There are all kinds of mixed signals coming in on the housing market. The good news is that home resales rose 2.9% in April to an annual rate of 4.68 million units. The Federal Open Market Committee said that the market "might be approaching a trough." The bad news is that housing inventory keeps rising. Last month it was rose by 8.8% with 3.97 million existing homes for sale, amounting to a 10.2 months supply.
The mix of sales is also confusing. 45% of the sales came from distressed sales. First time buyers came into the market at the lower end of the market. Then we have the actual house prices themselves. April saw a 15.4% drop in the median price over a year ago, standing at $170,000. On Wednesday the S&P Case Shiller index had home prices falling by 2.2% in April.
Economists are predicting that home prices will continue to fall because inventories of unsold homes is high, prices continue to fall and foreclosures are rising.
Sales were the strongest in the northeast and the west, up 11.8% and 3.5% respectively.
So who do you believe? Do you believe the Fed or are some of these numbers still too soft to call a bottom?
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Reader Comments (Page 1 of 1)
5-27-2009 @ 10:10PM
william lindblad said...
Depends on what you want to call bottom? Personally, I prefer to call "bottom" as a condition in which everything negative is either known or well expected. I think that we are now there, short of an encounter with something that is not on anyones radar.
You do note that 45% are "distressed". Most of this is auctions and the buyers are speculators, like in those that are primarily responsible for starting this fiasco. If their plan to recoup boomerangs due to a continual slide in market prices we will be a year or two away from a encore performance. You have to keep in mind that the the money flow is from the banks that the government bailed out and than were told to "lend". This could be a vicious cycle. I think that the concept here is to buy and rent, but this may not be prudent as there remain many rental properties that are held as secondary homes and this market too, may be saturated. Any doubters have all but to read the Volusia/Flagler Pennysaver, it's on the web. Look under homes for rent. I know this is Fla, but it is typical and applies to most other areas.
Something most miss about the housing market is that it MUST bottom. If is does not there will be no need for new construction and no need for all products related to this industry. It does not take rocket science to deduce an answer.
5-28-2009 @ 2:39AM
crhalt said...
In California the banks have stopped putting money into the houses to resell them such as paint carpets and cleaning.
They are starting at a lower price but geting multiple bids.
The so-called investors are renting them out as-is with
mold and dirty carpets. This practice is bringing down the value of every house in the area and creating unhealthy living conditions. Paint/clean/carpets should be mandatory
with a forclosure for sale. The banks should be held accountable for this housing market they created and
there are plenty of licensed contractors who need the work during this recession.