Housing Inventory Up 32%, Median Prices Fall: NAR
The existing home sales data for February is out. “Existing-home rose in February following five months of decline, indicating a stabilization is taking place in the market, according to the NAR. Total existing-home sales ncreased 5.2 percent to a seasonally adjusted annual rate1 of 6.91 million units in February from an upwardly revised pace of 6.57 million in January, but were 0.3 percent below a 6.93 million-unit level in February 2005.”
“David Lereah, NAR’s chief economist, said mild weather appears to be responsible for some of the gain. ‘Weather conditions across much of the country were unseasonably mild in January and likely were a factor in higher levels of buyer activity, which boosted sales that closed in February,’ he said. ‘Higher interest rates had been tapping the breaks, notably in higher-cost housing markets since mortgage interest rates trended up last fall.’”
“NAR President Thomas M. Stevens from Vienna, Va., said comparisons with market performance over the last five years distort what people should expect from housing as an investment. ‘Housing is simply returning to a normal market, where annual home prices will rise a little faster than the overall rate of inflation,’ said Stevens.”
“Total housing inventory levels rose 5.2 percent at the end of February to 3.03 million existing homes available for sale.”
“Lereah said sales activity at present was really a ‘tale of two cities’ with some of the hottest markets showing declines while some medium priced markets still posting strong sales gains. He said that sales were down by double-digit levels in such hot sales markets as Phoenix, Fort Lauderdale and San Diego. He said, by contrast, sales were up by double-digit amounts in aeas such as Indianapolis, Albuquerque and Houston.
“The boost in sales in February was likely due to warmer than usual weather in January, when sales that were closed in February were initiated, the realtors said. On a less positive note, the supply of unsold homes also rose 5.2% in February to 3.03 million, close to the all-time record of 3.04 million in 1986.”"
Looking at the PDF file on the linked page, the national median is $209,000, down from $220,000 in August 2005. In the west it’s $306,000, down from $327,000 last August. In the south, the median is $182,000, down from $189,000 in October. In the midwest, it was at $160,000, off from $176,000 in August, and the northeast was at a high of $263,000 from $250,000 this month last year. Sales by region were as follows, all YOY: NE up 2.6%. MW up 1.9%. South up 3.1%, and the west was down 10.6%.
Inventory is up 30.2% year over year and months supply is up 32.5%. February’s nationwide median was the fourth straight monthly decline.
As if .25% increase next Tuesday weren’t backed enough into the cake
Exactly. I expected the Feb numbers to show a small uptick as the increase in rates scared the people that have been sitting on the sidelines into taking the plunge. With the last strugglers out of the way and rates heading still higher, I expect we will resume a vertical decline with the April/June/July quarters. Please remember that the U.S. rates are no longer just tied to what our Fed does. With a huge deficit that needs ever increasing foreign capital to be services, what the ECB and Japan does with their rates, indirectly affects ours. And the ECB has shown 4 more rate increases in the horizon and Japan has just reversed course from 0% to higher rates. That means that the U.S. treasuries have to continue showing a better return delta to entice foreigners to continue funding our debt. So even if the FED was to stop raising rates, rates are going much higher because Europe and Japan just starting with theirs. And with every increase of the ECB and Japan, it makes the U.S. treasuries that much more undesirable. So the only way to deal with the Bush ballooning deficit is higher interest rates here in the U.S.
‘Housing is simply returning to a normal market, where annual home prices will rise a little faster than the overall rate of inflation,’ said Stevens.
Sorry, boys, not even close. A ‘normal market’ has 10% down for the median buyer, interest rates at 8.25% and average days on market of 6 months. Should these normal conditions return and current home prices remain stable - then you can talk about normal. Till then, hot air rules.
In the early 80’s it was 20% down 12% fixed rate.
Interestingly enough, my -ex and I made squat, and we still managed to get into a house after driving used cars; living in a modest mobile home and saving our money for 5 years after college.
F*ck these 20 & 30-something’s…They want the McMansions and double BMW SUV’s with no virtually sacrifice.
Boo-hoo for Texas Heidi.
The early 80’s were the other end of the range of possibilities from where we are today. Sometime between then and now, we went from abnormally high rates to abnormally low ones (the Conundrum)…
“F*ck these 20 & 30-something’s…”
Have some pity on them — after all, these 20 & 30-somethings were raised by baby boomers, so they would never have been taught any fiscal prudence, tact, or economic common sense.
and the baby boomers were raise by ‘the greatest generation.’
