Housing Bubble Busted

[unlawflcombatnt]

April Housing Starts were MUCH less than predicted. Though a slight increase had been predicted by the "experts," April Housing Starts actually declined significantly. April's 1.849 million annual rate is a decline of 7.4% from March's 1.996 million rate. This is the 3rd consecutive monthly decline in housing starts. The last 3 months' give a cumulative total change of -18%. This is the lowest number of Housing Starts in 17 months. ( Briefing.com )
Though the Northeast and Midwest showed increases, these were more than offset by declines in both the South and the West. Below is a graphic representation of the decline in Housing Starts over the last year.


It is also interesting to note the large excess of new home completions vs. New Home Sales. March's annualized new home sale rate was 1.213 million. In contrast, March's annualized new home completion rate was 2.077 million. This is a surplus of new home completions of 864,000 per year.

For March, there were 194,000 new homes completed. In contrast, only 119,000 new homes were sold. This leaves an increase in surplus homes of 75,000 for the month of March alone. This can be seen from the charts below from the U.S. Census Bureau.

New Home Sales



This information can be found at the U.S.Census Bureau site at: http://www.census.gov/const/newressales.pdf



New Home Completions



This information can be found at the U.S.Census Bureau site at:
http://www.census.gov/const/quarterly_sales.pdf

The supply of Existing Home is also increasing faster than sales. According to the National Association of Realtors, the supply of existing homes for sale has increased 37.5% since March of 2005.

With a supply of new and existing homes increasing faster than sales, there is nowhere for prices to go but down. And prices ARE declining. Median home prices declined 3.3% during the 1st quarter of 2006, according to CNNMoney article Real Estate Cools down. Median prices fell from $225,300 in the 4th quarter of 2005 down to $217,900 in the 1st quarter of 2006. This quarterly price decline of 3.3% follows a 1% decline during the 4th quarter of 2005, marking to consecutive quarterly price declines. Thus, median home prices have declined 4.3% in the last 6 months.

unlawflcombatnt

EconomicPopulistCommentary

Economic Patriot Forum

_________________
The economy needs balance between the "means of production" & "means of consumption."

[Boomer]

1. Just say "no" to McMansions

I'm hoping this downturn will stop the local developers from destroying a few more hundred acres of woodlands and farm land.

Probably too late, of course. They'll tear it all down, THEN stop development, and the bare lots will just gather weeds.

[MADem]

4. Time for some Johnny Appleseeds to do a little planting on those lots

And hope for rain!

Nature has a way of coming back, if people leave her be...

[thereismore]

2. According to your graphic, the bubble burst in March 05.

I am not fully convinced the April 06 data are fully conclusive.

[unlawflcombatnt]

7. Data

I'm focusing largely on the March data, which should already be in. The monthly New Home Sales were markedly less than monthly New Home Completions. For March 2006, the supply increased MUCH more than the sales. This is on a 1-month basis, as well as an annual basis.

Given that prices have declined 4.3% over the last 6 months, and 3.3% over the last 3, these numbers are consistent with an increase in supply of new homes over demand for new homes.

[LSparkle]

3. 4 out of 10 home sales are SECOND, third, etc. homes ... ?

Anyone else heard that stat? It could have been "4 out of 10 new home sales" or "4 out of 10 new home constructions" or something, but almost half of SOME part of the much-heralded housing market isn't about PRIMARY residences ... ???

[Robbie Michaels]

5. Most homes on the market

Especially condos, are investment properties. In some places, there will be a fire sale in the coming months.

[Eurobabe]

6. Good, I'll wait.

Seems like a whole lot of speculatin' going on.

[unlawflcombatnt]

8. Speculation

Earlier this year many commentators put non-residential home sales, including vacation homes, at over 35%. If a large part of those go up for sale, it definitely will flood the market.

[cobalt1999]

36. I agree...

in Florida, the payments for a condo were approaching 2X what you could rent it for. No way was that sustainable as an investment property. The condo market is about to totally collapse when those interest payments come due and people realize there is no one to flip it to.

[unlawflcombatnt]

9. 4 out of 10

I think that's pretty close based on earlier estimates.

Another interesting statistic would be how many owners of residential homes are hoping to upgrade to a better home. That would put even more homes on the market.

Also, there will be fewer new purchases of 2nd homes using home equity loans off the original home, now that interest rates are rising and home prices declining.

[DoYouEverWonder]

10. All I know is that there are For Sale signs

popping up all over the place. This is in areas where you couldn't touch anything for the last 2 years.

[anitar1]

11. Home sales are dropping here in Eugene, Oregon.

According to the local news last night. but I drove across town today and saw a large "development" site of many small houses going in. It is on a large plot of land and they are putting them quite close together. Very unattractive.

[PsycheCC]

18. Same thing happening where I live. Whatever happened to yards?

[BigYawn]

37. People do NOT want a big yard anymore...

It takes too much of your time. Not with cable TV
offering 130 channels, sports clubs & bars popping up
every where, & DVD sales going through the roof.

[PsycheCC]

38. I hope you're kidding, but I fear you're not.

[KoKo]

41. It's gonna be hard to plant that sustainable garden and position your

solar panels without a little yard space. But...different strokes for different folks. :shrug:

[IndyJones]

50. People with kids want big yards.

[Tiggeroshii]

12. Wow.

I'd kill to be able to afford rent in Cali on full time minimum wage...

[AX10]

13. This was going to happen sooner or later.

.

[unlawflcombatnt]

14. Time

It certainly was destined to happen. And of course, there are commentators and bloggers all over the web trying to deny the existence of a housing bubble, and that the housing industry is in decline.

It gets harder and harder to deny the decline, especially when the numbers are staring them in the face.

[unlawflcombatnt]

15. Homebuilder Sentiment Sinks to Lowest Level in 11 Years

"U.S. homebuilder sentiment slumped to an 11-year low in May amid rising mortgage rates, declining affordability and the retreat of speculators, the National Association of Home Builders said on Monday.

The NAHB/Wells Fargo Housing Market index fell six points to 45 in May -- the lowest level since mid-1995 -- from an upwardly revised 51 in April, the group said..."

http://news.yahoo.com/s/nm/20060515/bs_nm/economy_housing_dc

[EconomicPatriot]

16. Thanks

Thanks for the links, though I'm still not sure what I'm looking at from your post.

[AzDar]

17. Unlawflcombatnt, if I may...you seem to be quite knowledgeable

about the housing market,when do you suppose the bottom will truly fall out?
We've been priced out for the last two years here in AZ, and are hoping to be able to buy in the next 18 months.
Too soon? Too late?
I'd appreciate any input...

[catmother]

20. don't know. my husband and i were just saying earlier that we

could not afford the house we are living in if we had to buy it now. in 1996 we bought 2-1/2 acres for $48,000. 1 acre is now going for about $340. we built our house 2002 before everything went sky high -- ran us about $270,000 -- upgrades galore. so now we're told it's worth a million. i think that's totally inflated. i feel it's worth maybe $700-750.

my hairdresser just bought a 1500 sq. ft. house built in the 60s but remodeled in south scottsdale. cost her $390,000. her mortgage payment is $2600 a month. she's only 27. i can't even imagine having a payment that high.

i would say wait. i wouldn't buy anything right now. i think the prices are inflated and will come down.

[unlawflcombatnt]

21. The Bottom

I appreciate your faith in my knowledge. However, I'd hate to guess at when the bottom's going to drop out. As you know, many have been predicting this decline for quite sometime.

I definitely would not buy a house at the present. Price appreciation has pretty much stopped in Southern California, and is declining in some places.

I think waiting is the best choice at present. But if I had to guess, I'd say prices will be lower in 18 months than they are at present. Many current sellers or would-be sellers still haven't accepted the idea that the housing bubble has burst. As a result, many are still holding out for higher prices. I think this will change.

In the major Southern California markets, asking prices are slightly lower than they were 6 months ago. But unsold inventories have risen tremendously in that time, in some cases over 70%. And inventories continue to rise in all major Southern California markets.

The "asking" price is not the same as the selling price. It's what the seller hopes to receive, not what he actually gets. With inventories continuing to rise, the asking price will have to decline eventually. I think the best plan is to wait for that to occur.

Also, many adjustable rate mortgages are expected to experience large increases within the next 18 months. That will make mortgage payments unaffordable for many current owners, forcing many to sell and putting still more homes on the market.

I suspect price declines will occur in Southern California before they occur in Arizona. So I'd watch to see what's happening in Southern California. I'd also watch to see what's happening in Las Vegas, since it is also extremely overpriced.

I own some barren land in Arizona myself. And I was offered over 4 times what I am paying for it within the last year. And it's out in the middle of nowhere. And homes in the area have experienced tremendous price appreciation in the last year. So I don't think the bubble has burst yet in Arizona.

If my memory is correct, Phoenix area home prices are still rising. Again, I would wait.

Remember the "what goes up, must come down" adage. Also realize that the underlying fundamental that normally drives home prices is buyers' ability to pay those prices. When home prices rise faster than buyers' ability to pay for them, especially as much as has occurred over the last 5 years, prices MUST come down. It's only a matter of time.

[AzDar]

23. Thank you for that....your advice is appreciated. I've noticed that

if one asks anyone even remotely connected to the R.E. biz, it's ALWAYS a good time to buy,lol.
We'll be keeping an eye on the California and L.V. markets in the coming months, per your advice.

[unlawflcombatnt]

32. Your Welcome

I'll try to keep you updated on what I find out in the mean time.

It's also worth watching what Bernanke and the banks are doing. If banks loosen their loan requirements even further (which seems impossible), it will delay things.

Given Bush's economic buffoonery, however, I see no way that the decline can be prevented. There's simply no chance that incomes will increase enough to prevent a home price decline.

[Tansy_Gold]

25. I would also recommend waiting if you are in AZ now

The AZ market is in a holding pattern.

I sold a house in one part of the Phoenix metro area a couple months ago and got my full asking price after the property had been on the market 7 days. Within a month, my realtor said nothing was moving. Nothing. Maybe some of the new tract homes, but nothing else.

After selling my place, I bought another in a different part of the Valley that I was able to negotiate down about $40K because in just 30 days, the market had changed that much. Many properties that I looked at in January and February are either still unsold despite dramatic reductions in price. One that is just down the road from me has been on the market over six months and is now at least 15% lower than it was in January.

I'm of the old school that says buy what you can as soon as you can, but make sure you can afford it over the long run. Unless you can save a lot of cash by renting, your equity in a home will almost certainly appreciate more than rent receipts.


Tansy Gold

[unlawflcombatnt]

28. Arizona

Tansy_Gold,

Thanks for your input on the Phoenix area. The last I'd heard was that prices were still rising. But apparently that's changed.

Southern California is also in kind of a holding pattern, with the same continual rise in inventories. It's almost like a dam waiting to burst. When it does, the prices are going to sink. As mentioned previously, despite the slowdown in housing starts, housing completions are still greatly exceeding new home sales.

[QC]

29. Inventory in Phoenix is about to hit 50,000.

It's one of the biggest bubbletowns of all.

[unlawflcombatnt]

33. Thanks

QC,

Thanks for the update on Phoenix.

Inventories are skyrocketing in all Southern California markets as well.

[unlawflcombatnt]

56. Arizona (Phoenix) Housing Crash 5-23 update

AzDar,

It appears I've understated the housing decline in Arizona. A lot. When I saw the actual numbers I practically fell out of my chair.

Median asking prices for homes have declined almost 9% since August (from $379,900 on 8/14/05 to $349,000 on 5/21/06.)

Meanwhile, Phoenix inventories have skyrocketed during that time. August 2005 inventories have increased from 7,447 to 24,187 at present. This is a 224% increase in inventories. This information can be found at: HousingTracker-Phoenix

I would no longer recommend watching Southern California for "direction" or "trend." Phoenix appears to be way ahead of us here in California.

P.S.,
I'd advise you to ignore Housing Tracker's calculation of the changes and do them yourself. They've understated the changes significantly.

[lumberjack_jeff]

60. The thing that is most likely to deflate home prices...

... is inflation and rising interest rates.

The question you should ask yourself is which is better: a $400,000 house @ 6.2% interest ($2143/month) or the same house at $300,000 with a 8.2% mortgage ($2617/month)

Are homes in your area likely to drop more than 25% in value? Maybe, but not in mine.

Personally I've lived through too many "I wish I'd a' bought..." too many times to be quick to advocate sitting on the sidelines.

[CAcyclist]

70. But also keep in mind:

property taxes are lower on a house that costs you less.

interest on the mortage is deductible.

It's hard to see if you included those factors in your example.

[lumberjack_jeff]

77. No, I didn't - but...

1) mortgage interest deductions have one big flaw - you have to pay the interest first. You're never better off paying 2% higher rate unless your tax rate is >100%
2) property tax rates are established by assessing all the properties in the district. If everyone's house drops in value, everyone's tax rates will inrease by the same amount to compensate. Government won't take 25% less just because houses dropped in value.

[unlawflcombatnt]

72. 25% Price Decline?

Home prices have dropped 8% in Phoenix already. Are they likely to drop 25%? Yes, if the current trend continues. With a 224% inventory increase in the last 7 months, and an 8% decline in prices, I'd say prices are only beginning to drop in Phoenix.

[lumberjack_jeff]

78. A drop of 25% while interest rates stay at 6.25% would be unexpected.

I'm not intimately familiar with market conditions in every area. I only suggest that a 25% drop would be unlikely in my rural area, and quite unexpected if it were not caused by interest rate hikes.

[cliss]

19. Housing starts are a 'Leading Indicator'

This is one of the things they look at, not only at the Fed but Economists use this figure. It's a general sign of how the economy is doing. It's been a fairly reliable gauge for how the market is really doing.

And if I'm seeing correctly.....housing starts have dropped tremendously, starting with January of 2006. This is not good news, and it must have them nervous over at the Fed right now. They've probably got big sweat stains under their arms, as they try to put a good spin on this.

Not good.

[unlawflcombatnt]

31. You're Seeing Correctly

You're seeing correctly. Housing start numbers have fallen off a cliff. When Housing Starts are 1.849 million, & predicted New Home Sales are 1.150 million, you can certainly see the supply-vs-demand difference. And you can predict that Housing Starts will decline even further the following month.

[QC]

22. The Housing Bubble has gone mainstream!

I live in a major bubbletown, where construction never stops and many people have quit their jobs to flip condos fulltime.

Only a few months ago, if you mentioned the bubble here, people either looked at you as though you had just suggested that UFOs were impurifying our precious bodily fluids or got downright angry.

But now inventory is piling up, half the town is for sale, everything sits on the markets for months when it once sold in a few days, and big developers are shutting down projects. People are worried.

Good. They hoped to get something for nothing, and in the process they priced out people who actually work for a living and ensured that the local housing market will be a wreck for years to come. Let them suffer.

[unlawflcombatnt]

27. Mainstream

It certainly has gone mainstream. Late last week, even Alan Greedspan himself said the housing boom is over.

[Doctor_J]

24. "Economy is great" schreeched the Chimp and all of his liars

and the Limbeciles ate it up.

[PsycheCC]

26. Great post! I live in CA and watch home owners spend their equity

as fast as they can on new cars and toys they love. It will be interesting to see how many bankruptcies result from the burst bubble.

[laugle]

34. Geez....I detect some envy on your part,

you sound like your happy about homeowners losing their homes.

Obviously, you don't own one!! And how would you know what people spend their equity on?

[PsycheCC]

35. Ya think? I won't be sad to see stupid people who use their homes

as banks lose them. If they followed the economy at all, they would know the dangers of spending money that only exists in the minds of rabid speculators. In CA all one need do is look around to see evidence of people living beyond their means. It's a way of life out here. And if I can finally own a home because one of them is in foreclosure for being, again, stupid, I'll be very happy about that. When only 14% of the state's population can afford a home because of speculation, you'll find many more like me who should be able to own a home but won't (or can't) buy at these astronomical prices.

[laugle]

40. Like I said you sound envious,

I happen to be a realtor and my equity did increase greatly and I'm not one of those people who spend unwisely.

