Mountains of homes still listed for sale

[Herman Munster]

http://www.miami.com/mld/miamiherald/16716581.html

The story of housing in South Florida in 2006 was one of waiting -- buyers waiting for the right price, sellers waiting for the right buyer, everyone waiting to see where an uncertain market would go. Now the question is: Will 2007 be the year the market turns around? The answer lies in the mountain of homes across South Florida with ''For Sale'' signs -- the single biggest indicator of a market out of whack.

If you look only at homes that sold throughout last year, prices on the whole went up 8 percent to $280,000, according to a Miami Herald analysis of sales in Miami-Dade and Broward counties. However, sales are only the tip of the giant iceberg blocking the market. The real story lies in the homes that did not sell. For every home that sold in each month of 2006, an average of 14 did not, according to Multiple Listing Service data. The number of homes on the market doubled to almost 66,000, as sales dropped to their lowest level in a decade.

The backlog for houses runs all the way from the least-expensive fixer-upper to the luxury mansions. But it's most bloated in the middle range of $200,000 to $499,000, where Alvarez's house falls -- along with 60 percent of houses for sale in South Florida. Alvarez's broker, Leigh Fortuna, demonstrates the problem as she spreads out a map of the neighborhood, covered by a jumble of dots marking homes for sale. ''The house is priced well; there is just a lot of competition,'' says Fortuna, who works with Esslinger Wooten Maxwell in Coconut Grove. ``Within one square mile, there are 42 other homes for sale that are like us.''

A normal market has six to 12 months' worth of houses for sale. But at the current sales pace, it's up to 16 months in Broward and 18 in Miami-Dade. For condos in both counties, it's more than two years. Anxious sellers are dangling incentives in front of buyers that effectively lower prices by as much as 5 percent to 10 percent. More than 100 sellers with EWM Realtors alone are offering to pay all closing costs.

[whistle]

1. Expect a financial disaster anytime now

[rzemanfl]

2. The graph at this link explains it all:

http://bigpicture.typepad.com/comments/2005/12/chart_of_the_we.html

BushCo used interest rate reductions to hyper inflate the housing market to keep the economy afloat after 9/11. It is coming home to roost.

[Robson]

4. Pouring gasoline on a rock fire

Agreed...the US economy is not one of robustness and widespread confidence. It is one that was fueled by unnaturally low interest rates, removal of equity from homes, huge government spending on multiple wars, irresponsible tax cuts, foreign borrowing and corporate repurchase of stocks.

It's the equivalent of pouring gasoline on a burning pile of rocks. The rocks continue to burn but only because of external inflammable forces. Once the gasoline is turned off the rock pile will go out and cool immediately. Bush is doing his damndest to keep the fires going and dollar relatively strong until he leaves office.

[rzemanfl]

5. Bush will never be able to keep the ball in the air another two

years. I am having a hard time just absorbing the increases in insurance premiums cause by the storms of 2004 & 2005, plus being forced to insure non-existent "value" and things I don't even have in order to get coverage. I cannot imagine having to deal with an interest rate increase besides (we have a fixed rate mortgage, the escrow is our problem). The money is coming out of what would otherwise be spent on travel and entertainment. I don't miss the entertainment, but all my children but one and my grandchildren live far away.

The only thing I'd differ with you on is "removal of equity"-the equity often is fake-brought on by Federal Reserve policies. We bought this house for $69,000 ten years ago and at the height of the boom we could have sold it for $215,000. We've put ten grand at most into it since we bought it. The lot alone appraised for $60,000 about four years ago. That is just nuts.

[knitter4democracy]

3. There are a lot of homes for sale here in Battle Creek.

Bad economy. We're in a depression up here, and I think most of the rest of the country is, from what I read and hear.