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Home Sales Plummet in 38 States in 3Q
Yahoo Finance ^ | November 20, 2006 | Lauren Villagran

Posted on 11/20/2006 9:47:58 PM PST by GodGunsGuts

AP Home Sales Plummet in 38 States in 3Q

Monday November 20

By Lauren Villagran, AP Business Writer

Third-Quarter Home Sales Plummet in 38 States During the Summer; Home Prices Also Tumble

NEW YORK (AP) -- The feeble U.S. housing market showed more frailty when third-quarter home sales plummeted in 38 states, hitting Nevada, Arizona, Florida and California particularly hard, government data showed on Monday.

The once-booming real estate market's persistent weakness over the past year has reined in expectations for economic growth but hasn't been severe enough to offset a rising stock market, lower gas prices and improved consumer expectations.

The National Association of Realtors reported Monday that sales of existing homes fell in 38 states during the summer. Sales retreated to a seasonally adjusted annual rate of 6.27 million units nationwide, down by 12.7 percent from the same period a year ago. Nevada, Arizona, Florida and California led the declines.

Home prices also dropped: The realtors' survey showed that the midpoint price for an existing home sold during the summer dipped 1.2 percent year over year to $224,900. Some 45 metropolitan areas saw home prices decline.

Meanwhile, the latest report of building permits showed the slowest pace of annual growth in nine years in October. Housing construction slid sharply as builders tried to curb swelling inventories of unsold new and existing homes.

Stuart Hoffman, chief economist at PNC Financial Services Group, said he thinks the housing market still hasn't reached its low point.

"I think the permits numbers point to yet another flight of stairs down on housing before we hit the basement," he said. "On the other side, stocks are rising, consumer confidence is good and jobs are rising. Those factors are keeping this decline in housing contained."

A closely watched indicator of future economic activity release Monday provided further evidence of that trend.

The Conference Board, an industry-backed research group based in New York, reported Monday that its Index of Leading Economic Indicators rose 0.2 percent in October. Increased real money supply and improved consumer expectations helped offset the sharp decline in housing permits and weaker vendor performance.

"The economy is growing more slowly, but we have yet to have weakness spread beyond housing and motor vehicles to such a degree that we need to fear the proximity of a hard landing," said John Lonski, chief economist of Moody's Investor Service, referring to when the economy turns from growth to a recession.

The housing market slowdown has weighed on the leading indicators index this year. But all told, strengths and weaknesses in the leading indicators have been roughly balanced, according to the Conference Board report. The index stood at 138.3 versus 139.1 in January -- its peak so far this year. The index has declined four of the last seven months.

The Conference Board's labor economist, Ken Goldstein, said the October index suggests "the economy is unlikely either to reheat or to get significantly cooler."

"Instead, the kind of slow growth now being experienced could continue right through the winter and into the spring," Goldstein said.

In another sign of moderating economic growth, the Federal Reserve held its benchmark interest rate steady last month at 5.25 percent for the third straight session. The Fed had raised interest rates 17 times beginning in June 2004 to stave off inflation, before halting its campaign of credit-tightening in August.


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: alasandalack; bubblebrigade; buygoldbuygold; depression; despair; dispair; doom; doooooooooooomed; dustbowl; gloom; goldshill; grapesofwrath; misery; sackclothandashes; theskyisfalling
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To: PghBaldy
If the idiotic Fed had paid attention to what the price of gold was saying (nearly tripled in 5-6 years), the bubble wouldn't have gotten so big, and other costs wouldn't be rising so much.

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We all focus on the fed on the interest side but the real slight of hand comes in the magic they play with the money supply side. The real problem is not just a housing bubble, but the huge dollar glut that is inflating the currency. That is what gold and its cousin black gold have been telling us with their rapid increases.
121 posted on 11/21/2006 1:18:51 PM PST by photodawg
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To: TheLion
I think it will be slow until 08, personally.
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Until Hillary becomes president and gives every illegal alien who voted for her a free home compliments of Uncle Sam. That will fix the housing slowdown. (smile)
122 posted on 11/21/2006 1:23:31 PM PST by photodawg
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To: GodGunsGuts
"I meant inflation related investments. I think real estate will plummet and then wallow for 5 yrs +."

There won't be inflation if housing prices fall.

123 posted on 11/21/2006 1:28:05 PM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: Eric Blair 2084
The housing market collapse will actually be worse in high tax blue states like MA, CA, NY, NJ. As the Baby Boomers reach retirement age, they are fleeing in droves to low or no tax red states.

Trust me on this. It's not a prediction, it's happening now.
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It will continue to happen until the home prices in those high tax states are too low to allow the residents to afford housing in those low tax, warm weather states. That is beginning to happen already. Many northerners can't afford Florida or Arizona, and are even having difficulty in North Carolina and Georgia.
124 posted on 11/21/2006 1:32:20 PM PST by photodawg
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To: GodGunsGuts
I suggest that you look up the word "stagflation". It is patently obvious that you don't understand the meaning or the concept.
125 posted on 11/21/2006 1:52:48 PM PST by nopardons
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To: nopardons

I know very well what it means. It means the economy will suck and my gold will go to the moon.


126 posted on 11/21/2006 1:55:24 PM PST by GodGunsGuts
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To: babygene

BINGO!


127 posted on 11/21/2006 1:59:44 PM PST by nopardons
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To: Southack

"because secondary market aggregators have found plenty of naive capital, 'yield hogs', willing to buy the toxic waste (speculative grade mortgage bonds) that must be sold in order to make most of the bonds backed by mortgage pools with heavy doses of such crappy loans palatable to "investment grade" lenders. Over the next few years, these "yield hog" will be retching up their gains, and lose quite a few pounds in the process."

