Housing Bubble Bursting?

[Mike Simpson]

"So, you are telling me only those people associated with making loans will lose their job? No one else? Is that correct?"

Okay...I'm getting bored here....my feet are falling asleep already...don't we all have better things to do?

Appears to be a tag team going on here...designated hitters...they're striking out though.

Go back & read Rudolph...no sense in reiterating.

"Unless the loan had an LTV so low, there is going to be some kind of valuation."

There's all kinds of variables to be considered here, but appraisers are needed less & less everyday.

"If you have any statistics to present, Mike, on the total number of loans made with out an appraisal versus total number of loans made with an appraisal in the last two years, I would be interested."

You & your buddies can do that analysis Randolph...my 'impact points' diminish the more I stay-n-play here. Maybe you can get together with George & present a nice chart or graph for everybody...for now I've gotta concentrate my energies in other areas...rather than debate those whose dreary precognitions have been incorrect 4 years & running.

Alf Wienersaying!

-Mike

 

[The Warrior Monk]

"Unless the loan had an LTV so low, there is going to be some kind of valuation."

There's all kinds of variables to be considered here, but appraisers are needed less & less everyday.

This is true only for certain market segments, specifically low-end loans that get sold to the secondary market or very low LTV loans.

I don't see AVMs making any dent in high-value loans, portfolio loans (residential and commericial), or nonlending work.

 

[Big ole Boy]

MLS Sales data stats for North Florida

Closed sales of single family homes from:

4/1/2005 to 5/3/2005 compared to 4/1/2006 to 5/3/2006

Lake City MLS system ............ 99 sales to 10 sales ... down 90%

Gainesville MLS system ...........330 sales to 181 sales .... down 55%

Jacksonville MLS system .........1912 sales to 1361 sales ..... down 29%

THese three MLS systems cover about 8 counties or about 1.8 million people

The denser the activity core fair better than the outer core which is Lake City .....

Jacskonville/Duval County has about 1 million people

Is not my area a good weathervane for the tail of the Bull Run?

Activity slowed 6 months ago .... and instead of a stability phase it appears to be going right into a declining phase for values.....

.... perhaps prices in all sectors in our economy are behaving in a similar parallel fashion .....

..... stock market will run to a high and fall abrubly .......

... sellers are few due to inability to replace the asset with similar like kind ....

... illiquidity in the market creates "shortgage" of sellers due primiarly to "upside down-ness"?

 

[Randolph Kinney]

Mike, I understand you. You don't have any data to present. All you have is your opinion that you continue to share with us. And the stern warning from you that only people associated with lending (appraisers) are going to suffer. No other parts of the economy is or has been or will be affected by anything. Real estate is king, long live the king. I got it.

I rather enjoy George's opinion when he buttresses that with data and charts. It is so easy to grasp that even you have a hard time disagreeing with it. All you have is your opinion - unsupported. I take it in the spirit that you have offered it. Thank you and good night.

 

[Randolph Kinney]

Closed sales of single family homes from:

4/1/2005 to 5/3/2005 compared to 4/1/2006 to 5/3/2006

Lake City MLS system ............ 99 sales to 10 sales ... down 90%

Gainesville MLS system ...........330 sales to 181 sales .... down 55%

Jacksonville MLS system .........1912 sales to 1361 sales ..... down 29%

THese three MLS systems cover about 8 counties or about 1.8 million people

The denser the activity core fair better than the outer core which is Lake City .....

Jacskonville/Duval County has about 1 million people

Is not my area a good weathervane for the tail of the Bull Run?

Nice data there David. What was the average sold price for the comparison? Declining volume can be followed with declining prices. Just curious to see if the Bear is there now.

 

[Big ole Boy]

Statistics in these MLS systems are more difficult to obtain; 18 years ago I could get easy stats from older MLS systems ... todays systems around here have become too cumbersome for my patience.

 

[JSmith43]

David: The moral of the story is don't set up shop in Lake City right now? Wow. Any comments about the 90% drop?

I don't offer any charts and graphs, only musings. What I have observed locally and has made me cringe in the past 6 months are the number of people that requested that I qualify them for non-contingent purchases.

Stretch, we did, but always with a memorable warning from me that markets can turn on a dime and do you really want to be owning two homes? Basically, to "buy up" buyers I told them I wouldn't be greedy in selling my old home because I would make sure and get a good deal on the high buck purchase.

None of my clients have been caught with two homes. Mostly, by luck. But some sellers have no doubt been caught, and the market isn't all that flooded with listings up here, not compared to Lake City!

What I have observed during previous down cycles are that a few people take an initial bath because they got trapped and have to sell. These sales can send the market down temporarily and overshoot.

Market behavior quickly adjusts and fewer people get into the own 2 homes trap, they adjust their career path, choose to not relocate, etc. They adjust their plans, decide not to sell, accept longer marketing time. People can be so very creative and adaptive. It is not wise to assume a static model when evaluating market behavior. Prices rebound or at least greatly reduce their rate of decline as the victims of the musical chairs market (when the music stopped) finally sell off their distress sale properties.

Right now it is very important for appraisers to ask probing questions about the sale of comps that look like they are setting a drastic new low for the market, since they may just be a very finite supply of sellers trapped with 2 homes, when the music stopped playing:icon_smile:

 

[Big ole Boy]

Gainesville Stats

I generated a quick stats report for Gainesville .... average price has gone up from $190,693 to $207,311.

I'm puzzeled by Lake City ...... driving around up there I always saw so many for rent signs .... seemed like lots and lots of homes were being bought new from builders and then for rent signs were going up ....

Lake City is a fast growing area ..... lots and lots of folks are turning into FISBO's ..... lots of FISBO's are asking for prices that can not be supported ..... but, I am sure they can find some lender/appraiser who can build on it...... maybe Trump?

... I don't think so ..... I'm really seeing what I saw in Naples, FL in 1980 ..... all over again .... when step-dad was out pounding the streets to make a few home sales .... and silver was a hot commodity ..... memories ..... like the corners of my mind .......... oh, Barbara ......

 

[Mike Simpson]

"I rather enjoy George's opinion when he buttresses that with data and charts. It is so easy to grasp that even you have a hard time disagreeing with it. All you have is your opinion - unsupported. I take it in the spirit that you have offered it. Thank you and good night."



Randolph...good morning!

I'm not sure what you want from me? I've more than 3,500 posts, and many have contained explanation, data, and reasoning.

I've plenty of 'support' for my opinions, and they're backed up by a team. I have access to one of the regions most historically accurate Economist. We all had breakfast at a Country Club recently (Dave Robinson thinks I'm "a rich boy"...threw that in for him), and I was given a 32 page report...full of graphs, charts, data, and analysis that only supports what I already knew. Our team works with 3 large local builders & one well known regional one. Our viewpoints & understanding of the markets are valued enough to have been flown into other cities for meetings (one of our team is in Sacramento as I write this). Furthermore, I'm constantly asked for my opinions & analysis by one of their area Marketing Managers whose expressed repeatedly, 'that they feel lucky to have me.'

Now, I can get back to work making money based on what I know, or I can stay & debate people who're consistantly wrong & acerbic to anyone who disagrees with their ridiculously dated predictions. Any support I've ever offered...Bubble Heads have always poo poo'd (goes for others who disagree with them as well)...so why bother? After 45 pages, and over 9,000 viewings...we're bound to start boring people.

He's got charts, I've got graphs...who cares!...all that matters in the end is one side's consistantly negative in their reportings of the markets, and perpetually wrong.

Back to the mines.

-Mike

 

[Steve Owen]

Someone asked, in fairness, if Mike would post negative information. So, in fairness, here it is:

http://appraisersforum.com/general-appraisal-discussion/81484-housing-bubble-housing-bubble.html

and

http://appraisersforum.com/general-appraisal-discussion/89932-predications-05-06-a.html

But... in fairness, I've got to say that the first quarter of my 2006 was the busiest quarter I've ever had; so, at least that one prediction was not right yet as far as it relates to my business and competition. (And, I didn't have any yellow page ad last year - not that that was ever really worthwhile, but it's the only paid advertising I've ever done.) And, also in fairness, real estate is and always has been a great investment vehicle for those who invest in the right piece of property at the right time.