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Post by unlawflcombatnt on Aug 25, 2006 17:38:30 GMT -6
As economist Nouriel Roubini has put it, the housing market is in "free fall." New Home Sales continue to decline rapidly. In fact, it appears the sales rate has fallen off a cliff. The annualized rate of New Home Sales declined 4.3% in July. The current annualized rate of New Home Sales is now 22% less than it was 1 year ago. The annualized price increase is now at only +0.9%, much less than the 4.3% increase in the consumer price index. Also, the inventory of unsold homes are at record levels, having almost doubled since the same time last year. Below is a combined chart of New Home Sales changes taken from Briefing.com. The top chart shows the updated numbers, as of 8-24-06. The bottom chart shows the "preliminary" numbers from 8-23-06. The changes to the previous numbers are denoted by underlining in red and blue. The previous "guesstimates" are underlined in red. The current numbers are underlined in blue. Note that all of the revisions to earlier numbers have been revised downward. (Note: Check back later on this post. It will be revised later with additional information.)
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Post by unlawflcombatnt on Sept 3, 2006 16:33:19 GMT -6
This letter is also posted under the "Housing" section. I thought it would be appropriate here as well. 9/2/06 I read a good, 3 1/2 page summary of the causes of the housing bubble and why it is bursting called Requiem for a Housing Bubble. Though I can't quote it, I can re-state some very interesting points. One is that median existing home prices have now declined in 3/4 of the United States. The fact that appraisers were forced to inflate their assessments of home values has not received a lot of publicity. It's estimated that 43% of homes purchased in 2005 were with interest-only loans. The estimate that 50% of jobs created in the last 5 years came from the housing boom has been stated by others as well. The monthly inventory of unsold homes has nearly doubled over the last year. I think his best point, which really hasn't been stated before, relates to where the source of increased demand for housing will come from. Everyone who was going to be drawn in, has already been drawn in. Who else is left? Where will the source of the ever increasing demand necessary to sustain the boom come from? There's simply no one left to even maintain current demand. The number of homes on the market continues to rise faster than new families are created. With speculators now leaving the market, the demand will fall even more. Below is a graph from investech.com showing the rise in unsold new home inventories. This graph can be seen at found at www.investech.com/ or seen directly at: www.investech.com/others/upload/cw060902_unsoldhomes.gifAdd these to the roughly 3 million existing homes on the market and you've got a record level of over 3.5 million homes for sale at present. The number of new families created per year is less than 500,000. It appears the supply is greatly exceeding the demand.
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