Americans unexpectedly signed the fewest contracts to buy previously owned homes in more than five years in May as buyers waited for lower prices and lenders made it harder to get mortgages.
The index of signed purchase agreements, or pending home resales, dropped 3.5 percent to 97.7 from a revised 101.2 in April, the National Association of Realtors said today in Washington.
Today's report showed that the May reading was the lowest level since September 2001, when the economy was in the midst of the last recession. April pending home resales were revised to a decline of 3.5 percent. (Bloomberg, June 3, 2007)
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This is just the beginning. This summer many adjustments peak for subprime, and alt a next year. And credit will get tighter if this CDO mess unravels.
ReplyDeleteYes
ReplyDeletebut all the wall street wags say factor growth will ease us through- with declining consumption here- and soon in the global markets (that is the real trigger) I wonder what happens when factory growth falls along with a housing sector that is still falling>?
Did anybody else see the Nightly Business Report tonight?
ReplyDeleteIt featured the tough times house buyers are facing and mentioned a little about the sub-prime mess.
One talking head (couldn't get his name) mentioned the fact that the sub-prime mess has 2 MORE YEARS to go before all is said and done.
NBR, a respected business news source, finally admitting to its viewers the troubles ahead for housing (better late than never) and there are still some who think a soft landing is in store for RE.
Looks like the MSM, especially the business MSM part, is slowly but surely beginning to see that there is some kind of mess in the world of RE.
Anit-lance,
ReplyDeleteThanks for the info...
With how CMBS bonds have been doing the last week and a half... Sales will only slow. Ok, in light trading today they were flat.
As I have a large down payment ready... that reduces my competition. Everything is pointing to a divide at 15% down payment today... that will grow.
As my grandfather liked to point out, "only buy real estate when its tough to get a mortgage."
Gary noted the CDO mess... that will be ugly when it unravels. More hedge funds are locking out dispersals... that's scary.
More and more coworkers are economizing... for no reason other than they see their friends cutting back. Its really weird watching the mob move as one in their spending habits... Is this due to the decline in MEW? Credit exhaustion? I don't claim to know why.
Yet the "big event" is still months away. When? I wish I knew (I'd be rich).
Time to prep for the BBQ.
Got popcorn? and steaks? ;)
Neil
I know I asked this question before. Please use some economic reasoning behind your answer. Where do you see the following prices heading.
ReplyDelete2 bedroom condo Arlington (Crystal City)?
Single family in Loudan?
Single family in Woodbridge?
Single family in Lorton?
Somewhere in Maryland? (Im not familiar with Maryland)
Im just curious what price do most people think house(fair) prices should be in this area.
Please take in account Job growth, population, salaries, etc...
Things do seem to be unraveling, but I have read on other places (like thehousingbubble blog) that ARM loans are still being made in large quantity. I don't know if that is true or not, but it might explain some of the continued buying.
ReplyDeleteThe real break will come when we start to see lawyers advertising on TV and radio how to get foreclosures and short sales, to get out of old contracts.
Guys - David says we will definitely be in a recession by the third quarter of 2006. Bank on it.
ReplyDeleteWe haven't seen anything yet.
ReplyDeleteMike,
ReplyDeleteYour locations make this easy...all down. Loudon is already crashing...I worked in Herndon, and got a laugh at all the for sale (and later auction) signs. Lorton and Woodbridge won't do much better. Too far out, too many *ahem* "extended family" housing units, traffic, etc...
Arlington is tricky...flat to somewhat down (almost everywhere is at best flat). But you picked the one place that should be significantly down...Crystal City. If you haven't heard, a lot of the businesses there are leaving...following the military outbound migration as they are mostly military contractors. CC has pinned its hopes on becoming a Reston Town Center of infill, which means lots of condos and townhouses hitting the market at the same time.
Maryland is too vague. You need to name a specific location(s).
Guys - David says we will definitely be in a recession by the third quarter of 2006. Bank on it.
ReplyDeleteThis is true. David has been predicting a recession for a while. As have the folks over at The Housing Bubble Blog.
Not to say it won't happen. But they have been wrong in their predictions so far.
Oops, I guess inventory's down again:
ReplyDeletehttp://www.housingtracker.net/old_housingtracker/location/DC/Washington/
Anonymous said...
