http://www.trulia.com/voices/profile/Other-Chicago_IL-201730/The latest answers submitted by Ryan to questions asked on Trulia Voicesen-ushttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: And I almost forgot! This is the most insightful glimpse into the housing market that I've seen yet: http://www.youtube.com/watch?v=k6jeEJQi8qk Enjoy!Thu, 8 Jan 2009 11:47:54 PSThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Hello friends! Sorry for the many-month absence. After we moved to Chicago in September (we're renting a two-bedroom apartment in NW Chicago, $1,500/month), I became busy with my new job and uninterested in the housing market, so I sort of lost touch with this thread. So I just thought I'd stop by, update my photo (was the St. Louis arch, now the "Chicago Bean"), and let you all know I am still alive. My wife and I are happy here, but work is very slow, and I am often worried about keeping my job. After deciding not to purchase a home, I took what *was* going to be our down payment and used it to pay off 2/3 of my student loans, with the balance going into the stock market, where I promptly lost about 35% within a month. Oh well. I hope you all are healthy and happy, and I will try to check back more consistently. (As a sidenote, I'm very interested in projections for 2009--both for the housing market and for the stock market and economy as a whole. Which direction are we heading? Has the stock market finally factored in all of the bad news? Has it "overfactored" in bad news? Please chime in with your thoughts.)Thu, 8 Jan 2009 11:43:46 PSThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Realtyexec, I never thought I'd get called out for being off of my own topic! "i can cut and past bailout and depression articles and nausea." I think you mean "ad nauseum," Latin for "to the point of nauseum," unless you actually have the stunning ability to "cut and past[e]...nausea." I don't even know how that would work! But I can see your point about keeping this forum directly related to real estate, so I'll try to pull back a bit--I admit we/I have broadened this discussion beyond its initial purpose. But I've also tried (see below about 15-20 posts) to discuss how this current economic crisis affects housing trends and decisions.Wed, 1 Oct 2008 07:39:07 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Great, reasonable article that puts today's crisis in some historical context: http://www.nytimes.com/2008/10/01/business/economy/01leonhardt.html?hpTue, 30 Sep 2008 22:36:04 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: A stroll down memory lane--and a reminder of how we got where we are today. Enjoy this one folks, it's a nine year-old article I've dusted off from the archives: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1Tue, 30 Sep 2008 18:49:30 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: According to the C-S Index, the D.C. market is down 22.1% since its May 2006 peak. It's also down 15.8% year-over-year (July '07 v. July '08 data). So the average buyer who purchased a $300,000 condo in D.C. in May 2006 now "owns" a property worth just $233,700. If that buyer put 20% down on her loan, she has not only lost 100% of her $60,000 equity stake, but she also owes the bank an additional $6,300 if she walks away (not including foreclosure costs which she is also liable for).Tue, 30 Sep 2008 12:52:55 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Revolt of the Nihilists By DAVID BROOKS (NYT editorial article) Published: September 29, 2008 In 1933, Franklin Roosevelt inherited an economic crisis. He understood that his first job was to restore confidence, to give people a sense that somebody was in charge, that something was going to be done. This generation of political leaders is confronting a similar situation, and, so far, they have failed utterly and catastrophically to project any sense of authority, to give the world any reason to believe that this country is being governed. Instead, by rejecting the rescue package on Monday, they have made the psychological climate much worse. George W. Bush is completely out of juice, having squandered his influence with Republicans as well as Democrats. Treasury Secretary Henry Paulson is a smart moneyman, but an inept legislator. He was told time and time again that House Republicans would not support his bill, and his response was to get down on bended knee before House Speaker Nancy Pelosi. House leaders of both parties got wrapped up in their own negotiations, but did it occur to any of them that it might be hard to pass a bill fairly described as a bailout to Wall Street? Was the media darling Barney Frank too busy to notice the 95 Democrats who opposed his bill? Pelosi’s fiery speech at the crucial moment didn’t actually kill this bill, but did she have to act like a Democratic fund-raiser at the most important moment of her career? And let us recognize above all the 228 who voted no — the authors of this revolt of the nihilists. They showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. They did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them. House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds. Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century. With this vote, they’ve taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the G.O.P. as we know it. I’ve spoken with several House Republicans over the past few days and most admirably believe in free-market principles. What’s sad is that they still think it’s 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy. We’re living in an age when a vast excess of capital sloshes around the world fueling cycles of bubble and bust. When the capital floods into a sector or economy, it washes away sober business practices, and habits of discipline and self-denial. Then the money managers panic and it sloshes out, punishing the just and unjust alike. What we need in this situation is authority. Not heavy-handed government regulation, but the steady and powerful hand of some public institutions that can guard against the corrupting influences of sloppy money and then prevent destructive contagions when the credit dries up. The Congressional plan was nobody’s darling, but it was an effort to assert some authority. It was an effort to alter the psychology of the markets. People don’t trust the banks; the bankers don’t trust each other. It was an effort to address the crisis of authority in Washington. At least it might have stabilized the situation so fundamental reforms of the world’s financial architecture could be undertaken later. But the 228 House members who voted no have exacerbated the global psychological free fall, and now we have a crisis of political authority on top of the crisis of financial authority. The only thing now is to try again — to rescue the rescue. There’s no time to find a brand-new package, so the Congressional plan should go up for another vote on Thursday, this time with additions that would change its political prospects. Leaders need to add provisions that would shore up housing prices and directly help mortgage holders. Martin Feldstein and Lawrence Lindsey both have good proposals of the sort that could lead to a plausible majority coalition. Loosening deposit insurance rules would also be nice. If that doesn’t happen, the world could be in for some tough economic times (the Europeans, apparently, have not even begun to acknowledge their toxic debt) — but also touTue, 30 Sep 2008 10:12:35 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Per today's Case-Schiller report (home sales through July 2008), here are some peak-to-present (not trough, because almost all tracked markets are still falling) calculations of notable markets: New York: down 10.6% since June '06 Chicago: down 11.27% since Sept. '06 Los Angeles: down 29.7% since Sept. '06 Miami: down 33.5% since Dec. '06 Phoenix: down 34.1% since June '06 Las Vegas: down 34.3% since Aug. '06 Again, these are July numbers (as Paul is quick to point out, they are two months old the day they are announced). On one hand, the rate of decline appears to be slowing across all markets; on the other hand, the summer months are usually the strongest price-wise, and I would expect the fall numbers to be way down as buying season slows and home sellers accept previously unacceptably low bids. Finally, until now the story has been the effect of slumping housing on our economy. It will be interesting to see how the opposite story plays out: the effect of our slumping economy on an already beat-down housing market. As I previously stated, rising unemployment and wealth loss should cause more foreclosures and reduce demand, yielding ever lower housing prices. For instance, it is hard to imagine New York's real estate market (which has thus far been fairly strong) holding up like this after losing tens of thousands of high income I-bankers.Tue, 30 Sep 2008 10:05:46 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Rising unemployment and wealth depletion cannot be helping the housing market either. With the markets down 30% YTD, suddenly there isn't as much money for a down payment as was planned--or maybe the down payment money was set aside, but the "extra" savings cushion (mutual funds, whatever) isn't looking as safe, so the home purchase is delayed. I realize many people buy a home before investing in other markets, but I also think that many people invest while renting, or live in a small/relatively cheap home while saving for a move to a nicer home, or a large home in the suburbs, etc. I suspect that layoffs are also most likely to affect those homeowners who are barely clinging to their mortgages, meaning we should perhaps expect a new and fundamentally different wave of foreclosures.Tue, 30 Sep 2008 09:28:32 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Aj, that is true, but Buffett also said that he invested in GS because he believed the Government would "do the right thing" by passing a bill to bring stability to banking, and he said this action was required to avoid an "economic Pearl Harbor." So the premise (that the Government would intervene in credit markets) that led Buffett to act has since been nullified. Also, Goldman Sachs was probably the most healthy/least affected bank in this crisis, so that purchase says little about the viability of the rest of the banking system. Goldman can't lend to everyone.Mon, 29 Sep 2008 13:25:07 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Bayou, that's an interesting question, and I don't know the answer, but I suspect the regulations would not prohibit banks, pension funds, etc. from purchasing the securities in the future (though there may be added restrictions, transparency measures, etc.). I don't think we got here simply because the banks took on these assets, but rather because these assets were badly overvalued. Putting them back in the hands of banks, funds, etc. probably shouldn't be a problem once their market price has been properly adjusted downward. John, you know I always respect your opinion, but we'll have to disagree on this. It's clear that your take on what should(n't) be done is (at least in part) influenced by your safe personal assets, which I understand--when I decided not to buy a house, I wasn't too upset about falling home prices. If the Dow falls another 1,000, it sounds as if that is no sweat off of your back, so it's understandable that days like today don't bother you. But I think there is a very real risk of total credit and banking collapse in the near future if we fail to stabilize these markets. And to me, that's all this is about--stability. I have no interest in saving executives from their idiocy, or in artificially propping up our markets. But I don't think this is a simple market correction needed to more accurately reflect our nation's economic health; rather, I think our markets have crippled under the weight of fear and uncertainty, and Government intervention is required in the short-term to free our credit market from its own weight by allowing the credit market to trade these assets for much-needed cash that can be used to permit the business and consumer loans which drive production and growth.Mon, 29 Sep 2008 13:19:12 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I have to disagree with you here. First, the firms that made the bad loans have already eaten their losses. Three of the five largest US investment banks have failed in the past month. The survivors are clinging to "assets" that have gone toxic and expect to recoup $.20-.40 on the dollar for their poor investments--in my opinion, making banks realize a 60-80% asset depreciation IS making them "eat their losses." You say this is OK because "someone" with capital will come along. No they won't, and that is the problem. First, there isn't exactly a lot of capital to go around right now. Second, the capital that is available is avoiding (and will continue to avoid) banks like The Plague. Right now, there is simply no price at which private parties will infuse capital into banks right now, because the likelihood of total default is just too high. The only party who could bear that kind of risk is the Federal Government. Fear has devastated the value of holding these assets, meaning the Government could purchase them at a premium (as I said before, around $.20 on the dollar). The Government could then hold these assets, expecting some appreciation since the holder is more secure, and sell them in the future--potentially for a modest profit. At the same time, banks could then wipe these mortgages from their balance sheet in exchange for cash that they could (finally!) lend to consumers, small businesses, etc. Above all, a Government backing would have brought much needed stability to a market in a tailspin. The average citizen will "pay" far more in the form of wealth depletion than she would have paid for the Government's purchasing (and reselling) of these devalued assets, making inaction far costlier than action. Our nation will pay much more, too--in the form of foregone capital improvements, prolonged credit and housing crisises, and depleted tax revenue. Just my opinion.Mon, 29 Sep 2008 11:45:29 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Fdr (or whatever alias you're posting under these days), it wasn't President Bush who said we'd face an "economic Pearl Harbor" if we failed to pass a bailout package--it was Warren Buffett. A pretty important difference in terms of reputation on economic matters. The bill just failed and, in my opinion, Congress has failed us. The bill was perhaps doomed from the beginning when the media took to the label "Wall Street bailout" instead of "credit rescue" or "Economic Confidence Act" or something like that. We needed action to restore (at least in part) market confidence and to free up frozen credit markets. I honestly cannot fathom how our economy can function from here on out without some drastic intervention.Mon, 29 Sep 2008 11:07:17 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Real estate blog commenting on this discussion thread (the writer gives a slightly unbalanced view of what this thread's contributors are saying, apparently by discounting real estate bears as per se "extremists"): http://blog.realmiamibeach.com/2008/05/trulia-asks-why-should-someone-buy-in.htmlThu, 25 Sep 2008 08:12:30 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Average price of a new home fell by 11.8% in one month (July to August): http://biz.yahoo.com/ap/080925/economy.html New home sales plummet in August, prices tumble Thursday September 25, 10:21 am ET By Martin Crutsinger, AP Economics Writer New home sales plunge in August to slowest pace in 17 years as prices fall by record amount WASHINGTON (AP) -- New home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record, demonstrating the depth of the problem that Washington is trying to solve. The Commerce Department said Thursday that new homes sales fell by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991. It was a much bigger sales decline than the small 1 percent drop that economists had been expecting. The average price of a new home sold in August dropped by a record amount of 11.8 percent to $263,900, compared to the July average of $299,100. The median price was also down, falling 5.5 percent to $221,900. The big drop in new home sales followed news Wednesday that sales of existing homes were down 2.2 percent in August to a seasonally adjusted annual rate of 4.91 million units. Both segments of the market remain under pressure from the steepest housing downturn in decades. That housing slump has contributed to a record surge in mortgage defaults, leading to billions of dollars in losses by financial firms and spawning a severe credit crisis that is threatening to send the country into a steep recession. In a nationally televised speech Wednesday night, President Bush said the credit crisis could trigger a "long and painful recession" unless Congress acts quickly to pass a $700 billion bailout plan for the nation's financial system. Negotiations on that plan were continuing Thursday with expectations that an agreement would be reached soon. Besides the weak housing report, the government said Thursday that new claims for unemployment benefits shot up last week to the highest level in seven years. Orders to factories for big-ticket manufactured goods fell by a much-bigger-amount than expected amount of 4.5 percent in August. Both indicate the rising pressures facing the economy. The report on new home sales showed that business was off in every region of the country except the Midwest, which posted a 7.2 percent increase. Sales plunged by 36.1 percent in the West and were down 31.9 percent in the Northeast. Sales fell a more modest 2.1 percent in the South.Thu, 25 Sep 2008 08:08:30 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Thanks Elvis, great song! My favorite by MIKA is "Grace Kelly"--I've had this song stuck in my head for weeks at a time. OK, I promise to get back to real estate topics if I post again this week.Thu, 28 Aug 2008 08:16:57 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: John P, I guess we just have to disagree here. And I think Elvis is right about beating a dead horse, so this will be my last response on the matter. In response to your question, yes, it is my opinion that if another lawyer writes an article and posts it on a publicly-viewed website (not a paid subscription, e.g.), and then I post that article on another publicly viewed website and give the original author credit for the article and provide a link to the original article, I have not broken any law. I disagree with your assertion that John the Bruce did not clearly define whose words he was posting. His post specifically states that one should read the "actual article" (meaning his post is not that article), that "Mr. Jelbah makes the argument better than I ever could" (meaning "I," or John the Bruce, am not making the argument, rather it is the author's), and then the title of the article is given, "by Zuvin Jelbah," directly above the link to that very same article by Zuvin Jelbah. Not much deception going on here.Thu, 28 Aug 2008 07:40:01 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Since Trulia has redesigned its site, what is the best way to find this question thread? I used to simply click on "Trulia Voices," then "Best," and this was at the top. Now you cannot sort through questions based on popularity. I've recently had to find this by doing a google search. Thanks in advance for your help.Thu, 28 Aug 2008 07:08:16 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: No Spin II, I call your bluff. You never sent John the Bruce's post to anyone. You say that you "sent that out for review." Tell us, to whom did you "send" it? Was it by email or letter? Can we expect a report back from your reliable source? The funny thing is that you actually believe your scare tactics will stop us from reporting news.Thu, 28 Aug 2008 07:00:19 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: For a moment it seemed like Jim Cramer was saying it was a good time to buy a home. That time is no more. In an interview yesterday, Cramer predicted that housing prices would continue to fall 7-15% in the next year, with 40% additional declines in some markets, and he described the subsequent deflation as "the worst financial crisis since 1913."Thu, 28 Aug 2008 06:44:02 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: John P, I'm not sure about the legal effect of the website agreement. A poster cannot violate copyright law just because the author says so. For instance, if I tell a stranger "don't look at me or I'll sue," and then they look at me, I have no lawsuit--looking at me simply isn't illegal, despite my warning. Similarly, if John the Bruce's post doesn't violate copyright law, the website's standard form probably doesn't change this. I suppose that if J the B checked some box and "accepted" the agreement, that may have formed some sort of a contract between him and the website, in which case he would be bound to that agreement (but as noted before, there's still the issue of whether the author would ever want to sue and, if even he did, the author would still have to prove damages for breach of contract, which I cannot fathom the author doing here).Thu, 28 Aug 2008 06:40:11 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: John P, I am not a lawyer, but I feel