Again, this seems pretty obvious, that the credit bubble couldn't continue and has to shake itself out. But to see the press reporting it is the new development. We're also seeing more talk of this "hard landing" idea just in the past few days.
In New Zealand, their reserve bank chief is telling folks his interest rate moves might very well lead to a hard landing next year - and so be it. Unlike our fed, he's publicly said he's targeting the housing bubble. Ours is too, they just won't admit it publicly as to not cause panic.
In the end, I think 30%+ cuts to house prices are gonna be pretty "hard". And I think the rollover is fully underway.
A possible hard landing for the U.S. housing market poses the risk of a secular bear market for equities, mutual fund manager David Tice said on Monday at the Reuters Investment Outlook 2006 Summit.
"The rollover in real estate could happen pretty quickly," said Tice, who runs the the Prudent Bear, a mutual fund which seeks to benefit from falling share prices.
The United States has leaned heavily on housing and related industries for economic growth in recent years.
That virtuous circle, fueled by rounds of cash-out mortgage refinancing that has propped up consumer spending, will give way in 2006 or 2007 to a vicious cycle that drags down corporate earnings and employment, he said.
"If you continue to goose the economy with more debt it's like keeping an eight-year-old on a sugar high," he said.
December 13, 2005
More "hard landing" talk for housing: Tice awaits US housing hard landing
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36 years and counting.......
http://www.benengebreth.org/housingtracker
36 years in a row of year over year increase in median home sale price.......zero years of year over year decrease
can you imagine the poor soul in 1968 who was "waiting to buy until home sales plummet" and instead rented all those years?
keep on renting folks.......just know that the taxes you pay are subsidizing my mortgage.....thank you, thank you, thank you
1968 the median house was a one car garage 1600 sq ft home with a telephone outlet and TV antenna on the roof. Think that sucker has even kept up with inflation?
There was this inflation thingy as well if I recall.
keep on renting folks.......just know that the taxes you pay are subsidizing my mortgage.....thank you, thank you, thank you
Subsidizing? LOL! You know, there are times in history that buying a rental property was a cash flow POSITIVE proposition. Good on ya for losing mortgage money every month on an asset is now losing value every month, too!
John said...
All I see in Miami and LA are inventories rising and prices going down.
Where in LA do you see prices going down? No one else has seen this. The DQnews for November won't be out for a few more days but for October they say;
"The median price paid for a Southern California home was $473,000 last month. That was down 0.4 percent from $475,000 in September, and up 15.1 percent from $410,000 for October 2004. The peak was in August at $476,000."
You want to call 476-475-473 Aug-Sept-Oct a decline in prices? That's a stretch. I'll call it a decline when the median goes below y-o-y values, that would be the $410k number and that ain't gonna happen until we get 3 or more months of no sales not just rising inventory. That's 15% and remember 15% is also the combined costs of closing and recovering the costs of the last closing. Aka staying even. I would put this as the smallest possible price decline once it starts but we aren't there yet, the sellers are still in denial.
Robert - here are LA #s - declining prices with increasing inventory, and the trend continues...
http://www.benengebreth.org/housingtracker/location/California/LosAngeles/
Date Inventory 25th Percentile 50th Percentile
(Median) 75th Percentile
12/07/2005 12,744 $465,000 $615,000 $899,000
12/01/2005 12,930 $469,000 $619,000 $899,000
11/28/2005 12,908 $469,000 $620,000 $900,000
11/21/2005 12,979 $469,964 $625,000 $924,000
11/14/2005 12,811 $470,000 $629,000 $929,000
11/07/2005 12,597 $470,000 $629,000 $929,900
11/01/2005 12,448 $475,000 $629,900 $929,500
10/28/2005 12,496 $470,000 $629,900 $929,000
10/21/2005 12,224 $475,000 $630,000 $938,000
10/14/2005 11,978 $475,000 $635,000 $939,000
10/07/2005 11,707 $475,000 $635,000 $949,000
10/01/2005 11,593 $475,000 $639,000 $950,000
09/28/2005 11,569 $475,000 $639,000 $950,000
09/21/2005 11,305 $475,000 $638,000 $950,000
09/14/2005 11,008 $475,000 $639,000 $950,000
09/07/2005 10,415 $475,000 $639,000 $955,000
09/01/2005 10,205 $475,000 $649,000 $965,000
08/28/2005 10,168 $475,000 $649,000 $975,000
08/21/2005 9,930 $475,000 $649,900 $995,000
08/14/2005 9,719 $475,000 $649,999 $999,000
Keith B.;
Did you notice the disclaimer on the bottom of your chart?
"The numbers provided here are asking prices derived from MLS listings. Presumably, asking prices are correlated with sale prices and both are a function of housing inventory, mortgage rates and lending conventions, the local economy, and (not insignificantly) market psychology. If you are looking for sale price statistics, check out the National Association of Realtors website."
Don't get me wrong prices are plunging and have been since October. We just don't have the data yet and there are going to be lots of contradictory indications here at the turn. It is foolish to hang on to a few bits and pieces when other bits and pieces are in a state of flux. Better to understand the current conditions and allow the weight of evidence to accumulate. There may even be a month up in one of the next 4 months. I doubt it but why give the idiot "to the sky" pollyannas any ammunition at all? A hot August and cool October does not an Ice-Age make. When sales price not asking prices show a definite downdraft then we make them eat crow. Month to month is seasonal and subject to too many variables. Year to year serves to wash out many of those and is short enough that changes in the median house are not likely to affect the comparison.
I am also of the opinion (opinion only) that many of the high end properties ar "waiting until spring" before listing. This has the effect of reducing the reported inventory "in play" and reducing its' distribution towards the lower end.
Robert - see this article from Business Week on my data source:
http://www.businessweek.com/the_thread/hotproperty/archives/2005/12/real-time_indic.html
You can wait for dated data, or you can use this tool for real time look at what's going on in the market
Your choice. But as inventories expand and asking prices come down, guess what?
Your choice. But as inventories expand and asking prices come down, guess what?
Okay, I'll play. What? When was the last time "asking prices" had anything to do with "settlement prices?" It is today no more viable than were the multiple offers of last year. There's nothing wrong with waiting for confirmation is there? At least admit that there is a difference twixt offer and final prices. I'm suspecting that a lot of the recent offers are not going to close and serve to further sink the median. I'm just not willing to assert this as a done deal.
What? When was the last time "asking prices" had anything to do with "settlement prices?"
Uh, maybe EVERY TIME
asking prices go up - prices go up. asking prices go down - prices go down
Kinda got that concept in first grade
good luck out there, boy, you'll need it
"The day that rent = interest expense + maintenance expense on the house, I'll consider buying one. Till then, I'm not taking the appreciation bait. All that appreciation means is you will be able to exchange one inflated house for another, and keep making those fat interest payments to the bankers, and the Chineese."
That's the real kicker of the whole deal. People that are using pure appreciation money to move up houses aren't making themselves any better off. They are just trading one overpriced property for another that has higher energy, cleaning, furnishing, and insurance costs.
The only way to make money by appreciation is to sell the house and buy a house CASH with the money left over from the first house.
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