Existing home sales expected to drop 10.8%

http://money.cnn.com/2007/10/10/news/economy/bc.apfn.housingforecast.ap/index.htm?postversion=200710 ^ | 10-10-07

[Hydroshock]

WASHINGTON (AP) -- The decline in 2007 sales of existing homes will be steeper than previously anticipated, a trade group for real estate agents said Tuesday.

The eighth straight downwardly revised forecast from the National Association of Realtors calls for U.S. existing home sales to be 10.8 percent lower than last year as housing market struggles persist.

In its October report, the association predicts 5.78 million existing homes to be sold in 2007, down from 6.48 million last year. Last month, the association predicted an 8.6 percent drop from a year ago.

This year's sales would be the lowest since 2002, when sales hit 5.63 million. Sale prices for existing homes are forecast to drop 1.3 percent to a median of $210,200 this year.

Next year, the trade group expects existing home sales to climb to 6.12 million, down 2.4 percent from last month's prediction for 2008 sales

[2banana]

Don't confuse people with reason. The financial markets are doomed. Only 2banana, hydroshock, and others on this thread really understand it you see. The millions and millions of people putting real money in the markets and sending them to record levels are all stupid. These guys that know with absolute certainty that the real estate market is heading south (50% on average!) and stand to make a fortune only Bill Gates could dream about if they are even half right are instead posting like Chicken Little on FR instead of investing by going short in real estate.

Hey dude - some markets have already sunk 30% from the peak (All of Florida, Las Vegas, Phoenix, much of urban California) and we are only in the first inning. On deck is Boston (already wacked about 15%), New Jersey, Coastal Carolinas...

[old and tired]

This thing will drag out to 2011 at least .

I doubt it will last that long, my guess is early 2009. Also, I think the places hardest hit are the places, like the Jersey shore, that had the most ridiculous driveups in price. It's a correction that had to happen because cause of the ridiculous drive ups were not families, looking for long term housing, but speculators, looking for a quick buck.

In my experience (with Jersey shore real estate), the speculators are either 1)incorporated, so their wives and children are insulated from the almost sure to happen foreclosures or 2)they're young people without families who can survive and personally bounce back from a foreclosure or two in their 20's or 30's. Does it stink to be in either of those situations? Oh yeah, but I think the impact on the larger real estate market is not all that dire.

In my own suburban Philly neighborhood where prices went up but never reached the truly insane levels of the Shore, the prices are coming down a little, but only folks who purchased with no money down would be in danger of a bad investment - and only then if they have to sell in the next couple of years.

[NVDave]

I am short on housing. I’m short some homebuilders. Already made some money shorting them.

There’s no way I’d put money into actual housing in markets that are going to experience these sorts of declines, because:

a) actual houses are very illiquid. If the winds shift, it is hard to cover your position.

b) you can’t depend on politicians to allow the market to do what it is supposed to do. Along the way here, tax assessors are going to be screaming bloody murder. State legislatures are going to be looking at ad valorem tax revenues and either raising tax rates, or doing something to keep the values from falling.

c) You can’t depend on the Fed, the banks, et al, to allow the market to do the right thing here, either. Their necks, more than any others, are in the noose here.

So until then, you’ll pardon me if I merely short housing stocks.

In places like Las Vegas, where there is a two-year supply of homes for sale, and 45% of them are sitting empty, prices are going to come down hard. There are already fire sales happening in Vegas that are leaving people who bought earlier completely screwed on comp. valuations.

[NVDave]

It should be noted that NO FORECAST of the NAR on the housing market deflation has been correct to date. None. They’ve sacked one economist over the lack of accuracy, I’m guessing the next guy already has one foot out the door.

The NAR needs to quit thinking/talking like shiny happy realtors, and become more like bankers and “follow the money.” When one follows the money, from the mortgage borrower up to the investment banks who are peddling sub-prime contaminated debt to everyone and their pet chimp, one gets to see just how truly awful the situation is.

[mlbford2]

couldn’t help but go back and read this old post. Yes, i did indeed do well shorting homebuilders.

There are now some good deals out there but you must pick wisely. Still a lot of downside in many communities. Many are priced right now.

We have a new wave of sub primes hitting in Sept and then we have all the Alt-A “no docs” hitting in Dec. This will drive medium priced housing down more.

Since interest rates tanked with the take over of Freddie and Fannie home buying is getting more attractive. Still, the markets will not fully recover till ‘11.

Good luck, and go Macain/Palin