Housing: 2007 Thread.

[dullard]

I'm not going to put as much work into this any more. I'll still update it monthly, around the end of the month/beginning of the next month.

Animated roller coaster of inflation adjusted housing prices.

Picture format will be more dominant to keep upkeep small in 2007.

Picture uses final data if available, revised data if final isn't available, and preliminary data for the latest data point. Final data can sometimes be found at realtor.org. An Excel least squares linear fit is overlaid.


Existing Home Sales This is the biggest fraction of housing sales.
[*]Aug 2007: 5.5M.
[*]Existing home sales fall 0.2%, July 2007 - 5.75M. Supply of homes is at a 16-year high after the number of homes for sale soared.
[*]Existing home sales plummet again to multi-year lows, June 2007 - 5.75M. Revised 5.76M. But this is important, prices are just below the all time high. Inventory of homes also shrank. Possible cause: people got frustrated with sales, and pulled the houses OFF the market that weren't getting offers up to expectations. Net result: lower sales, lower inventory, and higher average price of those that did sell.
[*]Existing home sales flat, May 2007 - 5.99M. Revised to 5.98M. Prices are slightly under last year's levels for 10 months straight.
[*]Existing home sales fall, Apr 2007 - 5.99M. Revised: 6.01M. They are now at a ~4 year low. Prices are down a touch from last year, but basically they are flat.
[*]Existing home sales fall 8.4%, Mar 2007 - 6.12M. Revised 6.15M. This ends the recent increase in existing home sales and it is the lowest point since I've recorded data. See the graph. Prices are down from this time last year, but only by 0.3%. However, this marks 8 months straight where house prices are down from year-ago levels.
[*]Existing home sales rise 3.9%, Feb 2007 - 6.69M annual rate preliminary data. Revised 6.68M. The pace of sales is now almost to where it was a year ago. However, prices are still below last year's levels.
[*]Existing home sales rise 3%, Jan 2007 - 6.43M. Revised: 6.44M. However, prices fall 3%. Prices are now over 8% below their peak just last summer.
[*]Existing home sales fall, Dec 2006 - 6.22M. Revised: 6.27M.

New Home Sales Note: New home sales are a minor fraction of all housing sales.
[*]Aug 2007: 0.80M.
[*]New home sales up 2.8%, July 2007 - 0.87M annual rate preliminary data.
[*]New home sales down 6.6%, June 2007 - 0.83M. Revised 0.85M. They are nearly at a multi-year low.
[*]New home sales down 1.6%, May 2007 - 0.92M. Revised: 0.89M.
[*]New home sales soar up, Apr 2007 - 0.98M. Revised: 0.93M. But it took a 11% price drop to do so.
[*]New home sales up a bit, Mar 2007 - 0.86M. Revised lower to 0.83M.
[*]New home sales keep falling, Feb 2007 - 0.85M. Revised lower to 0.84M.
[*]New home sales plunge 16.6%, Jan 2007 - 0.94M. Revised even lower to 0.89M. They fell so low that I needed to rescale my graph to a new multi-year new home sales low.
[*]New home sales up, Dec 2006 - 1.12M. Revised: 1.02M.

New Home Starts
[*]Aug 2007: 1.33M.
[*]New home starts are down 6.1%, July 2007: 1.38M annual rate, preliminary data
[*]New home starts are up 2.8%, June 2007: 1.47M. New home permits plunge to 10-year low.
[*]New home starts down a bit, May 2007: 1.47M. Revised: 1.43M. But, they have been basically flat for 8 months now.
[*]New home starts are basically flat, Apr 2007: 1.53M. Revised: 1.51M.
[*]New Home starts are basically flat, Mar 2007: 1.52M. Revised: 1.49M.
[*]New home starts up, Feb 2007: 1.53M. Revised: 1.51M. Revised: 1.49M.
[*]New home starts down, Jan 2007: 1.41M. Revised: 1.40M. The housing starts are continuing their year-long near-linear drop from their peak. Starts haven't been this low since August 1997.
[*]New home starts up, Dec 2006: 1.64M.[/b] Revised: 1.63M.

