A return to pre-boom norm is going to require prices return to the pre-boom norm. What will motivate a buyer to buy over rent when buying is more expensive and there isn't massive apperaication?
A return to pre-boom norm is going to require prices return to the pre-boom norm. What will motivate a buyer to buy over rent when buying is more expensive and there isn't massive apperaication?
I'd agree with you, except for the fact that CA is not an anachronism in this boom/bust cycle. There are far too many areas that acted like CA and now have to come down. This, on average, will drag the whole country down.
If you read my post above, it's not just fringe people thinking this anymore, the capital markets are getting worried and are responding by looking for ways to hedge their investments, CDS is one of the better ways and they are starting to use them.
Vic
Elite Member
- Jun 12, 2001
- 50,422
- 14,337
- 136
This is more complicated than you make it out to be. As you imply but don't say when you compare prices to rents, by "prices" you mean monthly payments. When home values were low, interest rates were high. Low interest rates and creative financing packages are one thing that helped home values rise. Provided those remain available, buying over renting is in most markets not that much more dramatically expensive over renting on a monthly payment basis than is historical, and new buyers don't have to come up with a large down payment like they used to.
On your other point, anyone who buys rather than rents for the "massive appreciation" hasn't done the math. The reason to own is to not have a landlord. Rent or buy, someone has to own the property, that someone may as well be you.
Lastly, if prices do crash, rents will go up as that market gets flooded. As most investment owners have been buying purely on speculation of appreciation (because you can actually profit on investment property, unlike your primary residence), many (most) have been renting at negative cashflow.
Heh I'll be doing this in the Spring. My theory is, if somebody pays what I am asking I win. If nobody wants to come upto my level then I continue to live in my nice house
Slew Foot
Lifer
- Sep 22, 2005
- 12,379
- 96
- 86
New York Times Article on how prices are worse than they appear:
What Statistics on Home Sales Aren?t Saying
Article Tools Sponsored By
By DAVID LEONHARDT
Published: December 6, 2006
Down in Naples, Fla., a fast-growing city on the Gulf of Mexico, there was an auction of houses about a month ago.
Skip to next paragraph
Related
More on Housing Prices (December 5, 2006)
Reader Responses to the Column (December 6, 2006)
An auction isn?t the usual way to sell a home, but it can make sense for people who don?t want to leave their houses on the market for months at a time and also don?t want to take the first offer to come along. So on a Saturday morning inside the Naples Beach Hotel and Golf Club, a few dozen houses went on the block in front of about 500 audience members.
Based on the official housing statistics, you might have guessed that the sellers would have made out just fine, despite all the talk of a real estate slump. According to one widely followed real estate index ? tabulated by the government agency that regulates Fannie Mae and Freddie Mac ? the average house in Naples sold for 20 percent more this summer than it would have a year earlier.
But that wasn?t what happened at the auction. In fact, if you were at the beach club that Saturday, you could have been excused for thinking that the real estate market was crashing.
One three-bedroom ranch house with a pool sold for $671,000. In 2005, the same house sold for $809,000. Another house, just steps from Naples Bay, sold for $880,000 at the auction., compared with $1.35 million a year earlier. On average, the houses that changed hands at the auction had fallen about 25 percent in value since 2005, according to Thomas Lawler, a real estate consultant who analyzed the auction?s results.
Now, Naples is not a typical housing market. House prices nearly tripled in the first half of this decade, and speculators, who are more likely than residents to sell a house in a panic, flooded into the area in recent years. But with that said, Naples is not as unusual as you may think.
The truth is that the official numbers on house prices ? the last refuge of soothing information about the real estate market on the coasts ? are deeply misleading. Depending on which set you look at, you?ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year. But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept.
In reality, homes across much of Florida, California and the Northeast are worth a lot less than they were a year ago. The auction in Naples may have exaggerated the downturn in the market there, but not by much. Tom Doyle, a Naples real estate agent, estimated that a typical house there, sold in the normal way, would go for about 20 percent less than it did the previous fall.