'With a single law change mandating that holders of notes notify home-owners that their own home's mortgage is being sold at a discount, and a provision that the home-owner has the right to strip that note from a Pooled package and buy it, an entirely new buyer can be introduced into the Market.'

A clever idea, which I would expect to raise no serious secondary market aggregator objections (other than the usual lame "we've nevah done it that way before!" stuff), because they would never have to report, until they liquidate the whole pool, since before that they would never offer individual loans for sale, only bonds based on participations in intricately defined cash flows from the entire pool. At the point that the pool is liquidated (typically when 10% or less of the outstanding principle balance is left) they might be happy to sell the loan back to the borrower at a discount of some sort, and probably would be able to get a better yield at that point. So, I think they would say, "Brother borrower rep, please don't throw us into that briar patch! We're really terrified! Do anything you want to us, but that!" And then roll over when it came up for a vote.

Actually, if you want to track it down, something like what you suggest is SOP in one of the small European markets. Holland, I think, or maybe Denmark. Send a note to your congress critter. They love to have "win win" proposals that will keep their campaign donations flowing from the aggregators, and make borrowers happy.


128 posted on 11/21/2006 2:00:40 PM PST by Blue_Ridge_Mtn_Geek
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To: Petronski

LOL


129 posted on 11/21/2006 2:01:06 PM PST by nopardons
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To: capitalist229

Actually, I'm of the opinion that we are really experiencing a credit bubble, just as you say. Nice to see there are those on FR who have caught on to the real culprit.


130 posted on 11/21/2006 2:12:01 PM PST by GodGunsGuts
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To: photodawg

Houses aren't stocks or commodities like pork bellies.


131 posted on 11/21/2006 2:24:25 PM PST by nopardons
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To: GodGunsGuts
Your delusions and abject lack of knowledge is just amazing; nay, it's mind boggling!

We had terrible stagflation, under Carter. Where was gold? :-)

132 posted on 11/21/2006 2:29:54 PM PST by nopardons
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To: nopardons
You tell me...LOL!


133 posted on 11/21/2006 2:42:43 PM PST by GodGunsGuts
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To: GodGunsGuts
No, pet, you tell me. And also please factor in the fact that you could make more money, back then, on a passbook ( that's a savinings account, for those on Rio Linda ), than following golbuggery. Oh yes, and you could do far better, by delving into options! :-)
134 posted on 11/21/2006 2:47:06 PM PST by nopardons
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To: Toddsterpatriot
How do you sell housing short?


Figuratively. These buyers are in a position where they bought speculatively with poor financing (interest only loans, ARM's, 100% financing) assuming that the value of these "investments" would go up. That is leveraged money that puts them in an analogous position to the short seller with a margin call he can't pay because the stock price went in the wrong direction. These buyers were sure the prices would continue to go up, allowing them to make a killing with other peoples money. With the value plunging and their inability to meet mortgage payments (the figurative margin call) these "greater fools" now must default because the asset they have to sell is worth much less than what they owe on it.
135 posted on 11/21/2006 6:14:58 PM PST by photodawg
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To: babygene
Yes, the housing market will recover and the stocks will continue to climb.
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And your basis for this statement is "Where else are people going to invest?"


thanks for the "rosier" picture. I was hoping more for some factual analysis here, not just let's think positive, why be so negative. I don't think I'm being negative. If we go into recession because fully 25% of the economy is housing related that is not being negative, it is being realistic. If companies earnings are going to go down because of a recessionary environment, there are other places to put your money than in the market. When the market is breaking records and prevailing opinion is get on board, that's often the time to take another train.
136 posted on 11/21/2006 6:49:50 PM PST by photodawg
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To: nopardons

Houses aren't stocks or commodities like pork bellies.

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Before I respond. It would be good if you could post my comment you are responding to on your post. I have posted more than one comment (4 to be exact) on this thread. When you answer a post without letting me know what comment you are responding to, I just have to guess at a response.

So here goes. Obviously the above mentioned items aren't exactly the same. They do however have some similar characteristics. Housing can be an investment as can the other two. It can be highly leveraged as can stock options, and commodities futures. And all three are dependent on the broader economic health of the country for their appreciation. The main important difference in housing is that the owner occupied housing market has more intrinsic value as shelter and residence than for investment purposes.


137 posted on 11/21/2006 6:59:24 PM PST by photodawg
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To: photodawg

Yes. Pries for art and collectibles have gone through the roof too, another indicator of too much fiat money.


138 posted on 11/21/2006 7:11:23 PM PST by PghBaldy (Reporter: Are you surprised? Nancy Pelosi: No. My eyes always look like this.)
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To: photodawg
You've been here long enough to know that the post that someone responds to, is at the bottom of the reply. Why don't you know that?

For the vast majority of people, when they buy a house or co-op/condo, it's to live in; it's their HOME! To view it any other way is really stupid! Then, there are people who buy real estate to profit from; whether it's rental property, or as flippers. The latter category is a business and needs to be separated out from those who buy a "HOME". When I made my statement, I was talking about people who buy HOMES!

You can't live in an option or stock nor bond. Neither can you sell a house or an apartment at a moment's notice. And sometimes one is hot, when the other isn't. Real estate doesn't always track other markets; though some of the time it does.

I think that we might be closer to each other, in this, than either of us thought, at first blush. LOL

139 posted on 11/21/2006 8:23:26 PM PST by nopardons
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To: nopardons

Fiddling while someone is about to put the match to Rome.


140 posted on 11/21/2006 8:27:45 PM PST by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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