Friday, December 09, 2005

Hard Landing Now Seems Likely on East Coast

According to this article, price cuts of 20% are now commonplace in the East Coast housing market and analysts are saying that a "hard landing" (i.e., a crash) is far more likely. And foreclosures are up 35% It seems that they are entering a downward price spiral that will be difficult to reverse. Just a month or two ago it was all "oh, prices will soften and appreciation will only be the normal 5% or so...it will be a 'soft landing'". Is the East Coast a harbinger for the West Coast? How are their amygdalas doing I wonder?

Some choice quotes:
"Boston-area homeowners trying to sell their houses are sharply reducing asking prices -- in some cases, by $100,000 or more -- in response to the sudden slowdown in the real estate market."

"Demand for single-family homes has declined as prices have risen in recent years and interest rates have begun to climb, causing the number of properties on the market to pile up."

"...reductions in asking prices of 10 percent or 20 percent are now common in both high and moderately priced neighborhoods..."

"''The evidence -- both early data and the anecdotes -- are pointing more toward a hard rather than a soft landing" in the housing market, said Nicholas Perna, an economic consultant in Ridgefield, Conn. ''Prices could come down. Could it be 10 to 15 percent? There's no way of knowing, but what we're getting is more clues that you've got a decline in prices underway."

"Some houses are now listed below what buyers paid a few months ago for a similar house, making it very difficult for real estate agents to estimate an asking price for clients."

7 Comments:

Blogger Karen said...

Great! Guess where we just plopped the outrageous profits from the sale of our NorCal house?

Dec 9, 2005, 1:42:00 PM  
Blogger sf jack said...

I remember, it was 15 years ago (a long time for me) - but this is reminiscent of what happened then.

In Boston, the party was beginning to end in '89 and by late '00 it was clearly ending in Northern California.

Hard there, hard here.

This time I expect it could be "harder there, harder here."

Dec 9, 2005, 2:21:00 PM  
Blogger sf jack said...

marinite -

I saw this blog mentioned on a new NY Times blog (not yet with comments) refenced at housingbubble2

If I find the link, I'll send it.

Dec 9, 2005, 2:22:00 PM  
Blogger sf jack said...

See "The Walk Through", the NY Times RE Blog:

http://walkthrough.nytimes.com/?cat=4

"Back to the Hot Tubs"

12/8/05 12:56 pm

Dec 9, 2005, 2:29:00 PM  
Anonymous Anonymous said...

There is another article from HAT TRICK LETTER posted on the Financial Sense website. It has the following quote:

"The US housing market seems in many areas to have begun a stall, if not a decline. Many important measures show a stall, as adjustable mortgage rates have risen. Two forces (low mortgage rates, lax lending practices) have shown end stage indications. One new force (signs of Fanny Mae bankruptcy) has shown a spread of the foundation crack. If sheer weight from higher values does not invite a housing correction, then an assist by an incompetent USFed rate hike cycle will finish the job. All the while, fat Fanny’s foundation is being shredded along all its flanks."

Anyone heard of the Fanny Mae bankruptcy rumor?

Dec 9, 2005, 8:23:00 PM  
Blogger Marinite said...

Anonymous-

The rumors about the problems at the GSEs started in 2003 (or at least, that's when I first took notice). They have become public during the last year or so. A good place to read about the troubles of the GSEs is FinancialSense.com

Dec 10, 2005, 11:28:00 AM  
Anonymous Anonymous said...

Not aware of any of Fanny Mae problems. However, they recently announced to set 2006 single-family mortgage loan limits to $417,000.

http://www.fanniemae.com/index.jhtml

Dec 11, 2005, 12:13:00 PM  

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