New Home Prices DECLINE for 2nd Straight Month

[unlawflcombatnt]

NEW HOME PRICES DECLINE

New home prices declined 5.5% to $214,800 during the month of June. New home prices have declined 7.7% over the last 2 months, from April's high of $232,600.

New home prices have declined 0.4% over the last year.

30-year mortgage rates have increased over the last 3 weeks and now stand at 5.73%. In southern California, mortgage rates have been increasing for the past 6 weeks. The link for this is:
http://news.yahoo.com/s/ap/20050727/ap_on_bi_go_ec_fi/economy;_ylt=AgmPxLeg3IiV42f9f.D9OU6yBhIF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl

10-year Treasury notes are now at 4.26%. This represents a significant increase from 3.97% on July 3rd of 2005. This is consistent with mortgage rate increases, and suggests this is a continuous, ongoing trend in rising mortgage rates.

unlawflcombatnt

[GreenPartyVoter]

1. Still can't afford a house anyway. This trailer will have to do us for

as long as we can hold it together.

[bahrbearian]

2. Duck Tape, it not just for terrorist attacks.

[GreenPartyVoter]

3. True dat

[stray cat]

4. I hate to say it but a continued drop would sure help me.

They are going to have to drop for me to afford to buy.

[unlawflcombatnt]

6. Same Here

They're going to have to drop a lot for me to be able to buy as well. It's certainly not a good time to buy. But even if mortgage rates increase some, it will probably be cheaper overall in the future. The home speculators will start trying to get rid of their homes when they see prices dropping. And at least 1/4 of homes bought in the last year are "investment" homes. Many with adjustable rate mortgages are also going to have to sell.

It's certainly unclear when prices will drop significantly. But with new home prices declining 7.7% in the last 2 months, and mortgage rates starting to increase, it may not be too far off.

unlawflcombatnt

[readmylips]

5. Luxury homes around me stopped selling....

Luxury homes in my neighborhood were going like hot cakes three months ago, now they are at a stand-still. Nobody wants them even if the prices have gone down. Young couple down the street bought their house a year ago, today the bank if taking over their house. Young people don't understand, it's not just the mortgage that's expensive, the maintenance and utilities are even more expensive. It is also hard work, manual labor. Plus landscaping and the upkeep is very expensive.

[unlawflcombatnt]

7. Home Price Decline

Readmylips,

Thanks for your reponse. I haven't checked much in my area lately (Southern California.) California is one of the few places where home construction is not exceeding population growth. This may be due to prices already starting to decrease, though I don't have any specific local information.

Again, nationwide, prices on new homes have declined for 2 straight months. The total decline over that time has been 7.7%. It seems like things are starting to slow down.

unlawflcombatnt

[BlueIris]

13. Just for the official record, as I young person I "get" that.

Learned my lesson when my parents bought their second house in 1990, during another period of "the bubble, she is burst, please get a house." So, they got a house. They weren't so young anymore, had built up some savings, and thought it would be the best thing for our family. The price was very reasonable for an Oregon house with two stories and a basement, four bedrooms, two bathrooms and nice garage (of course, it was next to some of the best schools in the state, which was the real reason they purchased it). Seriously, 1990--$59,000. I swear to God. But then I watched them sink $20,000 into modernizing the wiring (which was pre-WWII), then another $10,000 into remodeling the entire freaking thing (the basement wasn't carpeted, two of the rooms had been frozen in time in 1973 and the back patio was a mess of splinters) and then they had to put in air conditioning (I don't even know how astronomically much that was). I also don't even know how much they spent on landscaping (my mom's a landscape architect even and I'm sure it wasn't cheap). In the decade they spent there, the remodeling (to make the house liveable, not luxurious) and upkeep (only one paint job, which I find impressive) must have cost them $100,000.

Even a nice apartment/condo comes with a lot of unexpected expenses. I seriously doubt I will ever be a homeowner, after watching what my parents (and many other people) went through.

[demzilla]

55. Yes, but what would that house sell for today?

$300,000 maybe? Or more? The point is that it never hurts to buy cheap in real estate.

[unlawflcombatnt]

8. Wage Decline

Continued rise in home prices cannot be sustained if wages continue declining. Some of the fundamentals of housing price appreciation is that either wages, inflation, or rental rates must increase to sustain the home price increase. None of these have occurred.

