Posted on 10/24/2007 8:22:01 AM PDT by Hydroshock
NEW YORK (CNNMoney.com) -- Existing home sales sank 8 percent last month, to the lowest pace on record, according to the latest reading on the state of the battered real estate market released Wednesday.
Sales of existing homes slowed to an annual pace of 5.04 million in September, compared with a revised 5.48 million sales pace in August, according to the National Association of Realtors.
Last month's decline marks the largest since the current measure of existing home sales - which includes multiple-family dwellings - began in 1999.
Economists surveyed by Briefing.com had forecast that sales would slow to a 5.25 million pace.
Lawrence Yun, NAR senior economist, blamed the credit crunch.
"Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher priced areas that rely more on jumbo loans," Yun said in a statement.
(Excerpt) Read more at money.cnn.com ...
Economy/Credit/Housing Issues Ping List
If you want on or off this list let me know.
How does an 8-yr history qualify as “ever”?
MV
Dunno...but the way these articles get shoved out daily makes me wonder if the MSM wants to talk it down more...to elect Hillary...
/tinfoil
Ouch! This is getting ugly.
Pray for W and Our Troops
So there you have it. We're still above 1998 levels for home sales.
It has been ugly, it is now getting fugly.
I agree that the press appears to be trolling for a recession going into the election cycle.
“doom & gloom” ping
“sky fell” ping
“lost trillions in equity” ping
“worst housing market since hoover” ping
“ranks of homeless swell” ping
“no health-care for kids because of mortgage payments” ping
“elderly can’t eat because of mortgage payments” ping
"no homes left in Louisiana & California" ping
ok...did I miss anybody ?
But homes sales weren’t tracked until 1999! :)
How will we EVER know!?
Doomed! Doomed! We’re doomed!
MV
There's just a ten month supply of homes for sale on the market, nationally.
It's a few local markets like Miami that are going to get hammered. Outside the bubble zones (just a few cities), life will remain fine.
Done
“it’s all Bush’s fault ping.”
Doom despair and agony on me
Deep dark depression, excessive misery
If it weren't for bad luck, I'd have no luck at all
Gloom despair and agony on me
“How does an 8-yr history qualify as “ever”?”
Exactly. Sort of like when they tell you that it’s the hottest it’s ever been “on record.” The “record” of course is only 120 years.
And you know, even without a crunch, the market for new homes can’t keep growing faster than the population growth. Eventually everybody would own a home, and unlike cars, most people aren’t going to own multiple homes.
And the market for existing homes is static, in the sense that sales of existing homes don’t contribute to the economy. They are just transfers of property from one person to another. And they go up or down NOT solely on economic factors, but on mobility factors.
We had a GREAT run during the Bush years as more people than ever before were able to buy homes. We shouldn’t expect home ownership to keep shooting up, and in fact a lot of people have been spooked into sticking with rentals for now (also the prices of homes went up so much people couldn’t afford them anymore).
If we just get back to a constant percentage of people owning homes, since the population of the country isn’t growing any faster than in 1998, and since we are TRYING to kick 12 million people out of the country, we should EXPECT the sale of homes to drop BELOW the 1998 levels.
That “lost trillions in equity” argument is similar to the left claiming that Clinton had a surplus and W spent it all.
IT NEVER EXISTED!
But... you can’t get in the way of a good ol’ leftist whine, now, can you?
All they have been building in the burbs the last decades are huge overpriced houses for small families that require two incomes and two SUVs
I am surprised it has kept up as long as it has
“How does an 8-yr history qualify as “ever”?”
It’s a bad headline. It is trying to make bad news sound even worse. It sells.
And it is technically correct (but grossly missleading) when you read the explanation in the article.
Home prices are only up 2% here in Nashville this year and I am waiting to buy. Maybe a few more months and I can get a good deal.
“So there you have it. We’re still above 1998 levels for home sales.”
Per capita?
Claims I find interesting are ones like “first [insert statistic here] since the great depression”. Whenever that sort of statement pops up - and is statistically true - it gets my attention.
You don't need to talk down a roller coaster. You think people are to dumb to see their own real estate market.
I said back in fall of 2006 that I believed we would know if this was going to get really bad in April of 2007 and I would either eat crow or claim “victory” in believing that this was going to be very bad.
I claimed “victory” and argued for a while, but it was like arguing with holocoust denyers.
‘
Few here remember that the MSM hardly ever talked about “current” figures in their “doom and gloom” stories in 2006. It was all about what they feared the future would bring. Now, the articles need not look to the future for an infinite amount of doom and gloom fodder. They need only look to the current data about where we are NOW. And I find it interesting that every single time the market is down now, the articles discussing it almost ALL talk about housing and credit concerns.
Heck, I live in Seattle, the city that is supposed to be bucking the trend, yet the new development by my home has a big banner saying “HUGE PRICE REDUCTION”. I’m 53 and that is the first time I have EVER seen that in Seattle (I’ve been here since 1966).
