January Median Price Higher Than 2004: Las Vegas Sun
One reader points out the difficulty of tracking housing statistics. “Although the problem of sellers’ denial is likely to prolong the agony, it does provide an opportunity to get around some of the difficulties in interpreting median price data. For example, when we see median prices decline, we don’t know whether it’s because sellers have dropped their prices or buyers are seeking smaller/cheaper units (e.g., condo conversions vs. McMansions).”
“But if sellers are refusing to lower their asking prices, we can instead follow the ‘% of asking price’ metric and more clearly determine whether median price changes reflect the type of residence or adjustments in asking price.” “I think for much of 2005 in San Diego, sellers were getting ~97-98% of their asking price; now it’s closer to 94%.”
The Las Vegas Sun reports on that bursting housing bubble. “The median price of a new home in Las Vegas dropped in January to just over $300,000, a sign the area’s hot housing market may be cooling off, analysts said. At $303,751, the median price is about $6,000 less than it was in December, but is 7.5 percent higher than it was in January 2004, Dennis Smith reported Friday.”
“The median housing price increases if the nearly 800 apartment conversions are excluded. Without the conversions, nearly 28 percent of the new home sales in January, the median price was $343,198, Smith said. Weekly traffic through new subdivisions, a gauge of people looking at new homes, has decreased 21.9 percent from the first few weeks of 2005 and net sales per subdivision are off by about a third, according to the report.”
“Larry Murphy said sales are stronger than expected this year, but prices are stable and the inventory of homes for sale, while growing, is remaining manageable.The median resale price also declined in January. The median price of an existing home was $279,000, down from $284,900.”
What was the median price in January 2005 ?
What’s the deal with the 2 year comparison?
It’s the only one that gave a positive number.
the report for july 2006 will say “slight price decline but median prices are still over july 1996″.
I can just imagine the subheader on this one.January Median Price Higher Than 2004But Not 2005
More evidence that home prices keep increasing:
January median price for for homes higher than January, 1968.
Did anybody catch the following wording in this Marketwatch article?
Hot-house data to dominate headlines
http://tinyurl.com/gt8vc
“The quarterly OFHEO home price index could be the most important data point of the week. Considered the most accurate gauge of home price appreciation, the OFHEO index for the fourth quarter will show whether the housing bubble is getting bigger, contracting or just changing locations.”
______________________________________________________________
I think this pretty much constitutes admission to an actual housing bubble. They are just trying to determine the stage it’s in….. “housing bubble is bigger, contracting, or changing locations.”
I did catch that-however, there will be no bursting until the banks stop lending funny (exotic) loans to people who are unable to find there tax returns and go stated income.
I agree.
Prices still higher than in 1933! They’re not building any more desert! We’ll never run out of oil or water! Real estate always goes up!
Just like the article in the OC Register about the median price going back up $10,000, after dropping $40,000- only a $10,000 ‘dead cat bounce’- all any of this really means is this:
There’s a diminishing supply of ‘greater fools’.
Sure, a few morons will see that the house down the street dropped it’s price by WOW $10,000! and go buy…
…but there are many, many more, in my opinion, that see the downward spiral has already begun.
More ‘dead cat bounces’ to come.
And ever more spinning of the numbers.
Yeah, I am wondering how those numbers are skewed myself…
Im sure they were…
I wonder whether the drop in prices will occur at a faster rate than the increase did over the next several years. Any thoughts?
Many are hopeful, but not a chance.
That’s why they call prices “sticky” on the way down. We may have a quick correction of 10-15% over 18 months and then the real stagnation and downward pressure for another 3+ years.
As long as they keep reporting that we are in a “soft landing” then the Fed will feel that much more comfortable raising rates….
Higher rates, even less buyers…by the time the data comes out it will be too late
Has anybody noticed american culture going down the tubes because of excess consumerism via housing bubble?
Yes, it drives me nuts! If I never have one more conversation about someone’s new granite kitchen or what kind of fancy car they are going to lease, it will be too soon! Our values and priorities are shot.
I agree totally deb. I think it is creating alot of social problems too. I feel most people don’t give a rats ass about their neighbors anymore. Did you catch that special on oprah about debt friday? This is really gettting disgusting.
