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Housing Rolling Along 2
- Thread starter Covertibility
- Start date
There is a risk that continued strong building could create excess supply of new homes, and drive prices down. A separate report from the Census Bureau on new home sales through October shows the supply of new homes on the market has been rising steadily for the last year, with an increase every month since April. Overall there has been a 20 percent increase in the supply of new homes available since October 2004. And the average price of a new home has slipped during that period.
Why would it matter. The theory was and frankly it worked for me in a pretty big way. That the baby boomers are a generation of excess. They go overboard with everything in every way.
Woodstock, drugs, love, govt spending, stock market, real estate. Soon to be health care and then demand for retirement benefits.
They are a selfish bubble generation. Historical norms need not apply.
Woodstock, drugs, love, govt spending, stock market, real estate. Soon to be health care and then demand for retirement benefits.
They are a selfish bubble generation. Historical norms need not apply.
Quote from jem:
Why would it matter. The theory was and frankly it worked for me in a pretty big way. That the baby boomers are a generation of excess. They go overboard with everything in every way.
Woodstock, drugs, love, govt spending, stock market, real estate. Soon to be health care and then demand for retirement benefits.
They are a selfish bubble generation. Historical norms need not apply.
Well.... At some point demographics and incomes/assets must come into play .... My numbers dont support the hypothesis that retirees will support the current price levels we have seen in historically popular retirement areas ...... In california in particular, there are not enough retirees to singularly support current pricing ... in my opinion ... actually same with florida and many other places where this same argument has been advanced.
Orlando inventory spikes hard....
http://orlando.bizjournals.com/orlando/stories/2005/12/19/daily26.html
"Also notable this month, ORRA says, is the number of existing homes available for purchase, 9,685, a 163 percent increase above November 2004's 3,681 homes. 'The area's inventory is now at its highest point since July 1996, when available homes first began to drop below the 10,000 mark,' says ORRA President Beverly Pindling.
http://www.boston.com/business/articles/2005/12/20/homebuilder_optimism_hits_32_month_low/
"Optimism among US homebuilders unexpectedly fell in December, dropping to a 32-month low, as executives braced for a slowdown in the housing market after a five-year boom."
"Our surveys indicate that three out of every four builders are experiencing some buyer resistance to current home prices, and many are offering certain concessions to buyers in order to help maintain sales volume."
http://www.voiceofsandiego.org/site/apps/nl/content2.asp?c=euLTJbMUKvH&b=486837&ct=1741953
"It used to take a couple of weeks to sell a property in San Diego. These days, sellers had better be prepared to wait at least a few months, according to those in the industry. In June 2004 there were slightly more than 6,000 properties on the market in San Diego County; today there are more than 15,000."
"As more properties hit the market and investors begin to abandon the city's once bonanza-like real estate market, there has not been a subsequent rise in home sales. Indeed, the number of completed sales in the county has dropped sharply in the last two quarters of this year, from 3,765 in August to 2,530 in November."
"Some sellers, albeit a small minority, have even begun to sustain losses on their property. Analysts said that would have been unthinkable just two years ago."
"'We are so spoiled that we need to be spanked,' said Kismit Cyriacks-Vella, a realtor and real estate investor in downtown San Diego. Cyriacks-Vella is not just being flippant. She said investors are due a good thrashing because the last few years have seen them earn rewards that are simply impossible to sustain. The rise in inventory shows a market coming back down to reality, she said."
http://news.yahoo.com/s/nm/20051221/bs_nm/economy_mortgages_dc
"U.S. mortgage applications fell to an 11-month low last week on a drop in demand for loans to buy homes, suggesting a slowdown in the housing market, according to industry data on Wednesday. The index is considered a timely gauge of U.S. home sales.
http://www.washingtonpost.com/wp-dyn/content/article/2005/12/20/AR2005122001510.html
"In 2000, only 1 percent of Americans who got new loans selected the interest-only variety, but by midyear 2005, about 23 percent of borrowers were using them. In fact, 54.3 percent of all D.C. home purchasers used interest-only loans. But now that the rates are rising, some people are finding themselves seriously strapped."
"Lauren Hillman bought a three-bedroom condominium in Reston for $250,000 in September 2004. At the urging of a friend and a mortgage broker, she took out two adjustable interest-only loans, one for the main mortgage and one for part of the down payment. The interest rate on the smaller loan started gyrating almost immediately, month to month, she recalled, climbing from 5.375 to 9.25 percent. She juggled bills and pared her expenses to the bone to handle the payments."
"'It was a lot more debt hanging over me than I realized,' Hillman said. 'In the preapproval process, they say you can afford a lot more than you think you can, but that's a lie. It's only with eating ramen noodles and not doing anything but go to work and come home.'"
"With the monthly price tag and the threat of her mortgage balance rising at the same time, Hillman grew increasingly nervous, she said. She eventually got a second job, took on a roommate and refinanced last month into a fixed-rate loan."
http://orlando.bizjournals.com/orlando/stories/2005/12/19/daily26.html
"Also notable this month, ORRA says, is the number of existing homes available for purchase, 9,685, a 163 percent increase above November 2004's 3,681 homes. 'The area's inventory is now at its highest point since July 1996, when available homes first began to drop below the 10,000 mark,' says ORRA President Beverly Pindling.
http://www.boston.com/business/articles/2005/12/20/homebuilder_optimism_hits_32_month_low/
"Optimism among US homebuilders unexpectedly fell in December, dropping to a 32-month low, as executives braced for a slowdown in the housing market after a five-year boom."
"Our surveys indicate that three out of every four builders are experiencing some buyer resistance to current home prices, and many are offering certain concessions to buyers in order to help maintain sales volume."
http://www.voiceofsandiego.org/site/apps/nl/content2.asp?c=euLTJbMUKvH&b=486837&ct=1741953
"It used to take a couple of weeks to sell a property in San Diego. These days, sellers had better be prepared to wait at least a few months, according to those in the industry. In June 2004 there were slightly more than 6,000 properties on the market in San Diego County; today there are more than 15,000."
"As more properties hit the market and investors begin to abandon the city's once bonanza-like real estate market, there has not been a subsequent rise in home sales. Indeed, the number of completed sales in the county has dropped sharply in the last two quarters of this year, from 3,765 in August to 2,530 in November."
"Some sellers, albeit a small minority, have even begun to sustain losses on their property. Analysts said that would have been unthinkable just two years ago."
"'We are so spoiled that we need to be spanked,' said Kismit Cyriacks-Vella, a realtor and real estate investor in downtown San Diego. Cyriacks-Vella is not just being flippant. She said investors are due a good thrashing because the last few years have seen them earn rewards that are simply impossible to sustain. The rise in inventory shows a market coming back down to reality, she said."
http://news.yahoo.com/s/nm/20051221/bs_nm/economy_mortgages_dc
"U.S. mortgage applications fell to an 11-month low last week on a drop in demand for loans to buy homes, suggesting a slowdown in the housing market, according to industry data on Wednesday. The index is considered a timely gauge of U.S. home sales.
http://www.washingtonpost.com/wp-dyn/content/article/2005/12/20/AR2005122001510.html
"In 2000, only 1 percent of Americans who got new loans selected the interest-only variety, but by midyear 2005, about 23 percent of borrowers were using them. In fact, 54.3 percent of all D.C. home purchasers used interest-only loans. But now that the rates are rising, some people are finding themselves seriously strapped."
"Lauren Hillman bought a three-bedroom condominium in Reston for $250,000 in September 2004. At the urging of a friend and a mortgage broker, she took out two adjustable interest-only loans, one for the main mortgage and one for part of the down payment. The interest rate on the smaller loan started gyrating almost immediately, month to month, she recalled, climbing from 5.375 to 9.25 percent. She juggled bills and pared her expenses to the bone to handle the payments."
"'It was a lot more debt hanging over me than I realized,' Hillman said. 'In the preapproval process, they say you can afford a lot more than you think you can, but that's a lie. It's only with eating ramen noodles and not doing anything but go to work and come home.'"
"With the monthly price tag and the threat of her mortgage balance rising at the same time, Hillman grew increasingly nervous, she said. She eventually got a second job, took on a roommate and refinanced last month into a fixed-rate loan."
Soaring house prices and higher mortgage rates have put homeownership out of reach for more people than at any time in more than a decade.
Housing affordability in October sank to its lowest levels since 1991, according to the National Association of Realtors' Affordability Index, a widely followed measure of the average household's ability to buy a home at current interest rates. In some areas, including New York City, Los Angeles, San Diego, San Francisco and Miami, housing affordability has dropped to levels not seen since the early to mid-1980s, according to mortgage giant Fannie Mae.
Affordability has long been a problem for low-income home buyers. But as home prices have marched steadily higher in recent years, many buyers with healthier incomes also are being squeezed. Declining affordability mainly affects whether first-time home buyers will enter the market, but in some markets people who already own a home are finding it tough to trade up.
There are signs that the growing costs of homeownership are also beginning to take a toll on the housing market. "There's a systematic erosion of affordability," says David Seiders, chief economist of the National Association of Home Builders. That decline is "the main reason ⦠the market is starting to cool." Mortgage applications fell to an 11-month low last week, the Mortgage Bankers Association reported yesterday, as applications to purchase homes declined.
FEELING PINCHED
⢠See the least affordable markets in the country.
⢠See the complete National Association of Realtors' Affordability Index. (Excel required)
⢠Also, find out how much money you may borrow to purchase a house, using the House Affordability Tool, at RealEstateJournal.com.
Despite the drop in affordability, the percentage of households that live in a home they own is at near-record levels.
Housing affordability in October sank to its lowest levels since 1991, according to the National Association of Realtors' Affordability Index, a widely followed measure of the average household's ability to buy a home at current interest rates. In some areas, including New York City, Los Angeles, San Diego, San Francisco and Miami, housing affordability has dropped to levels not seen since the early to mid-1980s, according to mortgage giant Fannie Mae.
Affordability has long been a problem for low-income home buyers. But as home prices have marched steadily higher in recent years, many buyers with healthier incomes also are being squeezed. Declining affordability mainly affects whether first-time home buyers will enter the market, but in some markets people who already own a home are finding it tough to trade up.
There are signs that the growing costs of homeownership are also beginning to take a toll on the housing market. "There's a systematic erosion of affordability," says David Seiders, chief economist of the National Association of Home Builders. That decline is "the main reason ⦠the market is starting to cool." Mortgage applications fell to an 11-month low last week, the Mortgage Bankers Association reported yesterday, as applications to purchase homes declined.
FEELING PINCHED
⢠See the least affordable markets in the country.
⢠See the complete National Association of Realtors' Affordability Index. (Excel required)
⢠Also, find out how much money you may borrow to purchase a house, using the House Affordability Tool, at RealEstateJournal.com.
Despite the drop in affordability, the percentage of households that live in a home they own is at near-record levels.
http://www.thedesertsun.com/apps/pbcs.dll/article?AID=/20051229/COLUMNS26/512290309/1215
Year of the 'perfect economic storm' around the bend
Vic Gainer
Special to The Desert Sun
December 29, 2005
"During the past two or three years, I have met many people who are renting here in the Palm Springs area, many are young couples who have bemoaned the fact that they have been unable to afford anything here in our city and despair that they never will."
"There is hope on the horizon. I have urged those folks to save their money and maintain good credit, because 2007 will be the year of the "perfect economic storm."
"It is the year that $1 trillion of adjustable rate mortgages and interest only mortgage loans come due for conversion to fixed rate mortgages."
"The victims will be those who could not have managed to make monthly loan payments on fixed rate loans so they opted for lower rate loans."
"How many will be able to afford a loan payment when their interest goes from a 2.7 percent ARM to a 7 percent fixed?"
"Consider this:"
"There never has been a number like the $1 trillion to hit our banking system. Never - not even close."
"Personal savings are at the lowest rate since the Great Depression. Most people have no backup for emergencies."
"During the past five years, 42 percent of the loans in the Coachella Valley have been ARMs or interest only loans. In Orange County, the number is 78 percent."
"So when these people attempt to sell those "getaway" places they bought here, the market will be inundated with "For Sale" signs."
"Add those whose primary residence is here and who are unable to make their new, higher payments, and prices will fall precipitously. There will be foreclosures and, yes, bank-ruptcy sales. There then will be a lot of affordable housing ("Valley Insights: Affordable Housing," Dec. 11)."
"This will present a major opportunity for those who "missed the boat," and like the real estate recession of the early 1990s, this will prevail for several years."
"The bad news for the banking system is that, unlike the collapse of the savings and loans, and the massive government bailout in the name of the Resolution Trust Corporation, there will be no "bailout" this time. The budget deficits have ensured that."
"So, yes, be patient and prudent, and an affordable home will be yours."
Year of the 'perfect economic storm' around the bend
Vic Gainer
Special to The Desert Sun
December 29, 2005
"During the past two or three years, I have met many people who are renting here in the Palm Springs area, many are young couples who have bemoaned the fact that they have been unable to afford anything here in our city and despair that they never will."
"There is hope on the horizon. I have urged those folks to save their money and maintain good credit, because 2007 will be the year of the "perfect economic storm."
"It is the year that $1 trillion of adjustable rate mortgages and interest only mortgage loans come due for conversion to fixed rate mortgages."
"The victims will be those who could not have managed to make monthly loan payments on fixed rate loans so they opted for lower rate loans."
"How many will be able to afford a loan payment when their interest goes from a 2.7 percent ARM to a 7 percent fixed?"
"Consider this:"
"There never has been a number like the $1 trillion to hit our banking system. Never - not even close."
"Personal savings are at the lowest rate since the Great Depression. Most people have no backup for emergencies."
"During the past five years, 42 percent of the loans in the Coachella Valley have been ARMs or interest only loans. In Orange County, the number is 78 percent."
"So when these people attempt to sell those "getaway" places they bought here, the market will be inundated with "For Sale" signs."
"Add those whose primary residence is here and who are unable to make their new, higher payments, and prices will fall precipitously. There will be foreclosures and, yes, bank-ruptcy sales. There then will be a lot of affordable housing ("Valley Insights: Affordable Housing," Dec. 11)."
"This will present a major opportunity for those who "missed the boat," and like the real estate recession of the early 1990s, this will prevail for several years."
"The bad news for the banking system is that, unlike the collapse of the savings and loans, and the massive government bailout in the name of the Resolution Trust Corporation, there will be no "bailout" this time. The budget deficits have ensured that."
"So, yes, be patient and prudent, and an affordable home will be yours."
Quote from prt_systems:
Well.... At some point demographics and incomes/assets must come into play .... My numbers dont support the hypothesis that retirees will support the current price levels we have seen in historically popular retirement areas ...... In california in particular, there are not enough retirees to singularly support current pricing ... in my opinion ... actually same with florida and many other places where this same argument has been advanced.
Hi,
This baby boomer generation should be arrested for "neglect". It has a zero savings rate. Truth is this is because many are waiting for there parents to die to inherent their estates. House, life insurance etc. This has been the baby boomer exit strategy into retirement all along. At least for a great many of them anyway.
The rest of the boomers are discovering right about now that if they don't start saving money they are doomed. Some will and most won't. How many will began to work double time to make up for years of spending will determine the economy over the next 10 years.
It could get ugly simply because America will go from free spending to super saver faster then anyone understands now.
This will cause it's own set of problems.
John
As a realtor, and and investor I have been watching this stuff.
First regarding the Price to income thing. Properly framed the ratio should be the cost of finance to income.
The NAR stat I just saw for my area which was the hottest in the country on recently moved out of the middle of the chart. It may begin expensive but it hasn't reached levels that were hit in the 1980s.
Two, I read today, that 40% of homes in this country are owned outright. No mortage. Which is consistent with what I have been saying. Many buyers here in Florida have paid cash for homes.
I am saying that we are not going to fall off a cliff. No, but what I am saying is I have seen these same B.S. stats for 5 years. They were wrong for the first 4 now we are having a little consolidation. We will see.
First regarding the Price to income thing. Properly framed the ratio should be the cost of finance to income.
The NAR stat I just saw for my area which was the hottest in the country on recently moved out of the middle of the chart. It may begin expensive but it hasn't reached levels that were hit in the 1980s.
Two, I read today, that 40% of homes in this country are owned outright. No mortage. Which is consistent with what I have been saying. Many buyers here in Florida have paid cash for homes.
I am saying that we are not going to fall off a cliff. No, but what I am saying is I have seen these same B.S. stats for 5 years. They were wrong for the first 4 now we are having a little consolidation. We will see.