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Realtors: Home sales now a 'buyer's market'
Sales fell for third straight month in June; nearly flat prices make double-digit gains seem like a distant memory.
By Chris Isidore, CNNMoney.com senior writer
July 25 2006: 11:54 AM EDT
NEW YORK (CNNMoney.com) -- It's official - even the nation's leading group of real estate agents now says it's a buyers' market in housing, as a soaring supply of homes for sale means nearly flat prices and longer waits for sellers.
The news came in the National Association of Realtors' report for June, which showed that home sales fell to the slowest pace since January last month while price gains were the smallest in over a decade.
The industry group said sales of existing homes fell to an annual rate of 6.62 million in June, compared with a 6.71 million pace in May. Economists surveyed by Briefing.com had forecast sales would slow to a 6.60 million rate.
June was the third straight month of slower sales, and the lowest pace of sales since the seasonally adjusted number for January. The pace of sales is now 9 percent year-ago levels, and was down in each of the four regions of the country.
The median home price, which reflects the point at which half the homes sold cost more and half cost less, edged up to $231,000 from $229,000 in May.
But that marked only a 0.9 percent increase from a year earlier, which is the smallest year-over-year gain in home prices since May 1995. As recently as October, prices had jumped a record 16.8 percent from a year earlier due to tight supplies and bidding wars among buyers.
"The change in price performance is directly tied to housing inventories - a year ago we had a lean supply of homes and a sellers' market, with monthly home sales at an all-time record high," David Lereah, chief economist for the group, said in a statement. "Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories."
The inventory of homes for sale on the market is now at 3.7 million, up a whopping 39 percent from a year ago. That resulted in a 6.8-month supply of homes for sale at the current sales pace, up from only a 4.4-month supply in June 2005.
The Realtors statement said the market has shifted to a "buyer's market," which it said is good news for those shopping for a home even if it posed a problem for those looking to sell.
"People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now," said Thomas Stevens, a Realtor from Vienna, Va., who is president of the group.
Last year we bought our house in Fresno - it was on the market for 12 hours, and had 7 bids. We lucked out to get it.
We were planning on keeping it for at least 5 years. But had to move and thus sell this summer. This year...it definitely increased in value but at this rate we'll be lucky to break even. It's just sitting there. And the 112 degree heat doesn't help matters :( SLC RE market is rockin it tho.
Every time I read something about the "bubble" it is about the number of homes on the market. This statistic doesn't really mean anything to me. I want to know how many of these homes are short sales or what the final selling price is below the asking price. I think all the bubble hype has caused some owners, and some investors who are long on real estate, to test out the market and see what they can get. Afterall it doesn't cost anything to list your house. So why not list it and see what happens? I have been shopping for some investment property lately and haven't found a bargain or this "buyers market" that is supposed to be out there.
Looking in the right spot?Quote:
Originally Posted by mcsquared
SLC is still going off. My sister has been outbid over asking price numerous times on listings less than 24 hours old. She's getting pretty frustrated just trying to spend her money.
I've heard claims that the SLC area gained 17% just from the start of this year and that percentage increase could be seen in what the lender valued the homes at. Even the home we bought 6 months ago is now worth 30-40K more then when we bought it.
NYT
July 26, 2006
Sales Slow for Homes New and Old
By JEREMY W. PETERS
Selling a new home is getting harder and harder: just ask the builders who are being forced these days to entice potential buyers with expensive inducements like free swimming pools and fancy kitchen cabinets.
At the same time, the torrid pace in the existing-home market is slackening, as prices are leveling off and properties are staying on the market a lot longer than they used to.
Adding it all together, a variety of experts now say, the housing industry appears to be moving from a boom to something that is starting to look a lot like a bust.
“Housing has had a great five-year run,” said Edward Yardeni, chief investment strategist for Oak Associates, a money management firm in Akron, Ohio, and a longtime bull on the economy. While he still does not expect a housing downturn to damage the overall economy severely, he predicts that the housing industry itself is entering a longer decline.
“Instead of being a seller’s market,” he said, “it became a buyer’s market. And once the psychology changes, it could take a while to reverse. Buyers recognize there’s no need to rush out to buy a home.”
The latest housing data, released yesterday by the National Association of Realtors, made clear that a significant slowdown is under way. It showed that the sales pace for existing homes fell for a third straight month in June — the ninth monthly decline since hitting a record last June.
On a seasonally adjusted annual basis, the rate of existing-home sales dropped to 6.6 million, down from 6.7 million in May and well below the record 7.3 million pace reported last June. The number of existing homes still on the market, meanwhile, grew to a record of 3.725 million units, representing a 6.8-month supply at the June selling pace, up from 6.4 months in May.
The shift of the upper hand from seller to buyer is showing up in home prices. Last month, the national median price rose to $231,000, less than 1 percent higher than in June 2005. That was the smallest year-over-year increase in more than 11 years.
