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I Keep Thinking That I’m Ready To Sell, And It Drops Again

A report from the Northern Express in Michigan. “Welcome to Traverse City, Petoskey, and Charlevoix — if you’ve got the money. ‘Home sales are continuing to rise in our area. In certain price ranges there are shortages of availability. So we are seeing multiple offers and consumers willing to pay more than the asking price and more than [its] true value to secure a home in Traverse City,’ said Carolyn Collins, president elect of the Traverse Area Association of Realtors.”

“Homes in or near downtowns, especially in the $100,000-$250,00 price range, are bumping up against a steadily declining number of such homes for sale. Those two forces continue to drive prices up, from an average of $243,762 in 2016, to $264,124 in 2017, to $277,542 this year, according to TAAR.”

“At the same time, the number of sales is decreasing, due to the shrinking inventory. Statistics from TAAR show sales of single-family homes for the year thus far lag behind both 2017 and 2016. This year’s total is 1,976, compared with 2,115 a year ago and 2,149 in 2016.”

“So will the cost of homes continue to rise, pricing even more people out? Is this a bubble that will ultimately burst, as happened in the recession?”

“Both national and local sources say the situation does not seem to portend a housing bubble. Edward Golding of the Urban Institute Housing Finance Policy Center, a veteran of HUD, who has also taught finance at several universities, appeared on a National Public Radio broadcast earlier this year to address the situation.”

“He noted that since 2012, house prices have increased substantially — about 34 percent faster than the prices of most other indices. But that is still far below the housing index in the bubble days: Between 1997 and 2006, house prices outpaced inflation by 84 percent. Golding refused to even use the word ‘bubble.'”

“In this region, it’s even less likely. ‘I don’t see any of the historical signs of a real estate bubble in our marketplace,’ said Wally Kidd of Kidd & Leavy Real Estate of Petoskey. ‘We aren’t seeing the speculative nature of real estate. People today are buying real estate to enjoy it. They’re not looking to make a quick buck.'”

“Another factor pushing sales: People have money now, and they are making home purchases they delayed when the economic outlook was not so rosy. ‘What we’re reaching is the end of the recovery,’ said Bob Pringle of Real Estate One in Traverse City. ‘The tight inventory is keeping prices up, but it’s slowing.'”

“Judy Porter, a Realtor with Real Estate One in Traverse City, also said the pace of sales has slowed down. She attributes it to several factors, including the time of year, the dwindling supply, and the fact that downtown prices have escalated so much that some who would like to downsize and move to a more central location can’t afford to. ‘Everybody wants to be downtown, but they don’t want to pay the price,’ she said.”

“Kidd said he also sees the market cooling, and the fact that interest rates are moving upward will also help it reach a more sustainable level. ‘The lending market has tightened up. They [lenders] have gotten a lot smarter. You’re not seeing the speculation craze. We’ve seen steady marginal price increases,’ he said.”

“Pringle said this area’s continued desirability as a resort and retirement community should help to insulate it from any potential downward trends. ‘There’s a lot of demand for retirement homes and second homes. That props us up. I think we’ll continue to see strong demand keep prices up even if the rest of the state is flat,’ he said.”

The Business Times on Colorado. “While real estate activity continues to increase in Mesa County, the pace of that growth appears to be slowing. ‘There’s a little bit of cooling off,’ said Robert Bray, CEO of Bray Real Estate in Grand Junction. He attributed slowing to the effects of higher interest rates in a market with rising prices and shrinking inventories.”

“Annette Miller, senior vice president of Heritage Title Co., in Grand Junction, also expects slowing in the fourth quarter. ‘I think it’s going to cool off.'”

The Washington Post. “Ten years ago, retired electrician Dave Roberts invested $650,000 in Donald Trump. Roberts bought a single room in Trump’s hotel on the Chicago River, then waited for his share of the Trump profit stream. But starting in 2016. Fewer guests checked in. Revenue dropped. Roberts estimated that his property value decreased by half, as the real estate market was flooded with unsold Trump hotel rooms.”

“Roberts said he had invested in the hotel against his lawyer’s advice. He had put down a $64,000 deposit on the unit in 2004, before the hotel was built. Then, in 2008, Trump asked for the rest of the money.”

“‘Lose your $64,000, don’t do it,’ Roberts remembered his real estate lawyer saying. The lawyer worried that he was paying too much, as a financial crisis and a housing bust loomed. But Roberts went ahead: ‘I’m careful with money, so I didn’t want to lose my $64,000.'”

“‘I owe more than I can sell it for,’ he said. ‘I can’t catch up with the drop in price. I keep thinking that I’m ready to sell, and it drops again.’ He has $290,000 left on his mortgage. ‘I don’t even like walking past the building’ now, he said. ‘I can’t even look at it.’

This Post Has 14 Comments
  1. ‘Edward Golding of the Urban Institute Housing Finance Policy Center, a veteran of HUD, who has also taught finance at several universities, appeared on a National Public Radio broadcast earlier this year to address the situation’

    ‘Golding refused to even use the word ‘bubble’

    So that’s why you’re on NPR! The B word freaks Thornberg out too. He must be sweating it out these days.

  2. ‘‘The lending market has tightened up. They [lenders] have gotten a lot smarter. You’re not seeing the speculation craze’

    ‘There’s a lot of demand for retirement homes and second homes. That props us up’

    Second shacks are speculation. Why not just stay at a hotel or resort? Cuz then you don’t get that easy sweet equity!

  3. ‘I’m careful with money, so I didn’t want to lose my $64,000′

    Click!

    And they are still doing these condo-tels.

    1. Click indeed!

      So far, it sounds like he’s lost a minimum of 640K-290K=350K, in an effort not to lose his $64K. LOL.

  4. Wow. Just wow. Traverse City is Delusion Central.

    “Both national and local sources say the situation does not seem to portend a housing bubble.”

    Why is it that local media dependent on REIC advertising dollars only cite “sources” who have a vested financial interest in denying the existence of a housing bubble?

  5. In certain price ranges there are shortages of availability. So we are seeing multiple offers and consumers willing to pay more than the asking price and more than [its] true value to secure a home in Traverse City,’ said Carolyn Collins, president elect of the Traverse Area Association of Realtors.”

    You stick with that story, Carolyn. We’ll pay no heed to data and headlines that say otherwise.

    1. I kept hearing great things about Traverse City, but when I visited it was pretty much the most overrated tourist destination I’ve ever been to. Cherry pie shops and a small beach park. That’s it

  6. Oh dear – September seems to be quite the month for “unexpected” drops in shack prices in the (formerly) hottest bubble markets. So riddle me this, my HBB brethren and sisters: why is it that the motley crew of posters in here see such drops as entirely predictable and the downward trajectory as accelerating, while the so-called experts the media chooses to quote always maintain that nobody could’ve seen this coming?

    https://www.theguardian.com/business/2018/oct/05/uk-house-prices-fell-sharply-in-september-amid-brexit-wariness

    UK house prices unexpectedly dropped at the fastest pace for almost six months in September, according to Halifax, as the number of homes for sale in 2018 fell to a decade low.

    Britain’s biggest mortgage lender said the average price of a home in Britain dropped to £225,995 last month, down 1.4% from the level recorded in August. The price of a home remained 2.5% higher than a year ago.

  7. “Pringle said this area’s continued desirability as a resort and retirement community should help to insulate it from any potential downward trends. ‘There’s a lot of demand for retirement homes and second homes. That props us up. I think we’ll continue to see strong demand keep prices up even if the rest of the state is flat,’ he said.”

    In 2004, in Southeast Florida heard this exact same argument with the addition of “the baby boomers are coming.” Last I heard the guy who made this statement was living in the Northeast after he lost his job and his home value fell like a rock. I

    Spoiler Alert: Ice Cold weather and snow do not make you special.

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