Real estate

Top 868. Nov 28, 2005 9:43 AM

» permabear - Existing home sales fall 2.7% in Oct.

Existing home sales fall 2.7% in Oct.
U.S. housing market has peaked, economist says

By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) - Sales of existing U.S. homes dropped 2.7% in October, signalling that the sizzling housing market has peaked, the National Association of Realtors said Monday.

Existing home sales fell to a seasonally adjusted annualized rate of 7.09 million from a revised 7.29 million in September. Economists were expecting a smaller decline in October to about 7.20 million, according to a survey conducted by MarketWatch. See Economic Calendar.

The number of unsold homes on the market rose 3.5% to 2.87 million, the most in nearly 20 years. The inventory represents a 4.9-month supply at the current sales rate, the most in more than two years.

The median sales price has risen 16.6% in the past year to $218,000. It's the fastest price appreciation since July 1979, when inflation was raging at double-digit rates.

The drop in sales and rise in inventories in October "signals that the housing sector has likely passed its peak," said David Lereah, chief economist for the real estate group. Read the full report.

"Make no mistake, slowing has occurred," he said.

"We expect further cooling in coming months," he said. Hot housing markets are transitioning to a buyers' market. Nevertheless, activity remains healthy.

Sales peaked at a annual pace of 7.35 million in June.

Lereah now expects record sales of 7.11 million in 2005, with a slowing to 6.86 million in 2006.

Sales fell in all four regions in October, led by a 7.4% decline in the Northeast.

Sales of condos fell 4.4% to an annual rate of 862,000, while single-family home sales dropped 2.5% to 6.23 million.

Hurricane Katrina has had a net positive impact on existing home sales, Lereah said, citing huge sales gains in Baton Rouge, La., Mobile, Ala., and Houston. Excluding Katrina, sales would have fallen 3.2%, Lereah said.

-- posted by permabear

Top 869. Nov 28, 2005 3:40 PM

» Jas_Jain - HOME PRICES IN CALIFORNIA ARE DOWN 5.27% IN TWO MONTHS, 27.73% A

HOME PRICES IN CALIFORNIA ARE DOWN 5.27% IN TWO MONTHS, 27.73% ANNULIZED, & Lot More

Tom wrote (in response to my original editorial on Schumpeter’s… Real Estate) :
>
> The intellectuals have already tried to destroy capitalism, but failed. They will try again I am sure, but if you believe in democracy,

No, I DON’T believe in democracy! Its decades are numbered, as in 2, 3, or 4.

>then you have to believe that a few elitist intellectuals with wrong ideas cannot possibly destroy capitalism.

Capitalism WILL BE DESTROYED by the capitalists! The Corporate Crooks of America (CCA) and Bankrupters and Fraudsters of New York City (B FNYC) have already done everything that is needed to discredit capitalism. It is not the system, but it’s the people that make any system fail or succeed. Blind faith in any system serves no other purpose than to disregard the abuses and the excesses of the system.

>It could happen in places like China (where there is no democracy), but not here.
>

I know Americans are very conceited on this subject. I call it The Fatal Conceit (title of a book by Hayek, one of the best capitalistic thinker and defender).

> Since there are no signs of monetary deflation, there is no need to worry about it (or do something about it) today.

There are no signs of a snow storm in the mountains where I live but I can bet that there will be one before Christmas. We ARE in the Longwave season (winter) where deflation is unavoidable. Postponing it makes it only more severe in the future.

>Also, I don't think there is a housing bubble. The housing market is near the peak of the cycle and housing is expensive, but just because something is expensive, it doesn't always mean that there is a bubble.

Yeah, keep dreaming soothing dreams.

>As the housing market cools down, some home owners will fell a lot of pain, but it won't be the end of the world for them. A growing economy should ease the pain some what.