 

[Slew Foot]

Some nice graphs you got there.
Sacramento is destroyed in terms of housing prices. I took a 30 min walk and found t about 20 homes newly on the market for sale and three homes with foreclosure notices that I didnt notice 2 weeks ago.

 

[dullard]

New data today includes preliminary data for all of 2006, see link in original post.

[*]Existing homes sold for all of 2006 dropped 8.4% from all of 2005.
[*]Median price for all of 2006 was 1.0% higher than from all of 2005.

In other news, foreclosures are up 42% for the year.

 

[TraumaRN]

Record numbers of foreclosures in Metro Detroit

In Macomb County, the number of foreclosure filings nearly tripled, from 2,755 in 2005 to 8,192 last year, translating to one home for every 39 in the county.

? In Oakland County, Michigan's wealthiest county, the number jumped from 3,754 in 2005 to 7,282, meaning one of every 68 homes.

? In Wayne County, the number of filings more than doubled, from 18,176 to 40,220, translating to one of every 21 homes. That, RealtyTrac said, is higher than any county in any of the nation's largest metropolitan areas.

Foreclosures soar in 2006
Macomb County

2006: 8,192
2005: 2,755

UP: 197% :shocked: :shocked: :shocked:

Oakland County
2006: 7,282
2005: 3,754

UP: 94%

Wayne County

2006: 40,220
2005: 18,176

UP: 121%

On the flip side....this is good for me and my g/f since we're looking to buy our first home hopefully by the end of the year.

 

[LegendKiller]

As far as the whole-loan sale market goes and interest rate outlook.


1. HomeEQ market is looking OK for this month. However, many believe that next month might be worse with Q2 really tanking.

2. The market believes that the fed meeting on 1/31 won't produce any loosening of rates. The next meeting only has a 6% expectation of loosening.

If oil stays low you'll see no loosening from the Fed. However, if foreclosures go up, then rates will also go up in response to increased risks, leading to a further erosion of refi gains.

 

[dmcowen674]

Thee who builds houses of cards do not expect to weather wind.

 

[nullzero]

Subprime lenders are going out of business in droves, from so many bad loans made over the past few years. Subprime lender out of business tracker http://ml-implode.com/.

 

[Thump553]

Real estate cycles like nearly every other investment or commodity. With the rare exception of post-WWII to 1970 or so, it has always cycled up and down.

We are in a downturn now, that much is obvious. My feeling now is that is not as serious as the last two cycles I professionally lived through. This time we don't have factors like the S&L meltdown or regional depression (remember the collapse of the Houston and Dallas markets?). I'm guessing 2007 will be semi-stagnant, baring any major outside factors (like an oil embargo, region-wide MidEast war, etc.).

I'm predicting the next downturn after this will be a dowsy, though. Far too many people, including aging baby boomers, have mortgaged their homes to the hilt, especially because of the easy second mortgages/lines of credit available today. When the next cycle turns down there are going to be a lot of retiring baby boomers with very little equity cushion in their homes. People won't be able to support a McMansion's mortgage(s) on a retiree's wages at McDonalds.

There probably will be something of a shakeout this time in the mortgage broker field, but there are too many of those around anyway.

 

[Genx87]

No biggie for me. I got in on my 30 year for under 5% in summer of 05.
Ill wait it out, I hate moving anyways. Might have to find some land though for future builds

 

[Thump553]

Originally posted by: Genx87
No biggie for me. I got in on my 30 year for under 5% in summer of 05.
Ill wait it out, I hate moving anyways. Might have to find some land though for future builds

The value for unbuilt land (or even moreso, undeveloped land) is far more erratic than that for built up property. Last I looked no lender around here would touch unbuilt developed lots for less than 50% down.

A good analogy would be the difference between playing the stock market and playing the penny stock market.

 

[Genx87]

Originally posted by: Thump553

Originally posted by: Genx87
No biggie for me. I got in on my 30 year for under 5% in summer of 05.
Ill wait it out, I hate moving anyways. Might have to find some land though for future builds

The value for unbuilt land (or even moreso, undeveloped land) is far more erratic than that for built up property. Last I looked no lender around here would touch unbuilt developed lots for less than 50% down.

A good analogy would be the difference between playing the stock market and playing the penny stock market.

