Housing Rolling Along 2
- Thread starter Covertibility
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http://www.signonsandiego.com/news/business/20051111-1315-wall&main.html
"The demographic story behind the housing market boom, as we always thought, was a giant hoax," wrote Merrill Lynch & Co.'s North American Economist, David Rosenberg, in a recent report."
"The supply and demand picture for housing looks out of whack. For six straight months, ending in September, builders started work on more than 2 million new homes. This has only happened three other times in the postwar period, according to Merrill Lynch: 1971 to 1973, 1977 to 1978 and early 1984."
"Those periods were fundamentally different from today in at least one respect: More people were forming households. Household formation is the growth rate in the number of households and it's boosted by new immigration and twenty-somethings leaving their parents' homes. It is currently half what it was for most of those peak periods."
"At no time in the past three decades has the gap between household formation and housing starts been as wide as it has been over the past 12 to 24 months," Rosenberg wrote. "We've become accustomed to hearing about how housing is in a new paradigm, that the fundamentals are sound, so on and so forth. But please, just don't tell me that the sector has managed to divorce itself from supply and demand realities."
"He points out that the number of households in the group most likely to buy a home, 25- to 44-year-olds, fell 2 percent last year, a record decline."
"Another indicator, unsold homes sitting on the market, also points down. The ratio of inventories to sales has been rising rapidly in recent months and now stands at its highest level since 1996, according to Wachovia Corp."
"Rents provide more evidence of an imbalance between supply and demand. Since World War II ended, sale prices for homes have generally kept pace with the overall rate of inflation, and rents moved at the same pace. That hasn't been the case for the last eight years, according to the Center for Economic and Policy Research."
"There has been no significant increase in rents, which would be expected if the run-up in house prices were explained by the fundamentals of the housing market," Baker wrote."
"Then, there's the problem of affordability. Affordability for first-time home buyers is the worst it has been in 20 years, which brings to mind an old parable about the stock market. A woman buys up a company's stock, driving up the price as she goes. Eventually, she tells her broker to sell."
"His response: "To whom?"
"House prices are at the mountain top," Zandi said. "All roads lead down. It's just a question of how steeply."
http://www.signonsandiego.com/news/business/20051112-9999-1b12housing.html
"October was the 16th month in a row that sales volume has declined on a year-over-year basis. The inventory of active, unsold listings crossed the 15,000 mark for the first time since the present boom began in 1997. By contrast, at the peak in March last year, there were only 3,113 listings."
"Coupled with rising interest rates, which rose to a two-year high of 6.31 percent this week, and a suddenly soaring foreclosure notice rate, up nearly 40 percent for the third quarter compared with a year ago, industry analysts said San Diego's housing boom seems to be coming to a quiet end."
"Buyers aren't afraid to come in with offers below the asking price, said veteran San Diego real estate agent Richard Mehren. 'We are seeing buyers submitting some aggressive offers,' Mehren said. 'It definitely is going to continue to be soft. There is a lot of inventory. We are going to continue to see prices drop, at least for the next few months.'"
"The slowing market affects desperate sellers the most. In Fayetteville, Ga., Vinse and Anji Evans are worried about just how soft San Diego County's housing market will become. They moved out of their two-bedroom condominium in Rancho Bernardo about 30 days ago. So far they have lowered the asking price by $60,000, to a range of $375,000 to $390,000."
"The demographic story behind the housing market boom, as we always thought, was a giant hoax," wrote Merrill Lynch & Co.'s North American Economist, David Rosenberg, in a recent report."
"The supply and demand picture for housing looks out of whack. For six straight months, ending in September, builders started work on more than 2 million new homes. This has only happened three other times in the postwar period, according to Merrill Lynch: 1971 to 1973, 1977 to 1978 and early 1984."
"Those periods were fundamentally different from today in at least one respect: More people were forming households. Household formation is the growth rate in the number of households and it's boosted by new immigration and twenty-somethings leaving their parents' homes. It is currently half what it was for most of those peak periods."
"At no time in the past three decades has the gap between household formation and housing starts been as wide as it has been over the past 12 to 24 months," Rosenberg wrote. "We've become accustomed to hearing about how housing is in a new paradigm, that the fundamentals are sound, so on and so forth. But please, just don't tell me that the sector has managed to divorce itself from supply and demand realities."
"He points out that the number of households in the group most likely to buy a home, 25- to 44-year-olds, fell 2 percent last year, a record decline."
"Another indicator, unsold homes sitting on the market, also points down. The ratio of inventories to sales has been rising rapidly in recent months and now stands at its highest level since 1996, according to Wachovia Corp."
"Rents provide more evidence of an imbalance between supply and demand. Since World War II ended, sale prices for homes have generally kept pace with the overall rate of inflation, and rents moved at the same pace. That hasn't been the case for the last eight years, according to the Center for Economic and Policy Research."
"There has been no significant increase in rents, which would be expected if the run-up in house prices were explained by the fundamentals of the housing market," Baker wrote."
"Then, there's the problem of affordability. Affordability for first-time home buyers is the worst it has been in 20 years, which brings to mind an old parable about the stock market. A woman buys up a company's stock, driving up the price as she goes. Eventually, she tells her broker to sell."
