Philip Bruce Raful: Local real estate - myth vs. reality

TIP O'NEILL, the late House speaker, once famously said: "All politics is local." The same is true for real estate.

[stonetree neighbor]

there are several homes for sale in stonetree. please come see them

[Lies and statistics]

Sorry Bruce, but juggling the numbers just based on MLS stats is starting out with false assumptions, which poisons the entire point you are trying to make. As an appraiser I am sure you were right in there guessing at values that were accelerating based on vapor and now you are pimping the residential real esate industry (no appraisals without sales?).
Just start watching the notice of defaults in the IJ and you will see that it is no longer mostly condos but has worked up the ladder to defaults on notes in the $500,000 to $800,000 range, with the occasional defaulted note in the $1,000,000 plus range. By the time this works its way through, along with the return to solid underwriting to get home loans we will see home prices in Marin drop another 35%. I suspect it will all end up around the prices in 1999 to 2000.

[kbfairfax]

Lies and statistics wrote:

Sorry Bruce, but juggling the numbers just based on MLS stats is starting out with false assumptions, which poisons the entire point you are trying to make. As an appraiser I am sure you were right in there guessing at values that were accelerating based on vapor and now you are pimping the residential real esate industry (no appraisals without sales?).
Just start watching the notice of defaults in the IJ and you will see that it is no longer mostly condos but has worked up the ladder to defaults on notes in the $500,000 to $800,000 range, with the occasional defaulted note in the $1,000,000 plus range. By the time this works its way through, along with the return to solid underwriting to get home loans we will see home prices in Marin drop another 35%. I suspect it will all end up around the prices in 1999 to 2000.

I'm not a realtor and I don't understand some of what you said, but I did think this piece didn't make sense in a couple of ways. for one, why would you discount foreclosures and short sales when evealuating a market? Two, it doesn't seem to make sense statistically to compare mean prices over 800k from two time periods. Obviously, in the most recent period, some houses may have sold for < 800k, therefore inflating the calculated average (being excluded), that in the earlier period would have sold for > 800k, for precisely the reason that is being denied, namely that the market is falling.

[stonetree neighbor]

come see what stonetree has to offer!

[Nevin L Miller]

In the isolated and conforming Novato neighborhood where I live and where the median value was in excess of $1,000,000 in 2006 - there have been few (if any) foreclosures and there are no condo's - values are down at least 30% from 2006.
There are as many ways to look at statistics as there are statistics.
One way is to look at same home resales - homes that sold in 2006 and then resold in 2007, 2008, or 2009.
The buyer of a home in 2006, who resold it in the last few years will not agree with my esteemed colleagues assessment.

[Nevins correct]

Nevin L Miller wrote:

In the isolated and conforming Novato neighborhood where I live and where the median value was in excess of $1,000,000 in 2006 - there have been few (if any) foreclosures and there are no condo's - values are down at least 30% from 2006.
There are as many ways to look at statistics as there are statistics.
One way is to look at same home resales - homes that sold in 2006 and then resold in 2007, 2008, or 2009.
The buyer of a home in 2006, who resold it in the last few years will not agree with my esteemed colleagues assessment.

A home that sold in stonetree for $1,700,000 in 2005 is for sale for almost exact price it was bought for today almost 4 years later!

[TBone]

Right on the mark. And a smart appraiser (so many are idiots that do it as a side job).

[TBone]

Lies and statistics wrote:

Sorry Bruce, but juggling the numbers just based on MLS stats is starting out with false assumptions, which poisons the entire point you are trying to make. As an appraiser I am sure you were right in there guessing at values that were accelerating based on vapor and now you are pimping the residential real esate industry (no appraisals without sales?).
Just start watching the notice of defaults in the IJ and you will see that it is no longer mostly condos but has worked up the ladder to defaults on notes in the $500,000 to $800,000 range, with the occasional defaulted note in the $1,000,000 plus range. By the time this works its way through, along with the return to solid underwriting to get home loans we will see home prices in Marin drop another 35%. I suspect it will all end up around the prices in 1999 to 2000.

If you believe what you wrote has an effct, then what you are really saying is "distressed sales" will continue for awhile. Agreed. It also means that when that works through the gut of the snake, prices will bounce back handily.

[Telmark]

The listing price of any house means nothing. It's the closing price that counts.

The problem with the current list price of many houses today is that the owners can't afford to sell them at a price the the market will bear. This is why so many houses have been on the market for well over a year (with some having not a single offer).

It will, IMO, be 3-5 years before we again see anything like the prices of the housing bubble of 1999-2003.

Job losses, tax increases, and the end of the "credit based economy" will continue to hinder any housing market recovery here in CA. Another problem is that businesses as well as productive people are leaving this State in ever growing numbers which, only makes any real economic recovery here unlikely.

[Lies and statistics]

TBone wrote:

<quoted text>
If you believe what you wrote has an effct, then what you are really saying is "distressed sales" will continue for awhile. Agreed. It also means that when that works through the gut of the snake, prices will bounce back handily.

