Posted by Chad Johnson at 10/2/06 7:22 p.m.

I think the Japanese in 1986 didn't believe in real estate bubbles, either.

Posted by unregistered user at 10/2/06 8:13 p.m.

A few things.

1. Susan, did you bother to notice the URL of that Yahoo article? 'http://promo.realestate.yahoo.com' That is an infomercial, not an article.

2. Even if we take said 'article' at face value, the 'author' pretty much contradicts her own thesis:

"A bubble is a market in which the value of the key asset is inflated based on speculation and psychology"

Values here in Seattle sure as heck are not based on income and rents. (A.K.A. fundamentals) I'd put my money on speculation and psychology any day.

Please keep this up though. I do find it most amusing.

Posted by unregistered user at 10/2/06 8:16 p.m.

I'm going to do a screen shot of this webpage so that 12-24 months I can come back to all the RE "professionals" (and I use that term loosely) and say TOLD YOU SO!

Posted by unregistered user at 10/2/06 8:38 p.m.

I took a shot of it too... this will be SO priceless!

I will sell this house today
I will sell this house today
I will sell this house today

Today I bought a Mercedes C280 for my mother in law in Los Angeles. It was an older model, 98' w/100K miles. I picked it up for $6800 after having it full checked by a Mercedes mechanic - about $3K under blue book.

Guess what the seller did for a living? Yep, realtor.

Posted by unregistered user at 10/2/06 9:40 p.m.

Interesting point of view. How would you describe the data in this graph?

http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

To me, it looks like the last 8 years of real estate prices are very anomalous. I'm not an expert, but I would say that looks like a bubble.

So, Susan, if this market isn't over inflated, why? Clearly there has been a massive increase in prices over the last 8-10 years. What are the fundamental forces driving up these prices?

Posted by unregistered user at 10/2/06 9:42 p.m.

Wow, nice post. But what would you expect from another biased, corrupted realtor.

Note to the world - if you read articles written by realtors that tell you there's no bubble, it's just because they want to eat again! Ramen Noodles get really boring after a year

http://housingpanic.blogspot.com

Posted by Chad Johnson at 10/3/06 1:27 a.m.

"I bet the idiot above was crying Dow 3000 in 2001 too. Lol."

I don't remember anyone in 2001 crying 'Dow 3000'. I do remember a commercial for a financial services company that featured a bear and a bull debating on what the DJIA and Nasdaq were going to do. I clearly remember the bear's prediction of Dow 8000, Nasdaq 800 -- which was a pretty funny statement until it started to look like it might actually happen and which I'll remind you, pretty much did in 2002. The Dow doesn't need to go to 3000 for people to lose their shirts.

That being said, I think that reasonable people can disagree on whether or not we are in a bubble. The piece by Kendra Todd was really just fluff -- I'm sorry, but 'there's no bubble because I say so' really isn't that compelling of an argument. I'm sure that the reverse is also true to the people that believe that there is no bubble.

My objection to Susan's post is different than that, however -- Susan seems to believe that there is no possibility of a bubble, which I find to be naive and ridiculous. Japan is the world's second largest economy, and Tokyo real estate prices posted their first y.o.y. price increase in fifteen years just two years ago. How is that possible if real estate bubbles cannot exist?

I think Kendra Todd is most likely right about one thing -- that it's not usually an overnight phenomenon. But I think it can happen and can happen rapidly enough that people won't notice until they're under water.

Like I said earlier, reasonable people can disagree about whether we are in a bubble. But pretending they cannot happen or cannot happen here is just plain risky.

Posted by unregistered user at 10/3/06 8:19 a.m.

I have read pretty much all of Susan's posts on the blog - and this latest one tells me that she is running out of defences for her position. Susan, how about posting an article that supports your ridiculous thesis from someone who is well respected and is not in the RE industry. I can point you to several that predict the coming gloom from very respected individuals. Let me know if you need to see 'em. The owners of this blog have consistently and conveniently turned a deaf ear when asked for data to support their positions (Mr. Braxtan?), unless of course you find one by a fellow realtor.

Susan, I am not sure how I would feel if everyone was predicting a slowdown in my profession. But the solution to the problem certainly is not in denying its evry existence.

Posted by unregistered user at 10/3/06 9:29 a.m.

I find it hilarious that 'bubble deniers' always seem to get the fact that bubbles are not driven by fundamentals but then can NEVER point to fundamentals which are in place to support these prices. They simply say 'interest rates'. Interest rates change and therefore are not a lasting fundamental....furthermore, even with interest rates at there current level housing is at historic lows as far as affordability. Price-to-rent ratio's are completely out of whack!! And median incomes have DECLINED since 1999.

Posted by Quark at 10/3/06 10:10 a.m.

The "reasons" spewed by the media about the direction ANY market will take is useless except as a contrary indicator. Remember, so called "journalists" don't know anything. If that wasn't the case, they'd actually be doing something productive instead of spending their pathetic lives reporting (and injecting their own bias whenever possible) on what OTHER people say and do.

My strategy has always been to look at the financial media for the first indication of a major trend change, then to look at the mainstream media (MSM) for confirmation of a top or bottom. When everyone "knows" the conditions will never reverse, and a bunch of books are published to support the popular viewpoint, then the longer term trend is rolling over.

