‘A Buyers Market With Plentiful Supply’: NAR
The existing home sales numbers are out. “Sales of existing homes fell in June for the eighth time in the past 10 months while home prices edged up at the slowest pace in more than a decade, more signs that the housing market has slowed dramatically. The median price of a home sold last month was $231,000. That was up 0.9 percent from June 2005 and represented the smallest year-over-year price gain since May 1995.”
“Total existing home sales declined 1.3 percent to a seasonally adjusted annual rate1 of 6.62 million units in June from an upwardly revised level of 6.71 million May. Last month’s sales were 8.9 percent below the 7.27 million-unit pace in June 2005.”
“‘The change in price performance is directly tied to housing inventories, a year ago we had a lean supply of homes and a sellers’ market,’ David Lereah, NAR’s chief economist said. ‘Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.’”
“Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.”
“Existing condominium and cooperative housing sales were 14.6 percent below the 943,000-unit level in June 2005. The median existing condo price3 was $226,900 in June, down 2.1 percent from a year earlier.”
“Regionally, existing-home sales in the Midwest were 6.2 percent lower than a year ago. The median price in the Midwest was $175,000, which is 1.7 percent below June 2005. Existing-home sales in the West also were 17.1 percent lower than June 2005. The median price in the West was the same as a year ago.”
“Existing-home sales in the South were 5.5 percent below June 2005. The median existing-home price in the South was $191,000, down 0.5 percent from a year earlier. Existing-home sales in the Northeast declined 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.”
“NAR President Thomas M. Stevens said opportunities have opened for home buyers. ‘People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,’ said Stevens. ‘Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.’”
Existing home for-sale inventory, from the PDF file on the NAR press release:
2,270,000 2003
2,224,000 2004
2,678,000 Jun 2005
2,756,000 July
2,841,000 Aug
2,772,000 Sept
2,868,000 Oct
2,924,000 Nov
2,846,000 Dec
2,883,000 Jan 2006
2,985,000 Feb
3,198,000 Mar
3,415,000 Apr
3,589,000 May
3,725,000 Jun
“The 1.3 percent decline represented the third drop in a row and the eighth in the past 10 months. The inventory of unsold homes rose to a new record of 3.725 million units. Analysts believe that the growing level of unsold homes will further depress prices in coming months.”
“Lereah said he believed price weakness will continue as sellers start cutting their asking prices in the face of weaker demand and rising inventories. He said that housing continued to be a “tale of two markets” with previously hot areas experiencing declines and more modestly priced areas showing a boom.”
We are only in the first inning and these clowns have already started to sing a much different tune. Wait until we hit the 7th inning stretch and Lie-reah starts carrying a “Will Work For Food SIgn”!
NOW IS THE TIME TO BUY! Now is always the time to buy. It’s a buyer’s market. Step right up and pick your house. Houses for everyone.
They need the market to move up or down and not stagnate. Right now it’s a Mexican standoff and sellers are just beginning to budge. They have to change the psychology of the market that prices ALWAYS go up. They created this monster, now suffer the consequences.
David Lereah - wasnt he the one that said there is a tight supply and high demand that justified these prices, and it was going to continue. I guess that went “POP”
added color here (thanks to destinism)
In a statement the reporter writing the story, Lereah said something to the effect that he “wouldn’t be suprised if national home prices fell”.
While it still didn’t get into the main message of the official release, that acknowledgement is huge. I think I hear a fat lady singing…
http://www.marketwatch.com/news/story/Story.aspx?guid=%7B86EBF65E%2D67C0%2D4D68%2D97AA%2D9D76B47CEB18%7D&siteid=
that never happens ecp for 30’s 90’s and 07,07,08 ……….
Gee I need help!
How does the Nat’l number only fall 1.3%
WHEN National public Builders sales were down 35-64%
CA - 23.6%
FLA -29%
MA -16%
where is the ground made up ?
IT wasn’t Nevada or Arizona?
What state saw increases ?
Sellers should expect lower prices, Lereah said, adding that he wouldn’t be surprised to see single-family home prices fall nationally.
And I wouldn’t be surprised to see Lereah’s book sales fall nationally.
Wow. Look at that graph. Anyone who doesn’t think home prices are going to fall YOY just isn’t paying attention. The only question is how low will they go?
From Marketwatch:
Existing home sales fall 1.3% to 6.62 million
Inventories at 9-year high; price gains at a 10-year low
The report shows a continued weakening in the housing market, with inventories up sharply while prices are softening.