My wife and I have been in the real estate business in Renton and Mercer Island during the past 10 years. In our adult lives, we have never seen so many existing homes rot on the market as we are seeing now. And in my area more than half of those have “price reduced” or “new price” signs. And many of them are simply pulled off the market by sellers that didn’t “have to” sell.
Our agent friends are getting killed right now.
Again, this is in Suburbs close in to Seattle, the “immune” market.
Frankly, the anecdotal data is pretty overwhelming and we are noticing it merely preceeds matching empirical data. IOW, the 8% drop was no surprise to me.
I get sick of reading it.
Why?
1. Can’t do anything about it.
2. Makes me worry about stuff I can’t control.
3. Hypes up a bad thing and makes it even worse.
“I am surprised it has kept up as long as it has”
Reverse ammortization loans and a belief that the pyramid scheme will never hit saturation.
It did.
The next ten years will be very interesting. Expect to bail some people out with your taxes.
Sure it did. If you sold a house at that time for what the market would bear and made money, you had equity.
“And you know, even without a crunch, the market for new homes can’t keep growing faster than the population growth.”
I became a “doomsayer” in 2005 when I read a statistic that basically said that the number of new homes built pretty much matched the number of homes being bought on speculation or as second homes.
That was kinda creepy.
Not quite true. If you make a profit when selling your own home, that's now money YOU have to spend, save, invest, or whatever.
Why?
1. Can’t do anything about it. 2. Makes me worry about stuff I can’t control. 3. Hypes up a bad thing and makes it even worse.
See that was fun and it made you feel better!
I have nothing against REAL real estate investors. The ones that buy at a legitimate discount, repair as necessary, hold a while, rent out, whatever...in fact many of them are my clients.
The speculators, i.e., the guys that bought an already overpriced home, then sold when prices skyrocketed even more, without ever doing anything, are a different animal entirely.
LOL...
As someone who has never owned a home, I am a little bit relieved. How are we supposed to raise our children ourselves and yet buy a house? No way. The prices of houses, here in the SF Bay Area, are obscene. You need to earn $250,000 a year to even qualify for most. I don’t know who is buying all these houses. I would sure like to see prices get into the reasonable range.
"There has never been a better time to buy a home. Interest rates are lower than ever. Home prices have stabilized. Talk to a realtor today."
Lies. BIG LIES. All lies all the time 24 hours a day.
People who respond to these ads are begging to be raped.
Home prices will be cheaper next yr! bwahahahahahahaha
At some piint, I am wondering if Bethesda/Chevy Chase will looze
the veritable immunity they have enjoyed to some extent thus far.
Luxury condo construction continues unabated here. Although
Lion’s Gate just hung the superstructure in the last six months despite
breaking ground nearly 2yr ago.
Luxury Towns remain unsold (these were built 2yrs ago) and
prices have been reduced from the mid 1mills! bwahahahahahaha
MV
Well...interest rates are not “lower than ever” they’re about 1.5% higher than 2003. Historically still low...but I digress.
Are you, however, suggesting realtors pack it up and not advertise? Just give up?
As would many...but SO many people would be crippled if that happened...that the economic upheaval would probably affect the very people who would benefit most from a huge price drop like that. Can’t buy ANY home if you’re jobless.
Not saying I don’t see the benefit...but be careful what you wish for.
I was over at the Countrywide site to see what was happening with foreclosures - they list their Other Owned Real Estate (forclosures) for sale on their site.
They have, at this time, 344 homes available in CA, 34 in AZ and over 700 in NV. I was surprised that NV has almost double that of CA.
Now, Countrywide is just one entity.
Also, I heard an interesting story about someone that went to Countrywide for a mortgage a few years ago - they were actually encouraged to not go for 15-30 years fixed rate and go for one of the exotic fixed/adjustable options, even though they had funds to put down. Now, would it be reasonable to believe that more commission was being offered and made on the exotic loan options?
I wonder what the numbers would look like if large urban sh*tholes run by the dims were excluded? Detroit, LA come to mind.
For direct lenders like CW, all subprime loans pay about triple what prime loans do. For brokers, generally that's not true, with one exception as shown below. "Exotic" loans generally mean Neg. Amortization/Pay Option loans, and I don't know if they're classified with subprime, prime, or their own category in Countrywide's commission structure. For brokers, the Neg Am loans used to pay better "back-end" premiums but that's not really true anymore.
“Home prices will be cheaper next yr! bwahahahahahahaha”
Yes, and they will almost CERTAINLY be even cheaper the year after that!
Even in Seattle, the facade has developed a huge gaping crack.
Anybody entering into home ownership now is just nuts.
But whatever profit you made is balanced by the money the person BUYING your house does NOT have to spend.
I just had a yard sale, made some money, and spent some if it. But I didn’t grow the economy.
Not even when you spent some of the money?
Prices will drop until the day when people think they won’t drop any more. Then the prices will stabilize, and start up again.
If you own a home already and want to trade up, you may or may not want to wait, depending on how houses in your existing house price range are faring vs houses in the new range you want to move into.
But in general, the housing drop has been good for new buyers, AND for anybody looking to move up, because if everything dropped the same amount, the DOLLARS you have to put in to upgrade are less, even if your house dropped in value.