RE is yet another perfect example. After a long term persistent trend everyone now "knows" RE never goes down. The "experts" and those with a vested interest in the continuation of the old trend trot out all sorts of reasons why their worldview simply HAS to be true, and the media parrots their profound pronouncements. Think about it – why is such wrong headed blather so incredibly popular at the END of a major trend? Because everyone who is long and wrong only want to read "reasons" and "evidence" that supports their position! They're not going to buy books that challenge their view point. It's just like religion – the faithful have no need for proof. Their fantasy MUST be true because everyone else is just as deluded as they are.

The experts think markets can be predicted with mathematical and/or demographic models and they NEVER account for changes in human behavior. They think in linear fashion, i.e., "It's been going up, so it HAS to keep going the same direction!" What they always miss is that when everyone has bought and bullishness is at its zenith, only sellers remain. Once again, the painful lesson is being taught and once again, it will be ignored by almost all the sheep.

Posted by unregistered user at 10/3/06 10:27 a.m.

Do you authors of this blog crave punishment? Haven't you noticed that every time you speculate about the future of the housing market you get hammered in the comments? Guess what: it's because you're in the biz and you cannot have a neutral perspective. That doesn't mean you're disingenuous. You simply have a conflict of interest on this matter.

My advice: stop making predictions about the market.

Posted by synthetik at 10/3/06 10:47 a.m.

Why does the PI sponsor a one sided blog like this? I'm assuming it has been relying on advertising revenues from the RE establishment and wants that to continue.

Instead of focusing on propping up a failing market, why not concentrate on getting sellers to come to grips with reality (as well as realtors) and start lowering their prices.

More RE commissions will be made as the market heads south if RE agents can convince sellers to lower their asking prices vs. the inevitable, which is following the market down and losing even more money.

Greed is not a sustainable attribute.

Posted by unregistered user at 10/3/06 11:35 a.m.

If there's one thing you can count on, no realtor these days is going to be saying anything that can hurt their business.

Especially somebody like Susan Ryan, who is a real estate agent and 'home remodeler'.

Is Susan Ryan an economist? No. Is Susan Ryan anybody who is credible to be making any comment about if this is a bubble or not? No.

With a vested interest in the lack of a 'bubble', and without any economic credentials, should think anything that Susan Ryan says is credible on this issue? No.

Posted by unregistered user at 10/3/06 4:33 p.m.

It's no coincidence that the real estate market started to inflate when Qualcom started to deflate. The fast money decided that real estate was the next QCOM.

Posted by unregistered user at 10/3/06 6:07 p.m.

GET OUT IF YOU CAN - IF YOU HAVE AN ARM OR CAN NOT AFFORD TO STAY IN YOUR HOME IF PROPERTY VALUES CONTINUE TO FALL AND INTEREST RATES GO UP, YOU NEED TO START LOOKING AT A PLAN B SUCH AS RENTAL OR MOVING IN WITH SOMEONE - YES...IT IS GOING OT BE THAT BAD!!!!

Posted by unregistered user at 10/3/06 6:26 p.m.

Wow that was fun.

Please post another gem like this soon Susan. I agree with Chad as to what is so offensive about your post.

I remember an old prof who chided us with

"In God we trust. All others BRING DATA"

You might want to heed that advice. (Sorry, a quote from a reality TV start does not count.)

Posted by unregistered user at 10/3/06 8:38 p.m.

The bubble is not about value. It is about the flattening of the equity rate. The reason is because most of the economy is driven by consumer credit, much of which is anchored in home equity. When people cannot borrow to postpone debt, they cannot consume goods, or even afford the mortgage payments. When equity rates are slow to rise, the fix up and sell market goes to hell, and the building industry takes it in the chops. When consumption goes down, then production must follow, and with that layoffs.

Pop!

Posted by Susan Ryan at 10/3/06 9:46 p.m.

Thanks to all who take the time to comment.

Please note that I said:
"A decrease in acceleration is not an implosion (or even a pop)."

Yes, I think the market is slowing down. No there is no bubble to burst. Again, wrong word.

What I like about Kendra's article is that she too explains why a bubble bursting is not an accurate metaphor for a slowing of the rapid acceleration we have had.

Chad you point out that Japan went a long time without an increase. Yes real estate is cyclical. But that doesn't make it ripe for sudden collapse. Flat is not the same as burst bubble.

I'm also wondering why real estate professionals, people in the business are not credible experts about their own business. Sharing the views of other Realtors, other experts in the field is less valuable than the opinions of non-experts? Kendra works in a real estate market (Florida) that is no longer a hot market. Surely she is in a position to understand and explain the changing market process.

For those of you who think that I and/or other real estate professionals have a vested interest in ever higher prices, you confuse my role with that of a real estate investor, a speculator. And experienced investors and speculators know that there is money to be made in all kinds of markets. The wisest investors buy more houses in a down market. I get paid when my clients buy or sell, regardless of whether or how much money they make on the deal. My job is to represent and advise my clients, which I do well and always with their best interests in mind. I would not be advising my clients properly if I did not have a handle on what price the market will bear at any given time. I do not get paid until my client's home sells, or until my buyer clients make a successful offer on a home. Why would I advise them inaccurately?

Also, people buy and sell houses all the time for many reasons in both high and low markets. Rarely is a home purchase about making an investment. My business is not dependant on an escalating market. I have said in several posts and will now repeat, I welcome a more balanced market. It easier to price a listing and a whole lot easier to represent a buyer. I won't miss for one second having to write five offers for every one that gets accepted. I won't miss having to obsessively check for new listings since the good ones sell instantly.