Where is here?

 

[dullard]

I haven't posted this type of study before. A separate city price measurement showed 17/20 cities had lower prices in Nov 2006. It appears the unweighted average price in those cities that fell was -0.6%. Of the three cities that increased, the unweighted average increase was 0.3%. "'Country-wide, home price declines appear to show no signs of slowing down,' said Robert Shiller, chief economist at MacroMarkets LLC, in a release."

It looks like the price decline is definately affecting most areas of the nation. Of course, some areas will always be exceptions to any national housing rule.

 

[OS]

slew of bad housing news this week;

"Plummeting commissions thin real estate's ranks"

link

"Real-estate agents hang up blazers amid slump"

link

"HSBC Says Bad-Loan Charges to Exceed Analysts' Estimates by 20%"

link

"Housing slide continues"

link

"HSBC fires US executives as it works to get Household in order"

link

"Toll's Orders Plunge, Forecasts Larger Land Writedown"

link

"Homebuilders feel Phoenix's pain"

link

"Mortgage Lenders Battered by Late Payers"

link

 

[Schadenfroh]

Still strong here, probably due to Katrina and people bailing from the coast / NOLA.

 

[BlancoNino]

If houses decline in price, why is that necessarily a bad thing? What about people looking to move somewhere but can't afford a house?

 

[imported_Shivetya]

Originally posted by: BlancoNino
If houses decline in price, why is that necessarily a bad thing? What about people looking to move somewhere but can't afford a house?

if its resales its bad because people may end up losing equity they have built up in the years. It also can hurt new home buyers is the market trends downward further because their investment will take longer to become a positive one.

other notes, the number of stupid loans (sub prime, over 100%, and such) is a major reason for foreclosures. When refinanced just a few years ago the lawyer told me I was the first person that day with a standard loan (went to 15 then). I was there at 1pm!!!

There are far too many of these options mortgages, interest only, and over 100% (some as high as 107, and combo loans, for the market to be sustained. The people who bought my home last year did a 80/10/10. While I was glad to sell my home their financing arrangements shows that they really should not have been buying a home at the price range they did.

In my immediate area (Dallas, Ga) there are 3 subdivisions that are close together. One has a sign out for 6 months no payment and builder pays all closing. This on top of a full appliance deal and blinds. Another offers 10,000 incentives, full appliances, and such. The one I live in is all appliances, no payments 3 months, and blinds. My subdivision has 9 homes sold, 11 standing spec homes, and 36 empty lots. The next one has 1 home sold, 1 under contract, 18 standing spec homes, and 300+ empty lots. Across the street, 20 spec homes, one under contract, 90 empty lots.

Not a great business to be in at times.

 

[LegendKiller]

It's getting bad here in the western burbs of DC. Prices have already fallen ~10% with declines continuing.

A bit of anecdotal evidence of the impending fall.

Last year when my wife and I relocated from FL we decided to rent for at least two years to allow the market to shake out. We looked at larger corporate owned developments and didn't find anything we liked. We decided to go with a lease by-owner condo, I had initial trepidations about going with a single person, since that presents you with significant risk, but I was convinced otherwise by my wife and a few other people.

We went ahead and signed a 2-year lease with a woman who was a successful realtor, who also owned the place next to ours and a few other places. The building is about 2 years old in a great part of town, at the hub of a booming downtown area. At lease singing she asked me why we weren't buying, I said because the impending downturn, which she scoffed at.

Time goes on and things go well, stuff gets broken and she fixes most of it. A few times she asks for the rent sooner rather than later, which we had no problem. We didn't notice much until there was a summons on the other condo, which wasn't rented out. I looked at it and found it was from the HOA.

A few weeks ago our access to the garage was shut off, I went to the office to find out why. While it was a mistake, we found out that the impending access blockage was a reality, because our landlord owed the HOA almost 20k in back fees. They are suing her in court to force all rent into escrow to pay down the back fees. If that doesn't work they will try and foreclose.

We also know that she is trying to refi but has been turned down by several lenders.


This is exactly what I thought would happen and I know it's not just my condo. If she goes down she brings 5 places with her and I know she is not alone. This economy is living on borrowed time and the housing bust has only begun.

