Real Estate: It’s Not That Bad, It’s Worse
May 19th, 2007Via: Big Picture:
Closing Data: Sales have actually fallen 22% year-over-year, based on comparing trailing 12 month periods. If you compare year over year sales, the decline is even more severe.
Mortgage Bankers Association (MBA) Data: MBA Seasonally Adjusted Purchase Application Index is down 18% from its peak in September 2005.
Builder Data: D.R. Horton and Lennar have reported that orders have declined 27% to 37%, year-over-year — even as they have dropped prices significantly. These are the nation’s two largest homebuilders.
Realogy Corporation Data: In 2006, there was a year-over-year decline of 18% in brokerage related transactions at Realogy owned firms (Century 21, Coldwell Banker, and ERA)
2005-2006 National Association of Realtors State Data: The NAR is showing some very sharp year-over-year corrections: Florida down 28%; California down 24%; Arizona off 28%. However, the NAR data may actually be understating the falloff. John’s data the more likely actual sales decrease to be closer to 34%, 27% and 38%, respectively. Prior to 2005, John’s data tracked very closely with the NAR, so this deviation is worth further investigation.
I have noticed here in Oregon, that the home prices are definitely coming down, even on the mid level houses and condos. The luxury homes had begun coming down months ago, with 20k-40k discounts or reductions being the norm at first, now its even more than that! Once it really starts affecting the homes at the low, 175,000-300k, then you’ll really see a glut of homes on the market..
This past week, SRS, a fund for those who are bearish on R.E.
broke out decisively on the weekly chart. This is significant and argues, as your post suggests, that the R.E. situation is, in fact, deteriorating markedly. What we are just beginning to see, which is almost certainly due to the housing debacle, is a massively negative effect on the consumer. My guess is we are already in recession, but that it will be obvious by mid summer as the employment situation, so heavily dependent on R.E. activity, becomes quite ugly. In short, we ain’t seen nuthin’ yet.
Homebuilders in Atlanta, Georgia, are offering a free Mercedes automobile with each new home purchased. Ouch!
It has a long way still to fall to revert to the mean (as always occurs).