Real Estate Sales and House Prices
- House Prices Decline Year-Over-Year, More to Come? (Evelyn Rubin in Seeking Alpha, September 26th): "Home sales are down and, in the second sharpest decline in almost forty years, U.S. median home prices dropped 1.7% since last year. Some of the statistics issued by the National Association of Realtors: sales of existing homes were down 0.5% from July and 12.6% from last year; condo sales were down 3.5% from July and 14.5% from last year; single family home sales were down 12.3% from last year; condo prices fell 2.4% from last year; and inventory of unsold homes rose 1.5% last month to the biggest supply since April 1993. Thomas Lawler, former Fannie Mae economist notes "You've got a ways to go. You still have affordability issues in a lot of markets.""
- Median Home Price Drops 6 Percent (Palm Beach Post, September 25th): "Existing homes in Palm Beach County posted their first significant price drop last month since the market began to slow down, with the median price falling 6 percent compared with the same month a year ago, the Florida Association of Realtors said Monday. The median price of an existing home fell to $386,000 from $411,400 in August 2005... Palm Beach County led the state in declining home sales, with only half as many sales closing in August as they did in August 2005, the report shows. Buyers closed on 655 home sales compared with 1,319 in August of 2005."
- C.A.R. Reports Sales Decrease 30.1 Percent in August, Median Price of a Home in California at $576,360, Up 1.6 percent From Year Ago (California Association of Realtors, September 25th): "Home sales decreased 30.1 percent in August in California compared with the same period a year ago, while the median price of an existing home increased 1.6 percent... “We experienced the greatest year-to-year sales decline last month since August 1982, when sales fell 30.4 percent,” said C.A.R. President Vince Malta. “This is another indication that we’re in the initial stages of a long-anticipated adjustment in the market... The median price of an existing, single-family detached home in California during August 2006 was $576,360, a 1.6 percent increase over the revised $567,320 median for August 2005, C.A.R. reported. The August 2006 median price increased 1.7 percent compared with July’s revised $566,940 median price... C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in August 2006 was 6.8 months, compared with 2.6 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate."
- House Prices Down, Realtors Say (OC Register, September 25th): "House prices in Orange County showed an annual decrease for the first time in a decade, the California Association of Realtors reported today. The state Realtors group, one of two key bodies that track Orange County home prices, reported that the median price of an existing single-family detached house here was $698,080 in August. That's 2.5 percent below the house-price median of $716,300 reported for August 2005. The last annual price drop reported by the state association was in July 1996, at the height of the housing bust that gripped the region in the early 1990s."
- Massachusetts Home Sales Plunge, Prices Drop (Boston Herald, September 25th): "Sales of single-family homes plunged in August by a whopping 21.6 percent,to 4,229 homes, compared with figures from the year prior. It was the fifth straight month of sales declines, the Massachusetts Association of Realtors said yesterday. The median price of a home took a 6 percent hit, falling to $352,000... Condo sales dropped by 18.5 percent, to 2,103, in August. The median price for a condo was off 3.3 percent, to $278,000..."
- Massachusetts Single-Family Home Sales Fall Nearly 20 Percent in August, The Warren Group Reports (Business Wire, September 25th): "The Massachusetts housing market slumped again in August as the number of single-family home sales fell by 19.8 percent and the median home sale price dropped by 8 percent, according to a report released today by The Warren Group. The market for condominiums was weak also, as the median sale price suffered its biggest year-to-year decline since 1995. The near 20 percent drop in single-family home sales marks the seventh month in the last 11 where home sales have fallen by double-digit figures in Massachusetts. July's 26.9 percent year-to-year sales drop was the biggest since 1995. The August figure is the second biggest year-to-year decline since 2000. Overall, the number of single-family home sales fell to 5,506 from 6,867 the year before. The median sale price fell 8.0 percent to $331,000 from $360,000 in August 2005. Condo sales dropped 19.3 percent in August, down to 3,113 units sold from 3,859 during the previous year. The median sale price dropped 5 percent to $276,000 from $290,500 the year before."
- S. Fla. Home Sales, Prices Continue to Fall (Sun-Sentinel, September 25th): "The median price of an existing single-family home in Palm Beach County was $386,000, down 6 percent from the $411,400 of last August, the Florida Association of Realtors said Monday. Sales in the county plummeted 50 percent, the biggest drop in the state. Broward County's median price also fell 6 percent, dropping to $362,800 from last August's $387,000. Sales in Broward declined 27 percent."
- Home Prices Likely to Fall More (USA Today, September 25th): "...the pace of the downturn has surprised several economists, including Ian Shepherdson of High Frequency Economics. "The speed of the collapse has been astonishing," Shepherdson says. "This time last year, single-family home prices were up 16.4%. With inventory still rising, there is no chance of any short-term relief. Prices and volumes have a long way to fall." To bring buyers back into the market, sellers simply have to lower their prices, said David Lereah, the NAR's chief economist. Lereah has repeatedly cut his forecast for the housing market this year and says he's now unsure how deep the correction will turn out."
Real Estate Investing and Sentiment
- Real Estate Slump Generates Ugly Press (Barry Rithotz in Seeking Alpha, September 25th): "Yesterday's Housing data is producing some pretty ugly headlines today; If the market chose to ignore the data, let me remind you that this is the last week of the quarter, so anything can (and will) happen. Here's how its being played..."
Mortgates and Real Estate Lending
- Report: ‘Exotic’ Mortgages Leading to Foreclosures in West (Central Valley Business Times, September 25th): "foreclosures are on the rise again in Maricopa and Pima counties in Arizona and... California is not far behind. “As of Sept. 11, there were 44,683 properties in some stage of foreclosure in California, and again, these exotic mortgages are a major factor,” [Alexis McGee, president of Foreclosures.com] says. “In San Diego, more than 50 percent of purchase money mortgages issued in recent years were these so-called creative loans. Now they’re coming back to haunt homeowners and lenders alike.”"
- Metro Atlanta Foreclosures Up 36 Percent (Atlanta Business Chronicle, September 25th): "Foreclosures in metro Atlanta jumped 36 percent in August, placing the area second-highest in foreclosures among the nation's 10 largest metro areas... The 28-county area had a total of 5,163 properties entering some stage of foreclosure and a foreclosure rate of one new foreclosure filing for every 281 households."
- It Seemed Like a Good Bet at the Time ... (NY Times, September 24th): "Craig Focardi, an analyst with TowerGroup... said a borrower who took out a three-year ARM in August 2003 could expect initial interest rates of about 4.6 percent. On a $300,000 loan, the monthly payment was $1,610. That rate would rise this year to about 6.6 percent, leaving the borrower with a $327-a-month increase, plus the possibility of future annual increases (or decreases) of as much as two percentage points... There is no consensus on how many of those loans are nearing the so-called reset point, when rates are adjusted. Some economists estimate that next year anywhere from $162 billion to $1 trillion worth of adjustable-rate mortgages will be reset."
- Voodoo Debt and the Coming Recession (Bill Fleckenstein in MSN Money, September 25th): "Author [of The Campbell Real Estate Timing Letter] Robert Campbell writes: "I always figured the deflation of the housing bubble would resemble a slow train wreck, but there is new evidence that makes me think the correction may occur more rapidly. This is because there is compelling evidence that a recession is dead ahead. … Now that housing prices are going sideways to down -- and incomes and jobs are still sagging -- this 'debt-fueled' artificial-life-support system for continued consumer spending (and an expanding U.S. economy) is running out of gas.""
- Record Number of Foreclosures on the Horizon (David Andrew Taylor in Seeking Alpha, September 21st): "Who are brokers to want to turn away business just because later there is going to be problems.... Except of course brokers who want to stay in business for a long time. I can also see regulation on the horizon. Who better to help out the consumers than the individuals who borrow more money from more institutions from all over the world than the U.S. government. They have years and years of experience in going into hock to lean on for sage advice. I'm sure that we'll be seeing something on the horizon with what appears to be record numbers of foreclosures looming."
Macro Impact, and Will a Housing Crash Cause a Recession?
- Home Prices Fall For First Time in Decade (Barry Ritholtz in Seeking Alpha, September 25th): "The National Association of Realtors announced Existing-Home Sales today. The data is consistent with our expectations of softening sales and prices and increased inventory...I continue to be impressed with the disconnect between Housing and the Equity markets. Its pretty clear the bond markets get it, as have the commodity markets. Equity markets, on the other hand, are still contemplating some sort of a a soft landing / Goldilocks environment. Well, someone will be right and someone will be wrong . . ."
- Housing Continues Its Descent (Rob Zenilman in Seeking Alpha, September 20th): "The Commerce Department reported that housings starts declined in August, marking the fifth decline in the past six months. Single family home starts declined 5.9% from July, and 20.6% from last August. Multifamily home starts also dropped 8.2% and 16.9%, respectively. Overall, August construction starts were down 6% from July and 19.8% from August 2005. Additionally, the Commerce Department reported that building permits were also down 2.3% from July and 21.9% from the same period last year. According to Wachovia economic analyst Phillip Neuhart, reduced new home construction will probably reduce 2006 second-half economic growth by at least 0.5%."
- Housing Weakness Poses a Significant Threat to GDP and Stocks (Chris Ciovacco in Seeking Alpha, September 20th): "...the correlation between a weakening housing market and the stock market suggests that a defensive investment stance is prudent at the present time. While the recent advance in stocks is impressive on the surface, a more detailed look yields some cause for skepticism. History tells us that the probability of the Federal Reserve being able to engineer a soft landing in the housing market is very low. The economic impact of the recent housing boom has been greater than even the largest stock market booms. It will be difficult, if not nearly impossible, to replace this economic activity from another sector of the economy."
Homebuilder Stocks, and Hedging Your House Price By Shorting Stocks
Web Site of the Day
Arizona Real Estate Notebook is a blog written by Arizona realtor John Wake.
He describes it as "Insider tips on Arizona real estate from John L. Wake, Realtor and Economist. Featuring exclusive graphs of Phoenix area home prices."
We like two things about it: first, his honesty and candour, for example his assertion that Arizona house prices may be worse than Zillow.com suggests. And second, his charts.
Worth a look for Arizona real estate buyers and sellers and those of us tracking the real estate market through accurate local data and anecdotes.
Sign up for Seeking Alpha's housing coverage including the Housing Bubble and Real Estate Market Tracker by email here (free, no-spam guarantee).