Sales of Existing Homes Fall/median price drops highest in 40yrs
http://www.breitbart.com/news/2006/10/25/D8KVN3000.html
Sales of Existing Homes FallOct 25 10:15 AM US/Eastern
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON
Sales of existing homes fell for a sixth straight month in September and the median sales price dropped on an annual basis by the largest amount on record, further documenting a lukewarm housing market.
The National Association of Realtors reported that sales of previously owned homes fell by 1.9 percent in September to a seasonally adjusted sales pace of 6.18 million units, the slowest sales rate since January 2004.
The median price of a single-family home fell to $219,800 last month, a drop of 2.5 percent from the price in September 2005. That was the biggest year-over-year price decline in records going back nearly four decades. Housing, which had set sales records for both new and existing homes for five consecutive years, has been rapidly loosing altitude this year, as consumers were battered by rising mortgage rates, soaring energy prices and a slowing economy.
Sales were down in all sections of the country except the South, which posted a small 0.4 percent decline. Sales fell the most in the Northeast, a drop of 3.7 percent, followed by the West, where sales were down 3.1 percent, and the Midwest, where sales fell by 2.8 percent.
The inventory of unsold homes, after climbing to all-time highs, fell for a second straight month, decreasing 2.4 percent, to 3.75 million unsold homes at the end of September, which represents a 7.3 months supply at the September sales pace. Sales of single-family homes dropped by 1.6 percent to an annual rate of 5.42 million units while sales of condominiums fell by 3.2 percent to an annual rate of 763,000 units. The 2.5 percent drop in the price of single-family homes pushed them down to $219,800 while condominium prices fell by 3.2 percent to a median price which was also $219,800.
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
^^^ yes and what isn't being reported by the Realtor's Association is that the number of existing homes 'listed' for sale is in part dropping because the owners simply refuse / can't afford to sell them at reduced prices, thus the listings are allowed to expire and the houses are 'taken off the market'. What also isn't being reported by the Realtor's Association is that there is also a steady stream of newly constructed homes continuing to come onto the market, with many being offered at 'distressed' prices ... which effectively creates a situation where people who purchased homes 2 years ago and want / need to sell must now compete with a brand new, never lived in equivalent home being offered by the developer at a price 20% below what they paid !
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
^^Yep. Fiance and I are one of those taking the house UNSOLD off the market. And we're moving all the way back to Phoenix from Seattle to live in said UNSOLD house.
Any numbers being posted claiming the RE market is not in the shitter are the product of "creative calculation" bullshit.
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
So I will be ready to buy a home or some land for investment purposes only in around 6 or 12 months , should be a lot of good buys out there by then . The prices in my eyes are just coming back down to reality prices . I mean people were asking rediculous prices for their homes . And the feds don't appear to be budging so I dont look at it as getting any better - the low interest rates is what started this whole scramble to begin with .
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
^^^ arguably, there will be some major bargains in 12-18 months time -
A. because of all of the ARM interest rate resets due next year, which will wind up bankrupting quite a few homeowners who can't refinance due to loss of equity upon reassessment plus lack of cash to cover the shortfall, and
B. because the 'tin foil hat' crowd is of the opinion that the Fed has been massively under-reporting inflation figures and holding interest rates steady to create 'window dressing' prior to the upcoming election, but that next year the Fed will have no choice but to raise interest rates even further or risk collapse of the US dollar.
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
and here's a fresh news blurb regarding the sales of new homes ...
(snip)"Inventories of unsold homes are up 14.4% in the past year. The number of unsold completed homes rose to a record 157,000 in September, up 47% in the past year.
Median sales prices dropped 9.7% in the past year to $217,100, the lowest price in two years. It's the largest percentage decline in median prices since December 1970. Median prices for existing single-family homes are down 2.5% in the past year, the largest decline ever recorded.
Home builders have piled on incentives, including vacations and new cars, to sell homes. Such incentives are not subtracted from the sales price reported to the government.
"The median price series in both the new and existing home sales reports are not good indicators of short run price swings because they are impacted by shifts in the mix of homes sold," said David Greenlaw, an economist for Morgan Stanley. In September, there was a 16% dropoff in the number of houses sold for more than $200,000, and a corresponding increase in sales of homes priced under $200,000."(snip)
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
Its going to be a buyer's market again soon, woohoo.
But all of these credit poor, high debt/income ratio real estate "investors" are going to get a rude awakening trying to finance these magical money breeding "flipping properties" once creditors begin to tighten the financing reigns. Bless their hearts though. ;)
Disclaimer: I am speaking of a very specific group of ppl who come see me for financial advice. I probably don't mean you so don't take this personally. :)
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
Uh huh. I think it will be a really good time to buy in around a year :)
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
^^^ it's arguably a buyer's market already. The major problem seems to be that many would-be buyers can no longer get affordable financing even though the sale price of properties is declining. This is borne out by the fact that 'low priced' homes are still selling like hotcakes, whereas homes priced significantly above the 'median' aren't moving despite substantially reduced pricing and other incentives being offered (over or under the table).
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
But for a person who has decent cash flow but not a huge down payment, being able to buy on "terms" opens the door wide for being a home owner.
Or for a person who can buy cheaply enough to lease option a home to people with past credit difficulties, but with decent cash flow, the lease option will allow the wanna be home owners the chance to work towards their own home, allow the owner to get a little above market value rent, and be able to have enough cash flow to hold the home until values trend up again, and sell it to the optionee (if they don't back out) at a profit.
