"The housing market is deteriorating by the month."
From the New York Times:
New Signs of Cooling in Housing
New Signs of Cooling in Housing
The housing market is deteriorating by the month.
In the latest and strongest indication that the home buying and selling frenzy is over, the National Association of Realtors reported yesterday that sales of previously owned homes fell to the lowest level in July in more than two years, prices flattened and sellers waited longer and longer to find buyers for their homes. The supply of unsold houses on the market hit a record high.
Economists said the data showed the housing market was following the traditional path of a slowdown: a drop in sales followed by a decline or a plateau in prices. But they remained divided over just how severe and long-lasting the coming slump was likely to be.
“It does feel a little scary right now,” said Celia Chen, director of housing economics at Moody’s Economy.com. “I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals.’’
...
“Certainly, the housing market is undergoing a measurable adjustment,” Lawrence Yun, senior economist with the Realtor association, said. “It’s a continuing cooling trend.”
The number of unsold homes on the market reached a record for the second consecutive month. There are now enough homes available that it would take 7.3 months to sell them all if the current selling rate held.
The bloated inventory levels, Mr. Yun said, indicate “a very sudden change which I have never seen before.”
...
July’s data showed that prices fell in most areas of the country. Only in the South are prices still rising: the median home there sold for 3.2 percent more last month than a year earlier. If prices there had not been so strong, the national median home price in July would have declined on a year-over-year basis. That has not happened since April 1995.
...
The sales and price declines were most pronounced on the East and West Coasts, where the housing market had overheated the most. In the Northeast, where median existing-home prices rose last year by 10.7 percent, prices fell 2.1 percent in July from the same month in 2005.
27 Comments:
"It does feel a little scary right now," said Celia Chen, director of housing economics at Moody’s Economy.com. "I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals."
No s**t sherlock. You're a few years late with that wisdom.
Also in today's Times, in the op-ed section was this letter...
To the Editor:
Your warnings about the risks facing the economy as the housing market deflates are well taken (“Hold the Champagne,” editorial, Aug. 19).
But the real problem in this story is the fact that the Federal Reserve allowed the housing bubble to inflate to ridiculous levels in the first place. There is no pretty way to deflate an asset bubble, as should have been apparent from the collapse of the stock bubble between 2000 and 2002.
The Fed, and most of the economics profession, has largely chosen to ignore the dangers posed by asset bubbles. The American economy, and possibly the world economy, will pay a large price for this decision in the next few years.
Dean Baker
Washington, Aug. 19, 2006
The writer is co-director, Center for Economic and Policy Research.
But, but real estate only goes up!
yes, but they will be saying real estate inventory only goes up!
Grim,
I may sound like a broken record but the charts are great. Thanks!!
In any trade the biggest moves are made when both the fundamentals and technicals move in tandem. From 2003-2005, it was obvious that the underlying fundamentals did not support this market. However, the technicals (inventories, price appreciation, etc....)showed otherwise. It did not matter what I or anybody else thought, the market was flying. Currently, the fundamentals and technicals are back in tandem, now on the downside. This (the last few months) is the first time that both of these have pointed down. This indicates, to me, the beginning of a very powerful move, to the downside. When both these indicators move in tandem in the opposite direction, it starts out like a strong current, then a big wave and finally a tsunami. We are just in the strong current phase. Buckle up!!!!!!!! Please be patient!!
BC Bob
"It does feel a little scary right now," said Celia Chen, director of housing economics at Moody’s Economy.com. "I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals."
Wasn't this one of the talkig heads that was saying no bubble just weeks or months ago.
These people are worthless!
Boooooooyaaaaaaaaaaaa
Bob
I am going to say this again. I am no genius or finance expert, but I saw this coming and so did alot of the blogosphere. How could so many economist have their heads up their butts. CF is my favorite exception. What I want to know is how many of them will get jettisoned from the field when people point out the fundamentals in a year or two that they should have seen.
Good thing for the internet, their comments will haunt them till the day they die.
And as for Edward Leamer predicting the bottom next year what is he smoking? Isn't he the guy who restrained Christopher Thornberg from coming out and telling what he really felt. Maybe they will blame the bubble on Christopher Thornberg for his parting shot he made when he left.
Rant over. Catharsis complete.
What happend to the New economy bubbleheads back in 1999-2000?
Ya know the same losers you see today being quoted on TV shows and other media venues. No need to name these losers but they are around still.
Accountability is short term and easily forgotten. just like 9-11 and al-queda.
"Wasn't this one of the talking heads that was saying no bubble just weeks or months ago."
