I think the real estate market may have finally peaked

[X]

Originally Posted by ChiTownAbs, Inc

i read in the journal a few weeks ago (maybe it was businessweek, can't remember) that robert schiller and a company (perhaps his?) is working on some futures contracts on real estate.

basically you are making bets about the median housing prices in certain markets. i think they will start with san fran, new york, and boston. expanding into other cities and then baskets of real estate.

There is a new factor entering into the equation. The price of the commute to where you work is becoming an increasingly important factor in your overall cost of living.

Where after tax calculations needed to be done to decide whether it was better to rent or own, now after commute calculations will be needed to determine whether a more expensive house close to a metropolitan center is a better deal than a less expensive house in the suburbs. Not to mention the commute time.

[X]

Originally Posted by ChiTownAbs, Inc

here is the story

That sounds pretty useless for anybody but a real speculator.

[jiggawhat]

Hey X, you gave me a good idea of adding a commute calculator onto my website.

Thanks!

[ChiTownAbs, Inc]

Originally Posted by X

That sounds pretty useless for anybody but a real speculator.

how? you can buy puts on the median price. if the puts are excercised, then real estate values have declined and your puts have kicked in.

[kvrdave]

Your puts have kicked in

[X]

Looks like it's still going strong...

Existing home sales rise in August
Sep 26 11:52 AM US/Eastern

WASHINGTON (Reuters) - Sales of existing U.S. homes rose 2 percent in August to the second highest level on record, a trade group said on Monday.

Sales of previously owned homes increased to a seasonally adjusted 7.29 million unit annual rate last month from July's downwardly revised 7.15 million unit pace, the National Association of Realtors said. That figure includes both single-family homes and condominiums.

Hurricane Katrina did have an impact on sales, but NAR said it would not be able to quantify the effect for several months.

Analysts had expected overall sales to fall to a 7.11 million unit annual pace from the originally reported 7.16 million clip in July.

The national median home price rose to $220,000, up 15.8 percent from a year ago, the report showed. That was the largest annual increase in prices since July 1979.

The inventory of homes available for sale rose 3.5 percent to 2.86 million existing homes. August's level equates to 4.7 months' supply at the current sales pace.

Stubbornly low mortgage rates have helped sustain the rally in housing, creating robust demand that has driven prices up by double-digit percentages in some areas and led some analysts to worry that the market was a bubble set to burst.

Single-family home sales rose 1.9 percent to a 6.35 million unit pace from July's 6.23 million unit pace. Condo sales climbed 2.2 percent to a 942,000 unit rate from a 922,000 unit pace in July.

Sales of previously owned homes fell 0.4 percent in the South, but rose 5.6 percent in the West, 1.9 percent in the Midwest and 1.7 percent in the Northeast.

[SpaceBoy]

This has to be regional. I'm looking now in MA, and they have the most houses listed in the last 25 years... So, I"m told.

Half the houses I have seen, have been on the market upwards of 100 days. So I think it's slowed down a great deal, at least here in MA. I'm even seeing places with 60k price drops since going up on the block < 100 days.

We've been hitting the open houses and stuff with our buying realitor, and half the time we look at a place, there is another right across the street forsale.

[The Bus]

Originally Posted by SpaceBoy

This has to be regional. I'm looking now in MA, and they have the most houses listed in the last 25 years... So, I"m told.

Half the houses I have seen, have been on the market upwards of 100 days. So I think it's slowed down a great deal, at least here in MA. I'm even seeing places with 60k price drops since going up on the block < 100 days.

We've been hitting the open houses and stuff with our buying realitor, and half the time we look at a place, there is another right across the street forsale.

The NYT had a good article saying that the people who will first see the bubble pop are agents and buyers and sellers on the street, not analysts. Your observation may prove true when official reports are released in a couple of months.

[al_bundy]

my wife just started doing RE part time and the agent she works for told her that thing have slowed down this year compared to last year

[atari2600]

man i hope it doesnt peak. just bought my first condo although its not primarily for investment. even if it does crash i hope i can stay long enough so that i withstand the bad times.

[al_bundy]

long term housing is always a break even

if you add up all the money you spend on mortgage interest, insurance, taxes, maintenance over 10-15 years than you don't make that much of a profit if any. but it's better than renting since you build zero equity when you rent.

It also depends on location. My brother lives in the midwest and in his area things are flat to slightly down over the last few years because there is land as far as the eye can see and no restrictions on building.

[X]

It appears there are regional aspects to the market slowing down. I've heard parts of Southern California are cooling. I've also noticed some homes having reduced asking prices around here, although this article seems to say that's not the norm.

I don't attribute longer selling times or slightly reduced pricing to the market being bad, rather to people's expectations of being able to ask exorbitant prices not being realistic. Prices of sold properties haven't gone down, instead they keep rising. People are still willing to wait for their price instead of dumping property. That's one of the factors that helps stabilize real estate prices.

