Wednesday, October 24, 2007

US Existing Home Sales

WASHINGTON, Oct 24 (Reuters) - U.S. sales of previously owned homes fell 8.0 percent in September to a record low 5.04 million unit pace amid troubles in the subprime mortgage and credit markets, the National Association of Realtors said on Wednesday.

It was the lowest sales pace since the group began tracking both single-family and condo sales jointly in 1999.

Total existing home sales, which include condominiums, fell in September from a downwardly revised pace of 5.48 million in August. Economists polled by Reuters were expecting home sales to fall to a 5.25 million-unit sales pace.

"Home sales fell in September, but it was certainly due to the August credit crunch," said NAR economist Lawrence Yun.

"The housing data ... tells us that we are not out of the woods yet. It increases the uncertainty regarding the U.S. economic outlook and reinforces the view the Fed may have to cut rates at its meeting next week," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.

The slower pace of sales helped drive up the inventory of homes available for sale by 0.4 percent at the end of September to 4.40 million, which represents a 10.5-month supply at the current sales pace. That supply was the highest for both single-family and condos combined since 1999.

Single-family home sales fell 8.6 percent in September to a seasonally adjusted 4.38 million-unit pace from 4.79 million, which was the slowest pace in nearly 10 years.

The national median existing home price for both single-family and condos dropped 4.2 percent from a year ago to $211,700.

And in the Vancouver, BC housing market we grow trees in the sky and fundamentals do not apply. I just want the local market to CRASH ALREADY! We all know its coming but the waiting is getting to me!


Dignan said...

"Final Major Point: We also believe that our markets are tired in Vancouver, are pushing the limit of affordability and essentially even us Vancouverites are a herd with a herd mentality. We find comfort in knowing lots of other people have made the same choices. I keep hearing the same story Vancouver is cheap in relation to the rest of the world (it is not). The Olympics will raise prices (it will not, all increases are factored in). Human beings naturally gravitate towards the crowd. And ‘crowds cannot think’. They can only feel, act and react. Edmonton rose so sharply that it left all people gasping ‘prices are going to the same value as Vancouver’. Now they are gasping – collectively – that it cannot stop going down. Markets become the stories people tell about them. Today everyone believes it is going higher and they feel comfortable ‘in the crowd’. Yes, we believe in the long term future of Vancouver ... but urge you ... dear reader: Hold your own counsel, look at your assets carefully, be confident in your cash flow, don’t stretch too far ... get out of long term deals that are cloudy and watch as we go – together – through the valley. Have some cash, you may find the deals on the other side (next spring/summer) to be a lot sweeter"

Any guess where this quote is from? Who could have said it? I'll let you know shortly.

Patiently Waiting said...

"you may find the deals on the other side (next spring/summer)"

Wow, I don't think it will happen that fast. I don't see real deals for a couple of years, maybe, and I think most bears will agree with me.


Deb said...

oh how impatient I am growing.

hadenough said...


it seemed to happen pretty quickly in the u.s.

almost over night

Mark Fenger said...

I'd say next fall earliest for "deals"

Next spring/summer may look like a deal compared to recent history though.

Personally I don't expect things to bottom out until Q4 '08 or Q1 '09 at the earliest.

westygrrl said...

"it seemed to happen pretty quickly in the u.s.
almost over night"

I would argue the signs have been there for over a year. In August 2006, I read an article about a large, US (Eastcoast-based) new housing company offering $100,000 'rebates' on new houses, as an incentive to buyers. The article was entitled "Christmas in July." IMHO, it was an intial clue that something odd was beginning to take shape south of the border.
It's 15 months and counting. Where is the canary in the coal mine here on the wet coast?

Patiently Waiting said...

In a few locations, like Sacramento and Naples Fl., it started about two years ago. The first real deals in those areas appeared very recently (50% off auctions etc.).

jesse said...

"it seemed to happen pretty quickly in the u.s."

I use Seattle as a good example of this. In June and even later Seattle was touted as the great bastion of high prices. Nobody publically called out the creeping inventory, save a few lifeless bloggers, and now the market is in trouble.

I remember first-hand stories of the big tsunami a few years back. People first thought it was a giant breaker, nothing abnormal. But the water kept rising and rising. Only when it was obvious the water wasn't receding or leveling off did people panic.

Seattle inventory was the same. Nobody noticed a problem until inventory kept going up and up and up.

freako said...

The housing data ... tells us that we are not out of the woods yet.

What is it with these talking heads and their metaphors? The damage is done and the price will be paid. The way these guys talk, its as if a couple of months of good luck and all will be well. If prices run ahead of fundamentals, real prices will drop until it is inline again. There are no shortcuts, and treating every mildly positive data point as a definitive turning point totally misses the point.

The worst culprits for this is the NAR, who seemed to think two months of slowing sales indicated bottom. What a bunch of tools. I hope Lereah's past comes back to haunt him in his future endeavours. Scumbag.

patriotz said...

Vancouver will not bottom until the US bottoms, and most likely a couple of years later. No reasonable estimate sees the US bottoming before 2 years from now, so I can't see Vancouver bottoming before this time in 2010.

I think it's quite likely that Vancouver will follow Seattle fairly closely, since it's the last major US market to start falling. But the eventual recovery in Vancouver may well lag Seattle, since the latter was not as overpriced and has a much stronger local economy. Vancouver is just attitude, and when that gets punctured, it can take a long time to reinflate.

freako said...

Mohican, if you happen to be in the mood for a rant, you might want to post something about the new CMHC changes which allows low downpayment for investment properties. Just what this market needs.

BearClaw said...

The insurance premium is up to 7.25% and the downpayment is as low as NOTHING for 1-2 unit rentals.

It could take 10 years to pay for the premium if combined with 40-year amortization see here

freako said...

The insurance premium is up to 7.25% and the downpayment is as low as NOTHING for 1-2 unit rentals.

As I posted on RETalks, that is like being fronted lottery tickets. You have nothing to lose.

patriotz said...

You have nothing to lose

Except your entire net worth.

Well I guess the cowboys had no asset s to start with, anyway.

freako said...

Well I guess the cowboys had no asset s to start with, anyway.

Well, if somebody had been stupid enough to lend me a million dollars when I was 20 years old, I would have taken flown down to Vegas and put it all on red. If I won I'd have paid back the million and enjoy my winnings. If I lost I would have just gone through most of my twenties without credit cardss. As an added bonus I could have bailed on my students loans as well.

In the U.S., lending was so absurd that I cosider the poolboys who bought five or more million dollar properties with no money down very smart invididuals.

Craig said...

"But the eventual recovery in Vancouver may well lag Seattle, since the latter was not as overpriced and has a much stronger local economy."

On the face of it, yes. But Seattle's second-biggest industry isn't an unknown variable, the city's police chief doesn't say that luxury purchases in the city are underpinned by criminal activity and the US isn't host to the world's greatest number of criminal syndicates.

Seattle doesn't have regular stories like this (though not regular in that the police catch them):

"The mastermind of the massive drug-money laundering operation was Dat Dac Tien (Frank) Tran, who was sentenced Friday to 10 years in prison after pleading guilty to laundering $201 million over a three-year period for Asian and Latino gangs that imported cocaine and exported B.C. bud."

One money launderer. Three years. $201 million. In Vancouver alone.

Alpha_Bear said...

I'm surprised that nobody has commented on the NAR figures. If you look at the NAR spreadsheet, you'll see that the existing home sales in the US are down 28.9% MOM, and down 22.7% YOY.

Alpha_Bear said...

New home sales in the US are down 4.8% MOM, and down 25% YOY.

According to the Census Bureau figures which the media likes to quote, but don't actually read.

patriotz said...

The idea that having a large illegal/money laundering component to your economy renders you immune to RE busts is absurd. Check out Miami (right now), and Hong Kong (about a decade ago), both of which take no back seat to Vancouver in "hot money".

Fundamentals are fundamentals, and capital which ignores them gets eaten up, regardless of source.