Bob is of course correct.
May 18, 2006: "Although price growth has been steady in Washington, it has not been outstripping the economic fundamentals," says Celia Chen, Director of Housing Economics for Economy.com. The real estate markets have been pretty much balanced in the Northwest while many others have been sellers-markets for years.
http://tinyurl.com/jyc83
Aug 24, 2006: "It does feel a little scary right now," said Celia Chen, director of housing economics at Moody’s Economy.com. "I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals."
http://tinyurl.com/l2rts
What a difference 3 months can make!
OT:
Why is outsourcing to India a threat, but will be limited in scope for the foreseable future? Too much of a culture gap.
Example: Here is a marketing approach that an Indian Businessman in Mumbai thought would help to spur sales.
http://news.yahoo.com/s/ap/20060824/ap_on_fe_st/hitler_eatery
Everyday the real estate Pro's are proven wrong.
I can't imagine how these flippers and speculators feeltoday as they see the bad new just grinding away and no interest in their overbloated spec condo/house. They better snap out of it cuz their losses are increasing weekly.
Drop the prices and move it out fast before it gets to PANIC state. Fire fire fire...find the exits. Oh no the door is not wide enough. You know the end of the story.
Sources saying that the misery is growing in REland. Grubbing sellers and starving realtors are waking up to market reality finally.
IT AIN'T GOING TO GET ANY BETTER SOON. IT'S GOING TO GRIND LOWER!
A real painful grind for the Dreaming RE tycoons who are now bagholding fools. It never changes.
BOOOOOOOOOYAAAAAAAAAAA
Bob
RentinginNJ,
You said "Economists see themselves as “shepherds”, who job it is to steer the economy in a certain direction by issuing optimistic prognostications." You have said similar things before and I accept that that is how they may percieve themselves.
However, these people in spite of their knowledge made statements as "experts" that many people followed which in my opinion was flat out wrong or at the least ingenuous.
I just about had to scrape my wife from the ceiling when I said I was not buying three years ago. The experts were saying it was a good time to buy of course so was the NAR. She believed. My wife is not dumb but she thought the train was leaving like a previous thread addressed. So I kind of take it personally when they spew their bogus happy talk.
BTW, I am not directing my anger at you Rentinginnj, but at the irresponsibility of the "grownups" supposedly in charge of oversight. This is unfolding event is what they were supposed to prevent. The people who will be hurt by this will suffer for years, maybe decades.
Chicago (OT)..I heard that restaurant owner on NPR yesterday say (the accent WAS really heavy and all I could picture was the guy on the Simpsons) that he had no motive at all for doing that. But if he received a letter in writing he would change the name.
Definitely different culturally, but same motivating money factor.
The use of the "Play Ignorant" tactic is way overused in the culture, but sometimes effective in wearing down the opponent. Thus, so much frustration felt by Americans not used to that.
It's that whole "negotiate everything" mentality as opposed to our "legislate everything."
Pat
Chicago et al,
I think it's more a matter of Indians not being too aware of how much this offends Jews.
India is a very diverse country (800 million Hindus, 100 million Muslims) and a 100 million others. The first time I met a Jew was when I came to the US.....didn't know anything about them till I came here. I don't think there was any malice when the restaurant name was Hitler's Cross....I think it's more so that people here are more touchy on the subject of anti-Semitism.
5 years ago, this would not be reported anywhere. Now anything about India and China is reported.
"The first time I met a Jew was when I came to the US.....didn't know anything about them till I came here. I don't think there was any malice when the restaurant name was Hitler's Cross."
Don't they teach history in India? Perhaps a mandatory "World War II" course is in order.
Unrealtor, yes they do teach history in India.... thank you very much. But WW2 is but one era in history. As Stalin said "A single death is a tragedy, a million deaths is a statistic.”
Don't they teach history in India? Perhaps a mandatory "World War II" course is in order.
Perhaps I could give you a crash course in Kamasutra. I said the first time I "met" a Jew was when I came to the US, and they happen to now be part of my extended family. Life's too short my friend...make love, not war.
DreamTheater, why direct your angst at me? I was commenting on a store owner who named a restaurant after Hitler, replete with giant paintings of the lunatic and swastikas.
Dreamtheaterr:
You are awesome to try to bring understanding about your native home to me. Obviously you know more about discrimination than I. My friends from India do the same.
Somehow, maybe because of your background, your diverse family, and your dreams, I've thought of you as an American from the first time I read your posts.
You will have to walk the line for a long time, I think. Ring of fire.
I hope you stay here.
Pat
This is going to be great to see the outcome!!!