“The greatest generation”? You bought into that book’s hogwash. The “greatest generation” lived in the 1860’s and fought the Civil War. That book was just too kiss up to the market too sell books. The 30’s generation set up the “New Deal” and “Great Society” and have proceeded to empty social security and medicare before their grandchildren can get any. The “greatest generation” control the AARP and have benefited financially from the rise in housing prices over the last 50 years. They then passed prop 13’s so they would not even pay their share of property taxes. The 20-30 year olds are desperate. Husband and wives must work. To bad about raising their children. The X’rs feel they must speculate before it is too late. It is too late. The price to be paid? A huge decline in the USA’s standard of living. Look out for a major generational divide.
Well said. “The Greatest Generation” spawned the most worthless, self-centered, and infantile generation: the Baby Boomers. No doubt some among them were great — like my grandparents — but as a generation, their legacy is a ruined and bankrupted country.
What? Empathy and pity for poor Texas Heidi as she lives in a 10X better house than I ever did at 30, simply because I was able to apply a modicum of common sense and fiscal restraint to the circumstance?
Not bloody likely…
I’n not a fan of the blame game. Be responsible for your own actions.
Greed is greed.
Nice language to complement your unfair generalization of a generation. Your historical anecdote is sadly not relevant in today’s insane market. Please, do provide an example, complete with math, to show how a couple today that “makes squat” (let’s make a generous assumption that squat is equal to 25% below the median household income) could afford to save a 20% downpayment on a SFR over the course of five years in any of the bubble locations.
This is not about fiscal prudence. Once houses hit 8x - 10x the median income for an area no amount of scrimping and saving will make a house affordable under traditional 20% down, fixed APR conditions. This is true for people making good money, and is doubly true for people “making squat”.
Believe it or not, the 12% interest rates that prevailed when you made your first purchase made putting 20% down much more feasible.
Of course — because higher interest rates make borrowing more expensive, which (when there is a maximum monthly payment people can afford) requires the principal to be lower — and therefore makes a 20% down payment an absolutely smaller number.
You’re so wrong. This has EVERYTHING to do with fiscal prudence. If you can’t afford it, why would you take that kind of stupid risk?
Amen! You clearly explained the “I’ll get mine - whatever the cost” attitude so pervasive today. With the help of Easy Al, the dumb and blind (50% of the population?) are now balls deep in a quagmire of debt. And they have nothing to blame expect their own “keep up with the Smiths” stupidity.
“On average” housing appreciates at just a bit over the pace of inflation. But that “average” is over the long haul, which includes periods of rapid appreciation and periods of depreciation.
The NAR is trying to trick buyers with faulty statistical logic. Don’t be fooled. After the record appreciation of the past few years, the only way to return to “normal” long term growth rates is through a large price depreciation.
Peterbobz: Thank you. Very well put.
Everyone I speak with still say that I’m nuts to even think that this housing boom is finished. Now this 5% increase in sales. I really think Americans have lost their capacity to think.
Just wait until they lose their capacity to borrow, or to pay off the balance on that I/O Option ARM over a compressed 25 year period, after it resets…
If this housing bubble goes on any longer, I’m going to lose MY capacity to think.
So depressing to keep seeing things go up, up, up. Well, I guess it’s good to see inventory go up, up, up too. But when will this madness stop?
“mild weather appears to be responsible for some of the gain”
I’ve seen more economic data attributed to the weather this year than ever before… everything from retail sales to energy use to housing. Could be true, but really come on you’d think these analysts could dig a little deeper sometimes.
>>I really think Americans have lost their capacity to think.
most of these transactions are funny money. remember, as little as 5 years ago almost 70% of amercians owned homes so while not all properties/geographies went up, all boats did rise. wouldn’t you look at putting a down payment of $200k from an inflating asset different than if you had to save that via blood, sweat and tears?
i know this is going to seem like a really big stretch however is there any possibilty David L. is correct and there is no housing bubble and it will be yet another year of price increases?
Umm, Stanley? “there is no housing bubble and it will be yet another year of price increases?”
If that happened, it would be further evidence of the existence of a bubble. You don’t understand the term. A bubble is a divergence of value from fundamentals. You seem to think a bubble means a drop in prices. That makes no sense.
I should say “you seem to think a bubble means an *immediate* drop in prices”
No. These are delayed closings from Jan.2005 in the higher end markets that are bringing up the numbers .There is always a ave. 2 month lag time from buying to closing .
Best definition I’ve read of a bubble, from “The Wisdom of Crowds”:
“During a true bubble, price and value lose all connection. Prices rise because people expect them to keep rising. At least they do until the moment when they don’t. Then comes the stampede for the exits.”
Prices have stopped rising and the surge in inventory is the stampede for the exits. Everyone should know what happens next
Keep your eye on that growing mountain of inventory, Stanley…
I know it is hard to pay attention — about as fun as watching paint dry.
or grass grow…
But eventually GRASS NEEDS TO BE MOWED, and prices will need to be CUT, as well.
quick little anecdote:
The area that I watch (Simi Valley for those who are familiar with Ventura County) has a soaring inventory. Keep in mind that it is a tiny little valley. Last Thursday there were 613 homes on ZipRealty, seven days later there are 672 (as of about 5 minutes ago). That is 59 more listings and nearly a 10% jump. IN A WEEK.
It’s finally starting in my neck of the woods. Yay!
The article plainly says that prices have DECLINED, not increased. It also says that the unsold inventory is at near record levels. Therefore, more price declines are ahead.
I think the way to interpret what is happening (using supply and demand) is to say that recently, demand has fallen a lot, resulting in large unsold homes and drops in sales. But initially prices stayed high, as sellers were late to realize the price drops, and we had a surplus and were in disequilibrium. Now, we’re seeing evidence of reduced price, and sales increasing slightly as the market moves toward the new lower price.
Everything in this article points to a drop in demand, and sellers beginning to price accordingly. It does not point to an increase in demand. Yes, sales may have gone up somewhat, but that is just because prices are starting to fall.
The 3 homes I was interested in in my target town are all gone. So even if I sell my home after dropping the price I’ve got no where to go. With all those sales going on around them sellers there aren’t going to be in a negotiating mood.
>is there any possibilty David L. is correct and there is no housing
>bubble and it will be yet another year of price increases?
Anything is possible. It’s not like we’re all God; we don’t know exactly what will happen, or when. I myself am just playing the probabilities game. However, from my view of southern Cali and central coast Cali, I’ve already seen price drops (5%-10%) from the peak last fall. Will it fall more? Will other markets fall as well? Will it be the end of civilization as we know it? Nobody knows. Not even David L. But try to keep in mind that he may have a vested interest in keeping prices up. (You should also keep in mind that some of us here have a vested interest in seeing prices come down).
Well at todays prices i can get more SQft of a home for what i sold my homes for last year, this is a fact, however i will still wait till this all plays out as its been in play since the start of 96 when homes in my area started to price up after the last bubble fall.
—AL
Also, return to this topic in August…I’m calling it as the peak (or near), let’s see how well I do. It will be interesting to see the YOY numbers for August 2006…
I’m following the inventory in the central coast. I think the market “peaked” in July 2005. There will be alot of lag, as homes have to sit for a while before sellers lower prices.
Northern VA inventory up, up, up. Coffee almost came out my nose when I read this agent’s new listing today.
Many realtors seem to lack basic writing skills. What are they going to after the crash?
They will all find jobs writing instructions for electronic products coming from China.
What’s a “Nuck”?
I believe it is a plastic surgery procedure.
To be more specific, it’s a plastic surgery procedure around the neck area. haha
You know, a breakfast nuck. C’mon, get with it Claudia!!! LOL!
It’s an OVERPRICED “Nook”.
It’s that little chuckle you do when you find out how much the seller wants for this gem. Kind of like “nyuck nyuck nyuck” only quieter.
You get a gold star for the Larry, Moe and Curly reference.
you guys are all too funny!
Was that supposed to be “Nook”?
I work with a lot of Chinese and Vietnamese engineers, the way the English is written here indicates this person is probably also from one of those countries. Obviously English is not their first language.
wouldn’t you look at putting a down payment of $200k from an inflating asset different than if you had to save that via blood, sweat and tears?
Certainly, money gained from an inflated asset feels easy or “funny”, but they’re, in that case, still buying another equally inflated asset, right before the air is set to come out. Regardless where they made their gains, it just seems to me stupid to buy right now, and apperantly a lot of people disagree with me on that.
“it just seems to me stupid to buy right now, and apperantly a lot of people disagree with me on that.”
You will find few people on this blog disagreeing with you.
Which is why I read. To become informed, and to keep my sanity.
Always more fun to gamble with other people’s money, especially when there is no certainty over whether it will ever have to be repaid…
The 5% inventory increase was a month over month number. From the update:
Looking at the PDF file on the linked page, the national median is $209,000, down from $220,000 in August 2005. In the west it’s $306,000, down from $327,000 last August. In the south, the median is $182,000, down from $189,000 in October. In the midwest, it was at $160,000, off from $176,000 in August, and the northeast was at a high of $263,000 from $250,000 this month last year. Sales by region were as follows, all YOY: NE up 2.6%. MW up 1.9%. South up 3.1%, and the west was down 10.6%.
