Oil Prices Popped the Bubble, Not Subprime - Housing Tracker

Quote of the Day

“The rise in gas prices from less than $1.10 in early 2002 to more than $3 today has dealt a major blow to consumer purchasing power and weighs most heavily on those metropolitan areas and those suburbs where people have to drive the farthest.” CEOs for Cities economist Joe Cortright author of a study on how rising gas prices-- and less so subprime loans-- popped the housing bubble because homeowners could no longer afford to buy in the suburbs and then drive to work. (WSJ Blogs, May 12th)

House Sales and Price Data

Median Home Prices Drop In Many Cities. “National Association of Realtors: Sales of existing homes were down in 46 states for Q1’08 compared to the same period a year ago. The largest percentage plunge was a 38.6% drop in Maryland during Q1’08 compared with Q1’07. Only Alaska, Indiana and New Jersey reported sales increases during the survey period… Nationally, sales fell by 22.2% in Q1’08 compared with Q1’07.” (AP, May 14th)

Bucking The Trend. NAR: The median price for a single-family New Jersey home fell 7.7%, to $196,300, in Q1, compared with Q1’08 -- the largest year-over-year decline since…1982… Home prices in NJ rose in a number of areas, including the Atlantic City region, where the median sales price increased 4.8% in Q1, to $277,400, and the Trenton-Ewing market, where the median price rose 1.6%, to $288,200… NJ was one of only three states where the volume of existing home sales actually rose in Q1 compared with Q1’07, [rising] 4%... Alaska and Illinois Q1 home sales [also increased.]” (NJ Start Ledger, May 14th)

Home Prices Fall 28% In 1st Quarter. “Florida Association of Realtors: Median prices of existing single-family homes fell by 28% during Q1;08 in the Fort Pierce-Post St. Lucie metropolitan statistical area… Prices were at $172,600 during Q1, down from the $240,000 recorded in Q1’07.,, Local Realtors sold 850 homes in Q1, up 1% from the 842 sold in Q1’07… The Fort Pierce-Post St. Lucie area saw condominium prices fall 14% to $159,300, down from the $196,700 in 2007.” (TC Palm, May 14th)

Orlando Q1 Home Sales Fall 31% “Florida Assn. of Realtors: Real estate agents in the Orlando metropolitan statistical area reported a total of 3,246 existing homes sold in Q1’08, [down 31% from the] 4,736 that sold in Q1’07. The median sales price for existing single-family homes was $222,900 in Q1’08, a 13% drop from the $257,400 posted in Q1’07. Existing Orlando area condo sales were 320 for Q1’08, compared to 731 sales in Q1’07 [down 56%]. The median sales price for condos was $149,400 for Q1’08, 10% less than Q1’07's $166,800.” (Orlando Business Journal, May 13th)

Median Home Prices In Santa Cruz Up Slightly To $661,000 In April. California: “Gary Gangnes of Real Options Realty: The median sales price for single family homes in Santa Cruz County was $661,000 in April, up from $650,000 in March. Gangnes reported 113 home sales in April. Sales under $500,000 accounted for 28% of the total sales, up from 20% last month but lower than January's 33%. Sales over $1,000,000 accounted for 17% of the total sales, up from 11% last month and more than January's 14%.” (Mercury News, May 13th)

Poor Quarter For Home Sales. Washington Center for Real Estate Research at Washington State University report: “Q1’08 Sales of existing homes declined 31.8% in King County and 29.7% statewide from Q1’07. Sales fell… seasonally adjusted, 1.9% in the county and 3.6% statewide from Q4… The median county sales price in Q1 was $435,000, down 1.1% from Q1’07. The statewide median was $293,600, down 2.4%. The national median slipped 7.7%, and the West declined 12.3%… [Statewide] affordability index: Typical families earn 76.6% of the income needed to qualify for a mortgage on the typical King County home and 94.5% of the income needed for the typical home statewide.” (Seattle Post Intelligencer, May 13th)

Prince William Home Sales Rise; Other Areas Fall. Washington: “Metropolitan Regional Information Systems: Single-family home sales increased by nearly 50% in April in Prince William County... There were 639 homes sold in the county that month, up from 427 in April 2007… The county's median sales price in April was $262,000, the lowest in the region.” (Washington Business Journal, May 13th)

Number Of Home Sales Up In April. “Arizona State University's Realty Studies department: In April, [the Valley] saw 5,585 home sales, in contrast to 4,855 a year earlier and 4,335 in March 2008… The first year-over-year improvement since July 2005. The 2008 year-to-date total is 16,975 sales, down from 19,045 for the same period in 2007… The median home price in Maricopa County declined from $220,000 in March to $210,000 in April, in contrast to last year's $265,000 median in April… Influenced by foreclosed properties, homes selling for less than $200,000 have increased from last year's 16% to 44% of the local resale housing market.” (Phoenix Business Journal, May 13th)

As Gas Prices Spike, Suburban Home Prices Fall. “CEOs for Cities report “How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs”: Higher gas prices negatively impact[ed] housing prices by sapping home buyers’ budgets and leaving less to spend on housing, and by making consumers less apt to bid more for homes in less centrally located suburbs… While initiatives by states and the federal government to ease the housing market’s woes will have some positive [near term] effect on the real-estate market… higher fuel costs will permanently impact the suburban landscape as more home buyers choose to reside in closer-in locations that offer shorter commutes and mass transit.” (WSJ Blogs, May 12th)

Tucson Median Home Price Slid To Lowest Since 2005. Arizona: “Tucson Association of Realtors: Tucson's median home price in April hit its lowest point since 2005. April's median, or middle, price dropped to $195,000, down 2.5% from March and down 13.3% from April 2007.. The average price of $253,729 also decreased about 2% from last month and 8.9% from last year. The number of homes sold rose 8.1% from March, but dropped 26.2% from April 2007. Active listings continued a slow decline to 8,808, down about 2.4% from last month and 15.2% from last year. April's median price was the lowest since March 2005, when it was $190,000.” (Arizona Daily Star, May 12th)

Group Says Central Kentucky Home Sales Down 16 Percent. “Members of the Lexington-Bluegrass Association of Realtors sold 835 properties in Q1’08… but that total was down 16% from Q1’07. The median sales price… declined 1% for Q1’08 and dropped 5% in March 2008, versus the same periods of 2007… In Fayette County, the average number of days needed to sell a house in Q1 was up 9% from a year earlier.” (Kentucky.com, May 12th)

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Comments

[richjoy]

Read carefully...this article mixes the bursting of the housing bubble (subprime crisis/giant increases in variable rate mortgages and credit freeze) with an increase in the cost of gasoline and consumer spending. I'm not buying the thesis that "Oil Prices Popped The (Housing) Bubble".

The cost of gasoline didn't become a common complaint until recently, but still accounts for a small part of our total spending. In the last year or so, over 1,000,000 monthly mortgages rising by +/-$300 (versus 50 gallons of gas monthly to get from the subburbs to work in the city and back has risen by maybe $50). Gasoline is a factor, but mortgages have been much more painful to a significant portion of consumers. Furthermore, you didn't take into account rising incomes over the period 2002 to present.

I suppose you will next bring up the "Hemline and Super Bowl Indiicators".

[sivere]

We are experiencing a gigantic financial bubble. The subprime mess plus the oil prices certainly helped thrigger the collapse of the bubble, but the ultimate cause of the bubble is congress:

1. The delegated their constitutionakl responsibilities to the Fed;
2. Especially under Greenspan, the Fed permitted, nay encouraged, the creation, growth and maitenance of a giant speculative bubble;
3. Now the bubble is popping, and the Fed wants to rush in to "fix it".

NO, WE NEED TO

takeBackTheFed.com

[Tom Lindmark]

Permanently higher energy prices could have a profound effect on housing but I can't buy off on the notion that there is any relationship with the current housing crisis.