Sign of the times.
I’ve seen this question pop up a number of times, and in each case different numbers are floated as the answer. So why not throw out another?
According to the Federal Reserve the aggregate market value of all the residential real estate in the US, as of Q1 – 2008, was (a) $19.718 trillion. In addition, there was (b) $10.601 trillion in mortgages against that real estate. Chart of growth below (click for larger view):
The estimate replacement cost of residential real estate structures at Q1-2008 was (c) $14.283 trillion. And here is a graph of the change in replacement cost of those residential structures over the period – this should provide some idea of the amount of value injected into the economy as a result of residential real estate construction (inflation notwithstanding):
Note: There are probably a few apples versus orange discrepancies as it relates to values, mortgages, and replacement costs on farm households, mobile homes, and second homes, as well as second liens taken out against properties. Also, multi-family residences were excluded where possible, as I could not ascertain what might be purely rental property.
Source: The Federal Reserve Flow of Funds Statements
(a) B.100 Balance Sheet of Households and Nonprofit Organizations – line 4
(b) L.100 Households and Nonprofit Organizations – line 25
(c) B.100 Balance Sheet of Households and Nonprofit Organizations – line 42
Linkfest Link Barrage Tidbits on real estate and oil, since this last weekend was about sun and fun (at least around here).
Barry Ritholtz, what say ye?
How else can you explain their shameless twisting of their own data? Don’t these damn fools realize that they have simply lost all credibility? I have heard more than a few Real Estate agents complain that sellers have unrealistic expectations of prices, due in large part to the ongoing and ridiculous bottom calls and turnaround forecast form the NAR.
Yep, agents are bitching.
HouseValues, for investing in ActiveRain. ActiveRain has been dubbed the “LinkedIn” for real estate agents, while HouseValues purports to tell you what price you should sell your home at. Real estate agents networking? House values?
Me thinks the investor has lost, twice.
UPDATE: People are still hitting the real estate sector with new ideas. While many will be the victims of bad timing, still others may wind up disenfranchising the traditional broker channels when (and if) things turnaround.
I wonder if Lawrence Yu, Lereah’s predecessor, will follow him up with “How To Impress Your Friends In Good Times And Bad,” (with a pullout on negotiating the US Bankruptcy Court system)?
False sense indeed:
Amazing to me how many Californians reflexively head to Zillow to “check” (they think) the value of their house during the current decline.
Californians aren’t the only ones. I’ve heard that IRS agents even use Zillow to check on home values of the people they are auditing.
The graph has received some criticism, but I think it’s pretty cool:
Some will look at the metros on the lower end of the scale and think all is fine and dandy, but I don’t think that is the case. Abuse at the top end has severely effected the capital markets. Those on the lower end are likely to suffer not just because capital is less accessible to all, but also because alternative capital will soon be looking for perceived bargains in those areas that experience the greatest top to trough declines (whenever those troughs begin to appear, which may take serious time).
(h/t to The Big Picture)
The wit and sarcasm is compliments of The Big Picture, in pointing out every reason why headlines coming out of the National Association of Realtors are, at best, reaching (and at worst, complete bull). As for crazed realtors, well Michael Arrington gets the kudos with a piece on some gangs of realtors suing each other.
Suspension of disbelief
The NAR continually tries convincing folks that there isn’t much to this housing debacle. And why shouldn’t they – they’re a trade association for realtors for goodness sakes – they are supposed to shill on behalf of their dues paying members so said members will be able to sell homes and keep paying dues. As for realtors fighting over a network of blogs, well its just the entertainment Arrington suggests. Realtors blogging – let me guess what they’re saying…
“While the overall market is down, our particular market is doing fine because we didn’t experience the kind of surge that other markets did.”
Yep, that’s a quote – it’s just that it comes from so many places that I don’t have room on these pages to list everyone who actually said it. And whether they are telling it directly to the next person that plunks down 2.5% in cash plus a signature on a HELOC and a 30-year fixed rate note with three points, or they’re blogging it to the masses, it makes no difference. It’s still a tired line.
We have a trade association that is twisting facts in a vain attempt to save their hides. They’ll get little short-term benefit from it as the events leading up to a massive train wreck are already rearing their ugly little heads. They’ll be left with zero credibility when and if the storm clouds dissipate. Meanwhile, there’s a group out their enabling brokers to pass the same worn out story to every last borrower they can via the internets. And they think there is actually enough value in that to steal customer lists and charge into court.
You’d almost think that the constituents involved know they add no value to the process they insert themselves into, and that from a legal/regulatory standpoint they are completely unnecessary when it comes to completing a transaction. And if you’d already thought that…
You’d be right.