Inventory is up 30.2% year over year and months supply is up 32.5%
CNBC repoter this morning had the spin working on these numbers. She made is seem far to rosy. I knew once the data came out it would not be so great.
CNN too. I find it hard to believe these so called pro’s believe the crap they’re spinning. Is market manipulation at an all time high, or are these guys just plain stupid?! Their short-sighted view points have to be intentional, or their folks way over paid for their fancy college educations.
Neither David Lereah nor KB Homes’ CEO Karatz (appearing on CNBC this AM) really seemed to believe fully the NAR’s February Existing Home Sales numbers. Karatz was notably subdued and spoke of “choppy” numbers and Lereah called them an “aberration”.
All of which makes me wonder about the CBOE Futures Exchange plans to launch futures contracts based upon median prices in the NAR’s existing-home sales data. How successful will this new derivatives product be if there is some question as to how well the underlying index represents the state of the housing market?
Specifically, what if I decide to purchase a home now and hedge my purchase by shorting the underlying futures contract? Then I watch as my neighborhood comps go down while the NAR’s numbers go in the opposite direction? Instead of being hedged I’m doubly screwed: both the value of my home and the value of my short position go down.
Mad Tiger,
I saw some TV media coverage on the upcoming Chicago Mercantile Exchange where they were developing 10 cities that people can hedge their bets on whether housing prices climb or fall.
I have never heard of this stuff before, but I think there is a fairly blatant “subliminal message” there- just the fact that Housing Futures Contracts can now be purchased.
It begs the question: “Well if Real Estate always goes UP, why do they allow traders to BET that it will go down??”
These guys (Lereah and Karatz) are human, and hence as subject to the stages of grief as the next guy. Current stage = denial…
Get Stucco,
Well said. I might add that these guys have also been on a MAJOR real estate pricing induced “High” for the last several years…
And, as with any Drunken Stupor or Drug Bender there is always a LAG between the EUPHORIC high and the reality that one needs to come back to “reality”.
These doods are definitely COMING DOWN and will soon be experiencing their CAREER HANGOVER. Ouch…
I wouldn’t touch those things with a ten-foot pole. There are a whole host of reasons to stay away from these contracts. As noted here many times, housing is not a commodity. Housing stock composition changes over time. The distribution of houses (and their prices) that sells changes over time. Both of these things can change the index value w/o a clear connection to rising or falling RE “values”. Worse yet, these contracts are essentially non-arbitrageable. Unless someone is going to play the futures and buy enormous quantities of RE (i.e., arbitrage the prices) there is nothing to keep the future and the prices in any relationship (in the short-term). To be sure, the future must converge to the spot when the contract expires, but in the meantime you could be subject to large unanticipated swings in the future and the margin calls that come with it. This is outright gambling to me. This will be an illiquid, immature market for a long time (if not forever). Caveat emptor. Just my $0.02.
“Housing stock composition changes over time. The distribution of houses (and their prices) that sells changes over time.”
They thought of this; the CSW index is based on repeat sales of the same house. Not sure how this works when prices are in a free fall, however; if no comps are currently selling and inventories are steadily building, then I guess the contract stays at last year’s price forever?
Professor Shiller, are you listening to me?
What’s a “nuck”??
I think it’s a ‘nook’ like a breakfast nook. I heard somewhere that realtors are publishing a dictionary for the general public. It’ll include definations for cozy, unique, Quintessential, charming, soft landing, etc.
Don’t forget “one of a kind”
“Great Opportunity!”
“Little Charmer” (although I already know the definition = piece of crap)
Quaint.
The one here is “Pottery Barn Pretty”.
Creampuff, Hanyman special, coveted, exudes, cottage…
Lots of euphamisms for SMALL OLD PoS!
“pied a terre” or some such. Over here in yuppieville realtors like to throw in French language phrases. I don’t know if it is to show off their “sophistication” or imply something about the house in question.
Honey, stop the car!!!
“Emotional” used alot here in Socal ads…
N VA
I like how the realwhore spills the beans= already bought means tide to the railroad tracks
This blows me away … even realtors that can spell post all these photos of unfurnished rooms that scream “double mortgage”, or betray true DOM with some crap about Thanksgiving in the description … this is a level of basic attention-to-detail failure that would get most people in most normal jobs fired instantly.
HURY-UP! … truer word(s) never spoken, apparently …
For all you new home buyers let’s hope the central banking system (especially China) does not do anything funny this year. When you talk about housing , it is the microcosm of what can really happen, if china decides they dont want to bail out the U.S. as much as they are doing now….that spells disaster of a weaker dollar causing inflation to rise. Look more at the central banking system and China, that will tell you when the bubble will really start deflating.
China is stuck between a rock and a hard place–they seem to be getting more uncomfortable holding so much in US bonds, and dollars just piling up like snow drifts, but they also don’t want us to stop buying the stuff the make, hence the reluctance to let the yuan fully float. A floating yuan would be inflationary for us, but right now it’s value is supressed, causing an artificial imbalance. So would the possible gain for American manufacturers offset the inflation? Hard to tell–the alleged experts haven’t been able to figure that one out, but my gut feeling is that it might.
It’s the US that is forcing China to float their yuan or face 27.5% tariff on Chinese exports to the United States.
The dollar will likely fall 5 to 10% this year because of the pressure from the US.
Talk about a shot in the foot… Ouch!
The NAR assertion that a homeowner’s return is far greater on a home, where he only puts down 5% put gets the gain on the entire 100% of the value of the house (i.e., put $5K down for a $100K house, which if it rises 5% in a year, means you get $5K in profit, i.e., 100%) has a flaw.
It ignores that the buyer is still paying interest on the entire balance of the loan. So the appreciation has to be GREATER than the loan interest rate, which is now around 6%. Loan rates are moving in the opposite direction of home price increases. So, it’ll be tough.
Yep. Not to mentioned that the method of interest
cacluation is different between money used to payback
a realestate loan and elsewhere (ie CD’s). In other words, interest
on a CD will plot as a linear slope, R/E loans generally plot
as a power curve. (ie. exponential)
Not to mention all the other expenses–such as property taxes, utilities, and insurance–which are increasing more rapidly than the official inflation rate.
Not to mention other often overlooked carry
costs such as routine maintenance. One of
the great attributes of a CD or TB is that
they don’t require a new coat of paint!
(whose costs are rapidly increasing. Slightly OT,
but anyone been to Home Depot lately? Recent
cost increases of basic materials — lumber,
paint, copper pipe, etc are incredible!)
Given that there is a vanishingly small number of first time home buyers in San Diego who can afford prices where they are now, I am wondering how long the market can sustain itself without this buying segment. Is it possible to maintain the level of real estate transactions and escalating prices without the bottom end? If so, I don’t see price declines for a while yet…
You need first-time buyers because they initiate the “move up” chain reaction.
The only thing that will kill the bottom end (which fuels the “move up” market) is when the easy credit spigot gets shut off. Lenders are still lending to anyone, still selling neg-ams and I/O’s and 40-yr loans, still doing low-doc and no-doc loans — I think they need to keep volume up so badly they’ll only shut off the spigot when the feds are banging on their door or the townspeople have chased them back to the castle angrily waving torches and pitchforks. This could take awhile.
When the market appetite for MBS wanes, as holders see losses, you will see an abrupt halt to the BS lending. That’s a guarantee as most MBS are sold as conservative investments to those not expecting a loss of any kind in exchange for moderate yields…
This NRA housing data reported today is either extremely lagged, or totally without credibility. Totally uncollaborated by virtually every account coming out in the local press or the MBAA purchase index. Amazing that the cognoscenti would even trade on this.
They may be getting the August peak (Sept. 9, 2005) in prices though.
the national median is $209,000, down from $220,000 in August 2005. In the west it’s $306,000, down from $327,000 last August. In the south, the median is $182,000, down from $189,000 in October. In the midwest, it was at $160,000, off from $176,000 in August, and the northeast was at a high of $263,000 from $250,000 this month last year. Sales by region were as follows, all YOY: NE up 2.6%. MW up 1.9%. South up 3.1%, and the west was down 10.6%.
Odd how the NAR uses the yoy number until it doesn’t suit them, so they switch to the monthly comparison for their headline 5% increase in inventory. There are 700,000 more houses for sale than a year ago, and prices have been falling for months.
Nice catch What’s even more bizarre and suspect is they are using monthly comparisons for months they just got through describing as notoriously unreliable, as they are subject to huge swings because of holidays etc etc… - More bullcrap.
Well Said Ben.
Seems like that “practice” is happening every day in the news here in Santa Barbara. Recently, they were comparing averages that go back 5 years ago vs. YOY and the comparison to what happened just last year.
