Day 2: Bust (from the Washington Post)
"In Northern Virginia, things were also unraveling. Kevin Connelly, a mortgage broker at Pinnacle Financial's Vienna office, fielded calls from desperate homeowners.
. . .
By last summer, the atmosphere was motionless in his office. Each morning, Connelly visited a Web site called 'the Mortgage Lender Implode-O-Meter,' which chronicled lenders that were going under. His day 'went from talking to 10 people and doing eight transactions to talking to 10 people and doing one transaction,' he recalled.
By summer's end, he said, 'I was working alone in that office.'"
12 comments:
I have to say, I've been pretty disappointed in the Washington Post's "The Bubble" series. I don't think it is revealing anything I haven't already heard or presenting any new angles on the bubble. Kinda boring really.
And a bit of revisionist history too with the "we all knew it was going to end" type quotes. I was a full-on housing bear in 2004-2005 and I couldn't find a sole who agreed with me at the time. Not a sole. JMHO.
I figured 2002/03 was peak - I mean how could it go on forever?
"I figured 2002/03 was peak - I mean how could it go on forever?"
Funny - I actually remember a client wanted to start building houses back in Mid 2002. We debated this in the office extensively - is this really such a good idea - how much longer could this runup continue???
From looking at the May sales chart, the sales rate appears to have been slowing down in 2002, especially in the outer counties.
Towards the end of 2002 and very early in 2003, I remember builders offering nice incentives to move property.
In the spring of 2000, a couple was waiting in the same apartment building lobby where I was paying rent and we started talking about house hunting. They said they thought the house prices were crazy and they were going to wait until the market calmed down before they would start looking to buy. I remember saying I was afraid it wasn't going to get any better any time soon.
So I guess they were the first "bears" I met :-).
"The American dream is absolutely changing"
http://tinyurl.com/6yunjt
ace said...In the spring of 2000, a couple was waiting in the same apartment building lobby where I was paying rent and we started talking about house hunting. They said they thought the house prices were crazy and they were going to wait until the market calmed down before they would start looking to buy.
Ace, where were you? I was in Alexandria. In spring of 1999 I started looking around at townhouses near our apartment. Prices were way over what we could afford. By 2000 prices in our neighborhood had come back down to a level we could afford and we bought a place right around the corner. That was my memory of the sequence, and the MRIS confirms it: August, 1999 median price $200,000, up 16.65% year over year. August, 2000 median price $150,000, down 27.01% year over year. Guess we weren't really 'priced out forever' in 1999 after all.
Sarah, I was in Alexandria (near Eisenhower)! So there must have been a whole den of bears in Alexandria then! :-)
"gold_h2o said...
The American dream is absolutely changing
http://tinyurl.com/6yunjt
Good Article Gold. I found this quote in particular interesting:
"Recent market research indicates that up to 40 percent of households surveyed in selected metropolitan areas want to live in walkable urban areas, said Leinberger. The desire is also substantiated by real estate prices for urban residential space, which are 40 to 200 percent higher than in traditional suburban neighborhoods -- this price variation can be found both in cities and small communities equipped with walkable infrastructure, he said.
The result is an oversupply of depreciating suburban housing and a pent-up demand for walkable urban space, which is unlikely to be met for a number of years."
This could be one of the reasons that months of inventory isnt too high close in. A transformation could be taking place right under all our noses... However, just like the flight to the suburbs was a 50 year phenomena, the transformation back to more urban areas will be so slow many of us wont notice in our day to day lives.
Not saying I am convinced about this, but it is something to think about.
"Recent market research indicates that up to 40 percent of households surveyed in selected metropolitan areas want to live in walkable urban areas, said Leinberger."
Glad if it's true-- it certainly matches my preferences-- but I've been predicting a return to European style cities in the US my whole adult life. Hasn't happened yet. I suspect before it can really take place we need to have some rebuilding of infrastructure and renovating and then maintaining what we have left-- and some reasonable way of financing it. City life without city amenities is hell.
Ultimately if cities are going to be places for middle-class families again they have to have good public schools and fairly low crime rates. Otherwise they will continue to be places where young, hip singles want to move and families and retires want to leave.
Of course schools and policing are part of the infrastructure-- and if families begin to want to stay they can improve both fairly quickly. Still, it's not a transition I expect to see soon.
So there must have been a whole den of bears in Alexandria then! :-)
Ace, the fact that anyone who refused to spend more than they could afford was ever called a bear says it all for me. We used to just be called prudent!
"Sarah said...
Ultimately if cities are going to be places for middle-class families again they have to have good public schools and fairly low crime rates. Otherwise they will continue to be places where young, hip singles want to move and families and retires want to leave."
Agreed - that is why I have been watching with great interest what Mayor Fenty & Michelle Rhee have been trying to do with the DC school system. In the 10 or so years since Ive lived in the area, it looks like the first time someone is actually putting in some serious effort to "fix" them. Alexandria, however, doesnt seem to have any real impetus to fix their abysmal schools.
Another thing to keep in mind is changing demographics - the number of one and zero child households is increasing, meaning there will be less demand for schools going forward. How much less though is tough to say.
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