My Completely Unscientific Real Estate Study Shows Some Surprising Results

Mortgage applications up 30 to almost 40% as resported 12/03 by the mortgage bankers association. Yes it is only a one week trend after a large rate drop (no this does not include refi's they were up even more)and it may reverse trends in a couple of weeks but let's look for positives.

Oh how I wish 2008 was the same as 2005 in my little slice of the world, Orlando. In January 2005 in zip code 32828 there were ONLY 65 single family homes to chose from regardless of pricing 25K all the way up past 1M, both new and resale. That is when we were looking in that area. If you look at that zip code today 32828 has 602 single family homes regardless of pricing. I would gather to guess in a very un-scientific way that most of these homes are either in the process of foreclosure or are REO's. I wouldn't dare put my home on the market until mess gets cleaned up. Anyone want to give a scientific guess as to when that might be?

Here is a comparison from 2005 to 2008 on actual stats. In Texas around the DFW area. In 2005 we could qualify 3 out of 5 buyers who desired to purchase. In 2008 we are able to qualify 1 in 9 on average. Dallas / Ft. Worth area has the LOWEST FICO scores in the country. (fact) This market was heavily reliant on the subprime market. Which is gone. (30 to 35% of the market) In 2005 we had a Down Payment Assistance program for first time homebuyer's program so the seller could pay for buyer's down payment and closing costs. In 2008 this has been cancelled and eliminating first time home buyers who have proven the ability to pay their bills on time but lack any savings for a down payment. In 2005 the average days on the market were around 75 days or a two and a half month supply. In 2008 there is a 10.4 months supply. In 2005 there were programs such as 80/20 (80% first loan; 20% second) with lenders and the sellers could pay closing costs. In 2008; this has been eliminated. In 2005 if a seller had equity; they could do a seller 2nd carry note on the property and still assist the buyer with closing costs. For instance a seller on a $100,000 property had $25,000 equity and they assisted the buyer in qualifying for a loan because they buyer only qualifed for a 75% new first loan -- typcically due to credit issues other than housing such as a small Mastercard or Visa account being delinquent or in collections and the total was less than $5,000 in outstanding credit. In 2008; this program was eliminated. In 2005 in the Subprime markets people with high FICO scores; meaning they had always paid their bills on time; but did not file taxes on all their income; or they had a siginficant job change and were not in that line of work for two years or more would not qualify for an FHA, Conventional or VA loan; this would considered a Subprime loan and the buyer would "state" how much they made, generally backed up by bank statements. These were considered a "Non-Conforming" loan. If their FICO scores were high enough typically over 650; then they could do what was called a "Stated" loan. In 2008; this program was eliminated and now these same people have to put a minimum of 5% down on a loan and document all their income. Those who have increased their education and their work ability for instance a person who had worked at a lumber yard driving a forklift and went to school for insurance, real estate or some other position that they did not receive a "salary" and were now on "Commission only" would not qualify for a Conforming loan. Now they would have to wait until they reached being in the new trade for 2 years on their income taxes. In 2005 an Investor could purchase properties with literally nothing down and have the seller pay their closing costs. In 2008; an investor has to put down around 10% and the seller can pay a maximum of 3% of their closing costs. Many investors stopped buying properties. Many investors would hold properties; build their equity and cash that equity out after a few years and then raise the rents to cover it. This has been changed as well. In 2005 a seller could Rent his house out instead of selling it to qualify for the new mortgage on the property he wants to purcahse. In 2008; the seller now must qualify for BOTH properties if they want to purchase the new home without selling it. Then the check for the tenant MUST clear the bank for the security deposit AND the first month's rent, PRIOR to the loan being approved. In 2005 -- it was referred to as a "Seller's Market"; meaning that there were more buyers in the market and usually a seller who had a reasonable property had multiple offers presented to them in a short period of time and the seller would not agree to pay any closing costs or any other concessions for the buyer. Average market time was 78 days and typically turn over was fairly rapid for inventory in the overall aspect of the market. In 2008 -- With the elimination of the Subprime market; the Stated Income programs; the 80/20 programs; the elimiation of the ability of people to refinance the suprime loans and take cash out as many were accustomed to do including investors; the markets are relying only on people with "good" credit. In 2005 we could qualify a buyer with a credit score as low as 510 and with $5,000 in outstanding collection accounts on a 100% loan and the seller paid their closing costs. In 2008; we have a hard time qualifying a person with 650 FICO score and with 5% down. Everytime you raise the FICO qualifying score; you eliminate a buyer out of the market who whould have purchased a property. This may have been a domino effect on the seller allowing him to purchase a new home from a builder or another home elsewhere. 96% of homeowners pay their mortgages on time; 4% of the people did not cause this mess. The elimination of these programs has taken out about 50% of the buyers out of the market. The total number of houses continue to come on the market; however there are by far less buyers capable of removing that inventory from the market; thus making longer marketing times and forcing sellers into a Buyer's Market. Now instead of having 10 homes come on the market this month and 8 are sold; there are now only 5 sold, now next month when the next 10 come on there are now 15 instead of 12. This has snowballed into now 10.5 months of inventory. Sellers now must make considerable concessions to the buyer as well or the buyer "walks". Since the owners in the market cannot refinance; they are facing foreclosure as opposed to refinancing -- an option that WAS available to them in 2005 but not in 2008. Thus, the foreclosure rate is continuing to rise. This has a dramatic affect on the regular markets as well. The foreclosed properties tend to be priced 15 to 20% cheaper than the market and the result is an overall market drop of around 16% or more in many markets. Instead of home prices going up 5 to 7% each year in appreciation; they are now worth less due to all the market pressures forcing the housing commodity prices down. These are only some of the forces at work.

I know several homeowners who have taken their houses off the market due to the current conditions. My parents gave up on selling and simply refinanced. Looking at listings doesn't take into account all the homes that would be on the market if conditions were better, ones that were de-listed without being sold, ones that are in the process of foreclosure and not yet listed, etc. If conditions appear to approve, I think you'll see a flood of homes into the market -- which will act to keep prices depressed for many months to come.

Really, all you can conclude from your data is that the real estate market is not dying in Stamford or Morristown (and even that may be a stretch). To draw a conclusion regarding "the Northeast" is absurd to say the least.

I sold my NJ house in December 2006, after is was on the market for 8 months and for $60K less than I had expected/started with. Housing prices have decreased and it's not surprising to have less houses for sale in the $600K to $900K range. It's a shame the study didn't include various ranges..$100K to $250K, $250K to $400K, $400K to $600K, and so on. I tend to think the number of houses in the lower ranges would have increased, becuase of inventory and the decreasing values.

The key question is how many of these homes are existing versus new in the mix. That's a pretty wide spread between 600 and 900K. Look at the mean and median prices to eliminate some of the possible anomalies.

If you look at the trend, at least in Atlanta, the housing inventory has been going down. The number of houses for sale is the lowest it has been in 2 years. Will it go back up, probably in the spring, but it should still be lower than the peak inventory of last year. The housing market is getting better, it is just going to take time.

It is a strange market hard to put a handle on it. It seems in my small part of the world (in town Atlanta Virginia Highlands area) that homes that are priced well and have no issues sell fairly quickly. Homes that are priced for a seller's market or take more imagination to understand the value are sitting for ever. Also, the McMansions (new larger houses rebuilt on smaller older home lots) in the price range from 900,000 to well over a million seem to be sitting (my belief is that many people who would buy those used mortgage products that are no longer availible). My data comes strickly from driving/walking the area.

Would a total listing of homes in these cities be a better gauge of the market? Suppose these homes currently listed were valued more in 2005? Selling price, more difficult to obtain, could also be a better market indicator. Anyway, it is probably correct to conclude the market has not gone as far south as some of the reports would lead one to believe.

Interesting piece...FYI. All real estate listings that are on the CMLS..Consolidated Multiple Listing System are automatically on Realtor.com. It is the website of the National Association of Realtors and is NOT optional. "Realtor.com is NOT losing listings to other websites"--it is not possible. Please get these facts straight before you hypothesize. Dr Ann PS. Watch my tv show Channel 77,The Real Estate Forum,we present local industry experts who address issues related to current real estate conditions in Fairfield County.

How long had the properties been on the market in 2005 compared to 2008? what was relevant age of housing 2005, 2008? how many had sold in the price ranges in same time frame?

much is freeze up and fear of acting too soon. fear uncertainty and doubt (fud) is ruling the 2000's. cause many cannot analyze raw data, they rely on talking heads of the leading media to tell them what is happening. until the sheep mentality is cleared, mostly those who can think and analyze (distinguish hype from real information) without freezing up will profit. check around, schools do not teach critical thinking or analysis. if one challenges the feel good teachings of modern education the person is labled as biased or un-happy or a "issue". many high schools produce educated mental migets who cannot add, substract, divide, read or provide analysis (both pro and con) on issues or predicted results based and raw data analysis. run a simple test and report back what you find on 5 schools taken at random. if the talking lamp tells us something it is true. we just elected a new administration/congress based on talking head analysis and support of change without analysis or definition of what is to be changed and the net result. oh well, so much for sheep, there is much $$$$$ to be made with analysis. watch the smoke trails and see where bias is hiding the real numbers and $$$$. forget book value of a company cause the accounting rules have messed up its definition. watch the sheep and see the correct course cause many are going to get net loss before they realize they been messed with. the days of buy and hold are over. its now watch the volume and when right, quick in/out with shorts/ puts and calls/ and analysis of the snakey lines.

I wonder if the prices of the homes were lowered because they didn't sell at the higher price?