UBS: Housing Demand Falling "More Quickly than Expected"

Submitted by
CalculatedRisk on Mon, 04/24/2006 - 10:55am (5 comments)
me wrote on Mon, 4/24/2006 - 1:05 pm

"demand has fallen more quickly than we expected."

What chumps. Anything bad, that most of us expect, is "unexpected" to them. Inflation "unexpectedle" higher. Offshoring "unexpectedly" higher. Demand "unexpectedly" lower. They must be blind.

Kett82 wrote on Mon, 4/24/2006 - 1:36 pm

Dear CR

I see long-term interest rates trending heading higher, regradless of the Fed's action on short-term rates. This will add even more downward pressure on home sales. I guess we will see with release of new and existing home sales, later this week.

Care to comment?

Best regards!

CalculatedRisk wrote on Mon, 4/24/2006 - 1:48 pm

Kett82, that was one of my 2006 predictions - higher long rates no matter what the Fed does (the Bernanke conundrum). And I'm looking forward to the housing numbers this week - I don't expect them to be too bad, but definitely not good.

Best Wishes.

David wrote on Mon, 4/24/2006 - 3:48 pm

No sh*t sherlock

Flipper wrote on Mon, 4/24/2006 - 4:26 pm
  1. Foreclosures which come up for re-sale represent the biggest threat to real estate prices. These foreclosed properties are usually priced to sell quickly as banks and other mortgage owners aren't in the business of holding real estate. They are blunt about that. Therefore a glut of fore closured property can depress real estate prices surprisingly rapidly.
  2. Builders etc. who build on "spec" are probably the next biggest threat to the real estate market because they can't afford to sit on new condo's or homes for very long. They can throw in amenities and some low-rate financing but in the end they have to sell fast. Most don't want to rent. Cancelled sales also represent a significant threat to this group.
  3. Most individuals, including so-called speculators or flippers, refuse to sell at a lose. Therefore a declining real estate market is represented by stagnant or mildly declining real estate prices on lower volume. You can't focus exclusively on average sales prices and ignore sales volume!
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