Home Sales Decline Unexpectedly

1. More devastatingly dire economic tidings.

2. After four months of gimpy gains, home sales fell 2.7% in August.

3. And that's with the artificial stimulant of $8000 dollars in tax credits for first time buyers, an inducement scheduled to end in November.

4. One third of the few transactions which did close last month were consummated by new home owners.

5. The median price of a house fell to $177,700, down 12.5% from a year ago.

6. 30% of deals were foreclosures or similarly distressed sales.

7. Movement of homes over 2 million dollars are down 40%.

8. There are 3.5 million properties currently on the market, an 8.5 month supply at current sales rates.

9. No bottom in sight.

10. Unemployment near 10% has got to be the most pertinent explanation for the failure of real estate to rebound.

Existing-Home Sales Decline Unexpectedly; Market Weak - Real Estate * US * News * Story - CNBC.com

Existing-home sales dipped unexpectedly last month after a four-month streak of gains, providing evidence that the housing market recovery remains fragile.

The National Association of Realtors said Thursday that sales dropped 2.7 percent to a seasonally adjusted annual rate of 5.1 million in August, from a pace of 5.24 million in July.

Click to expand...

The Prof

This is unexpected? The government is working to make sure that home prices do not fall; of course home sales will drop.

phattonez said:

The government is working to make sure that home prices do not fall

Click to expand...

yes, and the govt is failing

and no, not unexpected at all

The Prof said:

yes, and the govt is failing

and no, not unexpected at all

Click to expand...

Of course it's failing. No one can skirt the laws of economics.

That sucks for everyone who owns a home. But as for me.....

LOWER!!! GO LOWER BABY!! OH yAY!!!111 I wouldn't mind a house and with less than 5.5% interest rate right now its only a dream if the pricing and rates go lower. WAHOO!!!

Scourge will definitely have a house (maybe two) within the next few years.

That's something that's never mentioned. The affordability of homes goes up when prices go down. More people can afford a home if prices go down. I thought that the Democrats were all about helping the poor. I guess even Democrats can be hypocritical, it's not just a Republican game.

The Prof said:

1. More devastatingly dire economic tidings.

Click to expand...

Why is this dip devastating and dire? There was a four month trend of growth and now a small slow down. It's devastating and dire if it continues for a long period and stalls the recovery in a more meaningful way.

2. After four months of gimpy gains, home sales fell 2.7% in August.

Click to expand...

Yep. See above

3. And that's with the artificial stimulant of $8000 dollars in tax credits for first time buyers, an inducement scheduled to end in November.

Click to expand...

Which likely helped bring about the growth earlier in the year.

4. One third of the few transactions which did close last month were consummated by new home owners.

Click to expand...

Is that a problem? You have to get the old sh*t off the inventory shelves to start clearing out the new. It's got to start somewhere. I don't know the percentage, but of those people selling those houses to the first time home buyers, how many turned around and bought a bigger, nicer, 15 year home?

It's also very nice that so many people have become homeowners.

5. The median price of a house fell to $177,700, down 12.5% from a year ago.

Click to expand...

I don't think anyone can get an accurate picture by taking the median sales nationally since some areas are doing better and some not so great. Prices are still higher in most places than what they were at the start of the overinflated pricing 6-7 years ago.

I built my current house in 2002, and if I sold tomorrow, I'd still realize a profit. It wouldn't be as large as it would have been at peak in 2004, but I will more than make up for the on the other end when I buy a nicer home for less than I would have in 2004. So it's all relative, and it certainly doesn't scare me.

6. 30% of deals were foreclosures or similarly distressed sales.

Click to expand...

So? Would you rather they stay on the books? They need to get sold so the market can pick up again.

7. Movement of homes over 2 million dollars are down 40%.

Click to expand...

Movement in homes over 300,000 are probably down too, and that's probably a lot more concerning than what's going on with 2 million dollar homes however, it's not as sensational.

8. There are 3.5 million properties currently on the market, an 8.5 month supply at current sales rates.

Click to expand...

With the holidays and winter around the corner, those prices will most likely have to come down. People need to be realistic.

9. No bottom in sight.

Click to expand...

That's right, and you won't know when the bottom has hit until it has passed.

10. Unemployment near 10% has got to be the most pertinent explanation for the failure of real estate to rebound.

Click to expand...

