November 29, 2007

FLASH: New home sales (supposedly) crater 23%, prices crash 13% vs. last year


Let that sink in a bit. New home prices without even including the massive builder incentives and cash-back have crashed 13% versus last year. On a highly leveraged asset like housing, that's bankruptcy or financial devastation for most new buyers who listened to realtors on commission last year instead of HP.

$500,000 home
-13% price decline or $65,000
-7% selling fee or $35,000
-10% incentives/cash back or $50,000
= $150,000 loss in 12 months

Should have rented.

Oh, nice to see our lazy, corrupt and incompetent MSM headline that new home sales were actually up this month. Seriously, someone take them out back and shoot them. The MSM no longer serve a purpose for society.

24 comments:

Malcolm said...

I disagree about the MSM not serving a purpose.

After all, without them….

1. How would we know who to be mad at all the time? How are we to have an opinion on a subject if we don’t have the MSM giving it to us?

2. Without the MSM, how would we know which candidates to laugh at?

3. What would happen to all the out of work comedians and actors if they couldn’t turn themselves into “financial experts.”

5. Without the MSM, where would the mortgage and investment companies go to generate new suckers…excuse me… I mean “new customers”.

Tony Soprano said...

Imagine the poor fools that put 20%down and are now underwater? That's some cold facts right there.

Anonymous said...

QWEEFER it's that "NEW MATH" they teach in schools these days. You know where there is no right answer as long as you feel good about yourself. So a 23% loss can be a 1.7% gain. It's all good as long as your self-esteem is not hurt.

Frank@Scottsdale-Sucks.com said...

Should have rented.

But then the desperate homedebtors would have no one to look down on to make themselves feel important.

Anonymous said...

(SFBJ) -- Florida has temporarily suspended withdrawals from a state-run investment pool after school boards and local governments, fearing its stability, withdrew $10 billion in recent weeks and $3 billion on Thursday.

The Florida Board of Administration voted Thursday afternoon to freeze the run on the fund -- which is managed by the State Board of Administration and had been at about $28 million before the wave of withdrawals -- to allow it time to review options, Palm Beach County Clerk of Circuit Court and Comptroller Sharon Bock said. Palm Beach County had money in the fund, but began drawing down its $26 million investment in June when its own investigations suggested the fund might be tainted by the mortgage meltdown.

Anonymous said...

(SFBJ) -- Counties, city pull funds from state pool

Miami-Dade and Broward counties and the city of Pompano Beach pulled millions of dollars from a state-run investment pool, reacting to the news that the money market fund held more than $700 million in downgraded debt.

"There was some bad press, and we are not in the business of risking public funds," Miami-Dade Finance Director Rachel Baum said.

The Bloomberg news service reported Wednesday that local governments and school districts yanked $8 billion out of the State Board of Administration-managed fund -- more than 30 percent of its assets.

Wednesday evening, the SBA said it will recommend the board of trustees adopt a plan to assure investors that the pool "will provide safety of principal in the absence of market liquidity." This includes providing credit protection against the potential for default by about $1.5 billion in securities from Axon Financial, KKR Pacific, OTTIMO Funding and Countrywide, continued restructuring of investments to become more liquid and conservative, and building a larger reserve fund.

Anonymous said...

Nothing says good fundamentals for a market rally like these news:

BANKRUPTCY FILINGS THROUGH FIRST THREE QUARTERS OF 2007 ECLIPSE LAST YEAR’S TOTALS

November 19, 2007, Alexandria, Va.— The 623,399 total U.S. bankruptcies filed during the first three quarters of 2007 (Jan. 1 – Sept. 30) represented a 40.16 percent increase over the 444,789 cases filed over the same period in 2006, according to data released today by the Administrative Office of the U.S. Courts. The totals for both consumer and business filings during the first three quarters of 2007 also eclipsed those reached for the full calendar year of 2006.

“Bankruptcies are up sharply from a year ago this period, reflecting a growing vulnerability in household economics,” said ABI Executive Director Samuel J. Gerdano. “The continued stress on the housing market will likely fuel a continuation of this trend into 2008.”

Filings by individuals or households with consumer debt increased 40.15 percent to 603,139 for the nine-month period ending Sept. 30, 2007, from 430,364 filings during the same period in 2006.


http://tinyurl.com/343st2

Anonymous said...