pretty good about the bar exam I took last month, so I should be one within a few weeks. My personal (not legal) opinion is that news posts onto Trulia represent "fair use" of the posted material and as such do not violate copyright laws. U.S. law provides that "fair uses" are exempt from copyright law. In determining whether a "use" is "fair," courts must consider: 1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 2. the nature of the copyrighted work; 3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4. the effect of the use upon the potential market for or value of the copyrighted work. Copyright Act of 1976, 17 U.S.C. § 107. John the Bruce's (and others') posting almost certainly qualifies as fair use under this test. Instead of self-profiting, he clearly only seeks to advance a "nonprofit educational purpose." The "nature of the copyrighted work" is not a novel (as if John had posted a Harry Potter book, for example); rather, it is a mere blog post which, by its own nature and the author's apparent intent, is intended to be distributed to whomever is interested. Finally, John's post has virtually no effect on the "potential market for or value of" the author's article; on the contrary, it would seem that John's post--which clearly attributes the article's authorship to "Zuvin Jelbah" and even provides a link to Mr. Jelbah's article--would advance Mr. Jelbah's web hits and notoriety, not hurt him. Even supposing for the moment that John the Bruce violated copyright law by posting (with attribution) Mr. Jelbah's article, it is extremely unlikely that any action would be taken. Copyright law is not criminal law, so there is no government officer who would prosecute John for posting it. Instead, the author of the article would have to resort to a civil lawsuit. Since it seems pretty clear that the author WANTS people to read his article, it seems unlikely that he would sue John for bringing in readership. And one final matter: even if posting the article is copyright infringement, and even if the author is so inflamed that he chooses to sue John the Bruce, the author must still prove "damages" to a jury. That is, the plaintiff/author cannot win a lawsuit unless he can prove to a jury that he has been monetarily harmed by John's posting of his blog. As stated above, I'm fairly sure John's posting--again, with attribution--only boosted Mr. Jelbah monetarily, if it had any effect at all. Personally, John P, I would counsel you to not make legal assertions and serious accusations unless they are based on either (a) the law, or (b) your own professional experience or study. You have now posted eight times on this legal issue, and you have not yet cited any law or anything else that qualifies you to teach us all about the law. While I'm convinced you are an intelligent man and competent in your own field, I think this exchange has made you look silly.Wed, 27 Aug 2008 23:25:37 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: S&P: Home prices tumble by record amount (PDF of Case-Schiller report linked below) Tuesday August 26, 9:35 am ET Private housing index shows home prices tumbling by record amount nationwide in June NEW YORK (AP) -- A widely watched housing index released Tuesday showed home prices dropping by the sharpest rate ever in the second quarter. The Standard & Poor's/Case-Shiller U.S. National Home Price Index tumbled a record 15.4 percent during the quarter from the same period a year ago. The monthly indices also clocked in record declines. The 20-city index fell by 15.9 percent in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 17 percent, its biggest decline in its 21-year history. No city in the Case-Shiller 20-city index saw year-over-year price gains in June, the third straight month that's happened. However, the rate of single-family home price declines slowed from May to June, a possible silver lining, the index creators said. "While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level" said David M. Blitzer, chairman of the index committee at S&P.Tue, 26 Aug 2008 07:21:38 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Must-read article for anyone still interested in what economists are saying re the housing bottom (this is a Yahoo! finance summary of a much longer NYT article). Given many indicators, and after soliciting feedback from many economists, the NYT attempts to find the bottom. The research concludes that Chicago is currently the third-most overvalued market and is now 11% overpriced.Wed, 13 Aug 2008 20:14:59 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Video link to interview with Barry Ritholtz, CEO of Fusion IQ: http://finance.yahoo.com/tech-ticker/article/47438/A-Bottom-in-Housing-You've-Got-to-Be-Kidding?tickers= Ritholtz nicely summarizes all of the major factors which continue to weigh down the market, and he claims housing will fall another 25% (perhaps very quickly, perhaps over a whole decade) before the slump is over. He claims that the data just doesn't support the contrary (optimistic) view.Wed, 13 Aug 2008 06:15:22 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Freddie Mac chief made $38 million while ignoring repeated warnings of his company's risk exposure. Tuesday August 5, 2:40 am ET (Reuters) - U.S. mortgage market giant Freddie Mac's (NYSE:FRE - News) chief executive dismissed internal warnings that could have protected the company from some of the financial problems now engulfing it, the New York Times said, citing more than two dozen current and former high-ranking executives and others. In 2004, Chief Executive Richard Syron received a memo from Freddie Mac's chief risk officer warning him that the firm was financing questionable loans that threatened its financial health, the paper said. Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Syron heightened those perils by ignoring repeated recommendations, the NY Times said. In an interview with the paper, Freddie Mac's former chief risk officer, David Andrukonis, recalled telling Syron in mid-2004 that the company was buying bad loans that would likely pose an enormous financial and reputational risk to the company and the country. Syron received a memo stating that the firm's underwriting standards were becoming shoddier and that the company was becoming exposed to losses, the paper said, citing Andrukonis and two others familiar with the document. But Syron refused to consider possibilities for reducing Freddie Mac's risks, the paper cited Andrukonis as saying. "He said we couldn't afford to say no to anyone," the paper quoted Andrukonis as saying. Over the next three years, Freddie Mac continued buying riskier loans, the paper said. Citing many executives, the paper said Syron was also warned that the firm needed to expand its capital cushion, but instead that safety net shrank. Syron was told to slow the firm's mortgage purchases, but they accelerated, the paper said. Those and other choices initially paid off for Syron, who has collected more than $38 million in compensation since 2003, the NY Times said. But when housing prices began declining in 2006, those choices at Freddie Mac proved disastrous. Freddie Mac could not be immediately reached for a comment on the report.Tue, 5 Aug 2008 05:52:19 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Standard & Poor's senior economist predicts housing prices will fall an additional 10% nationally (for a 30% peak-to-trough total decline) between now and the time price declines level off, which she predicts will take place in the first half of 2009. http://finance.yahoo.com/tech-ticker/article/44272/No-Immediate-Relief-for-Housing?tickers=JPM,BAC,XHB,XLF,FNM,FRE,wmMon, 4 Aug 2008 13:55:23 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Fair point, Julia--I think the article mentioned that a significant portion of the "shadow supply" consists of baby boomers. I suspect some of this group will buy a smaller home, but most will opt for retirement communities or similar non-buying alternatives. Of course, most sellers right now are probably also buyers, but that hasn't changed the fact that oversupply is plaguing housing.Fri, 25 Jul 2008 11:37:12 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Invesco's investment strategist says housing inventory backup is actually understated (that is, worse than the numbers indicate) because it doesn't include the "shadow supply" of homes owned by individuals who want to sell but have prolonged the decision due to poor market conditions. http://finance.yahoo.com/tech-ticker/article/42434/Garnick-More-Inventory-Coming-1-Trillion-Minimum-Cost-of-Housing-Crisis?tickers=FNM,FRE,IVZ,XLF,XHBFri, 25 Jul 2008 09:39:56 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Foreclosures accelerating: --Q2 foreclosures up 14% from Q1 --quarterly foreclosures up 121% year-over-year --RealtyTrac forced to upwardly adjust its foreclosures forecast: "We've been saying foreclosures will total 1.9 million to 2 million this year," [the RealtyTrac spokesman] said. "But midway through the year, we're already at 1.4 million so we're going to be raising our projections."Fri, 25 Jul 2008 08:59:38 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Agreed--I am thankful to the many contributors who, like you, have made this an informative (if sometimes contentious!) forum.Thu, 24 Jul 2008 20:07:53 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: No, the point I was trying to make is just the opposite--that Buyer A has *not suffered* at all from his town's median price declines. He paid $100k for a house that was worth $100k. He merely got into his home earlier than later buyers, who all eventually bought the same quality house for the same price--$100k. Sorry if I'm still not clear.Thu, 24 Jul 2008 18:41:32 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Hilarious! Rob Banks/Slash/etc. just created a new account (Roy Davis), posted under that account, and then criticized the post HE JUST MADE under yet another of his alter ego accounts (Mike Rafone..."microphone"). To top it off, he then signs back on under "Roy Davis" immediately thereafter (less than five minutes passed between the posts from "Mike" and "Roy"), apologizes for his repetitiveness, and uses that as a reason to call for this thread to be terminated. You can't make this stuff up, folks! AJ, Zach, Richard, and everyone else (including real estate agents!), I'm still looking forward to hearing your thoughts on my post (and Paul's response) from last night. --Ryan "Sniffing out Chicago's biggest idiots since Spring 2008"Thu, 24 Jul 2008 15:05:30 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Great comment, Paul--thanks. Others, please chime in on my and Paul's posts below. More news: --existing home sales down 2.6% in June to their "lowest level in a decade;" sales down 16% year-over-year --foreclosures now account for at least 1/3 home sales, according to NAR chief economist Lawrence Yun (!)Thu, 24 Jul 2008 07:54:06 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: *Reposted with minor changes* A thought has been on my mind lately, and I wanted to bounce it off of anyone still keeping up with this thread. It concerns the relationship between whole market data and individual home sales. By now, everyone in this country (and certainly everyone trying to sell their home) knows that, generally speaking, home prices have fallen and it's a bad time to sell. Suppose I find a seller who realizes this and sells her $700k-listed home to me for $600k, 14% below asking price. The seller is disappointed but realizes that the market has changed in the past few years, and $600k may be a fair assessment of what her home is worth today. Other sellers with similar offers decline them, holding out hope that their home is worth more. Now suppose that for the next six months, as these "holdout" sellers perceive reality and slowly begin to sell their homes at the disappointingly low numbers, the Case-Schiller index continues to report that median home prices are falling. Does this *necessarily* mean that the value of my home has also fallen for the past six months? Or could it be that *my home's value* hasn't changed, but the C-S Index is merely reflecting the fact that sellers are slow to realize price losses? Instead of looking at month-to-month trends to infer the value of a single home, doesn't it make sense to look at homes as single units, some of which have realized their price losses and some of which have not? I fear I'm not articulating this thought well, so consider this hypothetical: [ Town A consists of five homes, all for sale and listed at $200k. Due to less demand, sellers are not willing to buy these homes for more than $100k. Buyer A offers Seller A $100k for his home. Seller A accepts. Buyers B-E offer Sellers B-E $100k for their homes; Sellers B-E decline. For each of the next four months, one of the Sellers wakes up and realizes home prices have fallen, so they sell their Homes to Buyers at $100k each. ] If I'm not mistaken, a C-S-type index would indicate that median prices have fallen for Town A during each one of the five months in the hypothetical: *Month 0 median price for Town A, before "pent-up" price loss has been realized by any homes: $200k *end of Month 1 median price (after sale of Home A): $180k *end of Month 2 median price (after sale of Home B): $160 *end of Month 3 median price: $140k (after Home C sold for $100k) *end of Month 4 median price: $120k (Home D sells) *end of Month 5 median price: $100k (Home E sells; Town A's price decline realized by all homes). But for Buyer A--who bought at the beginning of the hypothetical for $100k--surely it would not be accurate to say that the value of *his house* fell just because Town A's median prices continued to fall, would it? On the contrary, it seems to me that House A merely *realized* its pent-up price loss before the other homes did--NOT that the value of House A continued to fall with the Town's price index. Similarly, I continue to see significant price reductions in Chicago's market. Obviously some sellers (and their agents, no doubt) are beginning to realize that their home isn't worth what it was worth two years ago. If I buy one of these homes at what I perceive to be its true (and decreased) market value, and then Chicago home prices continue to fall, I see no reason why this means that my home's value has correspondingly decreased. As final food for thought, consider this tidbit from Jim Cramer's "Mad Money" show today: http://www.cnbc.com/id/25818021 (Relevant excerpt occurs about 2:15 into the clip and contains this quote: “I was the first guy that said torch your house for the insurance money. I am now telling you that between now and the next six months you have to buy a house.”) Whatever you may think about Cramer (I agree he has become the financial sector's "Dr. Phil"--more entertainment than substance--but this is probably the most unequivocal and objective endorsement of housing I've seen in more than a year). What do you think?Thu, 24 Jul 2008 05:50:38 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: It now sounds as if a major housing bill (described by Sen. Chris Dodd as "the most important piece of housing legislation in a generation") will pass by the end of the week. Please share your thoughts on this and post any topical editorials you come across. Who wins? Who loses? What impact, if any, should this legislation have on the decision to buy now or wait?Wed, 23 Jul 2008 17:59:44 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: More on the politics of foreclosure bailouts--decent analysis of problem, pretty weak on analysis of the solution. NY Times Editorial As Foreclosures Escalate Published: July 1, 2008 By the time the Senate returns next Monday from its July 4 recess, some 55,000 more homes will have entered foreclosure. And that’s hardly the full picture of the growing calamity. More than three million homeowners are currently at risk of default and millions more are expected to join them in the coming year as home prices drop, the economy falters and delinquencies rise. Yet the Senate went ahead with its vacation last Friday without passing a foreclosure prevention measure. The bill was expected to pass, but the vote was derailed by petty politics. Senator John Ensign, Republican of Nevada, for example, demanded that the Senate add a multibillion dollar package of tax breaks for renewable energy. Democrats balked — not out of opposition to the tax breaks, which rightly enjoy bipartisan support, but because Mr. Ensign wanted to tack them on to the foreclosure bill without paying for them. That would threaten passage of the bill in the House, which is more committed than the Senate to pay-as-you-go governing. This sort of delay achieves political ends, like denying Democrats the chance to campaign on the accomplishment during the recess, but it’s exceedingly poor policy. Foreclosures are feeding the nation’s severe economic problems. Turmoil in the financial markets is rooted in the collapse of the housing bubble and will not abate until house prices stabilize and sales pick up. Even Americans fortunate enough to have a down payment and a willing lender are hesitating, understandably fearful of further price drops. Rising foreclosures add daily to the glut of unsold homes, pushing prices down and foreclosures up in a vicious cycle. That same financial turmoil, coupled with huge losses in home equity, has deprived many Americans of the means or the confidence to buy a new house or other big-ticket items, like cars. In a recent Gallup poll, a majority of Americans said they were now worse off financially than they were a year ago. That’s the first time in the 32-year history of the question that more than half the population has reported losing ground. Unfortunately, the pessimism is justified. The Bush-era expansion was based largely on a boom in bad lending and house-price inflation — not on robust employment, wage increases or sustainable gains in household wealth. As a result, many Americans have spent the last several years taking on debt, rather than building their earning power or adding to savings. They are ill prepared to cope with a weakening economy and rising gas prices, and they know it. This spring’s tax refunds and stimulus checks have been a boost, but it won’t last. Soon, defaults on credit cards and auto loans are likely to pick up, and lenders will respond by keeping credit tight. The foreclosure prevention bill is not a cure-all, by any means, but is a way to try to break the cycle. It would allow many troubled borrowers to exchange their unaffordable loans for new mortgages guaranteed by the federal government — as long as the lender agreed to reduce the existing loan balance to 85 percent of the home’s current value. It is questionable whether lenders would be willing to take the loss, and there’s nothing in the law to prod them to do so. Still, the bill’s passage, which should be the Senate’s priority next week, would be an overdue acknowledgment that the foreclosure mess requires government intervention. Lawmakers could build on the effort as needed, but it is unconscionable not to take the first step.Tue, 1 Jul 2008 14:35:40 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Link to interview with Charles Schwab's Chief Investment Strategist predicts another 10-15% drop in housing prices before market stabilizes: http://finance.yahoo.com/tech-ticker/article/31337/Bottomless-Home-Prices-to-Fall-Another-10-15-Percent-Says-Schwab's-Sonders?tickers=LEN,KBH,XHB,SCHW She also discusses the need to "flush foreclosures out" instead of temporarily staving them off via legislation. Decent interview, though the interviewer either sucks or is on cocaine.Mon, 30 Jun 2008 13:41:12 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Kallen, your advertised homes are not "BELOW MARKET VALUE" if NO ONE IN THE MARKET IS BUYING THEM. Here's an article from the Washington Post nicely summing up our current economic problems (warning, this guy is as bearish as I've read in awhile): http://www.washingtonpost.com/wp-dyn/content/article/2008/06/26/AR2008062604030.htmlMon, 30 Jun 2008 13:18:37 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Sales of existing home show slight gain in May Thursday June 26, 3:04 pm ET By Martin Crutsinger, AP Economics Writer Slight rise in sales of existing homes in May; only second gain in past 10 months WASHINGTON (AP) -- Sales of existing homes rose slightly in May, only the second increase in the past 10 months. Prices, however, kept plunging and analysts said the large number of unsold homes indicated the prolonged slump in housing was far from over. The National Association of Realtors reported Thursday that sales of existing single-family homes and condominiums edged up by 2 percent to a seasonally adjusted annual rate of 4.99 million units in May. Even with the small gain, it was still 15.9 percent below the depressed levels of a year ago. The median price of an existing home sold in May dropped to $208,600, 6.3 percent lower than a year ago. That is the point where half sell for more and half sell for less. It was the fifth biggest year-over-year price decline in records that go back to 1999. Existing homes sales account for the bulk of the housing market. The report followed news Wednesday that sales of new single-family homes fell by 2.5 percent in May. That was the sixth drop in the past seven months and pushed the annual sales pace down to 512,000 units. The two-year slump in housing has dragged down the economy and rising levels of foreclosures are dumping even more unsold homes on the market. Given the weak economy, many analysts said they were not looking for a turnaround in housing for many more months. "Plunging prices and massive inventory are huge disincentives to home buying," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. Economists said that falling consumer confidence, rising job layoffs and higher mortgage rates were standing in the way of a housing rebound. Freddie Mac, the mortgage company, reported on Thursday that mortgage rates rose across the board in the past week. The 30-year mortgage climbed to 6.45 percent, the highest since last September. "We do not expect residential real estate markets to turn around soon," said Stuart Hoffman, chief economist at PNC Financial Services. "In a sea of weak data, home sales will remain an anchor, not a life boat." The existing homes report found a 5.5 percent increase in the Midwest, followed by gains of 4.6 percent in the Northeast and 2 percent in the West. Sales in the South dropped of 0.5 percent. Economists with the Realtors noted that for the past few months sales have rebounded in areas hit hardest by the housing bust. Examples included Sacramento, the San Fernando Valley and Monterey in California; Sarasota, Fla.; and Battle Creek, Mich. "Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," said Lawrence Yun, the Realtors' chief economist. Yun said foreclosures and short sales, when a home is sold for less than the value of the mortgage, are a larger portion of the current housing market, particularly in California, and are depressing home prices. The inventory of unsold homes dropped by 1.4 percent to 4.49 million units in May. That is a 10.8-months supply at the May sales pace, down from 11.2-months in April. That still exceeds the seven-month inventory that is typical.Thu, 26 Jun 2008 13:37:05 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Playing Devil's Advocate: I just looked over the C-S numbers and saw that Chicago's price index rose (oh so modestly--0.11%--but still a rise) in April 2008, the most recent numbers we have. Isn't this what we'd expect a bottom to look like? Before today, C-S showed 19 straight months of Chicago price declines. We could say "this is just April, which is always a good month for sales," but the C-S numbers don't seem to show much of a seasonal "April bump" in prices. In fact, last year's (2007) March-April price drop (-1.17%) was worse than that year's Feb.