I Know I'm Late

I know I'm delinquent in posting the Jan. Market Conditions Report with the Dec. sales figures. But hard as it may seem to some of the mudslinging pundits on here, I've been slammed-to-the-wall busy for the last week. And as much as I love this blog — and the, shall we say, 'frisky' debate — my clients get first dibs on my time. I've been working off and on for the last few days on the latest market conditions report, but to quote Santa (given the intense scrutiny on anything I post now), I'm "making my list and checking it twice."

By the way, as much as I might fuss over the comments posted, all of the folks that come by here make this a pretty unique and amazing real estate blog. This blog has generated intense interest from real estate folks around the country, because of the passionate visitor involvement.

I hope to have the latest figures up by Wed.

Comments

[bix]

Hey, it's just a sign that your blog is read and that people care. Consider yourself lucky! (customary spam for Sullivan County BBS omitted)

[DN]

Your blog is truly interesting to read. You deserve the press reports. Congrats.

[nikki]

I am a second home owner in SC for about three years and trying to learn more about the area. I read this daily not becasue I have any current interest in real estate but becasue it is the only helpful source of regional information other than word of mouth that I find helpful and interesting. Thanks.

[H. Smith]

No need David. Here it is:

Housing Sector

The 4th year of housing recession – and the worst housing recession since the Great Depression - is well on course.

Total housing starts have plunged from the 2.3 million seasonally adjusted annual rate (SAAR) peak of January 2006 all the way to the 625 thousand SAAR of November 2008 (the last data point available), an all time low for the time series that started in January 1959. Single-family starts built for sale are down 75% from their Q4 2005 peak (seasonally adjusted data are not available, we performed our own seasonal adjustment).

On the demand side, new single-family home sales are down 70% from their July 2005 peak. Both demand and supply of homes are therefore still falling very sharply which does not bode well for inventories. Inventories are the mortal enemy of prices for any goods-producing sector, including housing.

Starts need to fall substantially below sales so that the excess supply in the housing market is reabsorbed. Inventories persist at record highs and the gap between one-family starts (for sale) and one-family sales (-92K annual rate in Q3 2008 according to our estimates) is at levels that cannot promote a fast work–off of inventories. To put these numbers in perspective, compare this with a measure of vacant homes for-sale-only. Vacant homes for-sale-only were at 2.2 million in Q3 2008, an all time high. In the decade between 1985 and 1995 it oscillated around 1 million units on average and 1.3 million units between 2001 and 2005. This implies that we have to deal with an excess supply that ranges between 0.9 and 1.2 million units, of which roughly 85% are single-family structures.

The sharp and unprecedented fall of starts might not have reached a bottom yet. In this economy-wide recession, weakness on the demand side of housing is bound to persist and we believe that supply will have to fall further, given also the great wave of foreclosures that is adding to the excess of supply in the market. We see starts falling another 20% from current levels.

We believe that home prices will not bottom out until the middle of 2010. Our target is a 38% peak to trough (so far prices have fallen 25% from the peak) but given the worsening conditions on the real side of the economy, we see a meaningful chance for over-correction that would bring prices down 44% from the peak reached in the first half of 2006 (Case-Shiller is the reference index for these predictions.)

http://www.rgemonitor.com/roubini-monitor/255009/rge_monitor_-_2009_us_economic_outlook

[B.]

Mal,
As long closed sales under 125k outnumber those closed sales over say - 225k - you will see that your median and average prices for 2009 will be in the low 100's (which they are presently) as opposed to the three month running medians and averages which our host has posted which are certainly a lot higher.

To the contrary, many of those three month figures (i.e. SEPT - OCT - NOV) predate the financial meltdown and spike in unemployment in October going forward but since he uses a running method, eventually you will see them come down especially when he uses the NOV/DEC/JAN closing numbers - and then the DEC/JAN/FEB - numbers in the next 90 days.

Wait and see.

The bias right now is towards housing stock selling for under 125k and in the towns of Liberty, Thompsaon and Fallsburgh.

Stella - aka - Florke's past enterprise in Jeffersonville - now cut the offering price of 499.9k to *339.9k* (a drop of 160k) - and where are the offers? At least The Blue Vic slashed at 129.5k from the 300's across the street has had some action.

Wait and see.

B.

[Citi]

******* This Just In*******

Citi confirms talks with Morgan Stanley on brokerage combination.

New name for the brokerage: "Citi-Morg"

[residue]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aov5kTvfFfAU&refer=home

U.S. Home Prices Will Continue to Tumble Until 2010, PMI Says

By Bob Ivry

Jan. 14 (Bloomberg) -- U.S. home prices, already down 23 percent from their July 2006 peak, will continue to fall until the third quarter of next year, PMI Mortgage Insurance Co. said in a report.

Ninety-seven percent of the 381 U.S. metropolitan areas surveyed are likely to have lower home prices in September 2010, according to the Walnut Creek, California-based insurer’s Market Risk Index, which assigns a score to every region based on the likelihood real estate values will be lower in two years.

“The two primary drivers of increased risk scores across a broader segment of MSAs are the continued high level of foreclosures and rising unemployment,” David Berson, PMI’s chief economist and strategist, said in a statement.

The three-year-old housing recession has spurred a credit crisis that’s making it harder for borrowers to qualify for home loans. With home values tumbling, homeowners who are unable to refinance or sell have pushed the U.S. foreclosure rate to a post-World War II high. The lending crunch has, in turn, made it more difficult for companies to pay their bills, driving the jobless rate to a 15-year high.

The 10 regions with the highest risk for lower home prices were in California, Florida and Nevada, PMI said.

The 10 with the lowest risk for lower real estate values were Denver; Indianapolis; Cleveland; Columbus, Ohio; Charlotte, North Carolina; San Antonio; Pittsburgh and three Texas metro areas: Houston, Fort Worth and Dallas, according to the survey.

Mortgage issuance declined 23 percent last year from 2007, according to the Washington-based Mortgage Bankers Association.

Home prices will fall another 15 percent, according to economists Michelle Meyer and Julia Coronado of Barclays Capital Inc. in New York.

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.

[GM]

WOW This is very Terrifying

Nobel Prize Winner Paul Krugman says, "But we are in a situation where the normal tools don't work and we're back to 1930s-type environment. I hope that things will be improving by 2011, but they will still be ugly. It's nasty. This is nasty, brutish and long. It's really going to go on for an extended period, even with the best policies. And it's not clear if we are going to have the best of policies."

http://abcnews.go.com/Business/Economy/story?id=6649449&page=1

[sandra]

I like this comment by Krugman,

"We can't walk on air. Over time, we need to build an economy on more solid stuff: actual exports, producing stuff, not just moving assets back and forth."

I am amazed at how flipping realestate is calculated into GDP in this country.
No wonder why we have an artificially over inflated GDP.