 

[smack Down]

Originally posted by: BlancoNino
If houses decline in price, why is that necessarily a bad thing? What about people looking to move somewhere but can't afford a house?

Like any asset failling prices are good for buyers but bad for sellers. It is also bad for the economy because the number of transactions is reduced, and increases interest rates.

 

[smack Down]

Originally posted by: LegendKiller
It's getting bad here in the western burbs of DC. Prices have already fallen ~10% with declines continuing.

A bit of anecdotal evidence of the impending fall.

Last year when my wife and I relocated from FL we decided to rent for at least two years to allow the market to shake out. We looked at larger corporate owned developments and didn't find anything we liked. We decided to go with a lease by-owner condo, I had initial trepidations about going with a single person, since that presents you with significant risk, but I was convinced otherwise by my wife and a few other people.

We went ahead and signed a 2-year lease with a woman who was a successful realtor, who also owned the place next to ours and a few other places. The building is about 2 years old in a great part of town, at the hub of a booming downtown area. At lease singing she asked me why we weren't buying, I said because the impending downturn, which she scoffed at.

Time goes on and things go well, stuff gets broken and she fixes most of it. A few times she asks for the rent sooner rather than later, which we had no problem. We didn't notice much until there was a summons on the other condo, which wasn't rented out. I looked at it and found it was from the HOA.

A few weeks ago our access to the garage was shut off, I went to the office to find out why. While it was a mistake, we found out that the impending access blockage was a reality, because our landlord owed the HOA almost 20k in back fees. They are suing her in court to force all rent into escrow to pay down the back fees. If that doesn't work they will try and foreclose.

We also know that she is trying to refi but has been turned down by several lenders.


This is exactly what I thought would happen and I know it's not just my condo. If she goes down she brings 5 places with her and I know she is not alone. This economy is living on borrowed time and the housing bust has only begun.

I think you can kiss your security deposit good bye.

 

[JD50]

Originally posted by: smack Down

Originally posted by: BlancoNino
If houses decline in price, why is that necessarily a bad thing? What about people looking to move somewhere but can't afford a house?

Like any asset failling prices are good for buyers but bad for sellers. It is also bad for the economy because the number of transactions is reduced, and increases interest rates.

Also, most people looking to buy a house are probably trying to sell their old house.

 

[LegendKiller]

Originally posted by: smack Down

Originally posted by: LegendKiller
It's getting bad here in the western burbs of DC. Prices have already fallen ~10% with declines continuing.

A bit of anecdotal evidence of the impending fall.

Last year when my wife and I relocated from FL we decided to rent for at least two years to allow the market to shake out. We looked at larger corporate owned developments and didn't find anything we liked. We decided to go with a lease by-owner condo, I had initial trepidations about going with a single person, since that presents you with significant risk, but I was convinced otherwise by my wife and a few other people.

We went ahead and signed a 2-year lease with a woman who was a successful realtor, who also owned the place next to ours and a few other places. The building is about 2 years old in a great part of town, at the hub of a booming downtown area. At lease singing she asked me why we weren't buying, I said because the impending downturn, which she scoffed at.

Time goes on and things go well, stuff gets broken and she fixes most of it. A few times she asks for the rent sooner rather than later, which we had no problem. We didn't notice much until there was a summons on the other condo, which wasn't rented out. I looked at it and found it was from the HOA.

A few weeks ago our access to the garage was shut off, I went to the office to find out why. While it was a mistake, we found out that the impending access blockage was a reality, because our landlord owed the HOA almost 20k in back fees. They are suing her in court to force all rent into escrow to pay down the back fees. If that doesn't work they will try and foreclose.

We also know that she is trying to refi but has been turned down by several lenders.


This is exactly what I thought would happen and I know it's not just my condo. If she goes down she brings 5 places with her and I know she is not alone. This economy is living on borrowed time and the housing bust has only begun.

I think you can kiss your security deposit good bye.

Yeah, we have already written that off, along with our 500 pet deposit.

 

[dmcowen674]

Originally posted by: smack Down

Originally posted by: LegendKiller
It's getting bad here in the western burbs of DC. Prices have already fallen ~10% with declines continuing.

