Housing Bubble Bursting?

[moh malekpour]

this slump will last well into 2008.”

http://www.signonsandiego.com/news/business/20070612-9999-1b12housing.html

Retsinas said problems in the housing industry go beyond lending and foreclosures. Even as prices ease somewhat, affordability remains an issue in many areas, including San Diego.

As home prices doubled in San Diego County between 2000 and 2005, they far outpaced middle-wage incomes. With job expansion here concentrated in the low-paying service sector, the Harvard report foresaw no quick improvement in the region's low housing affordability.

When housing is prohibitively expensive, the economy suffers, Retsinas said.

“The danger is . . . you're going to lose skilled workers who will move to a part of the country where they can get a job and afford a place to live.”

According to Harvard's “The State of the Nation's Housing 2007” report, everyone who attempted to profit during the nation's housing boom – buyers, sellers, builders and investors – played a role in the market's decline.

 

[Randolph Kinney]

Brad,

I couldn't help myself, I had to look at NAR's current forecast. You might take a look too, just for reference at: http://www.realtor.org/press_room/news_releases/2007/home_sales_projected_to_fluctuate.html

WASHINGTON, June 06, 2007 -
Home sales are projected to move in a relatively narrow range with a gradual upturn becoming more pronounced by the end of the year, according to the latest forecast (PDF 136k) by the National Association of Realtors®.

Lets see how that plays out with reality going forward. Their past forecasts have been revised going forward, repeatedly, to agree with reality of a declining market.

Now, is this article, Dr. Yun attempts to explain the median sales price oddity:

“We continue to experience a temporary distortion in comparing median existing-home prices,” Yun said. “Because the sales volume has shifted from many high-cost areas to moderately priced markets, we’re not getting a true apples-to-apples comparison. When you look at other measures, such as this week’s price index from Freddie Mac which is based on repeat sales, overall home prices are rising slowly.”

NAR data on median prices show overall home prices rising too for the past several months. His explanation is a contradiction in common sense. If sales volume has shifted away from high price areas to low price areas, how does that produce increasing prices? :Eyecrazy:

 

[Karl]

All depends on how you define IF

 

[moh malekpour]

U.S. Mortgage Foreclosure Filings Rise 90% in May

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVVr0Jrm19OE&refer=home

June 12 (Bloomberg) -- U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.

There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio, the Irvine, California-based seller of foreclosure data said in a report today. The median price for a U.S. home slid 1.8 percent the first three months of 2007 as the housing slump entered its second year, according to the National Association of Realtors. The filings rose 19 percent from April.

A jump in foreclosures at a time of year that traditionally is the busiest for home sales means the slide in prices probably isn't over, said James Saccacio, chief executive officer of RealtyTrac. Typically, more than half of all home sales occur in the April to June period, according to Freddie Mac, the No. 2 mortgage buyer.

``Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,'' Saccacio said in the report. That will add ``to the downward pressure on home prices in many areas.''

Ranked by the number of foreclosure filings, California topped the list, with 39,659 in May, and Florida was No. 2, with 21,704. Ohio was No. 3 for the third consecutive month. It had 13,214 filings, said the report. Rather than count the number of unique households in foreclosure, the study counts the number of foreclosure-related legal filings, which could result in some properties being double- or triple-counted.

 

[moh malekpour]

U.S. Stocks Fall on Concern Higher Rates Will Hurt Profits, M&A

http://www.bloomberg.com/apps/news?pid=20601087&sid=aX9WWp_erfRo&refer=home

All 14 real-estate companies in the S&P 500 and every homebuilder retreated on speculation higher yields foreshadow slower economic growth.

 

[Randolph Kinney]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aX9WWp_erfRo&refer=home

All 14 real-estate companies in the S&P 500 and every homebuilder retreated. Take that with the new report of continued exponential rise in foreclosure activity, where are those forecasts of "soft landing"?

Bond yields (interest rates) are rising for a reason. Higher interest rates means housing will continue to deflate, maybe just an obnoxious hissing sound so as to not to scare off those people who if they heard a pop, would think maybe a "bubble" had formed.

 

[Randolph Kinney]

California REO count - Chase: 498; Countrywide: 1655; IndyMac: 75; Ocwen: 437; Downey: 80

 

[Randolph Kinney]

S&P/Case-Shiller best index, poll says

http://www.ocregister.com/ocregister/money/housing/article_1724525.php

We asked visitors to the Lansner on Real Estate blog which indexes is currently giving out the most reliable signals. The results from 206 votes cast, in what's an unscientific sample of public sentiment, were:

• 55.8 percent: S&P/Case-Shiller
• 19.4 percent: Research Council
• 16.5 percent: DataQuick
• 2.4 percent: OFHEO
• 5.8 percent: California Realtors

• "I'd go with Case-Shiller... an index of homes sold, not of all homes. If sales are drying up the fastest in neighborhoods where prices are dropping the fastest (this is likely, sellers don't want to recognize price drops, list for too much, and sales disappear), then even Case-Shiller will understate the extent to which prices are falling (temporarily, eventually those properties will sell and the index will reflect the fact, but it could take a while.)"

Although the poll is unscientific, it does indicate a public perception of which index has the confidence of the majority of people. I took particular note of the next to the least confidence was given to CAR index (which feeds the NAR index). The OFHEO index had the least confidence.

 

[Randolph Kinney]

This is for Greg - 2007 forecast for home prices & sales

The coming bottom of the real estate market as seen today by comparing past housing declines.

 

[Randolph Kinney]

California Foreclosures Reach $2.8 billion in May

The loan value of foreclosed homes returned to lender at auction, the measure of foreclosure activity that we have been tracking with FR since September 2006, increased from $420 million per month in September 2006 to over $2 billion in March 2007. After leveling off in April at just above $2 billion per month, it picked up again in May, reaching $2.8 billion.

Foreclosure activity is accelerating, not "leveling off" as some in the real estate industry have reported. More than $12 billion in loan value in total has been returned over the past ten months.