From bubbletracking, the percent of reduced listings in the bubble markets. Notice that every one is substantially higher than earlier this year (duh!). This should help you understand the median price figures we're seeing. It's going to take a few more months to see the collapse in pricing already well underway.
Over Supply, meet No Demand. Now meet your new friend Reduced Pricing.
Sacramento Metro:
1/30: 30.5%---> 6/13: 39.7%---> 7/13: 42.9%
Phoenix Metro:
1/30: 28.0%---> 6/13: 39.0%---> 7/13: 40.7%
Orange County:
1/30: 22.8%---> 6/13: 37.0%---> 7/13: 40.5%
San Diego County:
1/30: 26.3%---> 6/13: 35.3%---> 7/13: 38.1%
Riverside County:
1/30: 27.3%---> 6/13: 36.5%---> 7/13: 37.6%
Las Vegas Metro:
1/30: 21.0%---> 6/13: 32.9%---> 7/13: 35.7%
Los Angeles County:
1/30: 21.8%---> 6/13: 29.7%---> 7/13: 32.0%
Seattle Metro:
1/30: 17.1%---> 6/13: 21.8%---> 7/13: 24.0%
Santa Clara County:
1/30: 13.6%---> 6/13: 18.8%---> 7/13: 20.1%
July 14, 2006
Collapse in home prices already well underway
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funny how quickly we went from waiting lists and people camped out in front of new home developments to this
classic, and I mean classic, ponzi scheme
Talked to 2 sets of friends who are trying to sell houses in San Deigo. One thinks he has a bad RE agent no offers in 4 months and the other 1 offer that the buys must sell their home before the deal can close. I try to be understanding but they are in a 2003 mindset, SD is really slowing down. I still have that father-in-law who has taken money out twice on his house in north county SD and hasn't done any improvement in the house and blown all the money on bling ,bling. I should start cleaning out that extra upstairs bedroom.
San Diego listings just keep creeping up. I have friends who bought with toxic loans and you can see a noticable change in their behavior. They worry, can't sleep, and because they are in real estate related industries, they now fear for their jobs.
I truly believe we will have something just short of a depression, or even a mild depression.
Things have fallen considerably in just 12 months. If it's true as Piggington.com says that every historical run-up has had an equal or greater correction decline, things may get so bad that the only secure form of employment might just be as a U.S. soldier
Don't forget nursing for a secure profession. All the stress is going to send lots of folks to the hospital.
Poeple will be fleeing the country in a few years. The Mexicans will be perplexed as they pass American going the other direction.
News Alert !!!
Roof Collapses at Horton
By Nicholas Yulico
TheStreet.com Staff Reporter
7/14/2006 9:57 AM EDT
Click here for more stories by Nicholas Yulico
D.R. Horton (DHI - commentary - Cramer's Take) fell more than 9% Friday after it reported a drop in third-quarter new-home orders and slashed its full-year earnings forecast.
The largest U.S. homebuilder said that its orders for the quarter ended June 30 fell 4.4% to 14,316 homes from 14,980 a year earlier. The value of the homes sold dropped to $3.8 billion from $4.1 billion.
The company expects to post third-quarter earnings of 93 cents a share, well below analysts' average estimate of $1.30, as compiled by Thomson First Call. The company's forecast includes about 11 cents a share in write-offs related to land option contracts.
"The current home sales environment is characterized by an increase in both existing and new homes available for sale, higher than normal cancellation rates and an increase in the use of sales incentives in many of our markets," said Chairman Donald R. Horton in a statement.
For the full fiscal year, D.R. Horton sees earnings of at least $3.65 a share, compared with its earlier forecast of $5.25 to $5.35. Analysts target full-year earnings of $4.92 a share.
"We think the sharp deterioration in earnings throughout the end of fiscal 2006 likely reflects sharply lower closings and significantly lower margins," Bank of America analyst Daniel Oppenheim wrote in a research note.
He estimates the company's gross margins will fall to 16.2% in the fourth quarter of this year, down from 25.2% in the fourth quarter of 2005.
Oppenheim cut his 2006 EPS target on Horton to $3.65, down from $4.85, and slashed his 2007 target to $1.85, from $2.55, due to faster-than-expected margin declines.
Horton's sentiment echoes warnings from across the industry as builders ratchet down their fiscal 2006 estimates. Several major homebuilders, including Toll Brothers (TOL - commentary - Cramer's Take), KB Home (KBH - commentary - Cramer's Take) and Pulte (PHM - commentary - Cramer's Take), have cut their fiscal-year guidance in the past two months.
Shares of Horton fell 9.1% to $20.77 early Friday.
