Skip to content
BOL Conferences
Learn More - Click Here!

Page 1 of 2 1 2
Thread Options
#476122 - 12/29/05 07:16 PM Most overvalued housing markets
°X° Offline
Power Poster
°X°
Joined: Aug 2003
Posts: 7,332
WOOHOO
Most overvalued housing markets

NEW YORK (CNNMoney.com) - Sixty-five of the nation's 299 biggest real estate markets are severely overpriced and subject to possible price corrections.

That's according to the latest (third quarter) Housing Market Analysis conducted by National City Corp, a financial holding company, in conjunction with Global Insight, a financial information provider.

The report named Naples, Florida as the most overvalued of all housing markets in the United States. A single-family, median-priced home there sells for $329,970, 84 percent more than what it should cost -- $180,956 -- according to the analysis.

Snip........ CNN
____

Go th link to see if your town or area is listed.

It looks like we should all move to Texas!

Return to Top
Chat! - BOL Watercooler
#476123 - 12/29/05 07:21 PM Re: Most overvalued housing markets
MB Guy Offline
10K Club
Joined: May 2004
Posts: 10,124
Way, way south.
Quote:

Most overvalued housing markets

The report named Naples, Florida as the most overvalued of all housing markets in the United States. A single-family, median-priced home there sells for $329,970, 84 percent more than what it should cost -- $180,956 -- according to the analysis.





Hey, that's where I live! Trust me, you wouldn't believe how much it costs to live here. I <heart> my bank.
_________________________
Giddy up.

Return to Top
#476124 - 12/29/05 07:25 PM Re: Most overvalued housing markets
°X° Offline
Power Poster
°X°
Joined: Aug 2003
Posts: 7,332
WOOHOO
Mark - just wait a few more months - it's going to get cheaper.

Return to Top
#476125 - 12/29/05 07:31 PM Re: Most overvalued housing markets
MB Guy Offline
10K Club
Joined: May 2004
Posts: 10,124
Way, way south.
Quote:

Mark - just wait a few more months - it's going to get cheaper.




Wanna bet? It may/will slow down here (for the last few years houses here were gaining about $100k a year in value), but there are many reasons why prices won't fall. I read last week that approximately 1000 people a day move to FL, and Naples is an international market not just national. We are due for a slow down, and I am actually glad to hear it. It was getting insane around here.
_________________________
Giddy up.

Return to Top
#476126 - 12/29/05 07:34 PM Re: Most overvalued housing markets
Texas Boy Offline
Diamond Poster
Joined: May 2005
Posts: 1,717
I actually worked in real estate in College Station, TX before I decided to do banking. We did not sell much residential real estate, however, we did sell a number of multi-family apartment complexes. Nearly everyone of our clients was from California looking to invest in real estate in Texas. They all said the same thing, "We could buy a apartment complex for the same amount as we could buy a home in California".
_________________________
[i] Just keep Livin -Matthew McConaughey[i]

Return to Top
#476127 - 12/29/05 10:08 PM Re: Most overvalued housing markets
Fraudman CFCI Offline
Power Poster
Fraudman CFCI
Joined: Apr 2004
Posts: 3,189
Land of Steady Habits
How much does a double-wide cost in Arkansas?

Return to Top
#476128 - 12/30/05 01:51 PM Re: Most overvalued housing markets
Anonymous
Unregistered

A lot of this appreciation does not take into account some very important aspects of home ownership. The appreciation is based on selling prices from year to year not values. The value on many of these homes has increased more than an inflationary number because many home sellers are improving their homes in an attempt to get a higher selling price.

Return to Top
#476129 - 12/30/05 02:00 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Quote:

A lot of this appreciation does not take into account some very important aspects of home ownership. The appreciation is based on selling prices from year to year not values. The value on many of these homes has increased more than an inflationary number because many home sellers are improving their homes in an attempt to get a higher selling price.



True, but I think you may be a bit too empirical with your observation. A primary driver of this incredible appreciation was the presence of "cheap money": people could get money cheaper and therefore could get more of it and this lead to people being able to drive up the selling prices on homes. Not sure if we will see any housing market capitulation but I am pretty sure we are not going to see appreciation like we have seen recently for quite some time.

Return to Top
#476130 - 12/30/05 02:09 PM Re: Most overvalued housing markets
Anonymous
Unregistered

True, but this could an odd effect. Because of the price of cheap money many consumers think they can afford more home. This caused a flood of consumers (demand) in the market. Thus driving up price because supply increased, but not at the same rate. This in turn inflated the price of a home and caused consumers to actually be able to afford less. This is where the bubble begins (I am explaining this because I have not heard it explained like this, but as an economist I always think I'm right).

Now, when rates, as we saw them, become the norm, the prices should fall. Not because the homes are worth less (they are worth about the same), but because the demand will no longer be there which will reset an equilibrium price below that where it existed at its peak point. I think we will see prices go down in the housing market (not down overall necessarily, but to grow at a rate below inflation).

I waited to buy my house. I was told by everyone that this is a great time to buy because the cost of funds is so low. Hmmmm? But the cost of the home is so high! I hope it pays off for me. But like most things, we will need to wait and see.

I am also banking on uneven supply. Supply increased in excess of population. New homes are being produced but population growth is essentially stagnent. Did they knock down all the old homes? The answer is no. This will help drive prices down also.

Return to Top
#476131 - 12/30/05 02:18 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Well, you can stick to your perception of the economics of this. Enjoy.

Return to Top
#476132 - 12/30/05 02:42 PM Re: Most overvalued housing markets
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
Quote:

driving up price because supply increased




Not familiar with this school of economic thought...