-March price drop (-0.45%), suggesting April was a particularly disappointing month (all other things being equal, which I understand they are not). Again, I'm just playing devil's advocate. At best, the market is still too uncertain for me to jump in, and I have nothing to lose by sitting it out a year (prices aren't going up anytime soon). But for me, these numbers are reason for some optimism. A final point/question--someone below mentioned the effect of inflation of C-S data. Doesn't C-S control for inflation? I think this factored into the debate between AJ/Bayou re how much prices should fall to align with 2000 numbers.Tue, 24 Jun 2008 14:47:38 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Nancy, I think there is some way to do that under the "My Trulia" tab, "My Questions and Answers." If not, just ask someone on Trulia's staff--Trulia Roger was keeping up with this thread for awhile and can probably help you out. Hyuflg, glad you decided to take down your post. Of course you can never really "take back" anything you have published on the internet--it can all be traced--but it was probably a step in the right direction. Just so you know, I have kept all of your most heinous posts under the various names--from your "KILL LAWYERS" posts to the comments about my family members dying painful deaths to your most recent comments on what should be done to our nation's President. You've really done your profession proud (from your other posts I've read from different question threads, it's clear you actually are a REALTOR). I have collected and kept these posts in case I ever believe they should be reported to authorities outside of this web site. I repeat, do not ever post on this thread again.Sun, 22 Jun 2008 18:23:33 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Hyuflg, you are dumber than a tic tac. First, everyone here knows you're the same old Slash/Rob Banks freak. If it isn't clear enough by your poor grammar and general stupidity, it's easy to check your other posts, which I did, and see your same old run-of-the-mill whining about Trulia being anti-Realtor: (from another thread): "[Trulia] is primarily a place for people to come and tell Realtors how little we know and other bashing, have your broker look through some very active posts on here before jumping blindly in." [P.S.--what ever happened to your "thousands of Realtor friends" who were going to "take this thread down"? I suppose by "thousands" you meant "dozens" and by "friends" you meant you and your cat. if you're going to continue creating names, posting worthless crap, and giving my thread a thumbs-down, fine. The amount of time you commit to degrading our discussion is a sad commentary on your life, but that's your call. But at least stop pretending to be different people (remember when you invented "Go Cubs!", a woman??)--the whole charade really adds to your creepiness. Every time I see you've created another name I expect your comment to be something like "it puts the lotion in the basket!" (see http://www.youtube.com/watch?v=HrwDFgEeFCE ) Besides this, you're also a moron. I appreciate the fact that you've backed off of me ever since posting that you wanted to come find me under your "KILL LAWYERS" alias--very civil of you. Now you say "we needed" Lee Harvey Oswald (an assassin) to take care of our President. I hope you get a visit from the Secret Service--partly because it would teach you a lesson, and partly because I'm starting to believe it may actually be necessary. If you think I'm joking, I'm not. Title 18 of the US Code, section 871 criminalizes threats on our President, and the definition of "threat" is extremely broad--as you might expect, our Secret Service doesn't take comments like yours lightly. In 1996 the Secret Service detained a Reverend under this law who merely said "God will hold you to account, Mr. President" after Bill Clinton vetoed the partial-birth abortion bill. In my opinion, your comment that we "need" Lee Harvey Oswald is much more serious of a threat. http://usgovinfo.about.com/library/weekly/aa040398.htm Leave this thread and do not come back.Sun, 22 Jun 2008 17:28:04 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: The article Realtyexec just posted is one of the best I've read on this subject in a long time. Here are a few excerpts: --"There are 129 million housing units in the United States, comprising owner-occupied, rented, and vacant units. Of these, 18.5 million are empty. This vacancy rate is 2.5 percentage points higher than it has been at any point in the half century the data have been tracked, translating into at least 3 million too many empty housing units in the country. This number, moreover, is rising. This is the most intractable part of the real estate bubble, for we cannot find a true bottom to home prices until this inventory of empty units starts to clear, and we cannot find a bottom to the mortgage finance market until home prices bottom out." --"The worst type of inventory is an empty house, which people in the industry like to say has about the same half-life as a head of cabbage. As the former chairman of the Neighborhood Investment Corporation, I've seen the damage done to neighborhoods by vacant homes. They are never maintained adequately, depress surrounding property values, and can quickly become temporary retail space for drug lords and a playground for juvenile delinquents. They are also the homes whose owner has the least incentive, and usually the least ability, to service the mortgage or pay the property taxes. So whittling down the inventory of empty houses should be the first economic, social, financial, and political objective." --"Congressmen don't want to appear to be helping speculators, liars, or cheats. The trouble is, a good part of the problem was caused by people who might be considered speculators, liars, and cheats. Speculators by definition bought vacant properties in the hope of "flipping" them for a higher price. A vacant home is therefore a good sign of speculative activity. " --"Markets correct huge inventory overhangs and declines in demand due to the scarcity of credit by lowering prices. Home prices are correcting, though more slowly than the credit market shrank. Prices are down over 14 percent in aggregate since their peak in 2006--having adjusted in a year and a half as much as liquid markets might in a month. The pace of decline, about a 30 percent annual rate in recent months, is still accelerating. The California Association of Realtors reports that the median price fell that much in just the last year. Futures markets are predicting that home prices will fall over 30 percent in aggregate on a national basis, with 70 percent of the drop happening by year's end. I personally think the decline will be less, but just as 2007 was the year that mortgage credit dried up, 2008 will be the year that home prices plummet....Just a 20 percent decline in home prices would place a quarter of mortgages under water." --"The housing market crash is far from over, and its ramifications will be with us for some time. The combination of excessively easy credit, a rapid run up in prices, and overbuilding set the stage for the current mess. Prices must fall to correct oversupply, and that, in turn, will further adversely affect both consumer confidence and financial solvency. The unique nature of the problem makes a precise ending hard to predict. But it seems likely that some combination of speculative buying, inflation, and purchases by both foreigners and government entities will correct the situation. Now is not the time for ideology, of either the left-wing variety (soak the rich, punish speculators, and conduct a witch hunt through the financial community) or the right-wing variety (stave off government involvement of any form). Pragmatism is a conservative virtue. It is time for everyone to start practicing it."Mon, 9 Jun 2008 14:31:32 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: If by "tossing in some red meat" and "fanning the flames" you mean "posting an article I found on the AP wire," then yes, I am a full-fledged rabble-rousing demagogue. Funny how Joep posts a reply, "Nomorehaterz" appears from thin-air, and the post gets four thumbs-downs in ten minutes. And yes, I have made up my mind--which I made pretty clear about 600 replies ago. And yes, I hope the market continues to tank, deflating the bubble, and returning prices to historically-sane levels, at which time I will eagerly jump in--not because homes are a great investment (they aren't), but because I am anxious to own a home as soon as I can do so without blowing my savings.Thu, 5 Jun 2008 15:08:33 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: The first sentence in Manny's article sums it up nicely: "More than one million homes are now in foreclosure, the highest rate ever recorded, according to a trade group which warned Thursday that number will continue to climb." The impact of price declines on individuals' net worth: http://money.cnn.com/2008/06/05/news/economy/fundflows/index.htm "Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings. Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level on record..."Thu, 5 Jun 2008 13:16:12 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Home foreclosures set (another new) record in first quarter WASHINGTON (AP) -- Home foreclosures and late payments set records over the first three months of the year and are expected to keep rising, stark signs of the housing crisis' mounting damage to homeowners and the economy. The latest snapshot of the mortgage market, released Thursday, showed that the proportion of mortgages that fell into foreclosure soared to 0.99 percent in the January-through-March period. That surpassed the previous high of 0.83 percent over the last three months in 2007. The report by the Mortgage Bankers Association also found that more homeowners slipped behind on their monthly payments. The delinquency rate jumped to 6.35 percent in the first quarter, compared with 5.82 percent for the three months earlier. Payments are considered delinquent if they are 30 or more days past due. Both the rate of new foreclosures and late payments were the highest on record going back to 1979. Jay Brinkmann, the association's vice president of research and economics, told The Associated Press that the slump in house prices was the biggest factor for rising foreclosures and late payments. With prices expected to keep dropping, foreclosures and late payments "are going to continue to go up" in the months ahead, he said. Homeowners with tarnished credit who have subprime adjustable-rate loans took the hardest hits. Foreclosures and late payments for these borrowers also swelled to all-time highs in the first quarter. The percentage of subprime adjustable-rate mortgages that started the foreclosure process climbed to 6.35 percent. The rate was 5.29 percent in fourth quarter, the previous high. Late payments rose to 22.07 percent from 20.02 percent, the previous high. The association's survey covers just over 45 million home loans. More problems also cropped up with loans to more creditworthy borrowers. The percentage of such loans falling into foreclosure was 0.54 percent, compared with 0.41 percent at the end of last year. Late payment rose to 3.71 percent, compared with 3.24 percent. The numbers were higher for prime borrowers with adjustable rate mortgages. The proportion of those loans falling into foreclosures jumped to 1.55 percent from 1.06 percent. The delinquency rate rose to 6.78 percent, compared with 5.51 percent. "The number one problem is the drop in home prices," Brinkmann said. Declining prices, especially in newer built areas, "are hurting people's ability to recover when they run into trouble -- a divorce or loss of job," he said. "In other days, you could sell the home. But because home prices have fallen so much, in many of those cases, the homes are going into foreclosure." California, Florida, Nevada and Arizona accounted for 89 percent of the total increase in new home foreclosures, he said. Those are places where prices have fallen sharply and there was a lot of home building, creating too much supply, Brinkmann said. After a five-year boom, the housing market fell into a deep slump two years ago. That dragged down sales, and prices with it. As the value of homes plummeted, many newer homeowners found themselves owing more on their mortgages than their homes were worth. Homeowners with adjustable-rate mortgages were clobbered when their initially low rates reset to much higher ones. That made it difficult, if not impossible, to keep up with monthly mortgage payments. As foreclosures and late payments climbed, financial companies took multibillion losses when their investments in mortgage-backed securities soured. A credit crisis erupted and spread, crimping other types of financing. The fallout plunged Wall Street in turmoil, disrupting the normal functioning of markets. All those troubles have pushed the economy to the brink of a recession, if the country isn't already in one. Consumers and business have tightened their spending. Employers have cut more than a quarter-million jobs in the first four months of this year. To bolster the economy, the Federal Reserve made aggressive interest rate cuts. That has helped homeowners facing rate resets on their adjustable-rate mortgages. But with inflation on the rise, Fed Chairman Ben Bernanke this week sent his strongest signal yet that the central bank's rate-cutting campaign started that started in September is coming to an end. The Bush administration has taken steps to help distressed homeowners. It has urged lenders to freeze rates for some homeowners and encouraged lenders to rework mortgage terms so troubled borrowers can stay in their homes. A congressional plan that includes a foreclosure prevention program has stalled as lawmakers figure out how to pay for it. The government would back as much as $300 billion in new loans to help certain borrowers refinance into cheaper, fixed-rate loans. Mortgage holders would have to agreeThu, 5 Jun 2008 12:32:20 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Dave, I'm not sure I understand. Suppose a small town consists of four homes, average price $100k. Then a neighbor moves in and builds a significantly nicer and larger home, valued at $600,000. Suddenly, the town's average price has risen from $100,000 to $200,000--a doubling of the average price! But surely no one would argue that the town's housing prices have doubled; rather, someone simply built a house nicer than the rest. This example obviously oversimplifies things, but it captures the basic point. In any city, new construction is generally more valuable than "old" construction, so when new buildings go up, the area's average for-sale prices may be higher--but surely this doesn't mean that the value of those homes is rising. Despite the town's now-higher price, the owners of the $100,000 homes still own $100,000 homes (not $200,000), whatever the new neighbor may have built.Tue, 3 Jun 2008 14:15:06 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Here is a Washington Post writer's blog re the DOJ/NAR settlement NonRealtor just referenced. I suggested in a different thread that Realtors may be violating state and federal antitrust laws if they refuse to deal with a buyer who chooses not to go with a fellow Realtor, and I was sharply criticized by Realtors and received about 10 thumbs-downs! This is only a slightly different issue, as both deal with the NAR's attempt to limit its own competition, which is anti-competitive and illegal. Text: Jason Kincaid TechCrunch.com Tuesday, May 27, 2008; 8:09 PM The National Association of Realtors has settled its antitrust case with the Department of Justice, and has given online realtors full access to the industry-standard Multiple Listing Service (MLS) Databases. The MLS is a comprehensive listing of homes that are are available on the housing market, and until this point the NAR has restricted access to online brokers. These online brokers have been offering fees that are significantly lower than traditional realtor rates, and rather than adapt as an industry, the NAR choose a more childish route and withheld the essential data. The Department of Justice took issue with this stance, and filed suit in September 2005. The deal is especially important for disruptive online-only companies like Redfin, which rely on being able to access current home listings. If the case had gone the other way, Redfin CEO Glenn Kelman says that the company would have died a "slow, grisly death" ( SeattlePI). Redfin aims to make the home-buying process more efficient, while saving consumers money in the process (it has been able to save the average home buyer $10,000, which doesn't sit well with most traditional realtors). ad_icon Unfortunately, the settlement isn't a complete victory for online sites, which will be subject to restrictions on the comments users can leave on each home. If a home-seller asks that a comment be taken down, websites are obligated to comply (consequently, you probably won't be seeing many negative reviews). Instant customer feedback is one of the most valuable assets of online retailers - to deny consumers access to such information is both annoying and foolhardy on the NAR's part. The NAR should be supporting traditional brokers by emphasizing personal interaction and service, not by handicapping the competition.Tue, 3 Jun 2008 13:55:29 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: The flyer link Zach posted is just incredible. If I am lucky, I expect to find my shoes or shirts on sale "buy one, get one free." I never thought I'd see California homes selling the same way! I really feel for the California families affected by that situation. Here is an article summarizing some recent data which shed light on the widespread nature of price losses (as opposed to Case-Schiller, which focuses only on large metro areas). The data show 262/330 American housing markets--including 84% of American homes and 89% of home wealth--are experiencing price declines right now. Or, put a more positive way, 16% of homes have not fallen in value during the current downturn. The comprehensive nature of this data makes it valuable in considering the "real estate is local" mantra, which of course is mostly true but says nothing of the widespread nature of our current housing problems. [WALTHAM, Mass., June 2 /PRNewswire/ -- Global Insight, the world’s leading company for economic and financial analysis and forecasting, today released the first quarter 2008 update of the U.S. housing valuation analysis, House Prices in America, showing that single-family home prices fell for the third straight period, dropping at a steep 6.7 % annualized rate. Nationwide, 262 housing markets out of 330 in the study -- the overwhelming majority of the nation’s housing