WAGE DECLINE

Wage stagnation and decline have continued this year, despite the statements by the government that the economy is "strong, and getting stronger." Inflation-adjusted hourly wages have continued to decline through the month of June, according to the Bureau of Labor Statistics. June's inflation-adjusted wages declined 0.6% from May. June's inflation-adjusted $8.13/hour marked a decline from May's $8.18/hour. This also marks a 1.2% decline from April's inflation adjusted $8.23/hour. At this rate, wages would decline a whopping 7.2% over 12 months.
This information can be found at the U.S. Bureau of Labor Statistics site at:
http://stats.bls.gov/news.release/realer.t02.htm

June's weekly, inflation-adjusted income declined 0.8% to $274.95, from May's $277.29. June's decline marked a 1.7% decline from December 2004's weekly income of $279.73. Going back further, June's decline represents a 1.8% decline in the weekly wages from December 2003, which were $280.09/week.

Here is a graph of per capita real disposable income from the Dept. of Commerce. They use a different inflation measure than the Bureau of Labor Statistics, "chained 2000 dollars," which deliberately understates inflation. Even with this understatement of inflation, wages have clearly been stagnating since the beginning of 2005. Note in the graph below the lack of increase since January of 2005.


(Note: the above chart includes all income, including stock dividents and other non-wage sources of income.)


Wages definitely have NOT recovered during our alleged "recovery." In contrast, corporate profits have soared. Can the dividend income increases of the affluent maintain housing prices? Can housing prices be maintained by increased corporate profits and increased borrowing alone?

unlawflcombatnt

[BlueIris]

14. That chart is amazing.

Can't believe what it reflects about January of 2003, though. Yikes. Strangely, that was when I had some of the most money I'd ever seen in my life. Must have been a wacky anamoly because? Damn.

[unlawflcombatnt]

49. Link to Wages from Bureau of Labor Statistics

I'm posting a direct link to the United States Bureau of Labor Statistics for average hourly wages. (I'll also post the graph, but this will only be viewable for 24 hours, since the BLS changes the link to the graph at least once daily.) The direct link to hourly wages at BLS is:
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0500000049



unlawflcombatnt

[unlawflcombatnt]

50. The Wage Graph

The Bureau of Labor Statistics changes the link to this graph at least 3 times a day. It must be some kind of Right-Wing secret. Here is the graph again:



It's 2:30 AM in California as of this posting. It'd be interesting to see how long it is before the graph link is changed again.

unlawflcombatnt

[halobeam]

9. POP.....

Our area in LI, homes aren't selling for about a year here. Not at the price they got 10 months ago. Prices are dropping about 80,000 less for it to sell.

I should've left Nov. 3rd. Damn, my instincts are always dead on.

[unlawflcombatnt]

10. Thanks for that News

Halobeam,

Thanks for sharing that information. I'm starting to hear similar stories from other parts of the country. Home prices are declining everywhere except in the South.

I've probably stated this before, but new home prices nationwide have declined over 5% in the last month, and 7.7% in the last 2 months. With the increasing risk of foreclosures, due to the irresponsible lending practices of many banks, expect prices to drop further.

Almost 50% of homes bought in California during the last year are interest only. These are people who counted on continued appreciation in home values to bail them out. It appears that's not going to happen. As foreclosures increase, more homes are going to hit the market, further decreasing home prices.

It's probably best to get out now, if you planned on selling. Interest rates are rising, and that's going to drop equity values.

unlawflcombatnt

[RONSTOO]

11. so whats thats good

you want it to come down...think, think

[nadinbrzezinski]

12. So the bubble is bursing

hang on folks, this has been expected and will be fun

[BlueIris]

15. Come to think of it, I noticed today that prices in our area dropped

off a bit even from last month. Then again, I do NOT hold up Oregon's messed up, grossly price-inflated housing market as exemplary of any trend anywhere. We fund our bankrupt state government in property taxes, and in order to keep the charade going, all of the housing prices are waaaaay higher than anyone in their right mind should consider paying for the homes on the market. Especially considering how BADLY built many of the newer ones are. Still, it may be significant that I noticed a 3 bedroom, 2 1/2 bath in one of the most exclusive areas of our whole state is "only" selling for $259,000 according to some real estate ads I saw online this morning. For that area, that price IS low (it kinda made me wonder if someone had died there or something).