NAR didn't say that and neither did any other "expert" in the article you linked. It's a little dishonest to pepper in your opinion and not somehow set it apart from the facts you're quoting.

Lawrence Yun, the Realtor's chief economist, said the drop may reflect delays in completing sales due to tough lending standards and new rules for appraisals.

Click to expand...

This is likely the biggest factor in the " temporart blip," and it's been a huge problem for home buyers. These ridiculous new regualtions which took effect May 1 have caused things to slow down on the mortgage end. It's not the least bit surprising to see its effects a few months later.

The new regs irt appraisals IMO has been the most damning. If you are concerned about the real estate market, you may want to look there.

The housing market must be controlled, to many times it has caused an unsustainable boom, leading to the inevitable bust.

B L Zeebub said:

The housing market must be controlled, to many times it has caused an unsustainable boom, leading to the inevitable bust.

Click to expand...

When gov't starts messing with controlling things in the private sector, things go haywire. The gov't has stepped in w/new mortage regulations, and it slowed things down. The Feds need to stay out of this.

BTW with those first time home buyers, do you realize that with current programs like FHA, they only have to cough up 3.5% down payment? And because sellers are desperate to sell, buyers are demanding sellers pay that along w/their closing costs.

So basically, the same BS that got us into this mess is happening again. People who cannot afford to buy a house are buying a house. We'll see if they have the self discipline to pay their mortgage on time each month.

Mate, I dont care who regulates the housing market, I would prefer self regulation.

B L Zeebub said:

Mate, I dont care who regulates the housing market, I would prefer self regulation.

Click to expand...

How? Real estate pricing is based on fair market value. In other words, prices are based on what the consumer is willing to pay. How do you regulate that?

StandUpChuck said:

How? Real estate pricing is based on fair market value. In other words, prices are based on what the consumer is willing to pay. How do you regulate that?

Click to expand...

You restrict mortgages to qualified borrowers for a start.

No morgage that is more than 80% of the valuation of the property

The mortage must be no more than 3 times your anual income

A proven history say 5yrs of regular mortgage payments,or 2 yrs savings for first time buyers, at a similar rate to the re-payment of the mortgage you seek. that should also constitute the 20% deposit needed.

StandUpChuck said:

So basically, the same BS that got us into this mess is happening again. People who cannot afford to buy a house are buying a house. We'll see if they have the self discipline to pay their mortgage on time each month.

Click to expand...

What does self-discipling have to do with being able to afford the mortgage payments?

Middleground said:

What does self-discipling have to do with being able to afford the mortgage payments?

Click to expand...

Saving money for a downpayment is a good indication that someone is serious about managing their funds (as is the credit report). Not only that, if I sink $50,000 of my own hard earned cash into a property, then it's less likely that I will just walk away from the mortgage.

edit because I realize you're talking about more than just the downpayment. There are people who lost their jobs and could no longer afford to keep their homes. Then there are the people who over spent on BS and can no longer afford to keep making payments on everything. The latter is quite common yet rarely talked about.

I pretty much knew that, as soon as Obama unleashed his stimulus package, this would turn into a double dip recession. You can blame the first crash on the Bush administration, but the new crises, which will account for the upcoming second dip, you can attribute directly to Obama's policies.

Both Bush and Obama have done nothing to correct the underlying conditions. All they have done is apply band-aids to serious wounds.

New home sales posted a modest increase:

Sept. 25 (Bloomberg) -- Sales of new U.S. homes climbed in August to the highest level in almost a year as builders cut prices at a record pace to compete with the foreclosures that are flooding the market for previously owned houses.

Sales increased 0.7 percent to a 429,000 annual pace, less than anticipated, figures from the Commerce Department showed today in Washington. Other reports showed orders for durable goods unexpectedly fell and consumer sentiment climbed.

The worst housing slump since the Great Depression may be drawing to a close as first-time buyers rush to take advantage of tax credits before a November deadline. Federal Reserve policy makers this week pledged to keep borrowing costs low to sustain the recovery past the time when the government stimulus measures wane.

New-Home Sales in U.S. Climb to Almost One-Year High (Upadte1) - Bloomberg.com

winston53660 said:

New home sales posted a modest increase:

Sept. 25 (Bloomberg) -- Sales of new U.S. homes climbed in August to the highest level in almost a year as builders cut prices at a record pace to compete with the foreclosures that are flooding the market for previously owned houses.

