Good god, this is what a housingpanic looks like!
Run for the hills! We've got ourselves an absolute Bob Toll Meltdown! How's that builder upgrade looking now Merill Lynch? How's that healthy market and 10% price increase for 2006 looking now NAR?
Sales in February drop more than expected, as median price falls and supply grows. Is the real estate bubble bursting?
New home sales fell more sharply than expected in February -- and along with them, the price of a new house -- in the latest signs of a slowdown in what had been a white-hot housing market.
Sales sank 10.5 percent to an annual rate of 1.08 million homes in February, from the revised rate of 1.21 million in January, the Census Bureau reported.
Robert Brusca of FAO Economics said it's not too soon to wonder if there has been a bursting of the so-called "housing bubble" of recent years, when prices and sales kept rising.
"How can you look at these data and ignore the question?" he asked rhetorically. "We had such a dramatic fall in the West," he added, where sales fell almost 30 percent.
"If there's a bubblicious market, that's the one, the one that had the highest prices. And while you can say all housing markets are local, but it's clear there have been factors that helped all the different markets, so it would be folly to say that couldn't reverse."
March 24, 2006
FLASH: New home sales fall 10.5%, median price falls 4th straight month, inventory swells, sales fall 30% in West
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Best indicator of where housing market is trending---> DOWN HUGE !!!
REUTERS: US February new home sales tumble, supply soars
WASHINGTON, March 24 (Reuters) - Sales of new U.S. homes plunged 10.5 percent in February, the biggest drop in nearly nine years, while prices fell and the number of homes on the market hit a record high, the government said on Friday in a report signaling significant slowing in the housing market.
The pace of new single-family home sales slowed to a 1.080 million unit annual rate in February from January's downwardly revised 1.207 million unit rate, the Commerce Department said.
Economists had expected new home sales to decline to a 1.200 million unit rate in February from January's originally reported 1.233 million unit pace.
While sales slowed, supply surged. The number of new homes available for sale climbed to a record 548,000 by the end of the month. At the current sales pace, that represents 6.3 months' supply -- the largest inventory of new homes since January 1996, the government report showed.
Median home prices declined for the fourth month in a row, hitting $230,400 in February, the lowest level since July 2005.
The slowdown was driven by weak buying in the U.S. West and South -- regions that have posted some of the biggest gains in home prices over the five-year rally in the housing sector. Sales fell 29.4 percent in the West, the sharpest decline in more than 24 years. Sales in the South fell 6.4 percent, the report said.
Sales climbed 12.7 percent in the Northeast and 5.2 percent in the Midwest.
As mortgage rates started to climb last year, the U.S. housing market began to slow, ending a five-year run that shattered sales and construction records and sent prices up more than 55 percent on average across the country. The data have been uneven, showing occasional pauses in the cool-off.
For example, trade group data on Thursday showed a surprising pickup in the pace of home resales in February, but the National Association of Realtors called it "an aberration" due to warm weather that spurred buying.
Economists, however, widely expect the housing market to weaken throughout 2006.
The new home sales data is subject to revision as the statistics are estimated from sample surveys.
this was the most interesting, and contradictory, two days of housing information I've seen in a long time.
First, we have a report that sales of new homes were surprisingly strong (not great, but better than expected). Then, we have a report that new home sales are seriously down.
I'm not all that surprised. New home sales tend to be the townhouses, condos, and mcmansions out on the peripheries. These will be the first to go.
The effects will be felt in a more muted way in cities like SF, where inventory doesn't grow as quickly, and where demand will remain... well, I wouldn't say strong, but stronger than the outer rings in the suburbs.
It'll be bad in both places, but I suspect the worst pain will be in the suburbs - with the exception that some of the condoized areas in downtowns will also take a serious hit.
Not trying to sound too chirpy here - this is just degrees of badness.
And the ones that sell first are going to be the winners. God help you if you're don't sell in the next 5 months...
it's too late. firesale. $100,000 off on Centex homes.
You want out of this ponzi scheme you needed to have listed in Spring 2005, sold by July 2005. Now, it's gonna be a fast slope down. take whatever price you can get. but alas, there are no buyers, no lookers, no flippers and no investors. your only hope is to find a sucker, someone who doesn't read the paper, who has a cousin vinny who recommend they get into real estate.
game. set. match. this pig is poked.
In the Northeast and West, where most of the "tremendous gains" have been happening, sales are down 13% and 30%, respectively.
So the moral is:
What goes up, must come down.