[unlawflcombatnt]

16. Prices Dropping

BlueIris,

It may be that someone in the neighborhood is starting to see the light.

Mortgage rates in Southern California have been steadily rising since June 8th. On June 8th the 30-yr fixed rate was 5.153%. On July 27th the rate had risen to 5.447%. This will make monthly payments higher on fixed rate mortgages, reducing the fraction going to principle payment.

As home price growth slows down people are going to start trying to sell. And the very fact that more people are selling is going to drive prices down even further. When this will really start picking up speed is uncertain. Some experts believe it may only be a matter of a few months.

unlawflcombatnt

[iconoclastic cat]

17. Do you think a panicked dip will happen, and then a correction?

[unlawflcombatnt]

19. Panicked Dip

Iconoclastic cat,

I do suspect there will be a "panicked dip." I don't suspect there will be much upward correction, however. The fundamentals that support the high real estate prices are non-existent. Wages are not increasing. Home construction has far outpaced population growth in most areas. Interest rates are unrealistically low at present, and are beginning to rise.

I think the home speculators will bail out fairly soon, if new home prices continue to decline. With them the demand will drop tremendously, as well as prices.

unlawflcombatnt

[Rockholm]

18. Existing Home prices keep rising here in Mass!

The number of sales is indeed slowing and homes are stiing a bit longer than they have been. But prices are still going up. Not at the outrageous rate they have been, but still going up nonetheless.

In my opinion, why buy a house, let's say in southern Florida or Texas, when new neighborhoods are going up left and right? Here in the Northeast, there is very little land available to build. Our land is much more expensive.

For all of you who keep cheering for a bubble to burst, I say screw you. There will be may people hurt by a bubble, really hurt. The * cabal and the banking & credit card industry rigged the bankruptcy process to protect themselves.

Funny thing, if you are going to cheer a bubble, please look where the bubbles exist. Blues areas. Boston, New York/New Jersey, California.

[Kathy in Cambridge]

20. I agree. I invest in real estate bec. I already lost my retirement in the

stock market.

BTW the condo market here is still hot because of all the baby boomers retiring, and because of families who can't afford single family homes.

[BlueIris]

24. The condo market in Portland is psycho-hot right now.

If you believe my Portland friends (gay couples with no children) who want the condos 'cause they're allegedly "just the right amoung of space" in that city.

[David Zephyr]

21. Excellent post.

You correctly point to the term "new housing".

I've posted much the same thing that you have several times in the last months here. I have provided statistics on top of statistics, but there is a distasteful envious quality to many of the posts on this subject that rely on emotion rather than logic.

The bubbles are where new housing tracts are being built on speculation by greedy developers.

In the primary metro areas of Los Angeles, there are no new housing developments because there is no land available. The apartment vacancy rates are very low and condo conversions are making that worse, and the home inventory rate is the lowest in nearly two decades. Supply and demand.

Wishing for a bubble that would hurt people and families is just sick.

Will Rogers: "Buy land, they don't make it anymore."

[unlawflcombatnt]

22. There's Abundant Land in Southern California

There is abundant land available in Southern California. The only place where there are shortages of land are in downtown LA. There is no slightest shortage of land anywhere else. There is much wide open land in Orange County, San Diego County, Riverside County, and San Bernardino County. I live in Southern California, and I've seen all the land available. I even receive a monthly land sale newsletter. It may be true that much of the land is not the greatest, but that's a problem willing contractors can handle.

What's not abundant in Southern California are people with enough income to buy property. In San Diego county, only 10% can afford a median-priced home. In California overall, only 17% can afford a median-priced home.

I'm hoping the bubble will deflate slowly, instead of outright exploding. That's why I post on this subject. To get people to stop believing that home prices are going to continue to increase. They are not. The longer people think otherwise, the bigger the bubble will get, and the worse it will be when it pops.

I'm hoping to get people who can't afford homes to not buy a home. The insane loan practices by banks are contributing to this bubble, as well as the media propaganda that no bubble exists, and that home prices will continue to appreciate rapidly.