No, wish I did though. Seems like America may be faced with tough times in order to learn some lessons about debt. Sometimes I actually think that tough times could help redeem us, strengthening bonds of family and community. Sad to think that is what it might take.
Even more sad, I don’t buy the logic. You tend to get strong family/community bonds when people who are not well off empathise with those worse off. Traditional working class stuff.
This is not a characteristic of previously wealthy people fallen on hard times. They do not so empathise, except in moments of shared bitching, because their minds are consumed with the ‘unfairness’ of their fate.
If anything they have a tendency towards extreme selfishness, on the grounds that every little helps them back towards their ‘rightful’ station. I am thinking of the likes of the aristocratic refugees from the French and Russian revolutions; there are several accounts from Britain (where a lot of them found refuge) from writers bewildered by their viciousness.
If you’d like to catch up on the Oprah debt piece, here’s the link to her website-
http://www2.oprah.com/index.jhtml
One of the couples has $75k on the credit cards. I just don’t get how so many Americans can dig themselves into such a hole, all for the bling.
IMHO, the rotting of America’s core predates the housing bubble by several years (say, during the .com boom), or maybe it even goes back to the ’80s. In both periods, one’s personal worth seems to have been based largely on one’s (apparent) net worth, and conspicuous consumerism was transformed from a sign of vanity into a sign of happiness and success. “I’ve got mine, f*** you” became the slogan of the day.
You have some great information. Personal worth is all most of these shallow morons care about. We have got big problems on our hands nowadays.
iv’e discovered something interesting in my travels in Europe. When someone is asked ‘what do you do’ the response given is usually along the lines of ‘I like to paraglide’ or ‘I write poetry and my family likes to go camping’ In the US it’s almost always ‘I’m a lawyer’ and ‘i just bought a BMW’
I have always wanted to go to europe and see how people are over there. Seems like the eupopeans might be fun to hang around. I’m sure they are more exciting than the blank stares I get from most people around here.
Here’s the biggest difference to me:
When I was in France you’d go to buy groceries. First you’d get your bread from the baker who was next door to the butcher who was next door to the cheese shop etc. and you would talk to so many different people.
In Los Angeles you go from your house to your garage to your car to your place of buisness and the only interaction you have with strangers is being flipped off on the 405.
I lived in London for 5 years. When you ask British people what they do, they too will say “I’m a Barrister, or I’m in Finance”.
Perhaps the people you were talking to during your travels were out of work and had plenty of time to paraglide! One thing about Europeans, they do like their holidays. If they get 4-5 weeks of holiday, they take every last minute of it.
Regarding the butcher, next to the baker, next to the candlestick maker in France: France too has super stores. When my wife and I would spend summers in the south of France we would go to the Cap 2000 a huge supermarket super store. Everthing under one roof.
Check out the newest Businessweek article. Page 112 (not sure if its online). CEO of Con-trywide actaully says 30% price declines, Shiller claims 40% declines, however CEO of KB claims things will stabilize.
I’m not sure if this is proper blog etiquette, but since it’s subscription only (and a good, quick read), here it is:
MARCH 6, 2006
IDEAS — FACE TIME WITH MARIA BARTIROMO
By Maria Bartiromo
Jitters On The Home Front
Recent weeks have knocked a lot of the exuberance — irrational or otherwise — out of the housing market. Homebuilders KB Home (KBH ) and Toll Brothers (TOL ) reported an increase in order cancellations and a decline in net orders for new homes. And Hovnanian Enterprises (HOV ) said it sees a softening in the pace of home sales and in price increases in some markets. I caught up with three housing heavyweights — CEO Angelo Mozilo of mortgage lender Countrywide Financial (CFC ), CEO Bruce Karatz of KB Home, and real estate bear Professor Bob Shiller of Yale University — and asked how worried we should be.
How would you characterize the housing market right now?
MOZILO: The market has turned. The psychology of the buyers for single-family homes has clearly changed. We are seeing it from the flow of loan applications. If I had to pick a time, I would have to say it turned in January.
