April 25, 2006

Inventory Of Unsold Homes Hits New Record High

The existing home sales numbers are out. “Sales of previously owned homes edged up slightly in March but not enough to keep the inventory of unsold homes from hitting a record high as the once-booming housing market continued to flash signals of a slowdown.”

“The National Association of Realtors said Tuesday that sales of existing homes edged up a tiny 0.3 percent last month to a seasonally adjusted annual rate of 6.92 million units. The March increase followed a bigger 5.1 percent jump in February with the two months representing the first advances since five consecutive monthly declines.”

“Total housing inventory levels rose 7.0 percent at the end of March to 3.19 million existing homes available for sale.”

“The national median existing-home price2 for all housing types was $218,000 in March, up 7.4 percent from March 2005 when the median was $203,000. The median is a typical market price where half of the homes sold for more and half sold for less. Historic price data has been revised back to 1989, including updates to reflect geographic changes over time, but price patterns are consistent with previously reported data.”

“NAR President Thomas M. Stevens said changes in the housing market mean consumers need more professional guidance. ‘Changing waters require navigational adjustments, and this is especially true for home sellers in most areas who are now dealing with buyers that are on equal footing, it’s no longer a seller’s market,’ said Stevens.”

“‘Most buyers in today’s market are well-informed and have agents that represent their interests, so sellers need good advice on how to show and market their homes in the current environment, as well as negotiation skills, critical values that real estate agents bring to the table.”

The 7% increase in inventory was a monthly number. The year over year increase was 39%.














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Comment by Sly_Ace
2006-04-25 06:18:04

Still a negative number. The HBs popped on the news for a few minutes and then fell back into the red. This is exactly what one would expect as the bubble pops — inventory swells even as the average selling price increases at a slower rate. I.e., sellers are still expecting higher prices, but buyers are figuring out that prices might come down, so the number of unsold homes is increasing and the homes that do sell do so at higher nominal prices, but relatively lower prices accounting for recent trends.

Comment by johndicht
2006-04-25 06:47:33

Another interesting piece of statistic is that consumer confidence hits 4 year high, according to the Conference Board. Yeah right, between increasing interest rates and gas price, consumers feel real good about spending.

Comment by fishtaco
2006-04-25 06:57:42

Perhaps it is that there are no more new greater fools getting in the housing line and getting duped by an out of control ponzi scheme. All of the pontential greater fools are now feeling good. I personally feel pretty good with low rent, money in the bank (and not in an overpriced POS) and a gas-free short bike ride to work.

Comment by athena
2006-04-25 07:55:05

Right… I feel good too. I’m not spending. Am saving. And feel great about it. ;-) So what they aren’t saying is that consumer spending is on the rise and people feel good about it…. we are paying more for gas, and I can’t imagine anyone feels good about that. We just aren’t spending on much, and like I said… I feel great about that.

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Comment by bottomfisherman
2006-04-25 08:28:22

HBs down today. Shorts are having a good day. Once instutional sharehoders start selling in earnest, no amount of buybacks will be able to prop up this group. Look for a 50%+ decline by EOY.

Comment by Sly_Ace
2006-04-25 09:49:08

I sure hope you are right. Shorting the HBs was great fun from August to October, but since then it has been challenging.

Comment by cabinbound
2006-04-25 11:05:47

To Sly_Ace and bottomfisherman: I have been waiting for this day for a long time (given that I was not in a position to be shorting HB’s last summer). A statistic that comes out “better than expected”, e.g., today’s report of a slight increase in home sales, by the very fact of being better than expected, is bad for the industry, and the stock goes in the opposite direction of what makes sense.

The excuse being given is that this suggests that the Fed will continue to raise interest rates. (Huh? Weren’t we supposed to believe that they were “almost done, pending data”? Are we to believe that everybody buying in panic four days ago did consider this obviously market-moving number to be “pending data”? Gosh is sure looked like an honest evaluation of the Fed Mintues at the time to me! (rolling of eyes)).

