Housing | timiacono.com - Part 5

“Overbid Madness”

More evidence that things are getting even bubblier than they already were in the Bay Area of California comes via this CBS News story about one of the more popular terms in the San Francisco real estate market – “Overbid Madness”.

Of course, as in the case of the current U.K. housing craziness and in other property markets in the U.S. where home prices are skyrocketing, low supply is again blamed for the madness, almost exclusively by many pundits who look past the grossly distorted nature of virtually all markets these days and think that this is just somehow the new normal.

This item from three-and-a-half years ago somehow came up the other day and, after reading through the story of our 2010 short-sale odyssey, it seemed worth hoisting up again for old times sake. The first few days of May actually mark our four-year anniversary of both arriving here in Montana and making our original offer on the house we currently live in (we had looked around quite a bit before actually moving here, but had no idea we’d be living in a condo for six months). Anyway, a short trip down memory lane…


After this rant from six weeks ago about what, at the time, was characterized as our unsuccessful attempt to purchase a short sale property here in Bozeman, Montana, it will surely come as a surprise to most of you to learn that, while we were on vacation over the last month, the deal somehow came back to life and it is now done.

We closed two days ago.

Five-and-a-half months after we made the offer.

Now, the reason for not saying anything about this until today is that, up until the very end, we really weren’t sure that the deal would get done.

Any of you who have been involved as a buyer in a short sale surely know that there are many twists and turns along the way to a 50-50 chance (at best) of actually completing the sale and, just when you think you’ve got a clear shot to the goal line, something comes up that either nixes the deal or sets it back by a couple months.

In recent weeks, we again had more painful waits for the bank to respond with final approval letters and there were thousands of dollars in closing costs that we thought sure they would try to stick us with and some repairs that were sorely needed, none of which we ended up having to pay for.

It’s as if the short sale gods smiled upon us.


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This Wall Street Journal story ($) charts the latest dismal housing data in the graphics below, that is, with the notable exception of home prices that continue their remarkable rise.

Many of the most recent dismal reviews on housing were prompted by the plunge in new home sales reported on Wednesday and it’s worth pointing out again that it is home building, not home prices, that have the biggest direct impact on economic growth.

Also see this New York Times story that, basically, echoes the same line of thinking.

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I must confess, I occasionally look at Zillow.com to get some idea about the value of our home, purchased here in Bozeman, Montana about three-and-a-half years ago, and was recently astonished to see its Zestimate at about 60 percent above what we paid.

Apparently, I’m not the only one who does this, at least based on the results of a new survey from Gallup (they’re really on a roll this week) from which the chart below was pulled.

As noted in the report, there are big differences in expectations based on where you live as some 72 percent of those in the West think home prices will rise versus only 44 percent in the East (the South and the Midwest are somewhere in between).

This is consistent with data last week (as noted here) where real estate is again seen as the best investment choice, overtaking gold, much to the surprise of stock and bond investors.

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New Home Sales Plunge 14.5 Percent

So much for the idea that, after an unusually severe winter that kept home buyers away, the spring housing market data would show a larger than expected rebound.

The Commerce Department reported(.pdf) that new home sales plunged more than 14 percent in February, from an upwardly revised annual rate of 449,000 to just 384,000 in March, the lowest pace in eight months. This represents a year-over-year decline of 13.3 percent, consistent with the report on existing home sales as detailed here yesterday.

This item at Bloomberg indicated the March sales total was lower than even the most bearish forecast by economists they polled and it has rekindled the debate over how soft the U.S. housing market has become as a result of investors stepping back from record purchases in recent years after home prices and mortgage rates had both risen sharply.

The months-of-supply metric jumped from 5.0 to 6.0 and the median sales price of new houses sold in March was $290,000, representing a gain of 12.6 percent from a year ago, while the average sales price was $334,200, up 11.2 percent from last year at this time.

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