The 22 Million Bubblicious 'Donation'

October 31, 2006 D.C.: Centex Abandons Pricey Suburb Project

Dallas-based Centex Homes, which had offered 8,000-resident Warrenton, Va., a cash donation of $22 million to approve its request to build 300 homes on a 500-acre property, has backed out of the deal.

Affordable housing supporters had called the donation a bribe, saying such projects drive home prices up and suburban sprawl farther into the country.

But the town was delighted and intended to use the money to pay off debt on a new aquatic center. "It was kind of a win-win for everybody," said George B. Fitch, Warrenton's mayor. "I assumed that they had done their homework, that they saw the downturn coming and still thought it was a viable project."

Centex Division President Robert K. Davis informed the town of its decision to abandon the project by letter, saying building these houses whose prices start at $850,000 was no longer economically feasible

Source: The Washington Post, Sandhya Somashekhar (10/31/2006)

Overpriced Sh*tty Condos Sticker

On Flckr "i couldn't get a good composition with the offending condos without facing the sun & getting destroyed by traffic, alas... P Street, east of Dupont Circle, Washington DC 12aug06." These stickers can be bought at PuffTags.

US Recession Coming Very Soon

As the housing market continues to decline and the consumer spending falls it will have serious ramifications for the overall US economy. These two factors combined with other factors will almost certainly to cause a recession in the US starting in late 2006 or early 2007.

The preliminary 3Q 2006 US GDP growth was a lousy 1.6% compared to a 2.6% for the 2Q. That is a very strong drop in the growth of the GDP. Nouriel Roubini, an economist with Roubini Global Economics, writes

The first leading indicators of economic activity for October -– the Philly, Richmond and Chicago Fed reports -– are all consistent with a further economic slowdown in Q4 relative to Q3. I thus keep my forecast that Q4 growth will be between 0% and 1% and that the economy will enter into an outright recession by Q1 of 2007 or, at the latest, Q2.

Here are other factors that will contribute to the upcoming recession:

• Federal Debt & Deficit
• Continuing Housing Bust
• High Consumer Debt
• Large Trade Deficit
• Continued Offshoring
• Security Costs

Billionaire speculator George Soros said he did not expect the United States to fall into recession in 2006 - but he does the following year.

For the past 4 years the US economic 'recovery' has been too dependent on a mountain of debt. It was simply unsustainablele. The housing boom of last year is now a bust. The convergence of the housing bust with other significant economic factors will almost certainly put the US into a recession by late 2006 or early 2007.

Rowhouses for Sale in Washington, DC

Rowhouse for sale in DC

Rowhouse for sale in DC

Bubble Sphere Roundup

Geenspan and Today’s New Home Sales Report (Paper Money)

A most excellent comparison post: Percentage of Reduced Listings Per Market @ Bubble Markets Inventory Tracking. The sellers are really competing against each other in some of the bubblicious markets.

Ryan Homes Offering to Pay Realtor Commissions ( Baltimore Metro Area Housing Blog )

HousingPanic and other housing bubble blogs were attacked in the mainstream media (MSM) "Blogs such as housingpanic.blogspot.com are helping to confuse buyers about everything from rumors to “bubble” theories." We housing bubble bloggers were ringing the alarm bells while people were busy engaging in bidding wars in summer of 2005. On May 25th 2005, I wrote "Behold the bubble is about to pop. The bubble will pop (price declines) within the next 12 months."

Tommorow morning's 3Q GDP prediction: 1.7%
Update: Actual 3Q GDP: 1.6%

September New Home Sales

The New Home Sales number are out for September (pdf).

Sales of new one-family houses in September 2006 were at a seasonally adjusted annual rate of 1,075,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.3 percent (±15.6%)* above the revised August rate of 1,021,000, but is 14.2 percent (±12.2%) below the September 2005 estimate of 1,253,000.

The median sales price of new houses sold in September 2006 was $217,100; the average sales price was $293,200. The seasonally adjusted estimate of new houses for sale at the end of September was 557,000. This represents a supply of 6.4 months at the current sales rat.

The national median sales price for a new home in September was 217,100 which represents a decline of 9.7% compare to September of 2005 when the price was 240,400. The average sales price for a new home September was 293,200 which represents a decline of 2.1% compare to September of 2005 when the price was 299,600. Of course, in real dollars the percentage price decline is even greater.

U.S. NEW-HOME SALES DOWN 14.2% YEAR-OVER-YEAR

These numbers are a huge challenge for the Real Estate Industrial Complex (REIC) many of whom are spouting the 'soft landing' after the largest housing boom in US history.

Unsuccessful Condo Projects in Alexandria, VA

One great citizen reporter emailed me this information: Boy do I have news for you! Back on April 30, you posted an article on The Tuscany Condos at 240 Yoakum Parkway in western Alexandria, VA (DC suburbs). Your post was here:



The Tuscany Condos are being built on what used to be my apartment building's (200 Yoakum Parkway) tennis court. The Tuscany Condos were originally selling "from the $400s." By the time you posted your article on them, the price had already been reduced to "the $300's."