Who can guarantee “a growing economy?” What do you mean by some homeowners? You mean, only 20%? When the housing prices fall, and they will, it will cause pain to 30-40% of so-called homeowners. HOME PRICES IN CALIFORNIA ARE DOWN 5.27% IN JUST THE PAST TWO REPORTING MONTHS. Here is data:

CA Median Single Family Home Resale Price:

Oct-05 $538,770 -5.27% in two months
Sep-05 $543,980
Aug-05 $568,730

Also, see the article below on the default rate.

>It all look pretty good for equity right now.
>

Yeah, just like when the death row prisoner is given his last meal.

Jas
-----------------------------------------------------------
Media contact:
Mark Giberson (213) 739-8304
E-mail: markg@car.org
For release:
Monday, Nov. 28, 2005
Median price of a home in California at $538,770 in October, up 17.2 percent from year ago; sales decrease 2.8 percent
LOS ANGELES (Nov. 28) – The median price of an existing home in California in October increased 17.2 percent and sales decreased 2.8 percent compared with the same period a year ago, the California Association of REALTORS® (C.A.R.) reported today.
“While California is still experiencing year-over-year double-digit price appreciation, prices are starting to level off compared with the statewide peak reached in August 2005,” said C.A.R. President Vince Malta. “Regionally, the median price continues to post strong gains, with the High Desert, Riverside/San Bernardino, and San Luis Obispo regions hitting record highs last month.”
Closed escrow sales of existing, single-family detached homes in California totaled 621,530 in October at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 2.8 percent from the 639,570 sales pace recorded in October 2004.
The statewide sales figure represents what the total number of homes sold during 2005 would be if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during October 2005 was $538,770, a 17.2 percent increase over the revised $459,530 median for October 2004, C.A.R. reported. The October 2005 median price decreased 1 percent compared with September’s $543,980 median price.
“Year-to-date sales in October were 3.1 percent above last year’s level, on track with our expectations for 2005,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.
Highlights of C.A.R.’s resale housing figures for October 2005:
. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2005 was 4 months, compared with 3 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
. Thirty-year fixed mortgage interest rates averaged 6.07 percent during October 2005, compared with 5.72 percent in October 2004, according to Freddie Mac. Adjustable mortgage interest rates averaged 4.86 percent in October 2005 compared with 4.02 percent in October 2004.
. The median number of days it took to sell a single-family home was 35 days in October 2005, compared with 34 days (revised) for the same period a year ago.
Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 throughout the state. MLS median price and sales dataassociations of REALTORS for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 97 percent or 391 of 403 cities and communities showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/index.php?id=MzU2NTg=.
. Statewide, the 10 cities and communities with the highest median home prices in California during October 2005 were: Laguna Beach, $1,670,000; Los Altos, $1,585,000; Manhattan Beach, $1,437,500; Burlingame, $1,400,000; Saratoga, $1,377,500; Newport Beach, $1,305,000; Calabasas, $1,162,000; Santa Barbara, $1,125,000; Mill Valley, $1,062,500; Los Gatos, $985,000; Rancho Palos Verdes, $985,000.
. Statewide, the 10 cities and communities with the greatest median home price increases in October 2005 compared with the same period a year ago were: Twentynine Palms, 93 percent; Laguna Hills, 76.1 percent; Upland, 52.3 percent; Yucca Valley, 52.3 percent; Sanger, 48.4 percent; Oakdale, 47.8 percent; Desert Hot Springs, 47.7 percent; Porterville, 47.5 percent; Patterson, 46.5 percent; Rosemead, 45 percent; Rancho Cordova, 43.9 percent.
Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

October 2005 Regional Sales and Price Activity*
Regional and Condo Sales Data Not Seasonally Adjusted
Median Price Percent Change in Price from Prior Month Percent Change in Price from Prior Year Percent Change in Sales from Prior Month Percent Change in Sales from Prior Year
Oct-05 Sep-05 Oct-04 Sep-05 Oct-04
Statewide
Calif. (sf) $538,770 -1.0% 17.2% -4.5% -2.8%
Calif. (condo) $429,090 1.1% 15.2% -13.7% -5.2%