I'm hoping I can encourage current owners to stop using their home as a piggy bank to borrow from to buy more goods. They are going to get stung when this bubble deflates. In contrast, they might be more careful if they thought it was going to deflate.

It's not an envy issue at all. It's a caution issue. Those that continue thinking there's no bubble will get hurt the most. Those that are aware of the bubble will get hurt less. Continuing to deny its existence is simply going to get people in trouble.

unlawflcombatnt

[sendero]

67. Not to mention that..

... these bubbles screw it up for EVERYBODY, not just the speculators.

There are plenty of reasons to wish for the bubble to go ahead and unwind now, first among them being that the longer it goes on, the harder the crash will be.

Nobody likes this situation, but by and large it is a handful of players who are creating it (speculators and lax lenders) and I wish a pox on both their houses and I could care less who approves.

[HockeyMom]

40. Yep, you got it

I looked at a condo on Long Island back in October. WAY OUT. If it was any further out east, it would be a house boat. It is now $40,000 ($275,000 2 bedroom, 2 baths) MORE than it was in October.

What is wrong with this picture? You cannot sell something, so you RAISE THE PRICE? Duh? No, thanks. I WILL RENT.

When people start saying, "I am as mad as Hell, and I won't take it anymore", you will see.

[unlawflcombatnt]

43. Prices

Your unwillingness to buy a house at that price is the very thing that will bring prices down. If people refuse to pay these exorbitant prices, prices will come down. Over a quarter of homes purchased over the last year are for investment purposes only. These homes must be sold by the seller, since the seller has no intentions of living there. Price declines will cause these sellers to drop their prices to avoid losing money on their initial investment. Residential owners may just decide not to sell their homes, but investment buyers are always trying to sell their homes.

unlawflcombatnt

[RUMPLEMINTZ]

23. I hope they drop some more by

Thursday cause I'm flying to North Carolina to buy a house. I'm debating between these 2 houses.

http://www.realtor.com/FindHome/HomeListing.asp?snum=112&locallnk=yes&frm=bymap&mnbed=3&mnbath=1.5&mnprice=100000&mxprice=150000&js=off&pgnum=12&fid=so&mnsqft=&mls=xmls&areaid=75487&typ=1%2C+2%2C+3%2C+4%2C+5%2C+6%2C+7&poe=realtor&ct=Monroe&st=NC&sbint=2&presort=sbint&sid=051E39B80022C&snumxlid=1049891189&lnksrc=00002

http://www.realtor.com/FindHome/HomeListing.asp?snum=155&locallnk=yes&frm=bymap&mnbed=3&mnbath=1.5&mnprice=100000&mxprice=150000&js=off&pgnum=16&fid=so&mnsqft=&mls=xmls&areaid=75487&typ=1%2C+2%2C+3%2C+4%2C+5%2C+6%2C+7&poe=realtor&ct=Monroe&st=NC&sbint=2&presort=sbint&sid=051E39B80022C&snumxlid=1045631214&lnksrc=00002

Of course I can remember when I was a kid my parents compaining about 18% interest rates on the house they bought back in 1979. I bet that hurt!

[Contrary1]

26. I like the 2nd one...

you get a couple hundred square feet of home, the drawback being a smaller lot.
If you have children, or plan to, make sure you check out the school systems.
That may end up being the deciding factor. Good luck! :hi:

[RUMPLEMINTZ]

27. Thanks, but it's just me and

my dog. The reason I'm leaning toward the first one is it's got a fenced back yard for my pooch. It costs a small fortune to fence in a back yard that size!

[unlawflcombatnt]

28. Buying a House

Is there any way you could wait to buy the house? Prices will probably go down more if you can wait. And they may go down a lot.

On the other hand, if the home you're buying is in a area that has not undergone major price appreciation, it might be a good time. Some areas apparently have not seen the tremendous price appreciation that most major metropolitan areas have.

unlawflcombatnt

[RUMPLEMINTZ]

29. Nope, I bought

a restaurant and take over on October 31st. Since closing on my house now is September 7th I have to find a house down there and close on September 6th. Otherwise I'll be living out of a hotel. If you clicked on the two housed in my previous post you'll see that the houses are pretty cheap in that area.

