Can you verify whether the reported, declining existing home inventories include the residences that are on the auction block because of foreclosures, or, in inventories like the one Countrywide is trying to sell?
It is my understanding that foreclosures, which are rapidly rising, are not included in MLS stats, and they are not part of home builders' unsold inventories....and the forced sales, the majority sold via foreclosure auctions, will, if not now, be sold "at any price". These are the sales, even if home builders cease all new building for the next five years....and they won't, they're still building, for example, in the area around where I live....hundreds of new units....that will weigh on the market and will negatively impact average selling prices.....count on it!
ace....Countrywide would have a difficult time "moving" the 10,200 housing units, valued at over $2 billion, that it now finds itself "owning", if it did not make it's rising inventory, public. Since it is public information, folks analyze the data and the trend:
http://countrywide-foreclosures.blog...203-homes.html
http://www.countrywide.com/purchase/f_reo.asp
...it's a train wreck and it will feed on itself.....and it will take the entire US economy with it, as the rapid decline in cheap credit seems to indicate.
This is a year old, ace....but it holds true, even more so, today...with the first time buyer unable to obtain a "liar loan" or a "time bomb" option ARM loan because of the sub-prime implosion, and the halt of the trend of rapidly rising appraised "value"....because liquidity can no longer be "injected" into the RE market by first time buyers who only qualified for loans that only "worked" if the valuations reliably went "up and up and up".....lower priced home sales diminish, with the "high end" the last to fall, because buyers of high priced homes have alternative methods of financing unavailable to first time and other assetless, former buyers.
If fewer homes priced at the "low end" sell, and "high end" sales do not decline proportionally....sure, average selling prices will remain firm, or even rise a bit, but that statistic does not support an argument that the market is better than it seems at first glance. It actually means, IMO, that it is worse than it seems, because when first time buyers are not in the market, it will not be sustained by high end buyers....hence the dramatic decline in total numbers of housing units sold.....the largest decline in 16 years:
Quote:
http://www.oftwominds.com/blogjuly06/home-sales2.html
On the same topic, correspondent S.B. shared the expertise of one of his contacts, retired global business exec-turned San Diego-area realtor <a href="http://realtytimes.com/rtmcrcond/California~San_Diego~bobcasagrand">Bob Casagrand. S.B.</a> had these comments on why median prices could appear to be rising even as sales slump:
Whenever I have a (real estate) question I cannot get answered, I turn to Bob.
So I asked him, Why is the median rising, when each individual home is selling for less? Actually, most San Diego homes are back at 2004 prices.
Bob told me that the under $400K buyer is squeezed out due to rising prices and higher interest rates. The high end is holding up a little better, because the ripple effect has not yet made it to the high end, and the low end has weakened MORE than the high end.
Last year, the +$1million home was 8.5% of sales. This year it is 10%. This is skewing UP the distribution of homes sold, raising the median, although each home, including the high end homes, are selling for 10-15% less today than last year.
We are selling proportionally MORE of the expensive homes, and the median tells us only about the MIX of homes sold.
It does not tell us about the value of each home. The $1.1 mil house was worth $1.5 mil in 2004, so it has also gone down in value.
If you want to know how each house has held up, you have to use the Case-Shiller index, or the OFHEO housing price index. Both track the SAME house over time, giving us the change in valuation of each house instead of the change in the MIX of homes sold....
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