In fact, the stated reason is simply CYA as we all know. Far be it from the brokers to cite fundamentals of the industry at this point, inasmuch as bond sales and their underwriting dollars are undoubtedly in the future for some of these companies.

We have officially entered a new phase of the bear market in homebuilder stocks. When good news makes the stocks go down, then we are finally in a position for selling panic after selling panic for no reason whatsoever. “Downgrades for everybody!” so to speak. I expect now that any quarterly report is more likely than not to result in a next-day downgrade, regardless of its YOY comparisons &c. Look for “poor forward-looking statements” to begin to appear as the excuse in next-day postmortems of what will soon be de rigeur “explanations” of 4-5% post-report downgrade-related drops.

I also expect that this will be the norm for the foreseeable future — and I mean years. We could see the same firm downgrade a particular stock two or three times in a year and “reaffirming its downgrade” as often in addition, instigating panic selling every time.

Random downgrades using the most specious of reasoning, accounting, and mathematics — not that there is any lack of real evidence — will be the norm long before these stocks bottom, somewhere below half of their current values.

Comment by the_lingus
2006-04-25 13:38:18

Exploding energy prices, exploding food prices, exploding housing prices, $10/hr jobs the norm, WhiteHouse occupied by a liar and blooming idiot, halls of congress rife with criminals but yes Virginia, things really are good. Fox News says so.

Comment by robin
2006-04-25 20:35:28


Comment by rms
2006-04-25 21:53:42

Don’t forget that $40k SUV in the driveway!

Comment by dreaming 07
2006-04-25 06:21:17

Don’t sales usually increase by a whole lot more between February and March? Going from 6.9 M in February to only 6.92 M in March only reinforces my belief that the slowdown is accelerating. Of course, the media plays up the ‘gain.’ Bet the revised numbers will actually show a decrease.

Comment by Robert Cote
2006-04-25 06:29:08

“A seasonally adjusted annual rate of 6.92 million units.

NARspeak for “we made up a number because the real number is so scary.”

Comment by johndicht
2006-04-25 06:44:34

increase his ass!!

Comment by Robert Cote
2006-04-25 07:03:32

Ref: http://www.realtor.org/Research.nsf/files/REL0603EHS.pdf/FILE/REL0603EHS.pdf

The killer data is April 06. In order to mantain the fiction they’ll need to post April sales figures of 620,000 units. I predict a generous reporting of 505,000 that will be quietly revised to 490,000 when no one is looking. You heard it here second.

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Comment by Hoz
2006-04-25 08:34:37

IMHO the killer data will be in May. The figures reported today reflect contracts initiated in January and February. The word is now out on the street. Fewer contracts are being initiated, more listings are being cancelled -not sold-as new listings are coming on the market . Not many people will think about buying a residence an hours drive from work when gas is projected to reach $4 to $5 / Gal. I work with realtors who where happy Jan thru the middle of March and now are hoping their sales go thru. The pending sales have dropped but these will not show up in NAR figures for 2 months.

Comment by ajh
2006-04-25 18:06:28

:D :D :D, we’re all picking different crunch months.

IMO the killer data could be June, because in 2005 the median price went from 217K in May to 229K in June. March 2006 is 218K, so unless we see an increase between now and June (or an 8K “revision” like we just saw for February) that’s when we could see the US yoy go negative for the first time in NAR record-keeping history (1968 onwards).

Comment by bluto
2006-04-25 07:27:56

Seasonal adjustment is designed to take care of that. Say that you normally sell 4% of a year’s sales in February and 10% in March. If your monthly sales are 40 in February and 110 in March your seasonally adjusted (annualized sales in Feb would be 1000 and in March would be 1100). The trick is in picking accurate adjustment factors (especially on a limited historic data set–if the Feb data averages 4% but has ranges from 1-7% is what is the correct multiplier to use).

Comment by ajh
2006-04-25 18:12:30

Yes, in this case Robert is mistaken, the non-seasonally-adjusted figures show the same yoy changes.