Just think, we get to watch and see the bubble blow.
Yawn!!
Nothing has changed here. Folks are still giddy at the prospect of others getting hurt. Still highly spitefull of America and hoping that the economy collaspes.
I'll be back in two months and I'm sure it will be the same
Reinvestor: I'm not giddy, and despite what you say, I've never been. There is more riding on this than buying a house, and you know that. We have to figure out the economic plan...or at least a target and some possible strategy, so that we can make better voting decisions .. not just a Dem v Rep thing. You and I know this.
Pat
Chicago/Dreamtheater,
This passage from the article grabbed me:
"Once they told me how upset they were with the name, I decided to change it," he said. "I don't want to do business by hurting people."
I'm less impressed that this Indian businessman was not aware of who Hitler was and what he did and much more impressed by this quote. He sounds like he's open to listening and learning from those who are different from him. If only we had a little more of that approach to life in this country....
Metro/rentinginnj,
I think another aspect to the johnny-come-lately economists issue is that many that we hear from have conflicts of interest. The most glaring example is David Lereah from the NAR. They can't/won't focus on aspects of the market that might result in economic changes that could be detrimental to the institutions for which they work. Hence, you're never going to see someone like Lereah talking about a real estate bubble.
Not to mention that the economists themselves must be financially involved with various markets (as many people are). Human denial kicks in. They may not want to see for themselves that the financial good times are coming to an end.
I think this underscores the importance of looking at a variety of sources for information when researching any issue. And this blog helps fulfill that in a significant way, in my opinion.
Reinvestor,
Give it up already. No one here wants to see people get hurt; we're just eager for the markets to correct. Ultimately, the longer this bubble goes on the more damage it's likely to do to the entire economy and to all Americans.
Unless, of course, you are advocating that the entire country/economy should be jeopardized so that a few irresponsible homedebtors can continue to get double-digit appreciation??
Roadtrip boy,
Bombay’s Jews had called the theme of the restaurant offensive and demanded a name change. There are about 5,500 Jews in India, with about 4,500 of them living in Bombay.
“I never wanted to hurt people’s feelings,” said Sablok.
Some Indians regard Hitler as just another historical figure and have little knowledge about the Holocaust, in which 6 million European Jews were systematically killed during World War II.
The swastika symbol, which was appropriated by the Nazis, was originally an ancient Hindu symbol and it is displayed all over India to bring luck.
Pat,
America will always attract people from all over the world for a myriad reasons.
I came here to experience 'life' in as many ways as I could, even though I loved being back home. I had life easy in India but still felt a void. For 8 years, I went to a private residential school on an isolated hilltop in the foothills of the Himalayas in north India, waking up to a view of 20,000+ feet perpetually snow-clad mountains 9 months a year. The other 3 months home for the holidays, I had ten servants at my disposal. But I was not a spoilt kid in any way; only humbled and appreciative of how lucky I am to have a roof over my head when 300 million of my fellow citizens do not get more than 1 full meal a day. If that's not a tragedy, I don't know what is.
I came to the US 1 week before 9/11 to grad school. I visited the WTC towers for the first time 1 days before they came down. I was shattered.... it was a dark day for humankind. As Gandhi said "An eye for an eye makes the world blind" and I fear we are treading down that path.
America has a free spirit, and I feel it especially when I am at music concerts. Yes, it may sound stupid but my love for live rock concerts drew me to this country to. Even though I am 29, I grew up to the likes of Led Zep, Allman Brothers always playing at home. As my nickname suggests, I am a big fan of Dream Theater, a 90's version of prog rock bands like Yes and Rush.
When I went to grad school, 6 of us shared a 2 story house - each of us was from a different country! Only in America can you experience this.......and that's how I met by Russian wife.
I have quite a few American friends and its an amazing feeling to share unique cultures and experiences. Just as you drive through different countries in Europe, you can do the same in India and instead drive through different states, and each state has a different language and written script...isn't that astonishing?
It's been 5 years since I have been in the US, and feel more at home each day here.
On a more humorous note, here's a useless bit of trivia. There were two politicians from a state in eastern India as member of local Parliament (similar to your state Reps in the US) whose names were....... are you ready?
Adolf Hitler Marak
Frankenstein Lyngdoh
I'm not kidding!!!!
Wait! Wait! Wait! it is up to the buyer to buy at the inflated price. Then we are sad the buyer lost money. What are you talking about? Do the buyers think they bought a gold mine? It is up to the buyer to decide a comfortable time to buy. I can only afford a bicycle, but I am going to lease a Ferrari.
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