In the Boston area, prices have fallen about 10 to 15 percent since the middle of 2005, estimated Chobee Hoy, who owns a real estate brokerage firm in Brookline. Jerome J. Manning, who runs the Massachusetts-based auction company that conducted the Naples sale, told me he thought that values had dropped about 20 percent around Boston. (The government, meanwhile, says the average price rose 1 percent from last summer to this summer. But here?s all you need to know about how well the government tracks the Boston market: the index excludes any mortgage larger than $417,000.)
In September of last year, Ms. Hoy sold a one-bedroom condominium in Brookline for $395,000. She recently sold another apartment of the same size in the same building for $300,000. Since March, her firm has been listing a house in the Fisher Hill neighborhood of Brookline that cost $995,000 when it last sold, in the summer of 2004. Ms. Hoy expects it to sell this time for less than $900,000.
The market in northern Virginia is similar: prices are down 10 to 15 percent, according to an analysis by Mr. Lawler, a former Fannie Mae executive who?s based there. In Portland, Me., the typical house has lost about 10 percent of its value in the last year and a half, said Bill Trask, the former head of the local Realtors? board.
In New York City, where co-op boards generally bar the door to absentee speculators and creative mortgages, prices seem to have slid a bit in the last few months, but only to roughly their 2005 levels. In the New York suburbs, though, values have fallen perhaps 10 percent or more since last year. Prices also appear to be down in Sacramento and San Diego.
For many homeowners, of course, the decline doesn?t much matter. They didn?t really benefit from the run-up, and they won?t suffer from the decline. And for any renters hoping to buy a home, the fall in prices is downright good news.
Unfortunately, there are also a lot of families that took on huge mortgage debts based on the ephemeral peak values of their properties. In effect, they cashed in on the housing boom without cashing out. As Ed Smith Jr., the chief executive of Plaza Financial Group, a mortgage brokerage firm near San Diego, said, ?So many people picked up their homes, turned them upside down and shook them like a piggy bank.?
The withdrawals have been so big that the average household in Boston now has slightly less equity in its home than it did in 2000, according to an analysis by Moody?s Economy.com that took inflation into account. And that analysis used the house prices reported by the National Association of Realtors, which appear to be more accurate than the government?s data right now but are still too rosy.
Then there are the people who bought their homes in the last couple of years and made almost no down payment. Many of them may now be underwater, owing more on their mortgages than their houses are worth.
Most worrisome, growing numbers of these families are falling behind on their mortgage payments, and they won?t be able to bail themselves out by refinancing or selling their homes. ?We?re now going to combine a high amount of debt with falling home values,? said Mark Zandi, chief economist of Economy.com.
For the broader economy, this may turn out to be just a hiccup. Big piles of debt can often look scarier than they really are. Then again, the housing slump of 2006 may also be the start of something larger. Mr. Zandi considers it to be ?the most significant threat to the global expansion.?
Over the last few decades, the world?s financial system has endured a crisis roughly once every three or four years. There was the stock market crash of 1987, the Asian and Mexican meltdowns in the 1990s, the dot-com implosion of 2000 and, most recently, the aftermath of Sept. 11, 2001. We may now be living on both borrowed money and borrowed time.
E-mail: leonhardt@nytimes.com
What Statistics on Home Sales Aren?t Saying
Article Tools Sponsored By
By DAVID LEONHARDT
Published: December 6, 2006
Down in Naples, Fla., a fast-growing city on the Gulf of Mexico, there was an auction of houses about a month ago.
Skip to next paragraph
Related
More on Housing Prices (December 5, 2006)
Reader Responses to the Column (December 6, 2006)
An auction isn?t the usual way to sell a home, but it can make sense for people who don?t want to leave their houses on the market for months at a time and also don?t want to take the first offer to come along. So on a Saturday morning inside the Naples Beach Hotel and Golf Club, a few dozen houses went on the block in front of about 500 audience members.