And for whoever posted it, biased and corrupt are pretty harsh words. If you knew me, you might disagree with my opinion, but you would also know that I am neither biased nor corrupt. My business is about knowing the market and accurately advising my clients. Bias would make me not good at my job. No one who has ever been represented by me would question my ethics. If you knew me, you would know that I post what I believe to be true.

Not only do I represent my clients knowledgably and well, I also share what I know on this blog. And what I know is that prices aren't going to suddenly collapse. No bursting of bubbles.

I also know that I'm seeing some pretty riduculous prices on houses. When those prices are inevitable reduced, some will think that the market is falling, when in fact it is that the price they set was out-of-whack with the market. I've lost a couple of listings recently by accurately advising potential clients what their home is worth. They've gone with agents who do what we call "buy the listing." That is, they agree to list at whatever inflated price the seller wants. The seller has to then endure having their home on the market for a long time, usually through several price drops. Is this a sign of market collapse? No. Do the sellers get that their agent either had no clue, or didn't bother to give accurate advice? No. Would the sellers have such unrealistic expectations in a clearly slower market? Maybe, maybe not. But they might be more open to a realistic price if they could plainly see the shift away from a seller's market.

Yes, I welcome a slow down.

Posted by synthetik at 10/4/06 2:28 a.m.

why real estate professionals, people in the business are not credible experts about their own business.

That's an easy one. You are biased, you stand to gain. You work on commission. Most likely you and all the other industry people on this blog actually buy into the hype. The credit bubble is an inconvenient truth for your industry. (Thanks, Al) Why did David Lereah (NAR) write a book named "Why the Real Estate Boom will Not Bust"? Obviously, he has a vested interest in keeping the party going.

For those of you who think that I ... have a vested interest in ever higher prices, you confuse my role with that of a real estate investor, a speculator

Is Lereah a speculator?

Everyone knows that a slow down in Real Estate means less activity; fewer sales. Worse yet, at a RE bottom market sellers have capitulated - so there are no sellers and very few buyers. Liz Rhodes tried to tell me that a downturn in RE would be a "good thing" for her paper because it would mean that builders and home sellers would have to advertise MORE. It just doesn't work that way.

It really doesn't matter what you call it - the trouble with housing is actually a credit bubble brought to you by Alan Greenspan.

And experienced investors and speculators know that there is money to be made in all kinds of markets.

Absolutely. Short selling RE industry stocks is a fantastic way.

The wisest investors buy more houses in a down market.

Buy low, sell high. It's a great concept however most people do just the opposite. You just implied that it's a buyer's market. We're not even close! The median price of a home in San Diego is now almost even with Seattle - and it's still got a long way to go.

is to represent and advise my clients, which I do well and always with their best interests in mind.

That sounds wonderful and it may be true for you, however your typical realtor strives to manipulate the buyer and seller to facilitate a quick sale. In Freakonomics they found that RE agents took an extra 2 weeks to sell their own homes, on average. Why would that be? They were willing to hold out and get the right price. Why wouldn't they do that for their customers? The answer is that SOME might but most will work to make the commission. Who cares if the seller gets $20K less, that's only a $600 "loss" to the realtor, but she just saved herself 2 weeks of work!

Rarely is a home purchase about making an investment.

If home purchasing were not about making an investment, then why is there so much speculation? If people are using sub prime loans Interest only loans, aren't they SPECULATING that the cost of the asset will continue to rise?

Think back to 1999. Everyone was "all in" in terms of the stock market. Now we're just as fixated on the housing/credit boom to make us rich. While your typical homeowner doesn't consider themselves a speculator/investor, that's just what they've been doing since 2001 (Ah, 1.12%)

I won't miss having to obsessively check for new listings since the good ones sell instantly.

I know what else you won't miss! All those newbie realtors that invaded your space over the past 4 or 5 years. Now they can go back to [insert name of large corporation offering minimum wage job and no health benefits]

If you knew me, you would know that I post what I believe to be true.

I believe you. Again, we are dealing with an inconvenient truth here.

Thank you for not deleting the comments.

Posted by unregistered user at 10/4/06 8:11 a.m.

Today's Math Quiz:

Pick the larger value

A) .06 * $499,950
B) .06 * $349,950
C) None of the above

Answer to be included in Thursday's blog

Posted by unregistered user at 10/4/06 8:51 a.m.

Susan, I'm just curious why is conflict of interest seems to be hard for you to understand? If you run a mechanic shop, cars breaking down is a good news to you, for it brings you more business. It's just as simple as that.

Posted by unregistered user at 10/4/06 9:15 a.m.

"Chad you point out that Japan went a long time without an increase. Yes real estate is cyclical. But that doesn't make it ripe for sudden collapse. Flat is not the same as burst bubble."

Wow is almost all I can say to that........I would really suggest you not comment on things you obviously have no clue about. Do you even know what happened in the Japan real estate collapse? Prices did not stay 'flat'. Yea flat for 10 years AFTER a collapse of nearly 50%....lol.

Posted by unregistered user at 10/4/06 10:16 a.m.

Is 30% off a flatening or a drop?

This one is for Kendra and Susan (for believing Kendra) -
http://shopping.news-journalonline.com/ROP/ads.aspx?advid=405282

Who do I beleive - the home builder or the RE agent?

