April housing sales weak

Post #285,358 by JayMehaffey 5/25/07 10:52:55 AM Reply	April housing sales weak [link\|http://www.bloomberg.com/apps/news?pid=20601087&sid=agxKazDf_Z7U&refer=home\|Bloomberg] Sales of previously owned homes in the U.S. unexpectedly fell in April to the lowest level in almost four years, dimming prospects for a quick recovery in housing. Purchases fell 2.6 percent to an annual rate of 5.99 million last month from 6.15 million in March, the National Association of Realtors said today in Washington. A measure of the supply of homes for sale rose to the highest since August 1992. The decline comes a day after a government report showed sales of new homes surged as buyers took advantage of a slide in prices. Today's figures suggest that owners of existing homes may have to accept steeper declines in prices during the prime spring selling season. The drop also reflects the impact of banks making it tougher to get subprime loans, a response to rising defaults. The rise in new home sales is party a rebound from a very low March and partly sharp price reductions by home builders. Either way, sales are still way off last year. Resales of existing homes are doing even worse, as the people owning them don't want to reduce prices as much and the reduction in supply of subprime loans. At least 50 subprime lenders have halted operations, gone bankrupt or sought buyers since the start of 2006, according to Bloomberg data, leading to a smaller supply of money for lending. And that probably isn't the end of that problem either. I expect that shake out to continue into 2008. Jay
Post #285,360 by Another Scott 5/25/07 11:22:31 AM Reply	I wouldn't be surprised if it took 10 years to work out. In the DC suburbs, housing prices were flat for most of the 1990s. [link\|http://www.nvar.com/newsdetail.lasso?articleno=nvarn100819\|NVAR]: During the past 30 years, there has never been a nine-year period during which average home prices have fallen (Figure 1). If a family had purchased a home in 1977 and lived in it for nine years, the home\ufffds value would have nearly doubled by 1986. A home bought in 1997 was worth, on average, 166 percent more nine years later in 2006. The average nine-year appreciation has been 69 percent during the past 30 years. The most difficult nine-year stretch in recent history occurred between 1989 and 1998, when home values rose by only 8 percent (or less than 1 percent annually). Homebuyers should consider that period a \ufffdworst case\ufffd scenario when contemplating a home purchase. However, it is unlikely that the next nine years will be as slow as the 1989 to 1998 period. Job growth is strong and is projected to remain healthy in the region. The foundation of the region\ufffds economic resilience \ufffd federal procurement \ufffd would have to be substantially compromised for housing demand to slow to a crawl for nine years. There is nothing to indicate that the region will experience a major economic slowdown over the next decade. [image\|http://www.nvar.com/news/Figure1.jpg\|0\|Running average DC suburban housing prices\|536\|604] That's a very rosy scenario (as expected from a Realtor organization). After the recent run-up, it's silly to believe that prices will rise soon, IMHO. Especially with the [link\|http://news.briefing.com/GeneralContent/Investor/Active/ArticlePopup/ArticlePopup.aspx?ArticleId=SI20070525103615\|glut of houses on the market] (with more waiting in the wings). I'm sure the numbers would look much worse if the average were taken over 7 or 8 years rather than 9... Cheers, Scott.
Post #285,366 by mmoffitt 5/25/07 1:02:29 PM Reply	I grew up in California. But I have not understood the housing market there since 1971. In 1971, my dad bought a ranch house on the corner of a very busy street. Traffic was always heavy because McDonnell-Douglas was a block south, as was Long Beach City College. Two blocks north was Lakewood Center Shopping Mall. He bought the house in '71 for $30,500. In 1980 (9 years later) he sold it fo $99,000. I'm told that in 1998 the asking price was $480,000 and it sold for $450,000. I haven't a clue what that house would go for today. Our first house in Ca cost $14,500 in 1963 and sells for well over $250,000 now. I don't get it. I don't see how a house already valued at 10 or 20 times its worth can possibly go up in value. For how long can you sell $20,000 houses for $300,000? bcnu, Mikem It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
Post #285,367 by Another Scott 5/25/07 1:24:03 PM Reply	Sales prices are public information in most places. E.g. you can easily check sales in [link\|http://maps.assessor.lacounty.gov/mapping/viewer.asp\|Los Angeles County]. It only seems to go back a few years, though. I don't know if Long Beach is listed in there or not. As to how the price can go up so much, well I think it's due to several factors: 1) Most people spending that much have profits from previous houses (they're not first-time buyers); 2) A rising market makes people accept more risk; 3) Easier lending (you don't have to put 20% down anymore; ARMs; negative amortization; "liar loans"; etc.); 4) Multiple incomes (2 people or more working to pay the mortgage payment, versus 1 in the 1970s and earlier); 5) Jobs attract people and they have to live somewhere reasonably close by; 6) Inflation in general - When houses cost $15k [link\|http://www2.census.gov/prod2/popscan/p60-043.pdf\|in 1963, the median family income was $6200] (54 page .pdf). Using that same scaling of household income ([link\|http://www.census.gov/Press-Release/www/releases/archives/income_wealth/005647.html\|$44k in 2004]) to housing price, you end up with $106k for a home price. You can get a decent house for that in the midwest, but not in Long Beach, I'll bet. ;-) So inflation isn't the whole answer... FWIW. Cheers, Scott.
