Double, Double, Toil and Trouble
Today's New York Times has the latest (subscription may be required; you never know with the NYT, it seems) in what has been a deluge of media reports recently on housing prices, all of which pose the unanswerable question of whether there has been a housing bubble and, if so, whether it has burst. All this talk of slumps, soft landings, hard landings, busts, and crashes reminds me of the oft-heard line that a recession exists when your neighbor loses his job, but a depression occurs when you lose yours.
The same logic applies to house sales. I read these articles with the detached security of one who has seen his house value rise a good bit in the past two years and who does not expect to sell for a long time, so a downward trend is not something of concern. If I stand on my front steps, however, I can see six For Sale signs, each of which has been hanging for at least three months. The only thing moving, at least in my corner of the world, is the asking prices of these homes, some of which have decreased 5-8 percent in the past few weeks.
And, as all these articles note, where she stops, nobody knows.
The same logic applies to house sales. I read these articles with the detached security of one who has seen his house value rise a good bit in the past two years and who does not expect to sell for a long time, so a downward trend is not something of concern. If I stand on my front steps, however, I can see six For Sale signs, each of which has been hanging for at least three months. The only thing moving, at least in my corner of the world, is the asking prices of these homes, some of which have decreased 5-8 percent in the past few weeks.
And, as all these articles note, where she stops, nobody knows.
posted by FCB at 2:41 PM
1 Comments:
It's a cult; a religion; a fascination, this real estate thing. In the good times, it's all people can talk about; in the bad times, it's all people can talk about.
As someone with some experience in this area, I am consistently amazed by these boom and bust cycles and by how much they are fed by the greed of those who make their living in the real estate business.
Looking around this city, and others recently visited, there's no shortage of commerical and residential construction and new housing stock, all a direct result of the boom times. The grab for the last dollar before the bust. And, after having largely created this glut, the builders and developers complain about the bath they take together, as the media nervously follows the decline. Yet, somehow, all who work in this field still seem to make a good living in the lean years. [I remember selling co-op apartments in Manhattan (at, admittedly, what now seem bargain basement prices) when the mortgage interest rate was about 18%! People complained -but they bought.]
Nevertheless, the whole process, the whole cycle never stops feeling immediate and terrifying somehow to those stuck in the middle of it. My neighbors, convinced by those same real estate types of bloated property values, are forced, in such down markets, to reduce the prices of the homes they really need to sell to sums substantially less than they expected to realize.
Now, of course, those same neighbors, most of them anyway, as they reduce the prices of their homes, are only losing paper profits. As an investment, their homes will pay off handsomely for them, even at the lesser sales prices they likely will realize.
Perhaps my neighbors have more in common with the moguls than they're willing to admit. Somehow, though, that never makes the papers . . .
-- A friend in Philly
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