When selling, don’t check reality at the door

SUMMER DAYS DRIFTING AWAY

One of my favorite posts.

Sellers tend to learn the hard way.

That’s the message of a piece in today’s New York Times, which chronicles the bad decisions that some sellers made when they listed their homes.

Among a few anecdotes, the newspaper quotes a couple who ignored their broker’s advice to ask no more than the prices of houses near their 4,000-sf place in suburban Houston:

You’re emotionally attached, so you think your home is worth more. I had a landscape service and a Sub-Zero refrigerator and an icemaker on every floor, but buyers don’t care, they want deals.

Listed originally for $825,000, the house being sold by Michel and Rick Shanks underwent four price reductions and eventually sold for $605,000 after 10 months on the market.

Well, doh.

Karl Case (of -Shiller) argues for homeownership

Karl E. Case, professor emeritus at Wellesley

Being a real estate broker, I hardly can let pass without comment an op-ed piece in the Times last week.

It was written by Karl E. Case, one of the two economists behind the S&P Case-Shiller Indices. Although I regularly object to putting any stock in those numbers for residents of Manhattan (because the statistics embrace whole regions and include only single-family homes), I don’t have reason to believe that Case has any particular axe to grind.

In his column, Case makes this remarkable statement:

He’s the gift that doesn’t stop giving

If you predict that the time will be 6 p.m., you’ll be right twice a day.

If you forecast rain, you’ll be correct – eventually.

There had to be a time when Prof. Shiller was called "Bobby."

Robert Shiller was right eventually, too, when he projected a bursting of the housing bubble.  He had to be right – eventually.  Yet it was years before his doomsaying came true.

At the same time, the Case-Shiller Indices, which the Yale economics professor and his pal, Karl E. Case issue monthly, also can be right – but only if you put them in the following perspective:

Index shows upward price trend continuing, fading

Data through October 2009 released today in the S&P/Case-Shiller1 Home Price Indices, which omit apartment sales, record improvement in the annual rate of decline of the 10-City and 20-City Composites compared with September’s reading. It was approximately the ninth month of better readings in the statistics, beginning in early 2009.

As of October 2009, average home prices across the U.S. were similar to the autumn of 2003. From the peak in Q2 of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. With the relative improvement of the past few months, the peak-to-date figures through October 2009 are -29.8% and -29.0%, respectively.

The 10-City and 20-City Composite Home Price Indices declined

Kicking him when he’s down and up is just fun

Robert Shiller now is warning that house prices in some areas of the U.S. could be approaching bubble territory, Global Edge reports.

Home prices in San Francisco and elsewhere have risen by double-digits over four months and look they as if they are in “bubble territory,” Shiller contended, adding:

“It is entirely possible that even with the bad news we are getting, home prices could start a major increase. . . What happens from here will depend on people’s animal spirits and speculative impulses.”

He also predicted rising unemployment would not stop prices from ncreasing:

“Even in the Great Depression real home prices were rising with the unemployment rate above 12 percent. . . Just because we have high unemployment does not mean the stock market cannot boom and the housing market cannot boom.”

Shiller, of course, is that Yale economist who correctly predicted that the recent housing bubble would burst and gave his name to half of the flawed index that he shares with Karl E. Case.

Shiller made the bubble forecast for years.  He was right, eventually.  Even a clock is right twice a day.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

Malcolm@ServiceYouCanTrust.com
http://www.ServiceYouCanTrust.com

The sky is falling! The sky is falling!

In today’s New York Times, reporter David Streitfeld discovers that a number of others, including me, have been saying for months: Home prices and sales could continue to decline.  The way the article is written would lead–and doubtless will lead–readers to believe that the sky is falling.

Yes, it’s undeniable that many variables could change the anemically recovering housing market.  Among them are consumer confidence, unemployment rate, inflation, mortgage rates and a rise in the rate of foreclosures.