It's the old same trick over again:

1. month N : publish number of sales S(N)
2. month N+1: publish number of sales S(N+1) with S(N+1)<S(N)
3. simultaneously alter S(N) downward so that S(N+1)>S(N)
4.enjoy your housing sales "edging up"

It's been going on for several months now. I wonder when "Analysts" will get it...

zackattack said...

"But then the desperate homedebtors would have no one to look down on to make themselves feel important."

November 29, 2007 9:46 PM


I really dont understand the attitudes about rent vs. buy

I dont fucking care who owns and who rents. this is not a measure i use in judging ones value or status. I usually use what a person orders to drink at a bar to judge their value and status

Anonymous said...

zack sounds like a bitter loser renter...it's like the nerds in school who say they don't care what others think...yeah sure whatever you say Poindexter

Anonymous said...

just got off the phone with a buddy who "bought" a place in Cave Creek (30mi N. of Phoenix)about 2 years ago. He paid $291,000 for a three bdrm/2.5 bath.

EVERY HOUSE IS THE SAME in his neigborhood -- so boring. There are NO nice restaurants, or entertainment without driving down to PHX, which can take a hour in traffic. Anyway, he now has to move back to CA for a job. He always assumed that he had made about $70K on his home, and of course I never had the heart to tell him otherwise.

Today he called up asking me if I'd ever heard of zillow.com; of course I have. Apparently the price of "his" house has dropped from $359K to $319K in just the last six months. An 11% drop in just six months. I didn't have the heart to tell him that zillow is a lagging price, and that it was probably down at least another 5-10% from there. I could hear the fear in his voice when he told me that he'd be lucky to break-even after all the transaction costs associated with moving in and then selling two years later.

I told him to be aggressive and sell it asap. Worse thing he could do is walk the price down with the market. I explained to him that if the market price goes below the mortgage balance (he's paid zero principal in two years by the way) then he'd be on the hook for the difference. I'm honestly not sure if he even has *any* liquidity to pay the difference. CRAZY!!!

pwnd

Anonymous said...

I usually use what a person orders to drink at a bar to judge their value and status

I, on the other hand, check if the person is wearing a Coach handbag.

coke adds life said...

Kieth -

Unless I'm missing something, I'd not count the 7% "selling fee" until the home is resold, and then at the lower basis. Plus, repos don't include that charge.

Coke Out.

Anonymous said...

They actually crash 17% in 8 months! Have a look: http://jimmydoomsday.blogspot.com/2007/11/new-home-prices-crash-17-in-8-months_29.html

Anonymous said...

I'd like to say I think your blog is great and I've been reading it every day for the last few months. I also check out other similar blogs but I think this one is the best.

I was a software developer until 2 years ago when I retired and became a real estate agent, mostly because I hated paying those excessive 6% commissions when selling my own properties. I've learned many things being an "insider" in the real estate market. First, obviously, is that there are good agents and bad agents. The bad agents are always thinking about their own commissions and not their client's interests, know very little but act like they're experts and give bad advice. The good agents are knowledgable and can be very valuable to a client, especially if a transaction begins to sour. However, they're still not worth 6%. There are way too many agents in the country, their fees are excessive due to their control over the MLS databases, it's too easy to get a license and they're fighting new internet based companies that are trying to lower commissions.

Next, I don't think many agents, loan brokers, etc. saw the severity of this downturn coming. Everybody knew it was becoming a bubble and would eventually level off (or even turn down a little), but between the bubble, the sub-prime crisis, the resulting huge number of foreclosures and the loss of all that easy money it's become much worse than anyone I know would have predicted, whether in the real estate business or not. I do get annoyed though on all those talking points we're supposed to use to convince buyers that now is a good time to buy. I know I personally wouldn't buy anything right now. But a lot of the risk in financial markets is people's attitudes. If everyone stops buying then we'll be in a self-fulfilling prophecy and heading towards a major recession. If people can be convinced to go out and buy then we could avoid a downturn. So that's why we're always hearing that now is the best time to buy. That and the fact they need those commissions to contintue to pay their own mortgages and feed their own families.

I do think some areas of the county are going to be hit pretty hard and their real estate prices may drop by 25-50% but I think most of the country will see much smaller drops. I also think the Fed has to balance the value of the dollar and inflation with the risk of recession. I'm sure they think it's better to have a medium sized fall in the dollar with higher inflation and a mild recession then a full blown depression or total collapse of the dollar. Even though you hate Bernanke, I think he's doing the right thing.