The inventory of unsold homes rose to a record 3.725 million, a 6.8 month supply at the June sales rate, the highest since July 1997.
The median price has risen 0.9% in the past year to $231,000. It’s the weakest price growth in 10 years.
Sales of existing homes are down 8.9% in the past year.
“I hope we are hitting bottom,” said David Lereah, chief economist for the private real estate trade group, which is predicting sales of about 6.60 million this year.
…
Sales were flat in the West and Midwest. Sales fell 2.3% in the South and fell 3.5% in the Northeast.
Single-family sales fell 0.9% to 5.81 million from 5.86 million. Condo sales fell 5.5% to 805,000.
Median prices of single-family homes are up 1.1% in the past year, while condo prices are down 2.1%.
Sellers should expect lower prices, Lereah said, adding that he wouldn’t be surprised to see single-family home prices fall nationally.
Caveat Emptor!
Grim
Northern NJ Real Estate Bubble
From Destinsm-
Sellers should expect lower prices, Lereah said, adding that he wouldn’t be surprised to see single-family home prices fall nationally
(In a statement the reporter writing the story, Lereah said something to the effect that he “wouldn’t be suprised if national home prices fell.)
Given the inflated prices of 3Q-05, I think it’s in the bag.
http://biz.yahoo.com/ap/060725/home_sales.html?.v=8
News story on Yahoo Finance. Same story as above different writers. More Mr Lereah quotes. haha
The spreadsheet also said inventory was up 39%, yoy and months supply is up 54%, yoy. As many said here before, eventually the months supply statistic can’t be hid behind and will look more negative than the straight inventory number.
Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.
Ok, relative to the past 5 years, yes it’s getting better - however still not a good time to buy a home IMO. And I wouldn’t define it as a “buyer’s market” until we see real price corrections and there’s finally a segment of the market that’s affordable to the average Joe.
Someone at my office yesterday was going on about how it’s buyer’s market now. What a joke! I’m convinced she read one little article in the local newspaper that made that claim and now believes it to be true - like so many people in the general public do. They don’t bother to do any research - just let MSM tell them what’s true.
Thank GOD for this blog! I’d be out of my mind insane if I hadn’t found you a year or so ago.
The same thing in my office. One of the girls who I gave all kinds of info from this blog and other sources about the housing bubble heard on the radio that its “now a buyers market” and believes that now is the time to buy. Go ahead! You can only do so much.
Good point. At what affordibility percentage does this become a buyers market? 30? 40? 50%? A ‘buyers market’ can be a quantifiable term - no the wet dreams of realtors.
I almost threw up in the car when I heard a DR Horton radio ad over the weekend claiming that it was a “buyers’ market”.
Yes. Believe them, they are an independent third party telling you that it is time to buy . . . one of their houses.
My personal opinion is that it’s a buyer’s market when median home prices are 3 times median incomes. Plain and simple. Will it happen? Don’t know.
Even if people don’t buy at the exact bottom but end up saving only 100k by waiting awhile it was worth the wait, wouldn’t you say?
> it’s a buyer’s market when median home prices are 3 times median incomes. Plain and simple.
Don’t hold your breath. While I believe that prices will come down in most areas, the old 3 times rule might be gone for good, due to higher population, favorable tax treatments for house owners etc.
But what is then a buyers’ market? I would think it’s a market where potential buyers are outnumbered by potential sellers by a large margin, e.g. 6 month supply, and can increasingly dictate the terms of the trade: sellers accept contingencies, take over closing costs, etc. A buyers’ market is a good time to look around for the many choices, but not necessarily a good time to buy, not in its beginning at least.
We had a sellers’ market for many years (buyers feeding the squirrels ;-). That didn’t mean that selling at the beginning of that period was the financially best move either.
Regards,
Peter
“We had a sellers’ market for many years (buyers feeding the squirrels
. That didn’t mean that selling at the beginning of that period was the financially best move either.”
Worth repeating.
I’m not sure about other markets, but the 3 times rule would mean a big drop in prices in Monmouth County, NJ.
County median income: $85K (approx.)
County median new home price in 2005: $752K
Median price of a SFH on the county’s MLS last week: $550K+*
Median condo price in the county is probably at least $350K
*estimate. There are 3 MLS’s for the county on Realtor.com’s site. The largest (northern monmouth) has a median list price of $489K, Western Monmouth is $559K and Southern Monmouth $799K.
“the old 3 times rule might be gone for good, due to higher population, favorable tax treatments for house owners etc.”
