Housing Bubble Bursting?

[Randolph Kinney]

This website is getting hotter:

http://www.thehousingbubbleblog.com/

I am seeing people who are trying to put their homes on the market now because they are late one payment and realize they can't afford their home. They bought last summer of 2005, peak of market. This is the low end segment of the market where people bought with 100% financing.

Once this information becomes widespread and public knowledge, it could have a chilling affect on the market in general or at least this specific segment.

 

[Couch Potato]

Not good news.

Did you read this one:

The homeownership rate slipped from 69.1 percent last year to 68.5 percent this year. Jan Hatzius, chief economist at Goldman Sachs says, "The decline in homeownership is particularly interesting because it has occurred in the face of strong rental-to-condo conversions of apartment buildings, which have expanded the supply of owner-occupied units. Thus, declining homeownership is very likely due to a decline in demand, not a decline in supply of owner-occupied units."

While we no longer have record homeownership there is a new record:

The owner-occupied vacancy rate is rising sharply. At 2.1 percent, the current rate is the highest on record. Hatzius believes this over-supply of homes for sale is already pushing existing home prices downward and that home price inflation will turn negative by the end of the year.

 

[The Bob]

New Home Buyers Jumping Ship

http://globaleconomicanalysis.blogspot.com/2006/05/abandon-ship.html


Mike Morgan at MorganFlorida had this to say.

I have 43 clients walking away from deposits that range from $35,000 to $80,000. That’s 43 out of 43, and we were very careful to buy the very lowest price per square foot and the best amenities. None of these buyers are in condos or even in areas where there are condos. You’re not seeing the real story in the press. Agents don’t want to talk about it.

 

[Randolph Kinney]

The Fed

Some economists see rates at 5.5% by year end
Growth and inflation could be stronger than Fed forecast

By Greg Robb, MarketWatch
Last Update: 6:04 PM ET May 10, 2006



WASHINGTON (MarketWatch) -- The Federal Reserve may be hoping that it could take a long pause in its steady increases in rate hikes, but some economists believe the Fed will be forced to hike rates a few more times in coming months.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B18799B0D%2DD2C0%2D4075%2DA7B8%2D853766FBA2EC%7D&siteid=mktw&dist=nwhpm:new_popcornsmiley:

 

[Couch Potato]

Florida in for a rough time.

Jim the quotes that got me were:

Of the 120 units that have been sold, at least 110 are speculators. Within a couple of miles there are other projects under construction or recently built with more than 400 similar units on the market . . . all speculators that can’t sell. For our market, that represents at least a three year supply.

and

Do the math. In Miami alone there are 70,000 condos under development with a 2,500 a year absorbtion rate. Sounds ugly? Well we can’t even get hard numbers for Florida’s Gulf Coast, but that market is in far worse shape than Miami. Most of the WCI projects are on the West Coast of Florida, and these are unrealistic seven figure condos. This end of the market has not slowed . . . it has stopped, and is now going in reverse with more cancellations than orders.

I am in the middle of renewing the lease on the house I am renting. Based on market rents, most houses and condos are selling for more than twice the price that the rents will support. Rents have risen a little, but the supply of vacant properties and lack of significant increases in wages prevent rents from rising very much.

 

[Dee Dee]

Looks like Pamela, our resident Florida canary, was right about the impact that speculators have had in her state.

 

[Mr Rex]

Sounds like some of the fellow forumites with a few bucks in the bank might want to start listening to some of the savvy (buy low) investor/appraisers here and see if they can diversify. Certainly should be plenty of appraisal work to keep the day job for the good guys, what with REO work etc.

 

[Couch Potato]

Ouch.

Looks like Pamela, our resident Florida canary, was right about the impact that speculators have had in her state.

I am doing an inspection for a refi tomorrow. House was purchased last spring for over 700K, but my preliminary work shows it will probably be about 600k at the most. You never know until you see it, but the MLS has interior photos and provides aerial photographs so I don't expect to be surprised. I feel bad for them, but hopefully they can afford to absorb the loss.

 

[Sean Wagle]

The mainstream media has waded hip deep into the housing correction the past month or so.

It's time to take the question marks, off the end of the title of this topic.

 

[Pamela Crowley (Florida)]

Oh No!!! You can't mean there really might be a bubble and that it really is bursting!?!?!?