As others have pointed out, an increase in median prices or average prices does not necessarily indicate a strong market or an increase in actual VALUES. As SuzyH pointed out, and though it pains me to ever agree with her on anything, both median and average price can increase in a declining market. Some people theorize (and i haven't taken the time to put the numbers together to confirm it) that the reason average and median prices are increasing is simply a matter of lower end homes not selling. If the average/median price is $200k....but now all of the people who were buying properties in the $0-$200k range stop buying because they can't afford it or can't get a mortgage....and many of the people looking at $600k+ places decide to buy $400k places...the average goes up even though fewer people are buying and are buying for less than before.

Furthermore, the condo market is so small in terms of a sample size, that looking at prices in any given year/month is pointless because a couple of sales can skew the whole sample.

I think I will try to capture data from the last couple of years to see what is actually happening. I think the MLS breaks it out in $50k chunks. Perhaps I will break it down by sales $0-$99k, $100k-$199k, $200k-$299k, $300k-$399k, $400k and up.

timmy - i'm more interested in what you're seeing out in the trenches and on the streets and in your office.

Well, I can't think of too many things that we don't agree on, except possibly that cash back deals are illegal. You would consider a "10k seller's assist" legal, and I would too if it were recorded that way in the county records. Unfortunately it's not and it contributed to artificial inflation, and it is not legal. Unfortunately that 10k seller's assist very often went into buying items unrelated to the purchased house, and was not used to improve the property.

Maybe the other thing we don't agree on is that there will be a huge drop in the enrollment at the NAR (currently about 1MM, down from 1.2MM a year ago). Also we may differ in that it is apparent that the acceleration in local deflation market is growing (i.e. the pace of price drops is quickening), even more than the 11% predicted here. 11% on an 800k house in a year is an 88k drop (and that doesn't include taxes and maintenance), and a comparable house can be rented for a lot less than that.

Fannie and Freddie capital alert

By James Politi in Washington
Published: May 13 2008 23:38 | Last updated: May 13 2008 23:38


The government-backed mortgage companies that finance the bulk of new US home loans may not have enough capital to withstand the plunge in the country’s housing market, according to one of Washington’s most senior financial legislators.

In an interview with the Financial Times, Richard Shelby, the senior Republican on the Senate banking committee, said Fannie Mae and Freddie Mac were “thinly capitalised, highly leveraged and pose a systemic risk to taxpayers”.

“I worry about the failure of the institutions,” he said. “My interest ... is to try to make sure they are strong enough financially to withstand a real downturn in the housing market.”

The two companies are perceived to have implicit government backing which investors believe would trigger a bail out in the event of collapse, but the government has never had to exercise the guarantee.

The comments by Mr Shelby come amid talks in Congress over new housing legislation and the future of Fannie Mae and Freddie Mac, which have experienced heavy losses amid the mortgage crisis.

Mr Shelby and Chris Dodd, the Democratic chairman of the banking committee, are working to hammer out a bipartisan bill that would expand the Federal Housing Administration, the government insurer for mortgages to those with low incomes.

The aim of the bill is to halt the wave of foreclosures by allowing the FHA to guarantee the refinancing of up to $400bn (€260bn, £205bn) in loans to reflect lower house prices, with lenders voluntarily agreeing to forgive a chunk of their loans.

The bill would also create a powerful new regulator for Fannie Mae and Freddie Mac, and Mr Shelby is pressing Democrats to grant the body a higher level of “discretion” to force the companies to raise their capital requirements.

“I just think that the capital today is so thin, considering the losses, that it is dangerous,” he said.

The legislators must agree a text by Thursday morning, when the banking committee will vote on both measures. Mr Dodd released details of the bill on Monday, but has so far failed to garner Mr Shelby’s backing.

“We are not there yet,” Mr Shelby said shortly before Mr Dodd’s announcement. Afterwards, a spokesman for Mr Shelby said “it remains to be seen whether an agreement can be reached.”

The support of Republicans in the Senate is critical because 60 votes out of 100 are needed to advance legislation. The White House and many Republicans oppose the FHA plan on the grounds that it amounts to a bail out of speculators that puts taxpayer money at risk.

Mr Shelby said he worried the plan would raise “false hopes that it would take care of the housing crisis,” but did not to rule it out.

Additional reporting by Krishna Guha

Copyright The Financial Times Limited 2008

Jimmy Rogers is short these equities for a reason.

You might want to take a look at this. Cash is now king, and people are being forced to liquidate their assets. Talking about a recovery in housing under these circumstances doesn't really make too much sense. If people can't pay for gas, they certainly aren't about to buy a house.

“People are cleaning out their houses of gold, silver, whatever, to get money just to fill their cars with gas,” says Nat Leonard, a pawnshop owner in Philadelphia. “People are pawning out like crazy.”