I’d would think wages are the largest defining factor, coupled with future credit terms.
-
again, use this spreadsheet tool to help find the entry point during the bloodbath -
http://www.files.bz/files/11251/RealEstateValuationMethods.xls
thoughts?
Here’s something I put together awhile back.
Owner’s equivalent rent calculator
I’m more inclined to use rents instead of income to calculate fair market value. IMO the cost to rent versus the cost of PMI on a purchase will be about the same when it is time to buy again. That means about a 40% haircut in my neck of the woods.
I meant the cost of the loan plus PMI*
It’s a buyer’s market when the intrinsic value is less than the price. That value can be calculated from the price of a substitute, in this case renting, when all the costs and benefits of the two choices are weighed in. In this case, we’re not even close to a buyer’s market.
It may not be a buyer’s market in the sense that it is a good time to buy, but that buyers carry more leverage than sellers. Now, denial will only allow that leverage to go so far before the seller becomes too dense and desperate to budge anymore. But if the measure is who carries more leverage, I think the answer is clearly the buyer.
“…but that buyers carry more leverage than sellers.”
Not nearly as much leverage as they will carry a few years from now. The question potential buyers need to ask themselves is if they are willing to give that up by purchasing now.
Someone has to buy at the lower prices for the comps to fall….
“They don’t bother to do any research - just let MSM tell them what’s true. ”
Yep.. and these people will pay for price for not getting educated.
See the link. When the “third fifth” ratio is 3-to-1, we’re in a buyer’s market (IMO).
http://goofyblog.net/historic-household-income-vs-home-prices/
“I hope we are hitting bottom,” said David Lereah, chief economist for the private real estate trade group, which is…
Yeah, David, we have hit the market bottom in just six short months an insane ten year bull run-up in house prices, what luck! He is the chief economist for a nameless trade group.What a putz.
um, “after an”
What school gave this guy a degree?. I just love a paid economist using “hope” as part of his projection. Who was the economics father of the “hope theory” Do schools give courses on this.
Man, I though my schooling was a waste, till I listen to this clown
I just saw he who shall remain nameless on CNBC. Their whole “report” was nothing more than him giving his opinions. He is now saying sellers should lower those prices so that sales volumes stay high. Anything to make the deal go through, he doesn’t care about buyers or sellers, only the NAR’s commish matters to him. What a gem of a human being.
He’s starting to sound desperate. First the pleading to the FED to stop raising rates, now “hoping” we’re at the bottom. What happened to the confident LIEreah that said prices would appreciate 20-30% through the end of the decade?
far.org has been delaying their numbers for months…
Does anyone have a link to the June FL numbers even if it is raw data?
http://biz.yahoo.com/prnews/060725/fltu004.html?.v=67
“The 1.3 percent decline, which was in line with expectations, represented the third drop in a row and the eighth in the past 10 months as the nation’s once-booming housing market has shifted to a slower pace in the face of rising mortgage rates.”
I’ve grown tired of the MM constantly blaming the slowing on rising mortgage rates. Rates are still historically low. They still fail to recognize what is really going on here.
Agree. In the same articles they blame interest rates for things going south; then some realtor comments about how rates are still low and this make homes a great investment!?!??!
10 yr at 5.10 ? about as low as you can get w/o total recession
Ineterest Rates are so misconceived in this market. Just as Mr. Greenspun’s conundrum occured as he raised and Rates did not rise(heck some of them went down at time”s), I predict “Mr. Bernanke’s Bummer” as he lowers in 2008 and Mortgage rates in particular don’t go down. At that point we will have perceived “RisK”, and the market will overshoot to the downside.
Check-out Ben’s Foreclosure Report, that’s stuff is really heating up, the Media can’t avoid reporting it, as more and more “ordinary” people get hurt.
OCBear
Got a link? I tried Googling it but came up with a whole bunch of stuff.
There’s always a link on this homepage, on the righthand side.
I’m not sure Bernanke can cut rates. As much as the housing industry will squeal that rates must be cut, currency traders are ready to drive the dollar down at the first sign of weakness. Without offering some kind of return the flight from bonds, and therefore dollars, would be very rapid.
The dollar does need to drop, I’m just not sure Bernanke wants it to happen on his watch.
“David Lereah, chief economist for the Realtors, said he believed that the decline in housing sales was beginning to level out. Sales of both new and existing homes set records for five consecutive years, but economists believe sales this year will post a decline, reflecting mortgage rates that have risen to the highest levels in more than four years.”
———————————–
Thought I’d post this under yours, as you got it before me.
