That about sums it up... Too bad though we can't get an accurate read on prices. But with no buyers and all sellers, you know what's really happening out there...
Code Red.
Sales of previously owned homes plunged in July to the lowest level in 2 1/2 years and the inventory of unsold homes climbed to a new record high, fresh signs that the housing market has lost steam.
"The housing sector is fragile," said David Lereah, the association's chief economist.
The inventory of unsold homes in July rose to a record high of 3.86 million. At the current sales pace, it would take 7.3 months to exhaust that overhang. That is the longest period to exhaust the supply of home since the spring of 1993.
One of the things that Federal Reserve Board Chairman Ben Bernanke and his colleagues are watching closely is the housing slowdown. If home prices and sales were to crash, that could spell big trouble for the overall economy. Thus far, Bernanke has said the market's slowdown has been fairly orderly and smooth.
Lereah said he still expects a "soft landing" for the once high-flying housing sector. But he urged the Fed to leave interest rates alone and refrain from bumping them up again -- as some analysts have said is a possibility.
The housing sector's transition from a red-hot market to a cool one has important implications for the overall economy.
Consumers who watched their homes rise rapidly in value over the last several years felt wealthy and more inclined to spend. They also borrowed against their homes -- treating them like ATMs -- to support their spending ways.
But with home values not going up as much now as the double-digit gains seen in the past several years, consumers have tightened their belts. That has contributed to a slowing in overall economic activity.
Last week the National Association of Home Builders reported that confidence among builders sank to a 15-year low.
August 23, 2006
FLASH: Existing home sales plunge worse than expected, inventory exploding to record levels, prices are anyone's guess due to bogus NAR data
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33 comments:
"Lereah said he still expects a "soft landing" for the once high-flying housing sector. But he urged the Fed to leave interest rates alone and refrain from bumping them up again"
Leave interest rates alone so these F's don't lose their 60% gains? F'em.
If the Fed doesn't raise rates, inflation will skyrocket and the USD will devalue even more. If the Fed continues to raise rates the economy will implode.
Decisions, decisions, a mess for sure.
Greenspan screwed the US and they gave him a medal. Go figure.
Buy gold, it's going up either way.
when will lereah come off his soft landing BS? When home sales are down 90%? When inventory is up another 200%? When prices have cratered 20%?
What a joke. And people wonder why we view realtors as scum and liars
Among leading percentage losers were shares of Lowe's Co. and Home Depot Inc. -- both considered sensitive to the rise and fall of the housing industry. Shares of Lowe's dropped 2% to $27.37 while shares of Home Depot, also a Dow component, fell 1% to $33.70.
It's the latest from CNBC: In August last year housing market in Naples, Fl had almost one thousand closings, this year (also in August) only 38! LOL.
The drudgereport homepage has the housing crash up as the #1 story - headline "the big cool down" and a picture of a sea of stucco homes. Link goes to this article:
http://tinyurl.com/fanhz
With this BS from Lereah:
NAR Chief Economist David Lereah said the increase in the supply of available homes so far this year was the sharpest on record.
"What we are experiencing right now is an inventory and price adjustment," Lereah said. The housing market is in transition, he said, "and there is pain in that transition."
gonna be so many housing crash stories today I won't be able to keep up. Post good ones here.
yahoo home page has this report up:
http://tinyurl.com/o4bnl
Goodbye Condo Mania
By Pat Mertz Esswein
Kiplinger's Personal Finance
Buyers get better deals as the froth fizzles and sellers offer concessions.
Passengers on the Poseidon aren't the only people in distress this summer. Condo owners, who had been cruising along propelled by double-digit price gains, are encountering cooler currents and the prospect of perilous waters ahead.
The supply of existing condos for sale increased by almost two-thirds during the year that ended in April. At the same time, sales fell slightly, according to the National Association of Realtors. Investors -- about one-third of all condo owners, according to mortgage-data tracker LoanPerformance -- have been fleeing like proverbial rats.
from the NAR's anti-bubble talking points:
What are the prospects of a housing bubble?
There is virtually no risk of a national housing price bubble, based on the fundamental demand for housing and predictable economic factors. It is possible for local bubbles to surface under the right circumstances, but that also is unlikely in the current environment. There are tight supplies of homes available for sale in most of the country, and labor markets have been improving. In other words, the two conditions necessary for price softness do not exist in most of the country.
TOL24.30, -0.90, -3.6% ) was down 2.8% at $24.49. The stock found support on Tuesday in quarterly earnings that beat analyst estimates, even as it lowered its outlook for the coming quarters.
"TOL's results and guidance were not the stuff championships are made of, yet investors breathed a sigh of relief, and we believe that is the proper reaction at this point in time," said Stephen East, analyst at Susquehanna Financial Group.(Market Watch)
What a BS, check TOL shares today.
Need some advice, especially from Keith.
We are a small and simple family of 3 living in a modest home bought in 1994. My wife and I are thinking of getting another property that, not only that we can afford the mortgage payment on a conventional terms, but also for our daugther to take over and afford the mortgage payment as she joins the workforce 9 years from now.
Given that the condos are the ones taking the beating, we're thinking of getting at least a 2 bedroom, but preferably 3 (beds), for our daughter to call home someday.
Any sound suggestion folks? Thanks in advance.
Phoenix is a repository for dead-enders, third-stringers and serial losers who can't make it anywhere else.
A cesspool of mediocrity and the lowest common denominators.
Where does all this scum come from?
The horror !...the horror!!
why would you buy in this market for you daughter to have a house in 9 years?
