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BREAKING NEWS
September 9, 2006
A Humbling Lesson for Realtors' President
He, of all people, should have known better.

The president of the National Association of Realtors, Thomas M. Stevens of Vienna, admits he didn't follow his agents' advice when the real estate market started to cool. That, he says, is why his old house in Great Falls has now been on the market for a year at the price of $1.45 million.

"What I should have done," confessed the senior vice president of NRT Inc., parent of Coldwell Banker Residential Brokerage, "was listened to my agent and cut the price by $50,000 to $100,000 early on, and the property would have sold last October."

Or, even better, he said, "I should have listed it a month earlier," when the market was only just beginning to lose air.

Now Stevens, like so many other home sellers in the Washington area and around the nation, is waiting for a buyer in a market that has totally reversed course since a year ago. With two or three times the number of properties listed this year as last in some neighborhoods, agents are urging sellers to lower their expectations, put on their best face and offer incentives such as closing cost help.

He noted, in his defense: "Who knew last September how long this down trend was going to continue?"

When asked how long sellers should expect a sale to take these days, Stevens said 40 to 60 days would be typical. And if a house hasn't moved by then, he said, "You need to adjust the price. . . . But I didn't do that. And my house is still on the market."
The Washington Post


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"I Shoulda Sold That House When I HAD the Chance"
Category: REAL ESTATE
By: Pete Kendall, September 11, 2006
There are many reasons to believe that a bear market in real estate has, in fact, just begun.
The Elliott Wave Financial Forecast, September 2005

This is really ironic. I had to laugh.
--Peter Shiner

Notice he still hasn’t adjusted his price and he seems to think the slump is almost over. “Who knew last September how long this down trend was going to continue?” The response reminds us of the shrill screeches that went up outside NASDAQ’s Times Square location in April 2000 when tech stocks experienced their first plunge of the bear market. The comments from a person who is so deeply involved in the housing markets show how distracted people are when they are living inside a financial bubble. Even in retrospect, they seem completely unconscious of the reality of their predicament. The truth is that there was lots of talk about a housing bubble; The Elliott Wave Financial Forecast’s September 2005 missive even explained how the persistent “trepidation” fit into the forecast. Our entry from a year ago is included in the Additional References below. Despite the “humbling lesson,” the head of the realtors group must think the problem is over or nearly so, or he would lower the sales price on his house. As we said last September, it’s only just begun, and it has a long,long way to go.  For a blow-by-blow account of real estate accelerating downturn see the entries of ,  January 18, February 7, February 27March 17, July 6, July 7 and September 6.

Additional References

September 2005, EWFF
Why The End Is Near
The July issue showed Time magazine’s “Home Sweet Home” cover story over a completed five-wave advance in the NAREIT index and labeled it “Housing’s Home Stretch.” There are many reasons to believe that a bear market in real estate has, in fact, just begun, including the latest reading on that chart of bank mortgage holdings. At 61%, bank mortgage holdings touched a Fibonacci point of likely reversal. Another factor is the action in the EWI Sub-Prime Lenders Index, which the March issue of EWFF identified as the “front edge” of the great financial bubble. After completing five waves up at three degrees of trend in January (see chart on page 2 of the March issue), the index declined in five waves, sputtered higher in a countertrend bounce and reversed in what should be a powerful decline to much lower levels. The homebuilders have also joined in with a five-wave decline of their own. The decline’s break of the exponential curve formed by its near vertical rise is a powerful sign that a long, hard fall is starting.

Homebuilding company insiders apparently contributed to the fall as their sales at several key firms are running at their highest levels since 1985. Richard Bernstein of Merrill Lynch notes that the one-sided selling levels are similar to insider sales of technology stocks on the approach to their March 2000 peak. New home sales are still strong, but as the August issue of The Elliott Wave Theorist noted, the decline is now underway in several foreign markets and a tell-tale inventory build-up, which Conquer the Crash cited as the first sign of the big collapse, has started. Reports of rising inventories are surfacing from California to Massachusetts. In Sacramento, inventories rose to a 7-year high in July then shot up another 26% in August. Nationally, prices for condominiums fell for a second straight month, while the number of condos on the market rose sharply. In the once-torrid South Florida market, “the word ‘correction’ is being increasingly whispered” and agents report a “subtle change” in the tone of business over the last six months. More houses fail to sell and more listings expire—“something that would have been unheard of a year ago”—and asking prices are falling. “The market is turning,” says a Palm Beach realtor. Houses purchased by speculators in hopes of a quick flip are “killing the market in certain areas.”

Then there’s the uh-oh effect continues to mount within the real estate sector. Noting that reversals from “the biggest tops of all” are accompanied by ignored warnings of imminent reversal, the January EWFF stated that a flurry of concern about a housing bubble is similar to concern in 2000 about high prices for NASDAQ stocks, which EWFF used to successfully anticipate the NASDAQ’s peak in March of that year. Contrarians continue to contend that the housing boom cannot end because many pundits are worried, but the majority and its conviction are what matters. At this point, there is one key difference between concerns about the NASDAQ in 2000 and real estate worries: the effect is much stronger this time. “Talk of the current prospects for ‘the bubble’ has become an evening-news staple and is fueling endless cocktail party conversations and Internet blogger musings.” The National Association of Realtors’ web site even posted an unusual “wait-to-buy” advisory. The message was quickly removed because it was being “viewed incorrectly as a pronouncement that the bubble was popping.”

Worry Yes, Action No
Trepidation is rising, but few are acting on it. In fact, the more plentiful the “warnings” depicted above become, the more common are statements that say that a real estate decline is not going to happen and, if it does, it won’t be that bad. “Is the Great Housing Run coming to an end?” asks the Chicago Tribune. “Many Chicagoans apparently think not.” Most cautionary notes continue to be quickly followed by words that prices will stall or flatten or correct, but not actually fall. Some are convinced that the bubble cannot burst now because the worry surrounding the market is too pronounced. We agree with Alan Greenspan, who touched off the latest flurry of anxiety by simply noting that “history has not dealt kindly” with overextended markets in the past, an understatement for markets that became as extended as housing is now. When manifestations of the rise last longer and express themselves more intensely than ever before, it doesn’t mean that history no longer applies and should not be heeded. It means that while history may take longer to assert itself, when it finally does, it is likely to do so intensely. The reason the collective shudder is strong this time is that, in addition to marking the end of the line for the housing boom, the next decline will snuff out an even larger financial euphoria that dates back to the first half of the 1990s. One of our favorite “uh-ohs” is from the Cleveland economist who envisions an “orderly adjustment, or, more ominously, ‘an orderly crash.’” Anything but an all-out crash. The most bearish forecast that we have seen is for a 40% decline over the course of a generation. Conquer the Crash forecasts a decline that could exceed 90% in only a few years.

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