February 16, 2006

"Slowdown?" I don't think so. This is more accurate: "It's looking more likely ... that we're going to get a sharp contraction,"

I still find it humourous when the "experts" in the face of data, hoping against hope, predict "soft landings" and "slowdown, not a burst".


"Sharp contraction" is more like it. And memo to NAR: It's already underway.

Home price surge may be leveling off

David Lereah, the NAR's chief economist, cautioned that the market is rapidly cooling

I don't want to say this is the last hurrah, but it certainly reflects the peak of the boom in terms of price appreciation," Lereah said. "It wasn't the highest quarter for price appreciation ... but it covered a big part of the country — 72 metros is enormous." Sales of existing homes are falling faster than Lereah had expected. Price appreciation could slow to single digits this quarter and will reach only 5% for the year, he predicts.

Mortgage applications last week slid 7.3%, on a seasonally adjusted basis, to the lowest in two years, the Mortgage Bankers Association said, lending support to market pessimists.
"It's looking more likely ... that we're going to get a sharp contraction," says Ian Shepherdson, chief U.S. economist at High Frequency Economics.


moman said...

I suspect real inflation is right about 5% so if housing prices rise at 5%, they are merely keeping up with inflation.

Sounds about right in line with historical numbers. Over-leveraged owners better hope the prices are sticky.

Robert Coté said...

I suspect inflation is 6.5% for the typical US resident. This isn't as bad as it sounds. 10 years ago would premium CATV increases be an issue? First run movie tickets still are. Is a 42" plasma the new 21" TV?

Lereah is noise, disruption at this point. You cannot even use him as a contrary indicator.

keith said...

isn't it sad that we can't trust our own government when it comes to the real inflation number, after all the schenanigans they've pulled the past 30 years to make that number benign?