One day the MSM will hopefully do their job and not just a rip-and-read with NAR press releases. Or not.
The real story on today's already-horrific numbers is that they're waaaaaaaay overstating the average sales price.
Stories of $100,000 cash back, $75,000 off in incentives, 125% loans, free cars, paying for the downpayment, Hawaii trips, $20,000 gift cards and more are now commonplace. Existing home sellers have to compete with the fire sale packages being offered by builders, incentives and cash back are out of control, and the official NAR median price number is completely bogus.
That the MSM would report these numbers today and not even mention the issue shows you how lazy they've become. Hello blogs, goodbye MSM.
Existing Home Sales Drop 1.9%, Prices Decline
Sales of previously owned homes in the U.S. fell last month to the lowest level in almost three years, prompting sellers to reduce prices.
The median price of an existing single-family home dropped 2.5 percent from September 2005, the biggest year- over-year decline since record-keeping began in 1969.
And here's the PR from the NAR, with another hilarious quote from the corrupt David Lereah:
David Lereah, NAR’s chief economist, said stabilizing sales should build confidence in the housing market.
“Considering that existing-home sales are based on closed transactions, this is a lagging indicator and the worst is behind us as far as a market correction – this is likely the trough for sales,” he said.
“When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market, and sales will be at more normal levels in the wake of the unsustainable boom that we saw last year.” He noted sales already are improving in some areas.
October 25, 2006
Bogus and overstated NAR numbers show crashing home sales, record price decline, and Lereah says "worst behind us..likely the trough for sales"
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19 comments:
people are talking about how the inventory of homes for sale has declined in the existing home sales number . . .
what they are not talking about is alot of this is coming from people taking there houses OFF THE MARKET and renting . . . this has happened to two of the three houses that were for sale on my street - the other? Going to auction in a week.
And I live in a market that was never "frothy"
sadly, the REIC isn't talking about folks like the "i'm facing foreclosure kid" who colluded with the sellers to defraud banks and, ultimately, make others think that homes were actually appreciating in value.... that's the "big lie" that I don't see the "talking heads" talking about.
I'd like to see an estimation of the seller incentives as a percentage of sales price to get a better idea of how much this market has decreased. Why they allow these incentives to artificially inflate and distort home sales prices mystifies me.
43% of San Diego listings are being sold at "reduced price" - 50% in Ventura County. . .one condo on my block here in SD has been on the market for over a year, and has been reduced from 800K to today's 569K!!!! 1400 Square feet, 2.5 baths, hardwood floors, view, and it still can't sell!!. . .the media is asleep for the most part, and uses the stupid 8% decline for San Diego . . .20% is about average around here.
Please. The MSM is not there to inform you, it is to provide entertainment and convey the wishes of the government to the sheeple. When you read things in the newspaper, or see them on the television keep this in mind. As far as shillacious Mr. Lereah-rah-rah-rah goes, what is he supposed to say? If he spoke the truth, he would become the scapegoat, and be torn to pieces by enraged mortage holders. It is not any more excusable, but berating him for being the shill that he is won't help anything. It may provide some entertainment for people who weren't so stupid to take too big a loan on too big a house.
Keith,
I am relocating to Milan, Italy next year with my company and have been looking for a good relocation site.
Couldn't find one until I just noticed a like on your website. Thanks for the help!!!
nick c
NAR changed their seasonal adjustment to make September look better:
http://www.siliconinvestor.com/readmsg.aspx?msgid=22941764
http://www.siliconinvestor.com/readmsg.aspx?msgid=22941962
Saddam should have nominated Lereah as his next information minister.
:O)
http://www.welovetheiraqiinformationminister.com/
I doubt all these so called incentives are the norm. I spend hours each day on line looking at real estate, craigslist, major builders homesites, and have not found a single bargain or massive incentive to buy. I don't doubt that in some cases they are offered on some spec homes that other buyers walked from or investors walking from properties they overpaid for or developers that listed their properties out of greed and last years prices but who can still lower the price even $100,000 and make money. Since most of those over-built properties were in the pipeline in 2003/2004 and they saw a 40-50% rise in price in 2005 they can still drop the price to 2004 levels or even 2003 and make a profit.
I see lots of homes in Phoenix dropped $100,000 by sellers and most of them are still asking $100,000 more than they paid in 2002-2004 so where is the bargain, or the meltdown. Until prices drop significantly under what the MAJORITY of home owners paid in EACH market there really isn't a meltdown as long as the MAJOR loss is only on paper. As I've said before, most of my friends can see a 50% drop in the price of their homes and still sell with a profit.
All hype and no fact.
Oil down.
Gold down.
Stocks up.
Things are not all bad.
Marky Mark
This market correction is in its last throes - David
The down turn is accelerating! This is just the start. Wait 3 years and watch prices in the hot markets like Ca., Fla., and Az. go down 36% or more.
Stocks are in a "suckers rally". Money flows out of the housing market. Just wait until the housing market pain really sinks in! Shorting the stock market will be the play. Some will have their heads handed to them, both in the housing market and later the stock market!
The perfect real estate led economic tsunami is coming! It will take the stock market, housing, and the economy (including some ARM interest only people) with it! Go to cash, sell real estate, and get out of stocks! The closest thing to the destruction of this tsunami will be the 1930's Depression.
>>Stories of $100,000 cash back, $75,000 off in incentives, 125% loans, free cars, paying for the downpayment, Hawaii trips, $20,000 gift cards and more are now commonplace
While the 'stories' may be commonplace, the practice simply is not. There are always exceptions, but they are only exceptions. Trying to turn this into reality is silly.
New construction always sets the market price on single family homes. I'm sure builders are scaling back prices to meet the market demands and probably will continue to lower prices depending on the inventory of un-sold homes.
Also I do see plenty of extra incentives for things like a bonus to the buyer agent/broker. It's a ploy to attract agents that have clients that are looking to buy. I sold more new construction homes when the builders offered less than my normal fees than I am right now with the increased fees.
The 'free' vacations, cars, and whatever are to attract buyers, but a buyer with good representation can simply reduce the price against the value of the freebies (and probably more). I've yet seen or heard of a realtor that has told a buyer to buy a new build because a 'free' trip to Hawaii is included.
http://www.spiegel.de/international/0,1518,440054,00.html
America and the Dollar Illusion
By Gabor Steingart
The dollar is still the world's reserve currency, even though it hasn't deserved this status for a long time. The devaluation of the dollar can't be stopped -- it can only be deferred. The result could be a world economic crisis.
I saw two things that were very interesting this week.
1) I'm starting to see advertisements for new condo projects here in Seattle where they are offering incentives like Flat screen tvs and kitchen upgrades. This was unheard of for years now up here as the housing market was a total sellers market. There are construction cranes all over the Seattle and Bellevue skylines for major condo projects that are coming on line in 2007. All of them ofcourse high end projects where 1 bedroom units start at 400K+. Inventory of forsale properties in Seattle has gone from a low of 3000 early this year, to close to 6000 in September.
Prices so far have remained stubbornly high, but your starting to see prices drop here and there. You sense things are changing and the bidding wars are over. Median home prices hit their peak in May and have been flatlined all summer, and the past two months your starting to see a trend of prices coming down.
2) I was reading about how mortgage lenders who have sold mortgages as packaged investments like mortgage backed securities are seeing a ever increasing number of the ones who bought them using the clauses in the contracts of the sale forcing them to buy them back. When owners of mortgages sell them to other institutions, there are legal clauses built into these deals that states if the loan goes bad (people stop making payments on those loans) early on, the original seller has to buy it back.
Wall Street journal was reporting the growing market of research companies that use risk models to indentify companies that have been trading large quanties of loans that quickly go bad. This indentifies mortgage companies that may have been involved in fraudulent appraisal schemes and /or were not doing the proper credit investigations to recognize high risk applicants. And ofcourse they are indentifying that the ARM type /exotic / no money down loans have been experiencing the greatest rate of default.
Going, going
Auctioneers say they are seeing a lot more interest in their services to unload single-family homes in the slowing real estate market, and they expect to stay busy through next year. But in a sign of the desperation of some sellers, more property owners are opting for "absolute" auctions -- meaning they'll take the best offer regardless. That was the approach recently for the sale of the historic Honeymoon Row home on Lake Cherokee in Orlando. But an upcoming auction in South Florida is said to top them all: More than 160 homes will be on the auction block Saturday at War Memorial Auditorium in Fort Lauderdale, and 129 are committed to sell at any price. Most of the homes are in Broward, Miami-Dade and Palm Beach counties. Details are at the 123sold.com Web site.
It's really pathetic how they grab on every shred and least disastrous data, i.e. "Housing down 50%! Well, things can't get worse. I guess the worst is behind us. Never better time to buy!".
New house sales were in September because the home builders cut prices down 10% average. Nice. The new home builders are undercutting the existing home sales as I predicted. This will be the reason for prices dropping. House builders can still make an insane profit even as prices come down further verifying the thesis that houses were way overpriced to begin wit. The building costs have risen slowly (if at all) but the prices skyrocketed making home building the biggest gold rush since 1840.
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