Go figure. Literally, that’s what they do… they “figure” some angle until the numbers line up with a POSITIVE outlook.
Oh well, their time will come… Time to pay the Piper.
In every bubble there is ALWAYS a dead cat bounce. Look back to 1929, look at the CA bubble from the late 80’s . . . there may be a time 6 months down the road when people jump in and there is a bounce, but this one has a long way to go down before it had hit bottom.
Every bubble? Please inform us when the dead cat bounce hit the Japanese real estate market post-1990, for a recent example.
I withdraw my previous comment. Let me use my courtroom-like precision: Bubbles in the US, including, but not limited to, the 1929 stock crash AND California’s last RE bubble (not including the present bubble, if indeed, we are in the midst of that bubble,) contained a phenomenon known colloquially as a “dead cat bounce” hereinafter referred to as the “DCB”. In those and other bubbles, the DCB was exemplified by rising values incongruent with underlying value, a slight drop in price, followed by a short period of increased price, followed by a longer (in either duration or value) drop in prices, also including, but not limited to, increased inflations contributing to a drop in real value.
I speculate that this could account for the numbers released this month, but this is not meant to be taken as legal advice. Please seek independent legal representation when utilizing any of the information herein contained.
LOL
That “bounce” happened last spring. This “cat” has no rubber left in him, his bouncing days are over.
I agree. IMHO the “top” of the market was in the fall of 2004. The cat bounced over the summer 2005. With starter homes running at about 300K, First time home buyers are just priced out.
Agree as well. Peak sales were in 2003. Prices peaked in a rolling fashion. They peaked in many areas of San Diego (and Vegas???) in 2004. This was also the time of LOWEST inventory. At that point in So Cal, inventory started screaming up — and prices were down — until the DCB in spring 2005. The DCB was short and shallow. We will get many along the way, each with a lower high and lower low. The bounces will become shorter in duration as well. Last year, the sales slowed down a lot around Easter — closings shown in May/June/July of 2005.
I’ve been humbled by last year’s DCB. Hope this slowdown keeps the momentum. It does seem to be doing that, so far.
This is a chess game, where the end game is to keep the dollar from falling off a cliff and to let the the US economy down slowly instead of busting it even though it can’t compete anymore. That way instead of a crash with headlines it will be slow slippage and may sneak by underneath voters’ noses come November.
This is the reaction which was desired, sharp $ strengthening:
http://www.bloomberg.com/news/markets/currencies.html
WTF should housing sales slow down?
Long term rates are like up only a point from a relative 5.25 to 6.25/30 yr. even with Easy Al’s 14 FED increases
Rates need to run to 9/9.5% to even have a chance at slowing this train down.
Short term rates have pushed this market to a cliff on Mt Everest. You can try to convince yourself all you like. As interest rates climb and affordability numbers appoach ZERO, will that be enough to convince you? As it is, these figues are already in the single digits in CA.
There’s a very long way to go down from here unless inflation hits 20%, which in the end, amounts to the same thing - A HUGE LOSS…
20% inflation = 23% mortgage rates, unless BB turns out to be really skilled at manipulating the bond market…
From the update:
‘The boost in sales in February was likely due to warmer than usual weather in January, when sales that were closed in February were initiated, the realtors said. On a less positive note, the supply of unsold homes also rose 5.2% in February to 3.03 million, close to the all-time record of 3.04 million in 1986′
Sales typically rise when prices are dropped, and what would the inventory be if the weather hadn’t been so good?
Everything is down on the markets except the HBs… Somebody explain to me how this report is bullish for the HBs!
The way I see it this will give BB reason to keep increasing rates (strong economy) which is why the rest of the market is down. Higher rates will kill new build sales entirely!
How is this good for HBs?? I think I’m about to up my short position on them, but a little wary of what tomorrow’s report will bring. I just see the HBs getting pumped right now and will be ripe for a sharp drop next couple weeks.
I agree. Wait for them to get pumped up, then get short. Patience will be rewarded. TOL shed 50% of its value since last summmer ($60-$30). They have been beaten up. There are always brief bounces in downmarkets. Be patient and pick a good entry point.
Share buybacks… Ugh!