Anyway, I enjoy your blog, even though I'd say you swing way over to the pessimist side on many occassions and I'll be hoping you don't turn out to be right.

Anonymous said...


I usually use what a person orders to drink at a bar to judge their value and status


I usually order a soda because I'm allergic to alcohol

Frank@Scottsdale-Sucks.com said...

I dont fucking care who owns and who rents. this is not a measure i use in judging ones value or status.

I don't either, but most desperate homedebtors who post on this board are insecure enough to think that "owning" makes them superior.

just got off the phone with a buddy who "bought" a place in Cave Creek (30mi N. of Phoenix)about 2 years ago. He paid $291,000 for a three bdrm/2.5 bath.

EVERY HOUSE IS THE SAME in his neigborhood -- so boring. There are NO nice restaurants, or entertainment without driving down to PHX, which can take a hour in traffic.


Oh dear god, who the hell moves to Cave Creek? LOL!! A broker was telling me that even before the crash began, Cave Creek, Carefree, and far North Scottsdale were already losing value due to everyone who was sick of the commute and remoteness selling to move to P.V. and Arcadia instead.

Anonymous said...

My question to the software developer: How do you 'become' a Real Estate agent?

Is that like 'becoming' a prostitute or 'becoming' a pedophile?

Really, I'd like to know, so that if I ever exhibit those symptoms I will know to seek medical attention immediately...

shakster said...

Ok ,check it out.
I was in Bakersfield Today to pick up materials,and this radio show comes on.Real Estate show for the local B-field area.The two hosts avoided the real stories in favor of Ted Turners latest purchase of a gazzillion acres in Nebraski,but in doing so they revealed that they were card carrying R/E agents,that a wildlife refuge is really a wildlife REFUGEE(seriously Tom Petty),and that Ogalalla is pronounced Ogabalalalala.I did not know that(Johnny Carson).Making Bfield Peoud.OH yeah,and if you think lower prices in Real Estate are good ,then you're the problem.
Ignoring the real live disaster happening to so many home buyers seems to be the solution.Wow,how simple.
Solution to the housing problem- 1st know that it is happening
2nd Every FB needs to turn in the keys,and tell the Countrywides that if they want a deal then they will have to write a new contract.Then go Lowballen,Hardballen all up in them.Turnabout is fair play,the banks knew the risks,and the FBs had BK as an option which they should excercise.With all the wrecked credit ratings among the borrowers out there the new Excellent Fico score will be 200.They started it,they wrote the rules,they can eat it.They gambled that they could get the Consumer on the hampster wheel,but it didn't work.As for us bailing them out,don't blame the buyers,the bank wrote the rules,and we who do pay the taxes in the end got no backbone to resist an out n out fraud. TOO BAYADDD.

Shakster said...

The Homecoming Queen's gotta gun!

Anonymous said...

Anon 12:14 said
Anyway, I enjoy your blog, even though I'd say you swing way over to the pessimist side on many occassions and I'll be hoping you don't turn out to be right
-----------------------------
Pessimist side? Fu*k you loser. This website is actually optimistic. Its going to get a lot worse than what most people imagine...because of A-holes like you that screwed it for the rest of us!

Princess Mononoke said...

It's like invasion of the body snatchers... and

HPer's still haven't been infected or in some cases we have just woken up!

Anonymous said...

Frank@Scottsdale-Sucks.com said...
Should have rented.

But then the desperate homedebtors would have no one to look down on to make themselves feel important.

November 29, 2007 9:46 PM

-----------------------------------

Frank- im just a state educated guy that reads most of these posts but its OBVIOUS that you suffered some kind of personal psychological blow to your perceived idea of manhood by either
an economic better or a woman (probably a good one - from scottsdale)

dude- it becomes more transparent every time you post here!

Anonymous said...

Anyway, I enjoy your blog, even though I'd say you swing way over to the pessimist side

Have you heard that story about two brothers who open their presents on xmas? One asks the other, "What did you get?" One of the boys answers, "I got a beautiful bike". The other brother opens the box and finds a can full of sh!t, as his brother asks, "What about you, what have you gotten?" The brother answers, "I've gotten a horse, have you seen it, have you seen it?"