The Real Estate Apocalypse Cometh
All ye who feasted on the land greed of mankind, those who sought to take from your brother his hard earned coin for a housing pig in lipstick, your time a cometh.
I see the signs, the “For Sale” signs in Dupont Circle, where once none were needed, the $100,000 off coupons on new construction, the jump in listings and slow-down in sales and I can see the future.
First the Washington Post will caution that doors will close for real estate speculators with choice quotes like:
Sales of new condos fell 43 percent in the first quarter of the year, compared with the first quarter of 2005, according to one report, and there are almost four times as many existing condos for sale than last year.
“We think the softness of the market is largely due to the pulling out of investors,” said Gopal Ahluwalia, staff vice president for research at the National Association of Home Builders. “They have not only pulled back, they are canceling purchases.”
And they will tell the tale of the numbers Apocalypse warned about in the holy book:
Delta Associates, an Alexandria real estate research firm, said there are about 25,853 new condos being marketed locally now. But only about 1,996 new condos were sold from January to March, down from 3,520 in the first three months of last year.
And the area’s multiple-listing service, which lists mostly previously owned properties, showed about 5,500 condos and co-ops for sale in March in Washington and the close-in suburbs. That was about a fourfold increase from about 1,400 listed in March 2005 with the service, Metropolitan Regional Information Systems Inc.
Soon the glut will smite speculators, becoming a rout of falling prices, a Realtor will jump from a window, and the bubble will pop as locusts swarm.
Those who have wronged their brother will feel the full wrath of negative equity, will fall before the mighty bankruptcy court, and the meek, renters like I, will inherit the earth.
Or I can only hope.
That’s a pretty dramatic post there. Nice religious overtones from the prophet Wayan striking down upon the DC real estate market with great vengeance and furious anger.
“We think the softness of the market is largely due to the pulling out of investors…”
That sounds dirty.
Then again, wishing for a full collapse of the real estate market… that’s clearly a great idea :D
Unless there’s a mass loss of jobs, there shouldn’t be a collapse of the real estate market and I certainly hope we’re not wishing for a massive job loss. Speculative homebuying (defined as people who flip homes in less than a year) represent only about 3% of the “market” of home buyers. I think the price increases were more due to greedy developers than “speculative investors” – developers who claimed to limit the amount of investors buying homes to “protect” homebuyers were only protecting their own greed. That fact is also corroborated by the stock prices of these publicly traded home builders – when stocks are that high from record profits, it’s a clear indication that it’s the BUILDER who is overcharging.
Bottom line, I think we’re starting to reclaim some sanity in home prices, but in the meantime, the builders have made their millions and will turn their money from stocks elsewhere until their stocks are hot again… so it’s really the so called “real estate investor” and the average home buyer that loses.
The best discussion I heard of this recently had one of the ‘experts’ commenting that the softening would hopefully lead to people ceasing to ‘think of their home as an ATM to make withdraws from’ and start thinking of them as places to live again. Brilliant.
Tom M, from the Post article:
Nobody knows exactly how much of the real estate boom was driven by investment and speculation. Experts say that between 15 and 30 percent of all purchases were made by investors, rather than by people who bought homes intending to live in them.
Right, it said nobody knows exactly how much of the real estate boom was driven by investment and speculation. The guidelines that many stories in the media were citing used anyone who lived in a home less than 5 years as a “speculator”, in which case I would be an “investor”. I can assure you I’m not – when we had another child after buying our house in VA, we decided to upgrade our space and sold our home after just two years – we made money, but put it all into our next home, YET, studies cited by the news articles would have classified us as “investors”.
I know a lot of real estate “investors” and none of them have purchased homes with the intent of flipping them right away, almost ALL of them are using their purchases as long term investments with renters in place, that’s all I’m saying. Of course the builders are going to try to place the blame on someone else, it’s just like the oil company execs saying that “market demands” are the cause to high oil prices. Their profits, just like the builder’s profits are just “pure happenstance”… I’m not buying it.
The study I read that cited the 15-30% number was put together by the National Association of Builders – you think that they have a vested interest (stock prices are the issue here) to make sure that it doesn’t look like they were the ones pulling an Enron with home prices??? I think they might…. If I were them, I’d blame “investors” also… they don’t have to convince the home buyers, just Wall Street.
the growth in 2005 was not sustainable.. obviously, the market was going to slow down.
I’ve managed to save up roughly $47363 in my bank account, but I’m not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot?