Find Out What Is Happening In Summerbrooke and Ox Bottom Manor (Tallahassee)

Hey Greg, thanks for the feedback.

I'm a bit confused when you write "I’m so incredibly sick of all this housing cheerleading from the same sources (i.e., real estate brokers) that proclaimed in 2006 that housing is a great buy."

I just posted a story about prices dropping 10% (is this the "cheerleading to which you refer?"

If you follow this blog, then you will know that I have been tracking inventory levels very closely, and I continually say the same thing.... prices will continue to fall until inventories stabilize.

I'm not so sure that I agree with your assessment that "Inventories are down because sellers have pulled their homes off the market in hopes that “next season will be different.” I think you have no basis in this statement, though I do believe that there is some truth to it (all markets have unrealistic sellers, the totally unrealistic ones are starting to leave the market).

Finally, I stand by what I wrote 6 months ago and would rewrite it today. If you are a family who will live in Tallahassee for quite some time, today's interest rates plus finding a very-well priced home = no brainer. Waiting for the very bottom will most likely create a situation that results in a lower price for the real estate, but a higher price for the loan....resulting in a higher monthly payment.
Finally, you state "Those without a dog in the fight have predicted a 40 percent peak-to-trough reduction in prices. We’re not even close to the end." It's my experience that the most vocal opinions are always from people who have "no dog in the fight." They never will have a dog in the fight, but they will always air their opinions from their hidden, risk-free position.

I have a dog in this fight.

I'm so incredibly sick of all this housing cheerleading from the same sources (i.e., real estate brokers) that proclaimed in 2006 that housing is a great buy. According to you, it's always a great buy. As recently as 6 months ago, you argued that a real estate investment was a "no brainer." Inventories are down because sellers have pulled their homes off the market in hopes that "next season will be different." Nothing is selling now. Nothing will sell until sellers finally realize what's going on around them. It would help the process if real estate professionals took off the rose-colored glasses. The housing meltdown is a slow-motion train wreck because of this totally unsupported optimism. Those without a dog in the fight have predicted a 40 percent peak-to-trough reduction in prices. We're not even close to the end.

(1) No offense, but I give a heck of a lot more weight to the opinions of a Meredith Whitney, who is disinterested and has been ahead of the housing curve for a long time, over someone like you, who is invested in the issue and has continually pushed housing as a good investment. Whitney recently said that peak to trough “will be far worse than 33%.”

(2) I wonder how your clients who bought homes in 2006 at prices which I'm sure you then opined were "very-well priced" feel right about now. Your comment about well-priced homes being a good investment is tautological. Current prices are far, far from being well-priced. I'm sure you disagree, like all your fellow brethren cheerleaders.

(3) Your no-brainer investment was actually a rental. You ignored the risk of price stagnation/depreciation because you drank the cool aid that home prices would never go down and that rent/price ratios don't matter. You likely still believe that "over the long run" home prices would never go down. Tell that to the poor guy who bought a Summerbrooke house for 220/sq ft in 2006; the same one that has a current value of 120/sq ft and is dropping like a stone by the minute.

(4) What makes you think that if mortgage rates substantially increase, that that itself wouldn't cause a further reduction in demand for housing which would cause a further reduction in prices? This is further evidence of your bias. All of a sudden home prices would magically become insensitive to mortgage rates. What do you think would happen to prices if mortgage rates went to 8%? I know you're smarter than that, but I can't tell whether you are being deceitful or just blinded by your emotional investment in the issue.

(5) I'll check back in 6 months and we can see who's right. I say prices down another 20% and you like Hank Paulson will be calling the bottom for the 78th time.

Greg,

I don’t think you’re being fair. Like you, I am a housing bear; I think home prices will continue to drop both locally and nationally. I can give you endless reasons why real estate is not a good investment going during the near term.

With that being said, I wonder if you have been reading Joe’s blog long. If you look at his posts at least the data presentation portion tends to be very objective – especially relative to any other blogs maintained by a Realtor. Sure, the conclusions of his analysis tend to be much more optimistic than you and I. However, relative to every other Realtor’s blog, which are filled with reckless Pollyannaish predictions, Joe’s analysis is always tempered with a level of conservatism.

The thing I like most about Joe’s blog is he presents the data both good and bad, something I have never seen another Realtor do. Most will only present positive data while completely omitting anything even remotely negative. And, I am thankful for Joe’s work because there certainly is no one else out there giving us the data – good and bad -- on Tallahassee’s real estate market. Just look at this particular post – how often have you seen a Realtor show a price graph like the one in this post?

And, if you need any more evidence of Joe’s relative objectivity, just look at your two comments. Joe did not need to post your comments. He could have just deleted them just like most other Realtors do to every critical remark I have ever left on a Realtor’s blog. At least Joe is willing to openly debate the direction of the market.

What do you expect from a Realtor’s blog? Do you expect to have a similar tone as Thehousingbublbleblog.com or Patrick.net (two other blogs I read daily)? Joe is in the business of selling homes and you should expect his tone to be optimistic towards real estate. If you were in the market for a Realtor to buy, sell, or even rent a home, would you want to use someone who was overly pessimistic about the future for real estate?

As a disclaimer, I have never met Joe. So, this isn’t one of his buddies coming to his defense. I’m just a fan of his blog, even if we don’t always agree on the direction of the market.

Joe,

Keep up the good work; I appreciated. And, just so you know, I have sent many Tallahassee residents to your site. Hopefully, it will eventually pay off for you in sales. I know when I am back in the market to buy real estate, I will be contacting you (Don’t get too excited; I think Tally’s bottom is still two years off. So, it will be a while).

Thanks.

Perhaps the most comforting point I've read, Greg, is that you'll check back in the next 6 months. Please wait that long or longer. Let the rest of us have intelligent debates without emotion and attacks.

Also, your own statement that a home in Ox Bottom that once sold for $220/sq is now only worth $120/sq shows a decline of nearly 50%! Per your report Meredith Whitney predicted a 40% decline. Therefore, your own example states that we're at the bottom of the market.

Now, I'm not too naive to believe that we're at the bottom of the market, and most people, including yourself and Joe, agree. I do appreciate exact data from the Tallahassee Real Estate Blog so that I can form my own educated opinion.

Finally, one point that I think everyone overlooks is America's spending habits. We all agree that some buyers and sellers will make a move in the market no matter what is happening, e.g., job relocation, divorce decree that stipulates selling home, death in family, etc. The discretionary buyers, i,e. those who don't have to move but would like to, have been told (and rightly so) not to buy in 2007, 2008, and likely 2009. Will the average American really choose to put off what they want to purchase for 3 years? Can we trust that Americans really will wait until the right time to buy? It is my opinion that if the financial markets show more liquidity, many people who have waited to purchase a home since the beginning of 2007 will decide to make their move. And, if I'm wrong, I'm sure there will be many people to let me know...

I sense the frustration on here from people, like myself, who bought and are stuck with depreciating properties (mine bought in 2006). It's unfortunate, it hurts, and there's not a lot to be done. I certainly don't blame my agent. There are things that could have been done, but at the end of the day, he got me the property I wanted at the best possible price.

I DO blame the closing days of the Clinton administration, when Freddie and Fannie were given cart blanche freedom to administer loans. In fact, the New York Times saw the handwriting on the wall even then (Sept 30, 1999), arguing that a bailout would be required. It's sad.