Existing Home Prices Decline For Ninth Straight Month
Some housing bubble news from Wall Street and Washington. CNN, “The battered real estate market was even weaker than expected in April, as the pace of existing home sales fell to a nearly four-year low, and a glut of homes on the market continued to cut into home values, according to the National Association of Realtors.”
“‘We’ve been anticipating slower home sales because many subprime loan products are no longer available,’ Lawrence Yun, NAR senior economist said a statement. ‘In addition, increased scrutiny by lenders is stopping risky mortgage origination.’”
“The tougher lending standards are now cutting into sales, causing a rise in the supply of homes on the market for what is typically the start of the spring selling season.”
“That glut continues to slam home values. The median price of a home sold in the month was $220,900, down 0.8 percent from the $222,600 price for a typical home sale a year earlier.”
“It marked the ninth straight month that prices showed a decline from a year earlier, a relatively rare condition that had not been seen in 11 years before the current housing slump. The annual pace of existing home sales fell 2.6 percent to 5.99 million in April, down from a revised 6.15 million pace in March. It’s the first time the pace of sales fell below the 6 million level since June 2003.”
From Inman News. “Total housing inventory rose 10.4 percent at the end of April to 4.2 million existing homes available for sale, which represents a 8.4-month supply at the current sales pace, up from a 7.4 month supply in March.”
“Regionally, existing-home sales in the Midwest are 11.5 percent below a year ago. In the South, sales of existing homes slipped 8.8 percent below April 2006. Existing-home sales in the West declined 15.6 percent below a year ago. Existing-home sales in the Northeast fell 8.8 percent lower than April 2006.”
“‘It appears the worst of the price correction is behind us,’ said Pat Combs, NAR’s president.”
The Washington Post. “The Commerce Department reported yesterday that April sales of single-family homes…fell 10.6 percent short of the April 2006 estimate of nearly 1.1 million homes. The median sales price of new houses sold in April was down 11.1 percent from March, the largest monthly decline on record.”
“‘In terms of the home builder industry, the bad times are not over,’ said Gregory E. Gieber, VP of research at A.G. Edwards. ‘This is probably one of the worst recessions I’ve ever seen for housing.’”
“‘The very sharp decline in the median price suggests many sales occurring now are coming at the expense of quite a bit of discounting of homes,’ said Celia Chen, director of housing economics for Moody’s Economy.com. ‘It’s probably too soon to declare the end of the housing correction.’”
“‘I wouldn’t be surprised by some downward revision of April figures and some downward numbers in May,’ David F. Seiders, chief economist for the National Association of Home Builders.”
From MarketPlace. “Seiders says…we’re still in a depressed housing market. ‘The builders are saddled with a very heavy inventory overhang. Over half the builders in my most recent survey saying they are cutting prices to try to move inventory.’”
From CNN Money. “Most industry watchers agree that home prices will continue to slide before they recover, but now some economists say they’ve got a long way to fall before bouncing back. David Wyss, chief economist at Standard & Poors, has forecast a price drop of about 8 percent for the 24-month period through the fourth quarter of 2008.”
“Housing prices will suffer from a ’significant increase in defaults and foreclosures,’ he said, with affordability still a major issue.”
“He said its impact on areas like South Florida, where much of the buying is speculative investment in second homes, could be big. ‘You don’t need a second home,’ Wyss said.”
“Economist Celia Chen followed Wyss’ lead. ‘We also have an 8 percent decline in median house prices [for the 24-month period ending March 31, 2008].’”
“‘That is quite a bold forecast,’ NAR economist Lawrence Yun, said of Wyss’s prediction. NAR is predicting a much less severe total decline of 1.4 percent through the slump, prices have already declined three straight quarters, and that a recovery will start to take place in early 2008.”
“‘The run up,’ Yun said, ‘was an investor-demand driven boom, and it was followed by an investor-driven collapse.’”
From Reuters. “‘With respect to the recent problems in the subprime mortgage market, the Board plans to consider how it might further use its rulemaking authority…to address particular lending practices,’ Fed Chairman Ben Bernanke said in a letter released on Friday.”
“Delinquent payments and foreclosures have since risen as many adjustable rate loans reset at higher interest rates and U.S. home prices stagnate or fall in some areas.”
“Comptroller of the Currency John Dugan said he found it telling that lenders have responded to new housing market conditions by tightening standards on stated income and that loan servicers are verifying income before a loan is restructured.”
The Orange County Register. “Mortgage rates in Orange County spiked this week, at exactly the wrong time for a sluggish housing market. The average rate on a 30-year fixed loan with a one-point fee hit 6.107 percent for the week ended Thursday, its highest level in seven months.”
“‘The market is finally getting into its head that the Fed’s not going to decrease rates, said Josh Lewis, a mortgage broker in Costa Mesa.”
“Another reason is the spike in loan defaults, he said. Investors in bonds backed by mortgages are demanding higher yields to compensate for the risk more loans will go bad.”
“New Century Financial Corp., the largest U.S. subprime lender in bankruptcy, on Thursday said it uncovered accounting errors in its 2005 financial statements, and probably ‘materially’ overstated earnings for that year.”
“New Century had been one of the largest U.S. providers of home loans to people with poor credit histories before filing for bankruptcy protection on April 2. New Century has said at least 27 lawsuits have been filed against the company, its officers and its directors.”
From Bloomberg. “Two thirds of HSBC Holdings Plc’s $10.6 billion in loan defaults last year were in North America. The bank put a new U.S. management team in place and reinforced credit controls, HSBC CEO Michael Geoghegan said.”