And homebuilder stocks are up like 4% in the last two days... wtf?
Fundamentals? We don't need no steenking fundamentals.
Folks, remember this is all part of the real estate cycle.
If The "analists" are upgrading the HB stocks - then for sure the stocks are headed down. I would say that the HBs will still make money though because that had sooooo nuch profit on those cookie cutter developments. The fools that bought for flipping are the ones who are in for a real haircut.
I wouldn't be so sure that the HB's will do ok. Many of them spent all their profits the past few years on buying land or stock buybacks at all-time highs. Now they are saddled with debt and have little cash to last through a long dry spell. I don't know how long it will take, but some will definitely go bankrupt. My bet is on SPF BZH MDC CTX
My favorite part:
"The number of new homes available for sale climbed to a record 548,000 by the end of the month. At the current sales pace, that represents 6.3 months' supply"
Yet the HB keep building more and more homes with no buyers in sight
Can somebody explain me why homebuilder stocks are up today then?
Maybe expectation were that situation will be much worse?
Analysts expected a 2% decline and got 10.5% decline
My best guess is that the lemmings think the Fed will now stop raising rates due to the housing slowdown. They are mistaken because the Asians would pull out of the dollar if rates did not increase. Money is being printed as if it was nothing. Without higher rates, the US dollar would completely collapse in a matter of months and inflation would go thru the roof of this crapboxes
Oh I hope the FED doesn't stop raising interest rate now and maybe it needs to raise even 1 full point next time. That's would be fun to watch this house of cards falling apart really fast. Those greedy speculators that trying to unload their multiple properties now should not be saved. Let's them drown...
Get More Barbecue Sauce and KEEP that PIG Turning !
Inside word-
In a California area Beazer Had NEGATIVE Sales last week across 12 communities.
32 Cancellations
25 Sales
They are the 1st to go negative here!
More to come.
Can't wait to see next weeks numbers.
Homebuilder stocks are up because some of the Wall Street crowd thinks the Fed will pause in the tightening cycle if the housing reports are bad enough. This is a mistake, however, as the Fed has shown that it doesn't prop up housing. The Fed may well pause if LEI come in negative for another couple of months, and when it does the markets in general, and homebuilders in particular, will have one final little pop before they are both overwhelmed by negative data later this summer and fall.
How can you tell Bob Toll is lying? His lips are moving.
Prices don't have a tendency to revert to the mean. They ALWAYS revert to the mean. (There are few areas of investing, where you can safely use the "always" word.)
i have not seen price declines in the Los Angeles area.
Let's wait a couple more months until we know it's a silent spring.
The data is about 4-6 months behind....
I've heard all my life about how real estate is illiquid, and a slow market. But I still feel like I'm watching this disaster unfold in real time. More and more parts of the country are waking up. It's not just happening "out there" anymore.
It's almost like watching a stock market ticker. The scale is days, not minutes. But it's still real time.
i have not seen price declines in the Los Angeles area.
I don't think you will see significant price declines until summer. It will take a while (and more inventory numbers) before people get their heads around the fact that a decline is actually a trend, not a blip.
Can somebody explain me why homebuilder stocks are up today then?
Amplifying what was above: The decline in housing sales will constrain the fed to not raise rates. This is good for HB stocks.
"i have not seen price declines in the Los Angeles area."
San Diego County
--7/05: 3.0 months
--2/06: 6.0 months
Los Angeles County
--8/05: 1.7 months
--2/06: 4.6 months
Riverside County
--9/05: 2.1 months
--2/06: 4.4 months
Orange County
--7/05: 1.5 months
--2/06: 3.9 months
This is actual data that is showing inventories beginning to baloon. Right now those inventories are growing everyday. RE is cyclical and it is not linear. Some makets are further into the cycle than others. San Diego is a classic example in the state of California. It was the first to experience the boom by about a year. Now they are posting inventory of 18000 and growing. 19000 is the record high in 1995. Los Angeles and Orange County are about 12 months behind in this cycle, but trust me anybody associated with RE in California is looking at San Diego
everybody keeps saying wait until sping or summer or next year. Only thing that will drive decline in prices is if 30year fixed gets above 8%. People will pay the bills under this rate. Inventory #S may not reflect people who do not have to sell but are trying to get top dollar while they can but do not have to sell. if these people took their house off the market the inventory would go down. I know lots of people who in socal that recently have put their house on the market even those they have a fixed rate a 6% and bought 10 years ago. If it sells it sells if not they have low, low payments.