markets -- experienced declines, accounting for 84% of all housing units and 89% of real estate value. California, Florida and Michigan accounted for the steepest losses and contained 45 of the 50 worst performing metropolitan areas for this period. California and Florida had been among the most overvalued states for the past several years and Michigan is reeling from the impact of a slumping economy. Other housing markets in the bottom 50 include Las Vegas and Reno, Nevada and Bend, Oregon, areas cited in earlier House Price studies as being precariously overvalued and likely to be the next "shoe to drop." House prices are being pushed down across the nation by fewer high-priced home sales and an abundance of foreclosed properties being sold at discount. Contributing to the downward pressure are significantly tighter credit standards which are reducing the amount of borrowing available for home purchases. In the first quarter 2008, only eight housing markets -- down from a peak of 53 in 2006 -- were determined to be overvalued, representing only 1% of the U.S. single family housing stock and 2% of total real estate value, down from 32% and 16%, respectively, from 2006. Areas of the Pacific Northwest, including Bend, Oregon and Longview, Washington, continued to be among the most overvalued. However, other areas once extremely overvalued -- the Northeast and coastal California and Florida -- are now rated as fairly valued. Additionally, a number of widely dispersed and mostly smaller markets throughout the country that had seen less price fluctuation during the boom years experienced price resilience. The top nine housing markets registering price increases this period all had populations less than 300,000 and were as varied as Ithaca, New York; Billings, Montana; Houma, Louisiana; and Odessa, Texas. James Diffley, group managing director of Global Insight’s Regional Services Group, said, "The large price adjustments we have seen are precisely what was required before we could begin to talk of recovery." Jeannine Cataldi, senior economist and manager of Global Insight’s Regional Real Estate Service, added that, "The housing market will take some time to recover as consumers are constrained not only by tighter credit standards, but rising costs in other areas of the economy. There is also excess supply that needs to be absorbed, plus the rate of foreclosures entering the market needs to slow before housing can begin to pull out of its current downward trend." The House Prices in America study, a joint effort by Global Insight and National City Corporation, examines the top 330 U.S. real estate markets, representing 78% of all existing housing units and 93% of all related real estate value, to determine what home prices should be, accounting for differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts. Markets with valuation premiums above 35% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local market price declines observed since 1985. House Prices in America combines a statistical model originally developed at National City Corporation (www.nationalcity.com/housevaluation) with data largely developed at Global Insight. More information on Global Insight’s housing valuation analysis is available at http:// www.globalinsight.com/housingvaluation.]Mon, 2 Jun 2008 13:55:39 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Greg, FYI: I accidentally picked one of J R's responses as the "Best Answer." I have no idea how it happened and can't figure out if / how I can undo it. Just didn't want you to go searching through 21 pages of responses in order to find it. : ) I wouldn't take the thumbs-down too personally. A handful of people have followed this thread from the beginning, and it can be frustrating when someone chimes in for the first time (after 1000+ responses) to say "interest rates are at an all-time low" and "real estate is always a good long term investment" or something along these lines--statements which are not only false but, as one may imagine, have been pretty well covered by the first 1,045 posts. It's particularly frustrating when such statements are made baldly without any reasoning or factual support. As an example, Jed, who sells real estate in California, just said: "While Ryan and his tribe are renting and paying taxes and hopefully enjoying their lives here in 21st century America there are thousands of others that have bought houses, are paying their reduced taxes and hopefully enjoying their lives in 21st century America. In 5, 10, 15, years I hope they are all happy with their decisions. I have a feeling, no I believe strongly, that the people that bought will be better off. " Jed cites no data in this assessment, instead relying on his "feeling" or the fact that he "believe[s] strongly" in his conclusion. The fact is that the median California home price has fallen more than 30% in the past year *according to the California Association of Realtors*. In Sacramento, the *average* home owner has lost more than $100,000 of equity in ONE YEAR, and prices are still falling. When these home owners compare notes to their renter counterparts in 5, 10, and 15 years, I have a "feeling" you'll find the renters won't be regretting their decisions. http://www.bizjournals.com/sacramento/stories/2008/05/19/daily66.htmlSun, 1 Jun 2008 17:21:20 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Consumer Confidence (Way) Down. Question: does this news independently shape the economy in some way, or is it merely reflective of other news? A twist on the "chicken or the egg" question. May 30 (Bloomberg) -- Confidence among U.S. consumers fell in May to the lowest level in 28 years, pointing to slower spending as gasoline prices reach record levels and job losses mount. The Reuters/University of Michigan final index of consumer sentiment decreased to 59.8, the weakest reading since June 1980, from 62.6 in April. The measure averaged 85.6 in 2007. Consumer spending that makes up two-thirds of the economy is cooling as record fuel costs and a weakening job market undermine household buying power. Declining home prices and tighter credit are weighing further on growth, pushing the economy to the brink of a recession. ``The consumer is under siege,'' Russell Price, senior economist at H&R Block Financial Advisors in Detroit, said before the report. ``Home values are dropping, the job market is shaky, food prices are higher and soaring gasoline prices are a constant reminder of their financial burdens.'' The confidence index was forecast to fall to 59.5, according to the median of 57 economists surveyed by Bloomberg News. Estimates ranged from 50 to 63. The preliminary survey, released May 16, came in at 59.5. Earlier today, the Commerce Department in Washington reported that consumer spending rose 0.2 percent in April after a 0.4 percent increase in March. Incomes grew 0.2 percent, bolstered in part by the government's tax rebates, and the Federal Reserve's preferred measure of inflation moderated, the report showed.Fri, 30 May 2008 07:56:22 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Latest Case-Schiller data paints bleak picture. Anyone who can look at the graph on page 1 and say "it's a great time to buy" should check themselves into an insane asylum--or is lying to you. Report highlights (besides the graph, which pretty much tells you all you need to know): --home prices in the first quarter of 2008 fell at the steepest rate in the index's 20-year history. (Some have stated that "real estate is cyclical" and have compared this decline to the 1990-91 housing recession. In fact, over those years the largest annualized decline in prices was -2.8%, compared to -14.1% for the first quarter of 2008.) --"The steep downturn in residential real estate continues. There are very few silver linings that one can see in the data." --"Looking closely at these returns, you can see that 15 of the metro areas are also recording record lows, and eleven are in double-digit decline, with Chicago being the latest metro area to join these ranks."Tue, 27 May 2008 06:38:37 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Pretty thorough market update, incorporating some new projections and recent data: http://biz.yahoo.com/ap/080526/housing_prospects.htmlMon, 26 May 2008 21:55:01 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: It's been a very tame week for this thread, yet we've still had 11 thumbs-down in the past week. I think our old friend(s) Rob Banks/Go Cubs/etc. have shown restraint in their posts, but tried to slowly reappear with the thumbs-down. If any moderator can check to make sure this virus isn't manipulating the system again, it would be much-appreciated.Sun, 25 May 2008 18:35:32 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Great question, Carl. For those who have the time and interest, here is a fascinating article I recently read in March's issue of Atlantic Monthly: http://www.theatlantic.com/doc/200803/subprime The article is entitled "The Next Slum?" and argues that with rising energy prices and an overbuilt suburbia, there will soon be a mass "reverse exodus" from the suburbs to the cities--for those who can afford it. "The Next Slum" won't be a blighted urban area, but the suburbia once known for its picket fences. Favorite excerpts: "The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements." "At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son’s bedroom and into her own, Laurie Talbot, who’d moved to Windy Ridge from New York in 2005, told The Charlotte Observer, “I thought I’d bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen.” "For 60 years, Americans have pushed steadily into the suburbs, transforming the landscape and (until recently) leaving cities behind. But today the pendulum is swinging back toward urban living, and there are many reasons to believe this swing will continue. As it does, many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s—slums characterized by poverty, crime, and decay."Thu, 22 May 2008 21:07:20 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: 1000! Steep drop in mortgage applications: http://money.cnn.com/2008/05/21/real_estate/bc.apfn.mortgage.applications.ap/index.htm?postversion=2008052107 Article highlights: --mortgage applications fell 7.8% from previous week --"Mortgage application volume falls to one-third of where it was during the height of the housing boom in May, 2003."Thu, 22 May 2008 09:54:23 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: House prices post (another) record decline according to OFHEO data: http://money.cnn.com/2008/05/22/real_estate/ofheo_report/?postversion=2008052211 Article highlights: --"Home prices fell 3.1% from the first quarter of 2007, the largest decline in the purchase-only index, which excludes refinancings, since the agency began keeping records 17 years ago." --"It's not going to be the largest decline on record for long," said Peter Schiff, president and chief global strategist at Euro Pacific Capital."Prices are going to keep falling until we get to the equilibrium, which is much, much lower. This is only the beginning." --"The nominal price declines aren't as spectacular as they would be if we didn't have so much inflation," Schiff said. "Houses are becoming a less valuable asset relative to the cost of living." Even worse, these statistics may seriously understate the decline, because "The government index focuses on less expensive properties and includes fewer houses bought with risky home loans that have gone sour over the past year." (source: AP)Thu, 22 May 2008 09:49:23 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: NYU's Economics Chair predicts a further 10-15% national home price decrease in the next 6-12 months: http://finance.yahoo.com/tech-ticker/article/17662/No-Bottom-in-Sight-Home-Prices-to-Fall-Another-10-15-Percent-Says-NYU-Prof?tickers=CFC,WM [The current downturn is "much more serious" than past housing declines, Smith says, predicting another 10%-15% downside, on average, for national home prices over the next 6-to-12 months before any recovery begins. In other words, the housing market isn't anywhere close to a bottom yet.]Wed, 21 May 2008 11:19:18 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Not a lot of talk on this thread yet specifically about the plight of condo owners. Even accepting NAR estimates, sales of existing condo units were down 26% year-over-year in March (compared to 18% sales decline for single-family homes). The real issue is what happens when, say, 1/6 units in your building is in foreclosure, and now the rest of the owners have to take on an additional share of assessment fees that are no longer being shared by the whole building. Interesting New York Times article on this topic: "Collateral Foreclosure Damage for Condo Owners" 5/15/08 http://www.nytimes.com/2008/05/15/business/15condo.html?pagewanted=1&ei=5087&em&en=1ebc381fa67f7183&ex=1210996800Thu, 15 May 2008 09:49:19 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: New foreclosure data shows April foreclosures up 65% from same month last year; problem is probably worse, because many foreclosures have not yet been processed because public agencies cannot process the filings quickly enough. http://biz.yahoo.com/cnbc/080514/24615625.html CNBC Home Foreclosures: Crisis Is Only Getting Deeper Wednesday May 14, 12:15 pm ET It’s another record in the real estate market, and it’s not a good one. RealtyTrac, the online foreclosure sale site, which has also been tracking foreclosure activity since the beginning of 2005, reports the single largest one-month volume of foreclosure activity it’s ever seen. Again, they’ve only been doing this for three years, but you get the idea. Foreclosure activity in April--that’s default notices, auction sale notices and bank repossessions (so yes there can be more than one hit on the property, but we look at the total percentage increases)--was reported on 243,353 properties. That’s a 65% increase from April of 2007. Alright, so what about all the reports that borrowers are being helped, and all those programs to find and refi borrowers, and what about the word from some other sources that foreclosure numbers are actually dipping? Well here’s a disconcerting answer: Apparently the system, that is whatever court or clerk or local bureaucratic office is stuck with recording all this stuff, is stressed. In Ohio, for example, I’m being told that it can take two to six months to get your filings in the system. "In states like Michigan, we’re hearing from some of the trustees who actually do the foreclosures that the lenders have asked them to slow down because they don’t want to process any more into a market that won’t absorb the properties back through sales," says Rick Sharga of RealtyTrac. In Florida, a St. Lucie County court actually added a night shift to handle the massive backlog of foreclosure filings. The clerk of the courts was quoted as saying the caseload has become, “just horrendous.” The court used to handle about forty filings per month. In January they were tracking 715 foreclosure filings. Some are reporting lower numbers because the numbers simply can’t get into the system. The folks at RealtyTrac, and granted these folks list foreclosed properties for a fee, say they don’t believe we’ll see the numbers start to slow until the second quarter of 2009. May and June of this year, according to banking estimates, are supposed to be the peak of adjustable rate mortgage resets from subprime loans initiated in 2006. Lower interest rates on Libor (one of the most common of benchmark interest rate indexes used to make adjustments to adjustable rate mortgages) and other indices that correlate to ARM loans could help, as could continued efforts from FHA and lenders. But the sheer volume, it appears will remain high for now. All those foreclosed homes on the market will continue to push inventories up and push prices down in neighborhoods across the country.Wed, 14 May 2008 11:51:10 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Very good (and short) article from the American Enterprise Institute for Public Policy Research discussing how several negative economic factors are currently creating an "adverse-feedback loop" and slowing the economy. The article states that 1/3 of all U.S. home owners will have negative equity in their home by the end of the year.Wed, 14 May 2008 09:19:31 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I'm not sure if we have any NPR fans reading this thread, but if so, last week's episode of "This American Life" is excellent and on point. The show discusses what caused the credit crisis by interviewing individuals from various phases of the credit industry and can be downloaded onto your MP3 player. http://www.thislife.org/ (the show title is "The Giant Pool of Money")Tue, 13 May 2008 17:29:26 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I do agree with some of the others below who have complained that this thread has degenerated into a lot of bickering. Some of it is inevitable due to the "Slash"-type who come here for no purpose other than to muddy up an otherwise-impressive ongoing discussion. But to the extent possible, let's keep this discussion issue-focused (instead of personality-focused). Most of the personal issues can be worked out (or fought out) via email, but if this forum is to remain productive and educational, we really need to scale back the personal elements. I imagine I have been guilty of this as well, so I'm not trying to call out any person in particular. Maintaining an issue-focused thread also reduces the burden on moderators, which I'm sure they would appreciate. Since we're all adults, I don't think this should be too difficult. Moderators: thank you for correcting the thumbs-down issue.Tue, 13 May 2008 15:43:01 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Hey wsj, I checked alexa.com, and your claim is bogus. There is maybe a three-day dip, but certainly not a two-week dip--also compare trulia.com to zillow.com and you'll see they mirror each other in the slight decline over this period. More interestingly, try Realtor.com and you'll see the same dip, but even more pronounced. Maybe all real estate sites are getting fewer hits because fewer people are interested in buying. I also find your repeated claims (under various member names, of course) that you have the power to "have every realtor in the country" act in a particular way hilarious. Everyone monitoring this thread knows that you are one person with close to twenty different names, and everyone knows you're manipulating the thumbs-down system by creating names for no other purpose than to add a thumbs-down and throw in your newest useless tidbit (after getting called out under your "Go Cubs" alias this weekend this question received 17 TDs in a one-hour period--after receiving a total of seven in the previous month). So round up all of your friends--Slash, What?, Wsj, Go Cubs, Ryan's Mom, Zach's Mom, and the other fifteen people we've long forgotten, and enjoy watching Fried Green Tomatoes again tonight with your Mom and Dad in their Lakeview condo.Tue, 13 May 2008 15:24:55 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: A contract is NOT a moral obligation. JR, you continue to embarrass yourself by comparing mortgage default to murder and marital infidelity. A contract is a legal document expressing the duties of the parties, and the penalty to be assessed if a party to the contract fails to heed those duties. In the housing context, the mortgage is nothing other than an agreement--legal, not moral--, on the part of the buyer, to make monthly payments to the lender; and if he does not make those payments, the lender is entitled to recapture the home from the defaulting buyer. If morality were involved, lenders would probably want to meet with the buyer's friends and family, perhaps even clergymen and former school teachers, to find out as much as possible about the buyer's moral character. But they don't. They look into his finances, (sometimes) legal status and judgments outstanding, and credit history--all financial and legal, but certainly not moral, indicators. Furthermore, when someone defaults on her mortgage, she doesn't face criminal penalty (as when truly moral issues are involved, such as taking another's life) -- she loses whatever she agreed to lose in the contract. Legal scholars have been trying to emphasize this point to the JR-type for more than a century: "Nowhere is the confusion between legal and moral ideas more manifest than in the law of contract. Among other things, here again the so-called primary rights and duties are invested with a mystic significance beyond what can be assigned and explained. The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it — and nothing else... But such a mode of looking at the matter stinks in the nostrils of those who think it advantageous to get as much ethics into the law as they can." --Oliver Wendell Holmes (the most cited Justice, to date, in United States Supreme Court history), "The Path of the Law," 1897Tue, 13 May 2008 09:56:25 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Realtyexec, that is a fair point--I hadn't properly considered credit score. But it doesn't change the fact that the loan market of yesterday allowed people to play with house money; financially, they only stood to gain. The credit score hit is a serious consideration to take into account, but when one's home