SHILLER: The real question is: Will it be a soft landing, or will prices come down substantially? It’s hard to say because this is the biggest housing boom that this nation has ever seen, so we are in uncharted territory. I worry about a big fall because prices today are being supported by a speculative fever…. Home buyers typically expect price appreciation of 10% [a year] for the next few years, and that is not realistic. But I have learned humility when forecasting. Remember, we’ve had drops that looked similar before, notably at the end of 2003.
KARATZ: [The slowdown] started for us in our first quarter [beginning Dec. 1]. I think we will see the market settle off of its highs but still remain at very historically healthy rates two or three months from now. And with interest rates still attractive and the economy still chugging along, I think we will see housing come through very well. I would simply say that there is no indication that we should dramatize the present condition of the housing market.
How severe are the price declines you are expecting?
MOZILO: I would expect a general decline of 5% to 10% throughout the country, some areas 20%. And in areas where you have had heavy speculation, you could have 30%. We will see…sellers back off from the prices they have been demanding. A year or a year and half from now, you will have seen a slow deterioration of home values and a substantial deterioration in those areas where there has been speculative excess.
SHILLER: In Los Angeles in the last cycle, prices peaked in 1989 and bottomed out in 1997. In that interval, L.A. lost 40% of its real value. I can see that happening there again or in any of the cities that have had tremendous price increases, and there are quite a number of them in this country. I think a pullback of as much as 40% is plausible in many places.
KARATZ: I don’t see a fundamental slowdown other than in the hottest markets. Things don’t continue through the roof forever. This is a breather in prices, and that takes some steam out of the market. In some markets, 10% to 15% of buyers were speculators. You take them out, and the market drops 10% to 15%, and it takes three to four months for whatever overhang there was to be sold, and then the market stabilizes. That’s where I think we will be three to four months from now.
Where are the most vulnerable areas?
MOZILO: Miami and Fort Lauderdale. Las Vegas is another area where there is heavy speculation. That means people were buying three, four, five condos at a time and thinking they can flip them. Those are the spots we have identified where… we will only make loans when we know the person will live [in the housing].
SHILLER: The most spectacular cases are Phoenix and Las Vegas. They soared so suddenly. But others [are vulnerable, too,] such as San Francisco, San Diego, L.A. — really much of California.
Will your earnings be hurt?
MOZILO: What we have to do is gain market share in order to stay even with last year. I have not been acquisitive. But given the size we are now, the largest in the world, it’s hard to grow organically. There will be victims of the slowdown. And there will be fallout, and we will survey the field and see if we can acquire things on an opportunistic basis.
Maria Bartiromo is the host of CNBC’s Closing Bell
“….and the market drops 10% to 15%, and it takes three to four months for whatever overhang there was to be sold, and then the market stabilizes.”
That is absolutely one of the most hilarious comments I have read. 3-4 months to totally resolve a bubble that has been building since at least 2000 and probably longer. This guy doesn’t read much history (or he has sold himself out and will do and say anything regardless of the facts in order to try to stave off the inevitable bust that must follow all such booms).
It feels and looks like the fall of 1990 to me. The local title companies started laying people off in November ‘05. Prices peaked here on the Central Coast in September ‘05.
How about Los Osos, my former digs? I’ve read that a whack of homes are going to be paying to have their septic systems pumped every two months, or something like that. Also, the planned sewer system is going to cost each household something on the order of $300+/month for the next 30-years if I recall correctly a newspaper article from last December. This has to have some effect on housing prices there as most folks there were hanging on by a shoe string, IMHO.
Good article! I like maria bartiromo. She is a smart chick who will tear you a new *hole if you try to bs her. She gets sexier the more I watch her!
OT but FYI - The Suze Orman 2006 Real Estate Forecast episode is on tonight, 9:00 EST. This is Part III, and should be interesting since she was already strongly hinting at the existence of the bubble in Part II late last year.
What channel?
CNBC….don’t worry it repeats again later tonight.
I watched the suze special tonight. She was on top of her game as usual. A lot of it was about loans.
Major League disappointment. Suze must have gotten a lot of grief over her somewhat negative Real Estate 2 episode. Her lead-off premise in Rosy Real Estate 3 was that real estate is still a good investment if you find the right location. Of course that’s true, but the map of profitable locations is shrinking rapidly.
