Housing Market Declining Rapidly
 

HOUSING MARKET DECLINING RAPIDLY

Friday's New Home Sales report added further evidence that the housing market is declining. Monthly New Home Sales showed the biggest decline in 9 years. The decline in New Home Sales was larger than the real estate mythologists predicted. The annualized New Home Sales rate declined 10.5% during the last month. (Technically, if 0 new homes had been sold during the last month, the annualized sales rate would have only declined 1/12th, or 8.3%. So some previously sold homes must have become "un-sold.") January's number was also revised downward. Had January's number not been revised, the decline would have been 12.5%. The annual New Home Sales rate has declined 21% since July. Median annual prices also declined to a -2.9% annualized rate of increase. Inventories increased from 5.3 months' worth to 6.3 months' in February.

Since October's peak in New Home Sales of 1.345 million/year, the rate has declined to 1.080 million/year. Unsold inventories of New Homes have risen 4 of the last 5 months, from 4.5 months worth in October to 6.3 months' worth in February. The unsold inventory of New Homes is the highest in 10 years according to Briefing.com Over the past year, there has been a 24% increase in new homes on the market, according to CNN Money.

Also, according to CNN Money, the current median price for a new home is now $230,400. This is down $6,900 from February 2005. In addition, the current median New Home Price is down 5.5% from October's $243,900.

In some areas the decline was much larger. In the West, the 1-month decline in the annualized New Home Sales rate was 30%, declining from 357,000/year to 252,000/year. In the West, the annual New Home Sales rate has declined 49% from its October peak of 410,000/year. This information can be found at Briefing.com New Home Sales

EXISTING HOME SALES

The Existing Home Sales report from Thursday, March 23rd, was reported with unjustified optimism. The seasonally adjusted sales rate actually declined from the previous year. February 2006's annualized rate was 6.190 million/year, marking a -0.3% change from February 2005's 6.930 million/year rate. Meanwhile, Existing home inventories INCREASED 5.2% over the last month, and increased 30.2% over the last year. Below are charts from HoweStreet.com showing these changes.

http://photos1.blogger.com/hello/101...4/EHS-SA.0.jpg
http://photos1.blogger.com/hello/101...24/EHS-NSA.jpg

Once again, the declining numbers are even more extreme in the West, especially in California. Existing home sales dropped 15.5% from the same period 1 year ago. The inventory of unsold Existing Homes in California is now 6.7 months' worth, compared to 3.2 months' worth a year ago (from the Orange County Register.) In Orange County, California, there are currently 10.4 months' worth of unsold inventory of Existing Homes, compared to 5.7 months' worth a year ago. The median price of existing homes in California declined 2.9% from January 2006.

The Mortgage Bankers' Association purchase index also declined dramatically. The 4-week Purchase Index moving average has declined from 470 in October to 401.5 at present.

In summary, both New and Existing Home Sales are declining, with New Home Sales declining much more. Meanwhile, inventories are rising rapidly in both New and Existing Homes. The biggest inventory increases and sales declines are in bubble areas, especially California. Prices are actually declining in some areas, most notably Southern California. Housing Starts actually increased over the last month, which will increase inventories even further, and put further downward pressure on home prices.

The Housing Bubble is definitely deflating, and appears to be deflating even faster than many predicted.


unlawflcombatnt

The housing market over here has had a few wobbles this last couple of years since it's specatcular performance the previous 4-5 years.

Blips started post 9/11 and then hit more with the run up to the Iraq war and then post-invasion jitters, and the spiralling oil price which hit disposable income.

The growth of the eastern economies, particularly China and India, has acted as a counter-balance to the otherwise far worse effects that the oil-driven inflation could have brought, and companies generally here are still doing relatively well thanks a lot to the Eastern effect.

Net result is that property prices here only dropped a little while stock and share prices gathered momentum, having been at a low since the dot.com crash, and money therefore still seems to circulate and wages keep pace with rising costs. This year house prices are moving upwards again here - not sure if this is an inflation adjustment, though. There's still a feeling that the long-term is hard to predict, but short-term confidence is a good bit stronger.

The sorts of falls you show in your stats don't seem so different from those we saw here the last year, from memory. Maybe what you're seeing is just an adjustment similar to ours - but If US prices do drop considerably, then there always seems to be a plentiful supply of Brits ready to take advantage of low house prices and favourable exchange rates... guess every cloud....

British Home Prices
 

CycleFrance,

Several months ago I was hearing that real estate prices in Britain were declining. I didn't delve into too deeply, however. From what you're saying, however, prices are on the rise again. Is that correct?

Finally! Everything was beyond "batshit insane" down here, price-wise. A lot of the condo conversions, here, are actually throwing it in reverse and eating their losses to switch back to apartments as the area is flooded with developments. I noticed my complex tore down all their "CONDOS CONDOS CONDOS!!" signs last week, removed all the banners, and there isn't a trace of "New condos -- immediate openings!" anywhere on the property. It isn't because they sold out, either, as we didn't see a single new move in from December until now and most of the buildings are empty, except for those of us that grabbed apartment leases when they were signing them.

Hey, at $175,000 for a single bedroom in a market where everyone decided to convert to condos, we didn't think they'd be going like hotcakes, or anything. I'll be very curious to see how the Trump tower in dead downtown Tampa fairs with the sixteen other towers being thrown together a breakneck pace around the area.

Anyone care for a $600,000-$4,000,000 condo in a downtown area where no shops or restaurants are open byond 4pm, Friday?

My single-bedroom condo is between $300k and $350K right now. If I wanted to leave the area, I'd be a pretty wealthy fella. It's sorta crazy out there.

Every once in a while, I feel all smug and superior at the insane value of our house, until I come back to reality and remember that the fuckers tax me based on its value. I ain't goin' nowhere, and I get to pay extra for the privilege.

Yeah, I've got a friend who's inheriting a house in DC, and his property tax will be more than my yearly mortgage.
:speechls:

DC, SF... those are two very special places right now.

Yeah, I'm just going to wait another year or so. No hurry. We're seeing 1920's Florida all over again (1980s all over again for the condo market) and it's just time to let it ride.

You mean all those people that use to have good jobs, but now have to work at walmart and home depot, aren't buying as many $400k homes as they used to?
What a bunch of unpatriotic ingrates.:rolleyes:

Sorry, a bit slow replying as away from home. It seems to be the case that they are. The top end of the market was stagnating and that fed through the chain downwards to the cheaper end of the market - now this year the City have been handing out record bonuses again and are buying at the high end, so both the market and people are moving again. NOt sure how long this will last but London and SE UK prices are showing rises of 5%+ against last year already.

I think the forward market is still hard to predict - it's still unsettled - there isn't a clear sign that it's about to storm ahead or drop into the doldrums. The economy here seems to be coping at the moment with any fallout from oil-price driven inflation. In the past we would have seen the economy nose-dive by now. In then most basic analysis, expansion/growth in the East with countries like China and India is preventing that it seems.

I need the market to decline more rapidly where I am. The condo conversion went through and I may be homeless in November.

The Northern Tier beckons.

Austin is very nice this time of year, wolf. (Of course, it'll suck ass in another month and a half, but then it'll be nice around October/November again!) And our housing market isn't retarded.

It do indeed. And you've got a big nuthouse.

Most of us are free range though.