EXISTING-HOUSE PRICES DROP AT A RECORD RATE

The Houston Chronicle ^ | 25 October 2006

[LonePalm]

OK, so you're not Daniel. You have obviously seen the hand writing on the wall.

The Moving Finger writes; and, having writ,
Moves on: nor all your Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all your Tears wash out a Word of it.
-- Omar Khayyam

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)

[BP2]

People have to have a place to live.

I'm a Realtor, and know that resales is "where to be" for the next few years (until interest rates go down more).

[ErnBatavia]

you could see a big buyer's market that lasts another year or two.

The last cycle in Southern California lasted for around 5 years...I guess a lot of people don't remember back to the late 80's - early 90's.

[ErnBatavia]

I like Zillow, but on my house, the have the square footage wrong, as well as "short" by one bedroom and one full bath.

[djf]

Besides, without record profits to go along with the record highs, the only thing a "record high" stock market means is that your dollar, which yesterday might buy 1/5th of a share of stock, today only buys 1/7th or so.

That means your dollar fell in value.

[RightWhale]

The DJIA is at a record high. The stock market is not.

[Stat-boy]

If Bush were a Democrat, the title of the article would read "Houses Become More Affordable for Average Americans Under Bush Administration."

[OESY]

New home sales, durables rose
Thu Oct 26, 2006 11:34 AM ET

By Mark Felsenthal

WASHINGTON (Reuters) - Sales of new U.S. homes rose unexpectedly in September as builders cut prices, and durable goods orders aside from aircraft gained slightly, reports showed on Thursday, indicating the economy continued to expand at a modest pace.

New home sales rose for a second straight month as builders slashed prices by the biggest annual margin in nearly 36 years and the supply of homes for sale shrank, according to a Commerce Department report.

At the same time, the slight rise in orders for long-lasting durable goods outside the volatile transportation sector appeared to offer more confirmation of the inflation-wary Federal Reserve's projection of modest economic growth.

Analysts said the drop in inventories offered an early sign the housing sector was stabilizing after a big slump and suggested that the economy was poised for measured growth.

"It is hard to say but it looks like we are in for the soft (economic) landing," said Steven Gallagher, chief U.S. economist at Society Generale in New York. "It is telling me that the worst is over for housing."

U.S. Treasury debt prices briefly pared some gains but were still higher, the dollar rose against the euro and stocks slipped after the stronger-than-expected home sales data, which markets saw as an indication the housing boom will cool gradually rather than abruptly.

Former Federal Reserve Chairman Alan Greenspan said on Thursday the U.S. economy was pulling away from a sharp housing-sector downturn and that the outlook for growth was "reasonably good." But he noted that the sector's woes were "not over."

"Most of the negatives in housing are probably behind us," Greenspan said at a conference sponsored by the Commercial Finance Association. "The fourth quarter should be reasonably good, certainly better than the third quarter."

HOME INVENTORIES EASED

New single-family home sales increased 5.3 percent in September to an annualized rate of 1.075 million from a downwardly revised rate of 1.021 million in August. Analysts polled by Reuters were expecting September sales to ease to a 1.045 million rate from an originally reported August rate of 1.050 million.

However, September sales were down 14.2 percent from the 1.253 million annualized rate in September 2005.

The median sales price of a new home fell 9.3 percent to $217,100 in September from $239,300 in August as builders cut prices to lure buyers. The September median was down 9.7 percent from $240,400 a year earlier, representing the biggest year-on-year price drop since December 1970, when the median price fell 11.2 percent.

The supply of homes available for sale in September at the current sales pace fell to 6.4 months' worth from 6.8 months in August. There were 557,000 homes available for sale at the end of September, down 1.9 percent from 568,000 in August.

"Between the starts and the aggressive pricing on sales they are clearing inventories in a very rapid fashion," said Societe Generale's Gallagher.

AIRCRAFT ORDERS SURGE

The Commerce Department said orders for durable goods -- items meant to last three or more years -- leaped a much greater-than-expected 7.8 percent in September on a rush of civilian aircraft orders.

But orders rose a smaller-than-forecast 0.1 percent when transportation orders, which fluctuate widely from month to month, were stripped from the total.

