Posted on 06/07/2006 11:41:09 AM PDT by Hydroshock
The second quarter is proving to be troublesome for homebuilders. They have been cutting their full-year earnings projections in droves as orders look weak and cancellation rates rise.
The latest salvo came Monday after Standard Pacific (SPF:NYSE - news - research - Cramer's Take) and Technical Olympic (TOA:NYSE - news - research - Cramer's Take) announced weak order numbers, sending builder shares lower across the board. The selloff suggests that investors are having trouble seeing a bottom for the group and would rather not buy into a sector that may represent a value trap.
"If it is not already painfully apparent, the soft-landing thesis for the homebuilding industry is dead," wrote A.G. Edwards analyst Greg Gieber in a research note in which in he cut Standard Pacific from buy to hold.
(Excerpt) Read more at thestreet.com ...
Ping
I already is ugly. And wait until this starts to hit in places besides the coasts.
I don't think so. I've been telling people for about 5 years that housing prices were completely out of reason. I've been flamed so many times here and elsewhere I don't have any eyebrows left. When it comes down, it's going to be hard, hard, hard.
I would not be suprised if this causes a deep recession. I predict liquidity will be drying up for a good while.
Hmmmm......still up 200-400% over the last 5 years, even with this years decline. Yeah, nice bubble.
It seems like it would be obvious to anyone with a drop of common sense. When people are buying homes that they can barely afford (only because of low or no down payments and interest-only loans) because they're sure that they'll be missing out on rapidly increasing home values if they don't, I'd tend to call it a speculative bubble. Of course, it may take (or cause) a recession to pop this bubble, in which case I may well be out of a job and unable to take advantage of this correction in home prices. But at least I won't be way upside-down on a home mortgage if that happens. I may be wrong, though, in which case I'll have missed out on huge gains in equity - but I'm not about to jump in now at what may well be the top of the market.
Yeah, 5 years of a runaway market. That proves alot. Not. Prices are falling, and foreclosures are on the rise. Deal with it.
The only places that have seen housing coming down hard are those areas having huge jobs loses. I have expected some of the hot markets to give back some of their gain, but that is about it. The market is weakening, but there have not been any real loses yet.
My wife and I will be looking for a new house in about 18 to 24 months. So we hope to buy when prices drop. But I would never buy a house I can not pay at least 10% down and comfortabley afford 125% of the total monthly cost.
bump
The market is realizing now that the money machine has stopped printing money...
Prices are falling???? What are you smoking. Perhaps, if you cherry-pick a few locations. Let's look at the national data:
Office of Federal Housing Enterprise Oversight (June 1, 2006) HOUSE PRICE INCREASES CONTINUE; SOME DECELERATION EVIDENT OFHEO House Price Index Shows Annual Rise of 12.5 Percent WASHINGTON, D.C. – U.S. home prices were quarter of 2006 than they were one year earlier. Appreciation for the most recent quarter was rate is about one percentage point below the rate from the previous quarter and is the lowest rate since the first quarter of 2004. The figures were released today by OFHEO Acting Director James Lockhart, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends. “These data show average housing prices still growing stronger than some might have expected,” said Lockhart. “They do indicate, however, that price growth is moderating in some parts of the country, particularly in areas where prices have been rising the most.” House prices continued to grow considerably faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index. House prices rose 12.5 percent, while prices of other goods and services rose only 4.2 percent.
And that is it. As I see the tea leaves the money supply is goign to be gettign tighter for the next few years. No money for exotic loans.
Yeah, you're right. I give up.
Foreclosurs are up about 50% and loan apps are down. The bubble popping is only just starting.
There are bubbles in certain parts of the country. For instance, when the average price of a home is $400,000 to $750,000 and a family with a combined income of $80,000 a year can qualify for a mortgage like that then you've got problems.
Office of Federal Housing Enterprise Oversight (June 1, 2006)
If I were as full it as you have been for five years, I would give up to.
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