Dec. home sales plunge nearly 17%; worst fall in 40 years

[marmar]

AP, via the LA Times:



December home sales down nearly 17 percent
Associated Press

January 25, 2010 | 7:51 a.m.


WASHINGTON -- Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.

The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

"It's 'exit stage left' for first-time homebuyers," wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters. ............(more)

The complete piece is at: http://www.latimes.com/business/la-fi-home-sales26-2010jan26,0,7980427.story

[NightWatcher]

1. but I thought it was getting better

isnt that what they keep telling us?

[xchrom]

2. Oh fuckin joy.

And I'm gonna list my place this week.

[TexasObserver]

3. It was the extension of the $8000 tax credit to April that did it.

The tax credit was supposed to expire as an option for new home purchasers in November, but in November it was extended until April, 2010. The home sales that should have closed in December got put off, mainly because the extension of the $8000 tax credit for "new home buyers" until April was announced in November. That took the pressure off everyone in the deals regarding closings - the buyers, their lenders, the title companies, the inspectors, the realtors, the sellers.

The end of year is a bad time for people to close home purchases, anyway, with so many people busy during the holidays. Every closing requires some documents being created by a lender's attorney. The sag that came in December was largely a result of those events, and everyone involved taking a breather.

It is also my perception that lenders were trying to push over until 2010 their pending new loans, rather than close them in 2009.

With the tax credit extended until April, and with the traditional spring surge, I think we'll be seeing a decent level of home closings in March, April and May. But who knows?

[BlueJazz]

4. mmm..Let me see now: Ah...High Unemployment....Stagnant Wages...

Prices and costs of everything from food to health-care going up...
Damn...I just can't figure out why Houses are not selling ??????

[cutlassmama]

12. LOL, me either. Geez, with 1 in 4 people out of work you'd think people

would be scrambling to buy up those houses. Just can't figure it out!

[cbdo2007]

5. It's an excellent time to buy!!! Great deals to be had.

[Robb]

6. It seems most think

...the "deals" may be even better in six months. :shrug:

[Kurt_and_Hunter]

7. +1

[cbdo2007]

8. Possibly but anyone contemplating buying should go ahead and

start the process. It can take a long time to find the right house and then go through the purchasing process.

It's true that we MAY not have hit bottom yet but there isn't too much farther to go if any and the only way we'll know it's the bottom is when things are going back up. That'll be too late for people sitting on the fence.

[Kurt_and_Hunter]

11. That's faulty

You have a range of outcomes.

One year from now housing might be 20% lower or 2% higher.

There will not be an explosive housing rally off the bottom so the potential cost of delay is much lower than the potential cost of acting too soon.

Your advice is quite sound for things like a stock-market bottom where the move off the bottom is typically explosive, short-term.

[cbdo2007]

16. Most economic and housing data is showing signs of recovery....

so really the only people who think we haven't hit the bottom yet are the people here at DU that claim the sky is falling with every wacky negative economic percentage they see about anything in the news.

Whether the move from the bottom is short-term or long-term, anyone who reasonably believes that "One year from now housing might be 20% lower or 2% higher" isn't going to recognize recovery for months (or years?) after it happens.

Let me guess, you think I should buy gold too??

[cbdo2007]

18. Here is a graph showing existing home sales from 2005-2009 by month

http://www.calculatedriskblog.com/2009/11/existing-home-sales-graphs.html

[SoCalDem]

15. Yep.. there are millions of foreclosures ahead

Lots of people have been holding on by their fingernails, and will soon be forced out..

Job security is not much better than it was a few months ago

[timeforpeace]

17. Coupled with such low interest rates, that it's not happening is a horrible portent for the future.

[City of Mills]

9. Not surprising

The tax credit was set to expire at the end of November, so most people were rushing to get their closings in before the end of the month...which would leave few closings for December...that's exactly what I did; I wasn't about to gamble on an extension with the credit possibly expiring!

[moondust]

19. Bingo.

Bad weather in December probably didn't help either.


Home sales way up in October and November before tax credit expired and then sales dropped off after it was extended again.

December 22, 2009

NEW YORK (CNNMoney.com) -- After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors.

"This clearly is a rush of first-time buyers not wanting to miss out on the tax credit," said NAR's chief economist, Lawrence Yun.

~more~

http://money.cnn.com/2009/12/22/real_estate/november_existing_home_sales/index.htm

[Name removed]

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[gorfle]

13. Home sales are doomed for a long time.

The simple fact is that everyone who could afford a mortgage got one years ago. Since at least 2007 they were making loans to anyone regardless of their income or assets, and consequently millions of loans were made to people who had no business buying homes.

Now the banks have gone back to saner lending practices and are actually vetting the people who they loan money to. This means no more handing out loans to just anyone. This means a lot fewer people to be able to sell loans to. This means a lot fewer home sales.

Basically we are going back to the 20% down days. If you don't have $20K to put down, forget it.

[Gregorian]

14. Short sales.

I just got off the phone with my realtor friend. She was talking about how she saved a woman from foreclosure recently. I hadn't heard of short sales until just a few minutes ago.

http://en.wikipedia.org/wiki/Short_sale_(real_estate)

[tjwash]

20. That makes sense.

You can write off the 8000 dollar tax credit AND a years worth of interest on the mortgage, on next years taxes if you wait until now to purchase. If you purchased in December, you only get to write off the tax credit on this years taxes. It's akin to losing quite a few thousand dollars in deductions, if you split it up between 2009 and 2010.

I sure as hell would wait until now to purchase, if I had that option.