Yes, it’s OBVIOUSLY the mortgage rates which are taking this market down. Has absolutely **nothing** to do with jacked-up, fantasyland, insanely overpriced real estate. No, nothing at all to do with that.
Poor Ben B. He’s gonna take such a whipping for this…totally undeserved, of course. Idiotic sheeple are going to follow the lead of the MSM and repeat what they hear, “higher interest rates killed our RE party!” regardless of what “common” sense might say.
It would be cool for some blogger to start a Ben Bernanke fan club blog. I’d do it, but have too much on my plate. Someplace where those who sympathize with his situation can gather and post. Whenever someone bad mouths Ben, I bad mouth them instead.
When this whole economy is collapsing you know it will be the sheeple, corporate and otherwise, blaming the “high” interest rates.
Well, I guess “too much on my plate” is a lame way to phrase it, since I’m sure bloggers are busy people as well. I guess you either have to have a blog in you or not, and right now I just don’t.
I agree. I’d like to start a “Ben Bernanke fan club”.
Like you, I barely have enough time to sleep (average about 4 or 5 hours), largely due to this blog.
We ought to find a way to make it happen though.
That’s a great idea! We can cheer…”DON’T BENDOVER BEN!”
Stay stong and fight inflation! Raise those rates!
I think all this trumpeting by MSMS that “Fed raising rates is what’s hurting housing” is just a setup for when Fed has to start cutting (Spring 07.) Look! Fed cut rates 1/4 point! It’s time to buy, buy, buy houses!
When Greenspan handed Ben the scepter he made sure it came with a tub of lube. Poor Ben indeed!
“Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home:
So this clown’s definition of a “buyers’ market” is a 5-10% drop from a 150% appreciation where over 90% of people living in South Florida cannot afford the median priced home?
Another graduate from the Homer Simpson school of finance and Donut hole making.
(far.org has been delaying their numbers for months…)
An interesting issue may be about to unfold.
The National Association of Realtors relies on the public’s respect for its numbers for all the attention it gets. The local affiliates who collect the data from their members, on the other hand, may have things they don’t want to show.
The number of MSAs in the NAR data release has been going up for years, covering smaller and smaller markets. My guess is local Realtor Associations had wanted to get their MSA in the data, to get publicity for their areas and its housing.
A quarter ago I noticed the absence of data for the Detroit MSA in the initial data release. It was added to the spreadsheet later. Now you are saying Florida is delayed. The NAR has a release schedule. I can imagine affilates delaying reporting, and claiming the data needs to be adjusted as “non-representative.” Could be some real conflict as the 3Q release data approaches.
Which brings us to the difference between public and private sector data. Public is always better and more comprehensive, but it’s just too slow for private sector decision makers to use. Private is faster, but in the bust it may be about to slow down.
When is the last time we saw a YOY median price decline in the condo market? Anyone have the statistics on this. Thanks.
Did the U.S. population decline significantly in the last year? How is the following possible: ““NAR President Thomas M. Stevens said opportunities have opened for home buyers. ‘People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,’ said Stevens. ‘Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.’”
What changed to lead to this plentiful supply? There never was a supply shortage and this NAR clown have been talking smack for years as if there was an extreme housing shortage! Fools!
The end of capitulation has begun. The agony that kept more and more people deciding their ideas of fundamentals were wrong and diving into the “housing market” is fast disappearing. Those who correctly held to their beliefs in the fundamentals can watch in satisfaction, while the “fear of being priced out forever” dissipates among the greater populace. This will now be replaced by “fear of losing one’s equity” on the part of those who did capitulate.
…‘People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,’ said Stevens
More choices, yes, but why buy when prices are about to go off a cliff? The greater fools (I really like that term) have already bought, most everyone else will wait this out. Thanks anyway Tom.
You are just not asking the right people about when is a GREAT TIME TO BUY!, In fact the NAR has a “brochure” on the subject: “To Buy Or Not To Buy”
“Renting can cost more than seven times annually than owning, according to a newly revised consumer education brochure from the National Association of Realtors®. ”
Please read it for yourself! http://www.realtor.org/PublicAffairsWeb.nsf/Pages/ConsumerBrochureRv06
Cheers!
Renting can cost more than seven times annually than owning
Too funny! I assume Realtors have no legal accountability for such optimistic projections.
That’s ridiculous! I rent for 2k amonth. If I bought this house, I’d be spending 5k per month MINUS the opportunity cost of my down payment which is substantial! The bulk of my rent is paid by my $$ in CDs…so I actually live virtually rent free! Try to beat that! Those jerks at the NAR! I hope they all end up in BK court!
“while home prices edged up at the slowest pace in more than a decade”….
aren’t prices actually falling? It’s only y-o-y they are still rising (this is probably the last month they will be doing that).
Good point.
This whole thing has been like watching a train wreck in slow motion. The writing is on the wall (the inevitability of YOY declines, ARM resets/foreclosures, the tightening of lending, further inventory rises and prices falling).
It’s just a matter of time.
It’s like a train wreck in slow motion because we watch it every day. If you think in terms of larger time intervals, say 3 month periods, this sure has been changing quickly over the past year.
“Buyers Market” ? Yeah Right !!
Lereah and the NAR propaganda machine is working overtime, working on sellers to reduce asks and on buyers (buyer’s market etc). Their primary goal is to get sales moving again.
This is just the beginning. The decline will be long and steep and will likely last the better part of a decade. Bargains won’t truly emerge until 2010. Buyers would do well to wait until Real Estate becomes a bad word and investing in real estate gets a real bad rap.
Agree. However, I wonder if there is a chance that housing prices might not increase for even longer (many decades), because Boomers might well be selling (to fund retirement) or get into reverse mortgages (is the RE bubble a stop-gap measure for reduced SS/pension payouts?). The Boomer influence on housing prices (late 60s through late 90s) cannot be overstated, IMO. As these more educated, wealthier buyers are replaced by poorer immigrants and workers who now have to compete with third-world wage workers (and who have to rely on savings instead of pensions and employer-sponsored healthcare), there is a definite possibility that we will see deflation in housing prices for generations. Unless, of course, we see major inflation (money supply which translates to wages), but that would be nominal increases, not real increases in RE prices.
It might be best to consider buying RE a costly expense rather than an “investment”.
I think we’re some time away from your scenario playing itself out. SS will be ultimately fixed on the backs of the young. Taxes will be increased.
To my understanding, population/jobs drive housing more than most anything else. I think 15 years from now, as demographically speaking, the pig moves through the python, as the boomer generation turns 75 (and getting older), I think you’ll see less need for housing leading to less demand for housing, and lower prices for housing.
Before that happens, there will be time for another housing cycle.
#37 The boomer bust
and look what I found looking at the above.
Realtors: Home sales now a ‘buyer’s market’
“As these more educated, wealthier buyers are replaced by poorer immigrants and workers who now have to compete with third-world wage workers (and who have to rely on savings instead of pensions and employer-sponsored healthcare), there is a definite possibility that we will see deflation in housing prices for generations. Unless, of course, we see major inflation (money supply which translates to wages), but that would be nominal increases, not real increases in RE prices.”
Also unless the illegals and poor immigrants have 4 families to a house. That can happen to a house next door to your dream home (the thought causes me to shiver).
Can’t happen at MY dream house…it has no neighbors. It has a moat. A moat with sharks in it. Sharks with frikin’ LASERS on their heads!
Good drugs!
Did you have your scrotum ceremoniusly shaved when you were 12?
what is the big deal with these immigrants when in fact the next 2 generations after the baby boomers outnumbers the latter. you also have to consider that houses do not last forever and new houses will be built as long as there are demands.
I am starting to think so too. Looks like it may take a bit longer than expected. Maybe ‘09, or ‘10. A lot can happen in the interim to help speed things along though.
Probably right. Depends on how fast the FBs fold. If they give up fast and all at the same time this whole mess might melt down a lot faster than you might expect. Of course it’ll continue to slide but the shape of the price curve might show flattening earlier than previous cycles, if it truly is different this time…
There was a famous study in the mid-90s predicting that housing would be a deflationary asset (expense) starting around 1995 and continuing on until 2025. Their premise was that the population, housing material prices, and labor costs would all begin a long decent about the same time that the boomers started to pull out of real estate.
They may have been 10 years too early in their prediction, but the scenaio is playing out now.
Whoa! Who slipped what into Dave’s coffee?!? Is he actually saying that the prices got too high compared to the inventory?
“The change in price performance is directly tied to housing inventories - a year ago we had a lean supply of homes and a sellers’ market, with monthly home sales at an all-time record high,” David Lereah, chief economist for the group, said in a statement. “Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories.”
Realtors: Home sales now a ‘buyer’s market’
“The change in price performance”, I like that one.
In plain English: prices are falling.
I just booked my trip to Lebanon. I hear it’s a good time to enjoy a vacation in the ME.
