Housing Starts and Permits Fall
From Bloomberg:
U.S. Housing Starts Fall 7.8% in March to 1.96 Million Rate
April 18 (Bloomberg) -- Builders started work last month on the smallest number of new houses in a year, as rising mortgage rates and record inventories of unsold homes discouraged new projects.
Housing starts declined 7.8 percent in March to an annual rate of 1.96 million, from 2.126 million in February, the Commerce Department said today in Washington. Building permits, a sign of future construction, fell 5.5 percent to an annual rate of 2.059 million from 2.179 million.
Builders are breaking ground on fewer projects after new home sales declined in three of the last four months, falling in February by the most in nine years. Construction companies such as KB Home report fewer orders as increased borrowing costs and higher prices put new homes out of the reach of more Americans.
``It's clear that the housing market is cooling,'' Joel Naroff, president of Naroff Economic Advisors, in Holland, Pennsylvania, said before the report. ``There are areas of the country where we are going to see pretty sharp declines in construction and in housing prices.''
U.S. Housing Starts Fall 7.8% in March to 1.96 Million Rate
April 18 (Bloomberg) -- Builders started work last month on the smallest number of new houses in a year, as rising mortgage rates and record inventories of unsold homes discouraged new projects.
Housing starts declined 7.8 percent in March to an annual rate of 1.96 million, from 2.126 million in February, the Commerce Department said today in Washington. Building permits, a sign of future construction, fell 5.5 percent to an annual rate of 2.059 million from 2.179 million.
Builders are breaking ground on fewer projects after new home sales declined in three of the last four months, falling in February by the most in nine years. Construction companies such as KB Home report fewer orders as increased borrowing costs and higher prices put new homes out of the reach of more Americans.
``It's clear that the housing market is cooling,'' Joel Naroff, president of Naroff Economic Advisors, in Holland, Pennsylvania, said before the report. ``There are areas of the country where we are going to see pretty sharp declines in construction and in housing prices.''
24 Comments:
March PPI came in a bit higher than estimates at 0.5%..
Gas Prices Push Up Wholesale Inflation
A big jump in gasoline prices pushed inflation at the wholesale level up in March at the fastest pace in three months, as oil prices above $70 a barrel sent consumers a high-octane warning of expensive fuel costs ahead.
The Labor Department reported that wholesale prices rose by 0.5 percent in March following a 1.4 percent decline in February, which had been the largest drop in nearly three years.
The March increase was slightly worse than the 0.4 percent rise that Wall Street had been expecting and was driven by a 9.1 percent surge in gasoline prices, the biggest one-month gain since November 2004.
Sorry for the long post - great article.
Real estate insiders go bearish in blogs
In mostly anonymous postings, agents are reporting big problems in the markets.
By Les Christie, CNNMoney.com staff writer
April 18, 2006: 9:57 AM EDT
NEW YORK (CNNMoney.com) - If the secret worries of real estate professionals are any indication, home prices could be heading for a swoon.
When Brad Inman of Inman News, which tracks the real estate industry and is widely read by industry insiders, recently gave real estate agents the opportunity to blog about market conditions, they almost uniformly described them as bad – and getting worse.
"Normally, brokers and agents tend to sugarcoat the news; they don't want to affect consumer confidence," says Inman. "By letting them post anonymously, we gave them a way to really share their thoughts."
Most responded with tales of high inventories, slow sales and languishing prices.
Here's a sampling of their comments:
"Portland, Oregon is mixed . . . more inventory, sitting longer. . . . Sellers no longer king." Posted by anonymous.
"Minneapolis/St.Paul . . . 15 houses per buyer. If we had buyers. Huge inventory in every price range. More foreclosure properties coming on daily." Posted by anonymous.
"East Central Florida Coastal area inventories up four times year to year and sales down 75%." Posted by Ramon Rivera (Not all bloggers craved anonymity).
"Some Realtors, Mortgage Brokers & some clients have been more testy than in months previous. Something is in the air." Posted by S. Crowe.
"Northern Ca. Let's not beat around the bush here. There is a slow down!! Home prices are not going up. Sales are down." Posted by anonymous.
