The bubble that preceded this market was never seen before so its unwinding should be expected to be the same.
Zack, we've seen it before. In fact, we had banks and mortgage companies go belly up in 1989-1993. Lots of foreclosures, lots of builders walking away from half built projects. What is sad is we've made the same mistakes again.
What will happen is some area will begin their comback before other areas. When the number of homes on the market in a given city goes down, that means prices will start to rise.
Today's market is not nearly as bad as that period in the 80's. Sales volume is up over 30% in our office YTD. It's ALL about the price. In order to price a house correctly you basically have to throw the sold information out the window. Homes need to be priced competitively with their current competition. Buyers don't look at sold homes when shopping for a house. Homeowners need to know that. If they tell you the house down the street (which always is not as nice in their opinion) sold for a certain amount and they should get more, you have to educate them. Buyers are not going to look at that house down the street. It's gone. It's ancient history. It's a Realtor's responsibility to educate the homeowner as to market conditions. If someone really wants to sell their home it should be priced 2-5% below active comparable listings. Keep in mind those active listings haven't sold and may be priced to high. You need to be BELOW the other competition. The homeowner will end up with more money in their pocket if a home is priced correctly from the start.
The market is fine. All people have to do is stop watching television and reading the newspapers.
Thanks for getting back to the post. I've had trouble finding decent data from the 80s, but was just curious of the time frame you were referring to.
As for the average prices, i agree, they do not look like a bubble, and the market in westchester wasn't as ridiculous as california, etc but it still grew much more rapidly than was sustainable. This is true upstate ny also where I have a number of friends who bought houses in the past 3 years. The availability of credit to anyone with a pulse saturated the market with buyers that had no business buying. This caused unsustainable appreciation in the majority of the country.
I probably qualify as a doom and gloomer you're talking about but I'm far from alone. The United Guaranty corp, one of the large mortgage insurers, has declared all of westchester as a declining area and is requiring more money down. The declining markets are listed by zip code so they believe many of our local markets are in decline. Up until last month when we gave up our search in westchester, we found that many sellers are still asking crazy prices, like you mentioned the 80s were like, and the automated emails I get show about twice as many price reductions per day as new listings. That said, as your post supports, I don't think we'll see a large downward correction in westchester area, but a very long flat period. Given the closing costs and taxes in westchester though, a long flat area is very expensive.
One thing I can't figure out though is how homeownership became the american dream? I'm an american, and I've never dreamed of owning my own home. I own my co-op now but it surely hasn't been a dream. My dream is to retire by 40 and spend my days watching my daughter play soccer or whatever else she chooses to play and spending time with my family. With the current cost of ownership in westchester county, buying a house will make that goal nearly impossible.
Thanks again for clarifying the dates. When I get home tonight I'll see if I can find some better data around the area as I'm now genuinely curious.
2005 - $446,832
2006 - $467,764
2007 - $472,087
2008 - $475,508
Where's the bubble? These are actually statistics taken from the local MLS as of 1:23 this afternoon. Do you see any indication of a bubble anywhere in these prices? I don't. Needless to say, the statistics in Las Vegas, Southern CA, Florida and a host of other places will be quite different. The doom and gloomers don't differentiate between areas. I'm just getting a little tired hearing about how bad things are in real estate when it is NOT the case in my area. This is not from an NAR memo. Owning a home is still the American dream. Rent never ends, but a mortgage does.
Sorry, I do not have hard stats for the late 80's market (starting around 87) and the downturn at that time. I bought a house in late 1988 and was looking for quite a while before purchasing. I never saw so many for sale signs in my life. Problem was, they were still asking crazy prices. From 83-86 prices seemed to triple. By late 86 inventory was through the roof. There is your bubble. Although prices appreciated at a rapid rate from 2002-2005, it was not nearly what it was in that earlier period.
What period of the 80s are you referring to? I've heard others refer to the time up until about 1987, is this what you mean? I'm looking for meaningful data to compare the 2 bubbles, right now I've found this: http://www.economagic.com/em-cgi/data.exe/cenc25/c25m01 Although it uses median home price which is generally unreliable because its skewed by new construction. As for the entire country though, that skew should be rather small. The C-S index which takes this into account and fixes the problem by using only resales only goes back to 1987 which only catches the end if that's the time frame. Looking at the data on that page above, it does appear the changes in the mid-late 80s are similar to what we've seen now, although the downslope has been worse this time around. That might be part of why you're seeing increased sales now as the downturn has been fast and furious in many markets this time, where as previously, it seems prices just sat at the same level for nearly 10 years letting inflation do the erosion. I'm trying to find some better data and if you know where i could find one, I'd appreciate it.
Make the market! I can definitely say that I'm working harder, smarter and tenacious and my closing average is 1 monthly. With the amount of hours I'm putting in - like right now - I can say that when things start to open up more - i.e. buyers get off the fence - then I'm thinking 1 closing a week - minimum. The flood gates are going to open for me because I'm working harder and smarter. My business is edgy and I'm continuously searching out new ways to attract clients. Looking for a niche specifically that offers the most opportunity. I know short sales are becoming more popular - but they're a real "b". I have my thoughts on the areas I'm focusing on - but that's my secret :)
Anyhow - make the market. It's "bad", but if I mean, you've got to be hitting the phones now more than ever - referrals - touching base with EVERYONE you know. I mean with 27 years - you've got to have a lot of contacts - call people you haven't talked to in a while. Get that Christmas mail out list and make calls rather than just send out another list. Touch base with all your clients one by one. Saying "What's up - I've got this new program I'm working and it offers...."