The only real OWNERS who are hurt by dropping prices are those who are 1) selling out for good, 2) selling and moving into a much smaller house, or 3) selling and moving to another location where the housing prices have NOT dropped.
Also, your homeowner’s insurance should get cheaper, because it “costs less” to replace your house, even though in FACT it shouldn’t cost any less to rebuild your home now than a year ago, since the labor costs are the same and the material costs are the same. Maybe the labor’s a bit cheaper because there is a glut (no new homes being built).
Only in a zero-sum economy, which we don’t have.
If I have $50,000 in the bank and am looking at two homes...one for $200,000 and one for $250,000...and in each case the seller paid 100 grand for it, I could say I’d buy one house with $20,000 down and a loan for the rest of $180,000, or put $20,000 down on the other house and a loan of $230,000.
In either case, I still have $30,000 in the bank and bought a house. However, in the first example, the seller made $100,000 profit and the second seller would make $150,000 profit...with me spending the same amount up front and borrowing the rest.
Thanks for the insight.....Hmmmmmmm.....so, even if the borrower had funds or access to funds, they may have been steered to sub-prime? CW sounds sort of liable for this fiasco - I hope the Fed doesn’t bail them out.
Do you happen to know why a triple commission was paid - I suspect that it’s all about the built in yield over time within the loan contract? Of course, if the borrower cannot make the payments, there is no yield and that’s about where we are at this point on so many properties.
OK, but we have a limited-sum economy, as regards the money supply. For you to borrow that money, it has to come from a fixed capital availability. Otherwise we could all just keep borrowing money from each other and inflate our money supply infinitely.
To put it another way, the transaction you listed is equivalent to the person who owns the 250,000 home simply getting a new loan for an extra $150,000. In both cases he ends up with $150,000 in spending money, but in the 2nd case it’s clear we haven’t really grown the economy.
The thing that far too many casual analysts of the housing market keep missing is that the vast majority of people in the housing market cannot just whip out their wallet and buy a house. They need to go get a mortgage to do so.
The losses to holders of American mortgage-backed securities are stacking up all over the world. There are funds in the UK, Germany, Japan, etc taking losses as the ratings agencies slash the credit ratings on various tranches of US mortgage-backed debt.
The bond market ain’t like the stock market. Investors who buy bonds don’t like surprises. The US mortgage/real estate market is serving up one ugly surprise after another, and each new round of surprises is getting worse than the last one. The first little blip happened in March of this year, then came August.
Today, take a look at the news surrounding Merrill Lynch’s earnings report. You want to see what the future of the real estate market is? Look at Merrill and Citi’s books. Merrill warned the market only three weeks ago that they were looking at a loss of $4.5 billion dollars due to the mortgage market.
This morning, they reported a loss of $7.9 billion from writing down bad debt.
What happened in three weeks to balloon that loss from $4.5B to $7.9B? Well, downgrades on mortgage debt. Lots of downgrades. Oh, and they were holding far more shady mortgage debt than they first thought.
This is becoming a pattern on Wall Street — big banks finding out that they hold a lot of very crappy mortgage debt - but finding out in stages. The clear conclusion to draw from this is that all the claims that the “problem would be contained” made earlier this year are complete and utter BS. Those claims were made before the banks and funds even knew what they had on their books.
And even now, there is a bale-out fund for SIV’s being cobbled together to help prevent a financial meltdown for SIV’s that have short-term paper rolling over in November. SIV’s were expressly invented to keep various tranches of debt off the balance sheets — well, looks like it didn’t work out as planned.
We can see from what we know now (and there’s plenty more to come in the near future) that future mortgage lending in this country is going to require prospective home buyers to have a gold-plated credit rating to get a reasonable interest rate. If you don’t have a gold plated credit rating, then you’re going to have to pay higher interest rates, or (more likely for people who used to be in the sub-prime market) you won’t get a mortgage at all. The sub-prime market is dead for the foreseeable future. The financial sector cannot sell new sub-prime debt. This is why Countrywide is falling off a cliff. This is why Washington Mutual is firing people left, right and center, and is why there is now question whether the losses will be so bad that WM will cease paying their dividend.
The real estate market in the US is going to get very ugly, and it won’t be just the overbuilt areas like Las Vegas that are going to get smacked, and it won’t be because of how many houses are for sale. It will a problem of wild over-supply in some markets (like Vegas, where they have 22 months of supply on the market) and a lack of buyers due to the tighter lending standards.
Mind you, places like Vegas will fall much, much further than the “normal” markets. But the contraction in mortgage lending will mean a contraction in buyers in all markets.
The only real OWNERS who are hurt by dropping prices are those who are 1) selling out for good, 2) selling and moving into a much smaller house, or 3) selling and moving to another location where the housing prices have NOT dropped.
I seriously suspect it was an oversight on your part but you forgot the MAIN owners hurt: Those with resetting loans in a down market that can barely afford their current payment - the elephant in the room.
BTW, this housing/credit bubble burst is, in fact, international now.
It isn’t just the US.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.