Sacramento California crashing home prices and exploding inventory graphs

OK, I'm having a tough time reading these two graphs. Not sure if I see much of a trend. How 'bout you? I guess if you look real hard. Oh, I give up. I guess I'll just go ask a REALTOR to tell me what they mean.

Inventory can't possibly be exploding at such an amazing rate. Prices can't possibly be in such a panicked freefall. Suzanne researched it! Lawrence Yun says this is a normal market. Bernanke says the worst is behind us. Bob Toll says we hit bottom. RealtyTimes reports now is a great time to buy. And we all know that real estate is always a great investment, and that the Property Ladder only goes up and up and up and up.

Or not.

By the way, take this housing data research website for a spin of the bubble cities. You'll be amazed. It's ugly out there.

Miami Florida property crash: You may never see something like this again in your lifetime

One of the ugliest housing / property crashes in the history of the US is happening in condo-crazed Miami Florida. As this Bloomberg headline story points out, in the middle of the crash, builders are still building. And there are no buyers.

Fuel to the fire my friends. Fuel to the fire. Summed up nicely with this realtor quote: ``This is dumbfounding to me,'' Rosser said. ``It's a building boom in the middle of a housing bust.''

Anyone want to guess the percent downfall from peak to trough? 20%? 30%? 50%? 80%?

When the dust settles, this dot-condo flameout will be a crash for the ages. Miami may see the worst fall - yes, even bigger than Vegas or Phoenix.

Well done Miami. Well done.

Miami Condo Glut Pushes Florida's Economy to Brink of Recession

July 20 (Bloomberg) -- In the middle of the biggest glut of condominiums in more than 30 years, Miami developers keep on building.

The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s, and help push Florida's economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody's Economy.com, who owns a home in Vero Beach, Florida.

``Florida is the epicenter for all the problems that exist in the housing industry,'' said Lewis Goodkin, president of Goodkin Consulting Corp. and a property adviser in Miami for the past 30 years, who also foresees a recession. ``The problems we have now are unprecedented and a lot of people will get burnt.''

Thirty-seven new high-rise condos and 20,000 new units are being built in Miami's 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC in Deerfield Beach, Florida. That's the most unsold units since McCabe began tracking sales in 2002.

While the housing industry is responsible for 10.6 percent of the nation's jobs, in Florida it accounts for 20 percent, Zandi said. Florida construction jobs fell 2.9 percent in May to 626,200 from the peak in June 2006, according to the U.S. Bureau of Labor Statistics.

``All those jobs are going away now, and we're seeing the trickle-down effect in declining sales in big-box retailers and home-furnishing manufacturers,'' McCabe said. ``Florida is headed to a recession.''

``The market is as close to a depression as Miami has seen in 30 years,'' Eichner said. ``There's a gargantuan supply of homes and the overwhelming preponderance were built for speculators, not for people who are living there.''

As much as half of those putting down deposits for Miami condos are speculators looking to flip units, or sell them quickly for a profit without living in them, said McCabe of McCabe Research.

With sale prices falling, McCabe said he expects up to 50 percent of them to walk away from their deposits in the next 18 months rather than complete the sales.

Many ``flippers'' closed on their units and now can't sell them, said Michael Cannon of Integra Realty Resources-Miami Inc., leaving completed condo towers with floors of dark windows and empty balconies.

The skyline of Miami is visible from Key Biscayne, the barrier island where John Rosser lives. Some nights the real estate broker scans the new buildings and sees more dark windows than lighted.

``This is dumbfounding to me,'' Rosser said. ``It's a building boom in the middle of a housing bust.''

A message from HousingPANIC to out of control homebuilders and Desperate Homedebtors

Homebuilders: Keep building. Keep adding inventory to the fire. Keep pumping out houses nobody wants, nobody can afford and nobody can get financing for anymore.

Desperate Homedebtors: Keep asking for prices that no sane person would pay. Keep holding out for that price you "deserve". Keep hoping against hope. Keep reading realtor blogs.

Why, you ask, would HP ask such a thing?

Because unsold and unwanted housing inventory will continue to build and build and build and build and build and build and build and build and build and build some more...

And then home prices will crash back to the level where the fundamentals will make sense again.

Toxic buildup in slumping housing market - Home builders are fighting the shrinking demand ... by adding more supply

CENTRAL VALLEY, Calif. - How do you deal with excessive supply? Add more supply!

Sounds like a head scratcher, but that’s exactly what home builders are doing.