Posted by unregistered user at 10/4/06 10:24 a.m.

The bubble actually just LOOKS flat because it's so massive.

I'm trying but I can't think of a time in history when something like that happened before...

Posted by unregistered user at 10/4/06 10:46 a.m.

To realtors like Susan, 30% off isn't a bubble. They obviously do not know what a bubble is.

Perhaps we should use terms less confusing for realtors to understand, like "artificially inflated asset price" followed by a "asset price correction".

Posted by Wyo at 10/4/06 11:41 a.m.

Words of wisdom from Kendra Todd...

"Tucson, Az
...
...

-These areas are still affordable, which makes them very attractive. They have healthy economies and are good opportunities to get into now."

Well, if you needed any more of an excuse to kick Kenrda Todd's 'RE insights' to the proverbial curb, its her rec' that Tucson's a "good buy". Check out this article from the Tucson Citizen...

"Projected home price drop here: 13.4%"
http://tinyurl.com/psrxf

"Tucson ranks eighth among the top metropolitan areas projected to have the largest decline in median housing prices."

Ooh, yeah! A get in now and watch 13.4% sink into the toilet! Whatever, Kendra's a shill and snake oil salesman...

Posted by unregistered user at 10/4/06 11:53 a.m.

I wouldn't listen to any of these realtors or Kendra.

If you want some decent advice on real estate, talk to a good real estate investor with 50 years or so experience.

That's where I got MY real estate advice, from my grandfather who was a multi-millionaire with 50 years investing experience, and a good family friend with another 50 years of investing experience.

Not some short-term shill like Kendra or somebody who went bankrupt like Trump.

Posted by unregistered user at 10/4/06 11:59 a.m.

The main problem with real estate is that people jump in without doing their research.

The reason bubbles happen is because people FORGET that you can't change basic economics. They always say it's a 'new paradigm' to excuse their ignorance and make up reasons that things will continue to go up.

But the basic economics of this real estate bubble are that personal incomes, which is what this is all based on, haven't risen on inflation adjusted terms, and now houses are too expensive for people to afford.

Lots of people jumped in with mortgages they really couldn't afford -- ARMs, option ARMs and all of that, because they figured (wrongly) that RE would continue to climb.

If you want to know when the top is, it's when the low income Joe and Josephine with no business risking capital is taking out loans they can't afford and buying.

This current correction is going to affect a lot of people that got in late to the game. But those that were in before will be well insulated from the fall.

Posted by unregistered user at 10/4/06 12:07 p.m.

So one last thing. In 1988, my aunt had just gotten her Real Estate license in California, and she was on top of the world. She thought she was the hottest thing ever, she was making money hand over fist, like $100,000 a year, buying expensive cars and all of that.

My grandfather gave her a property to live on, and even got her a few sales. Because she was so stupid that even with $100,000 a year income, she couldn't save any money so as soon as she got a check, it was spent. She should have learned a few lessons but instead as a young woman she thought she was hot stuff, bought a nice new Mercedes. She argued with me, her junior, that real estate was a great field, that the market would never correct, that everything was going to be fine.

Well, in 1990 things started going down for her, as the RE market cooled in CA. She didn't make a single sale in 1991 or 1992, and relied on my grandfather for support. She was so stupid she got knocked out by an older guy who refused to pay her any $ and actually fled the country to avoid taxes.

At which point, she started using drugs heavily, lost the car, and started living off of my grandparents. Fast-forward 24 years later, and she's still a druggie loser.

So all you real estate agents who are going to lose your jobs in this downturn, better start making some plans now as to how you will support yourselves. Maybe you should sell of your assets now that you have on credit before you can't make the payments. You don't want to wind up like my aunt.

Posted by unregistered user at 10/4/06 3:07 p.m.

This is truly the most pathetic and idiotic article I've ever read!

Posted by unregistered user at 10/4/06 3:37 p.m.

If prices are all going to be lower as David Lereah has admitted. And inventory shows no signs of drying up. Why is now a great time to buy? Is it because you have a house payment?

For all your clients in 2001, 2002, 2003 did you every encourage them not to sell? Did you ever once say..."you know if you can wait a year or two I would?

The truth is, now is not the time to buy. Renting is mathmatically a smarter move especially if rates are dropping and inventory is high. Would any realtor in the right mind say, "you know, if you can wait a year or two and rent I would?"

Because not one realtor has said this publicly, and all we hear now is that its a "buyer's market!", we don't trust those with a vested interest in transactions.

P.S. Given that it's now a buyer's market....did you do you job for your clients over the last several months when they bought when it presumably wasn't a buyer's market?

Posted by unregistered user at 10/4/06 3:40 p.m.

I saw the perfect post regarding Kendra Todd....

"I told you guys strippers were becoming realtors...""

On a more serious note, to bring some clarity to some of these realtors stating that 30% is not a lot...Have them remove 30% off of their commision.

Posted by unregistered user at 10/4/06 4:01 p.m.

---Assuming, as most realtors do, you represent both buyers and sellers

---Given, as you have pointed out, that realestate is cyclical and there are good times to buy and good times to sell

---then by definition you are always giving bad advice to half your clients.

P.S. In the last two years what percentage of your clients bought a house with a 20% down payment, on a fixed rate, within the accepted 28-44% ratio? If as you say, houses are only gonna be flat or slightly lower for a while, will you recommend anyone buy with little down with an "exotic"? Presumably, as an honest advocate for you clients you won't. Therefore, if your answer to the first question is a generous 50%(which I expect is high) then expect you'll only sell 50% of the homes you sold last year. Good luck.

Posted by unregistered user at 10/4/06 4:21 p.m.

FYI - latest statistics show that Seattle has tipped:

http://tinyurl.com/p6bqr

Posted by unregistered user at 10/4/06 4:26 p.m.

guys - there is no reason to attack the realtor personally. btw - i am not involved at all in the real estate profession. my issue is the obvious and FINANCIALLY DANGEROUS bias from the real estate song book. DO NOT BUY A HOUSE IN THE NEXT 12 MONTHS...RENT-RENT-RENT! if i ever heard someone say that, i would respect them. the problem is a realtor will NEVER do that. it affects their earnings. so buy a house, wait for your 10-20% haircut, and then wait even longer for the price to get back up to the starting point. as you can see from the posts about the tokyo bubble, it does happen, and it takes years to recover.

Posted by unregistered user at 10/4/06 4:36 p.m.

Anyway we should be nice to the clueless realtors because a lot of them will soon be jobless.

Posted by unregistered user at 10/4/06 4:46 p.m.

"Rarely is a home purchase about making an investment."

Puh-leeze.

According to your own organziation, the NAR, 28% of all home purchases in 2005 were made by INVESTORS. Speculators. Flippers. Driving home prices to unsustainable levels. 28%!!!! Almost 2 million homes!!!! In 2004, the number was almost as bad, at 26%.

And that's just the official number of those who chose to not lie on their loan app.

And you have the unmitigated gall to suggest that there is no bubble???

Face it. The entire real estate market, for several years now, has been overrun with speculators.

And now they're gone.

And the really sad part is how the REIC enabled this madness, and how millions of Americans will be crushed in the aftermath.

Honestly, I don't know how you folks sleep at night.

Posted by unregistered user at 10/4/06 4:56 p.m.

This is such a good article. This is the likely scenario for these realtors and people who bought in the past couple of years with ARMs.

http://clearcutbainbridge.blogspot.com/2006/01/do-math-why-real-estate-will-get-cut.html

We should really be being nice to these realtors because they'll soon be in a world of hurt.

Posted by synthetik at 10/4/06 5:09 p.m.

Realtors are only doing their job. I have heard instances where a realtor has advised a buyer to wait 12 months.

Again, I'd advise them to concentrate on getting sellers on the ball with lowering their prices.

I'm sure with all the MSM press about the credit bubble this (seller capitulation) won't take as long as it's taken in other markets (San Diego).

The real fun begins when inventory levels drop because sellers have given up. We are a long way from that folks.

Posted by unregistered user at 10/4/06 5:20 p.m.

"The real fun begins when inventory levels drop because sellers have given up. We are a long way from that folks."

Oh ...oh... haha ...oh

Can't stop laughing....please stop it.

Posted by unregistered user at 10/4/06 5:36 p.m.

The thing is, Seattle has just leveled off, so nobody around here realizes the imminent threat of prices going down. They still think everything's fine.

The reason prices aren't falling more is that a lot of investors and flippers are eating the losses right now because they're in denial that prices aren't going to rise. And that's in places like San Diego that are ahead of Seattle.

Seattle has some catching up to do.

Posted by unregistered user at 10/4/06 6:13 p.m.

I'll just say what Keith said,
"Wow, nice post. But what would you expect from another biased, corrupted realtor.

Note to the world - if you read articles written by realtors that tell you there's no bubble, it's just because they want to eat again! Ramen Noodles get really boring after a year

http://housingpanic.blogspot.com"

http://www.forsakencraft.com

Posted by unregistered user at 10/4/06 6:25 p.m.

The modern state of news: one realtor saying that there's no housing bubble, and to back it up, linking to an article by another realtor who claims there's no housing bubble. (Oh, and don't forget to go out and buy some more real estate you hacks!)

And the real reason why you'll claim there's no bubble? Because by the realtor's definition of a real estate bubble, such a real estate bubble can't exist.

Nice to have the realtors working hard to clear things up for us. You can always trust the realtors to tell you the truth!

Posted by unregistered user at 10/4/06 8:09 p.m.

I've never seen so many people who are accurate economists and can predict the future. Maybe homeowners should hire blog posters for all their financial advice needs. Susan, you should really listen to them ;)!

Salt Lake Mortgage Blog

Posted by Susan Ryan at 10/4/06 8:17 p.m.

"Susan, I'm just curious why is conflict of interest seems to be hard for you to understand? If you run a mechanic shop, cars breaking down is a good news to you, for it brings you more business. It's just as simple as that."

So you are saying that the mechanic has a conflict of interest when fixing the car. If he does it properly he will have less repeat business than if he does his job poorly. So all the mechanics who do a lousy job of fixing cars have the most business since the cars keep breaking down (having been improperly fixed), and the mechanics who do a good job have less business since they do it right the first time. Hmm.

The mechanic I use is honest and does a great job for me. That's why I use him again and that's why I refer others to him. If he were to "manufacture" problems that would require me to pay him more, he would make more money -- but only on that particular transaction.

The mechanic I use was diagnosing and repairing my daughter's car. He told me that it needed a lot of suspension work, but since it was just a college student's car, he wouldn't bother having those things fixed. It would get her through the next few years just fine.