“‘We have stopped production on nonprime correspondent mortgage loans and eliminated certain classes of products,’ he said. ‘We have recognized the problem ahead of the industry, and we have taken swift and decisive steps to fix it,’ he said. HSBC (is) Europe’s biggest bank by market value.”
“Angelo Mozilo, who built Countrywide Financial Corp into the largest mortgage lender in the United States, disavowed blame for the collapse, pleasing his audience of fellow mortgage-banking industry leaders and foot soldiers.”
“‘You’ve got to be careful here about blaming ourselves too much,’ the chairman of Countrywide told the Mortgage Bankers Association this week.”
“Marvin Von Renchler, a veteran mortgage broker in Oregon, isn’t ready to shed a tear for consumers. ‘I run into very few people who can legitimately say, ‘I didn’t know (what I was getting into).’”
“‘People on Wall Street live in their own world,’ said Jim Campen, an economics professor at the University of Massachusetts in Boston. ‘They don’t understand what’s going on the other end. If these (subprime lenders) couldn’t sell these loans to Wall Street, they couldn’t do what they do.’”
“But many say they just do what the market wants. Peter Paul, considered a pioneer in bringing loans to well-off borrowers with untraditional financial histories, likens mortgages to clothing.”
“‘We’re somewhat amoral about this kind of stuff,’ he said. ‘If we were fashion designers and they wanted purple polka dots, we might have our own opinion, but we’d probably give them purple polka dots.’”
Yea!!!!
I’m moving today to a new pad. Views of ocean and Manhattan. Built by builder couldn’t sell. Started around 1.7 ended up at 1.4. Now I’m renting for a little over 4k. It has all the bells and whistles’. As a semi old time member of this blog, I have to shout….ITS FRIGGING GREAT HAVING THE WIND AT MY BACK! BITTER RENTER MY A**.
Ya know, there not making any more bitter renters.
I have to cut my electronic umbilical cord soon. The movers are working their way towards my location. See ya in a few days.
Congrats…now that’s a deal.
Wow. Sounds like a pretty sweet deal. Not familiar with Manhattan other than I now it costs a fortune to live there. What size place is this?
$4k rent for a $1.4mil place… why would anybody ever ‘buy’ such a damn place and rent it out?
why not rent and put the extra “saved” $6K in a prudent investment..
got cash?
“got cash? ”
yep
That’s great. I myself am moving into a $600K condo right on the ocean in South Florida. Granted I only have southern exposure from my balcony so I’ll have to tilt my head slightly to the left to actually see the beach, but for $1,400/month, including cable and water, I’m not complaining.
I don’t know how anyone could mistake this sh*t-eating grin for a look of bitterness.
Here is an interesting article about a retired FL couple who are going to run out of cash in about 6 months. Problem: they got into 2 flips and the cost of paying mortgages on 3 homes (incl their own home) is about $15k a month. The wife is a realtor.
http://biz.yahoo.com/hmoney/070522/052207_retirement_interrupted_moneymag.html?.v=4&.pf=oneclick
My prediction — 10% down from the peak before it is over nationally, in nominal dollars. That would mean a 35% increase from 2000, and over a decade that’s about inflation isn’t it?
I’m still thinking we will overshoot on the downside in a lot of areas…the shoeshine boy will warn you against real estate as “everyone knows it’s a risky investment”.
I agree. Price declines are widely reported, yet by the news accounts I read, most homesellers are still expecting cargo drops to soon materialize which will magically qualify buyers to purchase at 2005 prices. It ain’t going to happen, and when the masses realize this, prices will overshoot to the downside.
Caught myself looking at Vegas MLS today for upscale 2-4 unit or SFR…. not today but perhaps sometime in the not too distant future as this may be the west-coast poster child for overshooting to the downside while population is likely to continue to rise.
I agree. They’ve been building high rise lofts like crazy in Vegas, and more in the plans. But I guess some of those plans are being scrapped. I’m one to partake in the “sin” of sin city from time to time and a 24/7 guarded - gated condo suits my style if I can find one at 1998 prices plus 3% annual gain. I travel from city to city often, usually changing locales once a year, but I must keep a base address for tax avoidance purposes. Las Vegas is optimum for a single professional like me.
Be it known to one and all: Arroyo is one heckuva photographer. Click the Arroyo link and get ready for a visual feast!
Agree.
Beautiful!
WOW! Those are some of the most beautiful photos I’ve ever seen!
Beautifully done, Arroyo!!!!
With mortgage rates rising, I think real (not nominal) declines are a distinct possibility.
Nationwide.
Nominal price declines are already history, and sellers are still in denial at this point. Just wait until denial gives way to anger, bargaining and acceptance…
we already have 10% off peak of may 05
if you use like property
I think he means that price declines below inflation adjusted 2000 numbers are possible. But I don’t consider this an “overshoot to the downside” because of all the extra construction (2.5 houses per new household) that’s happened the past 5 years. There are still frequent condo eruptions, that I guess had to have started rumbling several years ago to be vomiting forth now.
Also, the market reached forward and sucked in many of its future homeowners too early. Now they are going broke with debt and will not be able to buy again for a long time. So there will be even less demand and greater supply than 2000, ignoring the psychological effect of the coming 3 years of depreciation.
It’s a slam dunk!
I think he means that price declines below inflation adjusted 2000 numbers
yes. Thanks for clarifying my post, ajas.
