Housing Prices

[CtownMikey]

I dont exactly understand the problem with it bursting

I have no idea what will happen, but im guessing that land and housing values will plummet... which will suck for the people that own it, but isnt it a good thing for people looking to move back to rhode island?!?!?

I mean the south is being flocked partly because of low prices

[Garris]

I really wish their was a bubble preparing to burst in RI. All the pundits who say there is a bubble predict it bursting right around the time that I would be in a financial situation to finally buy. At this point I feel like I'll forever be sliding down the side of the bubble, just out of reach.

[gregw]

An article in the NY Times quoted a Joint Center for Housing Studies at Harvard study which showed that house prices appreciation rates were starting to drop in Providence. (It's already archived but here's the ref: BUSINESS/FINANCIAL DESK {sodEmoji.{sodEmoji.|}} August 13, 2005, Saturday Do Try This at Home: Assess Your Area's Real Estate Bubble By DAMON DARLIN (NYT) 1740 words)

A Providence realtor quoted in the article said that it's starting to switch to a buyer's market. Anecdotally, I can say that in my neighborhood Summit, where the run up in housing pricing over the past few years has been unbelievable, the peak seems to have arrived. Houses have been sitting with For Sale signs now for several months. In one case that I know of, the seller opted to lower the price after going through like eight open houses!

Don't worry, Cotuit.  I think things are close to peaking.  Things just can't go that much higher for just the reason you mention.  Sellers and realtors, etc want you to be able to buy what they're selling, and if no one can afford anything, the situation becomes undesirable. 

This is what happened in Rochester, MN when I was there.  Before I arrived, prices went up by over 100% in about 3 years.  After I got there, people kept increasing prices to 120%, 150%, etc of what they bought for, and it just pushed prices out of the range of the people moving to town (like me), and their properties just sat on the market for months unsold until they lowered the price.  Eventually, over the 4 years I was there, things plateaued.  People who bought at the beginning of my 4 years and sold at the end were only, after fees, etc, making about 5-10% back, vs the people who made 110% several years earlier. 

The only difference between that market and ours is that there was a lot of building going on there at the same time, which isn't happening here.  Still, affordability matters. 

Regarding the PBN article, yup, a lot of development boo-hoo ("We can't build on wetlands!!"), but there were some true key points there also.  There is no doubt that, like around the nation, community efforts to keep families away are working.  Also, I thought this was a great statement:

"Kane said that before starting his business in Rhode Island five years ago, he worked on residential development in states such as Florida, Texas and Virginia. At his first town board meeting here, he was amazed to learn that lawyers presented housing proposals with the understanding that the application may ultimately be decided in the courts.  'I learned pretty quickly that things in Rhode Island don

[gregw]

Interesting housing bubble piece:

http://www.nytimes.com/2005/08/21/business...ney/21real.html

[eltron]

Also, I thought this was a great statement:

"Kane said that before starting his business in Rhode Island five years ago, he worked on residential development in states such as Florida, Texas and Virginia. At his first town board meeting here, he was amazed to learn that lawyers presented housing proposals with the understanding that the application may ultimately be decided in the courts.  'I learned pretty quickly that things in Rhode Island don

[Garris]

Well, I think this guy's statement should be taken with a grain of salt...they are one of the builders making the most use of the Low and Moderate Income Housing Act, which by its very nature is contentious and breeds opposition in the 'burbs. This tactic is ultimately effecticve, but usually not an easy way to start off projects, esp. with what the Low and Mod Act has been facing in the legislature lately.

That said, things are undoubtedly tighter here in the northeast than say, Houston.

<{POST_SNAPBACK}>

I don't know how much of a grain of salt it should be taken with. My condo association has its own lawyer to fight local projects with, as do many of the local neighborhood associations.

I remember when I moved here and there was a project the locals disliked, they were like, "Oh, we'll just probably end up taking them to court. These planning board and other meetings are just formalities to get information." And I was like, "Whoa! Itsn't that expensive? Do we want to do this?" And they were just like, "Well, yeah, we do. That's just how things work here. The process is decided in the courts usually, not at any of these meetings. It's the way it always happens."