Clearly it was not in his best (short term) interest to have made that recommendation, since he was paid much less than the thousands the suspension work would have cost. But he understands that running a business is about more than maximizing how much he gets paid on each transaction.

It's the same with my business. Advising and representing my clients well reaps rewards over the long haul. The idea that I stand to make more money if I give inaccurate information would only work in the short term. I'm in this for the long haul, so my interests are aligned with my client's.

Thanks to those who post their views without hostility and hatred, whether those views are the same or different from mine.

For those who feel the need to vent their hatred, I'm sorry if some real estate agent did a lousy job for you in the past. Some of us take very seriously our job to represent our clients well. I'm sorry if you feel you've been shut out of the housing market by the high prices. It may be hard to accept, but the market sets the price, not the agent. The price is whatever the market will bear. A seller who insists on too high a price will have difficulty selling his or her home. If someone is willing to pay that asking price, then it wasn't too high, even if many other people couldn't afford it. A competent Realtor will advise their client as to what price the home will fetch, and it is not in our best interest to have their price be more than a willing buyer will pay.

If my view of the current market upsets you so much, please don't read my posts.

There is no need for personal attacks. It won't change the market, it only cuts off communication.

We can disagree without insults.

Posted by unregistered user at 10/4/06 8:58 p.m.

"The wisest investors buy more houses in a down market. "

Gosh, that's funny, I thought you said earlier that houses weren't an investment, but now you're saying that the wisest **INVESTORS** buy more houses in a down market.

"I get paid when my clients buy or sell, regardless of
whether or how much money they make on the deal."

Gosh, Susan, how many people are likely to buy houses when prices are going down - more, or fewer?

Right. So that means you stand to lose business. So that means you want prices to go up, so that people will feel better about buying them and there will be more buyers.

This isn't rocket science, sweetie.

Posted by Susan Ryan at 10/4/06 9:24 p.m.

My aren't we patronizing.

Posted by unregistered user at 10/4/06 9:27 p.m.

It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.

Posted by unregistered user at 10/4/06 9:41 p.m.

Hey Susan,

I know you're really busy selling homes since it's now a buyer's marker and you're out their aiding those buyers to buy. However, if you find some time during your busy schedule I suggest you do a little reading on the collapse of real estate prices in Japan. This may help you understand that real estate prices in Japan did not FLATTEN out.

Posted by unregistered user at 10/4/06 9:46 p.m.

Susan,

What other professions are you capable of engaging in? If your answer is none, then I suggest that you start learning a new trade because in about the Spring of 2007 you're going to be looking for a new line of work.

P.S.

I don't think blogging is for you either. Blogging requires truth telling.

Posted by Susan Ryan at 10/4/06 10:01 p.m.

I'm feeling the love now, by golly.

Posted by unregistered user at 10/4/06 10:14 p.m.

"My aren't we patronizing."

My, aren't we avoiding the questions.

Just answer them:

a) Are people more or less likely to buy houses when prices are going down, and
b) did you or did you not say that "Rarely is a home purchase about making an investment", only to turn right around and say that investors buy when the market is down?

Posted by unregistered user at 10/4/06 10:16 p.m.

"If someone is willing to pay that asking price, then it wasn't too high, even if many other people couldn't afford it. "

What about all those people who used Option ARMS to buy those houses, Susan? Aren't they setting themselves up for disaster? Back in 2000, these loans were less than 1% of all originations. In some markets, like FL and CA, these loans were 30%-50% of originations in 2005.

Posted by unregistered user at 10/4/06 10:25 p.m.

"I've never seen so many people who are accurate economists and can predict the future."

Um, hey Nigel, in case you haven't noticed, there's no need to predict the future - the facts that are already out today are bad enough. Perhaps you should take some time to go read them.

Posted by Susan Ryan at 10/4/06 10:45 p.m.

"My, aren't we avoiding the questions.

Just answer them: "

You know, I re-read the comment and it still doesn't look like I was being asked questions. It looks a lot like the commenter was posting a rhetorical question, which he then answered, along with a nasty little pat on the head for me.

Posted by Susan Ryan at 10/4/06 10:56 p.m.

For the poster asking about option ARMS:

Yes, I do worry about people who buy more house than they can reasonable afford. I just don't see that very often in my business.

I see more people than I would ever have imagined who have enough money to buy the house they have selected.

The saddest part is that the people who used crazy, unrealistic financing to get into a house, may lose that house when the loan adjusts, and the people who have discretionary income to invest in real estate will buy those houses.

I have been searching for the whole of this year for a decent, affordable condo for a client of mine. I finally found one that she is buying for $173,500.

If you've looking into prices at all, you know how rare it is to find anything under $200,000. But we kept looking, since I would never recommend that she go ahead and spend the 200k, just because she could financed for that much.

Posted by unregistered user at 10/4/06 11:07 p.m.

"You know, I re-read the comment and it still doesn't look like I was being asked questions. It looks a lot like the commenter was posting a rhetorical question, which he then answered, along with a nasty little pat on the head for me."

Oh for Heaven's sake, Susan. OK, well, NOW you're being directly asked, OK?

Posted by unregistered user at 10/4/06 11:11 p.m.

"Yes, I do worry about people who buy more house than they can reasonable afford. I just don't see that very often in my business."