I suspect some perceptions are being skewed by where people live. There’s a huge disconnect between the March NAR numbers for the West (down 12.3%) and the rest (up 3%).

Comment by scdave
2006-04-25 06:21:45

Sorry OT;…Ben;…Big article in San Jose Mercury News on the Florida “Condo King” pulling out of Las Vegas…Page 3C…

Comment by dreaming 07
2006-04-25 06:23:50

National median was 218K in March 2006. The interesting piece of data left out is what the median was in February 2006. Anybody have the #?

Comment by mojo
2006-04-25 06:57:50

February median was also 218k…. no change. This number is down from the peak of 229k during the summer of ‘05

Comment by salinasron
2006-04-25 06:24:00

They still spin the truth. Lots of disconnects in the data from NAR read on the tv news…the only thing that seemed to be close to the truth was the percent of condos appearing on the market….

Comment by SAS
2006-04-25 06:30:35

“NAR President Thomas M. Stevens said changes in the housing market mean consumers need more professional guidance.”

Yes, we need Realtors now more than ever!

Comment by CanuckinTx
2006-04-25 06:55:18

Perfect! You can’t swing a dead cat without hitting one, but hurry because a lot of them will be peddling penny stock shares in gold mines pretty soon.

Comment by sf jack
2006-04-25 12:38:03

I say: “Ex-realtors for everyone!”

Comment by LinQ
2006-04-25 12:56:59

Now you’re just trying to scare me.

Comment by freeloading roommate
2006-04-25 06:34:41

What’s the year over year price change?

Comment by DC in LBV
2006-04-25 08:14:40

After inundating everyone with the Y-o-Y numbers for years, the NAR is trying to totally ignore them this time. Sales in (peak) March were up 0.3% from (non-peak) Feb, but were down 0.7% from March ‘05. But they still are glad to show that 7% Y-o-Y price increase.

Comment by Binko
2006-04-25 06:34:52

The number they want to minimize they report in month to month terms. The number they want to maximize they report in year over year terms. Meanwhile they have “seasonally adjusted” the numbers. Do they even provide non-adjusted numbers? And, just for kicks, they have revised the historical data back to 1989, obviously to make current trends look better, but we aren’t given any details about the revision.

The con game continues. But the con man is breaking out into a cold sweat and his previously smooth delivery is starting to crack.

Comment by stanleyjohnson
2006-04-25 06:40:52

Ben, you need to call in to this guys show. He loves to spout NAR numbers.

Comment by desidude
2006-04-25 06:46:01

i agree, last year not he was cheerleeding real estate insdustry, he was making fun of bears!. i heard him many times

Comment by desidude
2006-04-25 06:46:43

oops! I agree, last year he not only was cheerleeding real estate insdustry, he was also making fun of bears!. i heard him many times

Comment by moqui
2006-04-25 07:42:58

Ya…he had that RE data guy, Pat Veiling on the other day. Same person that sunset beach guy spanks on Lansers blog.
Every time Pat is backed in a corner, He cries personal foul…but on the radio program, he was able to project his rear looking statistics as future trends with out any lip from the show host. I wondered if Pat tipped the call screeners.

Comment by SunsetBeachGuy
2006-04-25 07:49:12


Facts are stubborn, Chewbacca defenses are laughable.

Comment by LARenter
2006-04-25 06:41:05

I think the most important element of this housing market right now is the inventory. As the Washington Post pointed out this weekend we are now starting to get a glimpse of how large a role the speculators played in the bubble markets across all dwellings, condos, townomes, SFR’s. Inventory build was different this year due to so many homes coming onto the market Jan through March. IMO many of those homes were the wiser speculators trying to exit. The wisest speculators have been gone for a while. It will be interesting to see if these inventories build through the summer and then the fall. I think 2006 will be known as the year of the great inventory build. Buried in this bubble you have a normal market now you combine that with waves of speculators putting addtional homes on the market plus the heavy pipeline of the builders hits the market and then you start to add the foreclosures. Ouch! Then we enter 2007. The sheer magnitude of this thing makes my head spin.

