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8/14/2019 Keeping You Current - December 2008
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December 2008
By: Madeleine Romanello
Keeping You Current
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Sales Sales year over yearyear over yearCategory Percent
ageExistingSales
-1.6
PendingSales
1.6
NewConstruction
-40.1
Source: WSJ
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Mortgage RatesMortgage Rates 30 year fixed30 year fixed
Since 9/19/98
Source: Federal Reserve
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Prices -Prices -year over yearyear over yearIndex Price ChangeOFHEO -6
Case Shiller -17.4NAR -11.3
IAS360-13.3Census Bureau (New
Homes)-12.2
Source: Macro Markets, IAS, OFHEO, Census Bureau, NAR
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Asking prices for homes across the country fell 1.5 percent inOctober, bringing the total drop in the last three-month cycleto 2.9 percent. Listed property inventories declined in 23 of 26markets. Widespread inventory declines have continued for
many months but, as demonstrated by declining prices, thepace of supply contraction has not kept up with the falloff inmarket demand.
List PricesList Prices
Source: Altos Research & Real IQ 11/7/08
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At its most volatile time in US history, the
US housing market demands somethingmore from its experienced industryprofessionals; a closer look.
- Integrated Asset Services, LLC
Keeping Current MattersKeeping Current Matters
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The SellerThe Seller
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Source: Brookings Papers 9/08
% Appreciation in 5 Year Increments% Appreciation in 5 Year Increments
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Source: Of Two Minds Blog 10/08
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Loan Delinquency RateLoan Delinquency Rate
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Foreclosures
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Where are prices going?Where are prices going?
2nd Quarter 3rd Quarter
OFHEOOFHEO
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Pricing in Todays Market?Pricing in Todays Market?When cutting the price, take a big bite, not a bunchof nibbles.- Washington Post.com 8/24/2008
If prices in your area are generally down 20% from
where they were at the bubble peak in 2005, thenprice your house 25% to 30% below its peak bubblevalue. Your area down 40%? Be prepared to takejust half of what the house was worth three yearsago. - Wall Street Journal 7/14/2008
Set an asking price 10% below what homeslike yours have been selling for. If your marketis really frozen and you need to drop the price,make one large cut. No baby steps.- Money Magazine 5/12/2008
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Months Supply Pricing
1-2 Double digit appreciation
3-4 Single digit appreciation
5-6 The Norm
7-8 Single digit depreciation
9+ Double digit depreciation
Inventory vs. PriceInventory vs. Price
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Historically, during housing busts, existing home prices fall for 5 to 7 years -so I'd expect to start looking for the bottom in the bubble areas in 2010 to
2012 or so.
CalculatedCalculatedRiskRisk.com.com
Source: CalculatedRisk.com 8/12/2008
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John Burns, who is president of John Burns Real Estate Consulting, estimatesthat by 2010 the most stable markets will reach equilibrium and by 2011 the
national market will move into better balance. Overall, he believes that it willtake until 2014 for it to be business as usual.
2014 !?!2014 !?!
Source: BusinessWeek 8/18/2008
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On a $200,000 house, a familyloses
$384.61per week.
ssuming a 10% fall in pricesssuming a 10% fall in prices
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100 pencils3 buyers
Price?100 pencils
6 buyers
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The BuyerThe Buyer
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New rules for home buyers
Rule 1: You can't time the bottomYou could get to thinking about trying to time thebottom. Resist. It's harder to do than you think, and
this is the best buyers have had it in two decades,with inventories up and mortgage rates low.
oney Magazineoney Magazine
urce: Money Magazine 5/12/2008
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MSN Real EstateMSN Real Estate
urce: MSN Real Estate 5/13/08
Waiting for the absolute bottomto hit before buying puts you at
risk of missing it and gettingcaught up in amarket on the upswing.
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Reportsappear to bepointing to a bottom in
the housing problem; in
fact, maybe the tiniestbeginnings of a recovery.
The reality is a possible upturn in the
housing trend, and at the very least we aregetting a bottom.
Source: Kudlows Money Politics 7/24/08
-Lawrence Kudlow ,host ofCNBCs Kudlow & Company
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This could be the time to
buy a house.
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I am now telling you that between now and the next sixmonths you have to buy a house.
Source: Mad Money Blog 7/23/2008
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ource: Westcourt Funds
OptimismOptimism
ExcitementExcitement
EuphoriaEuphoria
DenialDenial
FearFear
PanicPanic
DespondencyDespondency DepressionDepression
HopeHope
OptimismOptimism
Point ofmaximum
risk ininvestment
Point ofmaximum
opportunity
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http://www.homesforworkingfamilies.org/approach/academic/
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he PMI Value of Homeownership Study
Price Appreciation Return on Equity
35%
139%
71%110%
301%
498%
ource: PMI October 2007
5 Years 10 Years 15 Years
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Case-ShillerCase-Shiller
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Good Investment?Good Investment?
CityCity % off Peak
Miami -32
Los Angeles -29
San Diego -30
Las Vegas -32
Peak
180.9
173.9
150.3
134.8
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Return on InvestmentReturn on Investment
Dow S&P Nasdaq
Real Estate
Jan 1, 2000 - Sept 30, 2008
-20.6
- 47.8
72
-9.8
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Madeleine Romanello
cell 305.282.2133
office 305.695.6300
fax 305.695.6301
mromanello@ellimanflorida.com
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Any questions? Contact us at
info@KeepingCurrentMatters.com
Well bend over
backwards to
try and help!
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