Tech stocks edge lower as investors worry about home sales

[Bush_Eats_Beef]

http://www.mercurynews.com/mld/mercurynews/news/local/12456297.htm

Investors retreated Tuesday, sending stocks moderately lower as existing-home sales slid and volatile oil prices intensified Wall Street's summer malaise. The tech-heavy Nasdaq composite index fell 4.16, or 0.2 percent, to 2,137.25. Silicon Valley's largest tech stocks by market value were mixed. Cisco Systems, Google, Hewlett-Packard and Oracle gained. Intel, eBay, Yahoo, Apple Computer, Applied Materials and Symantec declined. The Dow Jones industrial average fell 50.31, or 0.5 percent, to 10,519.58. The Standard & Poor's 500 index fell 4.14, or 0.3 percent, to 1,217.59.

Investors sold off stocks after the National Association of Realtors said sales of previously owned homes dropped 2.6 percent in July as mortgage rates crept up. Even with the decline, sales were the third-highest level on record.

The latest snapshot of housing activity suggested that the sizzling housing market may be cooling slightly. A contraction could hurt consumer spending, since a raft of home equity loans have put cash in consumers' pockets.

Still, in late August trading, it doesn't take much to bring stocks down. No major economic reports are due this week, most companies' second-quarter earnings are out and many investors are on vacation, said Michael Sheldon, chief market strategist at Spencer Clarke. ``We're not seeing a lot of conviction, either by buyers or sellers, so far this week,'' Sheldon said.

[The_Casual_Observer]

1. To the millions of people who have entered the bogus

real estate "industry" fueled by the bogus bush "borrow as you go" policies, I kiss you goodbye.

[katamaran]

2. Precicely why we're waiting to buy a house

Precicely why we're waiting to buy a house. Boyfriend and I can't afford one right now, but we will be high and dry when the bubble finally bursts. Can't wait until those ludicrously priced $600K homes here drop to their proper $200K again.

[The_Casual_Observer]

3. Although they deny it to the hilt, I expect some wild ass

Japanese style panic selling in the next little while.
What's that they say? 25% of the houses are purchased as "investments".
Hang on to your cash, because that's what will do the talking for you when the time is right. Good luck! T_C_O

[NYC]

4. Do you think they will go that low?

I realize present prices are greatly inflated, but I can't imagine them dropping 2/3.

Thanks in advance.

[denile01]

5. Don't hold your breath

No drops in price like that in San Jose, at least not in the last 45 years.

I used to work in escrow in silicon valley in the late 70's, investors galore, and no bursting bubbles. Things slowed down a little in the early 90's, but nothing drastic.

It's incredible to me that people can still buy homes there.

[Bush_Eats_Beef]

8. Current median home price in Silicon Valley: $700,000

I live in a townhouse (rent, not own). It's a nice one, pretty big, with a 2-car garage, one master bedroom and two smaller bedrooms. The walls are THICK and I never hear my neighbors. The windows, unfortunately, are single-pane glass, so the home isn't energy-efficient at ALL. It's a sauna in the summer and a meat locker in the winter. There's a tiny, tiny little strip of landscaping at the back of the property, but other than that, it's townhomes sitting on a cement lot.

The unit a couple of doors down sold a month ago for $450K.

Condos, on the other hand (ESPECIALLY in Silicon Valley) are often converted apartments, which means paper-thin walls and a carport instead of a garage. Developers will gut an existing apartment, put in new carpets, splash around some paint, put in new plumbing fixtures and appliances and cupboards, but it's still a tarted-up APARTMENT for sale.

An article ran in the San Jose Mercury a couple of weeks ago about a married couple who were "thrilled" to have bought a 2 bedroom, 2 bath CONDO in San Jose for $435,000. Their mortgage payment equals FORTY FIVE PERCENT of their COMBINED income, and it took FIVE loans to purchase it.

Most of the HOUSES that are in the $400-500K range are "fixer-uppers" in bad (or at least questionable) neighborhoods.

When the "dot com" phenomenon caved in like the rotted melon that it was, the people who escaped with their money intact became "real estate speculators." It sucks, but yeah...I don't anticipate a bursting bubble here. There are too many vermin in this valley and they are too quick on their feet.

[MazeRat7]

6. Where is the relationship between housing and tech ?

Sorry, but the pin head for the Mercury News is trying to make a link that just does not exist. Yes, "some" tech's were down today... but not as a result of jitters about the housing market.

MZr7

[skids]

7. Their reasoning...

...is that consumer spending will go down due to less cash on hand due to less housing-related borrowing (or in general, the fact that the housing sector is pretty much what supports the middleclass economy these days). Less spending, less gadgets sold.