Falling Prices: Costly

[Julio E. Sune Jr. (FL)]

Some falling prices in one of the areas I do work.

5/1/03 Cove 18A Price change from $565,000 to $545,000
4/30/03 1 Cay Road Price change from $5,195,000 to $4,950,000
4/30/03 Angelfish 78A Removed from market
4/29/03 375 Harbor Removed from market
4/29/03 9 Pelican Price change from $5,750,000 to $5,590,000
4/28/03 Angelfish 37A Price change from $265,000 to $240,000
4/25/03 Marina 8B Price change from $1,395,000 to $1,100,000
4/25/03 Harbor 4B Price change from $365,000 to $330,000
4/24/03 Inn 210 Price change from $289,000 to $275,000
4/21/03 Cay 40B Removed from market
4/17/03 3 Diana Sale fell through; returned to market
4/17/03 8 Harbor Removed from market
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http://www.miami.com/mld/miamiherald/busin...ess/5871950.htm

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Can you hear me now???

"Duh??"

 

[Austin]

I have been doing appraisals for one bank since 1986, and never during that entire period did I hear back from an appraisal. I gave them the appraisal and that was it. The last two weeks they have worried the hell out of me over recent re-apparisals I have done recently that showed no value change some as far back as 1992 & 94. The fact of prices just stabilizing does not register in their minds. It has to be the appraiser because you just can’t explain to a borrower that his property value is not going up. “No other bank is telling their borrowers that” is their line.
Most recent example: Idiot buys a lot in a new subdivision in 1994, and pays $25,000. I search the entire 48-lot subdivision sale history and no lot has ever sold for above $26,000 and prices range from $12,000 to $26,000. Not only that but the only lots that have been developed have a view of the Blue Ridge Mountains. Development ends where view ends. Subject is in middle of undeveloped lots with no mountain view. Lender raised hell and reminded me that the lot cost $25,000 nine years ago. Borrower called raising hell because a lot near his was on the market offered at $32,000. LO called back yesterday and asked if I could raise appraisal to $27,000 ($2,000) just to get the idiot off their back. It has been like this for the last two weeks I swear. "It just can’t be, prices are always going up and that is what drives the economy. We can’t let it stop now or the sky will fall." That is their mantra.

Let me give you an example of why the government fears deflation: My son-in-law and I have so much grass to cut that we use diesel tractors. Diesel fuel cost went from $1.38 to $1.90 /gal recently. Monday son-in-law called to get the price to fill up our 250 gallon tank. $1.06 per gallon if we pay cash. Tank is empty but did we order a refill? No we didn't. Why you ax? Because in a few weeks the price will be down to $.90 per gallon and if we buy now it will just discourage further price decreases. This has been going on in Japan for 12 years. It works both ways: When people buy real estate because the price is going up and the price is going up because people are buying houses at inflated prices because they anticipate further price increases, then sooner or later the reverse will have to occur.

 

[Restrain]

I've been telling people that the home that they bought last year is not worth what they paid for it. The builder has cut prices by 5-10% and is giving concessions. They're squealing to high heaven.

 

[SmilingDog]

New Shea Home development of 83 homes in a subdivision of 650 homes. Price when built December 2002 with upgrades $514,000, last phase sold out in a couple of "days" (YES I SAID DAYS). Sold out phase at $650,000!!!

:yellowblack:

 

[Dee Dee]

Originally posted by georgeheredia@May 16 2003, 10:16 PM
New Shea Home development of 83 homes in a subdivision of 650 homes. Price when built December 2002 with upgrades $514,000, last phase sold out in a couple of "days" (YES I SAID DAYS). Sold out phase at $650,000!!!

:yellowblack:

Been there.

Now watch to see how many of those homes go straight onto the resale market as soon as they're finished. Often the first owner will have a new buyer already lined up to transer ownership to on the same day that they close on permanent financing, netting a tidy profit. And look at the original buyers...figure out how many of them are investors (predominantly real estate brokers) who have no intention of ever moving in when the home is finished. They can pound all kinds of drums, quoting exactly what you did to convince the next guy that it's a great investment. It's not unusual that the same investor will buy several homes pre-construction in one subdivision and walk away just six months later with several hundred thousand dollars of profit in their pocket. The builders roll with it because then they can charge more for each new phase. Just try asking the agents in the model homes how many of the buyers are in the real estate business or are investors....it freaks 'em right out.

It could be the same 'fluff' game that was so popular here. It could be a false impression that it's a hot market that naive buyers think they should get a piece of. The only ones who won were the first to get in who sold quickly and walked away with the big bucks. Soon enough the game has to end when the buyers wise up and/or there aren't enough true homebuyers (the ones that actually want and can afford to live there) to absorb the inventory purchased by short-term investors, but in the meanwhile the statistics and media will be claiming huge leaps in real estate values with legitimate numbers to prove it.

Maybe the boom you're seeing is legit, or maybe it's an illusion....I don't know...but watch for the indicators that could be warning signs of a false market.

 

[Frederick R. Ruffell]

Here in San Diego we had 55,000 new people move here and only built about 23,000 new units. Supply and demand

 

[Karl]

A same size, Floor plan, builder, & extra's is 5-8,000 less in 2003 than it was in 2001. This is AZ fastest growing state next to Nevada. We have many builders going "Belly Up" Most of this doesn't see the front page of Real Estate news. Nice to see that it is happening in other parts of the Country. Understand that back East the over 250,000 market is stagnet. Usually California is the trend setter of the country in Real Estate I think that when the New England area starts fallin the rest of us will be buried in REO work.

 

[walt kirk]

What goes up must come down. What goes up fast comes down fast.

 

[Ghost Rider]

I'm here in CT, and it seems like the majority of the appraisers on this board are out on the west coast. The market here is as hot as ever. The Refi boom is as stong as it has been in years, and the sales market is almost as crazy. Still enough demand to have prices going up with the severe lack of inventory of homes for sale......New construction activity is still strong, with lots of re-sales.

For the past 4 years, we were in a pretty good cycle of the sales market being very strong and refi's being slow, then seeing an almost total shift to the other side with the sales being slow, and refi's CRANKING. Everythign seemed to go on like a 8-12 month cycle (or at least that was what I was seeing).....whats making it hard right no for me to keep up, is BOTH of them are slamming right now, and it's impossible to keep up with the flow. I try not to play the priority game too much, normally it's first come, first servce, though I do try to give the purchases a little bit of an extra kick.

Basic turn-time for me (depending on how flexible the contact is to schedule; if I get the "well, I work for a living so I'm not sure how we can schedule it for business hours" line from another person, I'll hang up on them, I promise) is 5-7 business days from order date to appointment date, then turning the final report back to the client in 24-48 hours after seeing the property. When it's slower, it gets faster, but right now, in some cases those times are doubling across the board, which is horrible for me.

 

[wyecoyote]

My area things are more market specific for price decreases upper end homes. Some cities are seeing the upper end come down to prices that were 2001 or older. While other areas are still hot and going up (lower to mid level priced homes). To me this is more market specific areas than an all out price fall across the board. So to me this is a more depends market than and all out across the board price decrease or housing bubble burst.

Ryan