Why not wait a couple years and see where housing is then. We are at the top now with nowhere to go but down. Buying now would be akin to cutting off your penis.
Anon 5:52:08,
I'm with you and I just forgot to mention that - yes, I intend to wait, say next 5 years and get a real good deal.
Thanks anyway.
About the only thing that could make me more happy about watching this bubble unravel would be is if I found out that the hag ex bought an overpriced condo in her beloved Bradenton Florida in addition to building her overratted mchouse in St. Louis last year at the peak - gotta go, girlfriend wants ride on motorcycle. Signed, Smug Bastard.
"buy a house for your daughter?" -
THIS IS WHY WE ARE IN THE SPOT WE ARE IN TODAY! !!! DUMB AS S**T WALMARTERS BREEDING AND LISTENING TO CNBC!
Today on Yahoo finance, an article from Kiplinger's saying that sometimes it's good to RENT!!
This is a first, with no doubt more articles like this to come! ")
Keith, you may want to link to this article. The best line appears to be the guy bidding on the house and stopping short. He figured he couldn't flip the house within 30 days at the price it sold for. Incredible. Flippers are now attending auctions because that is where their supply of housing 'crack' is now.
http://heraldtribune.com/apps/pbcs.dll/article?AID=/20060821/BUSINESS/608210570/1448
Wall Street fell for a third straight session Wednesday as fresh signs of a housing slump triggered concern the economy is slowing too fast and could erode corporate profits.
Investors are concerned that housing sales are dropping faster than anticipated, stoking fears that a soft landing for the U.S. economy might be more difficult to achieve. The report from the National Association of Realtors that sales of previously owned homes dropped in July to a pace of 6.33 million units, the lowest since January 2004.
http://biz.yahoo.com/ap/060823/wall_street.html?.v=13
KB Home (KBH - commentary - Cramer's Take) was down more than 5% after The Wall Street Journal reported that the company is looking into its stock option grants to CEO Bruce Karatz.
it's all coming true now
I loved the link to the housing auctions news site. Even at no reserve, there are still plenty of greater idiots out there. Hammered down prices still ridiculously high. Stupid bidders caught up in the auction frenzy. As Mister T might say: "Buy a house today, I Pity The Fool!"
Anon 6:03:57,
You must be a very lonely person.
Just spoke with a friend who took her real estate license test last week. She said there were 1000 people in the room and they had to start and 1.5 late due to all the registration BS. Thats ALOT of people still wanting to get in the real estate biz. Seriously, when is the damn DRE gonna impose tougher requirements.
Gloom and doom. Don't you understand that as long as the top 10% can afford to live, are unaffected and keep buying second, third and fourth homes that no one in power in this country will give a SHIT?
Plutocracy is here. But then again, most of you voted for it.
"buy a house for your daughter? -
THIS IS WHY WE ARE IN THE SPOT WE ARE IN TODAY! !!! DUMB AS S**T WALMARTERS BREEDING AND LISTENING TO CNBC!"
wow you give americans way too much credit. none of my coworkers watch any news, and if they did it would be local news, not something half decent like cnbc, heaven forbid someone watch FNC and learn something
Need some advice, especially from Keith.
We are a small and simple family of 3 living in a modest home bought in 1994. My wife and I are thinking of getting another property that, not only that we can afford the mortgage payment on a conventional terms, but also for our daugther to take over and afford the mortgage payment as she joins the workforce 9 years from now.
"Given that the condos are the ones taking the beating, we're thinking of getting at least a 2 bedroom, but preferably 3 (beds), for our daughter to call home someday.
Any sound suggestion folks? Thanks in advance."
Here's my two cents worth: Number one, don't buy a condo in a half-finished building, because it will most likely never be finished or it will convert back to mostly apartments as the market continues to tank. Number two, I sincerely believe that we are just starting a down cycle, and anything you buy now will be worth much less a year or two from now. If you don't need a place for your daughter for nine years, why not wait a year or two and see how things are? Save more money for a bigger downpayment.
-Raising the roof
Thank you Anon 1:32:58,
Yes, I will definitely wait until prices hit bottom. With the condo idea, I can easily rent it out or even subsidize the monthly payment which by then, if the price tanks and even at 8& fixed, I can afford to subsidize it util my girl takes it over.
a condo is the worst investment ever. you'd be much better off to buy land. Your daughter may have other plans when she grows up than living exactly where you specify. you have plenty of time to set up a fund for her that she could use as she wishes.
don't buy anything until you know for certain you can rent it out and get positive cash flow
period.
Thank you all for the good advice. It's a great feeling to have blogger friends like you guys. Imagine if those that are in deep sh't right now; had they sought some advice to HP bloggers before they bought the so called (expensive & overvalued) McMansion, they wouldn't be where they're in right now.
:I can easily rent it out
I think this is one of the traps that the RE machine is trying to get people into.
True, during prior markets, condos were good investments w/ rental income potential, however, today, so many condos and townhouses were built in the past 3-4 years that if they go back into the rental markets, there'll be a flood of rental units making it very difficult for owners to pay for both maintenance and mortgage/taxes.
I read an article about buying a condo during the market downturn and the advice was find one that is close to public tranportation (counter to high gas price), one with a view, near major schools & shopping, etc.
This said, you'll have a greater chance to find a renter.
Any comments?
If you have a highly portable job, you safely could have bought/can buy a house in a non-bubble area, all things being equal with the economy at large. I had always thought telecommuting might help out some depressed areas of the country where there are great old houses but no jobs. Doesn't seem to have caught on.
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