Just wait for the OFHEO house price index next week. Several states (not just Michigan) will show negative nominal numbers.
10% from peak sounds rather soft to me.
Prices would need one hell of a fluffer to keep them from only getting that soft.
Some areas will dream about 10% declines. And by some I mean 90% or more.
Agreed. I just did a comp check on a property that depreciated 16.6% since summer 2005 and we are no where near the bottom.
“My prediction — 10% down…in nominal dollars”
That prediction seems to price in a lot of future inflation. How do you expect the Fed to successfully create inflation without crashing the long-term T-bond market?
Thus crashing the entire economy as Asia stops buying our worthless paper to support our no-manufacturing lifestyle.
rentingnj, you missed another area for renewable energy, ocean current technology
That’s why stuff that have value like gas is a real indicator of how high the inflation is due to all this printing of money.
Now we’re talking. Real vs. nominal are terms that are used for what Adam Smith called normal and market price. How Mr. Smith used normal and market are a far cry from real vs. nominal.
Yes, we all try to measure things in order to calculate their value. Real vs. nominal mean drastically different things to those at the Fed from the rest of the folks. I don’t have the space here to explain. It isn’t complicated, just too much for this forum. Read the Wealth of Nations if looking for knowledge. It is old (published in 1776…coincidence), but it is relevant.
Thus crashing the entire economy as Asia stops buying our worthless paper to support our no-manufacturing lifestyle.
100% correct-a-mundo!
You need to start copyrighting your posts.
The realtors here are walking around scratching their heads wondering what the heck went wrong…then affirming the NAR’s position that things will “pick-up substantially” after the first of next year…in the meantime, we have lost 3 agents in 2 weeks and 4 more are taking on real jobs…
What city are you in?
Naperville, IL where the market is “different”….yeah, right!
What type of jobs do they get? The job market here in Chicago seems pretty good. Wonder how much $$$ they make now.
Inventory is up at least 1 1/2 x more than this time last year….many are cutting their commissions and several clients have their homes for sale and for rent simultaneously…closings on our in-house listings are way down and a couple of folks here have no become “foreclosure experts”….
“What type of jobs do they get?”
A better question is, “for what types of jobs are they qualified?”
lowering the commission….
everythings negotiable….even the die hard 6% knows that now.
What type of jobs do they get? The job market here in Chicago seems pretty good. Wonder how much $$$ they make now.
They’ll probably try to go back to what they were doing before.
Chicago has one of the most diverse job markets in the country - some fields are doing greats others probably not so much. I just started a new job in software development. When I started looking, I was getting calls trying to set up interviews almost immediately after sending a resume. Had multiple offers within a month. I doubt that all fields are doing this well though.
Fourth!
David Wyss, chief economist at Standard & Poors….. 8% drop over 2 years…..
Rosemary Whatsherface, Realtor….. the worst is almost over…. things look great….
I think I’ll put my money on the S%P’s chief economist any day
“That is quite a bold forecast,’ NAR economist Lawrence Yun, said of Wyss’s prediction. NAR is predicting a much less severe total decline of 1.4″
Larry, Larry, Larry…what was NAR’s prediction for the housing market a year ago, and two years ago? Up, up, up, if I recall. Where’s the “street cred”, my man? Why should we listen to NAR’s predictions, when they’ve been so wrong in the past?
What is the real reason for this? Is it to reassure the public in general? Why would the NAR assume such an unrealistic position when reality begs to differ? Our agents seem to hang onto their every word and disregard what is actually happening in the marketplace. Why???
NAR is really screwing themselves at this point in time. Everyone KNOWS something bad is happening and housing is going down. NAR needs to acknowledge that, get prices down ASAP and get sales moving again. Their job is to facilitate transactions… can’t do that if seller are in denial.
NAR is starving their members by keeping sellers’ expectation up.
May be it’s their strategy in thinning out the rank.
I doubt it. I believe the NAR makes money on the member’s dues. They don’t really care if their members are starving as long as they pay the Realtor’s dues.
NAR does make money on the member’s dues..but they must have money coming in from other sources..gov’t? grants? have heard they have a powerful lobby in Washington…
I believe one of the realtor’s spin lies in the fact that many of them are speculators themselves and they want to unload their own white elephants.
NAR is speaking to Asia, not us. Keep buying MBSs, it will recover soon, just a little speed bump, best to wait it out, your investment is sound. Without Asia, no financing, no sales.
Is it time to start a Lawrence Yun Watch?
Yes, here is quote from ‘Dr’ Yun from Sept 2005:
” The chance of a housing price decline in the DC area is close to zero, in my view. I anticipate that prices in DC will outpace the national average price growth. DC prices will rise at close to a 7 to 10 % rate of appreciation. That’s not the 20 to 25% rate we’ve seen in the past, but it’s still very respectful.”
http://www.nvar.com/newsdetail.lasso?articleno=nvarn100608
It’s “respectable,” not “respectful,” you illiterate.
From this current article:
“Now with the investor-purchase cycle out of the way, traditional factors will drive sales,” Yun said, including economic growth, job creation and population growth, as well as a demographic sweet spot: Boomers are reaching both peak earning years and the time of life when they start to buy second homes.”
Oh yea, all the boomers are gonna buy second homes…. has this guy researched the economic situation of the boomers? And if a boomer wanted a second home, don’t you think they already bought one during the run up?
PS Mr. Yun. Got a clue as to why the Mortgage industry is seeing Reverse Mortgage as the new profit cash cow?
