Decipher this for me. New homes sales plunge.

[alfredo]

I know it is just a one month figure, but can you read anything into this.

http://money.cnn.com/2004/12/23/news/economy/home_sales/index.htm?cnn=yes

New home sales tumble
November's 12% drop, sharpest since '94, follows sharp dip in construction; should you be worried?
December 23, 2004: 4:01 PM EST
By Chris Isidore, CNN/Money senior writer


NEW YORK (CNN/Money) - Sales of new homes took the sharpest plunge in more than a decade in November, the second report in a week that raised questions about the strength of the nation's real estate market.


Sales tumbled 12 percent last month to an annual rate of 1.125 million new homes, the government reported, coming in well below most economists' forecasts. It was the weakest sales pace since July and the sharpest percentage decline since January 1994.

[Mayberry Machiavelli]

1. The "homes bought" and "New home ownership" thing was about the

only positive being pimped most of the last few yrs.

Could this be the beginning of our great real estate bubble popping like Japan's did?

We live in interesting times...

[Rockerdem]

16. Its the business cycle

Interest rates go down, house prices go up. Vice versa, its the opposite. Housing is a leading indicator, but its usually a year or so out in advance. Pointing to a bad 2006 (and excellent midterm election results for us).

[Deja Q]

18. Except, (a) housing prices are also way overinflated - combined w/ higher

interest rates and :nuke:

And, (b), In 2000, 2002, and 2004 we all had stupid pics in our sig lines of people toasting their champagne glasses and all sorts of other bullshit boasting about how we'd swamp the neocons in the 'next' election. Well, it didn't happen in 2000. Well, it didn't happen in 2002. Well, it didn't happen in 2004. Well, why are DUers so hot to trot thining that 2006 will be the same sort of cakewalk that it hadn't been since 1992? (and even then, we couldn't do it without Perot's meddling and ever since then Dems continued to lose in the House and Senate.)

[gmoney]

2. Housing bubble go "pop"

Who can afford McMansions? Even the people who might be able to afford them can't buy until they sell their old suburban home, but nobody can afford those either...

But W. will tell you that "home ownership is at an all-time high"

[SmokingJacket]

3. People CAN'T keep buying new houses.

yeah, it's only one month, so maybe it means nothing. But how many new houses can a given population buy?

I suspect Le Boom is over.

[Worst Username Ever]

4. It does not neceessarily mean anything.

It could have been a slow month, and it is also off-seasson for homes. Winter always takes a dip.

Even if the "bubble" bursts, it is not going to be huge. A mass sell-off of homes is pretty much impossible, compared to the mass sell-off of stocks that devalued the market in '00. People have to live SOMEwhere, after all. Either in your own home, someone else's home, or someone else's apartment building, therefor supporting their real estate investment.

[Mayberry Machiavelli]

5. Right but you WILL see the bubble popping in terms of the sale prices of

homes going way way down. Obviously the movement of the homes will be slow when the price is going down...

[Worst Username Ever]

6. To a point

A stagnation, perhaps. In some regions of the US, I could see a larger decline. But overall, as long as there is ANY demand for housing, prices will remain close to where they are. For a large decline, supply has to outweigh demand by a SIGNIFICANT margin. As demand falters, there will be no demand for new homes, so I could see contractors and home builders, realtors, loan originators, etc going out of business. But that just accomplishes a decrease it supply, which would then once again become level with demand.

My big fear is actually the death of all the baby boomers. The largest generation in history, before or since, completely vacating their homes within a 20-30 year period (either dying or moving into nursing facilities). THAT will create a massive vacuum in housing demand, there are not even close to the number of young folks needed to fill up all those empty houses. God, houses will be a dime a dozen, unless we a) start making more babies or b) open the doors to imigration, thereby increasing housing demand.

On edit: add to the vacant houses the fact that all the babyboomers will have sold off their stock in their 401Ks or left it to children, who undoubtedly sell, and you also have a huge stock selloff, creating another bear market. Add on top of THAT the unprecedented draw on the government for social security funds, and it paints a bleak picture of the future, IMHO.

[Warpy]

12. I disagree

We may indeed see a huge burst of the housing bubble as people find themselves jobless and with few prospects for the near or distant future thanks to offshoring of even the office jobs that have long been the mainstay of suburbia. Bedroom communities with long commuting distances to centers where employment can still be found will be the first to go as increased energy costs hammer away at those fortunate enough to still have jobs.

Yes, people have to live somewhere. I think we're going to see people walk away from their mortgages, store their possessions, and live jammed into trailers, studio apartments, and even their cars as this thing plays out.