Only thing that will drive decline in prices is if 30year fixed gets above 8%.
If you change "only" to "one", then I agree. The are many supply and demand factors that could drive a decline.
I know lots of people who in socal that recently have put their house on the market even those they have a fixed rate a 6% and bought 10 years ago. If it sells it sells if not they have low, low payments.
Supply, demand. Those will determine the price.
Some fraction will not "need" to sell. Some other fraction will be forced to sell. Those that are forced will determine the price for everybody.
Eventually, the market might be composed entirely of those that do not "need" to sell, in which case prices will rise. But the supply will rise accordingly, as we have seen in the past years.
Supply and demand: We never escape those dynamics.
Looks like things are getting ugly. You'll know there's a problmem when Housing Panic pleads for people to start buying home to support the economy. It WILL happen! :(
COMPASSION...
I know you are all gleefully awaiting a collapse in home prices- having sold your houses and invested in gold. As it is, my husband and I sold our home outside of Boston in 2003, in anticipation of such an event.
However, many friends and family of mine are unable to be as cavalier with their lifestiles. My sister, who works for a non-profit, and her husband, who is a teacher, have struggled to afford a home for their children.
So, I would ask that we all be a little more circumspect in our criticism. Not everyone who has purchased a house in the past 4 years has been a "greedy speculator".
If your sister and her husband dd not take out piggyback ARMs or some other stupid loan, then they will be fine if they stay put. However, this madness must end before it destroys the economy. Look at what 4 years of the dotcom bubble did to the economy. The longer this madness continues, the worse the outcome. It would be better to take our medicine ASAP. The next generation will be able to afford a home without going into debt for 50 years.
Two articles from today's LA Times. One on Merced mentions local Realtor(tm)s who are looking for jobs as used car salesmen http://www.latimes.com/business/la-fi-merced25mar25,0,3193995.story?coll=la-home-business as the local RE market implodes. Merced is the small town where you stop for gas if you go to Yosemite. I've never heard of anybody stopping there for any other reason.
The other says new home sales in Southern California, where the economy is relatively strong and diversified, rose last month: http://www.latimes.com/business/la-fi-homes25mar25,0,1745274.story?coll=la-home-business
The article states there were 530 more sales than the same period last year, probably a reflection of fence sitters jumping in as rates rise and incentives are offered. I believe this is temporary. I was driving through Redondo Beach today (Saturday) and there was an open house on every block. The same noosepaper printed a story a while back about speculators having moved on to cheaper pastures.
From the second piece:
"Yet in Southern California, sales of new single-family houses and condominiums saw their strongest February since 1988, according to statistics compiled by real estate research firm DataQuick Information Systems. Last month, sales rose 9.5% to 4,980 from January's 4,550, and were up 19% from the year before."
Whoops, I meant 430! I'm asking for a refund from my NAR math class.
The "Southern California" area could include up to 18 million people, depending on how they measure it.
Here is the story on LA inventory
1/2: 24,463
1/10: 25,894
1/20: 27,102
1/30: 27,732
2/10: 28,284
2/20: 28,875
2/28: 29,420
3/10: 29,988
3/20: 30,861
3/23: 31,153
Here is the Story on San Diego inventory
1/1: 13,916
1/10: 14,840
1/20: 15,643
1/30: 16,161
2/10: 16,601
2/20: 16,981
2/28: 17,262
3/10: 17,648
3/20: 18,003
3/23: 18,060
19000 is the all time record for SD.
I too drove around Redondo Beach today and saw the same exact thing. San Diego is the bellwhether and it is going into meltdown. The LA article is overemphasizing the Inland empire which does show sales growth but also increased inventories. Notice how they lump So Cal altogether. This is very clever Spin.
to this poster..."COMPASSION...
I know you are all gleefully awaiting a collapse in home prices- having sold your houses and invested in gold. As it is, my husband and I sold our home outside of Boston in 2003, in anticipation of such an event."
Bravo! you said it. This blog is full of anti-capitalist, liberal, bitter, angry suckers. They are mad that some people did well in this crazy market, and they need it to crash to make themselves feel good. It would be fun to see them all lose their asses in a gold bubble (which is happening btw). Just let them rant and rave, and be angry. They are born losers, so they need this release to sleep at night.
Oh, my. Aren't WE the bitter trolls. Tisk, tisk. Now back to FOX News with you, you dried up fart.
watching it right now sucka! Too bad you are poor and cant make $. John Kerry rules.
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Greetings.
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