GS,
I was thinking the same thing. Nothing like a little “pump and dump” for the insiders.
here’s the stats on resale homes here in orange county:
1/1/06 to 1/31/06 1818 homes sold per MLS
2/1/06 to 2/28/06 1,913 homes sold per MLS (volume up 5.2%)
but here’s some other stats as well
1/1/06 to 1/31/06 1,818 homes sold
1/1/05 to 1/31/05 2,644 homes sold (-31.2% on year to year basis)
2/1/06 to 2/28/06 1,913 homes sold
2/1/05 to 2/28/05 2,513 homes sold (-23.9% on year to year basis)
2/15/06 to 3/14/06 2,145 homes sold
2/15/05 to 3/14/05 3,217 homes sold (-33.3% on year to year basis)
where have all the buyers gone??? it is true though that average(mean) prices have increased from $727,752 on 1/1/06 to $733,696 on 3/14/06
The NAR reported sales volume for February does not reflect the activity we saw in Northern NJ. Not even remotely, we saw Feb ‘06 sales were down 18% over January ‘06.
Observed activity was more in line with the estimated drops.
grim
Northern NJ Real Estate Bubble
As far as spin by the media, lets all remeber the dotcom mania, all of these “experts” were on board. I used to laugh at them then, especially on CNBC, the funniest thing was when they would say so and so stock “got a big bounce today” or some thing like that, with no mention on any background info on why this was happening or if it should be happening. All of these characters on the business stations(ie Maria Bartaromo, Jim Cramer etc) are just in it for flash and ratings.
Now if you really want to see what real experts think, see what the people that didnt believe all the dotcom hooplah think about this bubble such as Buffet, Siegel etc.
As a side bar , none of the dotcom boosters ever said they were wrong(worst offender was Cramer who still claims to be a business genius-I think he just follows what is hot), they just moved on.
It actually has been increasing in Albuquerque, as said. Due to lower cost, and people actually moving in. Zillow.com calculated that the house I am purchasing increased in value by $2600 last month. I don’t know whether real or not, but it listed it now at $354K, and we bought for $299K.
Albuquerque is one of the new Phoenixes for speculators…watch out.
just ask yourself what you said,,,, ok the value for any item is what someone is will to buy it for, correct?, if so you are willing to purchase the home for 299K, unless your buying it from family and no one else had the chance to buy it, i’d say your value is very close to what you paid for it…
typo ? NE price went up
I’d think they would take a big hit
who ever moves to NE
“Umm, Stanley? “there is no housing bubble and it will be yet another year of price increases?”
If that were to happen I’d find the nearest ‘funny farm’ and check myself in for a prescription of Prozac!
Musings of a renter:
(1) Florida is nearing the end of its prime weather season and IMHO sales in their prime season should be a harbinger of the spring market for the rest of the country.
(2) With Hedge funds getting into pension funds, buying out REITS, and purchasing GMAC (realty holdings), I suspect that we will see them investing heavily in prime Florida, San Diego, etc properties (those that can be rented out like time shares) at high discounts only to be sold later at nice profit margins.
Shiller’s new housing price futures ought to create a nice opportunity for the big Wall Street players to exploit the little guy. They will be able to catch the falling knife at an advantageous point in the cycle, and insure against getting in early…
But I thought thinks were stabilized? For things to stabilize do they have to be destabilized first?
Things!
I’m the typo king.
The way this has been reported today reminds me of early spring 2005. Back then there was general denial, but that was before Alan Greenspan started talking down the market. The numbers I am crunching today are available to all, yet it is again only the blogs that dare to do so. Very near record existing-homes for sale. New homes were already at a record in January 06.
Squawk Box just told sellers ‘not to panic’ your property is still appreciating but not by as much’….sounds like mantra from the building industry that wants them to sit idly by while they (builders) unload property.
But if it’s not going up by 20% a year how am I going to refi and pull out money for my bloated Hummer !!!!!
Homeownership Fair 2006!
Saturday, March 25th 10 am - 4 pm
Santa Clara County Convention Center
5001 Great America Parkway, Santa Clara, CA
——————
Maybe someone could go to this and report back?
sales volume increases 5%
yes, but relative to inventory increase that is a net step backwards for housing prices.
even the losing team can get a base hit in the ninth inning
That’s especially true if the losing team also does the officiating.
“Lereah said sales activity at present was really a ‘tale of two cities’ with some of the hottest markets showing declines while some medium priced markets still posting strong sales gains. He said that sales were down by double-digit levels in such hot sales markets as Phoenix, Fort Lauderdale and San Diego. He said, by contrast, sales were up by double-digit amounts in aeas such as Indianapolis, Albuquerque and Houston.”