Return to Top
#476133 - 12/30/05 02:45 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Quote:

Quote:

driving up price because supply increased




Not familiar with this school of economic thought...



That's why I said he was free to enjoy following his theory. Sounds to me like he was trying to justify his recent purchase. I think that home ownership is a plus no matter what, but this "economist" should rethink real estate speculation.

Return to Top
#476134 - 12/30/05 02:49 PM Re: Most overvalued housing markets
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
I think s/he said that they haven't bought yet. The only thing I can figure out is that maybe they mean that low interest rates pushed the purchase price of homes higher. That's obviously true, as is the fact that there will be downward pressure on home prices now that rates have moved up.

I think our most serious problem right now is not that home prices are going to stall, or even fall a bit. It's the fact that the Fed keeps raising short term rates when the long-term bond investors are signaling that there is no inflation risk. This inverted yield curve stuff is scary.

Return to Top
#476135 - 12/30/05 02:53 PM Re: Most overvalued housing markets
MB Guy Offline
10K Club
Joined: May 2004
Posts: 10,124
Way, way south.
JM, seriously. This situation seems like uncharted territory, unless someone here knows of a time like this in history, I would love to hear about it.

I wish the Fed would just slow down on their raises of short term rates and see what affects it has in the longer-short term (you know what I mean, right?) instead of just cranking it up and the long term rates stagnated.
_________________________
Giddy up.

Return to Top
#476136 - 12/30/05 02:55 PM Re: Most overvalued housing markets
Anonymous
Unregistered

sorry I meant demand. And you both know I meant demand. Then the supply increased but not at the same rate as demand.

Return to Top
#476137 - 12/30/05 02:56 PM Re: Most overvalued housing markets
Anonymous
Unregistered

J, the Fed is actually raising rates to help slow the housing market (burst the bubble). Since the Freidman era the Fed has used rates to curb inflation. This is clearly not what they are doing here. Unless you count the fact that the number one expense for people is their home and home values have soared. So I guess in a round about way they are curbing inflation.

Return to Top
#476138 - 12/30/05 03:07 PM Re: Most overvalued housing markets
Anonymous
Unregistered

I think we HAVE seen inflation, despite the bond investors opinions in the housing market. While they are likely correct in other sectors, this is certainly a sector that hits home for many people.

I'm not sure if the downward pressure will force people to take losses when they resell so I would tend to believe most consumers are going to stick with what they have. But housing speculation for novices has clearly ended.

Return to Top
#476139 - 12/30/05 03:13 PM Re: Most overvalued housing markets
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
Quote:

sorry I meant demand. And you both know I meant demand. Then the supply increased but not at the same rate as demand.




Well, no, I didn't know what you meant. However, based on this post, I think that instead of:

"This caused a flood of consumers (demand) in the market. Thus driving up price because supply increased, but not at the same rate."

You meant to say:

"The increase in consumers (demand) in the market drove up prices because homes available for sale (supply) did not increase at the same rate."

Return to Top
#476140 - 12/30/05 03:14 PM Re: Most overvalued housing markets
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
Quote:

J, the Fed is actually raising rates to help slow the housing market (burst the bubble).




Then they would be better off to sell all their long term bonds, driving up the yield on long term rates. Raising short rates is not having an effect on the long rates.

Return to Top
#476141 - 12/30/05 03:16 PM Re: Most overvalued housing markets
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
Quote:

I think we HAVE seen inflation, despite the bond investors opinions in the housing market.




Bond investors don't have the luxury of looking at just one sector of the economy. Their decisions about whether to buy a bond at a given yield has to be based on their judgement about inflation over the life of that bond.

Return to Top
#476142 - 12/30/05 03:21 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Quote:

Quote:

I think we HAVE seen inflation, despite the bond investors opinions in the housing market.




Bond investors don't have the luxury of looking at just one sector of the economy. Their decisions about whether to buy a bond at a given yield has to be based on their judgement about inflation over the life of that bond.



My point was that for the consumer, inflation was certainly real. Many consumers are simply not able to see the bigger economic picture. You read the sentence after the one you quoted, right?

Return to Top
#476143 - 12/30/05 03:25 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Quote:

Quote:

J, the Fed is actually raising rates to help slow the housing market (burst the bubble).




Then they would be better off to sell all their long term bonds, driving up the yield on long term rates. Raising short rates is not having an effect on the long rates.




Well they are trying to leave themselves with a little more wiggle room in case something else happens. They are trying to control the short term supply of money.

Return to Top
#476144 - 12/30/05 03:27 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Just because the current yield on a bond seems to be left unchanged does not mean that the price is actually unchanged. The market decides price, not just the Fed. They can leave the price stable, but the market can increase it through buying and selling.

Return to Top
#476145 - 12/30/05 03:41 PM Re: Most overvalued housing markets
The Incredible ComplyGuy Offline
Power Poster
The Incredible ComplyGuy
Joined: Sep 2005
Posts: 7,350
The he11 of suburbia
Quote:

Quote:

J, the Fed is actually raising rates to help slow the housing market (burst the bubble).




Then they would be better off to sell all their long term bonds, driving up the yield on long term rates. Raising short rates is not having an effect on the long rates.




I don't believe I'm saying this, but I agree with Jokerman. Raising short-term rates does little or nothing to the long rates -- all it's doing is forcing a negative yield curve (which gets everyone panicking about a recession, even though the inversion has been pretty much artificially induced).

Return to Top
#476146 - 12/30/05 03:44 PM Re: Most overvalued housing markets
Anonymous
Unregistered

Not true, any increase in rate has some impact on long term rates.

Return to Top
Page 1 of 2 1 2