Based on the official housing statistics, you might have guessed that the sellers would have made out just fine, despite all the talk of a real estate slump. According to one widely followed real estate index ? tabulated by the government agency that regulates Fannie Mae and Freddie Mac ? the average house in Naples sold for 20 percent more this summer than it would have a year earlier.
But that wasn?t what happened at the auction. In fact, if you were at the beach club that Saturday, you could have been excused for thinking that the real estate market was crashing.
One three-bedroom ranch house with a pool sold for $671,000. In 2005, the same house sold for $809,000. Another house, just steps from Naples Bay, sold for $880,000 at the auction., compared with $1.35 million a year earlier. On average, the houses that changed hands at the auction had fallen about 25 percent in value since 2005, according to Thomas Lawler, a real estate consultant who analyzed the auction?s results.
Now, Naples is not a typical housing market. House prices nearly tripled in the first half of this decade, and speculators, who are more likely than residents to sell a house in a panic, flooded into the area in recent years. But with that said, Naples is not as unusual as you may think.
The truth is that the official numbers on house prices ? the last refuge of soothing information about the real estate market on the coasts ? are deeply misleading. Depending on which set you look at, you?ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year. But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept.
In reality, homes across much of Florida, California and the Northeast are worth a lot less than they were a year ago. The auction in Naples may have exaggerated the downturn in the market there, but not by much. Tom Doyle, a Naples real estate agent, estimated that a typical house there, sold in the normal way, would go for about 20 percent less than it did the previous fall.
In the Boston area, prices have fallen about 10 to 15 percent since the middle of 2005, estimated Chobee Hoy, who owns a real estate brokerage firm in Brookline. Jerome J. Manning, who runs the Massachusetts-based auction company that conducted the Naples sale, told me he thought that values had dropped about 20 percent around Boston. (The government, meanwhile, says the average price rose 1 percent from last summer to this summer. But here?s all you need to know about how well the government tracks the Boston market: the index excludes any mortgage larger than $417,000.)
In September of last year, Ms. Hoy sold a one-bedroom condominium in Brookline for $395,000. She recently sold another apartment of the same size in the same building for $300,000. Since March, her firm has been listing a house in the Fisher Hill neighborhood of Brookline that cost $995,000 when it last sold, in the summer of 2004. Ms. Hoy expects it to sell this time for less than $900,000.
The market in northern Virginia is similar: prices are down 10 to 15 percent, according to an analysis by Mr. Lawler, a former Fannie Mae executive who?s based there. In Portland, Me., the typical house has lost about 10 percent of its value in the last year and a half, said Bill Trask, the former head of the local Realtors? board.
In New York City, where co-op boards generally bar the door to absentee speculators and creative mortgages, prices seem to have slid a bit in the last few months, but only to roughly their 2005 levels. In the New York suburbs, though, values have fallen perhaps 10 percent or more since last year. Prices also appear to be down in Sacramento and San Diego.
For many homeowners, of course, the decline doesn?t much matter. They didn?t really benefit from the run-up, and they won?t suffer from the decline. And for any renters hoping to buy a home, the fall in prices is downright good news.
Unfortunately, there are also a lot of families that took on huge mortgage debts based on the ephemeral peak values of their properties. In effect, they cashed in on the housing boom without cashing out. As Ed Smith Jr., the chief executive of Plaza Financial Group, a mortgage brokerage firm near San Diego, said, ?So many people picked up their homes, turned them upside down and shook them like a piggy bank.?
The withdrawals have been so big that the average household in Boston now has slightly less equity in its home than it did in 2000, according to an analysis by Moody?s Economy.com that took inflation into account. And that analysis used the house prices reported by the National Association of Realtors, which appear to be more accurate than the government?s data right now but are still too rosy.