Comment by Notorious D.A.P.
2006-04-25 06:52:29

I agree 100%. As long as the inventory builds, regardless of sales, we have major problems. I think Robert Shiller has also stated to watch the inventory as well. The artificial demand is now starting to turn into hidden supply and the true magnitude of speculation will be revealed. Factor in the other variables of rising energy costs, suicide financing, negative savings rate, home ATM running dry, etc. and you have a potential disaster on the horizon.

Comment by nhz
2006-04-25 08:29:22

there is one thing regarding inventory buildup that keeps me wondering though …

In my area the vacancy rate for office space has been 30-40% for at least some 5 years now; about 15 years ago it was 5-10%. Asking prices are ridiculous (3-5x the price of 10 years ago) and have never decreased in those high vacancy years. Most small companies can no longer afford the rent - so when their 5-year or 10-year contract expires they close the doors or move to a much smaller space. Only government (-subsidized) agencies still close new deals to rent, because for them the cost doesn’t matter at all.

I am told that the owners of these properties keep the rent high because this is the basis for the loan they get from the bank. But it surprises me that they choose to keep the rents skyhigh and have high vacancy rate. Maybe this works for them because there are just a few players that have the market in a tight grip?

Could this also happen in the market for normal family homes?

Comment by nobubblehere
2006-04-25 06:41:18

“‘Most buyers in today’s market are well-informed . . .”

Gorpf. If they were well informed they wouldn’t be buyers in today’s market.

Comment by AmazedRenter
2006-04-25 06:43:36

Question for the NAR: What does it mean that despite a relentless sales pace of 7 million units/year, inventory swelled 39% YoY to a record high of over 3 million homes for sale?

WOW - think about this for a second…3 million homes for sale, at the very start of the slowdown. This will get very very ugly. I predict blood in the streets by year’s end.

Comment by moqui
2006-04-25 08:04:02

Please, not the “blood in the streets” again. Use “Hemoglobin on the Highway” so we don’t bring out the squeamish do-gooders.

Comment by BeachBubble
2006-04-25 12:51:40

Nice post. But don’t forget, that other article said many homebuilders don’t list their brand new homes for sale on the MLS, so there are actually many more homes for sale right now. :D

Comment by brianb
2006-04-25 06:46:35

Key number is number of EMPTY houses for sale. Otherwise one sale can spark a chain of “I buy your house and you buy someone else’s and so on and so on”. I’ve heard it’s a record, something like 3% of all houses.

The new home builders will build at a level slightly below last year’s level, maybe. But it will still be more than enough to add houses onto the pile.

Comment by crispy&cole
2006-04-25 06:49:06

How can every major market in the US have YOY sales decreases, LA, SF, Miami, PHX, LV, etc.. and yet the national numbers show an increase? WTF? Something stinks and its not me!

Comment by CanuckinTx
2006-04-25 06:57:57

my thoughts exactly. Expect a ‘revised’ decrease next month.

Comment by Nikki
2006-04-25 08:20:00

So true…so many major markets reported lower numbers (as reported here and other blogs), how is that even possible? Plus, the margin of error for those numbers are probably greater than 0.3%, so it’s basically statistically insignificant. So flat sales with a 7 (or 39%) jump in inventory? Yeah, that’s all the makings for a soft landing…a**holes.


Comment by optioned unarmed
2006-04-25 06:52:06

I am officially crying “bullshit” on all NAR numbers. They have now revised all their numbers back through 1989.

Last month, the stat for median sales price of all existing homes for March 2005, as on their website, was $193,000. Now they are saying the revised number for March 2005 is $203,000. That’s quite a difference.

