Home price drop is largest in 35 years
my2hands
Posts: 17,117
here come the bust, the sad part is that most dont even undersatnd how quickly it happens... it is like a roller coaster, once it reaches the top, it falls quickly
http://news.yahoo.com/s/ap/20061026/ap_on_bi_go_ec_fi/economy&printer=1
By MARTIN CRUTSINGER, AP Economics Writer
Home price drop is largest in 35 years
The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.
The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.
The price decline for new homes came while the sales pace picked up, rising by 5.3 percent to a seasonally adjusted annual rate 1.075 million homes. It marked the second consecutive increase in sales following three months of declines.
The declines in prices served to underscore the severity of the correction in the once-booming housing market, which had seen sales of both new and existing homes soar to record levels for five consecutive years, propelled by the lowest mortgage rates in more than four decades.
This year, with mortgage rates rising through midsummer, sales have cooled considerably, with housing expected to trim more than a percentage point from overall growth in the last half of the year.
The debate is whether the slowdown will be enough to push the country into an outright recession. The Federal Reserve, recognizing the weakness in housing, halted a two-year string of interest rate increases in August and left rates unchanged for a third straight meeting on Wednesday.
The Fed, however, gave no indication that it planned to start cutting rates because of the weakness in housing, saying it was still concerned that inflation remained too high.
The 5.3 percent rise in new home sales in September followed a 3.8 percent rise in August and was the biggest one-month gain since an 8 percent increase in March. However, sales had fallen for three straight months from May through July.
The rise in sales last month was led by a 23.9 percent jump in the West. Sales were also up 6.9 percent in the South. However, sales fell by 34.5 percent in the Northeast and were down 6.3 percent in the Midwest.
In other economic news, the government said that orders to U.S. factories for big-ticket manufactured goods, powered by a huge jump in demand for commercial jetliners, soared in September by the largest amount in more than six years.
The Commerce Department reported that orders for durable goods rose by 7.8 percent last month to $226.7 billion. The increase followed two consecutive months of declines and was the biggest gain since June 2000.
The improvement was more than triple the 2.3 percent gain that Wall Street had been expecting, but virtually all of the strength came from a giant 183.2 percent increase in orders for commercial aircraft. Outside of transportation, orders were up a far weaker 0.1 percent.
In a third report, the Labor Department said the number of newly laid off workers filing claims for unemployment benefits rose by 8,000 last week to a seasonally adjusted 308,000. That increase was in line with expectations.
The September 7.8 percent increase in factory orders followed declines of 0.1 percent in August and 2.8 percent in July. Despite last month's jump, analysts believe that the factory sector is slowing under the impact of a weakening overall economy.
The economy began the year with growth at a sizzling pace of 5.6 percent at an annual rate but saw that slow to 2.6 percent in the spring and analysts believe overall economic growth in the just-completed July-September quarter slowed even further to around 2 percent or less. The government will report the actual third quarter figure on Friday.
For September, transportation orders rose by 27.6 percent as the big jump in demand for commercial aircraft offset a 6.1 percent drop in orders to automakers, who have been struggling recently under the impact of weak sales of trucks and sport utility vehicles.
The rise in commercial airplane orders had been expected, given that Boeing Co. booked new orders for 175 planes, up from 30 in the prior month.
http://news.yahoo.com/s/ap/20061026/ap_on_bi_go_ec_fi/economy&printer=1
By MARTIN CRUTSINGER, AP Economics Writer
Home price drop is largest in 35 years
The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.
The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.
The price decline for new homes came while the sales pace picked up, rising by 5.3 percent to a seasonally adjusted annual rate 1.075 million homes. It marked the second consecutive increase in sales following three months of declines.
The declines in prices served to underscore the severity of the correction in the once-booming housing market, which had seen sales of both new and existing homes soar to record levels for five consecutive years, propelled by the lowest mortgage rates in more than four decades.
This year, with mortgage rates rising through midsummer, sales have cooled considerably, with housing expected to trim more than a percentage point from overall growth in the last half of the year.
The debate is whether the slowdown will be enough to push the country into an outright recession. The Federal Reserve, recognizing the weakness in housing, halted a two-year string of interest rate increases in August and left rates unchanged for a third straight meeting on Wednesday.
