Posted on 05/29/2007 3:01:05 PM PDT by Tolerance Sucks Rocks
WASHINGTON -- Market experts expecting the home construction lull to end some time soon are going to have to wait longer than hoped. The chief economist for the National Association of Home Builders said new home construction in the U.S. may take until 2011 to return to last year's level. According to the NAHB, monthly construction starts would need to jump by 21 percent to reach David Seiders' benchmark for full recovery — 1.85 million.
There were 1.53 million construction stats in April, the Commerce Department reported. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes.
According to the National Association of Realtors, the inventory of unsold homes is the largest since the NAR began counting them in 1999, and house prices have suffered their steepest decline since the Great Depression.
Defaults and foreclosures also may rise since about $650 billion of loans to subprime borrowers are scheduled to reset at higher interest rates by 2009.
Still, the Commerce Department reported one piece of good news last week — sales of new homes rose 16 percent in April, the highest increase since 1993.
In comparison, sales of previously owned homes dropped in April to the lowest level in almost four years, the NAR reported.
NAHB's Seiders was quoted as saying, "We've fallen way below trend because we soared way above trend during boom times. The upswing will be relatively slow, unlike earlier cycles."
Underscoring Seiders' prediction, the president of a California-based real estate consulting firm offered that builders have written off any hope of 2007 being a good year.
MoneyNews
Tuesday, May 29, 2007
NEW YORK -- Prices of existing U.S. single-family homes fell in the first quarter from a year earlier for the first time since 1991, the Standard & Poor's/Case Shiller national home price index reported on Tuesday. The quarterly index dropped 0.7 percent from the fourth quarter of 2006 and was down 1.4 percent from the first quarter of 2006.
"The fall of the national index into negative territory, after more than 15 years of positive annual growth, is a reaffirmation of the pullback in the U.S. residential real estate market," Robert J. Shiller, chief economist at MacroMarkets LLC, said in a release.
"The national index was yielding solid returns as recently as a year ago," he added. "First quarter 2006 growth rates were up 11.5 percent versus Q1 2005, a sharp contrast to the returns we are seeing today."
House prices in March fell in 13 of the 20 metro areas covered by the index, S&P said in the release.
The composite month-over-month index of 20 metropolitan areas fell 0.3 percent to 200.89 in March from February and was down 1.4 percent from March 2006.
S&P said its composite month-over-month of 10 metropolitan areas dropped 0.4 percent in March to 219.54, or a 1.9 percent year-over-year decline.
Detroit and San Diego posted the biggest annual declines of 8.4 percent and 6.0 percent, respectively.
Phoenix and Las Vegas have seen the largest price slides from their peaks. In September 2005, Phoenix showed a 49.3 percent growth rate and Las Vegas jumped 53.2 percent in September 2004. Those cities in March had respective price drops of 3 percent an 1.6 percent.
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
ping
Dear god, we are going to put lots of illegals out of work...
Sounds about right. I live in NOVA. Last bust took 8 years to clear.
Like it says in the Bible - 7 fat years followed by 7 lean years.
A realty expert freind of mine said 6 years till it rebounds.
I figure three years is a reasonable prediction before turn around.
I can remember 1978 - 81 and 1989 - 92 were soft times for housing. Based on that, I would predict late 2009 or early 2010 before thngs are on the move again.
If the article is correct and t takes a year or so longer, no big deal.
Yup... 2011 is when Amazon will hit $300/share again too. These bubbles do take time to float up again.
BTW, I employ Americans PERIOD!
Seems that long ago would have stopped a lot of this stuff.
Lovely ... Thank God for Fixed mortgages; what kind of an idiot uses adjustibles?
Even if that's true, housing will have to go into an uptrend long before then in order to hit that mark.
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¥?±?tays down long enough, then the contractors and skilled trades who are making high wages that drive the cost of homes through the roof will lower their wage demands enough so a household in the middle of the lower fifth and second fifth making $20,000 per year can afford a 20-year mortgage on a $60,000 one thousand square foot home.
Maybe if the demand for houses drops enough and stays down long enough, then the contractors and skilled trades who are making high wages that drive the cost of homes through the roof will lower their wage demands enough so a household in the middle of the lower fifth and second fifth making $20,000 per year can afford a 20-year mortgage on a $60,000 one thousand square foot home.
(prior post had a bunch of crap and missing text for no reason from my end that I know of)
I got an adjustable back in the 1980’s when interest rates were in a long term decline. It’s worked out pretty well. Of course, I didn’t know that at the time. Back then it was all I could afford.
::: SB raises hand with a sheepish look :::
I have been a carpenter for over 20 years. I own about $55,000 in tools plus a well equipped van. I also have a working cabinet shop behind my home where I do high end furniture and casework. My work has been shown in many magazines and I have had articles published in home building magazines.
What would you say I am worth?
I am sorry you can only afford a $60K home but we don’t build those anymore.
No kidding - the $600k house down the street (just sold), is undergoing a LOT of renovations, as we speak.
A more accurate statement would have been what kind of idiot uses adjustables, when fixed rates are in the low to mid 5% range. I got an adjustable rate when I bought my home 10 years ago, I never had a reset rate higher than the prevailing fixed rate. It was one of the better financial decisions I ever made.
Right now, getting an ARM isn’t a good idea when there is no lower rate for taking an ARM. Usually there is a spread, for example a 30 year fixed rate is 6.50%, a 5/1 ARM rate is 5.50%. If you plan on selling within that 5 year time frame, the 5/1 ARM is worth the risk. However, at best a 5/1 rate right now, would get you a rate of 6.25%, the reset rate would probably be 7.625%, it’s not worth the risk. There is a right time to get an ARM, but it’s not when rates are low. If you get them when rates are high and can anticipate them going low, then it could be a good decision.
End this Ponzi scheme once and for all!
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