http://money.cnn.com/2006/07/25/news/economy/homesales/index.htm?cnn=yes

[quote]Realtors: Home sales now a 'buyer's market'
Sales fell for third straight month in June; nearly flat prices make double-digit gains seem like a distant memory.

NEW YORK (CNNMoney.com) -- It's official - even the nation's leading group of real estate agents now says it's a buyer's market in housing, as a soaring supply of homes for sale means nearly flat prices and longer waits for sellers.

The news came in the National Association of Realtors' report for June, which showed that home sales fell to the slowest pace since January while price gains were the smallest in over a decade.

The industry group said sales of existing homes fell to an annual rate of 6.62 million in June, compared with a 6.71 million pace in May. Economists surveyed by Briefing.com had forecast sales would slow to a 6.60 million rate.

June was the third straight month of declines, leaving sales 9 percent below year-ago levels, the group said. Moreover, the weakness was widespread, with sales falling in each of the four regions of the country.

The median home price did edge up to $231,000 from $229,000 in May.

But that marked only a 0.9 percent increase from a year earlier - the smallest year-over-year gain in home prices since May 1995.

As recently as October, prices had jumped a record 16.8 percent from a year earlier due to tight supplies and bidding wars among buyers.

"The change in price performance is directly tied to housing inventories - a year ago we had a lean supply of homes and a seller's market, with monthly home sales at an all-time record high," David Lereah, chief economist for the group, said in a statement.

"Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories," he added.

The inventory of homes on the market is now at 3.7 million, up a whopping 39 percent from a year ago, or a 6.8-month supply at the current sales pace, up from a 4.4-month supply in June 2005.

The Realtors statement said the market has shifted to a "buyer's market," which it said is good news for those shopping for a home even if it posed a problem for those looking to sell.

"People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now," said Thomas Stevens, a Realtor from Vienna, Va., who is president of the group.

Regionally, existing home sales in the Northeast saw the biggest decline, followed by the South.

Sales in the South fell 2.3 percent from May to a annual pace of 2.57 million, which was 5.5 percent below the rate a year earlier. The median price slipped to $191,000, down 0.5 percent from a year earlier.

Northeast sales slid 3.5 percent from the prior month and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.

Sales in the Midwest were unchanged from a month earlier and down 6.2 percent from a year ago. The median price in the Midwest was $175,000, 1.7 percent below June 2005.

Existing-home sales in the West were also unchanged from May but sank 17.1 from June 2005. The median price in the West was $342,000, the same as a year ago.[/b]

Wow. I can think of some over-leveraged real estate agents who are going to be sad to hear this.

Fire up those prognostication engines armchair economists. This is the kind of opportunity you've been studying for. What will the effects be? How soon?

7/25/2006 8:41:05 PM

I've already been advising clients to reduce their real estate exposure. I'm thinking a definite correction, but I don't know how much.

In Charleston, SC (my turf) I expect about 25% reduction in home prices. Most severely impacted by apartment-turned-condos that are flooding the market.

7/25/2006 8:46:18 PM

Quote :

"Gamecat: What will the effects be?"

We're all going to die.

Quote :

"Gamecat: How soon?"

Any day now...

[Edited on July 25, 2006 at 8:51 PM. Reason : btw -- this is the fault of W and the Republican Congress ]

7/25/2006 8:50:47 PM

i would not call it a buyer's market yet unless you are paying cash

rates are up so much since last year that houses should be 15% cheaper, but they aren't

7/25/2006 10:25:31 PM

Quote :

"In Charleston, SC (my turf) I expect about 25% reduction in home prices. Most severely impacted by apartment-turned-condos that are flooding the market."

sweet!

if things go as planned, I'll be in Beaufort in 2 years or less.

otherwise, i'll be around New Bern/Morehead City/possibly Emerald Isle or one of the other beaches around there.