Sales increased 0.7 percent to a 429,000 annual pace, less than anticipated, figures from the Commerce Department showed today in Washington. Other reports showed orders for durable goods unexpectedly fell and consumer sentiment climbed.

The worst housing slump since the Great Depression may be drawing to a close as first-time buyers rush to take advantage of tax credits before a November deadline. Federal Reserve policy makers this week pledged to keep borrowing costs low to sustain the recovery past the time when the government stimulus measures wane.

New-Home Sales in U.S. Climb to Almost One-Year High (Upadte1) - Bloomberg.com

Click to expand...

It was only a matter of time before builders realized they had to adjust their pricing to compete with "used" homes.

B L Zeebub said:

You restrict mortgages to qualified borrowers for a start.

No morgage that is more than 80% of the valuation of the property

The mortage must be no more than 3 times your anual income

A proven history say 5yrs of regular mortgage payments,or 2 yrs savings for first time buyers, at a similar rate to the re-payment of the mortgage you seek. that should also constitute the 20% deposit needed.

Click to expand...

I don't disagree. Did you see my post about FHA? It's ridiculous!

StandUpChuck said:

It was only a matter of time before builders realized they had to adjust their pricing to compete with "used" homes.

Click to expand...

The news is not all that great analysts were actually predicting a larger increase in sales.

StandUpChuck said:

It was only a matter of time before builders realized they had to adjust their pricing to compete with "used" homes.

Click to expand...

And they have, which could attribute to a fall in sales of existing houses. Often, a brand new house for less will be more attractive -- unless you really want to be in that particular location or really love that house.

Harshaw said:

And they have, which could attribute to a fall in sales of existing houses.

Click to expand...

Damn good point. :thumbs:

StandUpChuck said:

Saving money for a downpayment is a good indication that someone is serious about managing their funds (as is the credit report). Not only that, if I sink $50,000 of my own hard earned cash into a property, then it's less likely that I will just walk away from the mortgage.

edit because I realize you're talking about more than just the downpayment. There are people who lost their jobs and could no longer afford to keep their homes. Then there are the people who over spent on BS and can no longer afford to keep making payments on everything. The latter is quite common yet rarely talked about.

Click to expand...

See, that's the thing. I don't think the latter is quite common. Yes, when people lose their jobs, or **** happens, then yeah, chances are the will default. But I have a hard time seeing people buying TVs, cars, trips, and furs over making mortgage payments.

What has not been talked about much since this whole crisis, is lenders not caring about who they are lending to. To me, that is beyond reason to the point where I cannot even phathom it. But it did happen. People making less that $30,000 were allowed/encouraged to buy houses with values over $500,000. That's insane, and a huge cause of the housing crisis.

B L Zeebub said:

The housing market must be controlled, to many times it has caused an unsustainable boom, leading to the inevitable bust.

Click to expand...

:rofl I am always amused at the notions that the Government can control anything and that with more Government interventions all risk in life can be avoided.

The FACT is that home prices will continue to decline as unemployment continues to climb with no end in sight and jobs continue to vanish. Many home owners who have been looking for jobs since the beginning of this "Change" Administration have been staring foreclosure in the face and now the beginning of a new wave of foreclosures and further declines in home prices can be expected.

BUT, the news we are not hearing is an impending tide of Commercial foreclosures on the horizon which will once again exacerbate the real estate markets decline and cause further job losses.

By next year when Democrats are finally honest with the American people about how ALL of us will be paying MORE taxes and fees to pay for their incredibly misguided spending spree, expect even less spending, more commercial closures and LES jobs again.

Compound that with the potential devastation cap and trade will have on manufacturing and we have a REAL disaster looming on the horizon.

My prediction is that the Obama Administrations efforts will make the Carter years look like a cake walk in comparison. If Americans do not vote these morons out of the Legislature next fall, there is certainly no redeeming hope for our economy.

StandUpChuck said:

BTW with those first time home buyers, do you realize that with current programs like FHA, they only have to cough up 3.5% down payment? And because sellers are desperate to sell, buyers are demanding sellers pay that along w/their closing costs.

So basically, the same BS that got us into this mess is happening again. People who cannot afford to buy a house are buying a house. We'll see if they have the self discipline to pay their mortgage on time each month.

Click to expand...

This is 100% correct and will indeed lead to even further damage in the jobs and housing markets.