Then there are the people who bought their homes in the last couple of years and made almost no down payment. Many of them may now be underwater, owing more on their mortgages than their houses are worth.
Most worrisome, growing numbers of these families are falling behind on their mortgage payments, and they won?t be able to bail themselves out by refinancing or selling their homes. ?We?re now going to combine a high amount of debt with falling home values,? said Mark Zandi, chief economist of Economy.com.
For the broader economy, this may turn out to be just a hiccup. Big piles of debt can often look scarier than they really are. Then again, the housing slump of 2006 may also be the start of something larger. Mr. Zandi considers it to be ?the most significant threat to the global expansion.?
Over the last few decades, the world?s financial system has endured a crisis roughly once every three or four years. There was the stock market crash of 1987, the Asian and Mexican meltdowns in the 1990s, the dot-com implosion of 2000 and, most recently, the aftermath of Sept. 11, 2001. We may now be living on both borrowed money and borrowed time.
E-mail: leonhardt@nytimes.com
The following article is from the Wall Street Journal's Dec 9, 2006 issue. I believe it is related to the current discussion but don't understand the ramifications. I'll be curious to hear comments from the folks here.
CREDIT MARKETS
DOW JONES REPRINTS
Mortgage Sector Withstands Subprime's Fallout
Derivative Index Absorbs Most of the Blow So Far From Two Lenders' Failures
By DANIELLE REED and ANUSHA SHRIVASTAVA
December 9, 2006; Page B5
The failure of two subprime lenders since the beginning of December is sending shock waves through the mortgage-bond market, but so far a derivative index is absorbing most of the fallout.
The slowing housing market this year has pressured the most vulnerable homeowners. Investors in their loans, which have been repackaged into bonds, have been on alert all year for signs borrowers are buckling.
Considered a leading indicator of investor sentiment, the asset-backed derivative index, which tracks the cost of protecting subprime mortgage bonds, blew out this week as investors scrambled to insulate themselves from losses.
"People have been concerned about these mortgage companies," said Derrick Wulf, portfolio manager for Dwight Asset Management Co. in Burlington, Vt.
Agoura, Calif.-based Ownit Mortgage Solutions, which made mortgage loans to borrowers with less-than-perfect credit, announced Wednesday it was shutting its doors due to "unfavorable conditions of the mortgage industry."
This followed on the heels of an announcement last week that Texas-based subprime lender Sebring Capital was shutting down due to similar pressures.
Several investors and analysts mentioned speculation that other subprime companies could follow suit in short order.
Still, multibillion-dollar bond deals backed by subprime loans continued to be sold Friday, with investors demanding higher premiums.
"The market does not shut down because of one lender closing," said one trader. "The sky is not falling."
Outside of the $1 trillion subprime market, investors in the much larger mortgage-backed securities market -- and notably in AAA-rated bonds or bonds guaranteed by housing finance agencies Fannie Mae and Freddie Mac -- were sanguine.
"It hasn't impacted" investors in AA or AAA-rated bonds, said Art Frank, a director in the MBS strategy group at Barclays Capital in New York.
For these investors, as well as for investors in agency-guaranteed mortgage bonds, he said, the widening of risk premiums in the subprime market could even conceivably be a positive, as it might cause investors to shift into less-risky, higher-rated securities, in what is called a flight-to-quality trade.
That said, the broader mortgage market is not immune by any means from pressures building in the subprime market, analysts said. Risk premiums for certain BBB-minus tranches of mortgage bonds backed by Alt-A (or near prime) loans that are "jumbo," or too large in size to be guaranteed by Fannie Mae or Freddie Mac, have widened about one percentage point since October, Mr. Frank said, with about 0.75 percentage point of that widening occurring since mid-November.
This is an indication that there is some potential spillover from the subprime market, Mr. Frank said.
Even for highly-rated mortgage bonds guaranteed by housing-finance agencies there is the potential for some impact from the concerns in the subprime market.
Mainly, the issue here is that Wall Street firms -- which have been acquiring subprime mortgage lenders of late -- now have exposure to the sector, said Walt Schmidt, senior vice president and manager of mortgage products and strategy for FTN Financial Capital Markets in Chicago.
If the firms were to experience losses at lenders they have ownership interests in, it could well curb their appetite for buying any number of different assets, including mortgage bonds, Mr. Schmidt said. There could be "some spread widening just based on that," he said.
Treasury Bond Prices Fall
U.S. Treasury bond prices ended lower Friday after a stronger-than-expected jobs report painted a picture of a still healthy labor market.
At 4 p.m., the benchmark 10-year note was down 18/32 point, or $5.625 per $1,000 face value, at 100 17/32. Its yield rose to 4.559% from 4.491% Thursday. The 30-year bond fell 29/32 to 97 12/32, to yield 4.665%.
Write to Danielle Reed at danielle.reed@dowjones.com1
URL for this article:
http://online.wsj.com/article/SB116559501589944722.html
Hyperlinks in this Article:
(1) mailtoanielle.reed@dowjones.com
CREDIT MARKETS
DOW JONES REPRINTS
Mortgage Sector Withstands Subprime's Fallout
Derivative Index Absorbs Most of the Blow So Far From Two Lenders' Failures
By DANIELLE REED and ANUSHA SHRIVASTAVA
December 9, 2006; Page B5
The failure of two subprime lenders since the beginning of December is sending shock waves through the mortgage-bond market, but so far a derivative index is absorbing most of the fallout.
The slowing housing market this year has pressured the most vulnerable homeowners. Investors in their loans, which have been repackaged into bonds, have been on alert all year for signs borrowers are buckling.
Considered a leading indicator of investor sentiment, the asset-backed derivative index, which tracks the cost of protecting subprime mortgage bonds, blew out this week as investors scrambled to insulate themselves from losses.
"People have been concerned about these mortgage companies," said Derrick Wulf, portfolio manager for Dwight Asset Management Co. in Burlington, Vt.
Agoura, Calif.-based Ownit Mortgage Solutions, which made mortgage loans to borrowers with less-than-perfect credit, announced Wednesday it was shutting its doors due to "unfavorable conditions of the mortgage industry."
This followed on the heels of an announcement last week that Texas-based subprime lender Sebring Capital was shutting down due to similar pressures.
Several investors and analysts mentioned speculation that other subprime companies could follow suit in short order.
Still, multibillion-dollar bond deals backed by subprime loans continued to be sold Friday, with investors demanding higher premiums.
"The market does not shut down because of one lender closing," said one trader. "The sky is not falling."
Outside of the $1 trillion subprime market, investors in the much larger mortgage-backed securities market -- and notably in AAA-rated bonds or bonds guaranteed by housing finance agencies Fannie Mae and Freddie Mac -- were sanguine.
"It hasn't impacted" investors in AA or AAA-rated bonds, said Art Frank, a director in the MBS strategy group at Barclays Capital in New York.
For these investors, as well as for investors in agency-guaranteed mortgage bonds, he said, the widening of risk premiums in the subprime market could even conceivably be a positive, as it might cause investors to shift into less-risky, higher-rated securities, in what is called a flight-to-quality trade.
That said, the broader mortgage market is not immune by any means from pressures building in the subprime market, analysts said. Risk premiums for certain BBB-minus tranches of mortgage bonds backed by Alt-A (or near prime) loans that are "jumbo," or too large in size to be guaranteed by Fannie Mae or Freddie Mac, have widened about one percentage point since October, Mr. Frank said, with about 0.75 percentage point of that widening occurring since mid-November.
This is an indication that there is some potential spillover from the subprime market, Mr. Frank said.
Even for highly-rated mortgage bonds guaranteed by housing-finance agencies there is the potential for some impact from the concerns in the subprime market.
