More than a few realtor trolls were flaming in the housing number posts this week - about how homes were flying, no need to worry, and how HP is full of ___ when I said
"Classic bubble behavior - units sold (i.e. dumped at the new low prices as the smart folks bail out) increased, as median price tumbled again"
Well, here's a great article today in the MSM that should be used to flog any realtor or housing pumper:
Let me get this straight: Mortgage and interest rates are on the rise. Household finances are also being pinched by record gasoline prices. Yet somehow, Americans have all of a sudden decided to go out and buy a whole slew of new homes?
That's what a new government report released this morning would seem to suggest. But dig a little deeper, and you'll see what's really going on.
According to the Commerce Department, new-home sales in March shot up an unexpected 13.8 percent, after plummeting nearly 11 percent in the prior month. As a result, the inventory of new unsold homes in the market fell from 6.3 months' worth of housing stock to 5.5 months.
The news comes only a day after the National Association of Realtors reported a slight increase in existing-home sales last month.
The March new-home sales figures came as a bit of a shocker to economists, who were forecasting single-digit growth at best. But the news wasn't all good.
In February, for instance, the government reported that the median price of a new home sold was just under $240,000. At that price, homebuilders found that demand was diminishing. In fact, new-home sales plunged by 10.9 percent that month.
So in March, homebuilders started slashing prices. The median sales price of a newly constructed property sold in March fell 7 percent down to $224,200. And since peaking at $243,900 in October, median sales prices on new houses have tumbled 8 percent.
What does this mean? While demand for new homes may be up, this is clearly turning into a buyer's market.
So if you're in the market to purchase a new home, wait. If you show some patience, chances are home sellers will be putting their properties in the discount bin
April 27, 2006
Bravo to US News & World Report - reinforces what the bubble blogs are saying on housing numbers
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10 comments:
Keep on dropping baby whoowhoo!!!!
When should I make my move and buy a house with all this excess capital I have been collecting? 2007 or 2008?
Of course the coming Housing Recession will look like more a Industrial Recession than a Builder's Recession like in 1991.
when the price to earnings ratio of housing is back in line - when you can rent out a home you purchase for more than the cost of owning the home
pretty easy
Household finances are also being pinched by record gasoline prices.
Lot more than gasoline thats for sure
UTILITYS COSTS
FOOD COSTS
CLOTHING COSTS (KIDS)
HOME IMPROVMENT COSTS
CABLE TV RATES (AMAZING)
TAXES (THRU THE ROOF)
WATER & SEWER RATES (FORGET IT)
Sure life is great if you have plenty of capital, but for a family of 4 and dad working 2 jobs making more money than he ever did, gets paid at the end of the week you sit there and say...where did it all go?
That is the reality of true inflation, not no goverment Numbers bull shit.
I reckon all of those new homes/condos sold at last years prices, finished construction, got their CO's, and then all closed at once. This would skew the real number somewhat.
This is from the WSJ today:
"The housing market has yet to show signs of a prolonged slump, but even with March's upturn a slowdown is still apparent. New-home sales in March, while up from February, were 11.5% below their peak last July. Sales of existing homes, which make up 80% of the housing market, are only 4.8% lower than when they topped out last June.
However, inventories of new homes on the market rose to 555,000 in March, up 24% from a year ago, and the unadjusted median sales price for a new home actually fell 2% from a year earlier, suggesting builders have used discounts to get homes sold. Existing-home prices have declined slightly so far this year, giving consumers less home equity to finance other purchases.
In another sign of weakness in the housing market, Dallas-based home builder Centex Corp. yesterday said orders fell 11% in the fiscal quarter ended March 31. CEO Timothy Eller said cancellations were up, too. The company slashed its earnings outlook for fiscal 2007 to a range of $8.50 to $10 a share, down from an earlier estimate of $10.75 to $11.25."
...continuation from above.....
The numbers are skewed. We are in a see-saw market; all markets get very volatile before a plunge.
The Mortgage Bankers Association says that mortgage applications are down over 22% but somehow new home sales are up 14%. So are we to believe that people are now buying those $750K houses with suitcases full of cash.
The price keeps rising because luxury homes (high-end) are still selling. Common man's homes (500K or less) are the ones taking the beating. This will drive prices up in the short term until the drag from the lesser houses overcomes the lift from luxury homes.
Over capcity. When a bubble bursts(like it did Quarter 4 2005), it takes about 12 months(one year) before you will see construction quiet. So, 6 months from now look for slowing employment and job growth from this sector. 2007 will be rising unemployment and most likely recession. As long as the Foreigners keep on pumping money into the US, is should be a mild recession. If they stop because of something happening, like the dollar quickly collapsing, it will be the worst economic fall since the early 80's if not worse.
Another possibility is that the FED grows a pair and tries to stomp the inflation out of the economy and pressure the government to cut spending/raise taxes, which could deepen the trough a little, into a more moderate/signifigent recession though the long term benefits of increased savings and paid off debts could be VERY beneficial by the 2010's.
The possiblities, what are the answers?
Alot different than the Dot.com boom which when that bubble burst, quickly slowed growth. They better not try putting the punch bowl back into the party, which has everybody about ready for a hangover........
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