C.A.R. REGION
Central Valley $358,650 -0.7% 20.9% -14.0% -10.5%
High Desert $315,870 1.1% 31.9% -4.1% 24.1%
Los Angeles $557,730 -0.6% 21.7% -22.5% -2.7%
Monterey Region $717,030 0.6% 13.5% -23.3% -25.7%
Monterey County $675,000 -0.7% 16.8% -24.2% -22.0%
Santa Cruz County $769,000 2.5% 16.5% -22.3% -30.7%
Northern California $435,180 0.1% 17.9% -15.7% -21.7%
Northern Wine Country $628,800 -1.7% 20.7% -23.7% -17.4%
Orange County $701,520 -1.0% 12.8% -11.8% 5.3%
Palm Spgs/Lwr Desert $348,430 -6.1% 1.8% -12.2% 3.3%
Riverside/San Bern. $394,840 1.4% 24.2% -16.6% -7.5%
Sacramento $383,280 -0.2% 13.5% -12.7% -19.1%
San Diego $601,850 -1.7% 6.2% -13.8% -10.5%
San Francisco Bay $719,660 1.4% 10.6% -9.4% -10.7%
San Luis Obispo $603,120 0.2% 29.5% -19.2% 20.9%
Santa Barbara County $610,290 -0.1% 0.1% -11.6% -23.8%
S. Barbara S. Coast $1,225,000 -16.9% 18.4% -18.5% -35.3%
No. S. Barbara County $466,000 0.7% 7.9% -9.1% -16.7%
Santa Clara $741,000 1.1% 16.5% -11.1% -14.0%
Ventura $677,780 -0.1% 15.9% -22.2% -7.2%

na – not available
*Based on closed escrow sales of single family, detached homes only (no condos). Reported month to month changes in sales activity may overstate actual changes because of the small size of individual regional samples. Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home. Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.
sf = single family, detached home

Source: California Association of REALTORS®

Median Prices By Region - Current Month vs. Year Ago
Oct-05 Sep-05 Oct-04
Statewide
Calif. (sf) $538,770 $543,980 $459,530 r
Calif. (condo) $429,090 $424,580 r $372,600

C.A.R. REGION
Central Valley $358,650 $361,290 $296,550
High Desert $315,870 $312,410 $239,400
Los Angeles $557,730 $560,990 $458,210
Monterey Region $717,030 $712,800 $631,810
Monterey County $675,000 $680,000 $578,000
Santa Cruz County $769,000 $750,000 $660,000
Northern California $435,180 $434,690 $369,060
Northern Wine Country $628,800 $639,390 $520,980
Orange County $701,520 $708,840 $622,090
Palm Spgs/Lower Desert $348,430 $371,250 $342,310
Riverside/San Bernardino $394,840 $389,450 $317,990
Sacramento $383,280 $383,920 $337,780
San Diego $601,850 $612,030 $566,740
San Francisco Bay $719,660 $709,980 $650,920 r
San Luis Obispo $603,120 $602,160 $465,560
Santa Barbara County $610,290 $610,710 $609,850
S. Barbara S. Coast $1,225,000 $1,475,000 $1,035,000
No. S. Barbara County $466,000 $462,700 $432,000
Santa Clara $741,000 $733,000 $636,000
Ventura $677,780 $678,380 $584,950

na - not available
r - revised
Source: California Association of REALTORS®

-----------------------------------------------------------
California real estate defaults rise

Slowing price appreciation partly to blame

Monday, November 28, 2005

Inman News

Foreclosures.com, a real estate information publisher and investment advisory firm, reported today that mortgage defaults are rising in California, due in part to a slowdown in price appreciation.