Inman grants that there could be an element of self-selection, with agents suffering a slowdown more inclined to vent. But usually, comments from posters tend to be very diverse, with no clear consensus. "This round of blogging," he says, "has been conclusive; no one said the markets are great."
Stat support
Statistical evidence of a housing slowdown appears almost daily. On Tuesday, the Census Bureau reported that March housing starts were down to their second lowest monthly pace in the past year.
So far prices have not suffered any notable decline - the median home price nationally in the fourth quarter was up 13.6 percent from 12 months earlier, according to the National Association of Realtors.
Still, NAR chief economist, David Lereah, is on record predicting price appreciation will drop to the mid-single digits. And NAR has recorded an uptick in inventory, though not enough to be troubling.
NAR spokesman, Walter Molony, characterizes conditions today neither as a seller's nor a buyer's market. "Probably, balanced is a better word," he says. "There has been a steady rise in inventory since last fall, but, broadly speaking, it's still a little tight."
Rates are going up
What argues against any big fallout is that, absent a serious economic crisis in which unemployment spikes or wages plummet, real estate markets generally do not fall very far or very fast.
But this time markets have to contend with rising mortgage rates - the average 30-year mortgage rate, at 6.49 percent, is now near a 4-year high, lowering home affordability.
That will have a bigger impact in hot markets, where many buyers would not have been able to afford their purchases without resorting to financing through low-downpayment, low-interest ARMs (30 percent of recent sales or more in some markets). As rates rise, some could face close to a doubling of monthly mortgage payments. And if their home value has fallen, they could wind up underwater, owing more than their house is worth.
How much potential for disaster there exists can be debated. According to Lereah, the next few years will feature a stable, more balanced, healthier market.
Even some of Inman's bloggers are not totally bearish. One poster wrote, "Northern CA - oddly enough, higher priced inventory (luxury homes) still moving."
Another one opined, "Wilmington, NC, market still active, except on barrier islands, where inventory of $300-500K condos over-supplied. . . . good to great condition, well-priced properties move quickly."
Still, these shaky endorsements come nowhere near the unbridled optimism of a year or two ago.
As for Inman, he sums up his blog-induced sentiments rather succinctly. "It scares me," he says.
NYC-area is for the moment immune.
Wall Street is firing on all cylinders. Absolutely breathtaking profitability on massive trading revenue. They are basically "toll takers" on the highway, and it is the height of rush hour.
This situation will not stay in place forever, but it is currently the case.
Bear this in mind as you review the regional data, and you might find more strength in it that would otherwise seem logical.
My opinion is that it will cause some people to make bigger mistakes, but I would already push out a few months thoughts of a sustained period of weakness.
We are already positioning ourselves for a strong bonus season in 2007, although we have many months to go.
chicago
This must be great news for realtors. Wonder how this most ethical profession will spin the news.
New Buzzwords..."Normalized", "Slower appreciation", "Buyers market"
Yeah Right!
Chicago,
Do you also think the working class towns like West Paterson, Little Falls, Clifton etc. are immune?
I understand that the high end communities on the midtown direct line will directly benefit from a strong Wall Street year; what about the true first time buyer who's earning the median for the state?
Will Wall Street keep the entire region's housing market going?
Richard,
I was always under the impression that the initial reset cap was specified separately from the annual reset cap and could be different. For example, 3% upon initial reset, and 2% thereafter until a maximum is reached (if specified).
grim
chicagofinance said...
Bear this in mind as you review the regional data, and you might find more strength in it that would otherwise seem logical.
Bubble-X, you probably could have conveyed that plug for your website in a less obnoxious way, no?
Inventory piling up. Lots and lots of For Sale By Owner signs - FSBO.
A friend just got a call from a realtor asking if he still was looking for a house. After I suggested he read this blog, he told the realtor not at these prices.
Buyers strike. demand lower prices or say NO THANKS.
Boooooyaaaaa!
Bob
Clayton, here's the link to that great article:
Long link:
http://money.cnn.com/2006/04/18/real_estate/agents_bearish_in_blogs/
Short link:
http://tinyurl.com/pmqfa
Condo Market Has ‘Totally Collapsed’ In Naples
The Naples News has this report on another failed condo project. “In a sign of the times, the for-sale sign has come down at Intermezzo, a luxury waterfront community in Naples. The developer, Phil McCabe, has closed the sales center and temporarily suspended sales at the mid-rise condominium, saying he will wait for the market to improve before opening his arms to buyers again.”