….has this guy researched the economic situation of the boomers?
Of course not. Suzzanne researched this!
No, he meant it: sale prices (i.e. buyers) do need to be respectful of NAR and its sales propaganda.
It’s amazing that they couldn’t find someone who is actually literate to act as their paid shill. Clearly the position pays more than minimum wage, so I can’t see what the difficulty would be.
Boomers are reaching both peak earning years and the time of life when they start to buy second homes.
What? Two houses to maintain? Forget that! Once the kids are out the door we’re “trading down”, prefereably to a low maintenance Condo or Townhouse. The last thing I want to be doing is mowing lawns and painting, etc.
“Boomers are reaching both peak earning years and the time of life when they start to buy second homes.”
LOL. Try “retirement years” and “the time of life when they start to downsize.”
Heh heh… he’s a little late. As HCB says, those “peak earning years” are almost over now. Any second-home purchases have already been made.
Hope.
That is what Yun is all about. People need a cheerleader to feel good about their $500,000+ dollar home. A coworker, who knows I’m bearish on housing, but now the depth of my bearishness, sent me this link to a RE shill article that quotes Dr Yun. Whatever. I’ll send a nice reply, cause I don’t want to piss my coworker off.
But if there is justice, all these sheep that blindly follow the mainstream press and bought half a million dollar homes will get slaughtered
http://www.examiner.com/a-747322~National__local_housing_market_data_mixed__but_District_shows_recovery_signs.html
Yes.
I was thinking of that, and thinking it should be called
“Lereahnce Yun Watch” in memory of our friend.
What are the odds that the NAR has bought up all the possible domain names for a Lawrence Yun Watch blog?
“New Century Financial Corp., the largest U.S. subprime lender in bankruptcy, on Thursday said it uncovered accounting errors in its 2005 financial statements, and probably ‘materially’ overstated earnings for that year.”
An understatement to say the least I’m sure. Have these greedy SOB’s learned anything since Enron/Worldcom? In the case of these fraudulent lenders, we need quick action to put these dirt bags in jail where they belong. I mean come on, the fed let you legally print money for yourselves by lowering any and all standards. Why cook the books as well? Didn’t these scum make enough money without having to do this as well?
Come on get with the 2000’s. Everybody cooks the books, pumps the share price, cashes out their options, and heads for the Bahamas. Enron, Worldcom and Tyco laid the groundwork now everyone is doing it. Leave the pension funds, 401ks and small-fry investors holding the bag.
Patheric scum at New Century. Take a look at what some of those sr. execs were making during the run up. Although I hope many do the perp walk, I doubt any will. And as for my old company KPMG, NC’s auditor, I hope they’ve covered themselves…but I don’t think they have.
Most of the money came from banks and hedge funds who looked the other way. Their shareholders and bond holders are left holding the bag. Look for yield spreads to widen on junk. IMO this is the beginning of a substantial liquidity squeeze that will utlimately bring about a deflation of the credit supply. The FRB has no control over it.
May I be the very first to call you a L.Y.’er?
“‘We’ve been anticipating slower home sales because many subprime loan products are no longer available,’ Lawrence Yun, NAR senior economist said a statement. ‘In addition, increased scrutiny by lenders is stopping risky mortgage origination.’”
LYer! excellent, aladin
Lies are like ghosts. They always come back to haunt you especially
if you have a big lying mouth.
“Always tell the truth…there’s less to remember”.
-Indian Larry, custom motorcycle builder-
“‘It appears the worst of the price correction is behind us,’ said Pat Combs, NAR’s president.”
I’ve been away for awhile. Is this Pat Combs the new hired liar for the NAR?
No Larry Yun is the new corrupt economist shill for NAR. Combs is an exectutive for NAR, so he’s been lying around for awhile (a bit lame but I could not pass that up pun intended).
Just FYI, Pat is a woman.
Are you sure about that? I can’t tell.
http://www.flickr.com/photos/50934565@N00/361394408/
I stand corrected!
That’s just wrong!
Is this the sam Pat on the SNL skit…I believe it was called “Ask Pat?”
No, Lereah was Chief Economist and was replaced by Lawrence Yun - who has wasted no time in filling the shoes of his predecessor with his lies and spin.
Lawrence Yun is NOT yet their chief economist. He still is a senior economist for the NAR.
Actually, I think Scott McIntosh is the new David Lereah. It says Lawrence Yun is a senior economist for NAR, David was the “chief” economist. There was a quote from Scott McIntosh on this board the other day, and his title was “chief economist.”
No matter what the name, they are all the same.
Why hire a person? How about saving some money and use Max Headroom the virtual economist.
“It appears the worst of the price correction is b-b-behind us…It’s always a g-g-good time to buy…they aren’t m-m-making any more land”.
brilliant
Wow, Ben, this is one heck of a posting you put together! Great job.
From the CourierPostOnline, Ben’s link for the Pat Combs quote:
“At least part of the decline in median homes prices in the United States is because sales are moving away from the more expensive homes.” Oh sure. They all want to have it both ways. Subprime caused the whole mess, subprime borrowers aren’t being funded any more. That’s the problem. At the same time, “sales are moving away from the more expensive homes.” Oh sure. Totally logical.
I yearn for the day when the MSM takes people like this to task for the economic nonsense they spout:- of course, the subprime mess almost certainly means that sales are moving away from the bottom of the market and thus the median is understating price declines.
The MSM is not going to bite the hand that feeds it.