ReplyDelete"Guys - David says we will definitely be in a recession by the third quarter of 2006. Bank on it."
It did start in 3 q 06 for some, but like all downturns, some areas are hit first while others get hit later. Isn't true many employees of house builders (I dont call them home builders) were laid off?
For them, for finding less work and earning less money/relying on unemployment, that IS a Recession.
Expect it to get worse as the months drag on (and as for the 150,000 jobs added to the economy, do these job numbers include the summer jobs that open up this time of year? Just asking, curiosity and all.)
Anonymous said...
"The real break will come when we start to see lawyers advertising on TV and radio how to get foreclosures and short sales, to get out of old contracts. "
I have not seen the Tv spots yet but I did catch a radio ad for buying foreclosures.
The pain is getting worse.
F'd buyers,
Got asprin? :(
Looks like we hit a new all-time high for inventory on housing tracker.
ReplyDelete12550 houses on the market right now, the old peak was 12469 on june 21 2006.
http://www.housingtracker.net/old_housingtracker/location/DC/Washington/?state=DC&city=Washington
More and more evidence suggests we are going to see significant price declines by the end of this year.(on top of what we have already seen)
"Oops, I guess inventory's down again:
ReplyDeletehttp://www.housingtracker.net/old_housingtracker/location/DC/Washington/"
"Wait, I just looked again, inventory is up 6.1% YOY. Maybe I got it confused with median price, which was down. I need to learn to read graphs more carefully before I post."
Anti-lance said...
ReplyDelete“I have not seen the Tv spots yet but I did catch a radio ad for buying foreclosures.”
The “We buy houses” and “facing foreclosure?” signs cropped up about 3 months ago at all the major intersections.
John said,
ReplyDelete" But you picked the one place that should be significantly down...Crystal City. If you haven't heard, a lot of the businesses there are leaving...following the military outbound migration as they are mostly military contractors"
I dont know the plan for Crystal City but I do know at the Hoffman building all the government contracters are leaving but is being filled by private sector workers (Higher Pay and rent). From what I heard the owner of the Hoffman building cant wait to get rid of the government contracters.
This migration you are talking about are all going to Ft Meade (Maryland) and Belvoir (FairFax). The Brack did not cause any job loss by the government in this area. All they did was move the jobs outside of D.C. for better rent and security. But the jobs are still in the greater D.C. area. I know Hoffman is getting filled, dont know much about Crystal City but Im going to assume they will have no problems filling the office space by the private sector. Office lease and contruction is still strong!
A lot of people think the brack will cause problems with housing but its actually helping it. Lower paying jobs are moving to the burbs while the offices in D.C. are getting filled with higher paying private jobs. Work where you sleep, but this is still 2 years out.
Forclosure filings dropped 36% for Prince William and 39% for FairFax according to a recent article at CNN.
It's a great time to buy.
ReplyDeleteNOT.
I buy when house prices plunge to affordable levels.
How's the ramen taste chumpy realtors?
hahahahaha
Anybody think the DC market will end up like Atlanta any time soon? Like within the next 18 months?
ReplyDeleteCNBC reports Baltimore 4 and DC 5 in national unaffordability survey, behind LA, Miami and Riverside CA.
ReplyDeletehttp://www.cnbc.com/id/19678159/site/14081545
Leave it to lawyers, government workers (DC) and wannabe's (Baltimore) to flunk basic financial math and ignore basic economics.
Keep up the good work guys. Maybe it really is different here/this time.
Homebuilder loses money:
ReplyDeletehttp://www.msnbc.msn.com/id/19694235/
I don't understand the enjoyment of potential pain of anyone who bought a home. It seems like that energy could be directed elsewhere. And I don't think it is always warranted.
ReplyDeleteI think too much of the talk on this blog is on a national or zip code scale. Real estate always has been and always will be block-to block. Bathrooms, parking, backyard, metro -- you can't find these in a zip code analysis. And you won't live in a zip code -- you'll live in a house.
Especially now, with sites like this, the media scaring the daylights out of people, and interests rates historically low -- there are deals to be had. People are dying to sell. Not everyone, but some people.
