MSNBC: New home sales fall, prices flatten, inventory rises to a record

[Human Torch]

New home sales fall more than expected
Prices flattening as inventory rises to a record

WASHINGTON - Sales of new homes fell in June for the first time in four months, and the government also lowered figures for May, providing further evidence the high-flying housing market is losing altitude. The Commerce Department reported Thursday that new home sales fell 3 percent last month to a seasonally adjusted annual sales pace of 1.131 million units. It was the first decline since an 11.5 percent drop in February.

The government also cut its estimate of sales activity in May to a pace of 1.166 million units, substantially below its initial estimate of 1.234 million units.

Analysts pointed to the drop in sales last month and the downward revision for May as fresh evidence that housing is slowing considerably, due at least in part to impact of higher mortgage rates.

Sales of both new and existing homes set records for five consecutive years as the housing industry enjoyed a boom powered by the lowest mortgage rates in four decades. But rates have risen this year as the Federal Reserve tightens credit conditions in hopes of slowing the economy and keeping inflation in check.



http://www.msnbc.msn.com/id/14059172/

[greenbriar]

1. bbbuutt bbbbuutt the enconomy is doing so well

the repukes say so

[Hugin]

3. Yup, it's a *pip*.

According to their numbers.

Just goes to show what happens when you start to believe your own lies.

[bleedingheart]

2. There are a lot of houses in my neighborhood up for sale and

prices are stagnating...

[smacky44]

4. I worry about the condo glut as many new condos went up in record time

Big Dig comes to mind. I have seen huge condos built in less than 8 months. I just wonder how safe they are?

[ThomWV]

5. I've Seen 10,000 New Units In a 35,000 Population Town

No shit. Morgantown, West Virginia. The town has a permanent population of about 35,000 and a student population (West Virginia University) of about 20,000 more. There are condos popping up on every available inch. With a flat student count and no employment driver in sight it is impossible to imagine who the owners of all that new rental property (including our disgraceful 1st District Representative) expect to move into all those new units. I see lots of bankruptcies coming for the owning consortiums of those units.

[The Cleaner]

8. I went to West Virginia U for one year

And boy was that winter COLD!!

I found it a small town, a bit depressed actually. My only guess is that it has turned into yet another West Virginia bedroom community for Washington DC commuters. But that's a HELL of a long commute, what, at least thee hours or so I suspect...and that's WITHOUT traffic!

[NashVegas]

6. Speculator-Driven Real Estate Prices Are Nuts

I'd love nothing more than to see the speculating investors get caught holding the bag.

[cliss]

11. Your wish

is about to be granted.

I have a few friends who are about to get caught in the vice. While I WILL feel sorry for them & will still be their friend after they lose their investment (maybe even more), I know & they know they were aware of the risks.

They gambled....and they lost.

Now, the thing that really confuses me is the foreclosure/fixer-upper thing. I have met so many people who are involved in this. They have taken expensive classes, invested a huge amount of money. They've been told they will get rich.

Get rich, how? Show me on pencil & paper where your millions are going to come from.

[NashVegas]

14. From the Turnaround

I'm in Nashville, which is still a very hot real estate market.

The *typical* hottest areas right now for houses are areas that are gentrifying. Buy a fixer-upper for 70k-140k, install a granite or concrete counter-top, etc, and sell for 200k. Make 130k-60k.

OR

Go to the older, tony area where you can buy a house in what looks like a 1960s-1970s solid middle class neighborhood, fairly crime-free where houses go for $400k everage. Buy one of those and dress it up a little more, then you sell that for $750k. At least that's what they're trying to do next door to me (I rent, (relatively) cheap, where I could never afford to purchase).

The thing is, when you do this kind of thing, you have to turn it around, fast to maximize profit.

[The Cleaner]

7. In the Year 2000, I was SCREAMING BUBBLE!!

But NOBODY would listen.

I was living in DC at the time, saw bidding wars, asking prices 25,000 higher than the home was worth, houses selling in two hours, crappy in need of serious repair townhomes in not so great areas selling for $250K, a FRENZY!

All signs of a major bubble. Greed, panic, and the rush to buy in. Happened in 1929, happened in 2000 (tech bubble burst), and it's happening now.

Doesn't anybody learn?

[The Anti-Neo Con]

9. I can see why.

Who can afford these new homes besides the wealthy?

[edhopper]

10. The last five years

have seen the biggest real estate bubble in US history (Schiller, Yale).
Things peaked last June. In textbook Economics 101 pattern inventories have soared, sales have plunged and prices have stopped rising. In a bubble collapse, prices usually stick longer than seems realistic, but they inevitably plummet. (See Japan in the 90's)
Mortgage rates will rise, foreclosures will grow, ARMs and IOs will reset and most who bought in the last 2 years will find they have a home worth less than they owe on it.
I think we will see a 50% to 70% drop in home prices before this is over.

[The Cleaner]

12. Agreed, maybe it will end up like Japan...

boy do I HATE being right sometimes!

Nobody would listen to our warnings of a bubble burst. It was buy in, buy now, things are rockin and rollin. We were prudent and didn't fall for it.

Riches don't last forever.

[The Cleaner]

13. Hehe, back in 2001 I had a job interview

over the phone with a company in California. I checked out the cost of living and we couldn't have even afforded a hovel on the salary they were offering. I knew it was a dud, so I decided to bug the lady and demanded $200K per year, citing the reasonability of that request due to the very high cost of living in that area.

I didn't get the job. But it was fun making that kind of a statement.

I don't know either! I've been banging my head trying to figure it out. HOW do people afford a $600K home on a $55K salary? WHO are these people? And WHERE are they gettin' the money?

[edhopper]

15. ARMs,

Interest Only loans, Negative Amortization loans.
Over a trillion $ come due in 2007. Sit back and watch the shit hit the fan.

[bikebloke]

16. In the DC area

I just moved out of a rental in a condo complex. The big money speculators decided to bail, putting 112 units up for sale. Others followed. Small fry flippers and naifs flowed in. The quality of living had declined since I moved in. I hope the new speculators get burned.