Existing-Home Sales Fell 3.5 Percent in July

I don't get why anyone is buying now. Why not wait a little and see what the economy does? Of course this is dependent upon rental prices and of course what area you are in. I think if I were living in FL or Las Vegas it isn't a bad time to buy

Was wondering if "cancellations of pending contracts" are being seen here. It would seem that this is a pretty negative indicator. These are people who were about to buy but pulled out (perhaps after some cost exposure) in the fear that prices are headed south.

Or, they're people who want to buy who were denied financing. The reason I think that's the explanation is that cash buyers are still in the market in a big way -- if there's a general fear that prices are dropping, wouldn't the investors get out too?

ali r.
DG Neary Realty

Buy now or be priced out forever!

No, f_p, that is not true. If there is no place to put your money that is safe - such as the stock market - then for the right price you can buy all cash. FYI I plan to do exactly that: buy all cash in Florida, where I can buy a 2-br 2-ba condo for $100k, rent it out and net 12% per year after expenses (taxes and maintenance).

Where else can you get a 12% ROI than buying distressed real estate for cash?

At that rate, I might buy 2 or 3 or 4 or 5. Why the hell not?

Methinks your analysis is flawed.

"denied financing" - Really? These people were not being denied before? Now, w/ mortgage rates at their lowest? Don't think so. It is due to 'piedus frigidarus' - also known as cold feet

"denied financing" - Really?

Yeah, really all over Middle America. Everytime I get out of the city I see the real world. They are getting denied like crazy. It seems if they have a good job, the bank just feels that sooner or later they won't. The banks do not want to help. Many buyers waited forever to hear back on short sales, went for financing and guess what? Say what you will about NYC, it doesn't know suffering the way the outer areas do.

Flmaozzz.... Denied financing, jumbo loan dropping by $100K in Oct, $1MM homes on market for 500 days in the BEST areas of munsey park, scarsdale.... what will become of the $1MM studios in LIC when Scarsdale mansions drop to $500K?

clueless harvard grad...

It's happening in NYC too. I just had buyers (who were working with a top mortgage broker) denied financing for a 2-BR in Brownstone Brooklyn, because the target bank had a nitpicky technical objection to the building.

The difference is that here in NYC, buyers are relatively affluent, and can just circumvent the lack of available financing by paying cash -- which is what my buyers did.

ali r.
DG Neary Realty

front_porch where in brooklyn?

the target bank had a nitpicky technical objection to the building.

That brings up another good point. Friends of mime in Miami Beach were offered 785K for their home which did comp with the others in their area at 800K. The bank said they felt (wrongly) that it was only worth 735K which killed the deal and happily they got a cash offer last week for 790K so they're good. With interest rates this low, why should a bank go to the trouble of giving financing when they won't make anything from it? When the rates go up, they will be falling all over themselves competing to give loans like days of yore. Remember, when they were bailed out they were supposed to give financing to eligible persons to get the economy going. One of many things that the banks reneged on. It's one thing that they created this mess, it's another that they still perpetuate it. We need to put blame where it is deserved.

"nitpicky technical objection"?

Like what - it didn't have a roof?

HAHAHAHAHA!

Banks aren't not lending b/c of low interest rates. Banks aren't lending because they expect properties to keep on falling in value.

ya well Manhattan buyers' could give a rat's ass about what the banks think. They want that property and they will pay cash to get it. Screw the bank let them lose more profit.

Banks playing games might work in Little Rock, AR not here.

Yes. Flippers who bought 4 homes or the millions of ppl who own 2nd horse farm 'homes' did zip to pump the bubble.

I don't buy Lego toys for my kids on credit. Flmaozzzzz

Plenty of blame to go around. Why blame a scorpion for using it's stinger?

"With interest rates this low, why should a bank go to the trouble of giving financing when they won't make anything from it?" The average rate on a 30-year fixed-rate loan is currently 4.15 percent, with borrowers paying an average point of 0.7. Banks are essentially getting money for free, be it from the depositer or Uncle Sam. Seems like there is money to be made at any interest rate.

switel, Prospect Heights.

ali r.

"ya well Manhattan buyers' could give a rat's ass about what the banks think."

Manhattan buyers WORK for the banks, you fool.

And they're all losing their jobs.

Steve,

Have you not be surprised by the relative strength of NYC real estate given all the problems out there?

Down 20% and then flat after a huge multi-year price run-up. And price-to-rent ratios of 25+.