One thing we know for certain is that exporting the bulk of the income producing work while expecting this country to remain the largest and sometimes the only market for goods and services produced overseas is not a sustainable system. Certainly, charging an unemployed population first world prices for third world goods is not going to work for long, and hyperinflated items like housing are going to take very big hits.

Bush, of course, will shred the social safety net even more to be able to lavish still more tax cuts on the rich, increasing the rate of the disaster even more quickly.

[mhr]

14. Unemployed 54 Months - Your Analysis Is Right On Target

All of my possessions are stuffed into ab 800 sq ft apartment and its not full.

At the age of 47, I have no prospects or hopes for the future.

I, like others, am in survival mode.

[ThomWV]

7. You Ain't Seen Nothin' Yet

Its called a spiral, if I remember correctly.

Interest rates go up.
New home sales go down
New housing starts go down.
Home construction labor goes down.
Less money in the economy.
Payments on varialbe rate mortgages goes up
Credit card monthly payments (the vast majority of which are variable rate and have a balance on them) go up.

In the mean time:

The as the trade deficit climbs and the dollar continues its slide against the Euro OPEC once again looks to abandoning the dollar. Iran's successful war against the US, the one being fought in Iraq, has proven so costly that the Government floods the world with bonds. Interest rates rise in order to cause them to sell and once again the presses roll to print the green to pay the debt.

So there you have it, unemployment along with inflation and a bleak future for those in the Carpentering business.

So then you take it a step further and you have an out of work carpenter faced with a rising monthly mortgage cost on a home that is decreasing in value. The credit cards are maxed out and there's 3 weeks left on the unemployment. Time for a good Hymm ....

[alfredo]

10. Property taxes go down

meaning less revenues for the cities.

[Anakin Skywalker]

8. WHAT?! This Cannot Be!

:wow: But...but *stammering* Bush 3:16 told me that "the economy is strong". :wow:

[DainBramaged]

9. There are SIX unsold older homes on my block for over 6 months

The bubble is history. And there are also 4 rentals with signs in front of them in my neighborhood (which used to be homes for sale). I live in a middle to upper middle class area, and things are looking mighty blue collar right now. Some of the homes for sale are by folks out of work a long time.

But all is well, furs and diamonds and boats and luxury cars are selling like crazy, why should we worry? The Thuglies are fat and happy, and they don't worry about dinner.

[baba]

15. Where do you live? n/t

[ShaneGR]

11. New home sales have been VERY high for the last half decade...

So it makes sense that with so many people having already purchased new homes and interest rates starting to rise that new home sales would go down. These things go in cycles.

[sendero]

19. Cycles? True....

.... but home building is one of the main economic engines we have. Every new home must be furnished and includes tons of durable goods like refrigerators and washing machines.

I agree that one cannot read too much into a single month's number, but if we have 3-4 months of these numbers in a row, look out below.

[robcon]

13. Month to month changes are often due to weather issues...

...especially during winter. It often takes several months to detect a trend in new home sales.

[elehhhhna]

20. Yes--starts were down in the NE due to sold snap...

and people don't schedule their closings in Mid and late November due to the hoidays.

The bubble they're referring to is Housing (homebuilder) stocks-not housing prices in general, correct-oL?(although the makjr big-city markest ae probablyinflated.

[idiosyncratic]

17. Median price for new home in San Diego area is almost $500,000

How can people continue to purchase homes at that price?

[LibDemAlways]

22. Only $500,000?

Here in Eastern Ventura County the few new homes for sale are one million and up. The cost of housing has become inflated beyond all reason and banks have been generously lending close to 100% financing. I personally know several people who have million dollar mortgages -- and they are not millionaires by any stretch. When the bubble bursts and prices come down, it's going to get ugly for a lot of people.

[jesusq]

23. SUCKERS!

$500k to $1m for a house? Maybe I wasn't so crazy buying a house in an older rust-belt city. Anyone interested in a 3 bedroom, brick house, with fireplace, hardwood floors, attached garage and central air for $85K? That's what I paid a year ago. Yo'ins probably spent that much for a car!

$85K for a livable home in move-in condition? It must be in a cultural desert, you growl. How about 2 major universities, world class fine arts, and a great pro football team ... all in humble little old Pittsburgh, PA.

I encourage all displaced liberals (living in exile in red states) to take a look at Pittsburgh, PA. Helluva nice town and median price of a home is about $102K (yes, this is below average).

[0007]

21. 'Tis a bad sign with the dollar dropping like a rock!