May 16, 2007

Nah, real estate never goes down

We're just getting started folks. First the explosion, then the leveling off, then supply builds, demand drops, and finally, after figuring out the game is up and they can't get last year's price, homedebtors start racing themselves to the bottom.

It's called reversion the mean. And it ain't nice.

U.S. Median Home Price Tumbles to 2-Year Low in Slump

May 15 (Bloomberg) -- U.S. home prices tumbled to a two-year low in the first quarter, with declines in almost half of U.S. cities, the National Association of Realtors said.

The median price for houses and condominiums slid 1.8 percent to $212,300 in the first three months of this year, the lowest since the first quarter of 2005 when it was $199,700, the Chicago- based real estate trade group said. The median price for a single- family home fell in 62 of 145 metropolitan areas.

Tumbling prices sparked an increase in sales as bargain shoppers snapped up the cheaper properties. Seasonally adjusted, home sales rose 2.4 percent to an annualized 6.41 million from 6.26 million in the fourth quarter, the association said. Compared with a year earlier, the number of sales fell 6.6 percent.

``The market is clearing itself as the lower prices lead to less supply,'' said Michael Darda, chief economist at MKM Partners LP in Greenwich, Connecticut. ``Over time that will help to bring supply and demand into equilibrium.''


Anonymous said...

hold chrysler for nine years, a/the means of mass production, and get 8 billion for your 36 billion investment???????? yet the dow is at record highs?/ housing,produces nothing but money?//?... and goes up?/??

tim_cognito said...

Remember Daimler pulled a ton of cash out of Chrysler's balance sheet while they held it so reports of a "loss" aren't so accurate.