I was stunned!

I'm not saying we should be Houston (bad, bad city), but there's probably a happy medium somewhere. Our regional nationwide reputation tends to scare away people looking to develop, and I'm not sure that's a plus overall.

- Garris

[Frankie811]

http://www.pbn.com/contentmgr/showdetails.php/id/117010

[ArtInRuins]

Not exactly the same as the house market bursting, but has anyone else noticed the slew or rental signs and listings on Craigs list right now? I think that all the students already moving into 401 Westminster have had an effect on the East Side rental market.

I have also noticed a lot more houses on the East Side

[Garris]

Not exactly the same as the house market bursting, but has anyone else noticed the slew or rental signs and listings on Craigs list right now? I think that all the students already moving into 401 Westminster have had an effect on the East Side rental market.

I have also noticed a lot more houses on the East Side – two and three families – going condo. And I've noticed that they stay on the market for quite a while, too. But until our tax assessments level off and come down a little, it isn't going to make too much of a difference for people who already own, only those looking to refinance or buy.

Right on both counts. There are absolutely many more rental signs this year. As for the single families going condo, that's a trend that's been evident for well over two years. We're starting to see the earliest of those start to hit the market now. They'll be a real flood of them for sale in the next two years.

The volume of condos is going to be interesting. There are apartment buildings, for example, on Benefit that are being completely converted to condos with many units, all of which plan on asking for relatively top dollar. It'll be fascinating to watch. Buyers will have lots of choices, and maybe even some bargaining power.

- Garris

[Frankie811]

http://www.pbn.com/contentmgr/showdetails.php/id/117423

[Frankie811]

http://www.projo.com/business/content/proj...x.215933ac.html

[TheAnk]

http://www.projo.com/business/content/proj...x.215933ac.html

I think this "slowdown" is a bit more than just seasonal.. There are many like properties out there on MLS with "price reduced"... To sell a house now, you need to stand out.. Unlike the past.. I expect a 10-15% drop in the next 5 years, as inflation forces the fundamentals (rents and incomes) back within historic ranges. House prices will have to wait for that..

People who bought with creative financing recently may not find the appreciation they need to get to a 30 year fixed.. And the FED has stated publically that they will keep loading the interest rate gun to fight inflation.. The 30 year fixed hit 6.375% today.. I think a 7% rate would have the FED's desired effects off halting the housing boom..

That combined with the crackdown by the GOV on creative financing (zero down, ARMs, no doc, low doc loans), should not only stop the price increases, but effectively lower them..

Never fear young lads, Big Brother is always there to keep everything in check.. A bunch of Dr. Jed Hills in the FED.. God Complexes..

[Cotuit]

Hey TheAnk:

Do you know anything about that condo in DePasquale Plaza that's been on the market forever? Were you the one who said it didn't have parking and that was part of it's problem? Do you know anything else about it (anything bad?). I was gonna give a call and see if I could take a look at it.

EDIT: this one.

[Frankie811]

http://www.pbn.com/contentmgr/showdetails.php/id/117627

[virgo20]

I think this "slowdown" is a bit more than just seasonal.. There are many like properties out there on MLS with "price reduced"... To sell a house now, you need to stand out.. Unlike the past.. I expect a 10-15% drop in the next 5 years, as inflation forces the fundamentals (rents and incomes) back within historic ranges. House prices will have to wait for that..

People who bought with creative financing recently may not find the appreciation they need to get to a 30 year fixed.. And the FED has stated publically that they will keep loading the interest rate gun to fight inflation.. The 30 year fixed hit 6.375% today.. I think a 7% rate would have the FED's desired effects off halting the housing boom..

That combined with the crackdown by the GOV on creative financing (zero down, ARMs, no doc, low doc loans), should not only stop the price increases, but effectively lower them..

Never fear young lads, Big Brother is always there to keep everything in check.. A bunch of Dr. Jed Hills in the FED.. God Complexes..