"His response: "To whom?"
"House prices are at the mountain top," Zandi said. "All roads lead down. It's just a question of how steeply."
http://www.signonsandiego.com/news/business/20051112-9999-1b12housing.html
"October was the 16th month in a row that sales volume has declined on a year-over-year basis. The inventory of active, unsold listings crossed the 15,000 mark for the first time since the present boom began in 1997. By contrast, at the peak in March last year, there were only 3,113 listings."
"Coupled with rising interest rates, which rose to a two-year high of 6.31 percent this week, and a suddenly soaring foreclosure notice rate, up nearly 40 percent for the third quarter compared with a year ago, industry analysts said San Diego's housing boom seems to be coming to a quiet end."
"Buyers aren't afraid to come in with offers below the asking price, said veteran San Diego real estate agent Richard Mehren. 'We are seeing buyers submitting some aggressive offers,' Mehren said. 'It definitely is going to continue to be soft. There is a lot of inventory. We are going to continue to see prices drop, at least for the next few months.'"
"The slowing market affects desperate sellers the most. In Fayetteville, Ga., Vinse and Anji Evans are worried about just how soft San Diego County's housing market will become. They moved out of their two-bedroom condominium in Rancho Bernardo about 30 days ago. So far they have lowered the asking price by $60,000, to a range of $375,000 to $390,000."
The article couldn't be more wrong. In 50 years all work will be done over the internet and this will allow the interior of the country to be developed because people will be working from home or "community offices" where the holographic equipment will be more sophiscated.
The interior of he United States has room for about 300 million homes.
John
http://www.commondreams.org/cgi-bin/newsprint.cgi?file=/news2005/1108-11.htm
Study Cites Recent Trends That Signal Housing Bubble
"WASHINGTON - November 8 - Recent trends in the housing market suggest a dangerous housing bubble, rather than a run-up caused by fundamental factors such as higher incomes and population growth, according to a new study by the Center for Economic and Policy Research (CEPR)."
"The report, "Will a Bursting Bubble Trouble Bernanke? The Evidence for a Housing Bubble," cites three trends in the housing market that suggest an unsustainable increase in house prices: 1) A sharp divergence between house sale prices and rents; 2) An extraordinary jump in the rate of housing construction; and 3) A sharp decline in the savings rate, driven by a housing wealth effect."
"Federal Reserve Board Chairman nominee Benjamin Bernanke has argued that there is no housing bubble and, therefore, no reason for the Fed to take action to address the bubble. Bernanke's approach raises grave risks, since the impact of a bursting housing bubble is likely to be even greater than the collapse of the stock bubble. The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession, according to economist Dean Baker, co-author of the report."
"If the Fed chooses to let a housing bubble expand unchecked, the eventual cost to the economy and to millions of American families could be enormous," said Baker."
"The report, by Dean Baker and David Rosnick, found three housing patterns that are tell-tale signs of a housing bubble:"
"- A sharp divergence between house sale prices and rents. If house sale prices were pushed up by fundamentals in the housing market, it would be expected that rents and house sale prices would rise together -- but they are not. The house price index has increased by an unprecedented 51 percentage points more than the rent index since 1997."
"- A high rate of housing construction. The rate of housing construction over the last three years is more than 40 percent higher than it was in the 17 years prior to the run-up in house prices. This is not caused by the increase in the U.S. population, since the most rapid growth in the number of new households actually took place in the 1970s and early 1980s, when the huge baby boom cohort was first forming their own households."
"- A sharp decline in the savings rate. If house prices move at approximately the same pace as the overall inflation rate, as was the case prior to 1997, then housing wealth will have little effect on the savings rate. However, in the last eight years, house prices have outpaced the overall rate of inflation. The resulting wealth effect has depressed the savings rate, which has actually turned negative in recent months."
Kauai median home price fall 100k! OWP
http://pacific.bizjournals.com/pacific/stories/2005/11/07/daily24.html
Study Cites Recent Trends That Signal Housing Bubble
"WASHINGTON - November 8 - Recent trends in the housing market suggest a dangerous housing bubble, rather than a run-up caused by fundamental factors such as higher incomes and population growth, according to a new study by the Center for Economic and Policy Research (CEPR)."
"The report, "Will a Bursting Bubble Trouble Bernanke? The Evidence for a Housing Bubble," cites three trends in the housing market that suggest an unsustainable increase in house prices: 1) A sharp divergence between house sale prices and rents; 2) An extraordinary jump in the rate of housing construction; and 3) A sharp decline in the savings rate, driven by a housing wealth effect."
"Federal Reserve Board Chairman nominee Benjamin Bernanke has argued that there is no housing bubble and, therefore, no reason for the Fed to take action to address the bubble. Bernanke's approach raises grave risks, since the impact of a bursting housing bubble is likely to be even greater than the collapse of the stock bubble. The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession, according to economist Dean Baker, co-author of the report."
"If the Fed chooses to let a housing bubble expand unchecked, the eventual cost to the economy and to millions of American families could be enormous," said Baker."