7/25/2006 10:38:26 PM

Post-and-go really cost me on this one.

http://money.cnn.com/2006/07/25/news/economy/homesales/index.htm?cnn=yes

Quote :

"Realtors: Home sales now a 'buyer's market' Sales fell for third straight month in June; nearly flat prices make double-digit gains seem like a distant memory. NEW YORK (CNNMoney.com) -- It's official - even the nation's leading group of real estate agents now says it's a buyer's market in housing, as a soaring supply of homes for sale means nearly flat prices and longer waits for sellers. The news came in the National Association of Realtors' report for June, which showed that home sales fell to the slowest pace since January while price gains were the smallest in over a decade. The industry group said sales of existing homes fell to an annual rate of 6.62 million in June, compared with a 6.71 million pace in May. Economists surveyed by Briefing.com had forecast sales would slow to a 6.60 million rate. June was the third straight month of declines, leaving sales 9 percent below year-ago levels, the group said. Moreover, the weakness was widespread, with sales falling in each of the four regions of the country. The median home price did edge up to $231,000 from $229,000 in May. But that marked only a 0.9 percent increase from a year earlier - the smallest year-over-year gain in home prices since May 1995. As recently as October, prices had jumped a record 16.8 percent from a year earlier due to tight supplies and bidding wars among buyers. "The change in price performance is directly tied to housing inventories - a year ago we had a lean supply of homes and a seller's market, with monthly home sales at an all-time record high," David Lereah, chief economist for the group, said in a statement. "Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories," he added. The inventory of homes on the market is now at 3.7 million, up a whopping 39 percent from a year ago, or a 6.8-month supply at the current sales pace, up from a 4.4-month supply in June 2005. The Realtors statement said the market has shifted to a "buyer's market," which it said is good news for those shopping for a home even if it posed a problem for those looking to sell. "People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now," said Thomas Stevens, a Realtor from Vienna, Va., who is president of the group. Regionally, existing home sales in the Northeast saw the biggest decline, followed by the South. Sales in the South fell 2.3 percent from May to a annual pace of 2.57 million, which was 5.5 percent below the rate a year earlier. The median price slipped to $191,000, down 0.5 percent from a year earlier. Northeast sales slid 3.5 percent from the prior month and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005. Sales in the Midwest were unchanged from a month earlier and down 6.2 percent from a year ago. The median price in the Midwest was $175,000, 1.7 percent below June 2005. Existing-home sales in the West were also unchanged from May but sank 17.1 from June 2005. The median price in the West was $342,000, the same as a year ago."

Wow. I can think of some over-leveraged real estate agents who are going to be sad to hear this.

Fire up those prognostication engines armchair economists. This is the kind of opportunity you've been studying for. What will the effects be? How soon?

---

Quote :

"TGD: We're all going to die."

Quote :

"TGD: Any day now..."

*phew* At least I don't have to worry about catching the global warming anymore...

Quote :

"TGD: this is the fault of W and the Republican Congress"

Obviously. I mean, come on. It's right there in the story in black and white. Bush: "I'm sorry, y'all, but I can't take these poll numbers anymore. My allies in Congress and I are gonna have to crash the real estate market and kill us all any day now."

Not really a defensible point you picked there.

Nonsense aside, I'm more interested in what people think the impacts of this shift will be. Where will the investment dollars go? Commodities? What will become of the retail investors who've seized on the RE trend too late?

The questions were sincere.

7/26/2006 10:00:12 AM

Quote :

"Gamecat: The questions were sincere."

haha I know, I just figured since you've retired as The Suit™ it would be appropriate to give you a traditional TWW-esque welcome back

7/26/2006 11:43:01 AM

Jeez...TSB really has gone to shit...

7/26/2006 4:28:55 PM

the bubble popped along the SE NC coast already also

7/26/2006 11:08:11 PM

Nah, mild correction. Values are still going to keep going up as more yankees + the half backs move in there.