In other builder news Friday, Raymond James released a report that said contracts for housing sales fell 42% year-over-year in June in the greater Washington area, according to an area realtors groups. Closings declined 38% and the inventory on the market now represents 7.1 months of supply, compared with 1.6 months in June 2005, and 5.9 months in May.
"We continue to believe the Washington, D.C., market is headed lower as excessive speculation and overbuilding will weigh on the market for the foreseeable future," Raymond James analyst Rick Murray wrote.
Public homebuilders that have a major presence in the market include NVR (NVR - commentary - Cramer's Take), Toll Brothers and Hovnanian (HOV - commentary - Cramer's Take).
Oprah has week long debt program. . .
Now why is THAT important for this board? Because the entire mind-set in USA is changing, from borrow and spend to save and pay down loans. . .Oprah is a very real trend setter, and if her program and web site are telling people to stop spending, then the consumer economy is really going to tank big time!
That was a great series Oprah did this week. Seventy percent of Americans live pay check to pay check. Just getting inside the heads to the people on the show was a real eye opener. People trying to beat the Jones, hell I don't even want to know those folks.
Real Estate Relief Act of 2007. . .
Will Bush sign?? Which Senator or Congressman will introduce it? . . .someone from FLA, CA, NJ???. . .a bill to bailout homeowners who are more than $100K underwater on home value, or who are already in BK. . .
I just returned from lunch at my favorite watering hole. Almost backed my car into a sign they put up proclaiming "High-rise urban condominiums".
My first thought was 'great, where am I going to park now?' followed by 'good thing they will never be built'.
I'll take a picture, but I'm willing to bet it will be 10-15 years before the project starts. There is such an abundance of overpriced, unnecessary housing in the area right now.
RE Joke of the Day . . .
What's the difference between a Real Estate agent and a volunteer worker??. . .Neither get paid, but Volunteer workers get free coffee and doughnuts in the morning.
Ok I SOLD IT
Just sold my stucco shit box in Phoenix. As you all guessed they used a suprime lender with 100% financing. They asked me to pay 3% of their closing costs which I did. I guess we all know how this is going to end.
I like to play pool so i know a few Jin my local neighborhood who also hang around the little pool bar. I have talked with a few and some know what is coming. One or two have no debt but at $10-$12 per hour they cannot save.
My advice to them is to be the person the bosses will keep when they have to lay off 50% or more of the workforce.
Maybe it will be like the great depression where a bunch of guys hung around pool halls and became hustlers. problem was back then there was no money to hustle out. That is until WW2 started. problem is we have WW3 already going on and the economy is not getting better. What will they do this time?
"Ok I SOLD IT"
How did it feel to get out from that debt?
Hey, Keith
You've been noticed in USATODAY blog:
http://tinyurl.com/fyvwa
For real estate entrepreneurs, signs of trouble in my hometown
..." One thing's for sure, this blogger is sounding Code Red about real estate overall."
Congrats!
I think the people who were calling for the July 4 holiday to be the "tipping point" were right.
The news has gotton much more grim lately. Shoes are dropping now announcements of reduced earnings, layoff announcements, etc in other sectors besides real estate.
Venezuala cuttting off oil supplies. $77 a barrel and climbing. Hurricane season about to hit with record sea temps in the Gulf of Mexico.
Consumer spending down. Middle east close to erupting in another war. Yield curve with the 2 yr par with the 30 year.
For those with good memories, they'll recognize this as the opening stages of a recession.
The tipping point is behind us, people. I hope you've been at your job long enough to qualify for unemployment insurance. You may need it.
I remember Anderson School of Economic saying last month that it was going to be a soft landing.
I am confuss after I read this article on what Chris Thornberg has to say.
Chris Thornberg, an Anderson Forecast analyst at the University of California, Los Angeles, said the housing market is in uncharted territory. Thornberg attributes the "everything’s fine" response from the realty industry to the "bunker mode" mentality that comes in circumstances like these.
"People are loathe to realize losses in homes," Thornberg said. "They don’t want to talk about it, to think about it."
Thornberg said that these numbers aren’t evidence of a soft landing.
http://www.voiceofsandiego.org/articles/2006/07/14/housing/976condodrop.txt
hey folks,
I have follow the housing market for couple years now. I am currently hold "shorts" position on Centex, but I am also interesting of owning some "puts". I need helps how to excercise the put options. How do I start buy some HB puts, and how do I exercise when it hits below the strike price?
Thanks
Response from Ok I sold it
It feels so great to have sold the house. If the buyer did not close, I was going to drop the price by 15% the next day. So it feels better than anything you could imagine.
Can anyone explain why higher end markets such as Granite Bay near Sacramento and Boulder near Denver are showing prices going UP? Is is just a matter of time or are these places protected?
I love your website. It has a lot of great pictures and is very informative.
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