A periodic blog dedicated to providing commentary and encouraging debate on topics in Economics and Finance.

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Age: 26 Occupation: Private Equity

Wednesday, May 9, 2007

Housing Analyst: "Our Contacts Have Officially Declared the Spring Selling Season a Bust"

All, sorry for the lack of posting... My REAL job has been demanding very long hours lately... I've got something good in store for you very soon. For now, check out this article from the Wall Street Journal....

By JAMES R. HAGERTY
May 9, 2007; Page D3

The supply of houses and condominiums available for sale continues to grow quickly in much of the U.S., reflecting weak sales.

The number of homes listed for sale in 18 major metropolitan areas at the end of April was up 7% from March, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condos and town houses on local multiple-listing services.

[Housing]

The increase was above the seasonal norm. Over the past 22 years, home inventories nationwide have increased an average of 4.5% in April from March, according to Credit Suisse Group. Spring is the busiest time of year for home shopping, as families with children try to get settled ahead of the next school year.

Some of the biggest increases last month were in the metro areas of San Francisco, up about 19%; Washington, 17%; Orange County, Calif., 15%; and Seattle, 14%. Inventories declined nearly 1% in the Los Angeles area, according to Zip.

In a report issued yesterday, Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse, said her building-industry contacts have been surprised by the weakness of sales recently, "given the typical seasonal bounce that occurs at this time of year." She added, "Our contacts have officially declared the spring selling season a bust." Many people who had expected a recovery by year end "now believe the market rebound will be pushed out until 2008 at the earliest," Ms. Zelman wrote.

After booming in the first half of this decade, the housing market began cooling in much of the country in 2005. Since then, prices have been flat to declining in many areas. In recent months, an abrupt tightening of lending standards has further sapped the market by preventing some potential buyers from getting loans.

The National Association of Realtors yesterday again lowered its forecast, predicting that sales of previously occupied homes will total 6.29 million, down 2.9% from 2006. A month ago, the trade group projected that sales this year would slip 2.2%. Lawrence Yun, a senior economist for the Realtors, said many speculators have fled the market.

"It's good that we're getting beyond the tendency of some buyers to view housing as a temporary asset to accumulate short-term wealth, which is not to be expected in a normal market," he wrote.

Write to James R. Hagerty at bob.hagerty@wsj.com

4 comments:

ghu206 said...

Great to see you back! I was getting a bit concerned....

Can't wait for your next blockbuster post. I appreciate that you try to come up with original content most of the time, unlike many other bloggers who simply paste links and give a few sentences of comments.

I realize you can't do it all the time though!

__k said...

In recent months, an abrupt tightening of lending standards has further sapped the market by preventing some potential buyers from getting loans.

These "potential buyers" never should have been able to get loans in the first place. The "abrupt tightening of lending standards" is really an abrupt "partial return to normal lending standards."

eternitus said...

___k... You are right on target. No one was commenting on the fact that the entire housing market was built on those insane lending standards when it was going up. Only "strong fundamentals..." a myth that has been debunked.

Unfortunately, many people are now finding out that the returns on housing suck in the long run, and you shouldn't twice as much to own a rotting box as you do to rent a rotting box.

Doubly unfortunate is the fact that a lot of young people like me are mortgaging their futures away to pay for some boomer's retirement, and that's before we have to pay 100% of the federal budget for social security and medicare.

Anonymous said...

Anyone see those retail sales numbers yesterday? I haven't seen so many excuses in one place in a very long time.

Apparently, all of the forecasters forgot that Easter was in March... Yeah right. At least that's a new one.

I saw the old "weather" excuse in there too.

That's a hoot!