Posted on 11/13/2007 12:58:15 PM PST by Hydroshock
WASHINGTON (AP) -- Sales of existing homes in the U.S. are forecast to decline to a five-year low in 2007, a trade group for real estate agents said Tuesday - and the outlook for 2008 is worsening.
The ninth-straight downwardly revised monthly forecast from the National Association of Realtors calls for U.S. existing home sales to fall 12.7 percent this year to 5.66 million, down from 6.48 million last year.
Last month, the association predicted a 10.8 percent drop from a year ago.
This year's sales would be the lowest since 2002, when sales hit 5.63 million. The realtors group forecasts sales will rise slightly next year to 5.69 million, but that is down from last month's prediction of 6.12 million.
The trade group's chief economist, Lawrence Yun, said the housing market is likely to experience a "modest" recovery next year as mortgage markets stabilize.
"It is possible for even higher home sales activity than we're forecasting if buyers regain their confidence," he said in a prepared statement.
(Excerpt) Read more at money.cnn.com ...
Uh, I only made one post to this thread. lol.
Fact is, those that are not being forced to sell, are taking their home off the market in droves, and they will continue to do so. You'd have to be pretty stupid to *want* to sell in this market. No?
We’re seeing lots of homes just go off the market. Like I stated earlier, you’d have to be foolish to *want* to sell, if your not being forced to sell, if you happen to be in a buyers market, where buyers are expecting a great deal. lol
I know, I thought about it after I posted.. just seems you can’t turn on the news or the radio or even walk down the street without somebody hawking real estate!
Sorry, I wasn’t picking on you, just the general attitude these days.
1984 was the last economic dip in this region. It’s been boom cycle ever since but we may be about to enter another down cycle and it might be permanent. Right now nobody is selling and nobody is buying. 1994 was crazy and that is when prices started to take off. Don’t know about five years ago but that wasn’t a low by any measure.
Oh really? You don't have much to do with DC do you? Would it trouble you to know that they are one of the most powerful lobbyists in DC? But they do it in the public interest, I am sure.
They are just another interest group trying to manipulate markets and political decisions in their favor. It is part of the national game, and that is ok, but that doesn't give what they say any special ring of truth.
In fact, up to a couple of months ago they were denying that there was any problem in the real estate markets.
It is affecting us now, though, because we want to sell and move back South. The home needed updating anyway, so we're doing that, taking our time to get it right, and we'll plan to put it on the market next summer. We may not get as much as we might have gotten in late 2005, but we'll still do well because it's well above what we originally paid for it, even figuring in the improvements we're making, since we're doing much of the work ourselves. We'll be competing against new homes, so we need to make it great. We're calling it 'The Conquest', because we're changing the things we've come to dislike about the house after living here 20 years, and doing things to make it just 'live' better.
I've heard that about EVERY boom and bust for the last 35 years. Real estate WILL go back up; it always does. Folks want to own their own homes, and will buy, when they're ready. Folks who want to sell, will do it at a time that they perceive as the most advantageous for their financial situation. If they're not forced to sell because of personal reasons, they're likely to stay put until they see the prices going back up. Seems wise to me.
While one reason for this massive sales slump is due to a normal housing cycle, the big reason is the bursting of the huge credit bubble, that is causing a fall of greater magnitude which I assume will be of longer than normal duration.
You also have to remember that after house prices fall, they will still retain a good portion of their appreciation, as homes have historically always appreciated at about the rate of inflation. So we know what homes should be priced at, and it is not like home values will crash.
Now here is the part that scares me. What if the FED had to raise interest rates. Home sales have plunged and prices are going down, yet interest rates are still not much above historic lows. What happens if inflation does return and rates on conforming loans go back to 9.5% or even into the double-digits. That is going to go have a huge negative impact on home sales prices.
I can imagine a worst-case scenario where homes sales begin to rebound and prices stabilize only to have the FED be forced to raise interest rates to fight inflation, and kill any recovery in housing. This could put the recover off years or even a decade.
This could be good for home buyers who might otherwise not be able to afford, since the amount they need to save for down payments will be smaller and their property taxes will be lower — all assuming they can qualify for that 10% loan and afford those high interest payments.
On the other side, it would be brutal for all of those people who honestly thought that the paper gains in their home values at peak was a permanent gain in their net worth.
His prediction strikes me as perfect.
Are you aware how long it became a “perfect time to buy” after the collapse in the California housing market in 1990? Peak was 1990. The bottom came in 1996. That is 6 to 7 years.
Peak in this housing bubble came in 2005. Add 6 or 7 years and you have 2011 to 2012 — only the deflation in prices will be far greater due to the much higher magnitude of the run-up in prices to begin with. I’m only referring to cities in states subject to the housing bubble like Florida and California, although MOST of the country was affected and most of the nation’s neighborhoods will be affected.
As for whether or not the “entire economy will be dead,” this bursting asset bubble and liquidity problem is precisely why I have been expecting a recession in the US economy.
I completely buy that it won’t be a “perfect time to buy” until sometime around or after 2012.
