Housing Bubble Bursting?

[Randolph Kinney]

Big drop in home prices predicted

http://money.cnn.com/2007/05/23/real_estate/prediction_big_home_price_drop/index.htm?postversion=2007052413

NEW YORK (CNNMoney.com) -- Most industry watchers agree that home prices will continue to slide before they recover, but now some economists say they've got a long way to fall before bouncing back.


David Wyss, chief economist at Standard & Poors, has forecast a price drop of about 8 percent for the 24-month period through the fourth quarter of 2008.

His prediction came during a general economic outlook session at the Mortgage Bankers Association's (MBA) National Secondary Market Conference & Expo in New York this week.


Housing prices will suffer from a "significant increase in defaults and foreclosures," he said, with affordability still a major issue. Wyss worried how hard the slump will hit already highly inflated housing markets.



Celia Chen, Moody's Economy.com's director of housing economics followed Wyss' lead. "We also have an 8 percent decline in median house prices [for the 24-month period ending March 31, 2008], which is consistent with what David Wyss had."


"That is quite a bold forecast," Lawrence Yun, economist at the National Association of Realtors, speaking from his Washington, D.C. office, said of Wyss's prediction. NAR is predicting a much less severe total decline of 1.4 percent through the slump - prices have already declined three straight quarters - and that a recovery will start to take place in early 2008.


"The run up," Yun said, "was an investor-demand driven boom, and it was followed by an investor-driven collapse."

 

[Randolph Kinney]

U.S. April existing home sales fall to 4-yr low

http://www.marketwatch.com/news/story/us-existing-home-sales-four-year-low/story.aspx?guid=%7BABF31B83%2DFE64%2D40E7%2D94AA%2D73CEA66167B6%7D&dist=

WASHINGTON (MarketWatch) -- Existing home sales fell 2.6% in April to 5.99 million units on a seasonally adjusted annual basis, the slowest sales pace in four years, the National Association of Realtors said. The fall in April sales was larger than expected. Economists had forecast that sales would dip a slight 0.2% to 6.11 million units. On a year-on-year basis, existing home sales were down 10.7%. The median national sales price was down 0.8% year on year to $220,900 in April. Inventories of unsold homes rose 10.4% to 4.20 million, a 8.4 month supply, the highest in 15 years.

I wonder when NAR will acknowledge that housing has not bottomed out yet and things are really get worse, not better?

 

[Brad Ellis]

2007 Jan 210,900 262,200 161,300 175,200 321,700 257,300 292,500 194,700 222,500 352,300
Feb 213,600 263,000 155,300 178,600 336,700 260,100 292,200 188,400 225,200 366,700
Mar r 217,400 272,500 160,900 179,900 335,000 265,200 302,100 199,100 227,300 365,200
Apr p 220,900 283,600 166,600 181,100 338,200 268,400 308,800 203,000 227,900 369,400 vs. last year: -0.8% -0.6% 1.9% -0.3% -2.1% -0.3% 0.6% 1.4% -0.6% -0.9%

Sorry this did not reproduce well, but there is an interesting piece of data here:

Since January, the national median prices of existing homes along with the mean prices of existing homes has risen each month.

I am not calling this a bottom but I can sure see how others might. They at least have some facts on their side.

Brad

 

[moh malekpour]

2007 Jan 210,900 262,200 161,300 175,200 321,700 257,300 292,500 194,700 222,500 352,300
Feb 213,600 263,000 155,300 178,600 336,700 260,100 292,200 188,400 225,200 366,700
Mar r 217,400 272,500 160,900 179,900 335,000 265,200 302,100 199,100 227,300 365,200
Apr p 220,900 283,600 166,600 181,100 338,200 268,400 308,800 203,000 227,900 369,400 vs. last year: -0.8% -0.6% 1.9% -0.3% -2.1% -0.3% 0.6% 1.4% -0.6% -0.9%

Sorry this did not reproduce well, but there is an interesting piece of data here:

Since January, the national median prices of existing homes along with the mean prices of existing homes has risen each month.