San Francisco-area home prices hit new high

Median price paid for a home climbs to $619,000
Updated: 3:17 p.m. ET Sept. 14, 2005

SAN FRANCISCO - Spurred by strong demand and continued low mortgage interest rates, prices paid for homes in the San Francisco Bay area rose to a new high in August and home sales in the region remained at near-record levels, according to a report released Wednesday.

The median price paid for a home in the nine-county region, which includes San Francisco and the Silicon Valley high-technology hub, rose to $619,000 in August, an increase of 2.1 percent from July and a 19-percent jump from a year earlier, according to the report by DataQuick Information Systems.

Home prices in the San Francisco Bay area, which boasts one of the strongest housing markets in the United States despite the economic shock to the region from a prolonged high-tech slump, have posted double-digit percentage increases each month for 21 consecutive months, the La Jolla, California-based real estate information service noted.

According to DataQuick, 12,154 new and resale houses and condominiums sold in the San Francisco Bay area last month, marking an increase of 6.0 percent from the prior month and a decrease of 4.1 percent from a year earlier.

Year-earlier sales were the strongest of any August in the San Francisco Bay area, according to DataQuick’s records, which date to 1988.

According to DataQuick, the region’s housing market is not showing signs of the slowdown many analysts expect. They have predicted the market will cool because increases in the area’s home prices in recent years have outstripped personal income gains of potential home buyers.

“We’re a bit surprised at how stable the market is in all categories. Usually one segment of the market will be outperforming the others. Right now, though, the same trends apply to all parts of the market from entry-level on up to the prestige market,” said Marshall Prentice, president of DataQuick.

“This stability means that the market will probably stay strong at least through the end of the year,” Prentice said.

A study just came out that said a family of four needed an income of over $55,000 just to survive here.

[kvrdave]

I just had 3 REPOs come through the office in the last 2 days. Currently (and I'm in a miniscule market) I am working on 8 total. Normally, I am working on maybe 1. But, there are lots of buyers for them still, and the reason they go back to the bank is varied (divorce, death, lost job, moved, etc.). I would guess that the slim majority of them are people who just bought more than they could afford simply becuase they could qualify for that amount.

[al_bundy]

Drudge is saying that tomorrow the NY Times is running a story about a RE slowdown that is popping up in all the hot markets

[X]

That's what I like. Headlines to headlines of headlines.

[al_bundy]

most likely they are chasing a story after the hurricanes to sell papers

earlier this year they had a story about how this year's market wasn't as hot as 2004 and 2003

[Aphex Twin]

Originally Posted by X

A study just came out that said a family of four needed an income of over $55,000 just to survive here.

I don't see why any couple making less than $100,000 combined would want to live in SF, unless I guess they wanted to live in Castro, but then they could always move to West Hollywood.

[heimerSWT]

Past the peak?

http://www.fortune.com/fortune/inves...140768,00.html

The Top 100 Real Estate Markets: Is the Party Over?
Well, not everywhere. FORTUNE asked Moody's Economy.com and Fiserv CSW to analyze home sales data for the country's 100 largest metro regions. They ranked each area by its projected price change for 2006. No. 1? San Antonio. Dead last: Las Vegas.

I just bought my first house in San Antonio, this year. The only way I can see this hurting me is through higher property taxes--and it will, since my taxes are about 3.5%.

[atari2600]

doesnt texas have no income tax or something? that helps.

[heimerSWT]

Originally Posted by atari2600

doesnt texas have no income tax or something? that helps.

True, but I have lived in Texas my entire life, so I am used to not paying state income taxes. The higher property tax levies will increase my monthly mortgage payment each year, and that will be a documented increase.

[Aphex Twin]

$71,000 for a house in McAllen-Edinburg-Mission, Texas? That's a lot less than a lot of people's cars here!

[VinVega]

Mortgage applications fall to 11-month low

By Julie Haviv
1 hour, 1 minute ago

NEW YORK (Reuters) - U.S. mortgage applications fell to an 11-month low last week on a drop in demand for loans to buy homes, suggesting a slowdown in the housing market, according to industry data on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week to December 16 fell 4.0 percent to 594.6 from 619.3 the week before.

The group's seasonally adjusted index of applications for mortgages to buy homes fell 5.2 percent to 453.1 from the previous week's 477.9.

The index is considered a timely gauge of U.S. home sales.

"Housing has passed its peak," said Robert Brusca, chief economist at Fact and Opinion Economics.

The jury is still out on whether the U.S. housing sector will wind down gradually from its unprecedented boom of recent years or contract sharply and hurt the overall economy.

This week's housing results have been mixed.

In addition to falling loan demand, U.S. home builder optimism fell in December to its lowest since April 2003, according to the National Association of Home Builders.

On the other hand, the government said housing construction accelerated more than expected in November, helped by mild weather, as housing starts rose 5.3 percent from October to an annualized 2.123 million units.

