s skippy the bush kangaroo: escrow where ya wanna go

skippy the bush kangaroo



Thursday, May 24, 2007

escrow where ya wanna go

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our good friend monkeyfister is quite aware of the skippy's adventures in trying to buy housing in the los angeles real estate market. monkeyfister himself has just closed on his own american dream down in tennessee, and for that, we congratulate him.

we are also, therefore, touched that he would give the skippys' search for affordable housing a shout out over at blah3, where monkeyfister gave us all the bad news: and that is, the nightly news isn't giving us the real news, which is, the bad news is much worse than we thought.

in this article, [economist barry ritholtz takes a look at a report by real estate analyst john burns, and concurs-- the real estate market is falling out faster than the media is reporting.

here are some highlights to get you started:

• closing data: sales have actually fallen 22% year-over-year, based on comparing trailing 12 month periods. if you compare year over year sales, the decline is even more severe.

• mortgage bankers association [mba] data: mba seasonally adjusted purchase application index is down 18% from its peak in september 2005.

• builder data: d.r. horton (dhi) and lennar (len) have reported that orders have declined 27% to 37%, year-over-year -- even as they have dropped prices significantly. these are the nation's two largest homebuilders.

• realogy corporation data: in 2006, there was a year-over-year decline of 18% in brokerage related transactions at realogy owned firms (century 21, coldwell banker, and era)

• 2005-2006 national association of realtors state data: the nar is showing some very sharp year-over-year corrections: florida down 28%; california down 24%; arizona off 28%. however, the nar data may actually be understating the falloff. john's data shows the more likely actual sales decrease to be closer to 34%, 27% and 38%, respectively. prior to 2005, john's data tracked very closely with the nar, so this deviation is worth further investigation.
mrs. skippy hasn't given up checking the internet everyday for new listings. but the skippy's have noticed that several listings that were on the market last year are still available now, only at lower prices.

unfortunately, not low enough for the skippy's! but we still wish the monkeyfisters a sincere housewarming in their new digs!

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posted by skippy at 12:01 AM |

6 Comments:

cheers, skippy!

perhaps this fall will be the right time for the two of you to find your american dream. i'll continue to keep my eye out on the real estate crash for ya.

-mf
commented by Blogger --mf, 4:30 AM PDT  
National aggregates are essentially useless in understanding real estate as are percentage changes that don't give you an idea of the base number involved.

Beware people who conveniently cite the three frothiest markets, which include California, Florida and Arizona, strangely enough the ones that made it into this piece. Also beware numbers that originate from 'applications' 'orders' and 'permits'. These will always peak with the bubble and take large percentage changes as the slope of the curve shifts, this is more the product of the math than anything dispositive. On the other hand 'starts' 'completions' and 'sales' give you real hard economic data.

But frankly any reporting which does not break their numbers down by market, and which doesn't explain that some markets are down, some are flat and some are up at double digit rates is close to useless.

BTW the same is true about foreclosures. Prior to late 2005 very few people were in a position where foreclosure was a realistic choice. the very nature of a housing/credit bubble makes it easy to exit and extract that equity. By 2006 the squeeze on prices in the formerly hot markets combined with lender reassessment and pull back on sub-prime combined to put people who got in at the peak in a vise. If nobody is buying and nobody is refinancing the natural result will be a spike in people walking away and the result expressed in percentages is going to be high. Once again much of that is an artifact of the math when you get a bend point in your curve.

Serious things are happening, and there are national effects, but the real damage is being done in certain markets, including the one in which people are trying to locate chez-skippy.

As an example I visited Lennar's website. Sure enough their market coincides with the hardest hit areas of the country, they have no penetration at all in the Pacific Northwest or most of the Midwest.
http://www.lennar.com/ That alone will skew their numbers, particularly when expressed as percentages.

Maybe really bad things are around the corner. On the other hand some of these Housing Bubble web sites are extending into their fourth year of forecasting imminent doom which like progress in Iraq never seems to actually happen.
commented by Anonymous Anonymous, 9:42 AM PDT  
Keep an eye out for at least the next year. Prices here in Fort Lauderdale, which was suffering the same ludicrous problems LA was, have started to drop precipitously. My g/f and I looked at a house (just out of our range, it turned out) that last year would have gone for $200K and is sitting at $150 after 6 months on the market, with no takers. We would have offered that, could we have swung a deal we could live with on a mortgage, and we figured that if we passed on it, it would move, but the realtor is still begging us. Everyone is sitting tight and waiting for the bottom to really fall out. We may be in a house inside of a year, and we never would have imagined it possible when we moved here two years ago.
commented by Blogger Brian, 3:23 PM PDT  
a house for $150 k? i wish! we can't even find a parking space for that!
commented by Blogger skippy, 8:38 PM PDT  
here in sunny atlanta, prices are at two levels; one which people leave their houses on the market at last years prices and they sit there, and pay the cost of running a real estate musieum, and the second where they suck it up and sell for 6-8% less than last years values, and sell in 4-5 weeks. We found also that not having a house to sell was an advantage as the market is such that arranging a contigincy deal with houses so slow to sell getting to be a problem. So non-contigincy buyers are at an advantage and can use that in negotiation!
happy hunting mr. and mrs skip!
commented by Anonymous drew, 3:31 PM PDT  
You know things are bad in LA when Bank of fucking America is offering super mortgage deals, like no closing costs. I heard this on the radio day before yesterday. I thank God I was stopped at a light because I blacked out for a second.

I'll be looking for a place in glamorous Lincoln/Boyle Heights next year. By then I should be able to buy several city blocks and some slaves.

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