I am not calling this a bottom but I can sure see how others might. They at least have some facts on their side.

Brad

Brad,
I know when you copy and paste an spreadsheat or use an incorrect quote function, the reproduction doesn't look like the original at all and it would be very hard to find out what it wants to say. The best way to do it is to post the link to the original article so any one who is interested to see what you try to convey can go to the original and read the whole things the way it is published.

 

[Randolph Kinney]

2007 Jan 210,900 262,200 161,300 175,200 321,700 257,300 292,500 194,700 222,500 352,300
Feb 213,600 263,000 155,300 178,600 336,700 260,100 292,200 188,400 225,200 366,700
Mar r 217,400 272,500 160,900 179,900 335,000 265,200 302,100 199,100 227,300 365,200
Apr p 220,900 283,600 166,600 181,100 338,200 268,400 308,800 203,000 227,900 369,400 vs. last year: -0.8% -0.6% 1.9% -0.3% -2.1% -0.3% 0.6% 1.4% -0.6% -0.9%

Sorry this did not reproduce well, but there is an interesting piece of data here:

Since January, the national median prices of existing homes along with the mean prices of existing homes has risen each month.

I am not calling this a bottom but I can sure see how others might. They at least have some facts on their side.

Brad

I suppose your point would be IF the NAR data were credible and correlates also with the published new home sales statistics, then home prices actually are rising.

If you have kept the NAR data from each month they publish, you will discover they are revising the year ago median price numbers. It is nice to change the numbers a year after the fact and make no statement that you did that and what affect does it have on any analysis.

It is also very suspect that the NAR forecast is for a declining median price for the year, yet, their data belies that forecast, doesn't it? :glare:

 

[Randolph Kinney]

Oh! The sunk is out of the bag - NAR

http://www.inman.com/inmannews.aspx?ID=63325

The national median existing-home price for all housing types was $220,900 in April, down 0.8 percent from April 2006 when the median was $222,600. The median is a typical market price where half of the homes sold for more and half sold for less, but there is a downward skew in the current national comparison because sales have shifted away from many high-cost areas during the last year, according to NAR.

What do you know about that? NAR feels compelled to explain its data by just saying sales have shifted away from high cost areas.

Using that logic, prices are not rising but declining, year over year. How is it that prices are rising month over month? :glare:

 

[hastalavista]

"That is quite a bold forecast," Lawrence Yun, economist at the National Association of Realtors

(my bold)

I think they misquoted him. I think the actual quote was "bald forecast":

Roget's New Millennium™ Thesaurus - Cite This Source
Main Entry: bald
Part of Speech: adjective2
Definition: simple
Synonyms: austere, bare, blunt, direct, downright, forthright, outright, plain, severe, straight, straightforward, unadorned, unembellished
Antonyms: adorned, decorated, embellished, ornate

 

[Randolph Kinney]

Lending Standards Dampen Existing-Home Sales

http://www.realtor.org/rmodaily.nsf/pages/News2007052502

Sales of existing homes declined in April, largely the result of tighter lending standards and a drop in the number of subprime mortgage products available to consumers, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — fell 2.6 percent to a seasonally adjusted annual rate of 5.99 million units in April from an upwardly revised level of 6.15 million in March. Sales are 10.7 percent lower than the 6.71 million-unit pace in April 2006.

“We’ve been anticipating slower home sales because many subprime loan products are no longer available,” says NAR Senior Economist Lawrence Yun. “In addition, increased scrutiny by lenders is stopping risky mortgage origination, which is good for both consumers and the lending community. Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help to stabilize the market going forward.”

The national median existing-home price for all housing types was $220,900 in April, down 0.8 percent from April 2006 when the median was $222,600. The median is a typical market price where half of the homes sold for more and half sold for less. However, there is a downward skew in the current national comparison because sales have shifted away from many high-cost areas during the last year, according to NAR.