Builders are losing their grasp on the new-home market, which is why so many of them have responded by being more aggressive in their use of promotions to sell homes. A new survey by the National Association of Home Builders of 369 builders across the country found that 75 percent are currently including add-ons like pools or garages at no additional cost when they sell a home. That compares with 50 percent a year ago.
A handful of builders reported offering free vacations. None did last July.
Builders are also helping buyers finance their homes. The survey found that 33 percent of builders are currently absorbing financing points on mortgages, which allows homeowners to pay lower monthly rates. Only 18 percent reported doing so a year ago.
When people were lining up to buy, “the only thing they had to complain about last year was getting enough material, labor and land,” said Michael Carliner, an economist with the home builders association. But now, he added, “things are slowing down.”
The home builders association reported last week that builder confidence had fallen to its lowest level in 14 years.
NYT
July 29, 2006
Housing Slows, Taking Big Toll on the Economy
By VIKAS BAJAJ and DAVID LEONHARDT
The housing industry — which largely carried the American economy through the tribulations of the 2000 stock-market crash, a recession and climbing oil prices — has lost its vigor in recent months and now has begun to bog down the broader economy, which slowed to a modest 2.5 percent growth rate this spring.
That was a sharp comedown from the 5.6 percent growth rate of the first quarter, the Commerce Department reported yesterday, caused in part by the third consecutive quarterly decline in spending on houses and apartment buildings, after several years of rapid growth. [Page C1.]
“It hasn’t slowed down a little bit — it has slowed down a lot,” said Doug McCraw, a developer who has scrapped his plans for a 205-unit condominium tower in a neighborhood just north of downtown Fort Lauderdale, Fla. “Anybody who did not have a shovel in the dirt has chosen to wait till the market settles.”
The housing slowdown is perhaps the clearest effect of the Federal Reserve’s two-year campaign of raising interest rates in a bid to tap the brakes on the economy and reduce inflation. That campaign has been largely successful, with the decline happening gradually while other parts of the economy, mainly the corporate sector, pick up much of the slack.
“Housing is going from being far and away the most important contributor to growth to being a measurable drag, and it’s happening gracefully so far,” said Mark Zandi, chief economist of Moody’s Economy.com, a research company. “But there’s now a growing and measurable risk that things don’t go according to plan.”
The biggest risk, economists say, is that the optimism that fed the real-estate boom will reverse dramatically. The number of homes for sale has surged in recent months, particularly in once-hot markets, like the Northeast, Florida, California and parts of the Southwest. As builders delay land acquisition and construction it could reduce employment and spending in the coming months.
More broadly, just as rising housing prices during the boom added to Americans’ sense of wealth and well-being — encouraging them to spend more on a variety of goods and services — the reverse could dampen sentiment and lead consumers to pull back on their purchases.
http://www.nytimes.com/2006/07/29/bu.../qeQ8eMzrx0HOQ
http://www.latimes.com/business/la-f...,3893046.story
Housing Expert: 'Soft Landing' Off Mark
By David Streitfeld, Times Staff Writer
July 21, 2006
Leslie Appleton-Young is at a loss for words.
The chief economist of the California Assn. of Realtors has stopped using the term "soft landing" to describe the state's real estate market, saying she no longer feels comfortable with that mild label.
"Maybe we need something new. That's all I'm prepared to say," Appleton-Young said Thursday.
The shift in language comes as debate over the real estate market is intensifying. The long-awaited drop-off is happening, but there's little agreement about how brutal the landing will be.
Federal Reserve Chairman Ben S. Bernanke said in congressional testimony Thursday that the national housing downturn so far appears orderly.
At about the same time, however, D.R. Horton Inc. Chief Executive Donald Tomnitz was telling analysts that the home builder's sales in June "absolutely fell off the Richter scale." Horton, the nation's largest builder of residential housing, has numerous projects in California.
For real estate optimists, the phrase "soft landing" conveyed the soothing notion that the run-up in values over the last few years would be permanent. It wasn't a bubble, it was a new plateau.
The Realtors association last month lowered its 2006 sales prediction from a 2% slip to a 16.8% drop. That was when Appleton-Young first told the San Diego Union-Tribune that she didn't feel comfortable any longer using "soft landing."
"I'm sorry I ever made that comment," she said Thursday. "When I get my new term, I'll let you know."
If there's one group in California still unreservedly bullish on real estate, it might be the throngs lining up to take the licensing exams.
The state Department of Real Estate recently reported that the total number of agents in the state passed 500,000 in May for the first time. That's one agent for every 55 adults in the state.
Appleton-Young had no qualms about predicting a hard landing here: "We're expecting a fairly significant shakeout."
Maybe the market will crash here and I'll be able to buy a place!