Prices will not "bounce back..." at all. Prices during the bubble were driven by cheap credit, no-cash down payment loans, interest only/option loans with significant increases built in, and no documentation loans. The fundamental value issue for housing is the employment and wages. Work it backward from median and average local wages/family income, using 20% down payment and debt service as 25% to 30% of income to see where housing prices will end up. Right back at 1999-2001 levels.

[Honestly]

Having just looked at insanely overpriced houses for sale in Boulder, CO, I have to say Marin asking prices look just fine by comparison! Hardly anyone thought Marin prices in 2007-08 made any sense, now we are back at 2006 range.

[TBone]

Lies and statistics wrote:

<quoted text>
Prices will not "bounce back..." at all. Prices during the bubble were driven by cheap credit, no-cash down payment loans, interest only/option loans with significant increases built in, and no documentation loans. The fundamental value issue for housing is the employment and wages. Work it backward from median and average local wages/family income, using 20% down payment and debt service as 25% to 30% of income to see where housing prices will end up. Right back at 1999-2001 levels.

Not a chance. you're a depressive negative after-the-fact doomsayer. Marin will be flat after a further modest decline this year. Come back in a year and we'll see who is right.

[Lies and statistics]

I've been in the real estate industry for more than 30 years and have seen a number of cycles. This is the most severe and has the most contributing factors of any of them. It has led to fundamental changes that will impact real estate values for a long time.

As to being "a depressive negative after the fact..." well, your statement is zero content, other than being an ad hominem attack to try and build up your lack of logic or proof of position. So, what's it like being a residential real estate agent that hasn't done a deal this year?

[BGHOZ]

Lies and statistics wrote:

<quoted text>
Prices will not "bounce back..." at all. Prices during the bubble were driven by cheap credit, no-cash down payment loans, interest only/option loans with significant increases built in, and no documentation loans. The fundamental value issue for housing is the employment and wages. Work it backward from median and average local wages/family income, using 20% down payment and debt service as 25% to 30% of income to see where housing prices will end up. Right back at 1999-2001 levels.

Good reporting TBone! Get as much information out of her as you can, I am sure there are many a homeowner
that would like to know.....Vapms in Forks WA?,how bout Marin?

[stonetree neighbor]

3 homes are in foreclosure in stonetree and one may be soon, its price has just been dropped $250,000

[TBone]

Lies and statistics wrote:

I've been in the real estate industry for more than 30 years and have seen a number of cycles. This is the most severe and has the most contributing factors of any of them. It has led to fundamental changes that will impact real estate values for a long time.
As to being "a depressive negative after the fact..." well, your statement is zero content, other than being an ad hominem attack to try and build up your lack of logic or proof of position. So, what's it like being a residential real estate agent that hasn't done a deal this year?

You have "proof" of nothing about the future idiot. Like I said, we'll see. I would NEVER be a real estate agent. The whole industry (85%)are idiot sales people that will say anything to get their commission.

[Lies and statistics]

Hey TBone, are you the same stuff-shirt that's so full of himself on the Mill Valley thread? I can tell by your post here you don't read very well either. I didn't claim to have proof, I was calling you to task for not offering any "proof" of your position. It seems like all you do is go from thread to thread slamming others... maybe you need to take a nice nap in your secret Mill Valley enclave of the only cool, successful people left and relax.

[TBone]

Lies and statistics wrote:

Hey TBone, are you the same stuff-shirt that's so full of himself on the Mill Valley thread? I can tell by your post here you don't read very well either. I didn't claim to have proof, I was calling you to task for not offering any "proof" of your position. It seems like all you do is go from thread to thread slamming others... maybe you need to take a nice nap in your secret Mill Valley enclave of the only cool, successful people left and relax.

You claimed prices will not bounce back. That's a prediction. Stuffed shirt? Far from it. Posters attacked everyone in Mill Valley as a trust fund baby. I merely took their knees out. Later, loser

[Lies and statistics]

TBone wrote:

<quoted text>
You claimed prices will not bounce back. That's a prediction. Stuffed shirt? Far from it. Posters attacked everyone in Mill Valley as a trust fund baby. I merely took their knees out. Later, loser

I claimed prices would not bounce back and gave a set of economically supportable reasons for my claim. You, on the other hand, just blustered without any support for your position. Odd to see someone that apparently doesn't read very well and can't construct a logical argument call anyone else a loser... maybe you are a trust fund baby and never had to learn nothin' you didn't want to 'cause mommy and daddy gave you whatever you wanted.

[Patient Buyer]

"...the median sales price of all homes listed and sold for more than $800,000 in Novato via the MLS was $1,129,500; in the second half of 2008, it was $1,071,250; and so far in 2009, it is $1,200,000."

Mr. Raful should at least convert these sales prices to $/sf so we can compare what size homes sold for >$800k in 1H-2008 and in 1H-2009. Without that adjustment these numbers are meaningless.