Existing Home Sales Rise, Prices Fall

[JS80]

Article

Does this mean prices are actually going down, or less McMansions are selling and people are buying smaller homes? That figure is useless...they should report cost/square feet.

Sales of existing homes posted a tiny increase in October, the first gain in eight months, but the median price of homes sold last month fell by a record amount.

The National Association of Realtors said Tuesday that existing home sales edged up 0.5 percent to a seasonally adjusted annual rate of 6.24 million. It marked the first sales increase since February.

However, the median, or midpoint, price for a home sold dropped to $221,000 in October, a decline of 3.5 percent from a year ago. That was the biggest year-over-year price decline on record. It marked the third straight month that home prices have fallen compared to the same period a year ago, the longest stretch of such declines on record.

 

[Squisher]

The prices here in the most depressed economy of Michigan prices have certainly fallen.

I've probably lost $30K on the house I bought in July of "05.

If you have the money to buy a house I don't see why you would hold back on buying the house you really want considering the buyer's market out there.

 

[iversonyin]

It's just mean that we are potentially at the bottom here....

"potentially"

 

[brxndxn]

IMO, the housing market hasn't even begun to correct yet. The housing market is a lot more liquid than people think since no one ever seems to take into account the high percentage of 2nd and 3rd houses owned by a single owner..

I still think houses are way overvalued.. So what if they went down 25% in the past 6 months.. They went up 200% in 3 years..

 

[dullard]

Your hypothesis can be rewritten as: big homes aren't being bought/sold. But why would that be? Why would people with big homes stop moving (ie stop selling the big homes)? Also, since the price drop occured in all four main regions, why would this pattern of people in big homes not moving exist in all of the local areas?

One thing to keep in mind is that this number is the median price of homes that have previously been sold. Thus, this is at least the second time that those homes have sold. The number does not reflect whether a lot of McMansions have been built recently or not.

Also, look at the inventory of homes. It has skyrocketted. Oct 2005: 4.9 months supply of homes. Oct 2006: 7.4 months supply. If supply goes up and demand doesn't match, prices go down.

Self-promoting link to my thread.

 

[Vic]

It's a great buyer's market out there right now. Rates are low, prices stable to even declining in some areas, and a lot of eager (to put it nicely) sellers.

Don't listen to the doomsayers. They're the kind who buy high and sell low.

 

[dullard]

Originally posted by: Vic
Don't listen to the doomsayers. They're the kind who buy high and sell low.

Why do you way that? In my opinion the doomsayers are the people who said don't buy at the all time high we recently reached and instead said wait to see if the prices fall. Now that the prices are falling/have fallen, the doomsayers (me included) think it is a better time to buy. Doomsayers want to buy low. They'd never buy high.

 

[Vic]

Originally posted by: dullard

Originally posted by: Vic
Don't listen to the doomsayers. They're the kind who buy high and sell low.

Why do you way that? In my opinion the doomsayers are the people who said don't buy at the all time high we recently reached and instead said wait to see if the prices fall. Now that the prices are falling/have fallen, the doomsayers (me included) think it is a better time to buy. Doomsayers want to buy low. They'd never buy high.

Many of today's doomsayers are the same people who, just a couple of years ago, were praising the housing boom and saying things like "you can't lose with real estate," etc.
The irrational pessimism that surrounds a crash is the flip side of the same coin as the irrational exhuberence that causes a boom.

 

[JS80]

Originally posted by: dullard

Originally posted by: Vic
Don't listen to the doomsayers. They're the kind who buy high and sell low.

Why do you way that? In my opinion the doomsayers are the people who said don't buy at the all time high we recently reached and instead said wait to see if the prices fall. Now that the prices are falling/have fallen, the doomsayers (me included) think it is a better time to buy. Doomsayers want to buy low. They'd never buy high.

If the real estate market "crashes" it mostly likely means the economy's in the shvtter and no one will be able to afford a home anyways.

I'm still hypothesizing that more smaller homes are selling and less mcmansions, hence the "median" home prices fell. I also hypothesize inventory won't have as much impact on future prices as the doomsayers because housing is not as liquid as commodities/stocks...owners can just refuse to sell and live in the darn house.

 

[chambersc]

home prices will fall -- from what i've read as much as 20%

 

[brandonbull]

Originally posted by: Vic

Originally posted by: dullard

Originally posted by: Vic
Don't listen to the doomsayers. They're the kind who buy high and sell low.

Why do you way that? In my opinion the doomsayers are the people who said don't buy at the all time high we recently reached and instead said wait to see if the prices fall. Now that the prices are falling/have fallen, the doomsayers (me included) think it is a better time to buy. Doomsayers want to buy low. They'd never buy high.

Many of today's doomsayers are the same people who, just a couple of years ago, were praising the housing boom and saying things like "you can't lose with real estate," etc.
The irrational pessimism that surrounds a crash is the flip side of the same coin as the irrational exhuberence that causes a boom.

These are the dum-dums that purchased homes above asking price, and they used one of those interest only loans.

 

[Chaotic42]

Originally posted by: chambersc
home prices will fall -- from what i've read as much as 20%

Let's hope so... With any luck, I might be buying a house in a couple of years.

 

[z42]

Originally posted by: JS80
Article

Does this mean prices are actually going down, or less McMansions are selling and people are buying smaller homes? That figure is useless...they should report cost/square feet.

I agree with you on the bolded part.

What is happening in my area is that sellers are finally accepting offers that are realistic instead of holding out for what they think their home is worth. After a few months of prices dropping, sellers are finally having realistic expectations. I have seen quite a few houses in my neighborhood that have been on the market for months finally sell because the asking price was lowered by 40-50k.

 

[Syringer]

Originally posted by: Vic
It's a great buyer's market out there right now. Rates are low, prices stable to even declining in some areas, and a lot of eager (to put it nicely) sellers.

Don't listen to the doomsayers. They're the kind who buy high and sell low.

Rates aren't nearly as low as they were a few years back.

 

[Vic]

Originally posted by: Syringer
Rates aren't nearly as low as they were a few years back.

Oh really? Do you even know what rates are right now? Or are you just one of those annoying types who thinks that 5.75% on a 30 fixed is high because for a brief couple months back in the spring of 2003 you could have gotten 5.25%?

 

[Rudee]

Here in Calgary, Alberta prices have risen dramatically in the last couple years. I have a townhouse which I am renting out and a home which I live in with my girlfriend, and both properties have increased a minimum of 40% in the last 2 years alone due to the economic boom here. We're considering selling both properties and moving out to the Okanogan in B.C and retiring in 10 years when we both hit the big 5-0.

 

[lokiju]

If you hold onto it long enough you'll get your investments worth.

 

[dullard]

Originally posted by: Syringer
Rates aren't nearly as low as they were a few years back.

Rates have dropped for months. They are about as low as they were at the beginning of this year. So much for the "Don't get a ARM loan doomsayers". (Hey, I had to take a shot at Vic somehow).

 

[IGBT]

..property flippers unrealisticly ran the home prices up so they could benefit. now a correction must take place so true values can be realized.

 

[dullard]

Originally posted by: lokiju
If you hold onto it long enough you'll get your investments worth.

Since you can say that about for just about anything in the world, does that make it a useless statement? It is common for it to take 10+ years for housing prices in a city to recover. It is not too uncommon for it to take 20+ years for housing prices in a city to recover if you consider inflation. Not many people can wait out a 10-20 year wait on a home. Especially if their job moves them out of the city. Since a home is more than just an investment (it is also a home), you can't use standard investment thinking alone.

 

[Dunbar]

Originally posted by: Vic

Originally posted by: Syringer
Rates aren't nearly as low as they were a few years back.

Or are you just one of those annoying types who thinks that 5.75% on a 30 fixed is high because for a brief couple months back in the spring of 2003 you could have gotten 5.25%?

I thought rates were in the low 4% range for a while? Or was that only on ARM's?

 

[Scarpozzi]

The interest rates will have to rise a little higher before the prices are going to fall...and that's primarily where the prices got REALLY bloated. In the $100-180 range, I don't expect to see it budge much.

 

[kranky]

I don't know what can be inferred from national statistics WRT home prices. The various local markets each have its own mini-economy. Some areas still have a long way to fall, others are stable, others are still rising.

I'm glad to live in Pittsburgh, where the median amount of income spent on housing is 15%. No boom, no bust.

 

[Vic]

Originally posted by: Dunbar

Originally posted by: Vic

Originally posted by: Syringer
Rates aren't nearly as low as they were a few years back.

Or are you just one of those annoying types who thinks that 5.75% on a 30 fixed is high because for a brief couple months back in the spring of 2003 you could have gotten 5.25%?

I thought rates were in the low 4% range for a while? Or was that only on ARM's?

That was only on ARMs. And it is true that ARM rates have gone up a bit. But fixed rates are still quite good.

 

[Syringer]

Originally posted by: Vic

Originally posted by: Dunbar

Originally posted by: Vic

Originally posted by: Syringer
Rates aren't nearly as low as they were a few years back.

Or are you just one of those annoying types who thinks that 5.75% on a 30 fixed is high because for a brief couple months back in the spring of 2003 you could have gotten 5.25%?

I thought rates were in the low 4% range for a while? Or was that only on ARM's?

That was only on ARMs. And it is true that ARM rates have gone up a bit. But fixed rates are still quite good.

http://realestate.yahoo.com/loans/rate_...l=on&state_code=CA&submit=Update+Chart

In case you didn't know, there's a strong correlation between ARMs and 15/30 year fixed rates.