After all, in order to have wealth you must save your money and invest.

Sorry, but you have a really bad attitude. Why don't you save your money for a downpayment and keep your FICO score high to get ready to buy when the prices come down.

You are right, there will be foreclosures, as there have always been. What you don't seem to understand is the banks will take a loss but not to the degree you think, because the loans are high due to the high property values.

You seem to think that you can buy cheap.......WRONG!!

If you do ever buy a home I doubt it will be in California! Good Luck...

[KoKo]

43. What a snarky reply....

just because folks were "flipping" and going in over their heads with "no interest down loans" hocking their souls to a house because of "hype" you are going after someone whose circumstance you know nothing about and telling them what they should do to buy a house that they couldn't have afforded no matter how much they saved unless they wanted to hock themselves into debt forever?

You call that envy?

Hey...I'm glad you did well in Real Estate. But, not everyone could do what you did. And you use "envy" as a perjorative term. Lots of honest work hard folks have been priced out of a home for years because of the Bubble. It would be hard not to wonder about all the Real Estate Speculation and Flipping being something that was harmful to the average person who didn't have the money to do it...and all they were looking for was a place to live and raise kids in peace without taking on debt they are worried about repaying.

[QC]

45. Snarky? Sure.

But realtors are, no doubt, feeling a bit jittery right now.

They have good reason to.

[laugle]

46. I don't think it's a snarky reply

at all, when someone takes great delight in someone else's misery, i.e., a person losing their home, in order for someone else to get ahead!

I think what you meant to say is "interest only loans" and you are correct they are very risky and some may lose there homes.

A house is more than just an investment, it is a place of memories, raising your kids, backyard barbeques, entertaining friends/family and so much more, the thought of someone losing it to foreclosure is very sad. That's why I took exception to the posters delighted attitude.

As far as buying I stand by my previous post. It's good advice!

[PsycheCC]

48. Oh Please! You make your living selling homes in an insane market.

Why don't you get off your high horse and admit your agenda?

[laugle]

49. Don't be a victim, there's no future in it!

[Name removed]

52. Deleted message

Message removed by moderator. Click here to review the message board rules.

[PsycheCC]

73. The victims are the people who were conned into buying homes

they couldn't afford and now will lose everything.

[TheWatcher]

75. Don't be so self-righteous and snarky

There's no future for you at DU otherwise.

[PsycheCC]

80. Well, let's see. This person came after me personally, and I responded in

kind. As to my future at DU, I'll take my chances. Or is it just up to you?

[unlawflcombatnt]

82. Keep Posting, You've got a Bright future

You just put into words what a lot of us had only been thinking about the housing bubble and home equity loans.

Southern California has become the land of the "home-equity-loan-financed" SUV. Californians have always been bigger spenders than earners. However, the housing bubble, and the home equity loan explosion it financed, have made the "spending-to-Earning" ratio even higher.

Though your response was somewhat aggressive, so was the post you responded to. As such, I think you were completely justified in your response.

[Gormy Cuss]

66. Not everyone sees their primary residence as a home.

PsycheCC is being somewhat brutal but if you're a realtor in Northern California you must be familiar with the phenomenon of people cashing out equity for expensive cars, vacations, and other niceties that aren't essential. Some of those people are one job loss or illness away from bankruptcy. If their credit rating isn't superb they will be forced to sell their home. They have spent their equity. I have friends and neighbors who live well beyond their means through the magic of credit. I know this from conversations with them. These aren't low wage earners either. They finance cars and vacation using HELOCs. They accumulate credit card debt to the tune of 20-50K and then consolidate it to the equity line. Lenders make it easy by extending ridiculously generous terms. When we refinanced last year the lender offered us a HELOC that was twice the size of our mortgage debt. The concept of actually owning a home free and clear is becoming quaint and antiquated.

Coincidently, these are the same people who worry about how to pay for private school for their kids even though they live in one of the top rated school districts in state, and they have no money set aside for the kids' college tuition. It's one big hedonistic party of keeping up with the Joneses. It is hard to be sympathetic to their plight.