"I worked hard for this watch. I'm middle-class, not poor. I can't believe I have to do this to buy gas."

"I've got business owners coming in to pawn things just to make their payrolls," Leonard said, incredulous. "I've never seen that before."

In this economy, people aren't buying as much jewelry as usual, so retail jewelers on and around South Street have to pawn inventory to pay their workers. "One jeweler owes me $150,000," Leonard said, showing off the pawned collateral in a backroom safe.

Jewelers on South Street...now that's kwality, baby

__________________
I'm Mr Brightside.

We've been through this. I think you just get confused.

Cash Back at closing is ILLEGAL.

Seller's assist IS LEGAL. The lender determines how much the sellers may credit at closing as a percentage of the sale price. It is also limited by the appraisal of the property as the lender will not write a mortgage for more than the appraised value of the property. Please don't re-visit your claims of a vast conspiracy among realtors, lenders and appraisers....that's not what this is about.

For example, let's assume the asking price is $400,000 for a home. Let's assume the property legitimately appraises for $400,000. The buyers can negotiate with the sellers and agree to a sale price of $400,000 with a seller assist of $12,000 (assuming the lender allows a 3% sellers assist and that amount does not exceed the buyer's closing costs). That is perfectly legal and happens every day. You can hate it. You can whine about it on the internet. You can call it immoral, unethical, despicable, whatever adjective you like. But you cannot call it illegal. Furthermore, sellers assist is solely a credit towards closing costs. It cannot be used to buy "items unrelated to the purchased house" and it is not a credit for repairs/improvements .... though sellers can offer credits at closing for repairs as well and those aren't recorded by the county either! A seller's assist is only a credit on the settlement sheet.

If you would like to change the way these transactions are recorded, don't preach to Realtors or any other party to the transaction. None of those people have any say in the matter. Talk to your local government about what they record in the public records. If you would like to outlaw seller assist please contact your lawmakers. In the meantime, stop barking up the wrong tree.


Yes, I'm sure NAR membership will drop. When the market is hot and money is easier, membership increases. When the market is down and money is harder to come by, membership decreases. Nothing shocking there.

So it's legal for the Bella in AC to offer the BMW convertible for purchasing an apartment there?

Last I checked closing costs would not be $35k on a $450k property (of course the apartment is really only worth $250k - definitely wouldn't have $35k in closing costs on a $250k condo). Ummmm how is this legal again? Isn't there a real estate agent representing the buyer who has an obligation to indicate that this practice is illegal (you said yourself, the credit cannot exceed 'closing costs'). As a card carrying member of the NAR (and given their strong ethical guidance) don't you have an obligation to say, yes, this transaction is an illegal one because 1) the new apartment (in the Bella) doesn't need repairs and 2) there is little chance that the closing costs can be $35k on a $450k (really worth $250k) apartment?

Perhaps it's better to just ignore the above and pretend it doesn't exist. Perhaps that way you won't step on the toes of any realtors who are encouraging this illegal practice (the Bella is just one example of thousands). But is that the right thing to do given the circumstances of the current market? Shouldn't those of us who want to see a market that isn't manipulated (so that we have confidence to purchase) at least expect one realtor out of 1MM+ to be able to speak truthfully and indicate that the Bella cannot legally give away a $35k car with the purchase of a mortgaged $450k condo (albeit one that is only worth $250k)?

I think that NAR membership will drop to 300,000 (obviously because of the dramatically slowing demand for house purchases); I didn't know you agreed with this too. Neat!

I am not familiar with this offer and had to google to find the place and the offer. I am also not familiar with NJ state laws. All I can do is guess...

1. The advertisement lists units starting at $425k. It also states that only 20 of these "offers" are available. It does not specify which units the offers apply to. It is possible that you have to buy a $900k condo to qualify. It also states that you can opt for UP TO a $30,000 credit at closing. See point 2.

2. Just because they are offering it, doesn't mean that the buyers can accept it in part or in full.

3. We don't know how the agreement and settlement sheets will be written up so we can only speculate.

Not that it is "right" but companies often advertise "offers" that almost no one actually qualifies for. I really don't know. I'd have to see a settlement sheet to really know what is going on. Heck, the HUD-1 which is produced by the US Department of housing and urban development actually has a line on the form for "personal property" that is included with the sale.

Why don't you call or email them and ask how this offer works?

(FYI-I don't carry a NAR membership card. Don't know where mine is, and would rather not be a member if I wasn't required to be. In fact, I refuse to pay the optional $20 a year "donation" to NAR's lobby group in DC that they stick in with the annual dues.)

Builders: No signs of housing recovery

The latest survey of homebuilders' confidence shows that the market remains in rough shape and will remain in a funk six months from now.

Last Updated: May 15, 2008: 2:23 PM EDT

http://money.cnn.com/2008/05/15/news...ion=2008051514