“The index of [U.S.] pending home resales rose 6.3 percent to 88.2, the highest level in six months, following a 1 percent drop in March, the National Association of Realtors said today in Washington. [A Bloomberg poll projected the index would fall 0.4 percent.]
The drop in property values may be starting to lure some buyers who are able to qualify for loans, signaling purchases will improve in 2009. Still, stricter lending rules, the recent increase in mortgage rates and continued pressure on prices from mounting foreclosures will probably keep some buyers away for much of the year.”
“’What people are most scared of is looking like a schmuck,’ Toll Brothers Holdings Inc. Chief Executive Officer Robert Toll said at a conference in New York last week. ‘What do I want to buy a home for and next year be looking at 10 percent less asset?’”
Pending Home Resales in U.S. Unexpectedly Increased [Bloomberg]

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by Trip

    Toll has the point correct but his spin on it is wrong. It is not that people don’t want to “look like” a schmuck by buying an asset now that is likely to be worth significantly less in a year. They don’t want to BE a schmuck by doing so.

  2. Posted by Foolio

    Trip has the spin correct but the wrong point. Just buying in “the real SF” means things will be worth significantly more next year.
    ;-)

  3. Posted by Scott

    Foolio, don’t fool yourself!!! Buying real estate today is NOT going to be worth more next year. LOL!!!
    Trip got it exactly right. It will be worth significantly less in a year.

  4. Posted by Tony

    Foolio, you sound like a real estate agent. All they ever say is that house prices will always go up.
    If that was the case, all of us should just pay retail for everything. I don’t think anyone of us wants to overpay for something (including real estate) that is overvalued and overbuilt. By waiting until 2011, I will save over $100,000. Patience pays.
    Also, has it ever occurred to you that this mantra always holds true: “There is a sucker born every minute”.
    Look what happened to any SF house buyer who purchased in the last year, they got burned badly.

  5. Posted by Boo

    Unless I’m missing something I think Foolio was just being sarcastic. He even followed it up with one of those winking smiley face things. I think most folks on this site are in agreement that any appreciation in value in SF will be a few years away. But many argue when the “bottom” will occur.

  6. Posted by Foolio

    Yup, Boo’s got it right…I was just being silly.
    Obviously SF is still working through its housing boom. It’ll be a while before the bubble fully deflates, IMO. And rather than try to time the bottom (which is what sellers and agents want you to try to do–since you’ll probably be wrong and catch a falling knife), I’ve already told myself I’m going to wait until after the post-bottom rise.

  7. Posted by sanfrantim

    @Foolio: Hmm. What’s the difference between trying to “time the bottom” (what other folks do) and waiting “until after the post-bottom rise” (what you are doing).
    Either you too are guessing when the bottom was reached or, if you wait until most everyone agrees that the bottom was reached at x date in the past, then you already will be well into the next period of appreciation and will have missed the buying opportunity.

  8. Posted by paco

    its b/c he does not really want to buy, rather he wants to sound smart by saying ” sf re is going down so i’m smart to continue to rent”

  9. Posted by Dude

    I can’t speak for Foolio, but I don’t think there will be any material buying opportunity to miss out on. Once the market normalizes, San Francisco will likely return to its pre-bubble historical appreciation rates of 3-5% a year. If I miss out on that 4% in Year 1 of the rebound, it’s not the end of the world. Better that than risk losing 10% or more by buying in too early.

  10. Posted by fluj

    “Foolio, you sound like a real estate agent. All they ever say is that house prices will always go up.”
    Precious.

  11. Posted by San FronziScheme

    It’s pretty hard to see a bottom. But I disagree with the assumption that once you know when the bottom occured it means you missed it and the buying opportunities that came with it.
    The mid-90s trough was a long protracted bottom. But prices in 98 or 2K were still pretty interesting in terms of owning vs. renting.
    imho, I think the good deals will be there when the speculators/investors/sweat equity flippers will have been sufficiently burned to move on to the next trend.
    One example:
    Say you buy an unimproved fixer and shove 500K or more into a gut-out redo where you nearly double the SFs. Today, the market in some locations can support the price of the place + redo + a good profit. But part of the profit is not only sweat equity, but also the appreciation for this market segment (total redos). If this market segment flattens out, then that’s when the market for unimproved houses will start to burst at the seams. Someone who barely broke even or lost a bit of money for the work/risk invested will not do it again.
    But the SF market is still unique. Therefore, I could be wrong. Time will tell.

  12. Posted by Foolio

    @Tim:
    A pretty big difference, actually, and Dude pretty much pegged it. It’s pretty standard risk v. reward stuff.
    @paco:
    Yeah, you got me. That’s pretty much right too. I love making myself sound smart. ;-)

Add a Comment

Your email address will not be published. Required fields are marked *