Sales of previously owned homes in the U.S. unexpectedly rose last month at the same time the number of houses on the market increased, signaling that the slowdown in housing is likely to be gradual.
What happens when existing home sales really drop?
Months supply will just skyrocket.
it's amazing how slowly this unfolds. You would figure with the internet and new blogs around dedicating to the housing bubble that more would be more hesitant to buy at these inflated prices. Amazing. I feel very confident that many of them will be regretting their purchase in next 1-3 years if they have to sell. They are in for a big surprise. And I am not going to assist in bailing them out.
An average of 246,428.57 sold per day in February and 223,225.81 per day in March ... that doesn't sound to me like sales were up. Or does the "seasonally adjusted" part account for that?
You would figure with the internet and new blogs around dedicating to the housing bubble that more would be more hesitant to buy at these inflated prices.
People have to live somewhere and in many locations the renting options are terrible - my small town for one.
If the economy slows & layoffs pick up there will be even more re-shuffling... so sales may continue to hold up somewhat even as inventory rises.
I went through times like that as a kid in the late 60s through mid 70s when my white collar father had to change jobs/relocate four times in a six year period moving us all over the eastern half of the US... New York to Deep South to Upper Midwest. It was rust belt & very turbulent... not unlike now.
Overall in his life he has bought/sold six homes... made money on three and lost money on three... the one he lives in now will be the 'rubber game' though at 84 he might not ever know the 'end result' of the match. He tells us it is his intention to die in this house.
As CR noted existing home sales are a lagging indicator. Moreovoer, home sales actually went up a whole lot in the Northeast and the Midwest, both of which enjoyed the nenefits of unusually warm winter. Keeping in mind that existing home sales are closings and March sales reflect contracts signed in Jan/Feb, the number is hardly surprising.
Meanwhile, sales fell in the South and West. West sales are down 13% yoy.
Inventory continues to surge and price appreiciation is close to halting. I did my own seasonal adjustment to the prices and over the last six months, meadina price appreciation is zero.
It seems like there is an effort to spin the numbers in a positive fashion. Here's another quote from Bloomberg:
"We're going to have what they call a soft landing," Sean Shallis at RE/MAX Villa Realtors in Jersey City, New Jersey, said. "You're going to see that landing in the next three to six months."
Shawn, these are seasonally adjusted annualized numbers. The actual sales were:
Feb: 401,000
Mar: 555,000
The key points are: 1) inventory is close to the danger zone (6 to 8 months) and 2) Existing Home Sales are stale numbers, reported at the close of escrow. Most escrows take 30 to 60 days - so these are January and February contracts. Give it time - the slowdown is, uh, slow!
So, if these numbers are "lagging indicators" and "not surprising", then the January and February market was actually strong while you Bubble Blubberers were announcing the end of days?
When did 6 to 8 months of supply go from being a balance market to a "danger zone" that will cause "pricing problems", and over 8 months "significant" problems?
The problem with these numbers is that it is national data. I am a strong advocate that we are about to experience 10 to 30 percent drop in housing values, but I would have no problem buying a $200,000 2500 sq foot house in Nebraska or Iowa or Texas today. If, in 2006, California housing sinks by 30% while the midwest increases by 30% these national numbers will show housing as fine as our economy will likely get thrown into a recession.
I think it's worth noting that flat sales in the context of increasing inventories is a bad sign in a housing market. Since each house is unique and buyers are choosey, higher inventory means greater selection, and all else being equal, greater sales.
Even in a healthy market, there'd be diminishing returns to increases in inventory: once there's already a good selection on the market, adding inventory would be expected to increase sales only marginally. But the relationship should always be positive, absent a reduction in buyer demand.
The purpose of monetary policy is to balance spending & saving, & rhetoric aside there's little reason to save these days. Until Fed supervised lenders stop lending any amount to anybody & until the Fed makes it advantageous to SAVE, there's little incentive for one to save instead of spend.
Topline CPI was 4.3% through March, annualized. Adding back in the Boskin reductions of 1% puts household inflation @ 5.3%. Ford Motor Credit (of the high-risk JUNK-rated Ford family) is paying a whopping 5.64% on its Interest Advantage Notes this week. A 30% tax rate reduces one's "gain" to 3.94%, A LOSS of 1.36% to inflation. Why would anyone but us doomsdayers invest in this environment, ESPECIALLY when no-money down buyers can just walk away from their liabilities IF times turn.
If the Fed's desire is to encourage saving, it MUST encourage saving. The question we're all waiting to see answered is, WHAT'S THE FED'S REAL AGENDA? DOES IT WANT US TO SPEND OR TO SAVE?
I checked out a nice (nothing special) house this a.m. It was built in 1956 & in 1998 it sold for $290k. The owner is asking $940k, recently reducing his asking price from $980k.
Compounding $290k @ 5% for 8 years (inflation +) puts the historical fair value in the vicinity of $430k. I hope ANYONE buying a house this year is planning on living in it for a LONG time BECAUSE our wonderful government that created this mess is NOT going to bail him out.
why couldn't the media come up with a better newstory than a freaking THEORY.
to answer bailey, republicans wouldn't mind us spending, demicrats would want you to save up for when they have a president of their own party/species.
Here's the headline from Bloomberg:
Sales of previously owned homes in the U.S. unexpectedly rose last month at the same time the number of houses on the market increased, signaling that the slowdown in housing is likely to be gradual.
What happens when existing home sales really drop?