Alexis McGee, Foreclosures.com president, reported 10,247 notices of default for third-quarter 2005 in major Southern California counties, while in eight of the nine San Francisco Bay Area counties the total was 3,150. "Defaults in California's southland are moving off the historic baseline because the hot markets there are finally cooling down," McGee said in a statement.

She added that defaults were still low in the San Francisco Bay Area because the price correction there had just barely begun. "We saw a little jump in Sacramento County to 1,051 defaults in the third quarter, up from 919 in the second quarter, and that market is definitely slowing, especially at the high end." She went on to say that when prices cycle over the top, weakness first appears in the most expensive segment of markets across the country.

"As interest rates rise, we'll see an end to the price boom of the last several years," McGee stated. "But we won't see a price crash like we did in the '90s. The high inventory just isn't there. We will see an increase in mortgage defaults for several reasons." She cited the example of a rise in the use of adjustable-rate mortgages. "As rates rise, their payments will be going up. With little growth in real personal income, those households are vulnerable."

She added, "We teach our investor clients how to first offer defaulted homeowners free help on finding workout solutions with their lenders in order to keep their homes.

"If that is not possible, then they help them preserve some of their equity to get a new start, by selling their way out of foreclosure. Our clients save many more homes than they buy. Either way, the homeowners avoid losing everything in a foreclosure auction."

Foreclosures.com publishes foreclosure property information in six major U.S. markets and offers training and investor advisory services. Foreclosures.com also announced today that it has redesigned its Web site, which has over 700,000 nationwide foreclosure property listings, and the company also launched an interactive foreclosure investors' Web site.

-- posted by Jas_Jain

Top 870. Nov 29, 2005 4:11 PM

» Jas_Jain - New Home Sales Report: How Many Ways Can We Mislead You?

November 29, 2005

New Home Sales Report: How Many Ways Can We Mislead You?

When an exiting home is resold it is not counted as sold until the title has been legally transferred, i.e., the Deed of Trust granted to the buyer. This is like a marriage for the new buyer. However, the same standard is NOT applied when a New Home, or New Hope, these days in places like California, is reported as “sold.” Unlike the buy of an existing home, the New Hope “buyer” is merely letting know his intention to date. Lot can happen between that intention and the altar.

How Many Ways Can We Mislead You?

Hopebuilders are members in good standing of Corporate Crooks of America. The number one requirement to join this band of brothers is the oath to put out reports that have at the minimum misleading headlines, but unusually data that does not exactly mean what it says, and to profit personally from such ploys by selling the company’s Scam at a much higher price than they would have been able to sell otherwise with totally honest reporting. The most successful Crooks among Hopebuilders, recently, have been the two Toll Brothers and the CFO of Toll Brothers.

Way #1

In most cases a New Hope that is sold is nothing more than a lot, in a development, where the buyer selects a plan, sees a model home, or just the artist’s view, and puts a deposit of $5,000, or more for expensive New Hopes. Usually, it takes six to twelve months before the buyer gets the title if everything goes as planned. Therefore, a New Hope is reported sold long before it is really sold. Many of these buyers have the I Can’t Lose attitude during the recent boom, because unless the prices have gone up while the New Hope is being erected he, or she, can simply walk away.

Far more important, especially, in today’s environment in Southern California, is that if the prices do decline during the romance phase, he, or she, WILL walk away. As you can see, this Way is perfect for speculators. Speculators win during the price boom period and many flip the property, i.e., sell before they ever occupy. During the price decline, the Hopebuilder will be left to resell at a lower price and hold it unoccupied for several months. IN A PERIOD OF PRICE DECLINE, OR EVEN IN A FLAT PRICE ENVIRONMENT, MANY OF THE ORIGINALLY REPORTED SALES ARE NOT CONSUMATTED.

Way #2

Let us suppose that a plan that was listed for, say, $329,000 six months ago, the price was just for the basic plan and the buyer would agree to pay extra for various upgrades selected. Also, buyer would be required to pay some closing costs and financing costs. The total cost to the buyer could be something like $369,000 (most of which is financed, of course). But, today the same floor plan with upgrades that cost $30,000 could be bought for $329,000 and the Hopebuilder might even agree to pay some of the closing costs. You can see that even though the price has not been dropped, the New Hope is $30-40K cheaper today than six months ago. So, there is no price decline shown when the price could have declined as much as 10%.

Don’t believe any report unless you know all about what is hidden in it, or what is conditioned on future that could change adversely. Today’s New Home Sales report contained a heavy dose of incentives as well as lot of speculative purchases in the high-priced areas of West and Northeast. All the growth, and more, came from these two areas. A big red flag, don't you think?

Jas

PS: Many of the Hopebuilders closed down after being up on the report. People must be figuring out.

-- posted by Jas_Jain

Top 871. Nov 29, 2005 5:13 PM

» Jas_Jain - IMPORTANT MISS -- Re: New Home Sales Report:

In response to New Home Sales Report: How Many Ways Can We Mislead You? posted by Jas_Jain:

--

I forgot the most important part of the New Homes sales report that no one has picked up on. The sales growth in two areas, West and Northeast, is 45% combined and the prices in these two areas are almost twice that of the rest of the US. While the sales growth outside was negative. If you are smart enough to do the math, one should expect a huge gain in the median price, without any increase in the price of similar homes sold from the previous month, rather than the meager 1.6% gain, just by the fact that lot more homes were sold in the expensive areas than in the inexpensive areas. If one were to do an apples-to-apples comparison, the price decline was significant.

One got to be very vigilant in interpreting statistics.

Jas

-- posted by Jas_Jain

Top 872. Nov 29, 2005 6:56 PM

» Q_out - Re: New Home Sales Report: How Many Ways Can We Mislead You?

In response to New Home Sales Report: How Many Ways Can We Mislead You? posted by Jas_Jain:

New homes are bought one of three ways.

The first way is to buy a home that has not been started. Homebuyers who choose to buy this way want a specific home with specific features on a specific lot. They tend to be perfectionists who are willing to wait the time it will take to get exactly what they want. After all, if you are going to buy new, why not get the very best? About 40% of all new homes are sold this way.

The second way is to buy a home that is already under construction. Most of the decorative stuff goes in the last month of construction. So, the buyer who chooses a home that is already started can often still get to pick the color of the siding, pine or oak trim, the cabinet faces, the carpeting, plain or six panel doors, etc. The advantage to the buyer is that she still gets to make many choices but doesn't have to wait as long to be able to move in. Another 40% of new homes get bought this way.

The last way is to buy a home that is already finished and ready to move in. If you've just been transfered to a new city, or if you've just sold your old home to an eager buyer, this may be the option for you. The last 20% of new homes get bought this way, but they may wait for 4 to 6 months or longer before they catch the eye of a desperate buyer.

Certainly home sales may fall through at any point between signing the contract and closing on the finished product, but as long as builders are getting 40% of the product sold up front and another 40% sold during construction, they'll be doing just fine.

For the record, in October 41% of sales were for homes not yet started and 36% were for homes under construction.

The number of completed homes still for sale was up 11% over October 2004.
http://www.census.gov/const/newressales....

<img src="/files/mysites/qout/bhoestarts.gif" width=53 height=34 align="left">
Q_out
DISCLAIMER: My words and observations are general in nature, and are not meant as specific investment advice. Individuals should consult with their own advisors for specific investment advice.

-- posted by Q_out

Top 873. Dec 3, 2005 10:07 AM

» Normxxx - The Golf Course Gamblers

The Golf Course Gamblers

By Tom Dyson | 3 December 2005

I usually play golf on my own, but the other day, the course was busier than usual, so the starter asked me to join up with a twosome on the tee.

We didn’t talk much for the first few holes. The guys gambled with each other, talked about business, and generally kept to themselves.

Then on the fifth tee, as we waited for the fairway to clear, the tall one started a conversation with me. He asked if I lived on the island. I told him I did. That’s when the dam burst.

“Whereabouts do you live?” he asked. I told him the address. His eyebrow arched and he glanced at his partner. He was familiar with the subdivision. “Did you buy?” More questions followed:

“Two beds, two baths?”

“How much rent do you pay, if you don’t mind me asking?”

“Is the unit in good condition? How old is it?”

“How much is the property worth?”

“Is it owned privately or does an association own it?”

And so the interrogation continued.

Turns out, my golfing buddies were real estate speculators. They had bought two investment properties in the last few months, and by the sixth tee, they were proposing I “take a quick tour” of one of their properties.

“Rent’s a little higher than you pay now,” he said. “But the place is great.”

You might think these guys were local realtors. Or property developers. But you’d be wrong. Like the stock tip shoeshine boy and the daytrader plumber, these guys had no business speculating on property...

I was playing golf with the local high school basketball coaches.

When the shoeshine boy gives you a 'free' stock tip with your shine, and your plumber takes up day-trading tech stocks as a side-line, you know it’s time to sell.

The latest research report from Merrill Lynch crossed my desk this morning, with a summary of the current conditions in the housing market:

Here are the most interesting points…

The Supply:

-Housing starts have topped two million units (at an annual rate) for seven months in a row, a string that has happened just three other times in the past fifty years.

-The unsold new housing inventory equals five months’ supply— a nine-year high.

-The number of newly built homes that have yet to sell is up 20% year-on-year, the biggest increase in two decades.

The Demand:

-Affordability for the first-time homebuyer sank to a 20-year low last month.

-The University of Michigan's homebuyer intentions survey fell in November to its lowest level since February 1991.

-Mortgage refinancing activity is down 43% in the past four months.

The Result:

November housing starts, new home sales, mortgage applications and building permits are all negative on a year-over-year basis. This last time all this happened in tandem was July 2000.

Merrill Lynch is seeing early signs of some price adjustment already, particularly at the high end of the market.

The financial press also sees trouble ahead for real estate. “The boom is near its end,” says The Wall Street Journal. “House of cards,” writes the Economist. Even the high school basketball coaches had jitters.

The obvious conclusion to reach from all this is: We are entering a real estate bear market. The anecdotes predict it. The statistics confirm it.

Problem is, the obvious conclusion is usually the wrong one.

Steve’s theory is more unusual. He thinks the froth will get scraped off— the margin buyers, the basketball coaches, the aggressive mortgage lenders— but home prices hold steady. Over time, rents and consumer incomes— pushed by inflation— catch up to prices.

Affordability is a measure of the average homebuyers’ ability to meet mortgage payments on the average house. It reflects buyer incomes, mortgage rates and house prices.

The last time real estate affordability was this low, real estate prices did nothing for 8 years. Prices didn’t plunge, they just got whittled away by inflation.

It’s not exciting. You won’t hear about it at parties. But until we get another update from the basketball coaches, it’s the most likely scenario.

Good Investing,
Tom Dyson

______________

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 874. Dec 4, 2005 10:46 PM

» permabear - The Housing market in my neighborhood

In response to The Golf Course Gamblers posted by Normxxx:

I don't know if my experience is shared by others on this board. But I have seen a change in the housing market in my local neighborhood in California. For the past couple of years, houses up for sale would be sold within weeks if not days or even hours. Often houses sold above asking price with multiple bids. Earlier in the year I saw maybe one or two houses for sale within a one block radius at any given time. Right now houses are for sale all over the place. Several houses have been on the market for the past couple of months. Prices are being reduced on a couple properties. One property went up for rent after the owner was unable to sell. I don't know if I can generalize across the nation, but if my experience is shared my others, than I think we have seen a major change in the housing market in just the past couple of months.

-- posted by permabear