AP: New-Home Sales Climb but Median Price Falls

[BlueStateBlue]

Could it be the beginning of the end of the housing bubble?

What's that hissing sound???

http://www.usatoday.com/money/economy/housing/2005-06-24-new-home-sales_x.htm

[Pirate Smile]

1. Here are four paragraphs from the article.

WASHINGTON — Sales of new homes in May climbed to the second highest level on record, but the median sales price fell sharply, the government reported Friday.
The Commerce Department said sales of new single-family homes rose 2.1% last month to a seasonally adjusted annual rate of 1.3 million homes. But the median sale price dropped 6.5% to $217,000, lowest since September's $211,600.

In May a year ago, the median price of a new home was $211,700. The median price peaked in February at $237,300.

The median is the point at which half the homes sold for more and half for less. (Related: May durable goods orders soar, but it's all aircraft)

[expatriot]

2. It looks like the northeast is going to/will be hit soon....

from the article....

"The increase in sales of new homes was led by a 22.9% jump in sales in the Midwest, which rose to an annual rate of 268,000 units. Sales were also up in the West, rising 1.7% to an annual rate of 361,000 units. However, sales fell a sharp 24.5% in the Northeast to an annual rate of 74,000 units. Sales were also down in the South 0.8%, to an annual rate of 595,000 units."


IMO, If one region implodes there will be a credit squeeze that will cut the flow of cheap mortgages to the rest of the country.... causing everyone to implode.

[BlueStateBlue]

3. That's good news for me!

I'm living in a shoebox in NJ waiting for the housing market to return to some semblance of sanity.

[expatriot]

4. If you've got some cash on hand it's good news for you

but in the event of a total burst there will be a credit crisis, mortgages will be hard to come by and very expensive.

[BlueStateBlue]

11. I'm ready to buy if everyone's playing by the old rules

Credit score around 800, 1 1/2 times my gross annual income
in the bank for downpayment. Sometimes I feel like a sucker
for not jumping on the bandwagon like everyone else a few years ago, but I just can't bring myself to BORROW twice what I think is prudent.

[meganmonkey]

5. Please someone buy my house

before it gets even worse. Please please please?

My boyfriend and I are looking for a few acres on which to build a quonset hut with geothermal heat and solar panels. But we can't do it until we sell our house.

[expatriot]

6. Where is it? nt

[meganmonkey]

8. Grass Lake, MI

A perfect example of an 'exurb'. About 30 min from Ann Arbor, 50 min from Detroit. Bedroom community (used to be a farm town), not really attached to anything. And with gas prices the way they are, people just aren't buying out here. It's a beautiful area though, and the house we are in is lovely. So no complaints, just a little impatience :)

[1932]

7. For people with interest-only mortgages and for fllippers, any drop

will be devestating.

For people paying nothing down and building no equity, their house has to increase at least by as much they pay in interest to break even on the sale. Even flat house prices mean they lose money.

[mccoyn]

10. Does anyone actually make money on housing?

I mean after you subtract interest, real estate agents and mortgage insurance?

Of course the flippers make money because they act as thier own agents and don't hold the houses long enough to loss much to interest. Do actual working people who buy a home and live in it for over a year actually sell (and take home) for more than they spend?

[1932]

13. In a NYT or WP article recently, they wrote about a couple

who sold a house for (IIRC) 400,000 more than they paid over ten years ago. After considering all the costs of home ownership (including the costs of one major annual improvement) their return on investment was only about 4-6%. Over the same period, even with the big stock market drop in 2001, the article pointed out that that money could have been invested for a greater return in stocks.

Of course, people aren't thinking about their homes as investments (usually) and this ignores the opportunity cost of the alternative (paying rent), but the fact appears to be that even seemingly large returns on selling your home aren't a way to get rich (especially if you have to turn around and spend that profit on another home which might be about to lose a lot of value).

[BlueStateBlue]

12. You got that right! n/t

[TahitiNut]

9. One symptom of the impending decline is there.

Sales of Condo/Co-op both lead and trail any bubble. The sales of single-family homes are less than half as much above last year (4.0%) as condo/co-op (8.4%), and both are down from last month on a seasonally-adjusted rate (-2.6% combined).

[BlueStateBlue]

14. A lot of real estate experts are expecting a major condo crash

very, very soon. Some say this is the beginning of it.