is worth $80,000 less than one's loan (which is very common in your neck of the woods--California), credit score concerns become secondary. In any case, the credit hit is an after-the-fact consideration and factors little into the initial decision whether to purchase a home beyond one's means--in my opinion, most people don't buy a house thinking about what will happen to their credit when they foreclose. It only factors in later, when the speculation-induced damage has been done.Mon, 12 May 2008 20:19:59 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: JR, sometimes I feel like you are living in a different universe. I don't know how anyone can disagree with Richard's most recent post, which you described as "disgusting." He simply stated the obvious--that it's natural for individuals to act in their own financial interest. Offer: "no down payment for this gigantic house--if it appreciates (which it has done for years!), you reap ALL OF THE REWARDS (minus a 6% commission); if the housing bubble bursts, you bear none of the risk!" What's "disgusting" about accepting this offer?? Suppose I ask you to call heads or tails. If it's heads, you win $50,000. If it's tails, I shake your hand and you walk away with an "aw, shucks." What's "disgusting" about accepting my offer to play in this game? You'd be a moron not to play. Many people who "played" in the housing boom of the past decade stood to gain (and did gain) much more than $50,000. I doubt they think there was anything "disgusting" about their decision. And many people have faced foreclosure in the past few years as housing busted. Oh, well! Now they're in a new home or are renting, and the move/foreclosure was a pain, but with no money down, it's no skin off of their backs. For these people, the coin came up "tails," but there's nothing "disgusting" about it.Mon, 12 May 2008 20:00:06 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: See my updates below: last night I called out "new contributor" "Go Cubs" as being another Slash alter-ego, and this thread's thumbs-downs quadrupled from 7 to 28 within a one-hour period. Moderators, thank you for your continued efforts to keep this thread clean, and I'm sorry that it has become more time-consuming than most. I don't mind that there are some thumbs-downs (which can be expected for a relatively controversial question), but I do want to uphold the integrity of the "thumbs-up/thumbs down" procedure by not allowing one individual to give 20+ TDs in the course of an hour (obviously artificial considering the question received only seven authentic TDs--assuming the others were authentic--over the previous four-week span). Next I expect Slash to give this thread TDs more subtly--say, four here, five there, etc., so as not to be so obvious. It would be great if we could eliminate this (and him) by banishing him completely in some way.Mon, 12 May 2008 13:52:25 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Twenty thumbs-downs on this question in 16 minutes now (after seven in the previous four weeks)--keep 'em coming! This is like watching the ball drop in Times Square. You know it's coming, but it's still so exciting!Sun, 11 May 2008 19:26:55 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Now you're answering like a real person--glad you took my advice. You've sure contributed a lot in the past fifteen minutes for someone who casually observed for the first 740 posts. See you under your next name, sweety! RyanSun, 11 May 2008 18:55:30 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Whatever you say, Slash! I noted in my post what wikipedia said--that the two-word is often used, but "Lakeview" is "increasingly used," hence its use by the community's Chamber of Commerce. Also, great job sidestepping Exhibits A, B, and D. You get creepier by the second. An authentic poster would either ignore my post or put me in my place for even questioning her--they wouldn't try so hard to prove themselves, as you just did. Finally, nice touch on the use of "honey" and "sweety" (three times! ...yes!). Way to prove you're a real live woman! Also, you used the "spin this one" lingo(quoted directly from your last post) to prove your point to Aj under the "Realtor B" alias three days ago. Sorry to out you like this--and on Mother's Day! Go Cards!Sun, 11 May 2008 18:43:55 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Go Cubs is just Realtor B's newest alter ego. Exhibit A: Yesterday Realtor B asked us "retards" to comment on how prices in Lakeview could be rising if Chicago prices were falling. Today "Go Cubs"--who claims to have been casually watching all along (she summarizes her view of all 700+ posts!), but has never contributed--arrives on the scene to "chime in" for the sole purpose of informing us that Lakeview prices are strong and that he/she/it knows "several investors" with "tens of millions of dollars" who are just waiting to jump into this market--like most crap Realtor B spews, completely unverifiable and almost certainly false information. Exhibit B: like every other one of Realtor B's split personalities, this "new contributor" created her account TODAY--the same day she posted. Exhibit C: both Realtor B and "Go Cubs" described the neighborhood as "Lake View," which is odd because the Chicago neighborhood "Lakeview" is one word. See wikipedia: http://en.wikipedia.org/wiki/Lakeview%2C_Chicago See also "Lakeview Chamber of Commerce": http://www.lakeviewchamber.com/ See also Trulia's listing of Chicago neighborhoods, which includes "Lakeview." The two-word spelling is seen in some instances, but it is by far less common, and it is certainly odd that both Realtor B and Go Cubs would "randomly" use this spelling. Exhibit D: two days ago, Roger fixed up the artificial thumbs-down problem, bringing this thread's thumbs-down total to seven. Yesterday, "Realtor B" was created, and there was immediately an eighth thumbs-down. Today, "Go Cubs" was created, and the thread (predictably) received its ninth thumbs-down, even though "Go Cubs" expressed that he/she/it was amused by the thread, and no other new contributor appeared. It's clear Slash/Rob Banks/Buster Hymen/Ryan's Mom/Realtor B/etc. is up to his old tricks. This time he apparently sought to at least start under the guise of being a serious contributor ("Go Cubs"!!) undoubtedly to try and bolster his beloved "Lake View" neighborhood before getting dismissed again. Making his "new contributor" an apparent female was a nice (though not clever) touch. Moderators, again, if there is any reasonable way to prevent this individual from further burdening our discussion, please try. As I sift through the thread's history and check my memory, I believe this is the eleventh alter ego he has created, which demonstrates tremendous time and effort expended for the sole purpose of destroying discussion and education (also recall that his numerous alter egos have repeatedly called for this thread's termination--apparently sabotage is Plan B).Sun, 11 May 2008 18:05:52 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: JR: "Surely you jest. I haven't seen ANY pro use the profany I have seen coming from certain other posters." JR, have you been reading anything coming from Realtor B, a Naperville "Real Estate Pro"? Search the entire 729-post thread and I don't think you'll see any "profany"--or any profanity, for that matter--from those contributors who are down on real estate. A few posters have bashed the value of Realtors generally, but I can say pretty confidently that none on this side of the fence has wished cancer or AIDS on others' family members. I really don't know what thread you're reading.Sun, 11 May 2008 13:54:04 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Another coincidence: creation of Realtor B's account ----> another thumbs-down for the question. Roger or whoever--thanks for taking care of the artificial thumbs-down problem. I know it doesn't really matter, but it was annoying seeing this thread's thumbs-downs accumulate with each new alias account.Sat, 10 May 2008 08:48:31 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Nice scare tactics, Realtor B (yet another "contributor" who created his account YESTERDAY). If you haven't noticed, most contributors to this thread have high respect for real estate agents who can make an argument based on facts and acknowledge strengths and weaknesses in their arguments. Most threads are filled with Realtors patting each other on their backs. This one is generally more critical. Is it really your belief that the presence of one bearish thread with a few Realtor-critical (or skeptical) comments warrants a full-out boycott of this website? How whiny. I'll bet you were the kid in kindergarten whose report card said "Doesn't play well with others."Sat, 10 May 2008 08:41:34 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: JR: I think you meant "ROTFL," meaning "Rolling on the floor laughing." Otherwise you're just "rolling on the floor," which makes you seem surprisingly insane (or a fire victim, in which case you should focusing on escape instead of this thread!). Helping people with internet jargon since 1992, RyanSat, 10 May 2008 07:45:40 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Another great article regarding those who keep chanting "the worst is over": http://www.abc.net.au/news/stories/2008/05/09/2240270.htmFri, 9 May 2008 18:59:15 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Another housing article from the latest issue of The Economist (discussing housing bailout efforts): Home truths May 8th 2008 From The Economist print edition Congress can't stop people losing their homes, but it can do a little to help AMERICA'S policymakers have fought the credit crunch with gusto. The Federal Reserve has slashed interest rates, pumped liquidity into markets and spun a new safety net for investment banks. Politicians have applied a fiscal stimulus and, to keep housing finance flowing, relaxed prudential controls on government-sponsored mortgage lenders. As The Economist went to press, the House of Representatives was set to vote on the latest plan: to stem foreclosures and stabilise house prices by allowing the government to reinsure up to $300 billion of problem loans through the Federal Housing Administration (FHA). It is not hard to see why politicians are so keen to help. For all the hope that the worst may be over in financial markets, the housing mess is getting nastier. Nationally, house prices have fallen between 3% and 13% depending on which index you look at. And they have further to sink. The stock of unsold homes is huge and the ratio of prices to rents suggests that property is still expensive (see article). Some 1.5m households went into foreclosure in 2007, up 50% from the year before. And with 9m people owing more than their house is worth, that figure is likely to soar. In general, governments should not try to prop up prices in inflated markets. However, as Ben Bernanke, the Fed chairman, argued this week, there is a case for government intervention to avoid unnecessary foreclosures. Evicting a homeowner and selling his property takes months, during which vandalism and legal fees can destroy a large part of the home's value—and drag down the price of the neighbours' homes as well. Borrowers and lenders would often be better off renegotiating and writing down loans than going through foreclosure. Yet securitisation has made it harder to reschedule loans and nobody knows how far house prices will fall. Too few home loans have been renegotiated. So is the FHA plan the answer? Supporters, from Wall Street financiers to all three presidential candidates, claim it will do great things: save 1.5m people from losing their homes and, as a result, help to stabilise house prices. Opponents, including the veto-wielding Bush White House, lambast it as a misguided taxpayer rescue for the imprudent. Neither is true. Criticism notwithstanding, the plan is hardly a bail-out. Lenders would have to write down their loans to 85% of the current value of a house. Borrowers would pay a fee for the insurance and give up a share of any later price rise to the government. By reinsuring more mortgages, the government would take on more risk, but the bean-counters at the Congressional Budget Office (CBO) put the explicit subsidy at about $1.7 billion over five years—a fiscal rounding error rather than a reckless handout. Yet because the plan involves little government cash and is voluntary, its effects will be modest, helping half a million households at most avoid foreclosure, according to the CBO. For all the hoopla, the FHA plan will be a useful addition to the anti-foreclosure tool-kit. But it will do less than its supporters hope—or its detractors fear. The virtues of modesty That is no bad thing. The role for government is to prevent more foreclosures than necessary, not to prevent them altogether. Given the scale of likely house-price declines and the laxity of lending standards during the bubble, many Americans are in homes that they cannot afford. In these cases, the right answer is to make foreclosure faster and less damaging to everyone else, so that homes can swiftly be bought by people who can pay for them. A useful counterpart to the FHA plan would be a federal effort to streamline the states' convoluted foreclosure laws. You will not be surprised to hear that no politician has supported that.Fri, 9 May 2008 17:32:02 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: "The courage to end it"? Isn't that a bit dramatic? Besides Chris, the only person who has called for an end to this thread is Rob Banks/Buster Hymen/Heywood Jablowme/ whateverelseproperlydemonstrateshisselfdisdainandinsecurity. Chris, again, STOP READING. It's easy. The proper cancer treatment is to remove the cancer, not kill the patient. And this thread's biggest cancer (BY FAR) is your partner-in-crime who keeps calling for the thread-killing and hurling juvenile insults at contributors under whichever name hasn't been deleted yet. I created this thread, and at least ten individuals continue to actively contribute. Just in the last day we received updates on this thread regarding new housing price numbers, California Assn. of Realtors updates, and Warren Buffett's recent comments regarding the housing market. All very valuable information that I would not have otherwise found. I understand your frustration with the personal stuff going on, and I repeat my request to Mike and others to keep this thread civil and, in turn, productive. But there's no need to shut it down. As a side note, this thread now has 17 thumbs-downs. At least ten are attributable to Heywood Jablowme and his schizophrenic friends.Fri, 9 May 2008 15:44:19 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: The weather analogy (that real estate, like weather, is "local," so it cannot be inferred from national numbers) has strong rhetorical appeal but is logically weak. You can only compare houses to weather if houses and weather are analytically similar in some way. They aren't. Simply put, housing prices have nothing to do with temperature and barometrics. The only *alleged* similarity is that both are "local," which presumes precisely what you are attempting to prove by creating the analogy, making it circular and logically irrelevant. To the extent we accept the weather analogy, how about this: while we may not know the precise figures, we do know that the "nationwide" (as opposed to "local") temperature will drop significantly from July to December. Minnesota's temperature will drop. So will Orlando's. The drop may be uneven, but the temperature WILL DROP EVERYWHERE. This is because United States temperatures are driven by constants--the Earth's rotation/tilt, distance from the sun, etc. Similarly, we may not be able to accurately predict how bad it will be (see: California Association of Realtors, which recently adjusted its 2008 forecasted price declines from 9%--March's estimate--to nearly 25%--May's estimate). But we can say it will be bad--(almost) everywhere. This is because home prices are based on predictable underlying characteristics which all point toward exactly what we have been seeing for several months in a row--rapidly accelerating price declines. It's not as if what is "randomly" causing prices in California to drop is also randomly affecting Las Vegas, Florida, the East Coast, Chicago, etc. in the exact same "random" way. No, markets across the country are falling because the same NATIONWIDE issues (lack of buyers, foreclosures causing price declines which cause foreclosures which cause further price declines ad infinitum, etc.) are affecting every region. Bring your umbrella--wherever you may be.Thu, 8 May 2008 22:00:36 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I hope Trulia never shuts down this thread. Whatever anyone else wants to believe, I am a real person who was absolutely planning to buy a house until about a month ago. My wife and I were in a contract to buy property at 4547 N. Ashland (Chicago), and we got out of the contract due to some problems revealed during our home inspection. My wife and I were checking websites such as craigslist, buysiderealty.com, and others on a daily basis looking for new listings. Then I found this website and was drawn to a comment and report cited by Trulia member John the Bruce. The report persuasively argued that home prices would continue to fall in the short- and medium-term future. I had heard home prices were falling, and my intuition was that this made it a particularly *good* time to buy, because I would get more for my money. I never considered the fact that prices could *keep falling*, perhaps dramatically. After all, real estate prices have been increasing every year since I was about ten years old, and Realtors I talked with always (yes, in my experience, ALWAYS) told me that it was a good time to buy. I just assumed that any price drop must be temporary. After I read John's link, I did some research on my own, and I created this question thread. It is hard to overstate how grateful I am today for this website and the contributions made to this thread by several Trulia members. As a once-objective and unbiased mind, I am now absolutely convinced that prices will continue to drop for at least another year, and I firmly believe that the information gleaned from this thread has protected my wife and I from losing a great deal of our savings in an ill-advised real estate purchase. The Center for Economic and Policy Research (an organization with neither a "horse in the race" nor a tarnished reputation, see: NAR) recently estimated that, based on the most recent Case-Schiller data, more than $6 trillion worth of home equity will "disappear" in 2008 alone due to home price deflation. This equates to an average of $85.000 of lost equity PER PERSON. http://latimesblogs.latimes.com/laland/2008/04/disappearing-no.html I am gladly not a part of this statistic. If anyone stumbles onto this website, and onto this thread, and makes a wise decision based on objective data instead of NAR spin, then the thread continues to serve a valuable purpose. To anyone reading this right now, I would recommend reading the first 100 or so comments, which are substantively the strongest, or you can click the link above entitled "Highest Rated" for the answers other Trulia members have chosen as the best. I am not aware of any other resource on the internet right now with more comprehensive analysis or better data links than the posts contained in this thread. Those who call for the termination of this thread are obviously bothered by the prospect of regular people having easy access to valuable information--there is no other explanation, because anyone who is simply annoyed by this thread could easily choose not to read it. Finally, I would note that with 600+ posts, it is more important than ever to properly flag posts worthy of "thumbs up" so future readers can actually find the best information.Thu, 8 May 2008 17:36:00 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Deborah, I don't want to speak for Ben, but I don't think he meant the "Joe Sixpack" comment the way you took it. I usually interpret "Joe ____" to mean your everyday person. Perhaps the "Sixpack" surname refers to working class buyers (which describes most people), but I don't think there's anything inherently offensive about that. The point Ben was making (at least how I took it) is that your everyday worker--"Joe Sixpack"--used to be able to buy a multi-hundred-thousand dollar house with no little or no money down, regardless of his credit rating. Today, the "regular buyer" needs to put up about $45,000 in cash to buy his "average priced" ($225,000 or so) home--AND he needs a very strong credit score. In some parts of the country, even this will not be enough, as banks are increasingly skeptical of approving loans for declining assets. "Joe Sixpack"--meaning, as I take it, persons of average wealth, average credit, etc.--can't buy a house today, at least not the way he could a few years ago. There is nothing local about the underlying problem facing the real estate market. Tens of millions of buyers--everyday people--have received rubber-stamp approvals for their home loans. This is no more. Banks are requiring large down payments and high credit scores, and this means substantially fewer buyers can buy, which means substantially less demand, which means substantially reduced prices. I don't have to hypothesize--this is happening.Thu, 8 May 2008 08:18:19 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Slash and Chris Freeman, this thread remains the top rated on Trulia, and by tonight's end there will likely be more than 100 responses (by twenty-five different people) TODAY. You don't need to constantly chant "kill the thread" (and accuse Trulia of evil-doing) every time Mike posts a response that makes you feel insecure. Your attempts to quash the opinions of others is not welcomed in most countries not-named-China. With that being said, Mike, you are going a bit (OK, a lot) overboard. I don't mind your passionate stance, but keep in mind two things: first, you have good points to make, and you do a nice job of supporting your opinions with articles and data, but when you get emotional with your posts and generally berate Realtors, you lose credibility and it takes away from your overall effectiveness. Second, I think it's important to not generalize so much. I think you're right that Realtors are not as critical to making a home purchase today as they were ten years ago (due mostly to websites like this). But I think it is equally true that Realtors continue to provide a great service to those buyers and sellers not able or willing to do it on their own. I just turned 25, but in three months I'll become a lawyer and charge people $300/hour for my services. A fair argument can be made that I'm not worth that, but the bottom line is that some people (and companies, of course) will gladly pay it. As long as people continue to gladly hire Realtors, I don't see the point of being so fussy about it. Similarly, I agree with you that MANY Realtors (and the NAR, in my opinion) greatly contributed to many wrecked lives in this country through the "Great Time to Buy (and Sell)" propaganda, and the well-being of buyers was shoved to the side in the name of more sales and more commission, but I also think it's true that many Realtors have been and continue to be realistic about this situation, and a few have really contributed to this thread. I don't think it's fair to say they are all worthless and will be making $10/hour in another industry next year. Just my thoughts--obviously this thread has taken on a life of its own, so no need to listen to me anymore.Wed, 7 May 2008 17:47:54 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: In other news from this week... *Moody's, in a report for forbes.com, reportedly predicts that home prices (at least in some markets) will continue to decline between 10-25% in 2009. *Fannie Mae president stated we are only now "in the belly of the cycle" (that is, at our worst point, but not close to over), and the company has upped its 2008 forecasted price declines from 5-7% to 7-9%. http://biz.yahoo.com/ap/080506/economy.html *Quote of the week: "Where in the world does it stop?" --National Association of Homebuilders chief economist David Seiders, on the worsening rate of foreclosures and resulting falling prices. http://seekingalpha.com/article/75863-moody-s-sees-prices-10-25-lower-in-2009-housing-trackerTue, 6 May 2008 21:35:47 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: [Some, not all] REALTORs say the darndest things! My wife recently received this email from "Agent Erwin" of Nexus Chicago Realty Group, LLC. I'm not sure how he got her email address...maybe from a sign-in sheet from last year, when we were actually considering buying a home. I wanted to see if anyone had thoughts on it. The message strikes me as plainly irresponsible. Don't REALTORs owe a fiduciary duty to their clients? If so, aren't they breaching that duty by soliciting clients in a way that misrepresents the true nature of the housing environment? Most people don't know how to do their own home research, and instead they rely on real estate "professionals." If an email like this induced me to buy a home that fell in value 15% after I bought it, I'd be pretty upset. I particularly dislike the line that says "We know that home prices are leveling off in Chicago!" --assuming, as I believe, that he means price DECLINES are leveling off. Anyhow, the soon-to-be lawyer in me can't help but wonder whether we can expect a class action lawsuit against REALTORs in the near future, or individuals suits against certain agents. I believe agents have a duty to inform their home-buying clients that the market is volatile and uncertain, that prices may continue to drop, etc. If people trust in and rely on their REALTOR's judgment, and that REALTOR misleads the facts, I think they should pay for it. [[[ *Do you want to be a homeowner? *Do you have a credit score of 620+? *Do you plan on living in your home for 5+years? What are you waiting for??? Finance costs will rise as the economy recovers, so trying to time real estate might not pay off [visual aid, described in following paragraph of email] Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. monthly principal and interest come to $944.31. Let's say that in 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $944.94 and you'd have saved NOTHING. Meaning while, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be. In today's housing market, the real risk is in waiting to buy a home! We know that interest rates are low TODAY! We know that home prices are leveling off in Chicago! We know that there are plenty of homes on the market to choose from! We know that sellers are willing to bargain. And we know that builders are willing to offer attractive incentives to get your business! Any or all of these favorable variables could change for the WORSE twelve months from today!Tue, 6 May 2008 21:29:00 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: That's a great article Paul, thank you. Paul Krugman is one of the most respected living economists. A couple other points in that article which I found very interesting: --prediction that 1/4 of all American homeowners will have negative equity before the housing correction is over --the possibility of "overshooting." Many people assume that prices will drop until they are in line with what the "should be"--whatever that means, and then they will stabilize. I thought it was interesting that Krugman believes prices could "overshoot" in the negative direction and fall farther than necessary due to the negative snowball effect (price drop causes foreclosures which cause price drop, etc.). This makes sense--if home prices rose unjustifiably for a decade based on superficial investment optimism, who is to say prices can't dramatically fall below baseline levels based on (perhaps unfairly hyped) negative trends?Thu, 1 May 2008 12:25:53 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I don't have much to add to this discussion right now, but I do want to address a stream of annoying comments: (1) I never sought to solicit advice to advise me whether to rent or buy. Read the question: I specifically say I'm leaning toward renting (in the interest of disclosure), and I just wanted a forum to discuss the issue and exchange data/opinions. (2) I'm tired of the "this thread is still going?!?" comments. If you aren't getting anything out of it anymore, then stop reading. What would you have me do, delete the thread? I'm not sure why these people are so committed to stifling others' discussions. Considering this thread has more "thumbs ups" than any in the history of this website, I'd prefer to keep the discussion active as long as others are getting something out of it. It's rather ironic that people keep contributing these worthless comments in order to point out that the discussion isn't productive. I don't have time to search the internet all day looking for new housing articles/data, but I do have time to check this site and read the 2-3 new solid links each day, so the thread is valuable to me if only for this reason. In the meantime, Mike, you really piqued my interest--can you tell us more about your old position? I am definitely interested in hearing what a former real estate VP thinks about this market.Wed, 30 Apr 2008 17:06:53 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Aj, I'm not sure if you had said it before, but I thought your last post's analysis made a lot of sense. It would be nice to know exactly what is going on in a particular neighborhood, but there just aren't enough home sales (especially in this market) to get a large enough sample to confidently reflect what's going on. For me, Dann, the C-S data is just the best (most objective, most reliable, etc.), so that is why I value it over almost anything else I could read, and I just cannot believe that Chicago (city) prices can be steady while Chicago (metro) prices are falling quickly. I understand there is some conflicting data and appreciate your reasonable disagreement. Here is a Chicago local market report by Chris Ford, Realtor (found on Realty Times website): There has been a noticeable slow down in sales of both the single family and condo market. Properties that show very well and are priced correctly are moving. But if you don't get an offer in the first 30-45 days, properties are sitting and market times are going up as well as inventory. The avg days on the market for Condos has gone up to 200 days Buyers are being very particular in what they want and if they are not finding exactly what they want they are moving on to the next property. Developers are being forced to offer big incentives to attract buyers and resale properties are being forced to lower their prices and expectations if their property has not sold quickly. A strong marketing plan is needed by sellers to attract as many buyers to their property as quickly as possible. As we move into the traditionally active Spring/Summer selling season with lots of left over inventory and new listings coming on the market I believe this trend will put even more pressure on sellers who have been on the market for some time to further lower prices. Making for advantageous deals for Buyers.Tue, 29 Apr 2008 11:59:29 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Couple of thoughts re recent posts: Chandler: I think you raise a good point about buyers' alarming tendency to make their lives' biggest investment without really researching. Sadly, I was one of them. Last summer I heard that home prices were starting to fall, but I believed what I heard on radio commercials put on by Chicago-area Realtor Associations: that the problem was confined to the coasts. My wife and I found a house we liked listed at $700k, and we thought we got a "steal" when we got it for $620k. This was a great price according to comps I was seeing (reinforcing your theory that, at least to a limited extent, stupid buyers create more stupid buyers). This spring, we did our home inspection, which revealed that the home's wrap-around front porch was defective and needed to be replaced. We couldn't work this out with the seller, so we walked away. Today, I am so thankful that our inspection revealed that defect. Best $395 I ever spent. JR: in response to Chandler's message about buyers overpaying, you wrote "Now where do we place the blame for inflated prices? Hmmmmmmm.....?" Not sure what you're getting at here. The vast majority of buyers rely on their trusted Realtors when deciding whether and how much to bid. Overpaying is also surely based, at least in part, on highly successful Realtor ad campaigns which gave Americans the impression that prices were inevitably (and dramatically) rising, so (1) no home investment could be a bad investment; and (2) pay now--whatever it takes--because you may not be able to find a home later. Dann: it's clear we have different opinions as to what is happening in Chicago, but I appreciate your insistence! I imagine that for every example or friend you can call, someone else has a counter example showing things aren't so hot in Chicago. For instance, a few months ago my wife and I saw a home we liked in the north part of the city. It was listed at $829,000 (out of our range), but we wanted to keep an eye on it. The home is now listed at $699k and is still on the market (and I can verify it is a beautiful home). It is also true that home sales *in the city* remain at a 17-year low, and Chicago was second nationally in foreclosures in February. I just think it is silly to believe that the problem is confined to the outer suburbs but not the city--after all, the city (not the suburbs) saw the most significant price appreciation in the previous ten years. My feeling is that we have a long way to go. Meanwhile, Case-Shiller shows Chicago prices are now down 8.5% year-over-year, meaning the average person who bought a $500k home LAST YEAR has now lost $42,500 in equity. And--once again--the price decline was steeper this month than the previous, showing the price free fall is intensifying, not slowing. (Reposted after correcting typos)Tue, 29 Apr 2008 07:14:14 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Extra! Extra! Case-Shiller's February data was published this morning (link below). Highlights: --17/20 metro areas posted "record low annual declines" --10-city composite data showed a year-over-year price decline of 13.6% --not so local: all 20 cities showed price declines from the previous month *** --"There is no sign of a bottom in the numbers." David Blitzer, Chairman of Standard & Poor's Index CommitteeTue, 29 Apr 2008 06:45:07 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Hey everyone, let's focus on the issues. On a lighter note (?), here is an article on "America's Worst-Selling Housing Markets": http://www.forbes.com/2008/04/15/homes-sales-worst-forbeslife-cx_mw_0415realestate.htmlMon, 28 Apr 2008 21:37:08 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Dann, if I understand correctly, your last post amounts to this: in deciding whose opinion to trust, if given a choice between... Person A: intelligent, unbiased, opinion based on hard evidence; or Person B: "experienced," but livelihood depends on making money from home investments and sales; You would trust the opinion of Person B in answering the question "what is going to happen to home prices and sales in the future?" Likewise, you seem to trust the opinions of national and Chicago-based Realtors (quoted in the April 23 Tribune article) over the opinions of award winning economists. Fair enough--at least you put your money where your mouth is by, apparently, purchasing over 100 investment properties. Just don't act shocked when others find your position difficult to understand. Remember, several Realtors who have added to this thread--people who would LOVE to believe that you are right about Chicago's resilient home prices--have conceded that the market has changed and prices are falling, despite their bias. Also remember that your neighborhood Chicago Mercantile Exchange traders also apparently believe local home prices will continue to fall for the foreseeable future: http://www.cme.com/trading/dta/del/delayed_quote.html?ProductSymbol=CHI&ProductFoiType=FUT&ProductVenue=G&ProductType=hngSat, 26 Apr 2008 17:28:53 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: This blog post (dated 4/25) from a Chicago real estate broker takes on some of the problems with the Chicago Tribune story that Dann keeps citing:Sat, 26 Apr 2008 13:21:09 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Paul, I can't figure out how to do that--don't think I can. I wanted to modify my question early on in hopes of stopping the numerous "Interest rates are low and it's a buyer's market!" responses, but I don't think I can do that without starting a whole new question.Sat, 26 Apr 2008 10:39:07 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Thanks to everyone for their contributions to this thread--as of this morning (4/26/08), it is the "best rated" question on Trulia! This is a bit of a misnomer, because my question is fairly unremarkable--rather, it it the thoughtful contributions of others who have made this thread strong. To anyone now reading from this thread for the first time: please scroll back to the beginning of the thread. That is where the most substantive thoughts/arguments/data were discussed. There have been some great comments and links in the past week, but comments 1-75 or so were (in my opinion) what really got this thread going so strongly. Thanks again to all contributors-- I never thought I'd be so excited for the next month's Case-Shiller data (released this Tuesday!). : )Sat, 26 Apr 2008 09:52:03 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Paul (Chicago Home Buyer Paul, that is--three posts or so below)--I'm not sure if you were joking or not, but when I see that graph, it scares the heck out of me. Yes, the graph clearly demonstrates that prices increased at unprecedented levels from the mid-90s until now. But the point is that gain was largely artificial--home prices were not intrinsically worth more, but they were buoyed by cash from disappointed stock market participants (mostly in 2001-02) and a surge in new buyers due to poor lending standards (no one needed a down payment, lenders approved individuals with poor credit, etc.). Add to this Realtor "Buy buy buy!" propoganda, and yes, as the graph shows, prices went up. But all of those factors are gone now. We are now seeing that graph start to dip--and boy does it have a long way to fall to be in line with historical price trends. That's actually the most graphically frightening evidence I have seen yet of how far prices could fall before this market correction is over.Sat, 26 Apr 2008 08:06:58 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Today's national (not local!) real estate news (link below): Opening caption: "Sales of new homes plunged in March to the lowest level in 16 1/2 years as housing slumped further at the start of the spring sales season. The median price of a new home in March, compared with a year ago, fell by the largest amount in nearly four decades." And while the slump may not affect all local markets, it is affecting every region: "For March, sales were down in all regions of the country, dropping the most in the Northeast, a decline of 19.4 percent. Sales fell by 12.9 percent in the West, 12.5 percent in the Midwest and 4.6 percent in the South."Thu, 24 Apr 2008 08:47:23 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Dann, I just read that report. I don't know. The only people quoted were regional/national advocates of the National Association of Realtors, not a credible (or historically accurate) source--see about fifteen posts below. This tracking website shows Chicago home prices are down 6.5% from one year ago: http://www.housingtracker.net/askingprices/Illinois/Chicago-Naperville-Joliet/Chicago-Naperville-Joliet And Case-Schiller's most recent data (will be updated with February numbers next Tuesday) show a 6.6% price decline: http://www.globalindices.standardandpoors.com/data/pdf/CSHomePrice_Release.pdf I can't really explain why these numbers differ so much from those reported by the local Realtor associations quoted in the article you read--if someone can, please explain (if you have any explanation other than suggesting the NAR twists the truth, which may be a fair point but has already been said).Wed, 23 Apr 2008 09:37:52 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Tom, no problem-- I took back my comment. Didn't mean to seem so defensive, but when I reread my post, that is way it sounded. Here is my question from earlier: Can someone translate the CME home futures data? I have checked out that link a few times and just do not understand what it is saying. Any insight is appreciated. Chicago home futures link provided below.Tue, 22 Apr 2008 18:18:23 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I am definitely interested and "affected directly" in the sense that until a week ago, I was planning on trying to buy a home for $650,000, and this is an investment I take very seriously considering I would have to put very near my entire life savings into the down payment. Otherwise, I have no involvement in a "related business" (unless being a junior high school teacher for a year followed by three years in law school is "related" to the real estate industry, which seems like a stretch). I graduate from law school in two weeks and have enjoyed the opportunity to procrastinate on this website instead of studying for my last round of finals.Tue, 22 Apr 2008 10:08:33 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Home sales update, and a new bold prediction from the NAR's chief economist! (see post on NAR credibility three posts below): "Lawrence Yun, chief economist for the Realtors, said he expected sales would begin to show improvements in the second half of this year, helped by an improved availability of mortgage-backed insurance from the Federal Housing Administration and higher limits for jumbo mortgages, loans that are critically important in high-priced areas of the country such as California." It looks like we're about to turn the corner--which has been the case for every quarter on record, according to the NAR.Tue, 22 Apr 2008 08:44:09 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I don't have anything against Realtors as individuals, but the NAR has lost a ton of credibility in my mind. In the past 2.5 years, the NAR has consistently spun data in a way that goes beyond optimism to become plainly misleading. As a result, tens of millions of home buyers who relied on NAR optimism in (sometimes over-) purchasing