up today

Here in central NJ the same is true. Well priced homes in good condition sell quickly.

The problem is in our area is that there is a glut of high priced homes..most bought when the market was very high...listed for a price that they no longer can command.

In addition, so many are the cookie cutter McMansion type, that only the most outstanding in terms of presentation, price and appearance move to sale.

It is pathetic to see how many 4000SF plus homes are out there, with in ground pools, patios that would knock your socks off, and an interior that has not much more furniture than a one bedroom condo. They scream "My owners can't afford me" which undoubtedly leads to low ball offers, probably for less than what is owed on the mortgage.

The homes priced under 500K are those that see the most activity. However, I have heard of three recent contract cancellations due to the homes needing repairs to the tune of 50K and above.

That said, the market in this area seems to be getting back to some semblance of normalcy. People who want to sell need to bite the bullet and make repairs and adjust price...or their homes will be sitting for a long time.


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RE: NY Times didn't cheer me up today

A couple I know sold their My Airy (Philly - PA) in three weeks and got their asking price.


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RE: NY Times didn't cheer me up today

I keep selling my house but then my buyers can't get the mortgage for one reason or another.

Logic, funny you should say that about the fancy houses having no furniture inside. My family has an appliance repair business up there. They go into homes in expensive towns like Deal, Rumson, Colts Neck, etc. I can't tell you how many times they've reported that a mansion, a real mansion, not just the McMansions, have no furniture inside.


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RE: NY Times didn't cheer me up today

I find the disconnect in people's minds between Wall St. and Main St. to be quite interesting. The two are inextricably intertwined, yet most consumers don't see the cause/effect.

Sales are down because people can't get mortgages easily. Banks are reluctant to extend credit because every loan requires cash reserves to be set aside. Cash reserves must be held in liquid instruments, the safety of which is growing increasingly precarious as the bond market is buffeted by global economic upheaval.

Thus, fewer loans are offered. Credit tightens for everyone as margins fall. The largest sources of income for banks, which are fees, have become constricted by the Dodd-Frank legislation (a poorly written monster at best) which Main St. demanded. Poor earnings = weak stock prices = less ability to make loans of any sort except to the highest-rated credit prospects and/or limited amounts.

Every time a lawsuit is filed against a bank to stop a foreclosure, other banks slow down their own past due pipeline because without legal clarity as to what their liability might be, they can't accurately forecast losses and earnings, for which Wall St. punishes their stock price.

I'm not assigning blame to anyone...just pointing out the way the whole process works. Banks fear regulators more than consumers fear the IRS. I worked in a bank and we got our loans audited four times a year - EVERY YEAR. Not for loan soundness - that's the responsibility of a bank's loan review committee - but for accuracy of paperwork. It was a file clerk's nightmare; in thirty-five years of admin/ops work in several different industries, I've never encountered a more complex and tedious filing system, with literally hundreds and thousands of sheets of paper for every loan.

Foreclosures/short sales and new home loans will continue to move through the pipeline, but at a very slow pace until the whole liability issue is fully settled. The shaky futures of Fannie/Freddie are also a huge drag on the mortgage market.

You want government out of mortgage loans so we can shrink Washington DC? Sure, you can do it, but there will be higher credit costs and fewer mortgages as a result. It's the way the system works, and unless you want to establish a tyranny and privatize the entire US financial system to overhaul it from the ground up, no amount of Congressional tinkering is going to change things.

Hitler did it and it worked. But I don't think I want to live under that, and probably none of the people on this forum want to either.


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RE: NY Times didn't cheer me up today

jkom51,
Good explanation on a couple of reasons why home sales are slow. But the biggest reason is that consumer confidence is at all time lows.
FYI... I have NEVER had a buyer be turned down for a loan if the buyer meets the loan requirements. Not one. It is just not true that banks are refusing to lend to qualified people. Banks ARE lending. They just are not lending to people with low credit scores, people not gainfullt employed or people who do not have the required cash. Go figure.


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RE: NY Times didn't cheer me up today

"Sales are down because people can't get mortgages easily. "

That is part of the issue, but the bigger issue is that we have super high unemployment. Somewhere around 20% of people have been unemployed sometime in the last 3 years. They've generally depleted their savings and many have blemishes on their credit now.

Additionally, many people are underwater in their homes and cannot sell them in the current market. It takes a willing and able buyer and a willing and able seller to make a transaction happen.

BTW - my county numbers have sales UP compared to last year recently but prices continued to decline. At least in my area, I think that trend will continue - moderate increases in sales and small declines in sales price. Even if employment starts to pick up, there is a lot of excess inventory out there already and a lot more potential sellers that have been on the sidelines waiting for the market to improve. It is going to take a while to work through all that.


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RE: NY Times didn't cheer me up today

Lower the asking price. If they aren't even getting lookers, they must be priced way too high.

If they aren't sure what to price, spend a few hundred dollars for an appraisal. Tell the appraiser they want to know try market value so they can price it correctly, and sell it.

Else they are wasting their time on the market if the home is priced too high.

Sadly, true market values are shocking sellers all the time. Even homes in good condition, with many upgrades, are worse way less then many owners thought.


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RE: NY Times didn't cheer me up today

jKom51...the banks get to borrow money from the fed at almost 0% interest. That more than makes up for the "fees" as before that, they had to do their overnight borrowing from other banks...using a middleman company in order that their "need" be kept confidential from their competitors..and they paid a VERY hefty fee for those transactions..which they no longer pay.

Please do not buy into the spin.


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RE: NY Times didn't cheer me up today

"jKom51...the banks get to borrow money from the fed at almost 0% interest. That more than makes up for the "fees" as before that, they had to do their overnight borrowing from other banks...using a middleman company in order that their "need" be kept confidential from their competitors..and they paid a VERY hefty fee for those transactions..which they no longer pay. Please do not buy into the spin."

The biggest banks never should have been allowed to receive TARP in the first place. They should have been allowed to fail (as well as indicted) for playing ponzi games with their books at the TAXPAYERS expense.

Now they are more at risk of failing than ever. Investors beware.

A link that might be useful:

www.moneyandmarkets.com/government-lying-about-debt-crisis-what-to-do-45511


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RE: NY Times didn't cheer me up today

Agreed dreamgarden.


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RE: NY Times didn't cheer me up today

>>the banks get to borrow money from the fed at almost 0% interest. That more than makes up for the "fees" as before that, they had to do their overnight borrowing from other banks...using a middleman company in order that their "need" be kept confidential from their competitors..and they paid a VERY hefty fee for those transactions..which they no longer pay.>>

Ummm....not always true, I think. Banks borrow money for different reasons, and the terms are always negotiable. The usual base was the LIBOR rate, but not always. Depending upon how the DODs were structured and the financial arrangements a bank would negotiate, the rate could be less (e.g., minus basis points) or more (plus basis points) over the base rate.

On one huge corporate borrowing for which I handled the paperwork, the loan was eventually coinsured out to a consortium. The lead bank (where I worked) paid less than 25 basis points over zero for the DOD, at a time when interest rates on mortgages were over 10%.


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RE: NY Times didn't cheer me up today

I live one town over from Hddana in TX Hill Country and I'm shocked at how the houses in my neighborhood are selling. These are fairly priced, good condition homes and they are selling within days of going on the market. One house that is overpriced has been sitting for months now - you would think they'd get a clue!


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RE: NY Times didn't cheer me up today

JKom51, I didn't say it was always true, but
it is most of the time.

Here is a link that might be useful: Fed Fund Rate


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