In any event, even their revised numbers still show declines, just not as steeply as their old numbers did. Here is their revised data:
Median sales price, all existing homes:
march 2005: $203,000
april 2005: $214,000
may 2005: $217,000
june 2005: $229,000
july 2005: $228,000
august 2005: $229,000
sept 2005: $225,000
oct 2005: $229,000
nov 2005: $225,000
dec 2005: $222,000
jan 2006: $220,000
feb 2006: $218,000
mar 2006: $218,000

Source: http://www.realtor.org/Research.nsf/Pages/EHSdata
(click on “Spreadsheet (20k Excel file).(Nation only)”

Comment by peterbob
2006-04-25 09:32:17

Last month, the stat for median sales price of all existing homes for March 2005, as on their website, was $193,000. Now they are saying the revised number for March 2005 is $203,000. That’s quite a difference.

But this shows a SMALLER increase in prices:

(old) March 06-March05=218,000-193,000=25,000
(revised) March 06-March05=218,000-205,000=13,000

Sorry, but their revisions have made YOY price increases smaller, not bigger.

Comment by optioned unarmed
2006-04-25 11:46:46

you can’t compare their old numbers to their new numbers because they are cooked differently. so you can’t compare their old $193k to their new $218K. they are using a different oven now.

Comment by nobubblehere
2006-04-25 06:57:40

Here’s one of NAR’s well-informed buyers:

Investor Seeking Opportunites 10 Milliom Cash To Spend
Reply to: hous-154055270@craigslist.org
Date: 2006-04-24, 11:09AM CDT

Please Email Me Any And All Real Estate Opportunities. We Are CASH Buyers Up To 10 Million. Pre-Construction Single Family With Some Equity, Condo Conversions, Vacant Florida Lots, Etc.

Comment by RentinginNJ
2006-04-25 06:58:43

“NAR President Thomas M. Stevens said changes in the housing market mean consumers need more professional guidance. ‘Changing waters require navigational adjustments’”

Right Full Rudder!
Reverse Engines, 100% Power!


Sorry too late for navigational adjustments. This ship is sinking.

Comment by pw
2006-04-25 07:02:49

Although sales overall are up about 7/10ths of 1%, sales in the west are down approx. 12%.

Orange County Resales (per MLS):

March 2006 2,872 sold (-31% compared to March 2005)
March 2005 4,174 sold

Orange County number of homes for sale in the MLS are up nearly 100% over last year at this time, but still below 3rd Qtr 2004 levels.

Comment by optioned unarmed
2006-04-25 07:07:01

The new NAR numbers have now been revised going back to 1989. The numbers on their website (before they “revised” them) showed quite a decrease in median sales price of existing homes. The “revised” numbers show less of a decrease. Now is the time to officially declare b*llsh*t on NAR data. The prices they are showing now are quite different from the prices they were showing before (I saved copies of the old prices).

Comment by pinch a penny
2006-04-25 07:36:47

Why would the NAR choose to revise the numbers now, and not a year ago? Would it have not been better to show INCREASED median price a year ago (revised from 193K to 203K), instead of showing a smaller increase this year(from 203 to 218)? Why would they go all the way back to 1989? Maybe they showed the first YOY decline, and had to “fix” all the prices going back to 1989, so that the sheeple would not trample the poor unsuspecting realtors, and then light the bonfires in the middle of the night, looking for Dottie Remax?

Comment by Jim
2006-04-25 07:51:05

Impossible Penny! Suzanne researched this!

Comment by optioned unarmed
2006-04-25 07:54:44

maybe suzanne is a double-agent

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Comment by peterbob
2006-04-25 09:34:16

Why would the NAR choose to revise the numbers now, and not a year ago? Would it have not been better to show INCREASED median price a year ago (revised from 193K to 203K), instead of showing a smaller increase this year(from 203 to 218)?

Exactly. In this case at least, the NAR is making YOY increases SMALLER.

Comment by crispy&cole
2006-04-25 07:22:56

52 week lows for SPF and HOV!

Comment by Getstucco
2006-04-25 11:10:57

Is it time to “buy the dips” yet?