A bit of anecdotal evidence of the impending fall.

Last year when my wife and I relocated from FL we decided to rent for at least two years to allow the market to shake out. We looked at larger corporate owned developments and didn't find anything we liked. We decided to go with a lease by-owner condo, I had initial trepidations about going with a single person, since that presents you with significant risk, but I was convinced otherwise by my wife and a few other people.

We went ahead and signed a 2-year lease with a woman who was a successful realtor, who also owned the place next to ours and a few other places. The building is about 2 years old in a great part of town, at the hub of a booming downtown area. At lease singing she asked me why we weren't buying, I said because the impending downturn, which she scoffed at.

Time goes on and things go well, stuff gets broken and she fixes most of it. A few times she asks for the rent sooner rather than later, which we had no problem. We didn't notice much until there was a summons on the other condo, which wasn't rented out. I looked at it and found it was from the HOA.

A few weeks ago our access to the garage was shut off, I went to the office to find out why. While it was a mistake, we found out that the impending access blockage was a reality, because our landlord owed the HOA almost 20k in back fees. They are suing her in court to force all rent into escrow to pay down the back fees. If that doesn't work they will try and foreclose.

We also know that she is trying to refi but has been turned down by several lenders.


This is exactly what I thought would happen and I know it's not just my condo. If she goes down she brings 5 places with her and I know she is not alone. This economy is living on borrowed time and the housing bust has only begun.

I think you can kiss your security deposit good bye.

But but but this is the fantastic economy Republicans in here insists is the greatest ever.

 

[dmcowen674]

Originally posted by: Shivetya

Originally posted by: BlancoNino
If houses decline in price, why is that necessarily a bad thing? What about people looking to move somewhere but can't afford a house?

if its resales its bad because people may end up losing equity they have built up in the years. It also can hurt new home buyers is the market trends downward further because their investment will take longer to become a positive one.

other notes, the number of stupid loans (sub prime, over 100%, and such) is a major reason for foreclosures. When refinanced just a few years ago the lawyer told me I was the first person that day with a standard loan (went to 15 then). I was there at 1pm!!!

There are far too many of these options mortgages, interest only, and over 100% (some as high as 107, and combo loans, for the market to be sustained. The people who bought my home last year did a 80/10/10. While I was glad to sell my home their financing arrangements shows that they really should not have been buying a home at the price range they did.

In my immediate area (Dallas, Ga) there are 3 subdivisions that are close together. One has a sign out for 6 months no payment and builder pays all closing. This on top of a full appliance deal and blinds. Another offers 10,000 incentives, full appliances, and such. The one I live in is all appliances, no payments 3 months, and blinds.

My subdivision has 9 homes sold, 11 standing spec homes, and 36 empty lots. The next one has 1 home sold, 1 under contract, 18 standing spec homes, and 300+ empty lots. Across the street, 20 spec homes, one under contract, 90 empty lots.

Not a great business to be in at times.

When I brought this up back in 2003 in here (I lived in Georgia at the time), the resident Republicans said the above is not possible and I was full of sh!t.

You must be on drugs Shivetya because your fellow resident Republicans say so.

 

[ShotgunSteven]

On the news this morning they were talking about how banks made too many mortgage loans and many people were unable to pay their ARM's now.

On another real estate note, certain ATOT members swore up and down that the housing market would never cool off. They said it never had, and that it never would. Of course, their only knowledge of real estate is from a course they got through an infomercial, and their knowledge of the housing market is limited to their one purchase that they made after moving out from their parents' basement.

 

[LegendKiller]

Originally posted by: ShotgunSteven
On the news this morning they were talking about how banks made too many mortgage loans and many people were unable to pay their ARM's now.

On another real estate note, certain ATOT members swore up and down that the housing market would never cool off. They said it never had, and that it never would. Of course, their only knowledge of real estate is from a course they got through an infomercial, and their knowledge of the housing market is limited to their one purchase that they made after moving out from their parents' basement.

Not to mention that more than a few were also somehow involved in RE.

It's interesting that HSBC said that it's loan loss reserves came in 20% higher than projected by analysts. HSBC lends to lower credit quality obligors, so we are starting to see an effect.