Friday, July 25, 2008

Existing Sales Down 15.5% from a Year Ago; Realtor vs. Realtwhore

Nobody is surprised. Right?

The National Association of Realtors reported that sales dropped by 2.6% in June to a seasonally adjusted annual rate of 4.86 million units, a 10-year low. Median house prices are also down 6.1%.

This is more than double the decline that had been expected and left sales 15.5 percent below where they were a year ago.

Meanwhile, has a new ratings system in place. It is expecting home prices to decline by an average of 25% in real terms at the national level over the next five years, starting from the second quarter of 2008. And that’s the base case scenario.

So why would anybody buy in this market? Check out Realtor vs. "Realtwhore" - Courtesy of Bloodhound Blog.


Dave Phillips said...

Hey, whose that really good looking guy on the sidebar of the Bloodhound post?

Real C'ville - The Bubble Blog said...

Just as a point of clarification re: Bloodhound, we don't believe all realtors are realtwhores...there are excellent folk in our area who are serving customers' needs. They deserve compensation.

We're riveted by the long convo at Trulia, though, and Bloodhound is always provoking.

And there *are* reasons to buy in this of them being that there can be some significant "bargains." If a buyer isn't educated nowadays, though, they may be easily taken advantage of--paying too much, paying too many fees, locking in a bad deal--and therein lies a significant problem with the post-bubble market.

Jim Duncan said...

re: today's market - I could make an argument that today's market is much safer for the consumer than the one of the past 5-7 years.

From a Realtor standpoint (hopefully) there will be a significant weeding-out of those who consider it a happy part-time hobby.

From a lending standpoint, I suspect that there will be far fewer "risky" loans than we are used to seeing.

Consumers absolutely should be well-informed. In this new, slower market they have more time to vet their representatives, learn the inventory and market conditions - and be better consumers.

That's a VERY good thing.

Montpellier said...

And there *are* reasons to buy in this of them being that there can be some significant "bargains."

Not yet, not in Charlottesville-Albemarle.

The valley is finally starting to capitulate, as are the surrounding counties - Greene, Louisa (Spring Creek anyone?), Orange (Gordonsville) and Fluvanna. Wintergreen (Nelson) will fall precipitously when the foreclosures pick up as Option ARM/Alt-A resets start hitting in earnest over the next year.

I believe we're headed back to 2001 pricing around here. The high end is always last to drop, so the Rugby Road holdouts will fall later, and the Official CAAR MLS stats will show a deceptively strong median price - a severely lagging indicator.

That said - the tightening of credit - FHA guidelines are getting tighter and rates for jumbos are really jumping - will really start the deflation of housing around here. The NAR lobbied hard for their lifeline (the bailout), but it seems it contains a rather nasty anti-kickback provision (no more Down-payment Assistance Programs!) which will immediately disqualify a lot of buyers. The fact that nearly half our single-family inventory requires a jumbo...well, you can surely see the writing is on the wall.

Jim - you're quite right - it's no longer open-season for the "experts" to have a feeding frenzy on the unsuspecting - regulators will start to enforce some market sanity, particularly in terms of the nature (danger) of the products offered. It is a bit safer for consumers - of course, the "safe" answer is that most won't be tall enough to get on the ride. Dave, what were you saying about ethics? Appearing on Bloodhound is certainly the sine qua non of ethical and informed advice - I personally would be...hesistant...about associating myself with Greg Swann. Jim, you see like a very stand-up guy - I have been very puzzled by your choice on this matter.

Jim Duncan said...

Montpelier -

I no longer write there; if you want to contact me offline, I'd be happy to share the details of why and when.

Much of the writing there is brilliant and thought-provoking; but for me choice to leave was the right thing to do.

matt s. said...

And new home sales down 0.6% from last month, announced today. Median sales prices down 2% from last month.

Q2 foreclosures are up 121% y/y, up 14% from last quarter.

"Almost 740,000 properties were in some stage of the foreclosure process, the most since they began tracking this data in January 2005."

"Pimco's Bill Gross noted that 25 million U.S. homeowners might soon be underwater -- risk owing more than the value of the their homes, according to Bloomberg. That would make it nearly impossible to negotiate better loan terms or sell their property without some additional cash contribution."

This must be the bottom, yes?

Real C'ville - The Bubble Blog said...


if you check the MLS new listings daily, or even just weekly, you'll see that prices are starting to listings are even lower (that being said, however, there's been a tremendous amount of new construction coming on the market...and it's just going to sit there unsold, IOHO).

But you're correct: pricing is going to do a big time-travel reversion. And Rugby Road area? Many of those houses are long paid-for, and the owners believe in them as "home," and therefore of a Bubble-value--instead of more appropriately seeing the property as the concrete part of a business transaction. Many houses are majestically overpriced, and will remain trapped in the bubble.

Montpellier said...

Jim - Sorry, I didn't realize you'd stopped writing there. Good for you!

BBlog - I do watch the MLS nearly daily, and yes, prices have been cut - but the cuts have been small, "chasing the market down" - 5%, 10% - at least in published asking prices. I haven't gone down to the courthouse to look at the actual transfers to see what really changed hands, and I expect the deals that are closing involve substantial reductions from these slightly reduced list prices. I just think advertised list prices have a ways to go.

brooklyn bob said...

matt s,

are you being facetious, or do you believe this is the bottom?

i'm thinking we're one or two Qs away from really being able to see or predict where the bottom is, esp. with recent prime loans starting to default...and all the credit card issues....(ie, amex having trouble collecting)

the housing bill seems like it will do something "good" for so few people, that it won't do anything to alleviate the current and forthcoming pain....

matt s. said...

Yes Bob, facetious I am... I think I'll cease that to avoid confusing/misleading anyone.

Things to watch for this week:

Stock market rally- will or won't? Rally was widely expected on passage of bailout bill, but is now uncertain. People are already quickly and surprisingly aware that the bailout will have little long-term positive effect, although it averts negative damaging GSE defaults on bonds. There is also some awareness that it will have seriously harmful effects from increased national debt.

Interest Rates- Expanding national debt will devalue Treasuries and increase interest rates, putting downward pressure on home prices. Bond markets may take some time (weeks?) to react here, perhaps not until Paulson is actually selling T's to raise the cash he has been given permission to spend.

Banks- Some weaker banks are reporting earnings this week. WaMu continues to run out of money.. big news when (ok, if) they go under.

(3 hours later) - not much of a rally :P Treasury 10yr note up $1 but low volume. where are we going? fear on all sides... maybe waiting to see George's signature on that bill...