“Clearly Still Too Much Supply On The Market”
Some housing bubble news from Wall Street and Washington. Bloomberg, “Home starts unexpectedly climbed 4.5 percent last month from November, the Commerce Department said in Washington. Building permits jumped 5.5 percent, the most in four years, to a 1.596 million pace, the Commerce Department said.”
“Even with last month’s gain in housing starts, residential construction dropped 13 percent for all of last year, the biggest yearly decline since 1991, to 1.801 million.” “Construction of single-family homes fell 4.1 percent last month to a 1.23 million rate, today’s report showed. Work on multifamily homes, such as townhouses and apartment buildings, surged 42 percent to an annual rate of 412,000.”
“‘The housing market has reached stabilization, but I would not be surprised to see some weaker numbers going forward,’ said Phillip Neuhart, an economist at Wachovia Corp. Favorable weather allowed some builders to get an early start on projects, ‘pushing the headline number up.’”
From CNN Money. “For the full year, single-family home building sank 15 percent and units in buildings with five or more residences slipped about 6 percent.”
“Bernard Markstein, director of forecasting for the National Association of Home Builders, said that the multi-family housing starts can swing widely from month to month. Markstein said for that reason his group is focused on the continued weakness in single-family homes. Starts on single-family homes last month were the second lowest since early 2001, ahead of only last October.”
“‘Getting a permit doesn’t mean they’ll start building tomorrow, but maybe three to six months from now they’ll start some projects again,’ said Markstein. ‘It’s definitely a very weak market. There’s clearly still too much supply on the market.’”
From Reuters. “Lack of progress in reining in mortgage lenders Fannie Mae and Freddie Mac leaves the economy at risk of possible financial crisis, St. Louis Federal Reserve Bank President William Poole said on Wednesday.”
“In a toughly worded address to a financial analysts’ group, Poole said the so-called government-sponsored enterprises or GSEs still need reform, including making clear to investors there is no government guarantee if they get in trouble.”
The Wall Street Journal. “A federal district court judge ruled that a Maryland bank must rescind loans made to certain borrowers who took out so-called option adjustable-rate mortgages because it violated the Federal Truth in Lending Act.”
“The ruling comes at a time of heightened scrutiny of option ARMs and other nontraditional mortgages, which grew in popularity during the housing boom.”
Some housing bubble news from Wall Street and Washington. Bloomberg, “Home starts unexpectedly climbed 4.5 percent last month from November, the Commerce Department said in Washington. Building permits jumped 5.5 percent, the most in four years, to a 1.596 million pace, the Commerce Department said.”
Sales continue to fall………so what do we do?……….why, build more.
Something is dreadfully wrong with this picture.
Who will invest in more ghost tract home developments built out on the hot desert sands when the predicted “100 or so” mortgage lenders go belly up with the end of the subprime slime plague? These guys must be smokin’ something really good. Or is it the Fed’s spiked punch bowl that has their minds in a state of foggy delusionment?
Articles like this infuriate me. There is NOT too much of a supply of housing in the market.
Rather, there are too many exhorbitantly priced listings from greedy SOB’s, with a limited quantity of people stupid enough to buy them.
If prices right now were anywhere near historical norms, I would venture to guess that at least half of us fence sitters would have mortgages right now.
So true.
“… half of us fence sitters would have mortgages right now.”
Half of a vanishingly small number is, well, vanishingly smaller.
Snip from a daily update I subscribe to. Written by 81 year old Richard Russell.
I just received the latest “Real Estate Timing Letter” by Robert Campbell (858-481-3236). This is a unique and excellent technical-fundamental report by a real estate expert — Robert was one of the first to call the top of the real estate boom.
Campbell believes we’re still at the beginning of a long bear market in real estate. Here are a few of his reasons —
“Real estate downturns typically last 4 to 6 years after housing prices peak out.”
“A huge wave of ARMSs are scheduled to be re-priced in 2007, causing a significant rise in mortgage payments and an acceleration in foreclosures.”
“A credit crunch is looming on the horizon, which make mortgage financing harder to get. If you contract the availability of credit, the housing bubble deflates.
“After rising by a spectacular 200% during the boom, history almost assures us that the resultant fall in housing will be equally spectacular during the bust.”
So there you have it, the bearish view of the real estate situation. My take is that Fed will want to counter the fragile real estate situation by flooding the markets with liquidity. Money will be, and is, available everywhere in enormous quantities. The banks are choking on liquidity. And although they don’t want to — if need be (to “levitate” housing), the Fed will again lower short rates. In my opinion, the Fed has been concentrating on housing ever since housing topped out last year. The Fed considers a soft landing for housing an absolute must, and the way to prevent a housing bust is to make money abundantly plentiful.
Poole really said he wanted there to not be an implicit guarantee. There was one really important bit in his speech, though:
[in a GSE crisis] “the Fed can provide liquidity support but not capital“
El Segundo.
There are these so called “artist’s lofts” condos starting at $800,000.00+ Plus HOA does. Bill Ruane (pronounced “ruin”) is the Realtor. These are located at 1225 East Grand, El Segundo, CA 90245. They are less than ½ mile from the sights sounds and smells of:
1) LAX (24/7 noise/shaking walls.)
2) Boc Gases. They synthesize Xenon, Krypton, Neon and You DON’T even want to know what else. Take a deep breath.
3) Chevron Oil refinery. I love artificial clouds. Nothing like the smell of burnt tar from your friendly neighborhood smokestacks.
4) LA Sewage treatment plant. How many people live in Los Angeles again?
This is just the start. Your “backyard” is next to a Metal Grinder company. Buzz. Buzz. Grind. Alarm clocks are so overrated.
Really cramped weird layout. No view up to the 2nd of third floors. Fake oriental interior with Granite counter tops and cheesy 1970’s “new” living room style.
But there is no loft at all in this loft. JUST A MISSING WALL between the garage and my new living room “office”. When I said I wanted a wall in the garage and they said:
“The missing wall in the garage is what makes it a loft”
Huh? A missing wall in the garage is a loft? Go figure. Well I want a wall in the garage. To this they shrugged their shoulders and said:
“Well you can always change it.” and “You can install the wall yourself”.
Whoa! Why would anyone grossly over pay for this white elephant in the first place AND THEN would have to make an instant expensive installation change? The arrogance to even suggest such a thing. I guess if you have to ask then you can’t afford it.
Basically these lofts are beyond a complete joke. Even at half the price. They have a huge SOLD sign outside of one of these units. So you better snatch the rest. These lofts are hot. Oh by the way - guess what?
IT HAS NOT EVEN BEEN SOLD.
That’s right. False advertising 101 anyone?
The commerce dept report generated headlines saying housing starts increased or even “jumped”
http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20070118-000676-0845
http://www.bloomberg.com/apps/news?pid=20601101&sid=aKKAxs9uCwAU&refer=japan
But housing starts cannot be said to have increased. The actual press release at http://www.census.gov/indicator/www/newresconst.pdf states that housing starts rose “4.5 percent ±8.8%,” i.e., with this MARGIN OF ERROR one cannot statistically say they rose, a minor detail not mentioned AT ALL in the Nat Assoc of Home Builder’s version at http://www.nahb.org/news_details.aspx?sectionID=148&newsID=3941 and even the fairly detailed articles at financial sites like http://www.bloomberg.com/apps/news?pid=20601087&sid=a4DsCnFbwYWg&refer=home where the data is discussed and interpreted somewhat. If even the finance sites selectively report government statistics, one must turn to the blogosphere where links are provided to the actual report.
The rest of the numbers in the report are even more negative, indicating clear declines of “18.0 percent (±7.1%) below the December 2005″ (i.e., a real decline) levels, but the headlines were universally that housing starts “rose” or “jumped” and the financial markets reacted as if this were true. Such statistically negligent reporting continues to amaze me!
The most interesting part of the report shows that builders have shifted their focus heavily away from single family construction to multifamily units. Since the condo glut is obvious even to builders, I suspect they are building more apartments and duplexes. Perhaps they realize that the backlash against the loose lending absurdity has begun and renters will no longer be sold mortgages simply because they claim to have income and can fog a mirror.
” how can you have both ?
There should be a surge in housing this year, along with refinance due to adjustable rate mortgages that are now adjusting.’”