Post #285,369 by bepatient 5/25/07 1:43:19 PM Reply	Father Guido teaches the answer at the [link\|http://pratie.blogspot.com/2005/03/guidos-five-minute-university.html\|Five Minute University] Too much of today's music is fashionable crap dressed as artistry._{Adrian Belew}
Post #285,370 by Another Scott 5/25/07 1:47:45 PM Reply	muy bien. :-)
Post #285,372 by mmoffitt 5/25/07 2:18:50 PM Reply	Thanks for the link. Apparently, judging by the assessed value in 1979, my dad got hosed. It is definitely my old house, though. bcnu, Mikem It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
Post #285,368 by Andrew Grygus 5/25/07 1:27:15 PM Reply	It's called "location" . . . . . like New York City rents. [link\|http://www.aaxnet.com\|AAx]
Post #285,371 by mmoffitt 5/25/07 2:09:32 PM Reply	I get that. And above. But, come on. These homes in the Lakewood/North Long Beach area are stucco homes, built in the 50's or 60's, and are something like 1400 sq ft. WHERE does it makes sense for such an abode to cost > $200,000? bcnu, Mikem It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
Post #285,373 by bepatient 5/25/07 2:50:14 PM Reply	Where? In California, thats where. Or on Long Island or Monmouth Co NJ. Too much of today's music is fashionable crap dressed as artistry._{Adrian Belew}
Post #285,378 by boxley 5/25/07 3:19:20 PM Reply	intercoastal in florida Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 51 years. meep reach me at [link\|mailto:bill.oxley@cox.net\|mailto:bill.oxley@cox.net]
Post #285,393 by Andrew Grygus 5/25/07 6:53:42 PM Reply	It's all about how far out you have to go . . . . . to get the same thing at a significantly lower price. Two decades ago thousands of young couples who just had to have those huge houses with high vaulted ceilings, RVs and all the trimmings built out in Palmdale and Lancaster where they could (almost) afford the property and property taxes. That's 60 miles or more commute to where they worked in Los Angeles. Today with traffic congestion and high gas prices the area would be crumbling into a ghost town if it weren't for the Metrolink line. Service was expanded and improved after the Northridge earthquake and people figured out how to use it. There's still plenty who drive though. 8-1/2 hours for work and lunch, 4 hours of commute, 8 hours of sleep - that leaves 3-1/2 hours a day for breakfast, supper and life. [link\|http://www.aaxnet.com\|AAx]
Post #285,427 by drewk 5/26/07 10:40:58 AM Reply	Oh come on... who (living that kind of life) sleeps 8 hours? === Kip Hawley is still an idiot. === Purveyor of Doc Hope's [link\|http://DocHope.com\|fresh-baked dog biscuits and pet treats]. [link\|http://DocHope.com\|http://DocHope.com]
Post #285,430 by Andrew Grygus 5/26/07 11:44:54 AM Reply	That includes tossing and turning time . . . . . while trying to figure out how you're going to pay your bills. [link\|http://www.aaxnet.com\|AAx]
Post #285,432 by drewk 5/26/07 1:30:17 PM Reply	They do that during the commute* Where do you think road rage came from. * Just realized that could be read as "thinking about their bills during the commute", or as "tossing and turning during the commute". Either one works. === Kip Hawley is still an idiot. === Purveyor of Doc Hope's [link\|http://DocHope.com\|fresh-baked dog biscuits and pet treats]. [link\|http://DocHope.com\|http://DocHope.com]

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