Tell the truth, now…aren’t these just speculators/investors bailing from Phoenix, Fort Lauderdale and San Diego, and re-speculating in Indianapolis, Albuquerque and Houston?
yes yes
anyone know where I can get old EHS (Existing Home Sales) reports going back to 2003. I want to do some analysis.
David
Bubble Meter Blog
Here’s the NAR press release archive going back a ways. Gotta pick ‘em one by one by hand.
I dimly recall doing an informal look through here some time ago and decided that March or April 2006 could very well be the month that we see a YOY decline in the national Existing Homes Sales Median Price.
“Tell the truth, now…aren’t these just speculators/investors bailing from Phoenix, Fort Lauderdale and San Diego, and re-speculating in Indianapolis, Albuquerque and Houston? ”
Unlike the initial moves 2 years ago from SoCal to AZ and Vegas or from NY/Boston to FL the speculators now have their equity locked up in these now illiquid bubble markets. Albuquerque has already had its run too. Way too much stuff being built in the Houston exhurbs. Strong population and job growth in a real economy coupled with the relentless rise in construction costs will eventually move those prices up in a big way but builders have to go bust and stop overbuilding first.. It is just incredible how many new home communities are going up in the Houston area.
Is there any way to get the absolute sales numbers used in the reports? The monthly reports are generated by the NAR by taking reports from a “representative sample” of the local associations, then adjusting them for the seasonal/annual extrapolation.
Also, does anyone compile statistics of FSBOs? How are they being affected? Does their percentage of sales stay the same, or does it change?
I suppose to get non-NAR numbers you’d have to go to each county in each state and count up the deed transfers.
you’re looking at 2, maybe 3 more 25bps increases this year before the Fed stops. the yield curve will not highly invert (due to a # of reasons one being the carry trade), bake that into the cake and you’re looking at rates AT LEAST 75bps higher than today. that will further crimp demand and put more pressure on prices.
this thing is unwinding. question is how fast?
Soon the realtors will prefer that they hadn’t been too boastful about housing stats headline.
The more rosy the interpretation is for these stats, the more hikes will be delivered by the Fed. Although, I am betting that the Fed is done raising rate after next week. But I could be wrong, and the Fed will keep going until they see panic in the statistics. They are in the process of reloading to prepare for the next clean-up so they could decide to reload as much as they can. Wall Street is obviously not celebrating this somewhat bullish home sales headline.
However, I see today’s existing numbers as rather bearish. Momentum is the most reliable indicator in near term direction of asset prices. Today’s numbers showed that we had a decline in home prices with increasing volumes. That is very bearish. With that surge in sales volume, the inventory is still at near record levels – another bearish fact. It looks like the fissure in the dam is cracked open in recent months. Momentum has inverted, and it will continue to pick up steam with bigger price changes, especially when you have rising inventory to fuel the downward momentum, and the Fed applying rear-end pressure with rising interest rates. There is not much to celebrate about today’s number, more dark clouds ahead.
I don’t think that Fed will stop soon. Housing is not the only worry that Easy Al left behind for Helicopter Ben to handle. The value of $ is the utmost important thing for American Economy to survive and gice some hope to others holding $ dominated assets.
I have been following Sacramento and more specifically Folsom Market. The Median house price peaked in Augut 2005 at $525K. The Median price of the Home in February 2006 was $475K on fewer number of sales.
The rosy picture NAR painted will definitely get a shaft from FED in terms of higher interest rates. The actual numbers tell the different story and that ain’t pretty. I believe that the stand off between buyers and sellers will continue while inventory piles up for next few months. Then starting August 2006 you will see some real price drop of 15-20% when auction will take place as stupid and greedy investors/flippers will owe more than what their investment/s worth.
I am very optimistic about a serious correction of 40-505 in next 2-3 years. Lets see how it unwind.
40-50%
Stop soon and live with 1980s level l-t interest rates. Good luck, BB!
Comments on NAR’s existing homes sales “data”, focus on the NE.
http://www.xanga.com/russwinter
Everything in this article points to a drop in demand, and sellers beginning to price accordingly. It does not point to an increase in demand. Yes, sales may have gone up somewhat, but that is just because prices are starting to fall.
Correct.
I looked at (2) rental homes last night (moving my company to Ventura County, from LA County), both brand new homes. I asked the owners why they were renting brand new houses. Both said they had purchased them while being built, but were unable to sale their current homes (3-4 months on the market). They had no choice but to rent them because of the cash burden.
I think all these numbers being posted by NAR (CAR) are really just distractions intended to divert you attention from the real state of the market.
Right now you need to just keep your “eye on the ball” which is inventory, and lack of demand.