90% of the new homes sales MOM increase yesterday was in the South - which has I believe the lowest median house prices - which accounts for that 11% drop in national new home prices. The inability of people to move up into move expensive housing due to their current house not selling just became obvious on the coasts.
“At least part of the decline in median homes prices in the United States is because sales are moving away from the more expensive homes.”
Well, duh. I think you can get this from the definition of the median + a decline in the number.
How much does this person get paid for such brilliant exposition?
“‘It appears the worst of the price correction is behind us,’ said Pat Combs, NAR’s president.”
I love these guys, highest of high comedy. I’d like a job where I can just completely blow off the obvious trends and make bold pronouncements with no factual backing.
It appears the worst part of the Russian winter is behind us.
- Napoleon, 1812
And what does that statement mean, “the worst of the price correction is behind us”?
If the worst of the correction is behind us, is the “best of the price correction ahead of us?”
yes.
He means now the price corrections will get big.
“‘In terms of the home builder industry, the bad times are not over,’ said Gregory E. Gieber, VP of research at A.G. Edwards. ‘This is probably one of the worst recessions I’ve ever seen for housing.’”
A.G. Edwards has a big advantage over east coast pundits, in that they hail from the “Show Me” State of Missouri, as in “Show me some hard evidence that the housing recession is behind us before you blather nonsense in the mainstream press.”
“‘People on Wall Street live in their own world,’ said Jim Campen, an economics professor at the University of Massachusetts in Boston. ‘They don’t understand what’s going on the other end. If these (subprime lenders) couldn’t sell these loans to Wall Street, they couldn’t do what they do.’”
When I hear crying in my neighborhood every night that is when I will know Wall Street finally got the message.
Is your work close enough to Wall Street to hear the THUMPs of bodies hitting the pavement?
You sound like you might have actually lived in Missouri.
Tell you what, the Missouri “Show Me’ state moniker is very much appropriate. You wanna convince anyone in Missouri, southern Illinois, Kansas, No. Arkansas of anything, you best be loaded to the gills with PROOF.
I love that about them.
“You wanna convince anyone in Missouri, southern Illinois, Kansas, No. Arkansas of anything, you best be loaded to the gills with PROOF.”
You mean, except for
a) Jesus
b) global warming
c) the War on Terra
d) Peak Oil
Too funny, and true
But Lawrence Yun, senior economist for the Realtors, said that the small year-over-year price decline of less than 1 percent was still modest compared to the 50 percent rise in home prices that occurred during the five boom years that ended last year.
“We’ve been anticipating slower home sales because many subprime loan products are no longer available,” he said. “Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help stabilize the market going forward.”
He said the big rise in unsold homes on the market could be an indication that sellers are testing the market in hopes of selling their homes and moving up to larger units, which he said would be a positive early sign of a rebound in housing.
I really am amazed that the NAR could have cloned so perfectly David (The Mouthpiece) Lereah. Yun is a bright confirmation that the tag ‘economist’ doesn’t extend to honesty.
I opened up my local newspaper this morning and the headline said ” Sales of new homes surge” below that was Industry posts highest monthly gain in 14 years while prices plunge.
Can someone explain this to me ? because it sounds like total BS. Beer Me Rich
I think you already explained it quite well (”total BS”).
Stucco is right, it’s BS. But the details are in yesterday’s threads. The April month-over-month was a gain in unit sales vs. (a revised low figure for) March. bfd. While median new home contracted prices were 10% or 11% lower than last April. Also, the unit volume was actually below last April too.
“…11% lower than last April.”
Before taking into account the increased use of incentives which are fraudulently rolled into and financed as part of the purchase price.
I said it above, but to expand this thread, the increase in sales came out of the South with its low unit prices. Hence the national drop.
Rich,
When the wheels begin to fall off, the car starts doing some unpredicable strange things. Early this morning, respectable Bloomberg was reporting the “downturn may be over”. They they end the day with this:
http://www.bloomberg.com/apps/news?pid=20601087&sid=akTTdAscSlZ0&refer=home
It’s armagedon out there, save yourself, men!
An old spinmeister trick–release the bad news after the business day so no one notices. Good thing you were paying attention and not starting your holiday like most folks. They only got the good news yesterday and this morning. They’re professional con artists, as you can see.
“Mortgage rates in Orange County spiked this week, at exactly the wrong time for a sluggish housing market. The average rate on a 30-year fixed loan with a one-point fee hit 6.107 percent for the week ended Thursday, its highest level in seven months.”
Supply is getting hit with foreclosures dumped onto the market at the same time demand is withering in the aftermath of the subprime collapse exacerbated by rising interest rates. A perfect storm is bearing down on The OC real estate market.
That 6.107% 30-year fixed rate sure is exorbitant. If that is enough to drive down demand then there truly is no more real demand left in the marketplace.
No kidding. 6.1% is a SPIKE?!?
Actually, it’s more like the second rung on a 30′ extension ladder.
Thank goodness that all the ARM resets have occurred, we’ve weathered all the foreclosure fallout and worked our way through all the vacant homes. If we weren’t such a strong manufacturing economy, this might have stung more. That and when times were good our government and citizens made sure to stock their rainy day funds. That could have been quite a recession for a less experienced capitalist society but through grit and foresight we did it.
That’s pretty funny, but pretty sad, too…
‘You don’t need a second home,’ Wyss said.” Well, this just might be the most scandalous thing I’ve ever heard. Where are Bryson Thaddeous and Irelynd suppose to spend Winter Break now? In a rental with their cousins Maykaylah and Jonathaniel, that’s just preposterous.
OMG, please tell me you had to use your imagination to come up with “Jonathaniel.” He’ll end up tougher than that boy named Sue.
When will prices stop slidding downward?
WHEN THE LAWS OF SUPPLY AND DEMAND ARE OBEYED!
Let’s the whippings begin!
YOY prices are flat in my area of Florida (actually up 1 percent). Number sold is down by about 34 percent. With the existing median around $280,000, I don’t see how this can hold up. We have new 3/2 homes in the area starting at $160,000.
‘If we were fashion designers and they wanted purple polka dots, we might have our own opinion, but we’d probably give them purple polka dots.’
When did a purple polka dots, put someone out of a home with financials screwed for years to come? Or help usher in a recession? Yes, borrowers are to blame, but to act like giving someone a mortgage that would crush them is equivalent to letting someone make a fashion faux pas, is just utterly ludicrous.
And if they wanted crack cocaine laced with battery acid we would give them crack cocaine laced with battery acid.
well, it’s what they want ya’ know. As the old man is fond of saying, you better be carefull what you ask for, it could come back to bite you in the a$$.
Falpping heads on TV just said again, “Today’s numbers are a direct contradiction to yesterday’s numbers.”
The clueless idiots. Today’s numbers are a DIRECT result of yesterday’s numbers. The builders are dumping inventory into a saturated market.
Since house prices got out of whack with fundamentals, including cost of construction, the builders had TONS of room to drop prices.
A large % of the people that are trying to sell today can’t cut prices because they owe way too much. So inventory soars while sells drop.
This could ONLY be contradictory if you’re a clueless dolt that believed the flapping heads at the NAR. To anyone with a clue, this is completely expected!
I think the new home numbers were better because they have dropped prices.Existing home sellers are much slower to react on priceing.A lot of people are buying new homes because of incentives and price drops.New homes only make up about 15% of the market and existing 85%.I expect existing sales to keep going down and new to go up as they did.
And yet another intelligent observation from this blog. Makes you want to grab these idiots and force-feed them a few weeks of Ben’s blog.
Dead on, Darrell. And it only gets better (worse) from here on out.
No kidding. They still have room to drop prices and make a profit. Margins on new homes were easily in the 40% plus range in 2005. They are probably still making 20% to 30% even after discounts. The big builders with lots of resources will weather this just fine. It’s the smaller builders who will suffer the most.
op margins for big builders were 20-25% during the boom , of which about half to 2/3 was land appreciation. Normal margins should be 6-10%. They will undershoot that range during the correction
Check the 10ks and 10qs
Thanks for the clarification. I guess I’m basing it on the figures I pencil out in my neighborhood. New houses on 6000 sf lots going for $750k. My guess is that land and building cost them between $400k to $500k (depending on when they bought the land). 10ks and 10qs will give you the smoothed over national numbers.
Smaller builders might be ok too. I read last week that small, local builders bought their land years ago at cheap prices, while the large, national builders bought land recently. The only thing I can’t figure out is why they all continue to build when there are no buyers out there.
Falpping heads on TV just said again, “Today’s numbers are a direct contradiction to yesterday’s numbers.”
The clueless idiots. Today’s numbers are a DIRECT result of yesterday’s numbers. The builders are dumping inventory into a saturated market.
I see this misunderstanding as a good thing. The sooner the MSM convinces normal people that they can’t trust economic data these days, the sooner it stops getting fudged to manipulate the markets.
Wrenching news from Marvin…
“Marvin Von Renchler, a veteran mortgage broker in Oregon, isn’t ready to shed a tear for consumers. ‘I run into very few people who can legitimately say, ‘I didn’t know (what I was getting into).’”
Though Marvin is being self-serving, he is also probably correct. For all the MSM sob stories, most foreclosures and and will be due to: (1) pulling out equity to live the high life now and gamble that this can continue indefinitely; and (2) FB buying a home that is completely unaffordable, gambling that it will go up in value.
Now I understand why heroin is illegal and should stay that way.
Contrary to libertarian fantasies, plenty of people are dumb, childish, foolish ignorant stimulus-response morans. And there’s enough of them to hurt us all.
Alcohol has done more damage than heroin ever will and look what a success “The Prohibition” was.
Actually, the same people who make laws making heroin and other drugs illegal also control the black markets and are primary investors in the prisons in which otherwise law-abiding citizens are held.
And in regards to Libertarianism, I know there are lots of stupid people, but that doesn’t mean the government is going to protect you from them. I will take my chances with the morons, because I know the govt. is totally inept.
Actually, being somewhat of a libertarian myself, I think the view is, if dumbasses want to destroy their lives or credit through stupidity, let them deal with the consquences. If there wasn’t a Nanny State to reward people for gross irresponsibility, i.e. conceiving children with men who have no intention to honor their parental responsibilities, people would tend to make better choices out of self-preservation.
Yes, why is it that the world is somehow supposed to be made idiot-safe?
Got this from Forbes…. Why are they headlining with the NAR’s party line?
Housing Market Nears Bottom
Evelyn M. Rusli, 05.25.07, 11:31 AM ET
The housing market is about to hit bottom. Existing home sales slid 2.6%, in April, the slowest pace in four years, according to the National Association of Realtors on Friday.
At that rate, the seasonally adjusted annual rate is 5.99 million units, below analysts’ expectations of 6.13 million homes. While the larger-than-expected drop in existing home sales underscored the major correction in the housing market industry watch dogs said that the market is nearing a rebound. Existing home sales total 85% of the housing market.