No one here gives a shit how much you make. Show off your wealth to your neighbors instead.Quote:
Originally Posted by mr_gyptian
Don't know much about the economics of the SLC area, but you are definitely swimming upstream. The days of easy money and 17% gains since the start of the year are over. Spend some time poring over homebuilder earnings reports and general real estate data. When making money is this easy it doesn't last. Real estate markets rarely crash in nasdaq-uean fashion, you'll just watch homes linger on the market much longer and have flattish or slowly declining values, depending on the local conditions of the market.Quote:
Originally Posted by meatdrink9
Don't know much about the economics of the SLC area, but you are definitely swimming upstream. The days of easy money and 17% gains since the start of the year are over. Spend some time poring over homebuilder earnings reports and general real estate data. When making money is this easy it doesn't last. Real estate markets rarely crash in nasdaq-uean fashion, you'll just watch homes linger on the market much longer and have flattish or slowly declining values, depending on the local conditions of the market.Quote:
Originally Posted by meatdrink9
Was that really worth saying twice?Quote:
Originally Posted by ski_trader
http://www.latimes.com/news/local/la...iewed-homepage
California Home Sales Take a Plunge
By Jesus Sanchez, Times Staff Writer
2:25 PM PDT, August 24, 2006
July sales of existing homes in California plunged nearly 30% from year-ago levels and prices in once red-hot markets such as San Diego and Sacramento dropped, according to a report today that provided yet more evidence of a housing market cool down.
In a separate report, nationwide sales of new homes took a larger than expected fall in July, dropping 21.6% from the same month last year to a seasonally adjusted annual rate of 1.07 million units, according to the U.S. Commerce Department. The sales pace was down 4.3% from June.
The sky is falling! The sky is falling!
Whatever happens over the next year or two, RE is still one of the best long-term investments going. The reason is simple: supply and demand.
There isn't any more real estate being made and as long as the population continues to increase the demand will be there.
If the market dips, that's a good time to buy. Wait a few years, maybe even ten, and you'll be making a nice profit unless you bought something really horrible.
I'm just gearing up to go RE psycho. I'll post some figures after a few deals have been completed, but this crash is BS unless you're an idiot. In which case you'll find ways to lose money doing anything.
People who weren't invested from 90-95 spraying about real estate? Idiots.
What I want to know, in simplistic terms , is whywhen the housing markets "cool" bringing prices down to where schleps like myself can actually afford a house, do interest rates go up? Therefor making it more difficult to afford payments? Is there a simple answer, one not tied to macro/ micro economics, dollar values, the whim of a reserve chief, or the wind direction on tuesday?
It just seems logical to me that when housing prices come down to where average joe's can afford them, then the federal reserve should be helping by keeping interest rates lower. Maybe I just answered my own question. If it's logical than the government wouldn't do it!
The federal reserve doesn't regulate mortgage interest rates. The fed regulates short term rates between banks and mortgage rates are tied to long-term bond yields rather than the short-term rates.
Quote:
Originally Posted by gr8fldoug
well, the simplest answer I can give is when I was buying in the last great crash around '94, and I offered 25% below the already depressed asking price, and the guy seemed happy and relieved and bit, well, timing is everything.
Chicken and egg. A big part of the cooling is due to the rise in interest rates.
I'm doubting that SLC will be slowing down anytime soon...if at all. You have to consider the rate at which the population here is increasing, and then combine that with the prediction that the Salt Lake Valley will be full (from an available land perspective) by 2015. Yeah, that's 9 years away, but I still see a lot of open space here. To think that all of that is going to fill up that quickly...there's obviously a legitimate demand for houses. Personally, we've seen close to a 20% increase in the value of our home that we purchased last fall...and prices in our neighborhood continue to rise.Quote:
Originally Posted by ski_trader
I'm not really into the whole RE game of trying to flip houses and get ahead. I'm just happy to have a house in a desirable neighborhood with a view of the Snowbird tram out my front window. :biggrin:
SLC is decreasing simply due to outside influences right now.
Truth, not myth.
Yup.Quote:
Originally Posted by cj001f
Got real ugly there for a while.
If you really wanna be a doom and gloom panic guy, you can have fun here:
http://housingpanic.blogspot.com/
Personally, I'm thinking (hoping) that 5-15% price corrections is all we'll see.
That would actually be healthy.
More than that (ie, complete loss of consumer confidence and a complete tanking of the market and massive foreclosures) and we may be really screwed for a really long time.
PS- the NAR even admits things are fucked:
http://www.realtor.org/Research.nsf/...%202006%29.ppt
PPS - but that slideshow does show Alaska and SLC still going strong.
we got a thirty year fixed here at 4.2%, with 1/3 cash down. Value has gone up 40% in three years, we did well, and were lucky. No bust here in Teton Valley yet, but things here are NUTS, we could use some cooling off. The high end spec developments are still charging ahead based on plans formulated a few years ago, the new target market is second, third and fourth homes for the uber-wealthy, and I simply don't think they are as affected by this current bubble....unless, of course, their relative wealth is tied in to RE holdings in more vulnerable markets.