The Fed, however, gave no indication that it planned to start cutting rates because of the weakness in housing, saying it was still concerned that inflation remained too high.
The 5.3 percent rise in new home sales in September followed a 3.8 percent rise in August and was the biggest one-month gain since an 8 percent increase in March. However, sales had fallen for three straight months from May through July.
The rise in sales last month was led by a 23.9 percent jump in the West. Sales were also up 6.9 percent in the South. However, sales fell by 34.5 percent in the Northeast and were down 6.3 percent in the Midwest.
In other economic news, the government said that orders to U.S. factories for big-ticket manufactured goods, powered by a huge jump in demand for commercial jetliners, soared in September by the largest amount in more than six years.
The Commerce Department reported that orders for durable goods rose by 7.8 percent last month to $226.7 billion. The increase followed two consecutive months of declines and was the biggest gain since June 2000.
The improvement was more than triple the 2.3 percent gain that Wall Street had been expecting, but virtually all of the strength came from a giant 183.2 percent increase in orders for commercial aircraft. Outside of transportation, orders were up a far weaker 0.1 percent.
In a third report, the Labor Department said the number of newly laid off workers filing claims for unemployment benefits rose by 8,000 last week to a seasonally adjusted 308,000. That increase was in line with expectations.
The September 7.8 percent increase in factory orders followed declines of 0.1 percent in August and 2.8 percent in July. Despite last month's jump, analysts believe that the factory sector is slowing under the impact of a weakening overall economy.
The economy began the year with growth at a sizzling pace of 5.6 percent at an annual rate but saw that slow to 2.6 percent in the spring and analysts believe overall economic growth in the just-completed July-September quarter slowed even further to around 2 percent or less. The government will report the actual third quarter figure on Friday.
For September, transportation orders rose by 27.6 percent as the big jump in demand for commercial aircraft offset a 6.1 percent drop in orders to automakers, who have been struggling recently under the impact of weak sales of trucks and sport utility vehicles.
The rise in commercial airplane orders had been expected, given that Boeing Co. booked new orders for 175 planes, up from 30 in the prior month.
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Comments
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
Just sold my home in September and had to drop the price quite a bit to do it. Still received a good price, but it was a painful process. Not long before that some neighbors were selling their home at some ungodly high prices.
We just missed it.
or waited 6 months and saved tens of thousands
You're pretty compassionate, huh? The good thing is that I put more than 20% down and bought on a fixed mortgage, so if the bottom falls out now, it should be back to a boom when I'm ready to sell.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
if you are selling and buying right away, it's all just differentials anyway. gross cost doesn't mean too much.
sucks trying to get into the market here though. prices are so huge that dropping 5% doesn't really mean much.
and it doesn't drop so fast at the bottom end because so many people are clamouring to get something even remotely affordable that it's holding the prices a bit more.
i'm glad i'm done though. stressful process.
Only if you are selling and buying in comparable markets.
well yeah, for the folks cashing out of this damn city, they're laughing.
for me, staying in town, doesn't mean much. just driven by family needs.
i dont want to see you lose money good friend, i was just stating the obvious, thats all, nothing personal
the problem is greed got in the way, which i guess is the typical american way, blinded by $ so they cant see 4-5 years ahead. everyone started to think this was their ticket to get rich and make easy money, now they have way overvalued property (maybe 2-3), overstrecthing their means because they thought the value would continue to sky rocket. i feel sorry for all of those people now... they are going to have a home that is not worth their mortgage, then they are really stuck.
it has happened in the past, as a matter of fact the bust in japan has been so bad that property value has declined for approx 15 consecutive years!
it's hard to get into the market but it's probably not worth stringing one's self up by one's financial nuts to do it.
The bust! Please, this is laughable...What's busting is not the housing market. Whats busting are over inflated home prices. People pay rediculous amounts for location, not smart...they can bust all they want! My business is booming (real estate investing) and to say the housign market is busting is pretty much off.
'If my fuckin' ex-wife told me to take care of her dog while her and her new boyfriend went to Honolulu, I'd tell her to go fuck herself." -The Dude
Whisky Drinker, Non-Hunter from Denver.
seriously though, just natural cycles, bound to happen. the market always seems to correct itself in time whenever prices reach extremes in either direction...and yes, prices were becoming very over-inflated...so it's self-adjustment.
i am glad we bought our house when we did, 10 years ago....really good timing before our local market, which is pretty much always inflated...really went nuts and got toally over-inflated. glad we're not looking to sell now either though. haha.