[RUMPLEMINTZ]

25. Since I'm buying a house

in a couple of days I went and checked the 30 year mortgage rate and according to Bloomberg it's at 5.39% which is still lower than it was a year ago when it was at 5.72%. Not sure if that makes much of a difference but just thought I'd tell ya.

http://www.bloomberg.com/markets/rates/index.html

[David Zephyr]

30. Some people are shorting REITS and are fanning the bubble fear.

I read your post and disagree with you.

There are some bubbles in certain parts of the country, especially where massive home construction has taken place by speculative developers.

You mention all of the land in the L.A. area that is available as a counter point to my earlier post, but the quality and suitability and profitability of building in those locations is generally prohibitive. My point really is that there are very, very few "new housing" developments happening at all in the greater L.A. Metro area.

Interest rates are still at historical lows, just not at the rock bottom rates we've seen during the last two years.

Also, where the demand far out-paces the supply in areas like Boston, Los Angeles, San Francisco and Chicago (as opposed to Dallas, Houston, Atlanta, Kansas City) buyers are willing to bunch up two families per household, children taking loans with parents where "afford ability" is not an issue when the income is combined.

Anyone who was waiting and sat out in hopes for the market to "cool off" in Los Angeles the last two years made a serious miscalculation and lost in home appreciation, lower rates (and monthly payments) and in mortgage and tax deductions.

The internet is now filled investment bulletin boards and forums with individuals who have shorted REITS in the market and are fanning the bubble of fear with postings in order to make money on their personal gamble that the housing market will turn south.

Let the readers beware.

[unlawflcombatnt]

31. The Housing Market WILL Turn South

Again, there is plenty of land in the greater LA area. I came close to buying some. Again, there is not plenty of income to buy real estate in the greater LA area.

You are simply trying to talk up the market, and you're claiming those of us that are less optimistic are trying to talk it down. The facts and logic do not support you.

Home prices appreciation is slowing, and new home prices have declined for 2 months straight. People holding homes for investment are going to lose money if they continue to hold them.

Mortgage rates in Southern California have increased over the last 6 weeks. 30-year fixed rate mortgages with 2 points were 5.153% on June 8th. On July 27th they were 5.447% in Southern California. This will increase monthly payments and decrease housing demand and seller prices. 10-year bond rates have been increasing, which supports an increase in mortgage rates.

The housing bubble in Southern California will burst. The amount of damage it does depends on how many people don't believe it will burst. If people do any research at all, they'll realize that the current home appreciation rate is unsustainable. The income increases to support it are non-existent. There is no slightest shortage of land in Southern California, if one is willing to drive a distance. And that has never been a deterrent to Californians.

unlawflcombatnt

[David Zephyr]

33. Are you shorting the market?

I have reviewed a lot of your posts here at the DU and this seems to be your big issue...dissing the real estate market in post after post. Why is that? Are you shorting the market in order to make a little profit? That's cool and many are doing just that. What sucks is visiting "financial forums" and watching those who are shorting the market and then "innocently" posting doom and gloom scenarios to help make it come true. I am not saying that you are doing this, but it does strike me as somewhat curious that this seems to be what you tend to post about here at the DU. Why is that?

You failed to address any of the points that I made.

I have no interest in talking up or down the market. I've long made a fortune in real estate here in Southern California over the last thirty years and, at this point in my life, will not really be effected either way (up or down).

Your prognostications of doom exceed even the most dire amongst the legitimate experts in the field...who are in a minority.

The demand far, far out paces the supply of homes here in SoCal. The desire by wealthy foreigners to own homes here and those of Californians who want second, vacation homes also further fuels the demand side. The Sunday L.A. Times Real Estate section last week just dealt with this issue.

Out of curiosity, how much real estate do you own?

[unlawflcombatnt]

34. Shorting the Market?

I'm not in the housing market. I can't afford the prices. And only 17% of my fellow Californians can. And that number is decreasing.

I think you're right about foreigners and 2nd home owners increasing demand. But most of them are hoping to sell eventually. As affordability declines, the number of people they can sell to will also decline. That's why home price growth is slowing nationwide. It will eventually happen in California. It's happening in some markets already.

I continue to discuss the housing market because it seems to be a topic of great interest. And also a topic of much overly optimistic spin.

