I call BS...
Who can buy them? Who can afford the taxes? Who can sell it when they lose their job?
Tracks with what I see in my area. I’m sure some will find a way to see this as bad news in some way!
Yeah. Along with gas prices, food prices, clothing prices. It’s called inflation. Homes aren’t worth any more than they were last year, it just takes more worthless dollars to buy them.
The inflation is now well established in the construction economy, next will be wages.
The inflation will come to wages in 2013 and then will permeate everything.
OK, so when prices were increasing rapidly, everyone was complaining about people being priced out of the housing market. Then prices dropped precipitously, and people complained that homeowners were under water on their loans and there were a lot of foreclosures.
Now prices are going up again, and that’s a good thing? Well, it is for sellers, but not for buyers.
I have an idea! Let the market work, get government out of housing and lending, and see if that doesn’t work a whole lot better than the crap that has been going on for the past few decades.
I work in land development. A few observations:
1. Inventory of brand new houses is low. The few builders left are doing ok, since there are still buyers looking for brand new, and there is very limited supply.
2. Rentals are full...at least anything decent. Builders are salivating to build small footprints and duplexes, where the mortgage payment is on par with rent.
3. Credit is getting loser (not necessarily a good thing overall), due to federal policies that de facto underwrite most home loans now.
4. Material costs are up. Lumber 15% over last year, sheetrock 30%, shingles 10%. It is hard to build new, without it costing more than existing houses...margins are very tight. And the cost of utilities has gone up 40% for gas and power.
5. Land development is very difficult. Banks are very reluctant to lend on development property...or even put up surety for a project anymore. They’ve been burned too bad.
6. The cities and counties are about to get burned. Banks with a large inventory of foreclosed lots (with no houses on them) do not see a light at the end of the tunnel...and the special assessment taxes are too high to keep holding the property. Once they start going delinquent, cities and counties will be very reluctant to do special benefit districts for development.
The last two developments I’ve done are 15 lots and 16 lots....very small. Every detail that used to be routine, concerning the financing, was suddenly an act of congress. I lost money as an engineer and designer. My client broke even as a developer/builder.
I predict the housing market will be sporadic for the next 2 years. We will occassionally see a story that the slump is over...and then sales will be flat for a few months, etc. I definitely don’t think we’re out of the woods yet.
The same bubble is re-inflating with bad loans forced onto lenders.
Inventories of decent foreclosed homes in this Rocky Mtn metro area have gone, and now the other homes for sale are disappearing.
Two major employers have just opened up in the valley, and existing home inventories are dropping.
Dirt is being excavated in various places for new developments.
Is the price of a house rising, or is the “average price” of homes sold rising? If its the average price of homes sold, it could just mean that there is an increase in the number of “expensive” homes sold. That would mean that the rich liberals are buying homes in California and Washington DC, and the average family can’t afford to buy a new home...and don’t.
It depends on the neighborhood. I live in a declining neighborhood. The house up the street has been for sale for almost a year. Despite numerous improvements and price reductions, no one is buying. It’s a nice house. In a really good neighborhood, it might sell for $200,000 or more. The seller is now down to $75,000 and still no takers. No one wants to live in a cesspool like this.