On Thursday, the Commerce Department announced that new home sales surged an incredible 16.2% in April, far above economists’ expectation of a 0.2% uptick. While existing home sales data represent actual settlements that happened in April, new home sales represents contracts to buy, and are thus more representative of the housing market in the months ahead. (See: “Wall Street Accentuates the Negative.” )
“Today’s data on existing home sales is definitely reflecting soft market conditions, primarily driven by subprime lenders going out of business and leaving clients in the cold,” said Lawrence Yun, a senior economist for the National Association of Realtors, on Friday. Abandoned clients, who must now scramble to find new lenders, are now waiting on the sidelines before they reenter the market. Recently, there has been a rise in mortgage purchase applications, indicating that even in this distressed environment, subprime borrowers are finding new loan products to finance their housing purchases.
Other fallout from the subprime debacle, including foreclosures, will expand the current inventory glut in the market, but according to Yun, foreclosures, “will be a rather minor impact in terms of sales and home pricing.”
While housing prices may remain depressed, especially for new homes, a rebound appears to be imminent. Given the fairly strong economic backdrop, including strong job growth and recent strength in corporate spending, consumer confidence should return to the housing market.
“We may look back and realize that April was the lowpoint,” Yun said. “Our forecast is that, by the second half of the year, existing home sales will pick up and prices will come around by late this year or early next year.”
“Our forecast is that, by the second half of the year, existing home sales will pick up and prices will come around by late this year or early next year.”
I thought the rebound was scheduled for this Spring -); Just like the last housing bust, NAR will call the bottom every month for the next 4 years.
For the NAR, real estate is all about good feelings. They are simply un-equiped to react to a lousy market, so they push the happy talk in spite of the facts.
Pay no attention to the man behind the curtain.
It reminds me of Jerry Springer actually… when one of his looser guests goes off on a tangent of drunken, trailer sex with somebody’s sister in law bla bla and Jerry just cuts them off with ‘ok so lets get back to ….’.
I really need to just stop listening to this drivel.
So true.
but according to Yun, foreclosures, “will be a rather minor impact in terms of sales and home pricing.”
Let’s archive this statement for future ridicule.
Did Yun give this speech in front of a “Mission Accomplished” banner?
“housing market industry watch dogs said that the market is nearing a rebound.”
Excuse me, but since when does Larry Yun, the NAR’s new chief cheerleader, qualify as a industry watch dog? An industry lap dog is more appropriate.
“‘The market is finally getting into its head that the Fed’s not going to decrease rates, said Josh Lewis, a mortgage broker in Costa Mesa.”
Duh. We’ve got our massive federal deficit to finance and all the other central banks are RAISING rates, not lowering them.
If the fed were to cave and drop short term rates, then long term rates will spike up to compensate for inflation fears.
Either way, the housing market’s dead meat.
So far the dollar has borne the brunt of the housing bust, while the bond market has held reasonably steady and stocks have spiked in a new bubble. How long can the bond market ignore building inflationary pressures and other CBs besides the Fed taking action to stem them? Something’s got to give…
The bond market doesn’t ignore “building inflationary pressure.” Long rates have stayed down because the bond market does not perceive the inflationary pressure that many of those on this blog believe is so evident. Look at charts of long bond interest rates back in the 70’s - rates were up huge when inflation was spiking.
Now, one can argue that long rates would be higher w/o foreign buying of long dated bonds, but that’s not the same as saying the bond market is ignoring inflation. To check out my point, look at the breakeven inflation rate (BEIR) on long TIP’s - Treasury Inflation Protected Securities. This is the first place you’d see inflation worries. The BEIR (the market’s expectation of inflation) is about 2.57% today on the longest maturity.
does this necessarily imply that the market believes that the official government stats on CPI will be understated by 2.57 points in the time frame you mention? I mean, if it’s inflation-protected, why would I want a discount?
This was in Craigslist inland empire, looks like he’s in deep trouble
http://inlandempire.craigslist.org/rfs/332596831.html
Hellsperia?
no thanks
Check out the whole set of listings: http://inlandempire.craigslist.org/rfs/
- “Extremely motivated” x 2
- “Short sale”
- “Foreclosure” x 2
- “Needs to sell”
- “Walking away” (!!!)
- “Must sell” x 4
…and that’s just the titles. Click on a few and you see “We’re facing foreclosure”, “short sale”, and “all offers considered”. Looks like everyone in the IE wants to sell THIS WEEKEND. (The few that don’t are still advertising wishing prices: “$30k below zillow, firm” Hahahahaha!)
From that ad: “I’m not interested in selling, it will take me too long.”
You signed on for a 30-year mortgage and you think selling will take too long?!!
Anyone know what about to LAY (Leslie AppleHEAD Young). She’s been MIA for a while now. Damn I miss her pathetic sound bites. She brought so much laughter to the HBB. Come on LAY, we know you’re dying to run your mouth.
She’s at a dominatrix convention for the month of May.
Her and Mary Meeker are on an “alternative lifestylel” cruise together…
Lots of negative headlines - worst must be behind us, right?
The CEO talking head from ReMax is going to talk on CNBC in a few minutes.
Somebody get me a shovel because the BS is getting deep and it’s a great time to buy in Wyoming !! Beer Me Rich
Off The Rack Financing
“But many say they just do what the market wants. Peter Paul, considered a pioneer in bringing loans to well-off borrowers with untraditional financial histories, likens mortgages to clothing.”
