Glut of homes hits 16-year high

Discussion in 'Wall St. News' started by S2007S, Aug 29, 2007.

  1. S2007S

    S2007S

    How many talking heads in the last 18 months said the bottom was in, what a joke to believe those fools, I have been posting article after article about the housing market, foreclosures and ARMS resetting over the last year. IS THE BOTTOM IN???? THE ANSWER IS NOOOOO, ITS NOT, its not even close to seeing a bottom yet, Homebuilders still have another 25%+ to drop, I would not rule out 1 or 2 homebuilders going bankrupt within the next 3-6 months. The bottom in housing probably wont set in until 2009-2010, some over heated markets as late as 2012. Do not listen to the talking heads that say the time to buy is now, ITS NOT. There are many more ARMS that need to reset, foreclosures are only going to get worse going into the rest of 2007 and into 2008.





    Glut of homes hits 16-year high
    Sales slip, but supply of homes on the market jumps to 9.6 months, pushing prices down for 12th straight month.
    By Chris Isidore, CNNMoney.com senior writer
    August 28 2007: 5:49 PM EDT

    NEW YORK (CNNMoney.com) -- Homeowners trying to sell last month faced the biggest glut of homes on the market in about 16 years, as declining sales and growing problems in the mortgage market helped push home prices down for the 12th straight month.

    The National Association of Realtors said sales by homeowners slipped to an annual rate of 5.75 million last month, down 0.2 percent from the revised 5.76 million pace in June. Economists surveyed by Briefing.com had forecast the sales rate would fall to 5.7 million in the latest reading.



    Not only did sales slip but the number of homes for sale jumped 5.1 percent, the group said, meaning there is now a 9.6-month supply of homes for sale, up from 9.1-months in the June reading. It was the biggest supply of homes by that measure since October 1991.
    Foreclosure rescue scams

    "Forget 'location, location, location.' The most important factor in today's real estate market is 'supply, supply, supply,'" said Mike Larson, a real estate analyst at independent research firm Weiss Research.

    "We are literally swimming in an ocean of homes for sale. In fact, at 4.59 million units, we have the most raw inventory for sale in history," he said. "Until we work through this extremely large inventory glut, we're not going to see any momentum in home prices."

    Even the Realtors' own economist admitted that problems in the mortgage market will continue to take a toll on home sales.

    "Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months," said Lawrence Yun, the trade group's senior economist.
    A $200,000 'loss' - and happy with it

    "Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize."

    August has seen problems in the mortgage market cut deeply into the availability of financing for many buyers, particularly those needing subprime mortgages due to credit rating issues or a jumbo mortgage of more than $417,000.

    The existing home sale numbers track sales that closed in the month. Closings typically occur a month or two after buyers lock in financing.

    "These are 'PC' figures - pre-crunch," said Larson. "The mortgage credit crunch that began very late in July and picked up steam in August will likely put more downward pressure on home sales and prices this month and into the fall."
    Add curb appeal to sell your home in down market

    The report comes after Friday's government reading that showed new homes selling at a better-than-expected pace. But the reports showed more weakness in prices - which have become a major concern for the U.S. economy as a whole.

    The median price of an existing home sold in the month fell 0.6 percent from a year earlier to $228,900. It marked the 12th straight month that prices have been down on that basis, after the June reading was revised lower as well. The July 2006 median price was a record high for that reading, which measures the point at which half the homes sold go for more and half go for less.

    Experts have tied weak auto sales at least partly to concerns among consumers about the decline in equity in their homes. Some fear that weakness in home values and reduced access to home equity lines of credit could soon affect a broader range of retail sales.

    In addition, the downturn in housing has also fed investor concern about mortgage-backed securities, which in turn has created a credit crunch in financial markets, and sent stocks into a tailspin, as a number of corporate deals have run into financing problems.
    Where the growth is - and isn't

    Not surprisingly, results at the nation's home builders have been among the hardest hit.

    While luxury home builder Toll Brothers (Charts, Fortune 500) managed to report a narrow profit last week that topped forecasts of a loss, it still saw earnings fall 85 percent from year-earlier levels. And the six publicly traded builders who are larger than Toll have all reported losses recently.

    Lennar (Charts, Fortune 500), the nation's No. 1 builder, and No. 5 KB Home (Charts, Fortune 500) both reported a loss in the latest quarter. No. 2 home builder D.R. Horton (Charts, Fortune 500) and No. 3 Centex (Charts, Fortune 500) both reported losses far bigger than Wall Street had expected, while No. 6 Pulte Homes (Charts, Fortune 500) and Hovnanian Enterprises (Charts, Fortune 500) have reported losses for the last two quarters and analysts project losses for at least the next year. Top of page
     
  2. MattF

    MattF

    Any time's a good time to buy if you can find the motivated seller...

    But if you're looking for things to go a bit lower, wait some more...
     
  3. How motivated can they get?

    If they offer 400k, I bid 100k... Their bank will come meet me at that price 7-12years from now.

     
  4. MattF

    MattF

    motivated that's equivalent to desperation :) ... or little time to negotiate.

    anyone else isn't motivated...they're just praying they can get out with a small margin or breakeven....
     
  5. 50% Drops are possible in places like San Diego, Miami, etc. Those jumbos are next to impossible to get.

     
  6. At this stage the wallstreet ignores housing. Everyone knows housing sucks. Whats new?
     
  7. It's only a matter of time before candidates start promising some new programs to rescue distressed buyers. In the thirties, there were populist programs that delayed foreclosures, etc.
     
  8. In absolute dollar value, yes, real estate appreciates over time. However, any unexpected variances from the mean growth rate will always be mean-reverting.

    I have barely seen hyper-speculative areas in California decline more than a few percent after a 10-year markup of up to 300%. And the bottom is in? Let me get my calculator...

    The real estate industrial complex continues working its spin machine to sucker in more fools all the time. This is a game of patience.

    RoughTrader
     
  9. Adobian

    Adobian

    It is said that it would take another 12-15 years for the home prices to get back to the previous peak. Kind lika we'll never Nazdaq 5000 again, until maybe 10 years from now
     
  10. It can take 20-30 years to hit a prior bubble high. For example, the 1929 high in the Dow was not breached until the 1950s. The Nikkei is still less than 40% of its 1989-90 peak. Gold has still not breached its 1980 high.

    The prime bubble areas may fall 50-75%. At 5% annual growth, a market that has fallen 60% takes 19 years to get back to its high. Even at 10% growth it would take 10 years to recover the loss.

    A decade is a long time to be underwater.
     
    #10     Sep 3, 2007