Well ok, but you kind of avoided the larger issue. Whether or not you specifically see them, there's a lot of them out there, and when these loans blow up - and most of them *will* blow up - won't that put a large amount of inventory on the market, adding to the already large current inventory? Won't that then put a lot of pressure on prices?

Posted by unregistered user at 10/4/06 11:24 p.m.

Susan,
Your bio sounds like you're an ok person. But, you don't have the background in or understanding of economics sufficient to make statements about macro economic conditions regarding the housing market. You are not a credible expert about the housing market any more than the guy at the Arco station is a credible expert about the oil market. You are a salesperson--that's all. That's not an insult--it's a fact. If you want to give investment advice that people are supposed to believe, get a stockbroker license, and risk the litigation that comes with selling someone a stock while telling them "it can't go down".

Posted by unregistered user at 10/4/06 11:37 p.m.

Susan, you didn't research this.

Seriously, the hype machine has been running in overdrive for awhile now. But at this level, it just doesn't make sense.

Prices can't go any higher, they might not go much lower, but in real terms renting will be a better bet for a lot of people for awhile to come. Unless of course there is a big, painful crash of some kind.

Posted by Susan Ryan at 10/5/06 12:16 a.m.

I think we're talking semantics here.

The anti-bubble my original post was about does not mean that I am saying or that I believe prices here will keep going up up up. It is my view that absent some sort of catastrophe, (think flood, earthquake, toxic waste dump) real estate does not behave the way the stock market does. That is, prices don't suddenly plunge -- no bursting of bubbles.

Just like the stock market, however, market timing doesn't work. We'd all like to buy low and sell high, but we can know the top and bottom only as a look-back.

Whether a specific person should buy at any particular time is far more dependant on their specific personal situation than on the market at any given time. There are lots of reasons for buying or selling a home that have nothing to do with investing.

Posted by unregistered user at 10/5/06 1:16 a.m.

I'm renting at 50 cents on the dollar of the current inflated market price on my condo (tax deduction included) -- and a comparable unit for sale across the street hasn't sold at that price for nearly a year now. Every other Sunday, the realtor puts out the "Open House" sign, that is attended by almost no one -- really pathetic.

Why should I listen to the Donald's Barbie that "it is a great time to buy" when renting is half as much and the obvious downside risk to me appears to be huge? Why buy an something that I would have difficulty selling and whose cost I could never recoupe with rent??

Even a 10% haircut at these prices is almost $100K, far more cash than even this very well-off area's median household income. By the time all the housing hype/ARMs/IOs/"Liar's Loans"/etc. plays out, I bet that owners will be crying for "just" a 10% hit and will resent ever listening to anyone who told them not to get out while they could. Home builder stocks are down 50% from last year -- why should home prices themselves remain flat?!!

I refuse to drink the Kool-Aide and will heed the warnings from these economists and business people:

"[T]he overall market value of housing has lost touch with economic reality. And there's a nasty correction ahead." --Paul Krugman

"Lately, I have been asked if we are in a real estate bubble. My answer is, ‘Duh!' In my opinion, this is the biggest real estate bubble I have ever lived through. Next, I am asked, ‘Will the bubble burst?' Again, my answer is, ‘Duh!'" --Robert Kiosaki

"in areas where you have had heavy speculation, you could have 30% [home price declines]. … A year or a year and half from now, you will have seen a slow deterioration of home values and a substantial deterioration in those areas where there has been speculative excess." --Angelo Mozilo

"This soft-landing scenario is a fantasy. … Anything housing-related is going to feel like a recession, almost like a depression." --Ed Leamer

"This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices." --Nouriel Roubini

"A lot of spin is being furiously spinned around–often from folks close to real estate interests–to minimize the importance of this housing bust, it is worth to point out a number of flawed arguments and misperception that are being peddled around. You will hear many of these arguments over and over again in the financial pages of the media, in sell-side research reports and in innumerous TV programs. So, be prepared to understand this misinformation, myths and spins." --Nouriel Roubini

Posted by unregistered user at 10/5/06 7:56 a.m.

Susan,

Did you do the reading on Japan to understand that housing prices DID NOT FLATTEN there?

Posted by unregistered user at 10/5/06 8:37 a.m.

Why would anyone believe anything that a Realtor (TM) has to say. I mean, don't they have a vested interest in seenig activity in the real estate market. After all, because they get 6% on every sale, do they really care if the market goes up or down? Nope, they just want us to keep buying so they can make money.

This woman is a tool like every one else in this corrupt industry. The numbers are in, the facts are clear - there was a bubble and it is now over.

Posted by unregistered user at 10/5/06 9:52 a.m.

Serious 2 part question Susan:

Do you believe that the recent relatively common use of "liar" loans, option arms, etc will have any effect on supply at all in the comming months as these reset?

If these options for buyers were suddenly unavailable or returned to "normal" times, would demand at current price levels stay constant?

Curious at what you thoughts are on this "new" wrinkle to the realestate market.

Posted by unregistered user at 10/5/06 9:53 a.m.

Susan said:

"Whether a specific person should buy at any particular time is far more dependant on their specific personal situation than on the market at any given time. There are lots of reasons for buying or selling a home that have nothing to do with investing."

What?

I'm just fine renting. My personal situation (especially my wife) would love to own. My decision to buy is based ENTIRELY on the market at all times. I'm renting for half the price of owning in the same neighborhood.

