HP'ers, you're reading all these headlines, you're seeing the inventory and sales numbers. Let's call a spade a spade.
The US housing industry has fallen off of a cliff. Just as the dot-bombs and telecom did in 2001, put a fork in it, the housing bubble and the REIC is toast.
Any realtors like to chime in on local market conditions? I'm tellin' you folks, nothin' is sellin' and there's no buyers out there. It's like the REIC threw a big party, and nobody showed up.
Unless you live in a cave, you're not out there buying a new home today, because you know for certain it'll be cheaper tomorrow. And for homeowners and sellers, desperate to cash in or get out, they know now that they can't get last month's price or last year's price. So some will pull the listing and ride it out, while others will do the obvious to get out.
They'll drop the price.
And this is what a housing panic looks like.
August 05, 2006
REIC and MSM spin: soft landing. Reality: real estate has fallen off a cliff
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If you want a good laugh about market conditions, go out to this link on Realty Times and what you can say if you pay the fee:
http://realtytimes.com/rtmcrtop/home.htm
or the short link:
http://tinyurl.com/dgu7j
The RE market in Tennessee is still steady. We've had a record year for sales. The average price of a 3 bedroom, 2 bath 1700 sq. ft. home is $162k. The upper bracket (McMansion) market died in December 2005. We have a 7 month supply and growing of homes over $500k. But, the market below $200k is very strong.
The cost to tell lies:
Market Conditions Reporting - $599 Annually
https://realtytimes.com/am/
ampack-order.htm?open&promo=rtmcr
Tennessee - if prices for a 3/2 1700 sq Ft home in San Diego would be only 162K, we wouldn't have a slowdown here either!. . .I bet the average salary in many Tennessee cities isn't that much lower than SD County. . .you probably have real jobs there. . .other than Military, most people in SD County seem to be dog walkers, herbal consultants, just plain consultants (read - unemployed), or waiting tables for convention crowds. . .
The condo market in Portland OR is exploding. I have no idea who is buying these overpriced pieces of air in a tower. I suspect it's the wealthy amassing condos in every cool city for the outside chance that they'll want to visit a couple days a year.
California house values
have appreciated at an extraordinary rate, accelerating after 2001 to 21% increase per year and continuing through 2005 at no lower than 16% per year. It is surprising how much the recent escalation of house values exceeds
the peak in the previous real estate boom in the late 1980s, even adjusted for inflation. As shown in the graph below, the previous boom peaking in 1989 only reached half the dollar value of the current boom. Speculation is now mounting of a “bubble” and another crash.
http://tinyurl.com/kx2v8
Existing-home sales, including single-family and condo, remained historically high in the first quarter but have experienced a downtrend since hitting a record in the third quarter of last year. Even so, 26 states showed increases in sales activity from a year ago, according to the National Association of REALTORS®.
The latest report on total existing-home sales shows that the seasonally adjusted annual rate* was 6.80 million units in the first quarter, down 2.1 percent from the 6.94 million-unit level in the first quarter of 2005.
The biggest increase was in New Mexico, where existing-home sales rose 26.2 percent from the first quarter of 2005. Louisiana's first-quarter resale pace rose 22.9 percent from a year earlier, while Montana experienced the third strongest gain, up 17.5 percent. Six other states recorded double-digit sales increases from a year ago. Twenty-one states and the District of Columbia experienced declines. Complete data for three states was not available.
David Lereah, NAR's chief economist, said rising interest rates have dampened sales. "A steady rise in mortgage interest rates has slowed home sales in higher cost areas, yet job growth in some moderately priced markets is boosting sales in other areas," he said. "The net effect is a modest decline in home sales for the nation as a whole, but sales remain historically strong and are providing a solid underlying base for the overall economy."
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.24 percent in the first quarter, up from 6.22 percent in the fourth quarter; it was 5.76 percent in the first quarter of 2005.
NAR President Thomas M. Stevens from Vienna, Va., said the sales pattern is expected to level out. "We project home sales may soften a little further before picking up in the fourth quarter, but we're not looking for any significant changes in the market moving forward," said Stevens, senior vice president of NRT Inc. "This should provide stability in the market so that buyers and sellers will be on a fairly level playing field in most of the country."
Regionally, the strongest performance was in the South, which reported an increase of 2.3 percent to an existing-home sales pace of 2.71 million units in the first quarter in comparison with a year ago. After Louisiana, the strongest increase in the South was in Mississippi, up 17.3 percent from the first quarter of 2005; resales in North Carolina rose 17.0 percent; Arkansas and Tennessee also posted double-digit sales increases.
In the Midwest, existing-home sales rose 1.1 percent to a 1.56 million-unit annual sales level from the first quarter of 2005. Indiana led the region, up 10.4 percent from a year earlier, followed by Iowa, up 9.0 percent, and Ohio, with an increase of 6.2 percent.
The Northeast recorded an existing-home sales pace of 1.12 million units in the first quarter, down 2.9 percent from a year earlier. Sales activity in Maine rose 4.6 percent from the first quarter of 2005, Rhode Island increased 2.0 percent and New York sales declined 2.2 percent.
In the West, the existing-home sales level of 1.41 million units was 12.4 percent below the first quarter of 2005. After New Mexico and Montana, the best performance the region was in Utah where existing-home sales rose 12.7 percent from a year earlier; Hawaii sales increased 6.3 percent while Alaska rose 5.9 percent.
The National Association of REALTORS®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Sorry folks, but mortgage interest rates are declining (again), so your predictions of an imminent collapse might be premature.
The Fed knows what it has to do to avert a disaster and I don't think it will allow the housing market to crater. What we see happen mighht not be very pretty by 2005 standards, but it will not be doomsday.
Genius said: The Fed knows what it has to do to avert a disaster and I don't think it will allow the housing market to crater.
I thought the Fed only controlled short term rates?
interest rate manipulation can't push this bubble any further. you can't recreate the mania conditions. interest rates were 0% in Japan for the last 6 years... what happened to their property prices?
the only rational reason to buy a house today is in anticipation of hyperinflation.
Anonymous said, "the only rational reason to buy a house today is in anticipation of hyperinflation." Doesn't have to be hyperinflation. I find it amusing to use the reverse inflation calculator. The one I use, a link from a government website that takes you to a Bank of Canada site, apparently we don't want people to really know the true inflation rate here in the USA. The amazing thing is that it says inflation has been a mere 2.6% over the past 17 years. I only use that because in 1989 after the quake in Northern CA my parent's house value fell to $350,000, almost $90,000 from before the quake. According to the inflation calculator that would now cost $511,660, Zillow has it at $871,000.
I think the inflation rate has been at least 4% over the past ten years inspite of government propoganda saying it has been less than 3%. I can't name very many items that have only gone up 3% a year, can you? Of course the inflation calculator won't let you plug your own inflation rate so maybe the price Zillow says my parent's house is now worth reflects a more accurate picture of inflation?
Again I think we have a schizoid economy, some areas in an inflationary cycle and other parts deflationary. Some goods and services are getting less expensive and others going through the roof. Same with homes, there are still a lot of areas that are in a depression because there are no jobs, closed factories, etc and home values are dropping and they already look cheap. In Brownsville Texas you can buy a lot of homes for less than $50,000 and then in Austin that might buy you a building lot.
In my neighborhood here in Austin the home builders have built several spec homes and there is one across the street they just finished and I've watched the price keep going up, not down. The house has been completed for a month and they price when they broke ground was $360,000 (about 8 months ago) climbed to $406,000 and then I thought maybe they'd discount it to sell and now it is $420,000. The cost to build in this neighborhood is expensive, massive concrete foundations, lots of rock and brick, the lots on my side of the street will cost you $60,000 before you improve it and just to grade the side of the mountain and install stone retaining walls will cost you upwards of $100,000 and that is before you even start to build the house.
The super of the job sites told me that costs keep going up for labour, materials, concrete, lumbar, you name it and if it weren't for the fact that 1/2 the workers are most likely illegals I doubt they could sell the houses at these prices and make any money.
I lean toward inflation rather than deflation or even stagflation since maybe a lot of workers won't have a lot of leverage for pay raises in a weakening economy.
Genius said: The Fed knows what it has to do to avert a disaster and I don't think it will allow the housing market to crater.
Bankrate.com said: Rates on long-term mortgages have dropped to their lowest level since April this week as loan applications dried up. Fewer people are applying for home loans than at any time since May 2002, according to the Mortgage Bankers Association. The association's market composite index, a measure of loan application volume, is down 29 percent from a year ago.
Patch Tuesday said: GM and Ford SUV's are on sale too. You should go buy them!
The Fed has to either save housing or rescue the dollar. Without reasonable interest rates, the dollar goes into free fall and the global markets go into the toilet.
So, it would rather let realtors and their clients suffer and thereby set off a national housing based recession with the hope that it doesn't go global a/o tailspin into a depression.
Personally I hope the Fed chooses the dollar over housing, but the number of Americans in over their heads in debt is much larger than the number that know jack s--t about the global financial markets, so it'll be politically tough for Bernanke to do the right thing.
Rising gasoline prices, energy prices, interest rates, higher taxes and higher House Holding Costs due to the re-sets plus the large Inventory..Inventory..Inventory !
These are just a few of the Factors that should make the long hard winter of 2006-07's "soft landing" very, very Interest-ING !
To Mark in San Diego
Yes, Tennessee pays a comparable wage (mech engineer $80k) and the cost of living is 1/3rd less. We're having a large group of retirees moving in from NY and Cali. Lakefront property is $60k and acre. Are only downturn will be the McMansion owners.
A depression is coming. But, only the borrowers without jobs will be devastated initially. We'll have to see what happens after a few years of a depression before knowing what's next.
Are=Our
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