At the same time, my apartment building has been getting converted to condominiums. I had originally been offered a purchase price of $262,900 for my one bedroom apartment. (I turned it down.) More recently, one bedroom apartments like mine have been advertised "from the low $200's."

Because of my building's condo conversion, all of the tenants who didn't choose to buy have been told to move out. I am now one of the very few people still living in this very vacant building. (Finding parking is GREAT!) My eviction date is October 28th -- this coming Saturday.

Last week, I found a new (and bigger) apartment elsewhere and signed the lease. I have been worried about being able to move all my stuff out on time, so I called and asked for a 3-day extension so I could have the whole weekend to move.

A few days ago, signs were posted in my building saying the condo sales office had closed. I was shocked that they could have actually sold all the condos in this declining housing market.

Today, I got a call back on my answering machine regarding the 3-day extension, and I cannot believe what they told me. My building is "going to turn back to rentals. It is not going condo." I JUST SIGNED THE LEASE ON THE NEW PLACE! I HAVEN'T EVEN MOVED YET! I haven't had a chance to ask, but I'm willing to bet that they couldn't sell nearly enough condos.

Months ago, I had bookmarked my building's condo sales website, strandcondominium.com. I even visited the site just a few days ago. So now, with the notice that my building is not going condo, I decided to visit the site again to see what it said. Well, it's gone! It has vanished into the ether.

And this is where I get back to The Tuscany. ITS WEB SITE IS GONE, TOO! The building is only half built, and its sales web site is GONE! (You actually posted the wrong URL on your blog. It's TheTuscanyCondo.com, not TuscanyCondo.com. You can see that if you look at the photo you posted.)

I'd say that clinches it. The bubble has definitely burst....but I still have to move if I want to avoid an expensive lease break fee on my new apartment.

Existing Home Sales

Bloomberg Reports on NAR's Existing Home Sales Numbers

U.S. home resales fell 1.9 percent in September and prices dropped from year-ago levels for a second month, the first back-to-back monthly declines since 1990.

Existing home sales fell to an annual rate of 6.18 million rate, the lowest since January 2004, from 6.3 million in August, the National Association of Realtors said today in Washington.

Compared with a year earlier, sales were down 14.2 percent, the Realtors group said. Home resales have fallen every month since March.

The median sales price fell 2.2 percent to $220,000 from a year earlier. Prices in August had fallen for the first time in 11 years.

The number of homes for sale fell 2.4 percent from August to 3.75 million, remaining at a 7.3 months' supply.

Nationally, the September median sales price is down 2.2% from a year ago. In real dollars that national is a decline of over 5%. The housing bubble has occured in many places throughout the US. These locales are enough to make national YoY price declines.

"Existing condominium and cooperative housing sales fell 3.2 percent to a seasonally adjusted annual rate of 763,000 units in September from 788,000 in August, and were 16.0 percent less than the 908,000-unit pace in September 2005. The median existing condo price was $219,800 in September, which is 2.8 percent lower than a year ago (NAR)"

"The worst is behind us as far as a market correction _ this is likely the trough for sales," said David Lereah, the Realtors' chief economist. "When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market."

Another inane comment by Mr. Lereah. Consumers care far more about house prices stabilizing then 'home sales stabilizing.' Prices will continue to fall in the bubble markets over the coming years. Don't be fooled by David 'Paid Shill' Lereah.

Letter To The Editor in WashingtonPost

Market Correction

Thank goodness for Kenneth R. Harney. Finally, someone has pointed out that this minor, much-needed adjustment in the local housing market is beneficial ["All Crashes Should Be So Good," Real Estate, Oct. 14].

All of this media brouhaha about a plummeting real estate market discourages the very people who most need the financial security that owning a home provides: first-time buyers.

HOLLY WORTHINGTON

President
Greater Capitol Area Association of Realtors
Silver Spring

'Interesting' Says Mudd Regarding Borrowers Facing Foreclosure

From Dow Jones. Hat Tip to Calculated Risk for finding this:

Daniel Mudd, chief executive officer of Fannie Mae, told the conference that the payment shock accompanying many monthly mortgage bills would have a profound impact on the housing industry next year. He said that out of $9 trillion in mortgage debt outstanding, roughly $1 trillion will reset in 2007."Those resets are going to have some interesting and difficult-to-predict impacts on consumers," Mudd said.

'Interesting'? Consumers are not guinea pigs for toxic mortgages. The Review Journal from Las Vegas reports that:

“In Nevada, 6,523 homes entered some phase of foreclosure in the third quarter, an increase of about 80 percent from 3,499 homes in the second quarter and roughly double the rate of foreclosure activity in the third quarter of 2005, said Tom Adams.”

The lending companies have been grossly irresponsible in peddling these suicide loans to ill informed borrowers. There has already been an explosion in foreclosures, and the worse is yet to come. The pain of the toxic mortgages will become much more evident as we approach the summer of 2007.