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
I think the question though is how long will prices continue to decline?
If you bought a house now and prices do continue to decline it could spell real trouble.
If you have decent credit the interest rates are still fairly good for a 30yr fixed. But you also have predatory lending agents and real estate agents that are trying to milk the last drop from the dying housing boom. Some still refuse to admit that the housing boom is even over. I think that is the other real danger in buying a home right now. If you haven't done your homework, meet a desperate lending or real estate agent, you could really regret the out come.
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
Quote:
the lease option will allow the wanna be home owners the chance to work towards their own home, allow the owner to get a little above market value rent, and be able to have enough cash flow to hold the home until values trend up again, and sell it to the optionee (if they don't back out) at a profit.
the 'tin foil hat' crowd would say that leasing is a 'desparation move' on the part of homeowners who can't get the price they need to 'break even' - and that continuing to hang onto a house in a declining market involves more risk in terms of loss of principal (i.e. the market price being even lower next year than it is this year) than the year's worth of lease payment cash flow provides.
Re: Sales of Existing Homes Fall/median price drops highest in 40yrs
article from a famous investor bbs re the 'joys' of deciding to become a 'landlord' vs selling that second home / investment property at a 'loss' ...
"One factor which I'm sure contributes majorly to the protracted declines, yet is never mentioned, is "landlord disgust". When people find themselves stuck holding residential property into a price decline, there is the understandable (but mistaken) thought that they will simply "wait a few months until things start going up again". As "a few months" turns into many months, and the decline continues, some people are generally forced to either sell at even lower prices. Those who remain, those who have a strong outside income or otherwise feel they can afford to carry the negative cash flow for a while, "decide" to become "landlords".
Oh...landlord...landLORD...that has a respectable ring to it. It evokes a commanding, upper-class image of a king sitting on a throne - not the image of the property owner spending Saturday, with a rented sewer-rooter in tow, trying to clear the tenants turds from the "throne". Not the image of sitting helpless as the tenant, who seemed so upstanding when they signed the rental contract, not paying rent but also not moving. Not the image of being dragged into court to finally evict the deadbeat, after months without rental income, only to find that the tenant is accusing you, the "rich" landlord, as a reason for not paying rent, of renting a property with a "habitability problem". And the court taking that accusation VERY seriously - you see, few citizens are aware that in most states rental properties have been "socialized" and landlords are considered a critical part of free social services to the underclass.
So, the tired landlord, feeling more bedraggled, finally gets his/her house back, 4 or 6 months late, only to find the tenant has left them a "gift": holes in walls, doors torn off hinges, water rot around the plumbing fixtures, grass 3 feet tall with a grease leaking, stripped car in on blocks in the back yard or in the driveway. And filthy...let me tell you about filthy.
So the landLORD commits to spend every weekend, and most evenings, for the next few months, fixing the property back up again. They they have to decide to (a) leave it vacant for years (b) sell it at an even LARGER loss, or (c) try renting it again. If (c) then they will likely eventually decide (perhaps after a few more rinse, wash, repeat cycles with tenants) to turn the nightmare over to a "Property Manager".
Now, in most states, "Property Managers" are required to be REALTORS. Quite a scam to begin with, as "sales skill" is approximately the LEAST important skill required to be effective at managing property and tenants. So, you are forced to choose a Property Manager - expecting professionalism, competence, frugality, honesty, and an eagles eye for discerning character in prospective tenants.
You've come to precisely the wrong place. From decades of "landlording", I tell you with great authority that AT LEAST 9 out of 10 realtor cum "Property Managers" are either incompetent, lazy beyond measure (it make no difference to them whether your property gets rented tomorrow or next month...and they became "realtors" largely BECAUSE they couldn't deal with a job which required them to be productive and reliable on a daily basis, rather than "free spirits" who work when they feel like it), or CROOKED.
MOST Property Managers quickly discover that they make vastly more money from your house (you) if it is vacant a lot and there is a neverending stream of required maintenance. Some PMs explicitly say on the contract they get a "percent" of all maintenance costs in return for "managing" the maintenance people. Some PMs have "in house" maintenance people who, of course, have to be "marked up". Some use outside "contractors" who provide a kickback to the PM in one way or another. And most PMs collect a fee, of as much as a full month's rent, for finding a tenant and getting them signed up. So, as you can see, the PMs best interests and yours are completely unaligned.
I have lost as much as $100,000 in six months of having a "professional" PM "manage" my properties versus what I was able to do, myself, when, in desperation, I finally decided to take the property back and, naseated as the thought made me at the time, continue to oversee maintenance, management, and rentup myself.
So...are you ready to sell, yet, and take your loss on your "investment" property? Have you had enough fun being a landlord?
Before you now decide to list the property at a price low enough to sell (probably substantially under market, as it is now a beat up "rental" - and that shows in myriad ways) you ought to check your agreement with your PM, if you still have them. Many PMs, realtors that they are, stick a clause in their management agreements which says that if you decide to sell during the management term, you MUST list through them!
Ah, the joys of landlording.
Hopefully you have a better idea, now, how the real estate cycle works and why it takes literally YEARS before a market reaches a bottom in prices. You also, hopefully, understand why it is not such a great decision to "just rent it" when you find that your property doesn't sell easily at a price that YOU think is right."