Now, if inflation returns and the FED has to raise rates to 10%, then yes = ARMAGEDDON. We be a hurtin’.
You can count on housing dipping below the mean before the next housing boom starts.
As I am sure you know, housing goes up about with inflation and simply can’t outpace salaries and rents. It is very doubtful we will see salaries and the rents they support skyrocket, so yes, home prices WILL revert to the mean.
Many people don’t understand this or refuse to listen about it, but they will feel the effect of it.
I don’t know if I would call anyone buying a home now a fool. I would say they are premature, impatient and are jumping in too soon, and they could probably save money by waiting two to 4 years.
There is just NO HURRY to buy a home today, financially. Emotionally, there is justification. Financially, there is not. Prices in most regions/neighborhoods are going nowhere but down, so why jump. Only a few regions/neighborhoods will see appreciation. Others should wait.
The only reason I can’t call someone buying a home today a fool, is that interest rates are still low. Prices are down (at least here in California they are down) and those who have resolved to sell are pricing their homes below peak. I think they are still priced too high, but today’s buyers are not going to get killed on depreciation, like those buying in 2005 and even 2004.
It is possible that those who buy today and keep their homes 30 years at a fixed 6.5% interest rate may actually do better than someone who waits to buy at the bottom price, but pays 10% interest, if rates never fall below that in their lifetime. Just saying, this is the only scenario I can see where the best financial move is to buy now.
Otherwise, you are right. Financially, if you can get a 30-year fixed loan at 6.5% on a $250,000 home today or the same home in the same place for $205,000 in 4 years, then those waiting saved themselves about $50,000 and are paying less in property taxes. When both homes appreciate in the next boom, the guy who waited will have more net worth than the guy who bought now.
Still, prices are down and if people want to buy now because they need a roof for their family, and plan to stay years and years — then what the heck.
But I agree that anybody buying a home today in a bubble city is being impatient and is throwing away some money by buying now, rather than waiting for the same homes to come down another 10-20% in price.
“Reduced”
“New lower price”
Those signs adorn entire neighborhoods in Sacramento, California.
I forgot to add, the worst thing for homeowners trying to sell their homes in California, is the glut of inventory. New home builders are able to slash their prices and completely undercut existing owners. The paltry few buyers out there are buying new homes because the home builders are simply undercutting any prices they are seeing on existing homes, so the existing homes are just sitting and rotting. People can’t sell them as long as Hovnanian or KB are charging $40,000 less for the same or similar home and throwing in plasma TVs and granite counter-tops in to sweeten the deal.
So what is your guess for the top for inventory, in months? I won’t be surprised if, during the worst of it, the US peaks out between 20-24 months of inventory.
And this region is... Madagascar? It really helps to keep us informed if you state which region you are referring to when you talk about home sales. What city/county are you referring to?
Thanks.
Uh oh. Cue Travis McGee and his credit crisis quote... ;-)
Sorry, I forgot to add that I don’t think the down cycle in housing will be permanent. There is no such thing as a permanent bust in a capitalist economy. As long as their is demand for a given supply of homes, they will continue to be driven by our wacky economic boom/bust cycles, but no, it won’t be permanently down.
Not as long as people want to live in good neighborhoods, put their kids in good schools, be close to work, etc. There will ALWAYS be demand.
We just went through a SuperSized upswing and we are due for a SuperSized downsizing on the bust end of things. But it will end and we’ll live to boom again.
I remember the housing bust in Sacramento in 1990. ALL of my friends said, “we will never see a rise in home prices like that again.” I just laughed. 20 years later, the young kids at work are just starting to say the same thing. I’m laughing.
Look for the next housing housing boom around 2015.
Somebody correct me if I am wrong. I am given to believe, there has NEVER been any 15-year period when home prices didn’t double in California. Can’t speak for the rest of the nation, but that seems to indicate there is alway another boom, unless you are in a dying city like Detroit.
Anyway, homes have always gone up with inflation, so the longer they flat-line, the higher the boom has to be to make up for that. That’s what I thought I was seeing in 2000-2002, but then it just shot up toward the moon and I started to realize that, like the dot.com bubble before it, housing was being propped up by “funny money” that was soon going to leak out and deflate the market.
By 2006 it was pretty obvious what the funny money was — CDOs and SIVs and ARMs and NINJAs. Sorry, assets you rent just can’t go up faster than salaries. Not over the long term.
I completely agree. But people are funny. They don’t seem to be able to see very far beyond their current pleasure or pain. People are too easily duped into thinking “it is different this time”. They were convinced the dot.com bubble was due to some “new economy”. But it was just cyclic. Same with the collapse of the housing bubble. I can just about guarantee before 2020, we will see another huge big boom in housing, and I would guess it would come somewhat sooner than that.
Soon, our standard of living for the lower and middle of the middle classes will shrink to levels that most people will refuse to acknowledge. There won't be a need for all the marketing specialists with MBA's that sit in cushy computerized cubicals because there will be a smaller market for luxury goods and services.
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