Susan, I think you need to stop. You're just digging yourself into a deeper hole.

Posted by unregistered user at 10/5/06 10:30 a.m.

Susan is probably right that the housing market will not crash as quickly as stocks. Because housing is a much less liquid asset than stocks.

But it does not mean it won't crash. Housing just takes longer is all.

Anyway, whatever. There have been extreme runups the past 5 years or something in a lot of markets. So most people unless they bought recently or flipped will be fine even if their house is worth 30% less or something.

It's just the REALTORS who will suffer because there won't be as many jos.

Posted by unregistered user at 10/5/06 10:31 a.m.

Poster #13874: Good luck getting Susan to actually answer you. So far she's ducked all the other serious questions that have been asked.

I especially like her comment that "housing prices don't act like the stock market."

Oh really? Tell that to the people who just bought a house from Pulte homes ony to have them turn around and offer massive price incentives up to 99,000 off:

http://www.pulteplus.com/landing.htm

How would you feel if your neighbor suddenly got a 99,000 discount on the same model you bought?

Posted by unregistered user at 10/5/06 10:33 a.m.

Anyone interested in what's REALLY going on in the housing market should check out Housing Watch. It lets you see what the median asking prices for major cities have been doing:

http://housing-watch.com/home.aspx?d=90

Posted by unregistered user at 10/5/06 10:49 a.m.

This one's even better!

http://shopping.news-journalonline.com/ROP/ads.aspx?advid=405282

How would you feel if you bought the Acadia model for 292K and suddenly it was priced at 202K? That's a 90,000 discount - almost 30%.

But, nah, there's no bubble. Prices don't just decline overnight.

Posted by unregistered user at 10/5/06 10:58 a.m.

Susan, posters don't think you'll answer my questions in post #13874.

Please answer as if I was shopping for a house and you were representing my interests. I have heard the news of several $billion in resets coming in 2007 and 2008. I am concerned. Will my choices be greater and my pricing be better if I wait? What are the odds that prices will rise? Would you buy a house now if you could wait? Are there any good reasons to buy now? What are you telling your shoppers now?

(I have a feeling your answer may be "it depends". If so, can you give a single example or scenario, of a situation where you would recommend someone not wait and buy now?....by the way: "It's the perfect house for the buyer!", as any realtor knows, is not a real answer.)

Posted by unregistered user at 10/5/06 11:26 a.m.

"real estate does not behave the way the stock market does. That is, prices don't suddenly plunge -- no bursting of bubbles.

Just like the stock market, however, market timing doesn't work. We'd all like to buy low and sell high, but we can know the top and bottom only as a look-back."

So in one sentence you say that real estate does not have violent trends...in that regard I guess you are saying it moves in much slower and often more predictable ways? I would agree with this.

But then your next sentence compares it directly to the stock market, absent your brilliant observation prior, and that there is no way to time this market. That I do not agree with.

You are spinning out of both sides of your mouth. Now is not a good time to buy since the trend curve is going down. When we reach fundamental 120 rent to own and/or fundamental income to price ratios it will be a good time to buy. The reason you are getting so much sarcasm is because you constantly ignore the obvious.

Posted by Susan Ryan at 10/5/06 12:04 p.m.

"Please answer as if I was shopping for a house and you were representing my interests. I have heard the news of several $billion in resets coming in 2007 and 2008. I am concerned. Will my choices be greater and my pricing be better if I wait? What are the odds that prices will rise? Would you buy a house now if you could wait? Are there any good reasons to buy now? What are you telling your shoppers now?"

First of all, the majority of home shoppers I deal with already own a house or condo and are looking to move for reasons that are unrelated to market timing or investing. Say they are expecting a new baby and need more room, got transferred and need to relocate, got a raise and can now afford more house, have no children left at home and want to downsize, are tired of commuting and want to move closer to where they work, etc.

First time home buyers are nearly always looking for similar reasons: Have saved enough for a downpayment, are getting married or having children, want to be able to create a haven decorated they way they want, want to escape the whims of a landlord, and understand that over the long haul, owning is fianancially better than renting for most people.

Next, if you were "shopping for a house," YOU would have already made the decision that you were ready to buy. I would discuss what type of house you wanted, how much you qualified for and how much you were willing to pay (which may not be the same, and where you wanted to live.

I would then help you to find and negotiate the sale on a house. It is not my job to decide whether you should buy a house now, that is your decision.

If instead you came to me and said that you were trying to decide whether to buy a house now or later, I would ask how long you planned to be in the house, whether their was a likelyhood of sudden job transfer or other reason for needing to sell at a particular time. I would discuss your reasons for wanting to buy, whether they were investment-related or life-style and security related. And lots more.

I gotta run now, but will address the ARM resets part of your question later tonight.

Thanks for posting.

Posted by unregistered user at 10/5/06 12:22 p.m.

To all of you folks out there who consistently ignore any evidence contrary to what appears to be a preconceived position, just admit that Susan has pegged it right. Not only that, she clearly puts her client's interests first. Why is it so hard to acknowledge that some people (like Susan) work hard to identify, then accomplish their client's goals? Isn't that how you'd want to be treated?

Posted by unregistered user at 10/5/06 1:18 p.m.

Well, her original post wasnt talking about her clients and how she treats them! Where is her and your evidence for the preconceived notion that bubbles are for bathtubs and not homes.