The housing market hasn’t seen any light at the end of the tunnel: Home builders have built too many homes and they've had too many cancellations. There are too many existing homes on the market competing with them, and now here come the foreclosures adding to supply.

Though homes don’t sell, home builders are building fast in some places.

You might wonder why home builders would dig larger holes for themselves.

Standard Pacific won't comment for the story, saying the company is in the quiet period before posting earnings. But Ara Hovnanian, CEO of home builder Hovnanian Enterprise said recently that building Spec homes is about the only way to liquidate land these days.

"It's easier to sell land by popping a house on it than it is to just sell land because there are just not many buyers out there," he said.

Florida condo bust: Buyers vs. builders and here come the lawyers

It's amazing when you see someone walk away from a $340,000 deposit rather than close on the condo. Shows you what the place is really worth (or not worth)

Anyone want to guess what % drop we'll see on Florida condo prices?

As Condos Rise in South Florida, Nervous Investors Try to Flee

As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.

“Motivated” sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.

“I get two or three of these calls a day,” said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.

The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.

But demand has dropped markedly, and people who thought they could “flip” condos — buying, then selling for a steep profit before construction is done — are parting with that fantasy. After years of stunning price increases — 25 percent in the West Palm Beach-Boca Raton area, for example, from March 2005 to March 2006 — condo prices have started dropping.

UK stamp tax on home sales freezes up the market

Another reason why buying a home here in the UK is a fool's game - up to 4% "stamp tax" every time you buy.

Seriously.

So buy that £500,000 home (you know, a 1-bedroom closet), and you're already down £20,000, plus your estate agent fee and other closing costs, say another £20,000.

All this does is makes people less inclined to move (i.e. afraid to move), as they know buying a new place is gonna hurt on taxes and fees. Which helps freeze up the market, likely helping drive up prices to the crazy point they're at today.

Ah, you gotta love it when government policy distorts a market.

Stamp duty 'hits property market'

Increased stamp duty has made house prices more volatile and reduced property transactions by as much as 500,000, according to research.

The CEBR study concludes: “As property prices rise in relation to incomes, one would expect demand to slacken and the upward pressure on prices to subside.

“But estate agents believe that a key factor currently sustaining house price inflation is that there is a lack of supply of suitable houses.

“Clearly part of the problem is the lack of new build – as a country we have been building about 60,000 fewer properties a year than would be necessary to stabilise the house price average earnings ratio.

“And this has been largely caused – as the Barker review has pointed out – by planning regulations and social housing requirements. But another aspect of the problem is an unwillingness to put existing houses on the market because of stamp duties.

I have no idea how the realtortrolls, permabulls and NAR can spin their way out of this one: Unsold Home Inventory Soars as Housing Bubble Deflates

Demand is tanking (people know homes will be cheaper tomorrow)

Supply is exploding (as homedebtor panic sets in).

The available pool of homedebtors is shrinking (thank you subprime wipeout)

It's significantly cheaper to rent than buy today (it's always about the P/E)

Jobs are going away (thank you housing crash vicious circle)

Consumer confidence is plunging (housing crash, oil prices, jobs, iraq)

There should be so surprises to HP'ers. Everything is going exactly as it should. Exactly as it always does post-mania, post-bubble, post-Ponzi Scheme. It was all in the book. Now what will we do with all these damn houses?

Housing glut: From bad to worse - Some markets have seen a tripling of property listings since the housing market has cooled.

CNNMoney.com -- The number of homes for sale in major markets ballooned in April, according to a new industry report, adding further evidence that the U.S. housing slump is still trying to find a bottom.

In April, there were 743,367 existing house and condo properties listed for sale in the 18 major metro areas tracked by ZipRealty, a California-based real estate broker.

That was up 33 percent from a year earlier and 7.2 percent higher than in March.

Some of the markets ZipRealty covers suffered far bigger inventory expansions than the total jump. Los Angeles reported a 39.7 percent leap since April of 2006, Miami climbed 53.9 percent and Seattle soared 63.2 percent.

The year-over-year stats only tell part of the story. Many of the areas covered had already experienced a significant sales slowdown and an expansion of the number of homes for sale well before April 2006.

The once remarkably hot Las Vegas metro market, for example, now has more than double the number of homes on the market - 26,243 compared with 13,238 - than it did in September 2005, when the local housing market was near its peak.