7/27/2006 9:04:45 AM

Gonna be awhile before we se it in Raleigh, if ever in the near future. Each of the last 8 houses that have gone on sale in my neighborhood over the last 7 months have sold in less than 5 days and at increasing value.

7/27/2006 12:45:55 PM

^^ it is already falling at the se coast here


^ raleigh and the triangle has almost always had a decent pace

there isn't a bubble in the triangle to pop

it's pretty constant here

7/27/2006 1:00:16 PM

http://money.cnn.com/2006/07/25/real_estate/housing_market_values/index.htm

Raleigh NC
actual $201.0
equilibrium $222.4
difference -10%
rating FairValue

7/27/2006 1:03:22 PM

From what I gather, the market is already starting to adjust to the slowdown in real estate sales. On the bright side though, they say that capital investments by companies (facilities, equipment, etc.) is picking up which could offset the cooling real estate market from a big picture view.

7/27/2006 1:36:28 PM

Quote :

"if things go as planned, I'll be in Beaufort in 2 years or less. otherwise, i'll be around New Bern/Morehead City/possibly Emerald Isle or one of the other beaches around there."

They're building way too many houses about 30-40 miles away from Morehead, Beaufort, and Atlantic Beach. 2500 homes are going in one development between New Bern and Havelock.

There's another area between New Bern and Havelock where people are building high six-figure homes and every lot available there (200ish) has been bought by different developers.

Not to mention condos are going up in New Bern right by the bridge on the Trent River. They're being sold for $300kish I think. Condos are being put up in Morehead and Beaufort. There's even condos been put on Radio Island (the island between the mainland and Beaufort when you're on Highway 70). Was surprised to see townhomes being built in Newport even. Atlantic Beach has been entirely built up, driving homeowners there to get defensive to make less people come there (dumbasses, it's always been a tourist town, you think just cause you moved there it's gonna change?).

Longtime locals don't like it, although my good ole Havelock has been left untouched. Nothing like a C-130 flying over your head to drive away the damn yankees.

I can't see where all those people to fill these up are coming from. If it's the northeast and the elderly that can no longer afford Florida, the demographics of the NC coast are going to change bigtime.


As far as the housing bubble, I always take a look at this website:

http://www.thehousingbubbleblog.com

A bit doom and gloom and mainly attended by people that are waiting for the massive fall in real estate and people that will get foreclosed cause they got outrageously bad loans and mortgages (those people there are called FB's, short for f****ed borrowers) so they can step in at the bottom of the market and buy from a desperate seller/bank. Supposedly South Florida, all of California, and Northern Virginia are in terrible shape. People on there are talking of some communities in California where 2 out of 3 homes on a street right now have a for-sale sign, and that in California, where non-Californians bought homes to quickly sell them for a cheap buck, that there is currently 1 real estate agent for every 55 adults.

There are good reads here as well on the impending financial crisis that the real estate collapse will cause.

http://www.financialsense.com

[Edited on July 27, 2006 at 10:33 PM. Reason : /]

7/27/2006 10:18:01 PM

...some people just buy more than they should get and deserve to be the guy that loses all his money in Vegas.

http://sfbay.craigslist.org/sfc/rfs/187088405.html

7/27/2006 11:52:04 PM

Hahah, I'd been looking to buy in the near future. Looks like now is the time

7/28/2006 10:18:41 AM

Quote :

