Wow, has the housing market changed fast this summer. Analysts have gone from using terms like soft landing and downturn, and have started replacing them with words like crash and blood bath.
It’s not just the Bubbleheads with the dire prognostications anymore. Consider the following from Goldman Sachs on 7/29:
HOUSE prices are set to drop in the US for the first time on record, US investment bank Goldman Sachs warned this weekend.
Prices in several segments of the market have already started to fall, and the overall market will move into the red even in nominal terms next year, fuelling fears that this will trigger a downturn in consumer spending and hit an already slowing US economy.
The risk is rising that nominal US home prices may be headed for an outright decline in 2007. It would be the first decline in national home prices ever recorded, at least in nominal terms, said Jan Hatzius, economist at Goldman Sachs. (emphasis mine)
Less than two months ago on June 5, I did a post called Doom and Gloomers- Looking for Balance? In it I listed my favorite Happy Talk sites, one of which was Realty Times – a site for Realtors around the nation to post their opinion of market conditions, and links to their websites.
Two months ago, just for fun- I would pull up Realty Times, and read posts to my husband. We would chuckle at the unbridled optimism. (Yes I know- we need to get out more.) But a lot has changed in two months.
In the Phoenix SE Valley, inventory has continued to grow. In my hometown of Gilbert, inventory has grown from 2619 homes on 6/5 to 2933 today, or an 11% increase. In Pinal County, just south of here, the town of Maricopa has gone from 1227 homes to 1306, or a 6% increase, and Casa Grande in Pinal County has gone from 821 homes to 1032- a whopping 20% increase in inventory.
It’s tougher to find those funny, flying-in-the-face-of-reality comments on Realty Times anymore. In fact, most of the time, you can’t tell a Realtor from a Bubblehead, based on their comments. Here are a few of the more sobering comments from Gilbert realtors:
From Pat Hune: Historically, June is one of the better months of the year for resale housing activity. However, the 5,460 recorded sales for June 2006 is truly one of the initial signs that the resale market is growing weaker. This level of activity is down from the 6,870 sales of May 2006 and well below last year’s 11,545 sales year to date. This is the weakest June since 2000 when 5,020 sales were recorded. (emphasis mine)
From Ron Wilczek: The price per-sq ft for a home sold in June was the lowest this year and marked 3 consecutive months that figure dropped. That may account for the 13% increase in sales from May to June as the inventory rose another 10%. May’s and June’s homes were among the largest sq ft sold in Gilbert in several months. Therefore, there was no gain in actual prices when considering price per-sq-ft. (Emphasis mine.)
But my favorite dose of reality comes from Eric Newenhouse, with a hard-hitting example for sellers:
Here’s an example I would like to present to Buyers and Sellers in Gilbert based on data pulled from the ARMLS on 7/29/2006.
The total inventory of 2 story homes, with pool, in a square footage range of 3000 to 3500SF, built after 2000 is 48 properties. Currently there are 2 homes under contract in this category- at an average asking price of $162.44/SqFt. This represents only a 4.0% absorption rate of the available product- indicating a very large supply compared to demand. This absorption rate is by far the lowest I have seen in all the markets I have checked year to date.
What this translates to is an average of 84 days on market- with sellers having to consider making serious concessions, in order to sell their homes in a timely manner. If you look back 12 months, only an average of 3.16 homes of this type are being sold each month and today we have 48 available!!
For sellers who are under pressure to sell fast, the home must be in perfect condition inside and out, in a good location, and priced correctly for this market. (Quote edited for clarity- emphasis mine.)
It’s too bad really- if this keeps up, I’ll have to remove Realty Times from my Happy Talk list, and add them to the Blogroll of Housing Bubble Sites. I guess Mr. Twist is just going to have to take me out to the movies. (Is the B horror flick The Bubble That Ate Phoenix playing anywhere?)
Mish's Global Economic Analysis
Northern Virginia Housing Bubble Fallout
Bubble Meter
Ohio Fraudclosure
UK House Bubble
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
I’ve been following housingdoom for the last 2 months and see the changes, even your links back then appear optimistic compared to the current. If this trend continues, October 1st could be in a state of panic.
I live in Lake Havasu City, some of my family was under the impression that a resort town would bypass the effects of a housing crash (contrary to history). A couple of them got in over their heads back in February as contractors, insisting “It doesn’t feel like that’s what’s going to happen”.
thank you once again for you truth and insight. We are buyers who sold in a non bubble area, took a loss in amount paid over 7 years of homeownership versus amount paid to keep home over 7 years (IE our meager, albeit NOMRAL, appreciation did not even break even with the amount paid out in mortgage funds over the years.) THIS was the norm (if you dont stay in a house long enough, you dont make money on it… even if you pay off a mortgage, chances are you will have barely beat out inflation over 30 years, or break even on what a 30 yr mortgage cost you) So, we rolled with it, and moved to a bubble area (I had no idea what I was getting into) 2 years later, and we still cannot buy a house!! We make a great income, as well as have excellent credit– but the median home prices are well beyond the amount of risk we are willing to take. I say Hallelujah to anyone willing to call this farce for what it is. You cannot force a market to change, but eventual change is inevitable. Now, if only the denial would stop, and acceptance take over…
I predict this fall for the onset of panic/
What a difference a day can make. My family’s old house, sold last year for 400K caught on fire today. While this may have very well been an accident, my suspicion to their financial problems may have been true. The owner got an 80-20 loan and was having a hard time keeping his head above water, working extra house at work. A couple weeks ago his mother moved out due to drama, whom was paying part of the bills, leaving him stranded financially. Now there’s a fire. Regardless of how likely this was potentially intentional or not; it still makes you wander if this scenario will be repeated in the coming months ahead.