Months supply will just skyrocket.
it's amazing how slowly this unfolds. You would figure with the internet and new blogs around dedicating to the housing bubble that more would be more hesitant to buy at these inflated prices. Amazing. I feel very confident that many of them will be regretting their purchase in next 1-3 years if they have to sell. They are in for a big surprise. And I am not going to assist in bailing them out.
An average of 246,428.57 sold per day in February and 223,225.81 per day in March ... that doesn't sound to me like sales were up. Or does the "seasonally adjusted" part account for that?
You would figure with the internet and new blogs around dedicating to the housing bubble that more would be more hesitant to buy at these inflated prices.
People have to live somewhere and in many locations the renting options are terrible - my small town for one.
If the economy slows & layoffs pick up there will be even more re-shuffling... so sales may continue to hold up somewhat even as inventory rises.
I went through times like that as a kid in the late 60s through mid 70s when my white collar father had to change jobs/relocate four times in a six year period moving us all over the eastern half of the US... New York to Deep South to Upper Midwest. It was rust belt & very turbulent... not unlike now.
Overall in his life he has bought/sold six homes... made money on three and lost money on three... the one he lives in now will be the 'rubber game' though at 84 he might not ever know the 'end result' of the match. He tells us it is his intention to die in this house.
As CR noted existing home sales are a lagging indicator. Moreovoer, home sales actually went up a whole lot in the Northeast and the Midwest, both of which enjoyed the nenefits of unusually warm winter. Keeping in mind that existing home sales are closings and March sales reflect contracts signed in Jan/Feb, the number is hardly surprising.
Meanwhile, sales fell in the South and West. West sales are down 13% yoy.
Inventory continues to surge and price appreiciation is close to halting. I did my own seasonal adjustment to the prices and over the last six months, meadina price appreciation is zero.
It seems like there is an effort to spin the numbers in a positive fashion. Here's another quote from Bloomberg
:
"We're going to have what they call a soft landing," Sean Shallis at RE/MAX Villa Realtors in Jersey City, New Jersey, said. "You're going to see that landing in the next three to six months."
Shawn, these are seasonally adjusted annualized numbers. The actual sales were:
Feb: 401,000
Mar: 555,000
The key points are: 1) inventory is close to the danger zone (6 to 8 months) and 2) Existing Home Sales are stale numbers, reported at the close of escrow. Most escrows take 30 to 60 days - so these are January and February contracts. Give it time - the slowdown is, uh, slow!
Best Wishes.
Thanks for the lesson, CR.
I'll soon be landing in the Four Corners area, so here's to hoping this declining price trend quickly bleeds into that region.
So, if these numbers are "lagging indicators" and "not surprising", then the January and February market was actually strong while you Bubble Blubberers were announcing the end of days?
When did 6 to 8 months of supply go from being a balance market to a "danger zone" that will cause "pricing problems", and over 8 months "significant" problems?
The problem with these numbers is that it is national data. I am a strong advocate that we are about to experience 10 to 30 percent drop in housing values, but I would have no problem buying a $200,000 2500 sq foot house in Nebraska or Iowa or Texas today. If, in 2006, California housing sinks by 30% while the midwest increases by 30% these national numbers will show housing as fine as our economy will likely get thrown into a recession.
"Usually 6 to 8 months of inventory starts causing pricing problem - and over 8 months a significant problem."
What actual data are you basing that statement of fact on?
Consumer confidence numbers were hot too...
Consumer cheer hits four-year high in April
The party isn't over yet hic... I just'ld like the room to stop swirling long enough so I can find my car keys.
CR,
Take a look at the Condo/Coop Data..
http://www.realtor.org/Research.nsf/files/REL0603CD.pdf/$FILE/REL0603CD.pdf
grim
I think it's worth noting that flat sales in the context of increasing inventories is a bad sign in a housing market. Since each house is unique and buyers are choosey, higher inventory means greater selection, and all else being equal, greater sales.
Even in a healthy market, there'd be diminishing returns to increases in inventory: once there's already a good selection on the market, adding inventory would be expected to increase sales only marginally. But the relationship should always be positive, absent a reduction in buyer demand.
The purpose of monetary policy is to balance spending & saving, & rhetoric aside there's little reason to save these days. Until Fed supervised lenders stop lending any amount to anybody & until the Fed makes it advantageous to SAVE, there's little incentive for one to save instead of spend.
Topline CPI was 4.3% through March, annualized. Adding back in the Boskin reductions of 1% puts household inflation @ 5.3%. Ford Motor Credit (of the high-risk JUNK-rated Ford family) is paying a whopping 5.64% on its Interest Advantage Notes this week. A 30% tax rate reduces one's "gain" to 3.94%, A LOSS of 1.36% to inflation. Why would anyone but us doomsdayers invest in this environment, ESPECIALLY when no-money down buyers can just walk away from their liabilities IF times turn.
If the Fed's desire is to encourage saving, it MUST encourage saving. The question we're all waiting to see answered is, WHAT'S THE FED'S REAL AGENDA? DOES IT WANT US TO SPEND OR TO SAVE?
I checked out a nice (nothing special) house this a.m. It was built in 1956 & in 1998 it sold for $290k. The owner is asking $940k, recently reducing his asking price from $980k.
Compounding $290k @ 5% for 8 years (inflation +) puts the historical fair value in the vicinity of $430k. I hope ANYONE buying a house this year is planning on living in it for a LONG time BECAUSE our wonderful government that created this mess is NOT going to bail him out.
why couldn't the media come up with a better newstory than a freaking THEORY.
to answer bailey, republicans wouldn't mind us spending, demicrats would want you to save up for when they have a president of their own party/species.