I bought in Feb 2006. I just got a HELOC for $143K. The right block, the right number of bathrooms, parking, etc. You can't find that in national data. Could I sell my house for the appraised value? The house across the street went for $10K more than asking and $40K more than my appraisal. And it has one less bathroom, and no parking.
Again, I just think there should be a distinction between "waiting to buy" and "looking to buy." Wating for the market to bottom-out really evens the playing field.
Just for thought.
Sam said:
ReplyDelete"Keep up the good work guys. Maybe it really is different here/this time."
It's not different here this time and that is what BHs are missing. This isn't the first time out-of-pocket expenses have risen slightly. And that is what the article you cite has left out.
People "moving up" don't really care if the nominal price on the purchase side has exploded because the nominal price on the sale side (of their old home) has similarly exploded. And first time buyers don't really care if the nominal purchase has exploded if the monthly, bottom-line, out-of-pocket expenses haven't exploded ... which they haven't. The article touches on the reasons for the nominal price explosion including lower interest rates. What it misses is that those lower rates allowed first time home buyers to get in without really any more pain than those of us a generation ago would have experienced when interest rates were hovering around 20%.
Everything is relative. And those focusing solely on nominal purchase price have lost sight of the end goal: affordable housing as a monthly expense.
Lance said:
ReplyDelete"And first time buyers don't really care if the nominal purchase has exploded if the monthly, bottom-line, out-of-pocket expenses haven't exploded ... which they haven't. "
I beg to differ, most people have seen their cost explode in the highly variable but very important energy (gas and power) sector. To a lesser extent food.
While these may not be "make or break" for a house purchase. It does impact many people and very much so first time buyers.
There is some relativity, but not that much.
Anon 6:12 said:
ReplyDelete"I beg to differ, most people have seen their cost explode in the highly variable but very important energy (gas and power) sector. To a lesser extent food. "
huh ... we're talking monthly house purchase costs (i.e., mortgage payment + property taxes + house insurance). THAT, because of extremely low interest rates, is NOT up to any significant degree over what it has been historically. It is actually LOWER than what we paid a generation ago when 20% was the rate for a mortgage.
"I beg to differ"
ReplyDeleteAnyone with even half a clue will differ with lance. Housing costs are a huge portion of most family's expenditures. The historically low interest rates we are currently experiencing absolutely do not mean that our current housing costs are in any way similar to the long term trend lines or sustainable. (unless of course you are talking about rents, which have stayed pretty flat)
Lance is just making a fool of himself, again.
"I buy when house prices plunge to affordable levels.
ReplyDeleteHow's the ramen taste chumpy realtors?
hahahahaha"
What are affordable levels??
25% of your income? Here in this area? First time buyer? Not going to happen even with the crash unless you have a dam good job.
My realtor lives in a million dollar home and eats at high end restaurants. But then again he wasn’t a part time guy who jumped on the bandwagon but doesn’t know
s!%t about real estate. Just like the investors the bs realtors are fading away also. I’m still curious to hear some numbers what "PRICE" everyone considers "Fair" value.
Lance said...
ReplyDelete“huh ... we're talking monthly house purchase costs (i.e., mortgage payment + property taxes + house insurance). THAT, because of extremely low interest rates, is NOT up to any significant degree over what it has been historically. It is actually LOWER than what we paid a generation ago when 20% was the rate for a mortgage.”
So “Lance”, housing cost as a percentage of income has dropped? If the old “standard” was 25%-30% what is it now? I have yet to see any data indicating income has risen in step with housing. Any link you have to support this argument would be greatly appreciated.
Somebody let the stock market know there is a recession coming!!
ReplyDeletehttp://www.housingtracker.net/old_housingtracker/location/DC/Washington/
ReplyDeleteI don't trust this site. You can try the following site county by county. Actually, the inventory has been down about 10%-12% YOY since a few months ago. It DOES NOT mean the market has recovered, but may has touched the bottom. It may take 1-3 more years to recover.
http://www.mris.com/reports/stats/monthly_reti.cfm
mike,
ReplyDeleteI agree with you for the most part. Just don't lump all investors together.
In this area, first time homebuyers have ALWAYS had to spend much more than 25% of their gross for monthly mortgage payments. We went FHA and paid 46% in the early 80's.
I just hope it keeps up for the next couple of YEARS when I am ready to get in, and start investing.
ReplyDelete