"Outside of the volatile aircraft orders, manufacturing is still subdued and that's consistent with an economy that's growing moderately," said Gary Thayer, chief economist at A.G. Edwards and Sons in St. Louis.

A Commerce Department report on economic growth in the third quarter of 2006 is due on Friday.

The biggest overall jump in orders since June 2000 was propelled by a 183.2 percent rise in non-defense aircraft and parts orders. That was the highest gain since a 210.4 percent rise in July 2002.

Analysts polled by Reuters were expecting a 1.9 percent climb in durables orders and a 1.0 percent gain with transportation orders excluded.

Without defense items, durables orders rose 6.3 percent. That was well above the 0.5 percent increase analysts expected.

Orders for non-defense capital goods excluding aircraft, a proxy for business spending, rose a larger-than-expected 1.1 percent. Analysts forecast a 0.8 percent gain in that category.

A separate Labor Department report showed the number of workers applying for jobless benefits rose by 8,000 last week to 308,000, in line with expectations and still pointing to a relatively healthy job market.


Comment: The Houston Chronicle makes Reuters look like a paragon of objectivity.

[GOPJ]

It's not perfect -- there's a place to "correct" Zillow - I've never tried it, but you might want to...

[RockinRight]

Here's a question nobody asks:

Does it reach a point in a desireable neighborhood where the price goes so high, that it becomes prohibitive and the price itself then drops desirability?

[ErnBatavia]

Yes, I saw that - I registered an hour or so ago (which you have to do to make revisions) and am awaiting the confirming password email. Thanks.

[RockinRight]

Where do you live, Eagles?

[RockinRight]

You can correct it. In non-ghetto areas it's usually pretty accurate once all that stuff is corrected.

[RockinRight]

I agree 100%. I DO NOT GET why a 1000 square foot sh*tbox (pardon my French) goes for a half a million in some of these areas. It's not THAT desireable of a place to live.

Insanity.

[irishjuggler]

Housing, which had set sales records for both new and existing homes for five consecutive years, has been rapidly loosing altitude this year

Loosing? Someone at the Chronicle needs a spelling lesson.

[AnAmericanMother]

I'm sure there's such a hypothetical point. It would vary with the "desirability" of the neighborhood.

Apparently in Atlanta there are an unlimited number of people with an unlimited amount of money. Or so it seems.

The young rich folks go for the intown neighborhoods. The ones with kids go for the close-in suburbs. Both those areas are booming, with no sign of a price slowdown.

What's at risk are the spec houses in further-out suburbs, which were a marginal speculation to begin with. That's where the downturn will hit Atlanta first.

[RockinRight]

I don't understand it.

I make as much or more money than the median income in a lot of these booming high priced areas (but live in a much cheaper area) and couldn't even THINK of paying what these people do for a house. In fact I don't HAVE enough money left over just paying regular bills (not major debts aside from my car) to make those kind of payments.

I just don't see how people making $70,000 a year are buying $650,000 houses. How can people make a $5000 mortgage payment bringing home $6000 a month and still pay utilities, gas, cars, food, etc?

[agrarianlady]

These are foreclosed homes in Prince William County, VA (DC exurbs) and their "Zestimates"™. There's a big difference.

http://www.foreclosure.com/search/VA_153.html

In spite of valiant efforts by our would-be homeseller neighbors, nothing in our luxury D.C. exurb neighborhood has sold since February of this year. Thus, there is no way of honestly valuing these homes. The old Zestimates™ are out of date. We haven't had price "discovery" yet.

[agrarianlady]

I just don't see how people making $70,000 a year are buying $650,000 houses

You're supposed to believe that they're climbing the property ladder, and that they're trading in a condo or townhouse. It's not much different from a ponzi scheme. The problem arises when the condo and townhouse buyers throw up their hands and rent for 1/2 the cost. Then the trade-up person is the bagholder with two houses, if they took the route of buying something before selling the old.

Other than that, it's as simple as dirt, with the help of an Interest-Only Option Arm. Up to 120% of the loan, and then you're hosed.

[AnAmericanMother]

Mean income creates another deceptive statistic.

You could have folks way high (buying), and folks on the bottom end (renting), and the median would be at a point that the expensive houses could not be purchased, but with only one actual wage earner anywhere near that point. I'd want to see the mode as well as the mean.