Mainly, the issue here is that Wall Street firms -- which have been acquiring subprime mortgage lenders of late -- now have exposure to the sector, said Walt Schmidt, senior vice president and manager of mortgage products and strategy for FTN Financial Capital Markets in Chicago.
If the firms were to experience losses at lenders they have ownership interests in, it could well curb their appetite for buying any number of different assets, including mortgage bonds, Mr. Schmidt said. There could be "some spread widening just based on that," he said.
Treasury Bond Prices Fall
U.S. Treasury bond prices ended lower Friday after a stronger-than-expected jobs report painted a picture of a still healthy labor market.
At 4 p.m., the benchmark 10-year note was down 18/32 point, or $5.625 per $1,000 face value, at 100 17/32. Its yield rose to 4.559% from 4.491% Thursday. The 30-year bond fell 29/32 to 97 12/32, to yield 4.665%.
Write to Danielle Reed at danielle.reed@dowjones.com1
URL for this article:
http://online.wsj.com/article/SB116559501589944722.html
Hyperlinks in this Article:
(1) mailto
anielle.reed@dowjones.com
Vic
Elite Member
- Jun 12, 2001
- 50,422
- 14,337
- 136
The subprime market has been assaulted by rampant fraud as the housing market has cooled. Desperate and dishonest sellers, realtors, and brokers have been pawning their junk off in the subprime sector, and some lenders have been badly burned.
This shake-up doesn't concern me as it will send a message to the rest of the industry to clean up their act in the face of this fraud threat. And some states, lacking proper regulatory enforcement despite having a lot of law on the books (Georgia and New York, I'm talking to you), and are going to find that fewer and fewer lenders are going to be willing to risk doing business there, and their housing markets will suffer that much more.
This shake-up doesn't concern me as it will send a message to the rest of the industry to clean up their act in the face of this fraud threat. And some states, lacking proper regulatory enforcement despite having a lot of law on the books (Georgia and New York, I'm talking to you), and are going to find that fewer and fewer lenders are going to be willing to risk doing business there, and their housing markets will suffer that much more.
Are you going to include your fellow Republicans in your rant?
The ones that got billions in monopoly money to build massive empty subdivisions all over the Country?
Of course you won't.
Speaking of sub-prime lenders. 10 of them are on the market to the highest bidder, nobody, not even i-banks which are really getting into principal finance, are buying. This is pretty interesting for one huge reason, whole-loan sales.
Usually, if a company finances a bunch of loans they don't have the capital to keep them, so they sell them off. However, they usually carry some representations and warranties, along with several covenants. One of the more major ones are early payment defaults. If they get too high with a group of loans sold, then the purchaser can "put" or automatically cause them to be sold back to the originator.
Many of these pools are getting close to hitting those triggers, causing the puts to trigger and companies to become insolvent as they can't repay the money. It's already happening to several companies and this is just the beginning.
Usually, if a company finances a bunch of loans they don't have the capital to keep them, so they sell them off. However, they usually carry some representations and warranties, along with several covenants. One of the more major ones are early payment defaults. If they get too high with a group of loans sold, then the purchaser can "put" or automatically cause them to be sold back to the originator.
Many of these pools are getting close to hitting those triggers, causing the puts to trigger and companies to become insolvent as they can't repay the money. It's already happening to several companies and this is just the beginning.
Vic
Elite Member
- Jun 12, 2001
- 50,422
- 14,337
- 136
Dave, intentional misrepresentation is the same as lying. When doing do as an assault on character, it's even worse. When the attempt is transparently false, as your attempts always are, you only make yourself look bad.