[PsycheCC]

74. A good post Cuss. I probably should have tried for this more detailed,

reasoned approach to my own response. Then again, name calling and character critique doesn't bring out the best in anyone.

[unlawflcombatnt]

55. Well Put

KoKo01,

Right on. I couldn't have put it better myself.

Real estate speculators have definitely priced many of us out of the market. Some of the stories told by speculators are absolutely disgusting. So many of them have taken home equity loans out on their first home to buy 2nd, 3rd, and even 4th homes. This greatly reduces the number of homes available, and greatly increases the price of the remainder. And these speculators take advantage of tax breaks to assist them in their unbridled greed.

Meanwhile, the banks making the loans insulate themselves from risk by selling the mortgages as mortgage-backed securities to unsuspecting buyers. Thus the banks have reduced the financial risk incurred by their irresponsible loan practices and transferred that risk on to others. Many of these mortgage-backed securities are bought by pension plans. Thus the very solvency of these funds is affected by the irresponsible loan practices of the bank selling them these mortgages. Thus many pensioners are unknowingly at risk due to the greed and avarice of banks and real estate speculators.

[PsycheCC]

57. Thanks KoKo. I read an email the other day about the 50 yr. mortgage

coming to California. The fact is that many of us just aren't willing to go into this incredible level of debt to "buy" a home. Actually, my husband and I could afford the monthly payments (we're more fortunate than the other 86% of Californians), but we just can't see buying into this runaway market. As the saying goes, "buy low, sell high." I do hope prices continue to drop so we can see the advantage of buying, but right now renting is actually a much better value than buying in terms of what you get for the money. But of course, you don't "own" anything that way. Unfortunately, many who have bought recently with "creative financing" and extremely over-valued homes, won't end up "owning" anything either.

[PsycheCC]

47. "I happen to be a realtor..." Big surprise. I imagine you're

reading this thread so you can figure out to spin the bursting bubble and dupe more people into buying homes they can't afford.

"Sorry, but you have a really bad attitude. Why don't you save your money for a downpayment and keep your FICO score high to get ready to buy when the prices come down." --Even though you're clearly a superior individual, you might have a bad attitude too if you'd been saving your money and keeping your FICO score high, waiting for the market to behave with some sanity, only to watch realtors and speculators make a fortune while you're stuck in an apartment.

Property values are high because people have been using homes like a stock market in the absence of any good stocks to invest in. There is no way they can stay this high, and even in California, prices do drop when homes become overvalued. In fact, in LA county with over 10 million residents, home prices have drooped 4% in non-inflation adjusted dollars since August of 2005. Also in LA county, inventories have increased over 50% in since August. In San Diego county, home prices have dropped 4% since August. Inventories in San Diego county have increased over 35% since August. Total national new home sales are expected to be roughly 1.1 million for April, while housing starts were over 1.8 million. Excess supply drives prices down. The links to this information are listed elsewhere in this thread. I'm sure you think you know everything there is to know on this subject, but if you think CA prices won't continue to drop then you've duped yourself too.

[unlawflcombatnt]

54. Foreclosures

"You are right, there will be foreclosures, as there have always been. "

You seem to downplay the recent increase in foreclosures as par for the course. But it is not. Foreclosures are rising now, and there'll be many more than there have been in the past, because there has never been a bubble as big as this one. There has never been anything even close.

Many respected economists, such as Dean Baker, think this will be much worse than the stock market bubble bursting in 2001. Foreclosures and the deflation of the housing bubble are not part of a "normal" cycle, as you have implied.

Obviously from some of your later posts, where you've admitted to being a real estate agent, you have a vested interest in perpetuating the myth that the housing market is not doing too badly, and that only foolish people who can't handle their credit will have trouble.

In fact, it is people such as yourself that have deceived many unsuspecting buyers into buying homes they couldn't afford and deceiving them into thinking that "real estate never goes down."

Instead of chastising someone else on this board, you should review your own very self-serving motivations. You're typical of the pot calling the kettle black.

People like you troll the internet to talk up the real estate market for your own self-serving interests. I've run into people like you before. You're every bit as honest and forthright as King George himself. People like you have perpetuated the myth that the housing bubble will never bust. In so doing, you've sewn the seeds of financial ruin for many hardworking Americans.

Though I haven't seen you do it here, I suspect you've posted overly optimistic forecasts of the housing market all over the internet. I run into your type every time I post.

I don't want to see a lot of hard-working Americans lose their homes. But I would be ecstatic to see all home speculators bankrupt and homeless, as well as all of the conniving real estate agents that have taken advantage of the ignorance of unsuspecting buyers.

[IndyJones]

51. In SD county, I read that nearly 80% of homes financed in the last

couple of years were adjustable. So as rates rise, it should be interesting to see what happens.

[unlawflcombatnt]

58. San Diego

It looks like not only is San Diego one of the major bubble areas, but it is very dependent on housing for job growth. An extremely high percentage of the jobs created since 2000 were in the real estate industry. According to Voice of San Diego article by Rick Toscano, there are 115,000 San Diegans employed in the real estate and construction industries. According to the article, San Diego job growth outside the real estate industry has been just 1% per year since 2000. See San Diego's ATM - Your House

Below is a graph of job growth comparing housing related jobs to total job growth.

http://www.voiceofsandiego.org/atf/cf/{1B6B0B5F-87AA-4272-BDBC-D99ABED5D7E0}/060126-STORY-GRAPH-TOSCANO-JOBS.GIF

[unlawflcombatnt]

53. Foreclosures are already rising

I don't know about the bankruptcies, but foreclosures are rising in Southern California. I'd expect them to rise a lot more in the near future.

It does seem like there are a lot more people driving the most expensive SUVs available since the beginning of the real estate bubble here. I suspect many of these high-priced gas-guzzlers are the products of home equity loans.

[bliss_eternal]

76. If the Reagan years are any indication

there will be many. That was our (CA's) last housing crash. What I recall of it, it got pretty bad--lots of home foreclosures, bankruptcies, etc. It got quite ugly. :scared:

[nadinbrzezinski]

30. We have been expecting this to happen for a while

I am not surprised, and this might finally be that significant event that many of us are actually dreading... can you say depresion? I knew you cuold

[unlawflcombatnt]

39. Affordability

According to MarketWatch article by Russ Nutting, housing affordability has nationwide has declined from 50.1% a year ago to 41.3% in the first quarter of 2006. However, many bubble areas were much less affordable.

"Los Angeles was the least affordable large city market, with 1.9% of homes affordable for typical families earning the median income of $56,200. The median home price in L.A. was $500,000, unchanged from the fourth quarter...

Fewer than 10% of homes were considered affordable in these California cities: Anaheim, Santa Barbara, Modesto, Salinas, San Diego, Merced, Napa, Santa Cruz, Stockton, San Luis Obispo, San Francisco, Sacramento, Madera, Riverside, Fresno, Oakland, Santa Rosa, Oxnard, Yuba City and Vallejo."

"Nationally, the median price of homes sold in the first quarter fell $4,000 to $250,000 while interest rates rose to 6.39% from 6.21%."

This article can be found at Housing Slightly More Affordable in first quarter

[Rainscents]

42. Lot of us here on DU, we knew this was coming.

We had been talking about this for past two years and I been warning my friends too.

[Orangepeel]

44. What happened in March 05? Starts rebounded from then

I do think that, at the least, the air is leaking out of the bubble. All signs point to that. But I am interested in why there was that blip before and what makes it unlikely that this is not a similar blip.

[carolinalady]

59. I posted this as a thread this weekend. Real life experience.

So I live in Carolina Beach and housing is abundant and expensive as I have posted in most housing threads. Well, for the last year, all these "luxury condos" 2500plus sq. feet with cherry floors, granite counters, 4 or 5 bedrooms and as many baths and fireplaces have been listed in the high 500's and up.

Up the street from me, (five blocks from the beach) there were 3 duplexes (6 units) that were built in the last year and initially listed at about 725K a piece. Well, needless to say they did not sell, so they decided to have an auction.

Hubby and I walked up today to see what would happen. The units were gorgeous. 7 bedrooms, 4.5 baths and a rooftop deck with a panoramic view of the ocean. The crowd was filled with realtors from all the competing agencies. They opened the bid at 500K and nothing!!!! Not one bid.

To make a long story short they ended up selling 4 units (two of them with elevators). One sold for 375K; two for 380K ; and the fourth for 365K (elevator unit). The auction was abruptly shut down and the realtors were speechless. You could have heard a pin drop. The auctioneers were flustered and kept stopping the auction to try and pump the price up. It was the strangest thing I have ever seen. There was a 10 percent buyer's premium added to the price, so the top price was 418K.

Unbelievable and I will be watching to see what happens next. We have several hundred of these brand new properties on the island for sale. Should be interesting.

[1932]

62. Thanks for posting that story.

[michaelwb]

61. And here in Boston

Buyers' market
A record glut of houses for sale in Mass. should send prices tumbling>

"And across Massachusetts, the average number of single-family homes for sale each month during the first quarter of 2006 rose by 16,467, to a record 55,338 homes, the Massachusetts Association of Realtors said."

"Single-family home sales fell 16.5 percent last month, to 4,142 statewide, compared to the same month last year.

The condominium market, which until recently had better withstood the housing slowdown, experienced a 15.3 percent decline in sales last month, to 2,420 units."

I can see this happening around me. The apartment where I live is one of three two bedrooms in a building in Boston. The landlord has been trying to sell them as condos for a year now with no success.

And I have never seen so many for sale signs as I do nowadays. Several people have made exactly the same comment to me. They're everywhere.

[unlawflcombatnt]

63. Thanks for posting that.

I appreciate you posting that. 15-16% declines in home prices over 1 year are pretty significant. I hope you don't mind if I insert the chart from your article here to give a more graphic view of what's happening in Boston. Below is the graph of Boston area prices.

[michaelwb]

65. Not prices

Re-read the article and look at the chart.

That's not a decline in prices (which we've also had) but a decline in sales.

Number of units sold, not dollars.

[unlawflcombatnt]

71. You're Right, Here are the Prices

You're Right. My mistake. That graph is on "sales," not prices. Below is the graph from the same article on prices.




Note that prices have declined significantly since August of 2005 and are definitely on a downward trend.

Also note that home inventories have increased a whopping 53% in the last year in the Boston area. It looks like there are all the makings of a severe price decline in Boston, a decline of which is already underway.

[Clarkie1]

64. Excellent news. n/t

[Deja Q]

68. The corporations have already moved enough of our base overseas.

Dunno how it's excellent for you or I, but they will survive and that's good enough for me.

[Deja Q]

67. Jan 05 looked 'bust' too.

I'd wait another month or two.

And if it is the end. Oh well.

[unlawflcombatnt]

69. April New Home Sales DECLINE

Despite the public dissemination of manipulated numbers by the Bush dictatorship, April New Home Sales were less than March New Home Sales. Below are the actual numbers from the U.S. Census Bureau.



The current (revised/manipulated) numbers can be found at: Census-New Home Sales

Note that April's New Home Sales were 107,000, which is 3,000 less than the downwardly revised March total of 110,000. That's a monthly sales decline of 2.8%.

In fact, if you refer back to the OP, you'll see that March's total was originally 119,000, instead of the currently stated 110,000 as the government. This downward revision of the previous month's numbers occurs almost every month. It makes the current months numbers look less bad.

If the original March total of 119,000 was used, the decline in 1-month sales for April would have been 12,000, or a whopping 10%. (Note also that January and February New Home Sales totals have been downwardly revised.)

I recommend that anyone interested in following government manipulation of statistics copy down the charts from the OP. They are no longer available at the Census Bureau site, so no one will ever be able to go back and see where they altered previous' months numbers.

[SpiralHawk]

79. "Enough noise, you proles. Just shut up and sit down...

this is all working out beautifully, and you Underclasses will just have to be content with your lot in life. I can assure you that my republicon cronies and I will find a way to make a Massive Profit off of this bubble collapse." - George AWOL Bush and Fat Cat neoCON Cronies

[unlawflcombatnt]

81. LOL

I think I heard the great "decider" say that myself.