homes have lost a great deal of their life savings. Two things especially bother me: (1) the NAR holds itself out as an unbiased organization. Most buyers don't know (or think about the fact) that the NAR has a vested interest in seeing homes sold, so these buyers rely on NAR information as if it is The Truth. After all, who would know more about real estate than Realtors?? This problem is compounded by two facts: (a) the NAR advertising budget is huge, so it has a powerful ability to sell its spin; and (b) its opinion is largely unrivaled--because what organization would spend millions of dollars to prove house prices were falling? (2) it also bothers me to hear Realtors blame the banks and the media for the downturn. The media has no role in the downturn; it merely reports data. The banks do have a role in the downturn, but only to the extent that they had a role in the dramatic upswing before credit tightened. In my mind, the NAR, with its perpetual optimism and deceptive spin, is more to blame and therefore just as responsible for the impact of foreclosures and price downturn on American families as any other entity. Here is an excerpt from a website I found depicting NAR spin in the past few years (web link below): [I’ve always found NAR’s opinions to be very entertaining. As the real estate ship Titanic slowly sank, you could be sure the NAR’s chief spokesman (David Lereah) was busy running the decks proclaiming how wonderful of a day it was and how nobody had anything to fear because the ship was running just fine. Before the pop, Lereah was busy calling bubble believers “Chicken Littles,” while trying to keep the hype going. The image and message displayed at the top right of this blog entry was even part of NAR’s $40 million “It’s A Great Time To Buy Or Sell A Home” advertising blitz campaign that started on November 2006, advising consumers to take buying or selling action now while conditions remained favorable. Such eternal optimists. As CBS Marketwatch bluntly pointed out: There are two universal truths at the National Association of Realtors: 1) It’s always a good time to buy or sell a home; and 2) We’ve seen the worst of the housing market correction. Just for kicks, let’s take a look at the National Association of Realtor’s predictions and compare them to what actually happened: December 2005 - NAR predicted the national median home price would rise about 6.1% in 2006. Over a full year, it “has never declined since good record keeping began in 1968,” NAR boldly stated. * The Reality: Through October 2006, the median price of residential properties was down 3.5% from a year earlier. The median price decline is even worse if you take into account all the extra cash and financing incentives that were thrown on new home buyers. January 2006 - David Lereah’s forecast: The market is in the process of normalization and “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead. * The Reality: Fourth quarter sales fell at an annual rate of 12.6% to 6.94 million annualized. April 2006 - NAR’s forecast: Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau. * The Reality: First quarter sales fell at an annual rate of 8.6% to 6.79 million. Lereah’s explanation: This is additional evidence that we’re experiencing a soft landing. July 2006 - NAR’s forecast: The market should even out just below present levels. * The Reality: Second quarter sales fell at an annual rate of 6% to 6.69 million. Lereah’s explanation: The market is stabilizing. October 2006 - NAR’s forecast: We expect sales activity to pick up early next year. * The Reality: Third quarter sales fell at an annual rate of 22.2% to 6.28 million. Lereah’s explanation: This is likely the trough in sales. January 2007 - Lereah announced: “After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing home sales to gradually rise all this year and well into 2008″ * The Reality: * Fourth quarter sales fell at an annual rate of 2.3% to 6.24 million. Lereah’s explanation: It appears we have established a bottom. September 2007 - NAR’s new chief economist Lawrence Yun confidently proclaimed: “Mortgage disruptions will hold back sales over the short term, but long term fundamentals are favorable. A modest upturn is projected for existing home sales toward the end of the year, with broader improvement to include the new home market by the middle of 2008.” Let the games begin.]Mon, 21 Apr 2008 13:59:09 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Paul, I still don't understand your concept of buying property "below market." I hear that often (especially on this site)--"this is a buyer's market, so use your leverage to bid low and secure the property at a below-market price," or something along these lines. I do not understand that. Presumably, the seller is not a charity. That said, the seller is not trying to make your day. He's not trying to help you out at his own expense. Rather, he is selling you the property at that price because that is the top dollar he can get at that point in time. This IS the "market price"--the price at which a willing buyer and a willing seller make the exchange. Sure, the seller could have held out for more money; but he didn't do that, because he was not certain he could sell it for more money in the near future--a valid concern considering the multitude of other available properties on the market. This is the reality facing many sellers today who must accept lower-than-anticipated offers in order to make the deal. These transactions are not "below market," they are the market. As a corollary, as the market continues to fall, so too does the value of the property you just purchased. You are not immune to market pressures because you bought smart--you bought at market value, and if your market falls, you property's value will fall with it. The most persuasive context in which I hear people speaking of buying something "below market" is when they buy property from a bank or via foreclosure. But even this doesn't make sense to me. Suppose a property is appraised for $100k in 2007; the bank forecloses, and you "steal" it from the bank for $70k. It is tempting to say you bought it "below market." But the reason the bank sold the property "formally appraised at $100k" to you for $70k is because no one else would pay $71k. There is still plenty of capital going around our country, so if consumers or investors wanted to pay $71k, they could and would--but they didn't, and that is because they didn't think it was worth $71k. The only exception to the market working in this way is imperfect information. I think there is some of that out there--many buyers (like me) don't exactly know what goes into buying from a bank, and the foreclosure listings aren't as informative and picture-filled as the ones featured on real estate websites. There are undoubtedly fewer buyers out there for these properties. But I think there *are* enough buyers, and there *is* enough information, that the short-sale/foreclosures market should run efficiently. Further, to the extent that buyers get "great deals" because there are so many more sellers than buyers, this is not a market aberration, but basic supply and demand coming together to correct actual market prices--nothing "below market" is happening in this case. In sum, when I hear someone say they bought something "way below market," I get a puzzled look on my face. Just because you got it way below some past appraisal, or way below its listing price, doesn't mean you got it below market. The price you paid IS the market value, and it's low not because you struck an amazing bargain, but because prices have fallen, and your seller figured this out before other sellers and adjusted his price accordingly. Your example aptly demonstrates my point. A seller "needs" to sell, but she think market value is $350k; however, if she lists at $350k, it may not sell (as you stated, "Homes are sitting on the market forever, buyers are scarce and geez... everybody says prices are going down."). So she adjusts her price to $325k, and it sells. This is not below market--it's simple price adjustment to make a sale, the most common market adjuster (not market aberration) of all.Mon, 21 Apr 2008 09:40:49 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Thanks Liz. We've probably come close to exhausting the current research out there, but as new data comes in, or new articles are written, please forward them to us all on this thread--otherwise it may be hard to find the post out there on Trulia if more than 1-2 days pass without checking. I know very little about how/when data is posted. Does anyone know what the "big" numbers in the housing market are, and when they become public? I'm thinking quarterly numbers, foreclosure data, updated price indexes (indices?), etc. Anyhow, whenever important numbers are announced, please pass it along. I think a lot of people who have read or posted on this thread are very interested in keeping up during this important time in the housing sector. Thanks as always to everyone who has contributed to this thread.Sun, 20 Apr 2008 11:02:34 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: I don't think some of the recent posters fully grasp today's buyers. Jer just stated: "Most people buy to eventually own (free and clear), regardless of the outcome of the gains and losses, with the hope of an overall gain which has been historically measured." I would be shocked if this were true today. I am 25 and do not know anyone near my peer group who is currently in a home they expect to "eventually own (free and clear)." Rather, I suspect an overwhelming majority of at least young buyers--say just out of college-age to 35--buy a house expecting to be there for 5-10 years. In this respect, "short-term swings" (meaning price changes expected in the next five years or so) are vital. Many reputable sources now predict home prices will fall by 20% or more from 2007 highs. This would be devastating to these purchasers' net worth. It's easy to play "Old Man River" and lean back in a rocking chair describing the way things were, but my generation is significantly more mobile than those preceding it, and few view their current homes (or jobs, or geographical locations, for that matter) as long-term investments. I also think Realtyexec's last post understates the issue. Jared said he would have "been in a world of hurt" had he paid asking price for a California condo in 2005. Exec replied that this would only be true if Jared had a 3-5 year ARM, but not if he had a 30-year. How is this accurate? If Jared would have paid asking price, he would be in the same position that has led millions of people to foreclose--after the value of his home fell, he would wake up and realize that he owed more on his mortgage than his home was worth. When Jared's condo's depreciation has caused what was a $300k asset to fall to, say, $250k, what incentive does Jared have to pay the bank on the $275k loan he owes it? Not all current foreclosures are people who are pushed to it due to costs they can't afford; some simply walk away because the math makes sense. In any case, I don't think chanting the "your home is a long-term investment" mantra is speaking to potential buyers like me. I can grant you the fact that I could buy now, lose in the short term, but then (if I'm very optimistic) gain the loss back within, say, five years. OR I can wait 1-2 years, buy then, and what was equity recapture is now pure equity gain. Either way, as long as it is true that prices are falling and will continue to fall in the short term, it makes no sense for buyers like me to rush to the market. Jer and Exec, thanks for your thoughts-- I respectfully disagree but appreciate your comments.Sat, 19 Apr 2008 00:32:55 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: More data (for anyone still keeping up with this thread). This is from Menzie Chinn, professor of economics at the University of Wisconsin. He ran several statistical models based on recent data from the WSJ and the OFHEO (Office of Federal Housing Enterprise Oversight--ofheo.gov). He concluded that, using the most optimistic assumptions that can be inferred from the most recent data, prices will continue to fall (but modestly) through the beginning of 2009; however, if negative trends reinforce each other in the way he projects, a 40% price decline from 2007 highs is not unlikely. Very technical analysis--not easy to follow. But intriguing nonetheless, and there are some interesting blog posts after the article.Fri, 18 Apr 2008 21:00:22 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Patrick, good thoughts, but what about this: 1. If I rent, I'm looking at payments of about $1,300/month. To buy a comparable home or condo, my monthly payments would be right about $2,500/month. So while I am not building equity in a home by renting, I am building equity in other assets--namely, the $1,200 each month that I will save and put into savings, 401(k), etc. 2. Your explanation assumed a 5% depreciation this year, then a rebound next year, meaning I would (hopefully) recover the loss within about five years. But what if depreciation is not 5%, but 25%? Reports show Chicago homes lost 2.2% of their value this January alone, and the rate of loss was accelerating. Even assuming the January rate is constant for this year (and does not continue to accelerate), this equates to a much more than 20% price drop this year. (Meaning a $500,000 condo is worth $400,000 after one year; also, if one put down a 20% down payment--or $100,000--one has lost her entire savings by the end of the year.) Even if we were talking about a 5% drop this year (which all forecasts I've seen say is extremely optimistic), that is a $25,000 equity loss in one year, assuming a $500k home. Given this, why wouldn't I just wait a year? Why would I buy if I was certain I would lose (at least some) equity? This is the heart of my thread question. If we know prices will fall, why should we buy?Fri, 18 Apr 2008 12:47:39 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Patrick, thanks for that article--we're getting closer. The only problem is that the report is based on old data--it simply concludes that Chicago prices fared modestly well in 2007. I think that is probably true, as Chicago prices continued to soar throughout the spring and early summer of 2007, held steady during the late summer and fall, and only started to really fall toward the end of the year. What I am most concerned about (for purposes of deciding whether to buy now) is where prices are going. If anyone has any (remotely) positive reports on our current/future state, please submit them. In the meantime, I do appreciate that post Patrick.Fri, 18 Apr 2008 11:59:02 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: There have now been 52 posts on this thread, with people weighing in from both sides. As of now, no one has submitted any reports or other data indicating that prices are rebounding or even stabilizing. The report linked to below is shocking: contrary to hope and popular opinion among many Realtors, now is not a perfect time to buy--in fact, it may be the worst time to buy we have ever seen. The report indicates not just that prices have dropped; not just that prices are dropping and will continue to drop; but also that prices are dropping now faster than ever, with January (the last month with data) being the worst month yet. Real estate is not the stock market; we don't see a great month followed by a bad month. Rather, trends accelerate consistently until they become stagnant, then (and only then) might the trends change. In August 2000, Enron stock was worth $90/share. Enron executives told the public they predicted it would hit $140/share, so people kept buying. Within a year, its price had falled to $42/share. Everyone said "look how badly the stock has fallen! It must be a perfect time to buy!" Two months later, the stock fell to $15/share. Everyone (again) was told that it had bottomed, so millions more people invested savings into the stock. Months later it was worthless. I am not saying people who own homes will bear the future of Enron investors (I certainly hope not, because I am a home owner). Home prices ARE more stable than stock prices, in part because they are tangible assets and less manipulable. But there are some similarities: like Enron executives, Realtors have long professed the enduring (and inevitable) appreciation of the assets being "sold" to the public; both assets saw very large appreciation in a short time period; and today, Realtors continue to profess--in response to increasingly bleak economic reports--that NOW is the "perfect time to buy." I just don't like the logic. When real estate was rapidly appreciating, it was the perfect time to buy--because everyone was making money and would continue to do so. Now that prices are rapidly falling, it is the perfect time to buy--because surely we've hit bottom (or are at least close). The problem is, there is no reason to believe we have hit bottom, or that we are close to hitting bottom. All studies I have seen indicate that prices are now falling faster than ever, and the problem is quickly intensifying, not stabilizing (and certainly not "rebounding"). If there is ANY DATA refuting these claims, please submit it. My opinion is based on the evidence I have seen, and I will soften (or even change!) my position if the evidence warrants it.Fri, 18 Apr 2008 11:22:39 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Re interest rates: Several people below have asserted that rates will soon increase, so this is a reason to buy now. The site below links to a bankrate.com "Rate Trend Index"--basically, the website polls a large panel of experts every week regarding their predictions for interest rates, both short and long term. The experts are asked whether they think rates will increase, decrease, or remain unchanged. Here are this week's results: 1. Short term: 0% say rates will increase, 67% say rates will decrease, 33% say rates will remain unchanged. 2. Long term: 11% say rates will increase, 56% say rates will decrease, and 33% say rates will remain unchanged. Some experts also give 1-2 sentence summaries explaining their predictions. For anyone interested, it's worth checking out.Thu, 17 Apr 2008 21:21:10 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Earlier today there was some discussion on whether and how much Congress's decision to increase the loan limit on government-backed mortgages would effect home purchasers. I'm not sure if this answers the question, but the WSJ link below provides an update on action being taken. It is my reading that the recent legislation ALLOWED Fannie Mae/Freddie Mac to increase limits on government-secured loans, but action had not yet been taken by those bodies pursuant to this approval--until today. Please let me know if I am misunderstanding this or if you have heard anything else. For any mortgage brokers out there--any insight on how recent legislation will affect interest rates (especially legislation aimed at increasing conforming loan limits) would be much appreciated. Again, thanks to everyone providing such strong analysis.Thu, 17 Apr 2008 15:57:03 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Calling all home sellers or real estate agents: many on this site have claimed there is reason to believe home price declines are stabilizing or even improving, both nationwide and locally. Is there any data to support this claim? Several studies--not doomsaying news articles, but economic studies conducted by organizations headed by Nobel Prize winners and Harvard professors--are cited in the thread below and strongly argue that price declines are now rapidly accelerating--not stabilizing--and in fact the last three months on record have seen our worst drops yet, projecting an annualized price decline of more than 25% this year (or a $100,000 equity loss for an individual who purchased a $500,000 home just one year ago). Please refute this claim if you can (my wife still sides with those saying "buy" but she's having a tough time justifying that view in light of the analysis in this thread!). Aj, thank you for your helpful rate analysis-- can you (or any others who can chime in) say a bit more about the effect of the government-insured loan limit increase (I think from $417k to $729k?). I suspect many potential buyers (including me) would fall within this loan change, and it is something I've thought about when deciding whether to buy. Specifically, (1) does this change directly affect the consumer, or does it just affect the loan industry in hope that it "trickles down" to the consumer (which Fed rate cuts have not); (2) how likely is it that these measures will be renewed before the end of the year, when they are expected to expire; (3) how much do these measures affect mortgage payments (assuming for simplicity purposes a $500,000 loan)? Thanks again to everyone providing such thoughtful insight.Thu, 17 Apr 2008 08:08:23 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: This is all very insightful, thanks to everyone who has offered feedback so far--I hope I'm not the only future buyer who is learning from this. Several people have indicated that the data is mixed on home prices, or that some economists are not glum on short-term housing prices--this is not what I read in the news, but I understand that being on the news doesn't necessarily make something true. But it doesn't make it false, either. So far, we have received several links to studies indicating housing prices have fallen and will continue to fall--perhaps dramatically--in the near (1-3 years) future, but I have not read any studies indicating the contrary view. If anyone has any data indicating that housing prices are not falling quickly, or that housing prices are "rebounding," as some have suggested, can you please provide the link? I would appreciate it if the link was to a source other than NAR--I don't have anything against the organization whatsoever, but it just seems like the NAR has too much of a "horse in the race" to provide an unbiased outlook (and I also think--but am not sure--that I read NAR data last fall saying home prices would appreciate 1-2% nationally over the next year, and it now looks like that projection will be more than 10% off). Again, thanks to everyone for their lively and intelligent input--let's continue to keep this respectful as we have thus far.Wed, 16 Apr 2008 20:33:29 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: Thanks Ida! I also would like this thread to include the question: "Where are prices going?" because I believe it factors heavily into the decisions of people (like me) who are trying to decide whether to buy now or to rent for 1-2 years and then buy. If prices will continue to fall, waiting seems to make more sense (as opposed to buying into a depreciating asset, if that is the case).Wed, 16 Apr 2008 16:25:37 PDThttp://www.trulia.com/voices/General_Area/Open_Opinion_Thread_Why_should_someone_buy_in_th-31301Answer by Ryan: (In response to another Trulia thread): Dann, I am not a professional, but I had the same question--I have been casually looking at Chicago listings for the past year in anticipation for my move to Chicago late this summer. Among all of the national reports, it didn't really seem like I was seeing any change in Chicago's (more local and specific) listing prices. But my most recent research (assisted by a few others on this site) indicates that this doesn't tell the whole story. First, Chicago prices HAVE fallen. According to the Case-Schiller price index, Chicago home prices have fallen 6.6% in the past year. This may not seem significant in the abstract, but if we assume John Doe has a $500,000 home, he has lost $33,000 (more than many peoples' salaries)--in ONE year. The optimistic answer is that one's home is a long-term investment, so one should not focus on short-term consequences. But the fact is, the home IS an investment, it is an asset (for most people, their biggest asset), and people cannot and should not gamble with obviously stupid investments. Would you buy a stock today if you were reasonably sure it would lose $33,000 of value within the year? Of course not, and that partly explains why people aren't buying. Of course, this data reveals the past--if home price trends were changing, buying now would make sense. But trends are not changing--in fact, prices are now declining at their fastest rate yet (Case-Schiller's most recent data indicates that Chicago prices fell 2.2%--or $11,000 on a $500k home--in the last MONTH; if this rate is annualized, meaning we assume price declines do not further accelerate during the year, we see that Chicago home values are now falling at a rate of more than 20%/year, equating to a more than $100,000 equity loss for a person owning a previously-valued $500k home). The studies I just referenced (link below) are based on raw home price data, and the chart on the first page of that report graphically shows this shocking trend (thanks to John the Bruce for the website link). Based on my research, there is no reason to believe things are improving. According to RealtyTrac's February data, Chicago was second only to Las Vegas in foreclosures last month (so much for hoping this problem was limited to the coasts). The impact of these foreclosures have not yet been felt. While listing prices superficially seem to be stagnant and not dramatically declining, the fact is that homes are not selling right now--at least not at high enough rates to be optimistic. My wife and I are mostly searching homes in the north/northwest part of the city. According to Trulia, this entire area (including, in my search, the neighborhoods of Lincoln Square, Ravenswood, Northcenter, Uptown, Edgewater, and Roscoe Village, from a price range of $585,000 - $775,000) has had a total of ONE property sold since January of this year. Fifty homes in these neighborhoods and in this range are currently on the market. In short, my wife and I want to buy a house in Chicago. We are blessed to be able to buy, and we'd love to be able to settle into a house in our new city and not have to go back to renting, worrying about moving again from a rental unit to a house, etc. But we can't force ourselves to be unwise with our money, and every single objective, reliable indicator tells me that buying a house now would be like buying Enron stock seven years ago while KNOWING what was about to happen. It is just irresponsible, and that's why we (and many others, it seems) prefer to wait this one out.Wed, 16 Apr 2008 15:42:38 PDThttp://www.trulia.com/voices/Home_Buying/Living_in_Baltimore_for_years_Is_it_worth_it_to-46283Answer by Ryan: It is almost certainly NOT worth it for that time frame. The market supply for that area is tremendous, and foreclosure rates are still increasing. I expect prices to drop slowly to moderately for at least another year, and probably two. If and when the market does turn around, it will be VERY slowly, and not significant enough to overcome your short-term losses. There is simply no way prices will increase during the upcoming three-year span. Add to it all the 6% commission you will have to pay an agent to resell, and it's a no-brainer. Also consider the risk-benefits analysis. If you rent, there is no downside--you have no stakes in the housing market, which is a good place to have no stakes right now. If you buy, there is a significant downside: loss of some or all of your equity. Finally, Obama has recently suggested he may try to eliminate the mortgage interest deduction if he becomes president. This would not only take away a large reason to own, but it would further reduce housing prices by making homeownership less attractive--not good for your investment. You would be wise to rent.Sun, 13 Jul 2008 15:46:50 PDThttp://www.trulia.com/voices/Market_Conditions/Chicago_prices_have_remained_stable_Why_dont_newsp-31155Answer by Ryan: Every economist worth his salt knows Case-Schiller (though admittedly imperfect, as are all models) is the most reliable home price tracker currently in existence. Matt, you're correct that Case-Schiller fails to incorporate condos and new construction, but this fact makes the Index *understate* price declines, as the condo markets have seen the steepest drawback in buyers (26.9% sales decrease year-over-year, as compared to 19% sales decrease for single family homes); the condo market is also the most heavily saturated (especially in Chicago) and is relatively volatile, meaning Case-Schiller's numbers almost certainly understate the price losses that Chicago and other cities are actually seeing.Thu, 22 May 2008 20:58:49 PDThttp://www.trulia.com/voices/Market_Conditions/Chicago_prices_have_remained_stable_Why_dont_newsp-31155Answer by Ryan: Dann, I am not a professional, but I had the same question--I have been casually looking at Chicago listings for the past year in anticipation for my move to Chicago late this summer. Among all of the national reports, it didn't really seem like I was seeing any change in Chicago's (more local and specific) listing prices. But my most recent research (assisted by a few others on this site) indicates that this doesn't tell the whole story. First, Chicago prices HAVE fallen. According to the Case-Schiller price index, Chicago home prices have fallen 6.6% in the past year. This may not seem significant in the abstract, but if we assume John Doe has a $500,000 home, he has lost $33,000 (more than many peoples' salaries)--in ONE year. The optimistic answer is that one's home is a long-term investment, so one should not focus on short-term consequences. But the fact is, the home IS an investment, it is an asset (for most people, their biggest asset), and people cannot and should not gamble with obviously stupid investments. Would you buy a stock today if you were reasonably sure it would lose $33,000 of value within the year? Of course not, and that partly explains why people aren't buying. Of course, this data reveals the past--if home price trends were changing, buying now would make sense. But trends are not changing--in fact, prices are now declining at their fastest rate yet (Case-Schiller's most recent data indicates that Chicago prices fell 2.2%--or $11,000 on a $500k home--in the last MONTH; if this rate is annualized, meaning we assume price declines do not further accelerate during the year, we see that Chicago home values are now falling at a rate of more than 20%/year, equating to a more than $100,000 equity loss for a person owning a previously-valued $500k home). This chart is based on raw home price data, and it graphically shows this shocking trend (thanks to John the Bruce for the website link): http://www.globalindices.standardandpoors.com/data/pdf/CSHom… Based on my research, there is no reason to believe things are improving. According to RealtyTrac's February data, Chicago was second only to Las Vegas in foreclosures last month (so much for hoping this problem was limited to the coasts). The impact of these foreclosures have not yet been felt. While listing prices superficially seem to be stagnant and not dramatically declining, the fact is that homes are not selling right now--at least not at high enough rates to be optimistic. My wife and I are mostly searching homes in the north/northwest part of the city. According to Trulia, this entire area (including, in my search, the neighborhoods of Lincoln Square, Ravenswood, Northcenter, Uptown, Edgewater, and Roscoe Village, from a price range of $585,000 - $775,000) has had a total of ONE property sold since January of this year. Fifty homes in these neighborhoods and in this range are currently on the market. In short, my wife and I want to buy a house in Chicago. We are blessed to be able to buy, and we'd love to be able to settle into a house in our new city and not have to go back to renting, worrying about moving again from a rental unit to a house, etc. But we can't force ourselves to be unwise with our money, and every single objective, reliable indicator tells me that buying a house now would be like buying Enron stock seven years ago while KNOWING what was about to happen. It is just irresponsible, and that's why we (and many others, it seems) prefer to wait this one out.Wed, 16 Apr 2008 11:50:13 PDThttp://www.trulia.com/voices/Home_Buying/I_am_planning_on_making_an_offer_on_a_house_with_o-36536Answer by Ryan: Trish, I can only speak from personal experience, but I was going to buy a home in Chicago this spring, I also did it without an agent, and the selling agent/seller agreed to reduce the final purchase price by the 2.5% that the seller would have otherwise given to the buyer's agent. Some of the responses below are pretty self-righteous and come from realtors who worry that the internet is making them increasingly unnecessary--especially from the buyers' point of view. If you're internet-savvy and smart, you can get to know your market of interest as well as any Realtor by visiting websites such as this. If you are able to negotiate, a Realtor is also unnecessary for this. There are lots of other technical aspects of the purchase to work out, but you can take care of this by hiring a lawyer to handle the transaction (probably around $500 for the whole transaction). Don't believe anyone who tells you "no one is saving anything"--the bottom line is that if you had an agent, that agent would be getting at least $12,000 for their services--this money DOES go somewhere when it isn't spent, and chances are, the selling agent pockets it. If you've already found the house you want, I'd consider buying it through buysiderealty.com . That website gives you back a refund of 2% of the sales price if it receives 2.5% as your "agent."Tue, 20 May 2008 19:59:45 PDThttp://www.trulia.com/voices/Home_Buying/We_are_first_time_home_buyers_what_do_you_recomme-33447Answer by Ryan: Sonia, I'm looking to buy in Chicago, too, but my wife and I have recently decided to wait a year or two. Prices are quickly falling, and I think there is a real risk that any home you buy now will depreciate in value, causing you to lose your $35k in equity. Those $450k homes that are currently out of your price range will be closer to your level in a year, so if you can stand renting for awhile (hard with two kids, I know), I would strongly recommend you consider it. Good luck to you and your family!Tue, 29 Apr 2008 14:15:51 PDThttp://www.trulia.com/voices/Home_Selling/This_is_a_multiple_choice_question_PLEASE_JUST_A-33132Answer by Ryan: Please "ready" my entire answer! I've carefully parsed out potential "fluff." Some time ago I received a call from a colleague who asked if I would be the referee on the grading of an examination question. He was about to give a student a zero for his answer to a physics question, while the student claimed he should receive a perfect score and would if the system were not set up against the student: The instructor and the student agreed to submit this to an impartial arbiter, and I was selected. I went to my colleague's office and read the examination question: "Show how it is possible to determine the height of a tall building with the aid of a barometer." The student had answered: "Take a barometer to the top of the building, attach a long rope to it, lower the barometer to the street and then bring it up, measuring the length of the rope. The length of the rope is the height of the building." I pointed out that the student really had a strong case for full credit since he had answered the question completely and correctly. On the other hand, if full credit was given, it could well contribute to a high grade for the student in his physics course. A high grade is supposed to certify competence in physics, but the answer did not confirm this. I suggested that the student have another try at answering the question I was not surprised that my colleague agreed, but I was surprised that the student did. I gave the student six minutes to answer the question with the warning that the answer should show some knowledge of physics. At the end of five minutes, he had not written anything. I asked if he wished to give up, but he said no. He had many answers to this problem; he was just thinking of the best one. I excused myself for interrupting him and asked him to please go on. In the next minute he dashed off his answer which read: "Take the barometer to the top of the building and lean over the edge of the roof. Drop that barometer, timing its fall with a stopwatch. Then using the formula S = ½ a t2, calculate the height of the building. At this point I asked my colleague if he would give up. He conceded, and I gave the student almost full credit. In leaving my colleague's office, I recalled that the student had said he had many other answers to the problem, so I asked him what they were. "Oh yes," said the student. "There are a great many ways of getting the height of a tall building with a barometer. For example, you could take the barometer out on a sunny day and measure the height of the barometer and the length of its shadow, and the length of the shadow of the building and by the use of a simple proportion, determine the height of the building." "Fine," I asked. "And the others?" "Yes," said the student. "There is a very basic measurement method that you will like. In this method you take the barometer and begin to walk up the stairs. As you climb the stairs, you mark off the length of the barometer along the wall. You then count the number of marks, and this will give you the height of the building in barometer units. A very direct method." "Of course, if you want a more sophisticated method, you can tie the barometer to the end of a string, swing it as a pendulum, and determine the value of `g' at the street level and at the top of the building. From the difference of the two values of `g', the height of the building can be calculated." Finally, he concluded, there are many other ways of solving the problem. "Probably the best," he said, "is to take the barometer to the basement and knock on the superintendent's door. When the superintendent answers, you speak to him as follows: "Mr. Superintendent, here I have a fine barometer. If you tell me the height of this building, I will give you this barometer." At this point I asked the student if he really did know the conventional answer to this question. He admitted that he did, said that he was fed up with high school and college instructors trying to teach him how to think, using the "scientific method," and to explore the deep inner logic of the subject in a pedantic way, as is often done in the new mathematics, rather than teaching him the structure of the subject. With this in mind, he decided to revive scholasticism as an academic lark to challenge the Sputnik-panicked classrooms of America. Oh, in response to your question-- (C): It takes only one posting to prove you're a tool. Story credit: "Angels on the Head of a Pin: A Modern Parable," by Alexander Calandra (printed in Saturday Review, Dec. 21, 1968).Sun, 27 Apr 2008 22:28:47 PDThttp://www.trulia.com/voices/Home_Buying/Procuring_Cause_Problem_Even_if_I_m_now_a_licens-31219Answer by Ryan: E, I mentioned this in another thread yesterday, and I still believe it to be true: I think (but do not know) that it would be illegal for a Realtor to refuse to deal with you just because you are not a Realtor. I believe this action would violate both federal and Illinois state antitrust law because of its anti-competitive effects on the market. A legal website summarizes the purpose of Illinois's antitrust law as follows: "the primary purpose of [antitrust law] is to prevent businesses from creating unjust monopolies or competing unfairly in the marketplace. Antitrust law seeks to maximize market efficiency and to protect consumers." The website also has a section labeled "How to Avoid Antitrust Violations." One tidbit of advice encourages business to "deal evenly with their distributors, franchisees, and customers, avoiding contracts or agreements that favor some members of a group over others or restrain their market behavior." It seems obvious that refusing to work with you because you are not a Realtor would "favor some members of a group over others" in clear restraint of normal "market behavior." Without being abrasive or unnecessarily confrontation (if at all possible), I would kindly warn an agent about the possible legal ramifications of her actions if she refuses to work with you on this basis.Wed, 16 Apr 2008 16:19:18 PDThttp://www.trulia.com/voices/Home_Buying/Why_do_I_need_a_Realtor_when_buying_a_house_-30714Answer by Ryan: Elv!s, you can have the "ye Olde English" version, and I'll take the form most Americans say. Read further in that article and you will see that your version (eat cake/have cake) is so uncommon that the Unabomber's use of it led to his capture. Despite our apparent differences, I promise this is the last parallel I will draw between you and the Unabomber. : )Tue, 15 Apr 2008 10:10:15 PDThttp://www.trulia.com/voices/Home_Buying/Why_do_I_need_a_Realtor_when_buying_a_house_-30714Answer by Ryan: Elv!s, Both forms of the adage "have cake/eat cake" are acceptable, but my use is more common: http://en.wikipedia.org/wiki/Have_one%27s_cake_and_eat_it_too Re my "lawyer learnin' left to go." I never claimed that a Realtor must represent any particular potential client--on the contrary, you are correct that you "are allowed to work with, or refuse to work with, whomever [you] please." However, once you decide to work with someone, it is not clear at all clear that you can refuse to acknowledge a potential buyer for the sole reason that the buyer is not represented by a Realtor. This is anti-competitive: just as Microsoft cannot require its vendors to only work with Microsoft to the detriment of, say, Apple, Realtors cannot insist on only working with other Realtors to the detriment of other market participants--in this case, an individual who wishes to purchase a home without a buyer's agent. In sum, a Realtor can choose who SHE works with and for, but she may not be able to choose precisely who can (and cannot) participate on the other end of the deal. In any case, I never professed to be an expert in antitrust law--this is just my (admittedly unresearched) inclination. I would hate to be the Realtor who found out I was right, though. Typically, this shouldn't even be an issue, because most seller's agents are not so unreasonable that they would wholeheartedly refuse to work with a non-conventional buyer--as April said, as long as the seller's agent gets paid her expected share, she loses nothing and gains a buyer. Elv!s and other Realtors, please don't be so defensive. You're entitled to believe that all real estate deals must go through you, and the rest of us (though underrepresented on this site) are ent!tled to d!ffer. RyanTue, 15 Apr 2008 09:53:17 PDT