And away we go. Someone send this to David Lereah and the NAR..
There are signs a housing slowdown that has gripped certain high-growth markets during the past few quarters is now spreading nationwide.
Preliminary reports from builders Hovnanian Enterprises Inc. and Toll Brothers Inc., whose quarters ended April 30, indicate demand is falling faster and more sharply than previously thought, and that the pullback is no longer confined to hot markets that had seen sharp home price run-ups in the past few years.
The areas with the biggest declines were Washington, D.C., with sales falling 22 percent; Los Angeles/Long Beach, 50 percent;Tucson, Ariz., 50 percent; Sacramento, 46 percent; San Francisco, 30 percent; and Phoenix, 37 percent.
"Almost every single major market that we track is showing pretty significant year-over-year declines in sales," Tomlinson said. "It's much more broad-based" than it was prior to February.
So far, builders' efforts to offer more incentives and discounts have "failed to move the needle" in driving sales, Tomlinson said. As a result, he said some may need to resort to bigger price discounts.
May 15, 2006
Experts predict real estate drop will spread
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For those who don't understand economics, here's a little primer on what will happen:
Supply and demand does work. There is tons of supply and little demand in Florida, causing a downward shift in quantity demanded. As QxD falls below QxS (quantity supplied) the price will drop and the markets will become inefficient (surplus of houses available for sale), leaving us with a few years of fire sales and losses before we reach a new, lower equilibrium price.
Is share buy backs- a strategy of Homebuilders to fight "SHORT-SELLERS" of their stocks or to make their stock price stronger for Investors ???
fyi read:
Centex to repurchase additional 12 million shares
Mon May 15, 2006 4:30 PM ET
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/11/cnus11.xml
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For years, pundits scoffed that there was no real estate bubble, that the run-up in prices was due to demand from a growing population, compounded by dwindling reserves of land to develop. Curiously, however, that demand was not reflected in apartment rents, which stagnated.
But a year and a mind-set later, rents are going up, while housing prices drop inversely to swelling inventory, as speculators dump properties before it gets worse.
And it's going to get worse, much worse, as interest rates rise (despite the occasional Federal Reserve pause) to stay ahead of inflation sparked by fuel prices. Homeowners will not only contend with hefty prices at the pump, but soaring mortgage payments when billions of ARMs come due, or overdue. All this on top of taxes, which aren't moderating. Foreclosure city, folks. Why do you think the government recently made it more difficult to declare bankruptcy? They knew.
Smart investors are already out of the real estate market -- as Joseph P. Kennedy said: "Only a fool holds out for the top dollar."
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