When I get back I will finally jump into that new house. I just read now’s the time to buy.
The future’s looking bright!
It’s a “BUYER’S MARKET” for LEBANESE VACATION PACKAGES.
There was actually a bit of a condo bubble in Beirut before things recently hit the fan–Ivana Trump had plans to build there.
Great! Maybe she can loan it to Donald for an overdue vacation.
Then he’ll stop hawking real estate to the uneducated masses in the Learning Annex classes. (Does anyone remember this moron declared BK after the last crash? Gezzzz.)
“Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.’”
?????????????????????????????
So let me get this straight…the “new” buyers market is defined when inventory skyrockets and sellers are kind enough to only expect a “modest” increase in price from a year ago when inventory was half what it is today?!
The sheer idiocy of this bubble astounds me. I heard a figure stating that the median house payment in CA is now 10% higher than what is was before the 1989 crash, when prices skidded up to 40% over a few years. Just because nobody is buying (outrageously overpriced homes) does NOT mean it’s a buyers market.
Maybe they should just come right out and say it:
THERE ISN’T ANY RE MARKET AT ALL. THE RE MARKETPLACE IS SUFFERING ACCUTE PARALYSIS!!!!
“I heard a figure stating that the median house payment in CA is now 10% higher than what is was before the 1989 crash, when prices skidded up to 40% over a few years.”
*******
I read where it’s 22% higher than at the last cycle peak 16 years ago. Perhaps that number I have seen is for SF City proper, the Bay Area or Marin.
In any case, 10% or 22% - it’s a long way from “normal”.
Oh… and that is an inflation adjusted 22% higher.
I live in CA and I can tell you today’s prices are much, much higher than the highs of the past. My grandmother’s house sold at 386 in 1994. Zillow says it was sold for 1.5 million last month. I do not have the price in 1990 but it was certainly much, much less than the price last month. It is an amazing house but I feel for the person who bought it now….unless they are just plain wealthy and it is their dream house. And, no, we did not sell it….we had it over 20 years ago.
I live in CA and I can tell you today’s prices are much, much higher than the highs of the past. My grandmother’s house sold at 386 in 1994. Zillow says it was sold for 1.5 million last month. I do not have the price in 1990 but it was certainly much, much less than the price last month. It is an amazing house but I feel for the person who bought it now….unless they are just plain wealthy and it is their dream house. And, no, we did not sell it….we had it over 20 years ago.
Just passing it along. If this is the best it’s ever getting for buyers, then I guess I’ll be renting forever.
New Data Are ‘Just Right’
By Tony Crescenzi
RealMoney.com Contributor
7/25/2006 10:44 AM EDT
URL: http://www.thestreet.com/p/rmoney/tcrescenziblog/10299147.html
The latest economic news is good news for the stock and bond markets. The data fit with the notion that the economy is slowing just enough to reduce inflation pressures, but not so much as to put the expansion at risk. In particular, the data on existing home sales suggest that the dire scenarios expected by some are far from becoming reality. In addition, the data on consumer confidence suggest that while recent jobs data have been a bit soft, conditions are far from weak.
Existing home sales ran at a 6.62 million annual pace in June compared to 6.72 million in May. That’s 20,000 more than expected. Sales are running about 10% below the record of 7.27 million set last June, fairly close to the decline posted in mortgage applications. The sales pace remains very elevated compared to five years ago, when sales were running at a pace of 5 million. Importantly, nationwide home prices are holding up; both the median and average prices for existing home sales reached new record highs. Prices remain well above the levels seen five years ago when they stood at about $180,000 for average prices (currently $279,000) and $140,000 (currently $231,500) for median prices. It would take a considerably weaker price trend to spur meaningful weakness in consumer spending.
Although prices have held up, high levels of unsold homes present a risk to prices. The inventory-to-sales ratio reached 6.8 months in June, the highest level since July 1997. These high level of inventories make the interest rate and income trends of the coming quarters important, as they will play a significant role in determining whether the inventory can be cleared without major disruptions to home prices. With the Fed set to end its interest rate hikes and inflation fears waning a bit, the odds look good for an orderly clearing of at least some of the excess inventory over the balance of the year.
With slowing but not slow growth, these data are “just right.”
A baseball thrown into the air has a speed which is “just right” immediately before it plummets back to earth.