Interesting the spin NAR puts on subprime mortgages. Due to a lack of subprime mortgage products available, that has caused sales volume to decline. How is it that median prices are rising month over month? Why that is because only the less wealthy people are not buying homes causing sales volume to decline. That leaves only the moderate to more wealthy buyers left in the market and they prefer to buy more expensive homes than entry level homes.

Make any sense? :glare:

 

[Brad Ellis]

Randolph,

Interesting indeed. But as to spin, there is simply no one out there who is not doing it- and that includes all of us.

I think I read somewhere that someone is figuring that the increasing inventory is in large part due to some selling second homes and investment properties. I do not know about that but the investment component sure makes sense.

We saw the really rapid run up in SRIPs after the dot.com bubble (yes- that one was a bubble) and the drop in the stock market. With the new highs being set in the DOW, this looks like the trend reversing itself.

Brad

 

[Randolph Kinney]

Bernanke Warned by Real Estate Analysts: Housing Collapse Is Much Worse Than You Say

http://www.larouchepub.com/pr/2007/070522warn_bernanke.html

[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]May 22, 2007 (EIRNS)—A real estate investment and analysis firm, John Burns Real Estate Consulting, said on May 21 that it is "going public with our concerns" that the national sales information for both new and existing homes, is misleading and covering up a deep plunge of the housing sector. "The housing market has softened much more than is being reported" by the Fed, and the National Association of Realtors (NAR), says JBREC.

[/SIZE][/FONT] [FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]The firm reports that having purchased and compiled actual home sale closing data for 55% of the country, it finds existing-home sales down, not 9% as NAR reports, but: 22% in May 2006-April 2007, compared to May 2005-April 2006; and much more than that on a simple year-to-year comparison of the past couple of months. It found that existing-home sales have fallen every bit as much as the new-home sales of the biggest homebuilders D.R. Horton and Lennar, which are down 37% and 27%. It found that home brokerage transactions by Realogy Corp., the nation's biggest realtor company which owns Century 21, Coldwell Banker, and ERA, fell 18% from 2005 to 2006. And that mortgage applications for home purchase have fallen 18%, even though many buyers now have to fill out several applications in order to get a mortgage.

[/SIZE][/FONT] [FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]Taking the states with the worst housing sales/foreclosures crises, JBREC found Florida home sales down 34%, not 28% as NAR reported; Arizona sales down 38%, not 28%; and California's down 37%, not 24% as NAR reports. This strong underreporting of the collapse by NAR, the firm says, only dates from the middle of 2006; it doesn't claim any intentional misrepresentation by NAR.

[/SIZE][/FONT] [FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]As for new-home sales, JBREC reports the Census Bureau is continuing not to subtract cancellations from reported sales, giving sales figures which are much rosier than the grim reality, and are reported publicly by the Federal Reserve.

[/SIZE][/FONT] [FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]"In summary, we believe that the Fed should know that the housing market correction has been quite steep, and is also not showing signs of bottoming out," concludes JBREC.

[/SIZE][/FONT] [FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]Separately, a Wall Street firm reported May 18 that the foreclosure "shock cone" is widening: While total foreclosures, at all stages, are up 60-70% over last year so far, foreclosure notices—the front end of the process, when a mortgage is typically 90 days delinquent—are 127% higher so far than in 2006. It said that foreclosed homes being resold by banks or lenders, are hitting the housing market with an average price drop of 30% nationally. [/SIZE][/FONT]

Uh-oh, someone else does not believe the NAR data. And the fact that the Census Bureau does not go back and subtract out the cancellations of new homes sales already reported makes the sales numbers overstated. The accumulation of cancellations makes the new home sales numbers an unbelievable statistic.

Gosh, someone could make some money by tabulating and reporting the real data, instead of the cooked and spun data.:glare: