Posted on 07/26/2004 11:44:26 AM PDT by Pikamax
U.S. Existing Home Sales Rose to a Record in June (Update4) July 26 (Bloomberg) -- U.S. sales of previously owned homes unexpectedly rose to a record 6.95 million annual pace in June, pushing prices to their highest ever, an industry report showed.
``When you combine the fact that people are working and we have low mortgage rates, you get a healthy housing market,'' said Tom Kunz, chief executive officer of Cendant Corp.'s Century 21 real estate unit. Prices ``may not rise like they have in the past but I don't think we'll see a decline.''
Existing home purchases increased 2.1 percent from a 6.81 million-unit rate in May, the National Association of Realtors said in Washington. The median selling price rose 5.2 percent to a record $191,800.
The economy so far this year had the strongest six months of job growth since 2000, while the average rate on a 30-year fixed mortgage is less than a percentage point above an all-time low. Sales of previously owned homes in 2004 are forecast by the Realtors group to surpass last year's record.
(Excerpt) Read more at quote.bloomberg.com ...
So much for that "deflation" Mr. Greenspan was all worried about.
The economy keeps improving. Along with homes, the new owners will be buying furniture, drapes, appliances, paint, wall paper, etc. Go Bush Bounce!!!
Previously owned? Surely a sign that people are being forced to sell their homes because the Bush economy has taken so much from them.
Actually I fear that Greenspan has created another bubble that will need correction in the future. There is some real crazy financing going on in the real estate market, 120% financing, non-profits flipping houses, interest only financing, etc. It "feels" like the stock market speculation of the late 90's. The question is, who will be left holding the bag when the prices pull back?
LOL...the Washington Post spun this by saying the increasing worth of housing has pushed up real estate property taxes...which means Bush's tax cuts were eaten up. No mention in Sundays business section article, that this was a sign of a strong economy...or that it meant people have increased their wealth by the amount of equity they now have.
you got it. No what can the gubmint do to help those poor people who have to rent and apartment (ghast!).
MY GOD!! Think of all the new "homeless" people that could result from this!!!
That is weird stuff .... why anyone would not take a 30 fixed right now is crazy
Ouch. I have already heard it spun that way on ABC radio news.
What has gone up before had gone down.
It will drop and come back years from now again as it always does.
I was talking with one builder who has built over 100,000 home in the west and he is getting rid of his last homes project in Nevada and leaving that state for other places since the margin for profit is shrinking and his read of the market is to get out.
Other property barons I know are saying DON'T buy right now.
So based on at least a couple of people in the trenches, I think something will hit the market negatively soon as they see it.
Many have non-fixed rates or interest only loans, so at some point the worm will turn and they will be the ones to first send things back to to the bank. When rates rise, there might be some hell to pay, but I could be wrong, after all, who would have ever 20 years ago predicted historic low interest rates?
Historically a reversal of a trend in the market is forecast first in condos and town homes. They are the last to see the benefit of a good market and always the first to see a decline.
Look to that for some small advanced warning in a reversal of the real estate market.
They might be right, but the beautiful thing about real estate is that if you hold it long enough, it (usually) makes a genius out of you.
Good for me as a seller but not "happy news" as a buyer
Sure, long term that is correct.
But if you buy at the top of a market and can't afford to sit the decline out for 6 years you could go broke.
I know a few people who bought a bunch of units and went bust.
Carl Karcher of Carl's Junior fame decided that he knew about real estate as well and lost all his money.
Money (everything) can be lost if you can not hold out and pay all the mortgages for years in a depressed market.
Realtors in our area are facing a tremendous shortage of homes to show prospective buyers. Builders are building new homes at a remarkable rate (pre-solds, not speculatively). Yep, sellers are sitting pretty and buyers are paying a premium.
Just looked up rates. For a $200,000 loan:
A 7/1 ARM is 4.75% -> $1,043 / month
A 30 year fixed is %6.25% -> $1,231 / month
thats a difference of $188 / month. Take that over a 7 year period - 84 months, that adds up $15,792. If you decide to roll that extra $188 a month into the mortgage payment, you'd be substantially ahead of the game at the end of the seven years.
Good enough reason for a lot of people. :-)
Of course they're buying...interest rates are probably going to rise.
7/1 ARM : $174,633
30 year : $179,774
Along with the $15,792 in lower payments, you'd have $5,141 more in equity. The total difference would be $20,933.
Pretty darn substantial.
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