Comment by cabinbound
2006-04-25 11:32:52

Yep I am short HOV and I’m seeing that it never quite gets the oomph that the rest of the HB’s get on those external, broad-based buy programs that show up out of nowhere from time to time. Obvious Fed manipulation is different of course — the only time that has gone up and stayed in the past two weeks is when some Fed governor starts braying about being “almost done” raising interest rates. But lower lows are the future for HOV IMO.

BTW, HOV’s quarter officially ends April 30 I believe and they will probably announce their earnings on June 1 or so. Doesn’t look to me like anybody who would be in a position to know what the numbers for the almost-completed quarter will be is giggingly stuffing any of this 52- (more like 75-)week-low stuff into his pockets.

Comment by Me
2006-04-25 07:24:12

You guys got it right NAR never even noted prices have droped 5% off there peak. Who cares what prices were in March 2005, the bubble peaked Aug. 2005. All data should now use this a basis for reporting.

Comment by Sly_Ace
2006-04-25 09:59:41

Right. This would be like CNBC reporting in the summer of 2000 that the Naz was x% higher than it was one year ago even though it was down significantly from the 5,000+ peak in early March.

Comment by Peter
2006-04-25 12:34:32

Real estate transactions are seasonal (I don’t trust the seasonal adjustments if it’s from the NRA). Comparing March with October makes much less sense than comparing March last year to March this year. Therefore, let’s be patient and wait for the June numbers (and July and August). Hopefully, they will be down from last year, and, hopefully, the media will spread the news. This could put to rest the mistaken belief of real estate never going down, which should take (short-term) appreciation out of buyer’s calculations and result in a housing valuation, which is based on fundamentals like income and possible rents.

Comment by agentjmf
2006-04-25 15:24:22

honestly, the media doesn’t need to jump on board. there’s really nothing that can be done at this point. i’ve lived in l.a. for 20 years and trust me….it goes down. during the last bursting of the bubble, there was no internet, no blogs, no zip, zillow (fill in the blank) and it still popped. my first home purchase was on a place that i bought for 41% less than it had sold 5 years prior. just be patient man..it’s coming.

Comment by Peter
2006-04-25 19:12:35

Yes, bubbles pop without media reporting the pop; they report then only the following downslide. But I believe that a bubble popped early is better for the economy than a bubble popped late. The earlier this mess of debts is cleared up, the better.

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Comment by Judicious1
2006-04-25 07:39:27

David Lereah, chief economist for the Realtors, said the sales increases over the past two months were a hopeful sign that sales will experience only a slight drop-off this year.
“This is additional evidence that we’re experiencing a soft landing,” he said. “The market clearly is stabilizing.”

Give me a break…stabilizing?? Oh yeah, sure, thanks for letting us know that David. By the way, how are you making out with that Las Vegas investment property purchase?

Comment by David
2006-04-25 10:25:53

check out the David Lereah Watch Blog


Comment by Jim
2006-04-25 07:47:50

“Statisitcs are for losers” - Don Meredith, Monday Night Football circa 1981. Be everything as it may, close your eyes and imagine trying to sell your primary residence, (or) vacation home, (or) ski house, (or) “investment condo” etc. in today’s mkt. 40K+ in Phoenix, 28k+ in Miami, countless other tier 2 and 3 mkts with huge inventory. Not to mention increased carrying costs ie. ins., taxes, interest rates… That’s where the rubber meets the road my friends.

Comment by Judicious1
2006-04-25 07:59:33

I agree with that - a common sense approach to predicting where this is going. The NAR and a number of other organizations are on a single, secret mission - damage control.

Comment by Drop the bubble
2006-04-25 08:20:00

I have a friend that works in the REO (Real Estate Owned, forclosures, distressed properties) business and he says, “They are getting very busy”. I’ve also been doing research for a new real estate web site and found that the most searched keyword phrases related to real estate are, ‘Selling a home’ and ‘For Sale By Owner’ with about 3,000 to 4,000 impressions a day on each. Also the two family across the street from me in Boston was bought last April for $390K, a little work was done on it and then it was put on the market for $595K in June. Well it never sold after four price reductions bringing the price to $529K and finally after one year of painful carrying costs the for rent sign came out. More evidence of the rinse cycle cleaning away the dirt and exposing the truth.