“It’s the first time the pace of sales fell below the 6 million level since June 2003.”
And this is just a warm-up. As lenders continue to tighten their purse strings, and prices soften even further (putting more people underwater) watch transactions fall off a cliff.
“…but now some economists say they’ve got a long way to fall before bouncing back. David Wyss, chief economist at Standard & Poors, has forecast a price drop of about 8 percent for the 24-month period through the fourth quarter of 2008.”
He calls this a long way to fall? After the percentage increases the last few years of the run-up? Yikes, I’m hoping prices fall a lot more than that.
“‘It appears the worst of the price correction is behind us,’ said Pat Combs, NAR’s president.”
Another graduate from the NAR soundbite college!
NAR has reached the rock and a hard place. New sales go up, which causes the median price to crater. Then existing homes crater and months-of-sales to rise.
There must be some dark room in the bowels of their building where many people are working overtime on the spin cycle.
I really don’t get it. For sales to appreciably pick up prices have to drop — dramatically. So why doesn’t NAR just get with the program, do what they are supposed to do, and facilitate transactions by spinning this tag line:
Lower your price until the house sells!
I don’t see how prices and inventory are up since Jan. WTF?
http://tinyurl.com/2uluts
“‘It appears the worst of the price correction is behind us,’ said Pat Combs, NAR’s president.”
Can they please stop spewing this shit!!! I am sick of it. These people have no clue what the hell is going to happen. The NAR made predictions and the people on this blog made predictions. As far as I see it, we have a helluva lot more credibility than they do. We were right. We also know it is going to get much worse before it gets better.
The only thing about to save the “numbers” for the NAR is the Fed and the Treasury department printing more money. That will also screw us! Yeah prices went up 2% but inflation was 10%!
They are desperately trying to work on buyer psychology. Unfortunately, affordability is the problem, and aside from handing out money, it’s game over.
Touche. Its one thing for Britney Spears to open her mouth, its another thing for you to go up and kiss her.
to open her
mouthlegs,That is the funniest Stucco post I’ve ever read.
What would the mortgage on this be?
http://seattle.craigslist.org/see/rfs/337615532.html
Before or after the interest tax deduction?
After, and that’s assuming I’m put 10% down, which is about $70.
Having recently been looking to rent in this area, I’m guessing that would rent for between $2K and $2500/mo. Maybe closer to $3K–they don’t quote # of bedrooms or baths or sq-ft’age.
I would say definitely less than half as expensive to rent it as to buy it!
Haven’t heard from that wanker, Gary Watts, recently. Come on Gary, give us some wisdom…..tosser……
“NAR is predicting a much less severe total decline of 1.4 percent through the slump, …”
Uh — we’re already off 10% plus in my hood. What is this bogus prediction supposed to mean, if the predicted decline is smaller than what has already occurred on a national basis?
“‘The run up,’ Yun said, ‘was an investor-demand driven boom, and it was followed by an investor-driven collapse.’”
1.4% decline = ‘collapse’
“‘That is quite a bold forecast,’ NAR economist Lawrence Yun, said of Wyss’s prediction.
Here’s another Yun for you.
Your realtywhores will be fighting those squirrels for Peanuts BEFORE this Bust is OVER !
WOW!!!
Took a couple weeks for Phx area houses to jump from 52,000 to 53,000. About 2 days ago we broke 53,000 for the first time. Just checked. Now north of 53,400. We could jump 1000 in a week!
Sorry, that is Maricopa county. Total PHX market has been pretty stable at 60,700 ish for a week. Jumped 300 today.
I think what Yun meant to say was “Now with the investor-purchase cycle out of the way [we're moving into the investor-dumping part of the cycle], and traditional factors will drive sales [right into the crapper],”
From CNN money article on pedicted falling prices: “Duncan’s analysis includes a number of supply-side wildcards - some of which could send prices even lower: cancelled sales are not immediately counted, foreclosures are spiking and owner/occupied vacant homes are at a record high.”
Duncan of MBA said, “owner/occupied vacant homes are at a record high”. Are the owners occupied? How can a home be occupied and vacant at the same time. This should read, “Foolish buyer vacant homes are at a record high.”
If prices are dropping in April and May — just think about what they’ll be doing from September-January.
Maine home sales down, prices up
By Portland Press Herald Staff Report
May 25, 2007 02:24 PM
The number of home sales statewide fell in April, but prices were up modestly from a year ago, according to the latest statistics released by the Maine Real Estate Information System Inc.
The number of homes sold was 12.2 percent lower this April than last year, while the sales price for an existing single-family home rose 5.79 percent. The median sales price for the 921 Maine homes sold reached $201,000, up from $190,000 last April.
In Cumberland County, the state’s busiest housing market, the number of homes sold fell by more than 7 percent. The median price rose nearly 2 percent, to $244,250.
Nationwide, April’s sales were down 11.2 percent compared to last year. Prices fell slightly. According to the National Association of Realtors, the national median existing single-family home price dipped 0.9 percent to $220,500 in April.
In the Northeast, sales were down 8.8 percent. The median existing single-family home price was $283,600, down 0.6 percent.
http://news.mainetoday.com/updates/012284.html
The first link to CNN is great - comments are quoted from the cautious and the outright bearish. Now that the truth is reaching the mainstream media, what is left for the blog, Ben? We mentioned once opposition to government bail-outs and reminding people who call the bottom of the market of their previous bottom calls. Is that enough, or where does the blog go?