Let's just breathe...
I am myself like you somehow
~Michael Bolton
Of course, by the same token, you might say that I sold my previous house just in time. It went up in value 27% in just the 4 years that I owned it. So maybe it all works out in the end.
In fact, I actually made money by living there. If I add up the sum of all the payments and downpayments that I made, I came away with about a $3000 profit.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
One of the easiest ways I make a ton of money on my primary homes (not my investments/rentals) is buy brand new homes from builders. I will locate a subdivision where the builder is finishing the inventory, kill on incentives, then a year later I sell and look for another. I get paid for living in brand new gorgeous houses, course the only draw back is getting attached and wanting to stay etc.
'If my fuckin' ex-wife told me to take care of her dog while her and her new boyfriend went to Honolulu, I'd tell her to go fuck herself." -The Dude
Whisky Drinker, Non-Hunter from Denver.
My new house is brand new from a builder. I will say I couldn't negotiate the price much lower than their initial offer. It's in a subdivision where all of the houses are less than a year old and in an area that is getting ready to experience quite a bit of growth - widening of the highway, an expensive Jack Nicklaus golf course and development, etc.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
mine almost doubled in 4 years. most of which was the last 24 months. bonkers. but this city is an anomaly.
Let's say the market is down 10% so your $100,000 house is now being sold for $90,000.
But you want to buy what would have been a $200,000 house last year which is now selling for $180,000. You are saving $10,000! You lost $10,000 on the sale of your smaller home, but saved $20,000 on the purchase of a bigger home.
Sure, homes are sitting on the market a little longer than they were. Sellers are still wishing they could get top dollar (and some are waiting for that killer offer and kicking themselves when they can't get it) but it's a great time for buyers and first time buyers are holding the market steady right now.
Another misconception is the Fed and prime. Mortgage rates aren't based on Prime. Home Equity rates are, but not Fixed rates. Fixed rates come from secondary investors (FNMA/FHLC) and can be usually tracked by the bond market and the Ten Year Treaury Note (supply and demand too) but set by the Fed.
Little tangent, but seriously, IMO, the market may be slowing but is NOT bursting. And I do mortgages for a living in an armpit of upstate NY where the economy is not the best. If our market is holding steady, then it can't be quite as dismal as they make it seem in that article everywhere else!
Albert Einstein (1879-1955)
I saw Hard To Imagine LIVE at MSG!
people have been using bullshit words like "bubble" or "burst" or "implosion" all just complete bull shit. I've sat and watched analyst or experts talk all day about this subject and how it's going to happen, or it already is happening...their fucking retarted, yeah the bubble is bursting (assuming these dumb fucks truly beleive their really is one) thats why my home building stocks in my portfolio have done nothing but make me money. Thats why every company that provides to these builders are doing nothing but making me money...where do these guys get their info! Their the same retards who said invest in YUM and NOT MCD! Yeah bought Micky D's when they said not to at 29 bucks a share...fucking idiots!
'If my fuckin' ex-wife told me to take care of her dog while her and her new boyfriend went to Honolulu, I'd tell her to go fuck herself." -The Dude
Whisky Drinker, Non-Hunter from Denver.
when it hits you, you feel to pain.
So brutalize me with music.”
~ Bob Marley
What the fuck does this have to do with the conversation??? Make me money??? Sweetie I manage my own funds! Trendy is not my cup of tea...making money and lots of it is my cup of tea
'If my fuckin' ex-wife told me to take care of her dog while her and her new boyfriend went to Honolulu, I'd tell her to go fuck herself." -The Dude
Whisky Drinker, Non-Hunter from Denver.
Now which side is using fear? People on here think they are experts on everything just because they read an article that supports the view they hope for.
exactly, either that or we have to listen to how poor surfer dude is at picking friends...
'If my fuckin' ex-wife told me to take care of her dog while her and her new boyfriend went to Honolulu, I'd tell her to go fuck herself." -The Dude
Whisky Drinker, Non-Hunter from Denver.