Posted on 09/29/2007 5:37:19 PM PDT by shrinkermd
THE DOWNWARD SPIRAL IN housing, the source of so much of the turmoil in so many markets and already proceeding at a rather sickeningly dizzying pace, accelerated further in these memorable three months. For both existing and new homes, sales and prices continued to buckle and inventories continued to extend their unrelenting rise to the heavens. Wachovia, which knows a thing or two about real estate, mortgages and the like, relays the news that in August, sales of new homes sagged to an annual pace of 795,000 units, a breathtaking 40% below the peak set in October '05, and median prices dropped a startling 8.3% from July. On a year-over-year basis, the 7.5% skid in the median price was the sharpest since December 1970.
The truly bad news, moreover, is that the prospects for any kind of pickup soon in housing range from dim to dismal. Daniel Mudd, the CEO of Fannie Mae, doesn't see housing hitting bottom "until the end of '08" and, even then, he warns, it'll take a while "to work its way back."
This morose appraisal was echoed last week by Jeffrey Mezger, the CEO of KB Home, which wound up deeply in the red in its third fiscal quarter ended August. Mr. Mezger neatly summed up the lugubrious state of homebuilding by citing the worsening oversupply of both new and existing homes, "tighter lending standards, low affordability and greater buyer caution" as putting a crimp in demand, "while higher foreclosure activity, combined with heightened builder and investor efforts to monetize their real-estate investments, boost supply."
And here's the "Ugh!" factor from Mr. Mezger: "We see no signs that the housing market is stabilizing" and, he sadly ventures, "It will be some time before a recovery begins."
(Excerpt) Read more at online.barrons.com ...
Well, you’re a busy little monkey today - morning and evening weekend posts!
Fortunately, I live between the two most expensive homes on my block (one of which is valued at twice the value of my current home). Being in a first ring suburb and in the starter home price range ain’t bad, either.
There is no question that the housing market is in turmoil and looks bad, but then, what kind of fool actually believed solidly in the radically inflated values given modest homes in the last ten years? Haven’t we learned anything from the wild-west economy of the krintons?
Good grief, a bubble doesn’t correct itself in 2 weeks. We are only starting to see this mess.
The not so carefully crafted house of cards is starting to crumble.
The market is adjusting itself towards being rational again.
I wish it well. ‘bout time.
We would like to buy a larger home. How is paying less for one a bad thing?
I agree with you, and it’s the reason people aren’t jumping out of buildings. Everyone knew what was going on. For the most part, the buyers knew the mortages were bad for the long term...they wanted those big houses and they wanted them now. The sellers knew their homes were being appraised way above what they should have been valued...and they turned a blind eye. Just like the artificial tech boom..everyone knew one day it would come to an end. As usual, the rich get out right before (That’s why they’re rich). We all knew we were part of a sordid pact. But as long as everyone was getting what they wanted...
so what to invest in now ? ...will gold hit 900 before next summer ?
I don’t know. I tend to stay away from gold. No good reason. I’m cashing out into high yielding money markets for now. I will not go through what I went through in the early 2000’s, when we all lost a bunch. I’d rather make just a little, than lose a whole lot.
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