First caller, a Navy pilot, owns a house in Jacksonville, being transfered to Norfolk where he plans to buy another house. Should he keep the Jacksonville home (rent it out) as well? OF COURSE, says Suze, since her magical news magazine survey (highlighted on Ben’s blog about a month ago) projects property values going up in both locations.
Later in the show she cited the 20x annual rent rule for the rent/buy decision. She might have mentioned that rule to the Navy pilot.
suze told us we should buy at 20X rent; she used the example of if you pay 2000/month in rent, then *BUY* at 480K.
Don’t worry. Pitchers and catchers are reporting now and trout season opens the last Saturday in April during the Springville Rodeo. Alfred E. Newman and the rest of the sheeple could care less about the housing bubble.
It’s off-topic, but I just can’t believe the number of open house/for sale signs I saw today as I drove from Redondo Beach to the San Gabriel Valley. Flippers must be crapping their pants!!! There were all kind of signs… A few of the homes I drove by had multiple (and huge) open house signs at nearbyintersections. There were a lot of FSBO, and homemade signs (low quality, “cardboard box”).. They are pulling out all the stops!
Yep, they are getting desperate. Usually I see a sh*tload of sign twirlers on the weeksends over here.
Saw my first sign twirlers in a long long time just the other day here in the San Fernando Valley (on a TUESDAY!). They were promoting some ugly condo conversions.
Sign twirling must be a boring job. I really don’t think it is good advertisement anyway. I think it makes you look desperate. I guess you would be close to san bernadino right? I’m going back to sacramento in a few weeks so will have to drive through the misreable traffic in that valley. Once i get to I-5 it isn’t that bad.
Sounds like a buyer’s market….better jump in before you miss the window.
I’m kidding of course. Since I live in Redondo Beach, I’m all too familiar with the situation here. Yes, the “for sale” signs are sprouting up everywhere…like tulips.
I wont be jumping in for awhile. I would like to buy but I know better to do it now. I will live in my truck with my two cats before I get screwed over.
Dude…that’s funny.
Tulips. Nice.
Read about Higher home prices discourage buyers .
“Bad news for the many homeowners trying to sell: It’s likely only going to get tougher.
The number of home listings in metro Phoenix is at an all-time high. In January, there were 30,113 houses for sale across the Valley. A year ago, there were 3,402.”
Here is the Phx metro inventory.. .has been jumpy on Ziprealty…guess they are overwhelmed too. … and Maria Barteromo is a coke whore. yeehaa.
Phoenix
7/20/2005 10748
7/21/2005 10968
7/22/2005 11122
7/23/2005 11424
7/24/2005 11338
7/25/2005 11112
7/26/2005 11315
7/27/2005 11353
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8/6/2005 12196
8/7/2005 12658
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12/1/2005 26792
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1/1/2006 26462
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1/3/2006 26751
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2/25/2006 36388
Read about Debating the ‘twin deficits’.
“Mr. Merrill says there “is likely to be a 30 percent collapse in U.S. housing prices in the near future.” That would wipe out trillions and trillions of dollars in effective household savings that he had earlier cited as a major reason for his sanguinity.
The twin deficits, and a $6 trillion deflation of a housing bubble, mean less sound sleeping for many economists, especially those who agree with Mr. Merrill, as they look toward the future.”
Read about Housing market turning into buyer’s market, sources say.
“For example, said Ford, if a seller has a home he is hoping to sell for $200,000, but the market is only going to bear $194,000, instead of dropping the price to $194,000, the sale would be financed for $200,000, but then the seller would credit back $6,000 at closing. This would allow a buyer who cannot come up with a down payment a chance to buy.”
Now, with $11 trillion in personal debt and $8.2 trillion in national government debt, we can thank Greenspan’s liquidity manipulations for leaving us at the precipice of a financial disaster.
Today, Ben “printing press” Bernanke is at the helm of the Federal Reserve. Bernanke is a student of the Great Depression.
Was he put in this position for the depression? Just a thought…
Read about Market Reports.