Yes the price of buildings stocks over the last year tells us everything is fine……… just perfect………
“Bubbles caused by cheap cash menace world economy” from Reuters:
“Monetary authorities have lost control of money,” said Brian Reading, director at Lombard Street Research, a London macroeconomic forecasting company in a research note. His statement is provocative, and few economists are willing to go quite that far.
http://tinyurl.com/hnsls
Anecdotal evidence related to the need for banks to shove more debt down our throats, I was making a deposit the other day and the teller said “Congratulations, you’ve qualified for a (fancy name I can’t remember) prime card for $10,000″. I said I didn’t want it and the teller pressed me. I had to tell her 3 times that I didn’t want it. Finally, she said she gets penalized if the customer declines, and practically pleaded with me to take the offer. I did ask what her success rate was and she said 2 out of 3 take the offer. Amazing.
That article is not particularly focused; still, it’s incredible to see a MSM story on the dangers of the current credit bubble.
“His statement is provocative, and few economists are willing to go quite that far.”
Galbraith did.
Shiller does.
History proved them right before, and this time is NOT different.
“”Every time you inflate a bubble with cheap money, you trash someone’s balance sheet,” said Stein.”
Scary thing, most of the FB’s likely don’t have a balance sheet. But they will certainly feel the brunt, and make it painful for the rest of who were responsible.
“One might even call this the Great Liquidity Expansion puzzle,” Borio wrote.
Is ‘puzzle’ Latin for ’shitstorm’?
Had a similiar experience signing up for a new credit card (has better kickbacks than my present one)
Rep: For a limited time, you can transfer balances at a low introductory rate.
Me: I don’t have any balances.
Rep: This includes gas cards and retail store cards. You can save a lot of money by transferring these high rates onto your new card.
Me: I don’t have any outstanding balances with anyone.
Rep: Silence, then the sound of paper shuffling…apparently a few pages down the script.
I don’t think she believed me.
Had the same to me and the wife when we were preapproved for a mortgage. Told the lender we had no debt and they kept asking me over and over again if “i was sure” before they got a chance to pull our credit. NO debt.
Orange County CA resales per MLS slowing down as well:
6/23/06 to 7/22/06 $752,236 avg / 2,193 sales
1/1/06 to 1/31/06 $732,180 avg / 1,826 sales
6/23/05 to 7/22/05 $719,725 avg / 3,871 sales
7/25/06: 15,589 homes and condos for sale
1/1/06: 6,976 homes available for sale
so far this year, available inventory is up 123%, prices are up 2.74 % from Jan 2006 and up 4.5% from last year at this time. Number of sales is down approx. 43% from last year, and # of sales this year are at lowest levels since b4 1999.
where o where did the buyers go???? and where’s gary watts when you need him???
New Florida numbers just out: http://media.living.net/releases/JUN%2006%20Stats%20Release.htm
NWFla… Doesn’t look like the panhandle of FL is doing to good
Yeah, but everybody around here is convinced that the new airport will turn us into New York City on the Gulf. And then there’s all those baby boomers who would pay millions to live here! And Discount Lion Safari!
The level of denial here is astounding.
“The statewide median sales price for condos remained relatively flat last month at $212,500; a year ago, it was $215,700. The national median existing condo price in May 2006 was $229,300.”
Since when is a 3,200 (or 1.5%) decrease relatively flat? A price decrease is a decrease and it will get worse in July.
Centex Corp., the fourth-largest U.S. home builder, said its fiscal first-quarter earnings dropped 31% because of a slowdown in the housing market amid higher mortgage rates. Net income fell to $160.3 million, or $1.27 a share, from $233.7 million, or $1.74, a year earlier, Dallas-based Centex said. Revenue rose 13% to $3.27 billion. >>
I don’t think the term Buyers Market was ever meant to mean that it is a good time for a person to buy. Buyers Market only means that in a real estate transaction the buyer can control the process more so than the seller. In respect to price, contingencies, financing, etc..
Agents and others, with a vested interest, misrepresent the term to mean that if your sitting on the fence thinking about buying a house, now is a good time to buy.
Good point.
By saying ” it is a good time to buy a home ” now, some Realtors acknowledge that theirs is a dishonest profession. After all, during the bubble years, did they ever tell any client that it was “NOT a good time” to buy ?
According to them, it’s ALWAYS a good time to buy.
Good points. What else could they call it?
Stalling, Falling, Deflating, Declining, Dropping, Sinking, Crashing, Burning, Bursting….
I guess they are stuck with “Buyers”.
“‘The change in price performance is directly tied to housing inventories, a year ago we had a lean supply of homes and a sellers’ market,’ David Lereah, NAR’s chief economist said. ‘Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.’”