“‘It was just my judgment that the market was too much in turmoil for me to proceed at this time,’ said McCabe. ‘It’s the market. The market has totally collapsed.’”
“He’s returned deposits worth about $40 million. That was for 20 units. ‘My goal was to get 50 units under reservation to go full-speed ahead, 100 miles an hour,’ McCabe said. ‘We obviously didn’t achieve that.’”
“In March and April, the Naples market continued to soften, and so did demand, McCabe said. ‘I am most concerned about the future,’ he said. ‘It’s a major real estate correction going on.’”
“Following a national trend, there has been a shift in the Naples market. Home sales have slowed, listings have grown and investor interest in buying real estate has waned. In February, existing single-family home sales in the Naples metro area dropped 47 percent from the same month a year ago.”
“McCabe considers the waterfront location superior, however. ‘It is not the case that there are buyers not wanting to buy there because of the location,’ he said. ‘It’s because there are simply no buyers period.’”
Ooooh it is starting to look like a more normal market. slower appreciation this year.
NOT!!!!!!!!
COLLAPSING PRICES. IT IS DIFFERENT THIS TIME. WE NEVER HAD THESE KIND OF RISKY LOANS BEFORE THIS BUBBLE.
WE ARE IN UNCHARTERED TERRITORY AND NOONE REALLY KNOWS HOW BAD THESE LOANS ARE GOING TO CRASH AS RATES RISE AND LOANS ADJUST UPWARDS. lol!
Just read elsewhere that over-hyper Jim Cramer from CNBC was on Jay Leno last night and stated the housing market is in decline, and that he feels sorry for people who bought in recently.
That's a big deal -- bubble pop news hits the masses.
Anyone see the show?
RE: lease breaking
Contact the landlord, tell them about the house hunt, and ask how much notice they would like.
Unless they're a jerk, they'll likely have no problem with a 60-day notice (or possibly a 30-day, if you're lucky).
This is assuming the renter always submits the rent on time, doesn't crank the stereo to annoy neighbors, etc.
On skeptic's point, to avert any legal issues, make sure if a landlord says "xx-days notice is fine" that they also put it in writing.
question on lease breaking. do the courts enforce this heavily in NJ? how pain free (aside from losing your security deposit) is it typically?
i'm sure this is a relevant question for alot of renters who might see the right property they want to purchase but have an existing lease. thanks for all responses.
In NJ, the landlord must offer you month-to-month if your lease has expired, or a new lease with whatever terms. This can actually go on forever, or it can be cut short by simply writing a letter giving the appropriate notice--the more the better.
If you are in a lease, then tak with your landlord. Technically, you are responsible for the term of your lease, but the landlord is also repsonisble for protecting himself by advertising the availability and showing the property.
Now for the reality check--there are a ton of rentals out there and the probability of your landlord finding a tenant is pretty low, unless you have on a the few Jersey rentals that are worth renting.
Good luck,
A. Landlord.
Wall Street related is 5% of the workforce in NYC, and earns roughly 25% of the gross income.
40% of people who commute into NYC [from elsewhere] to work are from NJ.
A friend of mine got stuck paying off the remainder of her lease when she bought her first house in 1996.
She probably didn't fight it too hard, though, knowing her.
My wife is non-revenue producing and received a 50% of base bonus.
CF,
They hiring? :)
grim
Housing starts declined 7.8 percent in March
Yes, but the decline for the Northeast was under 1 percent.
"Housing starts declined 7.8 percent in March
Yes, but the decline for the Northeast was under 1 percent."
Which makes sense, given the mass building on empty land that goes on down South, compared to the already-built-up Northeast.
Richard -- if you get a judgement or an eviction notice entered against you, it could affect your credit if you seek to buy a house and want a mortgage. Low as the probability is, I think that may be more pain than its worth. Try and negotiate with your landlord.
On a reverse note, if your township has rent control and your landlord makes you pay more, I think that under case law, you can sue him for triple the difference + court costs under NJ's Consumer Fraud Act.
Richard:
Alper?
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.
Take a look at Wallstreetwinnersonline.com
RickJ
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