I've posted this link before from economist Dean Baker at the Center for American Progress. You can tell me what you think is wrong with his assessmet. Here's the link:

http://www.cepr.net/publications/housing_fact_2005_07.pdf

unlawflcombatnt

[David Zephyr]

37. Shorting the market with options.

One doesn't need to be in the "housing market" to short the market and profit by a downturn. Your response makes me certain that you understood exactly what I meant.

[unlawflcombatnt]

36. More links to Housing Bubble

Here are some links to a site by an independent real estate analyst in San Diego named Rich Toscano. Though he discusses the San Diego market specifically, the general points he makes apply elsewhere as well. San Diego sounds like a more extreme version of the unaffordability spectrum, with only 10% of families able to afford a median priced home. In Southern California overall, only 17% can afford median priced homes. Below are the links.

http://econo-almanac.com/bubble1_evidence.php

http://econo-almanac.com/bubble2_risks.php

http://econo-almanac.com/bubble3_causes.php

unlawflcombatnt

[unlawflcombatnt]

38. More links

David Zephyr,

I certainly did answer your direct question: "how much real estate do you own?" Again, none whatsoever.

If you're implying that I hope that home prices decline, you are correct. If you are implying that I hope the market will "crash," you're wrong. Bursting of the housing bubble will badly damage our economy. But limiting the size of the bubble, and beginnig the deflation sooner, will be much less damaging. The sooner people realize this is an unsustainable bubble, the less it will increase in size, and the smaller the effect.

I certainly do hope prices fall in California. With only 17% of us being able to afford homes, that would help most of us. In addition, if people realize the tenuousness of their home prices, they're less likely to take out further home equity loans. The realization that the bubble will not last will help those people, not hurt them. They won't be as devasted by the depreciation of equity as they will be if they aren't aware of the bubble's existence.

I'm going to post another link to an article written by 4 economists involved in the California real estate field. Their discussion is not only about the housing bubble, but the damage to California such bursting would cause.

In this article the Northern California housing bubble is also discussed, as well as the lack of any "fundamental" reason for the large home price appreciation in that area. Home prices in the Bay Area have surged, despite the loss of 367,000 jobs since March of 2001. There simply isn't enough residential buyer income to support the home price appreciation that has occurred there.

According to Anderson Forecast economist Michael Bazdarich "bubblesare most clearly in place in Southern California."

Below is the the link. You do need to sign up first. It's free, however.
http://www.contracostatimes.com/mld/cctimes/news/state/11946508.htm

[KoKo]

56. And...CNBC had a report that the major homebuilders have insider selling

that's up 40 percent. They are dumping their own stocks. KB, Toll Brothers, Centex. CNBC is a known Pumper. These statistics were reported in articles here on the DU "Stock Market Watch" that lists articles every day in the "Latest Breaking News Forum."

When CNBC verifies that the major homebuilders insiders (Corporate Heads) are selling their stock in the millions of dollars then I think it's time to watch out.

Yahoo Finance will give the stats on "insider selling" right on the site of each Homebuilder's Stock. This isn't fantasy when the "Pumpers and the Cautioners" get in sync.

True the "Bubble" is much worse in some areas of the country then in others. Greenspan has even said that some areas might have pricing pressures that are exaggerated upward, and perhaps some areas of California can sustain huge increases in prices where only the "chosen few" can afford and can keep "flipping properties." Maybe Florida (Hugely Overheated) still has so many Boomers rushing in there to buy their dream McMansion for over 1mil....but I'd be careful here and think that it's not a matter of "if housing will blow out..but when."

:shrug:

[unlawflcombatnt]

61. Thanks

Thanks for this information. The housing bubble is starting to deflate in some areas of California already. Price appreciation has declined everywhere in California. Sales activity in Orange County declined over 12% in 2004. Prices are increasing at less than half the rate they were in 2004.

unlawflcombatnt

[Zynx]

44. There is bubble type activity in a frightening number of markets.

Florida, Virginia, D.C., Maryland, PA, NY, MA, RI, even parts of ME, CA(the worst by far), OR, AZ, CO, IL, and many other markets including some aspects of the local Milwaukee market here have some fairly out of whack pricing. There are so many regional housing market bubbles that it adds up to a bizzare figure where nearly 40% of the markets, according the Wall Street Journal, have some degree of price excess. That is actually similar to the stock market bubble where only large cap stocks, and only selected ones there, were truly out of whack before the bear market hit.

