November Current Market Conditions Report Posted

OK, all you data junkies. Its up. The November Market Conditions Report with October's sales data. Stop with the emails, "Where is it? When's it coming?"  It took a couple of extra days this month, because I kept rethinking and rewriting. The market is really tough to read right now, and I've posited an alternative scenario about our fall slowdown that I'd really like your thoughts on. Also, I'm putting out the idea of starting to price future risk into houses to make buyers more comfortable buying sooner rather than later.

As always, I look forward to your comments about all of this.

Comments

[Josh]

Another point to consider in this market, in particular when it comes to the timing of purchases, is that Wall Street and much of NYC is nervous about bonus season this year. In the past few years, the market has been clearly gearing up for big bonuses giving buyers confidence. Word on the Street right now is to expect little or nothing and layoffs are at hand. We may soon see second home buyers from the past couple of years downsizing their total obligations by selling unnecessary luxuries like lake cottages.

[Chuck]

Josh - It definitely will cause a few families to rethink expense priorities. But, as they say, for every loser there is a winner, so I think money is still being made. I know of a few examples of killings being made from this 'catastrophe scenerio' - because, when you think about it, it wasn't hard to see it coming. Appraise, finance and sell a home for more than its value, and try to find a chair when it's over.

[TR]

Article at:

http://www.recordonline.com/apps/pbcs.dll/article?AID=/20071110/BIZ/711100315

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October home sales in Sullivan County, NY

Single-family home sales Median price

Sullivan County

70 homes (sales in October 2006)

51 homes (sales in October 2007)

OFF -27.1%

CLOSED PRICES:

$170,165 (October 2006 median)

$156,000 (October 2007 median)

OFF -8.3%

Sources: County boards of Realtors. Data reflect only those sales reported to the boards.

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'Wealth effect' is unraveling

By Michael Levensohn

Times Herald-Record
November 10, 2007

The housing market shows no signs of recovering from its extended slump.

High energy prices are putting a chill on consumer spending.

The credit market has seized up under the weight of countless bad mortgages.

With the holiday shopping season getting under way, these are grim economic tidings. Some experts posit that consumers will keep a tighter grip on their wallets this fall.

Federal Reserve Chairman Ben Bernanke told Congress earlier this week that he expects U.S. economic growth to "slow noticeably."

The International Council of Shopping Centers is calling consumer confidence "a neutral to slightly negative factor" heading into the shopping season.

"We have the unraveling of the wealth effect," said Ann Davis, an assistant professor of economics at Marist College. "Even if I'm not trying to sell (my house), I feel less wealthy, and that affects spending."

The good news is this: Local housing prices are holding up relatively well compared with other parts of the country. Home sales in Orange, Ulster and Sullivan counties are down from a year ago, but prices are fairly flat, according to October data provided by county boards of Realtors.

So maybe the mid-Hudson will avoid the holiday slump.

Don't bet on it, said Davis.

"The bonuses on Wall Street are going to be smaller. A lot of the second-home people around here are going to feel it."

Davis' opinion — and perhaps Bernanke's as well — is shaped by a blizzard of bad economic news.

And the very act of reporting the bad news seems to exacerbate matters. This last bit of perspective comes courtesy of Toll Brothers CEO Robert Toll, who during a conference call Thursday blamed the media for driving would-be homebuyers to the sidelines.

Toll also graded the housing markets in three dozen regions where the builder does business. He gave most grades of F or worse. Las Vegas got an F-minus-minus.

Toll gave the New York suburbs and exurbs — he named Dutchess and Putnam counties specifically — a relatively robust grade of C-plus. Toll's local projects include Mountain View at Gardiner in Ulster County and Toll Brothers at Milford Highlands in Pike County. It wasn't clear from the transcript of the conference call whether Toll was including either of those projects in the suburbs.

The alternative? On the other side of Pike County are the Poconos, which got an F-minus.
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[end article]

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Chuck - Right now, it seems, is that the only money being made is by the shorts.

TR

[Chuck]

Tony - I agree, and lots of companies hedged with shorts. My friend Zach said his fund would be out of business if it weren't for their short positions - as it stands, they are as profitable as last year.

What amazes me most - being a non-high finance expert - is how incredibly unoriginal these guys and troubled banks are - just follow the herd to the easiest buck, for the largest short-term bonus. How irresponsible and uncreative.