Rental Vacancies peaked at 8.1% in Q3 1987. Homeowner Vacancies peaked at 1.9% in Q3 1989. There was a huge stock market crash in 1987 but the economy didn't slow dramatically until the 1990 to 1992 period when the housing market slowed nationally.
Fast forward to the present situation. Rental Vacancies peaked at 10.4% in Q1 2004. Homeowner Vacancies set a record high of 2.0% in Q4 2005.There are many reasons to fear an even greater economic slowdown starting in 2006 based on a more dramatic rise in home prices and extreme private and national debt levels.
Vacancy data can be found here.
From Q4 2004 to Q5 2004 the number of vacant homes increased by 427,000, with vacant for sale up 191,000 and seasonal vacancies up 245,000.
With speculation by property flippers, vacation home buyers, and retirement home buyers driving demand for new homes, it is not surprising that the nation produced far more homes than were needed for habitation in 2005. All this is leading to a supply glut that finally is impacting prices. Median prices for new home sales were down 8.39% from September to December
It isn't surprising that if you build a house where there is already overcapacity you might have a hard time selling it.
NAR estimated inventory of 2,796,000 existing homes for sale, or a 5.1-month supply in December, which is up by 582,000 (26.3%) year over year. Distressed borrowers will have a very hard time unloading their homes in a hurry if they decide they can no longer afford high mortgage payments.
February 18, 2006
Follow the vacancies... Good God, this is such obvious stuff
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37 comments:
it is good to see articles and comments about housing again.......it seems the blog author was getting off topic the past few weeks
Buy_lo,
Answer me this- with the TRILLIONS of dollars that have been extracted by HELOC's, with the lowest interest rates in 50 years, with the largest housing bubble in our lifetime, and with the Fed pumping more money in the system EVER- WHY is the savings rate NEGATIVE?
How did we as a nation manage to save 5-6% when rated were double digits and the only mortgages wher conventional 30 year?
You are missing the point. People have spent some 60-75% of their "equity" by using their houses as ATM's. There IS NO savings period. There should be a huge savings rate from the cash people pulled out as the values exploded, but it is allspent.
WAit until the 2.5 trillion resets this and next year
I don't want to sound like a member of the tinfoil hat crowd but the table title mentioned below is gone. Other RE sensitive data seems to be getting pulled off of sites.
Table 11. Percent Distribution by Type of Unit by Region
Buy Lo,
PMI estimates over valu of around 40% in bubble areas which is over 40 % of the country. Dallas which is not bubble territory is imploding with foreclosures among other places like tennesee.
I say they (FMOC) have been reading some bad tealeaves.
Dont forget the "sheep factor" People like sheep travel and invest in herds. Anyone with ling term observation can see that people buy when they should be selling, sell when they should be buying, and spend when they should be saving.
Buy_ lo,
Please don't lecture me. I fully understand economics. You failed to answer my question. We have had record extractions in HELOC's. The Savings rate is negative. Where did all of the money go to? Surely consumers did not spend all of that money. My point is that in decades past, people manages to save MORE as a percentage. We did not have thse exotic finacing schemes.We did not have the deficit at 7% of GDP. We did not have 50 year low interest rates.
I know what the definition of savings is and that is what scares me. we have extracted TRILLIONS of equity over the past 5 years and spent it all. What is going to happen when the value of houses declines? This is exactly like having a margin account and be fully leveraged. There is no room for a loss here.
Watch this year when the trillions in resets starts. Then come back and try and tell us that about all of that "equity" not reflected insavings.
I conducted my own survey with actual people instead of internet @hole$ trying to get my email address.
//People that bought their home B4 the boom dont care.
//People have saved.
//People have refied to get a lower payment.
//There is a $hitload of cash in the economy from RE.
//The educated posters have moved to other blogs
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