California in particular is ridiculous with home prices rising 20-40% per year on a median basis statewide. Any basic economics lesson will tell you that while rates may be low, that's one freaking big mortgage payment for a $500,000 house.

[NewJeffCT]

32. It's slowing here in CT

We're in a pretty new neighborhood - our house was new a year ago, and the oldest houses are 2 years old. Last summer, when our home was finished, there was a lengthy waiting list to get into our development and the two homes in the development that went up for sale sold very quickly.

Now, another family has a house up for sale & they had to re-do their offer & drop the price $20,000 and it's been on the market for a month. The development's builder also built a house on spec for the first time - and that had trouble selling, though it finally sold... I don't have a final price on it yet, though I suspect it was cheaper than the original list price.

[theboss]

35. I would think this is a good thing in some ways

This housing market obviously needs a correction. What it does not need is a rapid correction.

[1932]

41. When real estate crashes, money is going to plough into stocks, I bet.

[Zynx]

46. The two usually are seperate in their moves for obvious reasons.

Both take big money to move one way or the other so intuitively if one is stalling, then money will flow to the other. The last five years have been great for housing precisely because the stock market has had one of the worst periods in decades.

[carnie_sf]

39. San Francisco's still red hot

[unlawflcombatnt]

42. San Francisco

Yes, it is according to my information. It is one of the most risky housing markets, according to information I've read. The bubble is even bigger there than in Southern California.

unlawflcombatnt

[Zynx]

45. Never chase what is hot.

People always make that mistake and they get burned.

[unlawflcombatnt]

47. Exactly

Investors will buy into the market with the hopes that it will continue to increase. Every bit of information implies it's ready to pop.

unlawflcombatnt

[unlawflcombatnt]

48. Housing Price Increases More than Wages & Employment

Here is another link to the California real estate situation. The most important point made is that previous home price increases have been accompanied by wage and employment increases. The current home price appreciation has occurred despite declines in employment and wages. This means there is no "fundamental" driving force behind the current rise in home prices. It also indicates this is an overinvestment-created "bubble." Below is a graph of the employment-home price relationship. Again, the current prices are completely disconnected from employment.




This is a link to the article:
http://www.edab.org/newsletter/Quarterly/q7-04_files/real_estate.html

unlawflcombatnt

[unlawflcombatnt]

51. Housing Price Decline

Housing starts have declined 11% since February 21. If one combines this with a 7.7% decline in new home prices in the last 2 months, and an increase in mortgage rates over the last 2 months of approximately 0.3%, a housing appreciation slowdown seems inevitable. Below are 2 graphs of relating to the housing industry.



Below is a housing starts graph, representing the decline in housing starts in recent months.





unlawflcombatnt

[unlawflcombatnt]

52. Housing Bubble - Great Link

I ran into a great link on the housing bubble. It gives all the proposed reasons why housing price appreciation will continue. Then it gives all of the counter arguments to those reasons.

The author talks mainly about the San Francisco Bay area housing bubble, but most of this applies elsewhere.

Factors responsible for making the current appreciatation growth unsustainable include increased number of risky loans by banks, low interest rates that are starting to rise, and declining or stagnant wages and employment.

The author also contradicts the market hype about increasing population causing increased demand. As others have stated, the number of homes built is exceeding the increase in population and new family formation. By these measures, prices would normally be declining. Many other good points are made in the article. The author states the bubble has already started deflating in San Francisco. The link is:
http://patrick.net/housing/crash.html

unlawflcombatnt

[BlueStateBlue]

57. Link to a real estate investors' message board

I've been reading this board for a couple of years now (while I anxiously await the crash). These folks are very well informed for the most part, and they are always providing great links to housing related news.

http://www.siliconinvestor.com/subject.aspx?subjectid=51347

[unlawflcombatnt]

60. Another Link

I may have already posted this link, but I'll post it again to make sure. This comes from a San Diego real estate analyst.

http://piggington.com/


unlawflcombatnt

[Oerdin]

53. Over supply situation

OVer all new home sales are the highest ever but high prices have attracted a whole lot of new development which has created a slight over supply situation. Here's an MSNBC article about the results from last June.

http://www.msnbc.msn.com/id/8726461/

Sales figures keep getting rivised upwards and nation wide are up 14% for the year. That's a strong market but builders are building houses even faster so the competition is lowing prices. That's hardly a bad thing for consumers, however, a better way to judge things is to look at both new homes and resale of existing homes because new homes only make up 20% of the market. You have to also look at the other 80% if you want to get a clear picture.

[unlawflcombatnt]

58. Housing Spin

MSNBC's article was interesting. What's more interesting is how they try to rationalize away that new home prices have declined 7.7% over the last 2 months. They claim it's "due to the big jump in new home sales in cheaper areas, such as Midwest and South." This is complete nonsense.

Home price appreciation in California has declined, and prices are actually going down in some areas. June's monthly sales rate of homes in San Diego declined 8.8% over the previous June. Price appreciation in San Diego is down to 6.3% annually. This is 1/3 of the rate it was 1 year ago. John Karevoll, an analyst from the housing publication DataQuick, stated that price appreciation may be down to a 0-5% rate by the end of the year. http://www.signonsandiego.com/news/business/20050719-9999-1b19housing.html

Home sale activity declined 12.6% in populous Orange County, California, over 2004.
http/www.dqnews.com/ZIPOCR2004.shtm

Home price appreciation growth has declined in all major metropolitan areas in Southern California. Los Angeles' home appreciation rate has declined to 14.7% from 2004's 24.8% rate. Orange County has declined even more, from 24% in 2004 to 11.7% by the end of June. Though Riverside county is still at an annual appreciation rate is 23.2%, it has declined from it's 2004 rate of 32.4% annual appreciation rate.

San Diego's 6.3% annual appreciation growth has dropped markedly from its 26% rate in 2004. http://www.dqnews.com/RRSCA0705.shtm

There is definitely a downward trend in home appreciation in most large metropolitan areas, especially California. The deflation of the housing bubble is already underway in the San Francisco Bay area.

unlawflcombatnt

[unlawflcombatnt]

59. Addendum

The median price increase for a home in Southern California was up 14.5% from June 2004. This is the lowest year over year price increase since March 2002.

unlawflcombatnt

[cindyw]

54. yipee, fall, fall, fall, so I can buy buy buy

:-)

[banana republican]

62. What about homes in the $!M+ ranges are they falling??n/t

[BlueStateBlue]

63. I think they're taking a lot longer to sell, at the very least. n/t

[neverforget]

64. Not here in Portland, Oregon. Median home price is $240,000

which is 13% higher than last year at this time. The wife and I are looking for a house but the pickins' are slim in our price range.

[unlawflcombatnt]

66. Home Prices

See if you can find information to compare the previous year's home appreciation rate. The rate of appreciation may have slowed over the last year, which means prices will eventually stop increasing, and may even decline.

In California, home prices are still increasing, but the rate has declined drasticly. In San Diego, home price appreciation is increasing at 1/3 the rate it did a year ago. The same changes are occurring in the L.A. area. If the appreciation rates continue to slow, prices will ultimately stop increasing and may start to decline.

unlawflcombatnt

[unlawflcombatnt]

65. New Home Sales to Decline 6% in 2005

I was inadvertently given another good reference by a Right-Winger on the trend in housing construction and new home sales. (Apparently he didn't read his own reference.)

New residential construction spending increased 17.6% in 2004, compared to a projected increase of only 1% for 2005, and a -0.9% for 2006.

Total residential housing construction increased 8.3% in 2003, but only 4.7% for 2004. Housing construction was projected to decline 5.7% in 2005.

Total number single family units built is is predicted to decline 5.4% in 2005. Total multifamily unit construction is predicted to decline 7% in 2005.

New Home sales are predicted to decline 6% for 2005.

This information can be found at:
http://www.manufacturing.net/ind/index.asp?layout=tcsArticle&articleID=CA513788

unlawflcombatnt

[unlawflcombatnt]

68. Home Price Decline

Here's another more link to the California housing market. In the San Francisco Bay area home sales declined 11% in July. Median prices on single family homes declined $1,000.

In San Diego, price appreciation has declined to 5% annually from a 30% annual rate last year. Homes are also staying on the market longer than previously.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/08/17/BUGAJE8R9P1.DTL

unlawflcombatnt