An interesting site by zip realty. Go down and read recent posts for information. When I read Poway, it disappointed me but oh well.
Poway is full of cookie cutter Mcmansion housing developments as far as the eye can see interspersed with buisness parks and strip malls. There are some really ritzy areas also ( alot of the Chargers and Padres live there) It’s not easy to get in and out of during rush hour and the I-15 is a nightmare.
I can’t figure out why Poway would have a 37% price increase. Most other SD areas seem flat.
Read about Homeowners build equity in residences.
“The popular image is that America’s homeowners are turning into debt junkies, hocking their houses to the hilt, and are banking on double-digit appreciation rates to bail them out.”
Ben,
I would like to postpone some constructive threads, because moaning and bitching or schadenfreude is not going to do my networth any good.
We all know that this bubble is going to burst. Let’s all work together and figure out how to make money from the burst (perhaps making the pain of the flipper more acute as a side-effect, but nevertheless, I am more interested in making money from all this).
So here is what I propose. Let’s share the builder sales info in our neighborhood and try to come out with some shorting candidates. We can short M Reits, lenders, builders, plenty of related industries out there that will go down in flames with this, and let’s all profit from this.
So let’s not waste time in jumping up and down on these amateur flippers, they are going to hell anyway, and their going to hell may not add an extra 0 to my bank account either if I don’t take actions to benefit from their fall. So let’s be constructive and work on a way to profit from the fall, this is called capitalism at its best.
I like your line of thinking.
What specifically do you recommend shorting?
I would also like to propose a persistent column somewhere here for us to identify those hones held by flippers (somebody who bought within 12 months try to sell for an outrageous effort). The purpose of all this is to draw buyer attention to this. The buyer has jealousy syndrome too, he/she may not be happy to see a flipper getting all this money, so given a choice, he/she would rather choose a non-flipper home if everything is held equal. This is the best way to screw the flippers if that is your purpose, single them out (check zillow for prior transaction record), then put them in the spotlight for how much they try to earn within a short period of time, and bring this to potential buyers’ attention. One more day these flipper homes need to stay on the market, one more day of finance he needs to pay and more pain to him. Eventually, I’d like to see this site morphed into kind of buyer verification site, all potential buyers will have to come here and check if he/she is being taken advantage of.
So if you want to screw the flippers, take actions that matter, instead of just watching his inventory sit. Do something to make his inventory sit, lengthen the time that it sits. That is called constructive for yourself (and destructive for people you hate).
I concur with you completely. Out of principle I would never buy a flipper house. It disgusts me to see the listings on Realtor.com for new home resales where the principle selling point is “Never been lived in”! That screams, “I am being sold by a flipper, I haven’t done anything to improve this home, never intended to live in it, but I fully expect you to pay a premium to enrich me.” It makes me PUKE! A buyer should research a flip that has not been lived in by the flipper and at most (if feeling generous) offer what they paid for it and let the flipper go negative by whatever the carrying costs were (closing, realtor, taxes, etc.).
should be outrageous profit.
short becn,bmch
lumber off from 460 to 344 since last year
all they have is roof trusses and shingles
saw a $ 300 off on granite at HD
Let’s get that thread going. I know of one looking for outrageous profit.
In CT, alleged flipper purchased house at $825k in March 05, back on market now at $999k.
Only difference I can see is kitchen cabinets repainted…
I cannot believe the absurdity of this flipping price. There is probably someone stupid enough to buy it though, hopeing to sell it to the next fool. I don’t know when we run out of fools?
Actual construction materials escalation/de-escalation is of particular interest to me.
I think the bldg material escalation of the last couple of years was due to the EZ credit fueling this and all construction bubbles.
Lumber off by 25% is great news for housing bears.
Remember, if you are standing in line to buy an asset you are getting screwed.
Visited Lodi, CA yesterday– Suburb of Sac. I saw for sale signs and open houses everywhere- like mushrooms after a big storm. The Sac area was flipper central until the summer of last year. IMO, this area will fall 50% from the peak.
Hopefully it does fall 50%. The prices around sacramento are just ridiciulous now. I think you are right that the area will decline significantly. I left roseville in 2004 and it has got worse since that time.