Quote:
Originally Posted by Core Shot
I just did some research last night on my old neighborhood in Denver and things are going ape shit. I was considering selling a property or two there to finance some other investments out this way, but not a chance. Even if some cities are slowing down (Denver) you can still find pockets that will continue to thrive.
I think SLC as a whole has got at least another solid year or two of gains and if you hit specific areas on the Wasatch front I bet you've got 3 - 5 more years. When you compare home prices here to anywhere else it just seems like such a steal and it is. It won't be long before we start to catch up with the rest of west (already happening).
Let's pretend I know very little about RE investing. Because I don't. I'm in a weird fucking market here in JH that I'm a little unsure about.
I'll start out here: A friend got a house that he lives in, in Wilson actually, appraised for 2.4 million. It's 3 acres with a double-wide on it. The only person who would by this, I presume, would tear the double-wide down and build a mansion. But it's right in town with a lot of teeny-small houses all around it. if I was going to spend all that money, I wouldn't ever-never build no mansion theere. It would be out of place (although it's a good location if you are a ski bum). Lots of these small houses with a 1/2 acre (?) are worth 900,000.
There isn't much room to grow in this valley, if any at all. It's almost maxed out, I think. But these prices are stupid. Who would spend almost a million on a teeny cabin with no backyard? I think these houses are over valued and will drop because of this, but what do I know? The Rev was mentioning how RE was dropping in Sun Valley quite a bit, so maybe it could happen here too.
I talked to a RE agent in SLC recently. He came up here and was blown away. I said this might be the next Telluride and Aspen, so the prices here might be justified. He said no, because while you might need $5 million to buy something in Telluride, their houses are a lot bigger and nicer for that money. But then he recommended buying anything while I could around here.
As for where RideIt lives, on the other side of the pass, I see a big valley that can grow and grow and grow. The prices there are getting kinda high too, but they might flatten out because there's tons of dirt that hasn't been developed, and when it is there will be an over-saturated market. I'm thinking of buying something on that side and flipping it, similar to what MD9 is doing in SLC. But I wish it was SLC. (I can't afford anything in JH.) I'd hate to buy something and have it cool off in an instant. I don't want to hold on to anything for 5, 10 years and wait for it to go up.
Any thoughts? I've come to these conclusions with little input and I'm wondering if I'm way off-base. I'm thinking of waiting for a cool-off and then look for some bargains. But I don't want to miss the boat, either.
No doubt!Quote:
Originally Posted by meatdrink9
Iraq is dooming the Republicans (and some incumbents) for this election, and the continuing real estate quagmire will force a big house cleaning in '08.
"whatdayamean I can't use equity in my home to by a big screen TV and a Range Rover and a 2 week trip to Vail this year. bwaaahhhhhhh"
Quote:
Originally Posted by slippy
You don't have to be there to buy there. If you don't like the market you're in find a way to buy in a market you like. Lord knows you've got plenty of SLC contacts and friends. Not to mention the numerous trips you'll probably make here throughout the year (all become write-offs). Not a bad idea for any ski bum wanting to get to UT a fair amount. Do it all tax free.
This is a great idea. I'll convert the garage and decorate it like a Super 8 motel room for myself.Quote:
Originally Posted by meatdrink9
Out of curiousity, have there been any studies done, to see who, over the years has been in the best situation in terms of salary, house prices, and interest rates?
I feel like my parents' generation was better off: their salaries were 1/3 to 1/2 and interest rates were sky high, but house prices were 1/10th of what they are today.
The simple answer to this question is probably people who got jobs around 97-98 and were able to buy within the next year or two.
The returning soldiers immediatly post WW2 (they had the GI bill, too), and this most recent boom. Don't see mortgage rates in the 5s with such a healthy economy much.
If the internet was more popular in the late 80s/early 90s I bet you could find some msg board where there people saying that they could never lose on RE. I searched Usenet quickly - nothing there.Quote:
Originally Posted by cj001f
True, but I was hoping to buy a dumpy house and fix it up. So I'd have to be living near it.Quote:
Originally Posted by meatdrink9
But maybe buying a semi-decent house in SLC, that only needs a lil' work would be easier. I already thought of buying in Bozeman because I didn't like the JH market, but SLC is way cheaper, and almost the same distance. Good thinking, MD9.
Quote:
Originally Posted by LeeLau
It was THE topic of conversation at parties and backyard barbecues. You may remember those - that's when people got together in a defined space, shared drink and food, and conversed while looking each other in the eye. Or trying to, if the person on the other side had nice breasts.
so I should refinance my arm?
d'oh.
I hate this shit so much.
So very very much. :mad: