chart of the week - Existing Homes Inventory & months worth of supply
this one should be fairly self-explanatory
for some reason the BBS code won't bring up the chart automatically, so you'll have to click the link.
IMHO the major point would appear to be that since 2004 the number of existing homes for sale but unsold has doubled from 2 million to 4 million. At typical monthly closing rates, this translates into a 4 month supply in 2004 versus an 8 month supply now - a backlog which has not been as high since the early 1980's.
Of course, the typical monthly closing rate number probably doesn't take into account that an increasing number of would-be home buyers are no longer deemed creditworthy to obtain a new mortgage !
Discussion ? I am struck by the thought that, for anyone interested in buying a house, there are going to be some awesome bargains available once this market bottoms ... but that such a real estate market bottom is still a ways off in the future.
Re: chart of the week - Existing Homes Inventory & months worth of supply
I don't have much left to discuss.
43 month supply!!!
http://www.palmbeachpost.com/busines...ales_0526.html
how did we get a 14 year record of new home sales? (may require some info you can fake)
http://www.azcentral.com/arizonarepu...adein0517.html
Re: chart of the week - Existing Homes Inventory & months worth of supply
^^^ the bottom line is pretty well covered by this snippet from your link ...
(snip)"Some analysts see these programs as a sign that builders are in trouble and doing anything it takes to lock in sales.
"These trade-ins signal the real trouble some Phoenix builders are experiencing now," said Jim Belfiore of Phoenix-based Belfiore Real Estate Consulting "We thought in December home-building was starting to make a real turnaround. But this move signals real desperation by some."
John Burns, a California-based analyst who follows the national new and resale markets, isn't so sure.
"Builders have to sell homes," he said. "Basically, builders that are somewhat desperate and don't have strong balance sheets need to sell some homes to appease their lenders."(snip)
In other words, when a new home builder has constructed a spec house using borrowed money, the builder is stuck making the loan payments plus the property tax payments plus watching the market price of the house decline with every passing month. However, the builder also has some degree of profit margin to play with in most localities. Thus when a new home builder finds himself bumping up against his company's credit limit because he has $10 million dollars tied up in 25 unsold new houses, he can justify taking a few lumps or employing gimmicks in order to turn some of those unsold houses into cash even if there isn't much / any profit margin left over. If the builder doesn't have enough cash to make the loan payments, property tax payments, to pay subcontractors etc. that spells a quick trip to bankruptcy court. So selling off some housing inventory, even if done at break-even, is necessary to keep the company solvent.
However, if distressed sales by new home builders undercut the current real estate market pricing, it's really bad news for individual homeowners who is trying to get out from under a 1-2-3 year old house with an oppressive mortgage that they are no longer able to re-fi !!! After all, what sort of 'new home buyer' is going to pay the same (or higher) price for a 1-2-3 year old house versus a brand new never lived in house !
Re: chart of the week - Existing Homes Inventory & months worth of supply
The other thing is homebuilders loan agreements are written with requirements to keep cash flow at certain levels, which they have been unable to do this year, so technically many of them are in breach of their agreements. However, the creditor's really can't do anything about it at this point.
For the life of me, I can't figure out why Icahn is/was so interested in WCI (his offer expired), but AFAIK he still owns 15%. Of all he companies he could buy, he chose WCI?
Re: chart of the week - Existing Homes Inventory & months worth of supply
^^^ because Carl knows something that we don't !!!
Re: chart of the week - Existing Homes Inventory & months worth of supply
Quote:
Originally Posted by
Melonie
^^^ because Carl knows something that we don't !!!
I did a lot of homework on WCI.
The only thing I could come up with is he saw it as the weakest in the market. He used a tender offer and his name to prop up shares. Now some stupid hedge fund is going to come along and buy it because of his involvement and actually pay him a premium for fucking them over.