I agree 100% here. Many people that have bought homes over these last few years and refinanced with cash-out have maxed out the values of their homes. Some have used interest only and option arms to buy these homes because they can't qualify on a traditional loan ( fixed principal & interest) based on their incomes. I don't see a "bubble" hapening per say, but I definitely see more foreclosures in the next few years happening all over the country. Places like Buffalo( NY ), Detroit ( MI ), and Cleveland have all had significant depreciation as of late. There are many homeowners who owe more on their mortgage than what the home is worth. I don't see that be a major epidemic in Little Rhody , but states like California, where only 17 % of homeowners are in traditional mortgages , this could be a big problem. I read somewhere that only 46% have the income and means to support a traditional mortgage.

Cotuit, if you need a mortgage loan, let me know. I can do an automated approval for you and you get a discount off closing costs through any referral.

[TheAnk]

Hey TheAnk:

Do you know anything about that condo in DePasquale Plaza that's been on the market forever? Were you the one who said it didn't have parking and that was part of it's problem? Do you know anything else about it (anything bad?). I was gonna give a call and see if I could take a look at it.

EDIT: this one.

I never saw the insides, because there was no parking and no pets.. Both deal killers for me.. The location is nice though.. I think there are two on now..

[CtownMikey]

http://www.projo.com/business/content/proj...on.823d996.html

so they say the south is where the housing boom is migrating to.... meaning that it wont be that much cheaper to live there in comparison???

[Cotuit]

so they say the south is where the housing boom is migrating to.... meaning that it wont be that much cheaper to live there in comparison???

Yes, you're already seeing that in the southwest. Property values have been climbing steadily there the last few years. The conditions that make our housing expensive will eventually catch up with the rest of the country.

[Garris]

Yes, you're already seeing that in the southwest. Property values have been climbing steadily there the last few years. The conditions that make our housing expensive will eventually catch up with the rest of the country.

Exactly. These things always swing. Development and infrastructure eventually costs money! All those roads, schools, pipes, bridges, courts, police, etc need to be upgraded, expanded, and cared for, and that requires taxes.

Look at California. For the last 40-50 years, it was the poster child for people flooding there for the sun, sand, jobs, and low cost housing. Now, it's a mature and costly market, and demographers are saying that for the first time, California has had a net loss of population in recent years, mostly losing them to Nevada, Oregon, the SW, and Mid-West. The reasons? Lower costs, lower taxes, etc...

Eventually, the cycle will repeat. In a few years, eventually everyone will discover how cheap the depressed (and quite appealing otherwise) places like Buffalo, NY are to live, people will flock there, and on and on and on...

- Garris

[CtownMikey]

when will new england be cheap in comparison again?

[Cotuit]

when will new england be cheap in comaprison again?

Not soon. And not ever if we don't work to address the issues we currently face with infrastructure. All of our infrastructure in all 6 states has serious problems. Roads, bridges, dams (as recently drastically illustrated)...

[Cotuit]

Not quite a burst, but in Boston they are talking about a Buyer's Market:

Housing forecast: downturn until '07

Suddenly, area's housing market favors the buyers

[TheAnk]

http://www.projo.com/business/content/proj...on.823d996.html

so they say the south is where the housing boom is migrating to.... meaning that it wont be that much cheaper to live there in comparison???

Never.. They don't have the land restrictions the North East has..

[Cotuit]

Never.. They don't have the land restrictions the North East has..

Well that will equate to larger infrastructure problems when the time comes. All that acreage of roadways sprawling into oblivion needing to maintained in 20-30 years is gonna hurt the tax base.

And of course the southwest doesn't have the land restrictions we do, but they also don't have any water.

[brick]

Well that will equate to larger infrastructure problems when the time comes. All that acreage of roadways sprawling into oblivion needing to maintained in 20-30 years is gonna hurt the tax base.

And of course the southwest doesn't have the land restrictions we do, but they also don't have any water.

"Hello, this is Canada."

"Yes, this is the State of Arizona, can we just go ahead and buy half of the lakes in British Columbia? Thanks!"