In other words, this post here of yours is why people call you a troll and a moron. I know I'm wasting my time and bandwidth by even mentioning what I'm going to mention to you next, but... I'm not a Republican, as you know all too well, and I'm a mortgage professional with a great deal of experience on this very issue. In fact, my GF is a subprime secondary underwriting manager who has daily hands-on experience in exactly this arena. So I contributed expert, non-partisan, non-political commentary to this thread, and you retorted with some moronic partisan bit of ignorant uninformed garbage. Ergo, you're a troll and a mindless sheep, baa-ing loudly whenever any informed and relevant discussion might take place to distract from your mindless agenda. Kindly STFU.
- May 21, 2001
- 25,913
- 4,506
- 126
November 2006 new and existing home sales numbers are both up. That makes 5 months in a row that the total home sales have been basically the same. Does this mean that the housing sales slump is over?
Note: just because the total number of homes sold has leveled, doesn't mean that price will level any time soon. Existing prices are still down over 3% from this time last year.
Note: just because the total number of homes sold has leveled, doesn't mean that price will level any time soon. Existing prices are still down over 3% from this time last year.
SarcasticDwarf
Diamond Member
- Jun 8, 2001
- 9,574
- 2
- 76
techs
Lifer
- Sep 26, 2000
- 28,559
- 4
- 0
Any young person buying a house now will have to deal with the huge numbers of houses that will start hitting the market in 20 years as the number of retired boomers skrockets and they are forced to sell their homes to pay for their retirements.
So in 20 years or so the housing market may collapse completely and tens of millions of Americans may find their homes worth next to nothing.
So in 20 years or so the housing market may collapse completely and tens of millions of Americans may find their homes worth next to nothing.
Slew Foot
Lifer
- Sep 22, 2005
- 12,379
- 96
- 86
You still have to take the numbers with a grain of salt, as a couple weeks from now when no ones looking they'll be revised downward so that the Dec numbers can look like a rise has occured. That and 30-50% of new homes sold are cancelled before escrow closes.
?Builders sold new homes at a faster rate last month than they did in October, the Commerce Department reported yesterday. When the numbers are not seasonally adjusted, the number of new homes sold in November, 72,000, was the lowest in almost four years. Inventories, a 7.7-month supply unadjusted, were the highest since December 1995.?
Huh? I thought sales were up?
?Builders sold new homes at a faster rate last month than they did in October, the Commerce Department reported yesterday. When the numbers are not seasonally adjusted, the number of new homes sold in November, 72,000, was the lowest in almost four years. Inventories, a 7.7-month supply unadjusted, were the highest since December 1995.?
Huh? I thought sales were up?
- May 21, 2001
- 25,913
- 4,506
- 126
From the data in the OP, existing home sales were revised down 7 times, up 4 times, and the rest had no revision or I can't find a link to the original numbers. In many cases, the revisions were insignificant. Thus, boldly claiming it will definately be revised down is jumping to conclusions.
As for your 30%-50% number, I have no knowledge about that, so I can't comment on it. The important question is whether this 30%-50% statistic is growing AND if those who abandon don't decide to buy a house and exit the market entirely. If they don't exit and just buy another house, then all we are talking about is a lag and not a fundamental shift in housing.
My posts are all about the annually adjusted numbers (except price). If you choose to use unadjusted numbers, create your own thread. And anyways, two small ticks up within a 5 month pause does NOT mean numbers are going up. Don't look at the trees and forget you are in a forest, Slew Foot.
Slew Foot
Lifer
- Sep 22, 2005
- 12,379
- 96
- 86
The 30-50% figure has been tossed around by home builder CEO's for the last few month's, http://www.bloomberg.com/apps/news?pid=...er=columnist_sperling&sid=aEMGTIycjgH4
this article makes a mention of it.
From another article:
?Hovnanian Enterprises, New Jersey?s largest builder, on Dec. 18 reported a fourth-quarter loss on cancellations of new-home orders. Hovnanian customers canceled 36 percent of their contracts in the period, an increase of 25 percent, the company said.?
??We didn?t have this in other slowdowns, customers walking away,? CEO Ara Hovnanian said.?
My feeling is that people walk away when they realize that they can get a better deal somewhere else, or they realize that prices are falling and they decide to sit on the sidelines for a bit.
You probably wont see any meaningful changes in the market until the end of the first quarter next year, when everyone who was holding on to sell when the buyers return, will realize that there arent many buyers left.
On a semi-related note Laci Peterson's home sold for about a 10% price cut in a year while the flipper owner was being threatened with foreclosure. Expect this story to repeat itself throughout 2007.
http://news.yahoo.com/s/ap/20061228/ap_on_re_us/laci_peterson
this article makes a mention of it.
From another article:
?Hovnanian Enterprises, New Jersey?s largest builder, on Dec. 18 reported a fourth-quarter loss on cancellations of new-home orders. Hovnanian customers canceled 36 percent of their contracts in the period, an increase of 25 percent, the company said.?
??We didn?t have this in other slowdowns, customers walking away,? CEO Ara Hovnanian said.?
My feeling is that people walk away when they realize that they can get a better deal somewhere else, or they realize that prices are falling and they decide to sit on the sidelines for a bit.
You probably wont see any meaningful changes in the market until the end of the first quarter next year, when everyone who was holding on to sell when the buyers return, will realize that there arent many buyers left.
On a semi-related note Laci Peterson's home sold for about a 10% price cut in a year while the flipper owner was being threatened with foreclosure. Expect this story to repeat itself throughout 2007.
http://news.yahoo.com/s/ap/20061228/ap_on_re_us/laci_peterson
Dr. Detroit
Diamond Member
- Sep 25, 2004
- 8,467
- 872
- 126
If we are at a 8-month supply of unsold homes in November, and we are in the slowest home buying season, and we have buyers who have pulled their listings in favor of a spring boom and will relist then, what will March '07 bring us?
I think the long-term buyers are out there, but not the flippers. So the rate of home sales will be lower going forward unless price appreciation in the double-digits is seen again.
Will March'07 be a 12-month supply?
Thump553
Lifer
- Jun 2, 2000
- 12,836
- 2,620
- 136
Significant anecdotal evidence: (1) I just received an email from a title insurer warning that Mortgage Lenders Network USA, Inc. has just announced that it will not be funding any of the mortgage loans it currently has in the pipes and that it will attempt to farm them off to other lenders and (2) a friend, who works for another mortgage lender that was touted in our local newspaper maybe two months ago as going gangbusters, told me that a company wide email was sent out (just before the company Christmas party) warning that because of business downturns that major layoffs, possibly even down to a skeleton crew, were imminent.
I haven't seen these sort of things since the last real estate bust, and place far more weight on them than the happy news issuing from Washington.
I haven't seen these sort of things since the last real estate bust, and place far more weight on them than the happy news issuing from Washington.
Topic Title: Housing: Official thread.
Topic Summary: Dec 27,28: Nov new & existing sales up - have they leveled off?
No, the few people that had the means to put a house under the tree did so but it sure won't save the Republicans.
Defaults up 35% YoY
http://money.cnn.com/2007/01/16/real_es..._2005/index.htm?postversion=2007011711
Rates up
http://money.cnn.com/2007/01/17/real_es....reut/index.htm?postversion=2007011707
Not looking good.
http://money.cnn.com/2007/01/16/real_es..._2005/index.htm?postversion=2007011711
Rates up
http://money.cnn.com/2007/01/17/real_es....reut/index.htm?postversion=2007011707
Not looking good.
TRENDING THREADS
-
Discussion Zen 5 Speculation (EPYC Turin and Strix Point/Granite Ridge - Ryzen 9000)- Started by DisEnchantment
- Replies: 25K
-
Discussion Intel Meteor, Arrow, Lunar & Panther Lakes Discussion Threads
- Started by Tigerick
- Replies: 21K
-
Discussion Intel current and future Lakes & Rapids thread- Started by TheF34RChannel
- Replies: 23K
-
-
Facebook
Twitter