David L — you lurking here? Fess up…
“NAR President Thomas M. Stevens said opportunities have opened for home buyers. ‘People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,’ said Stevens. ‘Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.’”
GET YOUR FALLING KNIFE HERE!!!
“opportunities have opened for home buyers”
yeah..opportunities to buy today and watch the value of your purchase GO DOWN! jeesh…just a bunch of salesmen - watch your wallet
Here are my comments on NAR’s Jun 06 numbers:
http://tinyurl.com/g2elw
David
Bubble Meter Blog
And there’s some fun comments on your comments, by the looks. Plenty of vinegar and bile being thrown around, and even a bull or 2.
I might start lurking over there as well as here.
Why don’t we call it what it is, “A Losers Market” People buying now are dummer than those that bought a year ago.
must…resist…dumm…joke
$50,000 down on a $500,000 FLA. investment property.
Had to take possession because you didn’t get the $100,000 flip gain that you should have.
$350 a month condo fees.
$2,000 a year insurance that just went to $4,000
$3,000 a year utilities.
$8,000 a year taxes
3.5% ARM THAT just got re-priced to 6.5%
Builder now selling (trying to sell) the same unit for $400,000
And you still don’t think that you have a problem.
PRICELESS!
And the craziest things is . . . Homebuilders’ stocks are UP on teh news today! This is truly a Bizzaro-world right now.
The HB stocks are all heavily shorted. It probably is fund money buying back at this point to reduce short positions.
poor.dad
The homebuilders stocks are heavily shorted issues. They will only go lower at this point if the data is REALLY REALLY bad.
poor.dad
2 words: ’seasonally adjusted’
I always wonder how else they’ve been adjusted. These statistics for sales seem awfully suspect to me.
I have been following each release from the home builders (I realise we’re talking new homes vs. existing homes). The homebuilders are reporting deep falls in new home sales..20-40% in most cases. Yet existing sales are down only 9%? Seems fishy to me.
Also, all the anecdotal evidence here certainly says sales are off more than 9%. The NAR sure has a reason to massage the numbers. Are they?
I’ve been wondering about that too. Also, it seems like it’s very hard, if not impossible, to find the actual number of houses sold in the month, rather than the “seasonally adjusted annual rate.”
I also noticed this comment in the WSJ article today:
“The level of resales in June was above Wall Street expectations. Analysts predicted a 6.60 million rate of sales of previously owned homes.”
So the “seasonally adjusted annual rate” was 6.62 million, rather than 6.60 million as “expected” by Wall Street analysts, which translates to a grand total of 20,000 more homes on an ANNUAL basis, “exceeding analyst expectations” by about 1/3 of 1%. I’d be curious to know the actual difference in the number of houses sold in June versus the “expectations.” Sounds like statistical noise to me..
Economic stats are also seasonally adjusted. If not, we would have a severe see-saw growth of -8 to -10% each 1Q with growth of 10-15% each 2 & 3Q.
Seasonally adjusted is a valid method of weighting the data to show true trends.
“‘Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.’”
It’s a good time to buy a home if you a) find your dream home you can live in for 20 years whether or not your job gets outsourced and b) you need to borrow at most the equivalent of 1/5 of your net worth (stocks, bonds, money market funds, and so on minus real estate).
It’s aterrible time to buy. Things will be much better in 12 months.
Lowball 100 houses and pick the best one.
I live in the Vancouver, WA area. Sunday’s paper stated that according to the realtors here, the selling prices of homes increased over 2005. But buried deeper in the paper was the comment that home sales were off 21.5% for the first six months of 2006 when compared to the first 6 months of 2005.
A younger colleague tells me every so often that now is a good time to buy a home. I just laugh! Been caught on the downside of the last long deflation real estate bubble (1990 to 1996). I learned my lesson. How many times do I have to laugh at those people?
Part of the problem is that we don’t have consensus on what “Buyer’s market” means. The realtors like to throw it around, but most of use bubble-sitters think it’s still a year or more away.
If you mean, a market in which power has shifted to the buyers, and in which sellers are under pressure, yes this is a “Buyer’s market.” If you mean a market in which it is smart to buy, i.e., we’ve come close to the bottom and prices are near their lows for the cycle, we are nowhere near a “Buyer’s market.”
With all the spinning coming out of the real estate complex, we should be insisting on clear definitions of these terms.
At this point, I no longer wish to own a home. Been there, done that.
I love the freedom of renting. You can move whenever the neighbors disrespect you.
Or move when your disrespect them.