"The Arizona Republic has this update on Phoenix. “The business of buying and selling houses provokes extreme emotional outbursts. People yell, they lose sleep, they cry, they’re stricken with buyer’s and seller’s remorse. That’s especially true these days in metropolitan Phoenix’s post-boom housing market, where nearly everything has reversed since last year’s frenzy.” “The number of homes for sale on the Arizona Regional Multiple Listing Service increased nearly four times from June 2005 to last month, when it hit a level nearly double what experts consider healthy. Many homeowners had their assumptions of what a house is worth and how quickly it should sell recalibrated by the buying craze.” “Real estate agent Neil Brooks was getting the feeling that his client was about to completely lose it. He’d seen it before. He had just broken some bad news about her house deal, and she wasn’t taking it well. ‘I was thinking, ‘OK, here we go,’ said Brooks. ‘Something’s going to happen. Something’s going to blow.’” “He was right. The client whirled suddenly and whipped the phone at him. But he was ready. He ducked, and the phone shattered against the wall behind him. The client stormed out of the house.” “Home prices have become a touchy subject. Builders are discounting speculative homes, and resale prices are flat, or down, in a lot of neighborhoods. Buyers are submitting lowball offers. Even some sellers and their agents are having trouble agreeing how much similar homes in the same neighborhood are worth.” “Two houses on the same north Valley street, similar in size and age, are for sale. One lists for $749,000 and the other for $775,000. A third house came on the market on the same street a few doors from the other two. The new listing was similar to the others in size and age but priced at $659,000.” “‘The neighbors were really mad,’ said (realtor) Thomas Stornelli in Scottsdale. ‘They knocked on the door and asked, ‘What are you thinking?’ For a lot of people, their home equity is their bank. It’s like taking money out of someone’s bank, their retirement account. People (future buyers) are going to use that house as a comp, even if it doesn’t have the same upgrades. It’s going to leave a mark.’” “The owners of the least expensive home were equally upset. They were in the midst of a corporate relocation and wanted to sell quickly. Suddenly, angry neighbors were confronting them. One night, someone tore down their for-sale sign.” “The market has proven everyone wrong. None of the houses had sold as of the third week of this month.” “A woman walked into Barry’s Realty Executives office about nine weeks ago, sat down and began crying. She said she bought two houses last year, fixed them up and quickly sold them, making a $50,000 profit on each. She took her profits, threw in some extra money and bought five more houses. She spent money fixing them up, but when she put the houses on the market, she realized she had bought at the peak, Barry said.” “‘Her eyes just started to well up, and she just started bawling,’ Barry said. ‘She said she couldn’t sell them for what she bought them for. She said her monthly payments were about $20,000.’” “Barry suggested turning them into rentals. She told him she couldn’t get enough rent to make it worthwhile. ‘She was expecting to flip them,’ he said. ‘The market flipped her. She was devastated. People have forgotten that houses are not a liquid asset. They never were meant to be.’” "

7/30/2006 10:48:09 PM

That sucks for the lady with the 20k/month mortgage, but wtf lady? Did it not occur to you that the bubble could burst?

7/30/2006 10:55:16 PM

You fool me once... well, actually, that's enough, how many housing bubbles come through in a lifetime? 2? Maybe 3? People aren't used to it because it never happens.

That said, the women with the $20/k should hold firm as long as she can. She fixed them up, and the market isn't actually trending down, it is an irrational walk, so even though she bought at the top she should break even if she holds on long enough and did sufficient renovation (and gets tenents!).

But if she needs to flip, then I only wish I had the million or so dollars to relieve her at well below market price. The population of that city is growing fast, if builders just take a few years off they'll be back in shortage in no time (something that cannot be said for some of our largest cities which are shrinking every year).

7/30/2006 11:52:10 PM

Quote :

"I live in Carlsbad, north San Diego county. Yesterday, I drove through Aviara, La Costa, San Elijo Hills and then Lake San Marcos looking for “sold” or “sale pending”…signs. What I saw was absolutely unbelievable! Hundreds of for sale signs and not ONE sold sign! I also noticed the open houses of coarse. Same story- you just drive by and think to yourself: Man that realtor must be bored! I personally know five people who are in bad financial shape because of exotic loans and CANNOT sell their houses here in so Cal. They can’t even get a person to look at their house. California is cooked! I wish I could fast forward to 2007. What an ugly year that’s gonna be!"

8/7/2006 11:06:26 AM

Well I guess this could be good for me since I want to move to the Charlottesville area in the next 3 years and could benefit greatly from the housing boom going bust even a little.

Lucky for me I bought a house in December but I did a 30 year fixed and paid under market for it. Its in a good neighborhood in a small town which was really unaffected by the housing boom, and my particular house I will likely flip for almost double what I paid for it when all is said and done, as I am redoing the yard, redoing the home interior, etc. etc. all by myself. My particular house is actually in high demand in the area as several big historic homes are for sale, but almost no middle sized homes are available in a decent neighborhood.

8/7/2006 11:50:17 AM

Quote :

"You fool me once... well, actually, that's enough, how many housing bubbles come through in a lifetime? 2? Maybe 3? People aren't used to it because it never happens."

Well, if you look outside of real estate you don't have to look far. Remember the tech stocks? It's the same principle. Anybody who didn't see this coming was a total investment n00b. It was going to happen. Predicting when it would happen and how badly is the only hard part.

As for the title of the thread: "Real Estate to Investors: Pop!"

Dedicated real estate investors will make more money off the decline in prices than most house flippers did in its heyday. "Buy low, sell high" ring a bell? "Buy high, sell higher" is great until everybody and their brother gets in the game.

Quote :

"That said, the women with the $20/k should hold firm as long as she can. She fixed them up, and the market isn't actually trending down, it is an irrational walk, so even though she bought at the top she should break even if she holds on long enough and did sufficient renovation (and gets tenents!)."

I don't know if I agree with that. IIRC, Phoenix had an average of 49% increase in home values in 2005 alone. It's completely feasible that properties more than doubled in the last 3 or 4 years (although I'd have to research the numbers to find out.) She might be better off cutting her losses. She could rent them out, but it might take years to get back in the green on those houses and if she's losing money every month it might not be worth it.

8/7/2006 5:10:35 PM

http://apnews.myway.com/article/20060815/D8JH0TOO0.html

Quote :

"Home Sales Decline in 28 States, D.C. WASHINGTON (AP) - The slowdown in the once-sizzling housing market is spreading, with 28 states and the District of Columbia reporting spring sales declines, led by big drops in former boom areas of Arizona, Florida and California. Nationally, sales were down 7 percent in the April-June quarter this year compared with the same period in 2005, the National Association of Realtors said Tuesday in its latest state-by-state look at housing conditions around the country. The Realtors survey showed that the biggest declines occurred in states that had been enjoying red-hot sales during the five-year housing boom. The five biggest declines this spring compared to the April-June period of 2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California, down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5 percent. ..."

Stupid liberal housing market...

8/15/2006 5:01:20 PM

Good news for me. I'm hoping to move to and buy something small in the metro DC area next year.

At least things are good for the NC market:

Quote :

"In all, 20 states had sales gains in the spring, led by Alaska, which enjoyed a 48.6 percent jump in sales; followed by Arkansas, up 17.9 percent; Texas, up 11.3 percent; North Carolina, up 11 percent, and Vermont, up 9.1 percent compared to the spring of 2005."

8/15/2006 5:32:54 PM

This is a very pertinent quote from last week by the chairman of Toll Brothers, the largest home builder in the US

“It appears that the current housing slowdown ... is somewhat unique: It is the first downturn in the 40 years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors,” he said in a statement.

8/15/2006 9:13:57 PM

It was precipitated by escalating interest rates. Sure, they are not high by historical standards, but they are a hell of a lot higher than they were 3 years ago.

8/15/2006 10:33:10 PM

can't blame this on interest rates. this is like every investment bubble.

matter of fact, this housing boom was catalysed by the wealth effect that carried over from the roaring nineties.

8/15/2006 10:52:16 PM

^^ Then you're arguing the Fed screwed us over by putting them at record lows, setting us up for mass increases while we were used to the low.

8/16/2006 12:49:46 AM