Tuesday, November 28, 2006

Existing Homes: Sales Up, Median Sales Price Down 3.5% YoY, Inventories Up

"Sales of existing U.S. homes rose 0.5% to a seasonally adjusted annual rate of 6.24 million in October, the first increase since February, the National Association of Realtors reported Tuesday. Economists were expecting sales to fall to 6.15 million annualized. September's sales were revised higher to 6.21 million from 6.18 million initially reported."

"Sales are down 11.5% in the past year. Median sales prices fell a record 3.5% year-over-year, the third decline in a row. Inventories of unsold homes increased 1.9% to 3.854 million, representing a 7.4-month supply at the October sales rate. It's the largest months' supply since April 1993." (MarketWatch)

“Sales of condos dropped 4.8% to 778,000. Median sales prices are down 5.3% in the past year to $214,300. Condo sales are down 14.5% in the past year. The inventory of unsold condos rose to 9.1 months. ‘That’s a segment of the marketplace that’s experiencing some pain,’ Lereah said.”

No folks this is not the bottom and the housing market will continue to decline. Overall, this is NOT a rosy report.


  1. Don't you love how the report tries to gloss over the South and West? When credit tightens, you won't think they're unrelated...

    David said "
    No folks this is not the bottom and the housing market will continue to decline. Overall, this is NOT a rosy report."

    Nicely understated...

  2. Today’s report on Sacramento has been released!
    Daily Home Price Analysis

  3. This question is off topic, but I need advice. What is the best tactic for low balling these sellers? Should I use the listing agent or should I go through one of the agents at their office? I've noticed when low balling the listing agent, some insist their listing is "priced right" which is BS. I know these greedy Brokers and agents want all the comission off the sale. I've done okay going directly through the listing agent, but not good enough..no deal. Any ideas or tactics?

  4. Here is a story on CNN that contridicts your post:

    New home sales slip, but prices jump
    Pace of new home sales falls much more than expected, as supply of homes on market hits record; prices show surprising strength.
    November 29 2006: 10:14 AM EST

    NEW YORK (CNNMoney.com) -- The pace of new home sales fell more than expected in October, although prices showed strength after a couple months of weakness, according to a government report.

    The pace of new home sales fell to an annual rate of just over 1.0 million from 1.04 million in September, which was also revised lower. Economists surveyed by Briefing.com had forecast that the annual sales rate would fall to 1.05 million from the original reading of a 1.08 million sales pace in September.
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    But the median price of a new home sold in the month jumped to $248,500, according to the report, up from $218,200 in September and $243,900 a year earlier. Other measures of housing prices have all reported a recent drop in home prices.

    Major builders, including Pulte Home (Charts), Centex (Charts), D.R. Horton (Charts), Lennar (Charts), KB Home (Charts) and Toll Brothers (Charts) have all seen sales and earnings fall sharply this year in the face of the housing slowdown, with many warning the sector has yet to find a bottom. Most have also reported lower prices for homes due to a glut of supply on the market.

    That oversupply continued to grow in Wednesday's report, rising to a record 166,000 completed homes available for sale.


  5. razor - today's lowball offer will be next year's full asking price offer. why rush to buy now and deal with resistant sellers and their agents?

    in all seriousness, lowballing can and does work in certain circumstances. years back, i bought a house for 25% below asking. it generally works if the subject property has been on the market for a long time and if the seller is motivated (needs to move out of the area, has already moved out of the area, facing financial pressures, etc.).

    i would recommend submitting your offer on an unrepresented basis directly to the listing agent. the listing agent will then get the full sales commission (5 or 6%, no sub comp) and will therefore be highly motivated to talk their seller into accepting your offer (yes its unethical for the listing agent to do this, but hey, its realtors we're talking about here). if you do this, make sure the listing agent knows you are completely serious (think big earnest money, pre approval letters, etc.) and that your price makes sense (since prices are falling use 2004 or prior comps, price relative to rents).

    you'll likely get laughed at/rejected multiple times, but be firm. it only takes one weak hand to get a lowball offer accepted.

  6. Razor said:
    "I know these greedy Brokers and agents want all the comission off the sale."

    The answer to your question lies in your statement above. A selling price $10,000 or $20,000 or $30,000 above or below the asking price translates to almost nothing in how it changes the commission a real estate agent brings home. You're not getting good answers to your questions because your poor attitude must be as transparent to the agents as it is to us. You approach them "greedy", and then expect cooperation? So tell me, when you go see your doctor, do you similarly look at them as the cause of what ails you?

  7. David, I think the following article also piggybacks on what you have here.

    Home Prices Fell at Record Pace in October (From the WaPo)

  8. John,
    I’ve been low-balling these greedy sellers through their agents for about a month now. It’s amazing how willing most sellers’ agents are willing and happy to submit the offer. There are some that get their feeling hurt because they listed the property and feel there asking price is valid. I have had some callbacks by some of the agents that laughed at me last month.

    I come with my pre-approval in hand when making my offer. I even have my lender sending me approval letters for much less than what I’m qualified for. My lender calls the sellers today “greedy leeches” and tells me to never take in the maximum approval letter, this has been sound advice.

    I’ve posted the original message on several crash blogs and have had some sound advice given. Thanks for the comment. P.S. That Lance guy sounds like a real estate agent…oh-well

  9. “I come with my pre-approval in hand when making my offer. I even have my lender sending me approval letters for much less than what I’m qualified for.”

    Come on folks, this should be standard operating procedure. NEVER let them see how much you’re fully pre-approved for. Always get multiple pre-approval/quall letters in stepped amounts. If not:

    “Can I borrow some cash?” Sure, how much you need? “Well, how much you got in your wallet?”

    Get the lowballs out there! Your best bets are for homes with higher DOM. Now, this may take some research, as we all know DOM is easily and often re-set. Check inventory levels for your particular location. If a potential buyer has 200 other homes to choose from, the seller does not have much clout.

    Check the tax records on the home. Furthermore, find out what you can about the current mortgage. Is it an ARM? If the home is in Maryland, mortgage info can be found at:


    You must register, but it is free.

    Hand your offer to the listing agent. If you need help, an attorney can get paperwork in order and ensure that the transaction paperwork is on the up and up, usually for a reasonable flat fee. No attorney and must have help? Get your own RE agent and sign nothing more than a non-exclusive agreement (i.e. if your agent does not show you the house, they don’t get the commission).

    During boom times, the listing agent wants that commission. During lean times, the listing agent wants that commission. The listing agent knows more about the seller’s situation than anyone. If it’s a high DOM, lots of inventory, and the listing agent places your offer with no qualms, your lowball wasn’t low enough, and I hope you love your new house.