OVERALL DEMAND FALLS

Total loan applications dropped to the lowest since the week ended January 7, when the index reached 587.8, although home borrowing costs fell for a second straight week.

Interest rates on 30-year fixed-rate mortgages, excluding fees, averaged 6.22 percent, down 0.06 percentage point from the previous week's 6.28 percent.

The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June, but below its 6.33 percent high in the week of November 11.

Rates on one-year adjustable-rate mortgages decreased to 5.41 percent from 5.50 percent.

The group's seasonally adjusted index of refinancing applications dropped 1.6 percent to 1,418.1 compared with 1,441.8 the previous week. Volume was at its lowest since the week ended June 25, 2004, when the index reached 1,386.9.

[Lateralus]

New Home Sales Plummet in November

By MARTIN CRUTSINGER, AP Economics Writer
7 minutes ago



WASHINGTON - Sales of new homes plunged in November by the largest amount in nearly 12 years, providing the most dramatic evidence yet that the red hot housing market over the last five years is starting to cool down.

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The Commerce Department reported Friday that new single-family homes were sold at a seasonally adjusted annual rate of 1.245 million units last month, a drop of 11.3 percent from October, when sales had surged to an all-time high.

Last month's decline was even bigger than the 8.7 percent drop-off that Wall Street analysts had been expecting. While sales of both new and existing homes are still on track to set records for a fifth straight year in 2005, analysts are forecasting sales will decline in 2006 as the housing boom quiets down.

Analysts are looking for home sales to dip by around 6 percent next year under the impact of rising mortgage rates. Analysts believe that house prices, which had been soaring at double digit rates, will moderate as well.

Some of that price moderation was evidenced in the November report, which showed that the median price of a new home sold was $225,200 last month. That was up just 0.3 percent from November 2004, the weakest year-over-year price change in two years. The November median price was down 4.1 percent from the October median sales price of $234,800.

In other economic news, the Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods jumped to a record $223 billion in November. That was a 4.4 percent increase from October, representing the largest percentage advance in six months. Orders for durable goods had risen 3 percent in October.

The gain in demand for durable goods was far above the 1.1 percent increase Wall Street analysts had been expecting. But the strength was concentrated in a surge in demand for commercial aircraft, which shot up 133.8 percent to $25.9 billion from $11.1 billion the previous month.

Outside of this area, manufacturing demand was weak. Excluding transportation, durable goods orders dropped by 0.6 percent, the third straight monthly decline in these categories.

Some economists are worried that housing prices in some areas have been driven higher by a speculative frenzy that could see prices plunging as sales slow in the hottest markets. That scenario would evoke memories of the sharp declines that occurred when the stock market bubble burst in early 2000.

But other economists contend that housing is unlikely to exhibit the same collapse that the stock market did although they believe that the declines in sales expected next year will act as a drag on the overall economy.

By area of the country, sales were actually up by 13.4 percent in the Northeast, the biggest percentage increase in this region since January 1994.

However, sales fell in all other areas, led by a 22.1 percent drop in the West, the biggest decline in this region since February 1995. Sales were down 18.3 percent in the Midwest and fell 5.5 percent in the South.

The 4.4 percent rise in orders for durable goods, items expected to last at least three years, was the largest one-month advance since a 7.3 percent rise last May.

Analysts had expected a big gain in aircraft orders because of the sales success Boeing Co. had at the Dubai air show. Analysts said that Boeing booked 148 new plane orders for the month compared to 36 orders in October.

Orders for all types of transportation products were up 15.6 percent as the strength in commercial aircraft was offset by a 5.7 percent drop in orders for motor vehicles and parts and demand for military aircraft fell 44.3 percent.

Orders for non-defense capital goods, seen as a good barometer of business plans to expand and modernize, rose by 19.6 percent, but all of that strength was in the surge in aircraft orders. Excluding aircraft, non-defense capital goods actually fell by 2 percent last month.

[slop101]

I just want to point out that this real estate "bubble" is actually world-wide - any desirable home in almost any westernized country is "overpriced" in relation to other expenses. That's why I don't think that this is a bubble per se.

[DodgingCars]

Originally Posted by slop101

I just want to point out that this real estate "bubble" is actually world-wide - any desirable home in almost any westernized country is "overpriced" in relation to other expenses. That's why I don't think that this is a bubble per se.

Well, it's only a bubble if it pops. Anytime you hear someone call it a bubble, it's really their prediction of the future.

Certain markets are incredibly over-priced though. LA, which is usually higher than other areas because of both high demand and low supply (with little room for more building except on the extreme outskirts).

But LA is still incredibly overpriced when compared to incomes. To buy an average home, the household income would have to be about $120k a year. Yet the true med. income is probably closer to $40-60k a year. You have 90% of the buyer priced out of the market. How long can you sustain prices that high when no one can buy?