In Los Angeles, inventory has more than tripled since July 2005, as it has in Miami since October 2005. In Phoenix, there were 50,062 homes for sale during April, compared with 11,656 in July 2005, for more than a threefold jump.

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.''

Vacancy rate soars, millions of houses and apartments sit empty, inventory of unsold homes builds, and homebuilders keep adding fuel to the fire

Supply. Demand. Inventory. Prices.

Any questions? It's just Econ 101 folks, playing out to perfection.

From the Businomics blog:

Add together homeowner vacant and rental vacant and we've got a 1.5 million housing units vacant ABOVE NORMAL VACANCY RATES.

OK, what's normal annual demand for new housing? Counting population growth, vacation homes, demolitions and changes in family size, I peg demand at about 1.7 million units. I know that others have estimated demand at 1.6 or 1.8 million units, so let's be generous and use a high number like 1.8 million. Current housing starts are 1.5 million, plus another 0.1 of manufactured housing, so we're underbuilding by 0.2 million units a year now. At that pace, we work off the excess inventory in only 7.5 years.

I don't claim a high degree of precision in these estimates, but they are certainly in the ballpark. And they say quite decisively that the housing problem won't be over next year, or probably even the year after.

Business planning implications: Stay away from the housing construction supply chain. Look for price declines in markets that are relatively overbuilt and undergrowing.

Harsh but true: "You should be happy if you can get '04 prices."

Ah, gotta love it. We're dialing back the clock, and it's 2004 part time again! Soon it'll be 2003. Then 2002. Then 2001. Then 2000. Then 1999....

House buyers driving discounts - Flood of inventory results in some offers below asking price

"With flooding inventory out there, it's not uncommon to see offers at 10 percent below asking price," said Greater Milwaukee Association of Realtors President Dave Schmidt Jr.

Double that price cut if the property is in danger of foreclosure, said Robert A. Jansen, president of the Milwaukee listing service ForeclosuresWI.com.

Post-boom conditions have put home buyers in the driver's seat, agents report, and they've flattened sales prices.

"We're seeing many people writing offers at 10 percent to 20 percent below asking price. Buyers are less afraid to insult sellers," said Roy Scholtka, broker-owner of HomeSale Realty in West Allis.

"Everybody I talk to is wondering, 'Why isn't my house selling?' It's because they're still thinking they should be getting 5 percent price appreciation a year," Moore said. "You should be happy if you can get '04 prices."

A HousingPANIC Message for the REALTORS (ramen-eating real estate clerks) of America

I'm baaaaccckkk... Now where do I even begin? Here's one for starters, a thought for our real estate clerk friends.

Dear REALTORS of America,

It has come to our attention that unsold home inventory is at record levels, with more and more homes are being put on the market every week, and we're just getting started. This is called "exploding supply".

It also appears that home sales velocity has plummeted, as people have come to realize that you and the NAR were lying, and that real estate values can fall. People aren't buying anymore (even if they could - thank you subprime implosion), since the smart people know the same house will be cheaper next month or next year. This is called "plummeting demand".

Now, when supply is rocketing, and demand is cratering, there's this third variable called "price" that gets impacted. For homes to sell, the prices will need to come down. Drastically. And this is your job now, to help Desperate Homedebtors understand that nobody wants their home anymore, especially at last year's price.

So, it's time to do the unimaginable. It's time for you, REALTORS of America, to embrace HousingPANIC. Make HP your friend, not your enemy.

Send your sellers the link to HP. Help them understand that the game is up, homes are insanely overvalued, the fundamentals do matter, and if they want out from under their debt trap, they're gonna have to cut the price, cut it bigtime, and cut it now. And if they don't it'll get even worse tomorrow. Trust us.

Then send your prospective buyers the link to HP. Help them understand that now is a great time to buy - at 50% off. Teach them all about foreclosures, lowballing, and Desperate Homedebtors. Then get out there and lowball!

Finally, listen to the HP community when it comes to The Corrupt David Lereah, the NAR, and the usual REALTOR spin. At your next REALTOR gathering, be the one who calls for TCDL's resignation. Next time the media interviews you, or you blog, write about what a joke the NAR, your fellow REALTORS, and TCDL have become. And try telling the truth for a change - it can only help at this point. Yes, telling the truth is against your normal business model, but times have changed.

I know the idea of embracing HP is like eating glass to many of you. But at least you'd be eating something! Good luck out there. Now get those prices down - they're gonna crash anyway, so wouldn't you rather it be sooner rather than later?