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John Lounsbury
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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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  • New Homes: Just Looking, Thank-You 4 comments
    Jan 18, 2013 5:50 PM | about stocks: XHB

    Business Insider has an interesting graphic today:

    click to enlarge)

    This graph inspired the headline. I was immediately reminded of the store clerk who asks the shopper: "May I help you?"

    The classic answer: "No Thanks. Just Looking."

    Why is this happening?

    One answer is that buyers are cautious after experiencing a housing bubble collapse. Another possibility is that a lot of home owners who would like to sell are trying to evaluate the market.

    Anecdotally, two real estate agents I know personally tell me that almost all showings are for possible buyers who have a home to sell before they can buy - and many do not consider making contingent offers (contingent on sale of current residence). And only a small percentage of contingent offers go to closing, much below what transpired five and ten years ago.

    Housing inventories are low which should be producing more interest in new homes. The modest increase indicates that the demand for new houses remains very low, within 100,000 +/- per year of the historic lows of early 2011 - and half a million below the pre-bubble sales of 1999.

    Recent headlines show some promising data:

    If we really have seen the bottom for this housing cycle it appears to me that the recovery will be a long slog.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: housing, new homes Stocks: XHB
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Comments (4)
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  • Dr. Kris
    , contributor
    Comments (330) | Send Message
     
    Not in LA. What little inventory is on the market is snapped up immediately and bidding wars are starting to become common. The cheapest tract home on the Westside is at least $1.2M (if you can even find one at this price); starter homes in the Valley are in the $500-$700k range. It's definitely a sellers market here.

     

    Not that I'm grumpy about it...

     

    Kris
    22 Jan 2013, 03:03 AM Reply Like
  • Stilldazed
    , contributor
    Comments (2142) | Send Message
     
    Hi Doc,
    I live 90 miles from LA in the Inland Empire, lots of empty houses out here and prices are way down.
    22 Jan 2013, 07:21 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (330) | Send Message
     
    Still,

     

    Riverside County & environs was waaay over-built as was the Las Vegas area. It'll take time to reduce that inventory. Real estate in LA and other popular urban centers such as SF and NYC didn't experience much of a drop during the 2008 recession for two reasons: there's no more room to expand (yes, you can rebuild) and all of these places are very popular with wealthy folks, especially foreigners.

     

    Living in LA is essentially living in a melting pot of the world's upper classes. There are significant presences from all over; the Russians being the newest arrivals. I hear Eastern European languages spoken on the street and in stores almost as often as English and Spanish.

     

    One problem that LA's high housing market is creating is that it's pushing blue collar workers further and further out. Pretty soon, the rich are either going to have to house their help, pay transportation costs, or do the grunt work themselves.

     

    Just my Tuesday morning cuppa joe musings...

     

    Dr. K
    22 Jan 2013, 01:25 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (3980) | Send Message
     
    Author’s reply » These comments reflect the three most important words in real estate. The first imprtant word is location.
    24 Jan 2013, 12:08 AM Reply Like
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