"The report, by Dean Baker and David Rosnick, found three housing patterns that are tell-tale signs of a housing bubble:"
"- A sharp divergence between house sale prices and rents. If house sale prices were pushed up by fundamentals in the housing market, it would be expected that rents and house sale prices would rise together -- but they are not. The house price index has increased by an unprecedented 51 percentage points more than the rent index since 1997."
"- A high rate of housing construction. The rate of housing construction over the last three years is more than 40 percent higher than it was in the 17 years prior to the run-up in house prices. This is not caused by the increase in the U.S. population, since the most rapid growth in the number of new households actually took place in the 1970s and early 1980s, when the huge baby boom cohort was first forming their own households."
"- A sharp decline in the savings rate. If house prices move at approximately the same pace as the overall inflation rate, as was the case prior to 1997, then housing wealth will have little effect on the savings rate. However, in the last eight years, house prices have outpaced the overall rate of inflation. The resulting wealth effect has depressed the savings rate, which has actually turned negative in recent months."
Kauai median home price fall 100k! OWP
http://pacific.bizjournals.com/pacific/stories/2005/11/07/daily24.html
It seems like the housing market is like a car slamming into a brick wall. Inventories in bubble areas up 30% to 300%, sales down about the same.
The rate from Wells Fargo on jumbo loans (basically anywhere there is a bubble you need a jumbo) is almost 6.8% APR and rising fast! Put a fork in it.....and at least with three more Greenie rate increases, springtime will never arrive for desperate home sellers.
below is an excerpt pasted from a housing blog poster....is there a vast amount of "hidden" inventory coming to the market soon? OWP
"...Same with a friend, he bought a 2500sq beautiful tract house in Palm Springs area with upgrades for $620K in April 2005. He was initially going to keep it for spring of 06 to make a few bucks, but now with all that is going on, he's got cold feet, so just after 6 months, he put it up for sale, asking 689K."
"As of 1 month, no one even has inquired about the place, so he reduced the price to 669K now, still no inquiries as of yesterday."
"The problem is the fact that in a matter of 3 weeks, there have been about 30 similar properties listed in the same walking distance area, not one has gone in escrow."
"Guys, if you think flippers are coming in the market, give it another 3-4 months, it is going to be scary."
"As for my friend, even if he sells now, he will probably just break even, but my senses tell me he will not be able to get more than what he paid for if he waits that long."
"What cracks me up is the fact that these flippers still think time is on their side, total mistake. The longer they wait, the tougher it will get, especially when uncle Greenie raises rates another couple of quarter points."
I find it amazing this guy still posts, and now posts stories from other boards. I wonder if the people are on the other site can read an earnings report.
The earnings reports are probably not as important to the "man on the street" as the notice of foreclosure or the BK paperwork from the local county courthouse delivered by the process server. The only thing going parabolic going forward from now will be the notice of defaults, foreclosures, BK's, and inventory numbers in the MLS. Like these numbers from the Sacramento housing market showing that the local inventory year over year is up 300%! Talk about a parabolic line!
http://sacramentohousingbubble.blogspot.com/
Oh...and the latest earnings reports are starting to go downhill, with some of the "homies" guiding down, and others missing and warning. This will pick up quarter by quarter. Like all POS earnings whores, good for a trade only.
I've quietly read through this thread, and the other Housing one (actually both other housing threads on this forum). I'm neither a bear nor bull, but I would just like to say that Convertability has got to be one of the biggest examples of desperation ever in denial on this board. And that says a lot. I predict that in 6 months, perhaps even sooner, we never hear from him again (at least under this nick).
Thanks for your time.
-Ivan
Thanks for your time.
-Ivan
I am amazed, make a little money and your criticized. Go against the popular thought and criticized. How many people think traders on this site make money?
I like how so many point out how housing fell from its highs yet not a single person came out and said, lets short right here. There are quite a few housing threads on this forum dating back to last year when according to many posters on one particular thread claimed inflation was 10%, rates were going to go through the roof, etc.. (I miss the Weimar fans).
One month from now this thread will be history and a profitable one at that. Notice this is a trading site, how many threads out there can anyone claim a profit? I'll start a new thread when the calender turns and take predictions.
I like how so many point out how housing fell from its highs yet not a single person came out and said, lets short right here. There are quite a few housing threads on this forum dating back to last year when according to many posters on one particular thread claimed inflation was 10%, rates were going to go through the roof, etc.. (I miss the Weimar fans).
One month from now this thread will be history and a profitable one at that. Notice this is a trading site, how many threads out there can anyone claim a profit? I'll start a new thread when the calender turns and take predictions.
_lets be honest ... the folks who bought either R.E.
or housing stocks a yr or more ok are still doing ok
but some folks who bought in the last 6 months are nervous nellies ...
( note ... I am deparately trying to figure out the
best way to hedge my families R.E. holdings ...
as each case is complex in its own way )
or housing stocks a yr or more ok are still doing ok
but some folks who bought in the last 6 months are nervous nellies ...
( note ... I am deparately trying to figure out the
best way to hedge my families R.E. holdings ...
as each case is complex in its own way )