Shiller on Housing

[Parsad]

Comments by Shiller on housing.  He's concerned that house prices have declined for 5 years, but doesn't know what way the psychology is shifting.  What I like about Shiller is he's just plain honest.  He gives you the facts, but then he says over and over...I don't know...I'm not predicting.  Cheers!

 

http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-chance-bottom-suburban-prices-may-not-161914444.html;_ylt=Ahs9F9JK4GHx7ZXPYAII.aiiuYdG;_ylu=X3oDMTNyajBxbzFyBG1pdANGUCBUb3AgU3RvcnkgTGVmdARwa2cDZmM0OWE5NDktMWZkNC0zOWJjLTkyNWUtMDE4ZThkZTBjZTE3BHBvcwMyBHNlYwN0b3Bfc3RvcnkEdmVyAzk5N2Y3ZTgwLTc4MjgtMTFlMS1iZGJiLWYyMWFkOWFiMDU1Mw--;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3

[Junto]

Comments by Shiller on housing.  He's concerned that house prices have declined for 5 years, but doesn't know what way the psychology is shifting.  What I like about Shiller is he's just plain honest.  He gives you the facts, but then he says over and over...I don't know...I'm not predicting.  Cheers!

 

http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-chance-bottom-suburban-prices-may-not-161914444.html;_ylt=Ahs9F9JK4GHx7ZXPYAII.aiiuYdG;_ylu=X3oDMTNyajBxbzFyBG1pdANGUCBUb3AgU3RvcnkgTGVmdARwa2cDZmM0OWE5NDktMWZkNC0zOWJjLTkyNWUtMDE4ZThkZTBjZTE3BHBvcwMyBHNlYwN0b3Bfc3RvcnkEdmVyAzk5N2Y3ZTgwLTc4MjgtMTFlMS1iZGJiLWYyMWFkOWFiMDU1Mw--;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3

 

Completely backwards looking. I think residential real estate is decoupling across the country and becoming more localized than it has been in recent years. In the Minneapolis / St. Paul, Minnesota area, the market is certainly picking up. I have seen this first hand. Pricing is firming and inventory levels are down. We have under contract or offers on as much property as we sold in all of 2011 and 2010 already in March 2012. Now we need them to close :)

 

Now you couple this with the rental market at sub 3% vacancy rates (sub 2% for a while) and rental rates pushing $2 / SF, people will start moving back to home ownership from renting. It is the herd mentality still and once the momentum turns, the prices will start to rebound.  Certainly provides opportunities for us that like to play the contrary positions and move the chips into the game while the others run scared.

 

I not saying that the market is going to bounce hard, but the bottom I feel is in. We will see how it ultimately plays out. I am certainly more positive than Shiller is on the outlook.

[Parsad]

Junto, in the Minne/St. Paul area, do you find that properties are selling faster in core market areas, or is it a broad increase in sales in all suburban areas too? 

 

I agree with your comments about the market decoupling.  It could very well be that certain markets are picking up, and certain markets are in a depression-like state.  You are getting bidding wars now in certain markets.  It seems as though most people in the housing industry are tentatively optimistic.  Cheers!

[ERICOPOLY]

Some of the higher priced areas (such as La Canada-Flintridge) around LA have no inventory anymore.  Just a few months ago there was several homes in the $1.2m - $1.8m range and they're all gone now.  Our realtor down there says the credit is beginning to loosen up on these larger mortgages and the inventory is just gone.

[Guest valueInv]

Junto, in the Minne/St. Paul area, do you find that properties are selling faster in core market areas, or is it a broad increase in sales in all suburban areas too? 

 

I agree with your comments about the market decoupling.  It could very well be that certain markets are picking up, and certain markets are in a depression-like state.  You are getting bidding wars now in certain markets.  It seems as though most people in the housing industry are tentatively optimistic.  Cheers!

 

On one hand, we're getting bidding wars in the Bay Area:

http://blog.redfin.com/sfbay/2012/03/more_madness_in_south_san_francisco.html

 

On the other, SF is also among the markets with the biggest declines according to S&P:

http://www.npr.org/2012/03/27/149457402/home-prices-continue-to-slide-in-most-big-cities

[watsa_is_a_randian_hero]

I've had similar experience in phoenix.  I've been trying to buy a rental for the last year in the 150k price range.  To give you some idea of how the market is changing fast...the last property we bid on, the ask was 147, we bid 150 the 1st day it was on the market.  We did not get.  The property had 18 bids in one day.  Was sold for a cash bid over the ask price. 

 

I have found cash is king.  Bank REO sales will sell to a cash buyer who can close fast even if they receive higher offers that are non-cash.  Some other sellers are doing the same thing.  Cash is especially good now because of tighter scrutiny on the appraisers.  With the market now seeming to rebound slightly in phoenix, appraisers are now appraising very conservatively, and higher bids will not appraise.  Therefore, if you are a seller, and you receive a number of offers, and one is cash and it is reasonably close to the others, you'll take the cash offer because an appraisal will be unnecessary. 

[Junto]

Junto, in the Minne/St. Paul area, do you find that properties are selling faster in core market areas, or is it a broad increase in sales in all suburban areas too? 

 

I agree with your comments about the market decoupling.  It could very well be that certain markets are picking up, and certain markets are in a depression-like state.  You are getting bidding wars now in certain markets.  It seems as though most people in the housing industry are tentatively optimistic.  Cheers!

 

There are certain areas that really did not get hit very hard or at all by the downturn (Edina, MN for instance has several neighborhoods meeting this description). There has continued to be tear down / rebuilds in niche areas. My colleague has a friend in Richfield who in the last month had a bidding war on their home after dropping the price $10,000 they recouped the drop and then some ($210M PP). This is an older neighborhood first ring suburbs.

 

We also have some OREO in outer suburban areas that sold much faster than I would have anticipated (211 acres of raw land surrounding an upscale development).  We also are part of another project in an nice outskirt development that is seeing an increase in lot prices and another receiving multiple offers from large builders trying to secure lots. I live in the suburbs and try to watch the market near my home which seems to be going well. There are two brand new developments in the dirt this year and one development that has nearly sold out throughout the recession (granted at much lower prices than originally projected).

 

My personal data points are all turning positive. Conversations with other community bankers in and around the Metro are also starting to turn positive. We will see if the momentum holds through the summer but right now it is certainly more positive than it has been since 2008.

[Parsad]

Thanks for the information guys!  It's tough to get a read from Vancouver.  I go to Seattle alot, so I check out how things are in Washington, but they got hit much later than the rest of the U.S., and they are still working their way through.  Cheers!

[racemize]

I'll add that Texas has been doing pretty well in terms of the initial hit and recovery--my cousin does flooring in the Houston area and it has picked up significantly in the last year.  Also, while Austin took a minor down turn, a lot of the housing prices have held or increased since, at least in my area.

[ERICOPOLY]

Thanks for the information guys!  It's tough to get a read from Vancouver.  I go to Seattle alot, so I check out how things are in Washington, but they got hit much later than the rest of the U.S., and they are still working their way through.  Cheers!

 

Seattle peaked in July 2007.

[Parsad]

Thanks for the information guys!  It's tough to get a read from Vancouver.  I go to Seattle alot, so I check out how things are in Washington, but they got hit much later than the rest of the U.S., and they are still working their way through.  Cheers!

 

Seattle peaked in July 2007.

 

Peaked in July 2007 and prices fell slightly, but did not fall like most parts of the U.S. until mid-2009.  Cheers!

[ERICOPOLY]

Thanks for the information guys!  It's tough to get a read from Vancouver.  I go to Seattle alot, so I check out how things are in Washington, but they got hit much later than the rest of the U.S., and they are still working their way through.  Cheers!

 

Seattle peaked in July 2007.

 

Peaked in July 2007 and prices fell slightly, but did not fall like most parts of the U.S. until mid-2009.  Cheers!

 

Too many ex-pats like myself are going back to Cali.

 

 

 

[Parsad]

Thanks for the information guys!  It's tough to get a read from Vancouver.  I go to Seattle alot, so I check out how things are in Washington, but they got hit much later than the rest of the U.S., and they are still working their way through.  Cheers!

 

Seattle peaked in July 2007.

 

Peaked in July 2007 and prices fell slightly, but did not fall like most parts of the U.S. until mid-2009.  Cheers!

 

Too many ex-pats like myself are going back to Cali.

 

That would make sense.  Some went to Australia too!  ;D  Cheers!