Comment by Me
2006-04-25 08:26:31

These NAR numbers are now BS. They reweighted the US numbers. Gee we don’t want to show lower numbers for the US, so why not weight a greater number to hight housing cost arears.


Comment by miamirenter
2006-04-25 08:30:17

wow! i think this still is an interest rate play..folks are still buying!!
and confidence so way high!!
almost seems that “doomers” are a minority!
something doesn’t add up!

Comment by grim
2006-04-25 08:57:33

If you thought the overall looked bad, look at the Condo/Coop data. Inventory is up over 85% YOY.


Comment by David
2006-04-25 10:29:26

You right. I just posted on this. Thanks for the tip.


Bubble Meter Blog

Comment by Hoz
2006-04-25 09:03:25

Question regarding Zillow.com - (My security settings necessary for my work does not give me rapid access) - Since Zillow is supposed to be on time data, the NAR numbers show median price not necessarily the same type of house as last year, Would Zillow show a drop in price on the graph as a result. e.g. last year median price house 2bdrm/2bth vs current 3bdrm/2/bth ? My suspicion is in places well documented like Orange County, Zillow would show a dramatic decrease in price as a result of more house for the money.

Comment by rallymonkey
2006-04-25 11:33:18

I don’t know about Zillow - I looked at a house they value around 650 in the OC. Its a 4 bed 2 bath. The one year chart shows it was worth around 400 last year. Its value skyrocketed for 2005 but still shows small increases into 2006.

This doesn’t jive with what I read here, or NAR’s metro area reports, which showed a decrease from 3Q2005 to 4Q2005 for that area.

I don’t doubt such a house still sells (or at least gets listed) for 650 right now, but I seriously doubt it was only 400 in Jan 2005.

Comment by NOVA fence sitter
2006-04-25 09:10:45

I think this has been mentioned by other folks but I think there is pent up demand that is driving sales. I live in the DC area and although inventory is up houses are still moving. I think the prices and in particular the bidding wars kept people out of the market who otherwise would have bought. As the market cools those people are buying because they feel they can now get a “reasonable” deal or at least they don’t have to out bid five or six other people. I would bet the pent up demand is spent by the end of year. This is going to be a slow ride down unless there is a big event to pop the bubble.

Comment by Nikki
2006-04-25 10:31:15

Here in the “Balto-Towson” area, the lower priced TH’s and condos (~$200-$225Kish) are still selling in a week or two, while houses above $350Kish sit for much longer. But there really is a standoff here, and while inventory in the Balto metro area (not just the city) is up 114% from last year, sales are down 13%. It goes to show you that people still do want to buy homes,but fewer are willing to overextend themselves and are buying what they can easily afford (ie 200K at 6.5%) and staying away from many overpriced homes in this area. It’s hilarious, the areas that are still trying to pump up their prices here are the areas in which the most new building has taken place I guess they see $650K for a new Mcmansion, their $425K 20 year old 2000 sq ft normal house seems like a bargain. But they’re not accounting for the fact that soon, that $650K Mcmansion that can’t sell even with a free finished basement and landscaping for a year will drop to $600K and then $550K, and their overpriced domicile will have to drop as well.

Comment by Russ Winter
2006-04-25 09:47:04

Big inventory glut in maladjusted Shanghai:

Comment by AL
2006-04-25 10:20:44

David Lereah, this guy ticks me off,,, now he is using the excuse that gas prices are going to hurt the sales,,, why doesn’t he just look at the fundamentals with affordability that says it all… just another way to blame a slow down…

Comment by Echelon Bass
2006-04-25 14:14:17

This is a special appeal to all builders. Please crank up the pace of building new homes. The prices keep going up, and as you can see, prices need to go down :) This whole bubble will get ugly when it goes poof!

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