Housing: 2006 thread, use the 2007 thread instead.

[dullard]

Link to the new 2007 thread: Click here.



The housing bubble is deflating. It may be on the edge of popping. I wanted one thread to store housing data. So here it is, I'll add as I get time.

New picture format. Using final data if available, revised data if final isn't available, preliminary data for the latest data point. Final data can sometimes be found at realtor.org. An Excel least squares linear fit is overlaid.

Existing Home Sales This is the biggest fraction of housing sales.
[*]Existing home sales fall, Dec 2006 - 6.22M annual rate preliminary data.
[*]Existing home sales tick up again, Nov 2006 - 6.28M annual rate preliminary data. Revised down to 6.27M. Prices are down 3.1% from Nov 2005.
[*]Existing home sales tick up, Oct 2006 - 6.24M. But prices are now down 3.5% from Oct 2005. This is the biggest yearly price drop on record.
[*]Existing home sales fall, Sept 2006 - 6.18M annual rate. Revised to 6.21M. Prices are down 2.2% from last month and 2.2% from Sept 2005.
[*]Existing home sales fall slightly, Aug 2006 - 6.30M. Revision unchanged.
[*]Existing home sales fall 4.1%, July 2006 - 6.33M. Revised to 6.33M.
[*]Existing home sales fall 1.3%, June 2006 - 6.62M. Final: 6.6M.
[*]Existing home sales fall 1.2%, May 2006 - 6.67M. Final: 6.71M.
[*]Existing home sales fall 2%, Apr 2006 - 6.76M. Final 6.75M.
[*]Existing homes steady, up 0.3%, Mar 2006 - 6.92M. Final: 6.90M.
[*]Sales stop skid, up 5.2%, Feb 2006 - 6.91M. Final: 6.90M.
[*]Sales fall 4th month in a row, Jan 2006 - 6.56M. Final: 6.57M. Part of the reason for the fall: California sales down 24.1% comparing Jan 2006 to Jan 2005.
[*]Sales fall 3rd month in a row, Dec 2005 - 6.60M. Final: 6.75M. Overall for 2005, sales were at all time record 7.07M.
[*]Sales fall second time in Nov 2005 - Final: 7.05M
[*]Sales fall in Oct 2005 - 7.09M. Final: 7.05M.
[*]Sales strong in Sept 2005 - 7.28M. Final: 7.20M.
[*]Aug 2005 - Final: 7.21M.
[*]Sales fall in July 2005 - 7.16M. Final: 7.13M.
[*]Sales all time record in June 2005 - 7.33M. Final data at record high of 7.27M.
[*]Sales in May 2005 - Final: 7.14M.
[*]Sales in Apr 2005 - Final: 7.17M.
[*]Sales in Mar 2005 - Revised: 6.87M.
[*]Sales in Feb 2005 - Revised: 6.82M.
[*]Sales in Jan 2005 - Revised: 6.82M.

New Home Sales Note: New home sales are a minor fraction of all housing sales.
[*]New home sales up, Dec 2006 - 1.12M annual rate preliminary data.
[*]New home sales up, Nov 2006 - 1.05M annual rate preliminary data. Revised to 1.07M.
[*]New home sales fall, Oct 2006 - 1.00M. Revised: 1.01M. But prices soar to recover last month's drop.
[*]New home sales up 5.3%, Sept 2006 - 1.08M. Revised to 1.04M. But prices are down 9.7% on new homes.
[*]New home sales, Aug 2006 - 1.05M annual rate. Revised: 1.02M.
[*]New home sales down 4.2%, July 2006 - 1.07M. Final: 0.98M.
[*]New home sales down, June 2006 - 1.13M. Final: 1.08M.
[*]New home sales up 4.6%, May 2006 - 1.23M. Final: 1.10M.
[*]New home sales up 4.9%, Apr 2006 - 1.20M. Final: 1.12M.
[*]New home sales up 13.8%, Mar 2006 - 1.21M. Final: 1.12M. But to do so, average prices were slased 7.1% and median price slashed 6.5%.
[*]New home sales plummet 10.5% in Feb 2006 - 1.08M. Final: 1.04M. Median price fell 3% from Feb 2005. Unsold new homes up 15% from Feb 2005.
[*]Sales down 5% in Jan 2006 - 1.23M. Final: 1.17M.
[*]Sales up surprise 2.9% in Dec 2005 - 1.27M. Final: 1.26M.
[*]Sales tumble 10yr record in Nov 2005 - 1.25M. Revised even lower to 1.23M.
[*]Sales soar to ALL TIME record in Oct 2005 - 1.43M. Revised down to 1.40M.
[*]Sales rise in Sept 2005 - 1.22M Revised up to 1.26M.
[*] Sales fall off cliff in Aug 2005 revised to 1.20M.
[*]Sales rise to all time record in July 2005 - 1.41M. Revision to 1.40M.

New Home Starts Seems to be the most volitile of the data.
[*]New home starts up, Dec 2006: 1.64M annual rate.[/b]
[*]New home starts recover part of Oct plunge, Nov 2006 - 1.59M. Revised to 1.57M. But, new permits are now at a 9-year low.
[*]New home starts plunge almost 15%, Oct 2006 - 1.49M. Revision unchanged.
[*]Housing starts recover all of last month's decline, up 6% in Sept 2006 - 1.77M. Revised to 1.74M.
[*]Housing starts down 6% in Aug 2006 - 1.67M. Final: 1.66M.
[*]Housing starts down in July 2006 - 1.80M. Final: 1.76M.
[*]Housing Starts down in June 2006 - 1.85M. Final: 1.83M.
[*]Housing starts up in May 2006 - 1.96M. Final: 1.95M.
[*]Housing starts slow in April 2006 - 1.85M. Final: 1.83M.
[*]Starts fall in Mar 2006 - 1.96M. Final: 1.97M.
[*]Starts return to more typical levels, down 7.8% in Feb 2006 - 2.12M. Final: 2.13M. The more closely watched year over year figure is down 4.8% from last year, but permits are up 2.5% year over year.
[*] Housing starts soar 32yr record 14.5% in Jan 2006 - 2.28M. Final: 2.27M. Change due to seasonal adjustment factors being large, not to actual increases in spending.
[*]Housing starts plummet 8.9% in Dec 2005 - 1.93M Revised to 1.99M. Preliminary data shows 2005 was up 5.6% over 2004.
[*]Housing starts soar in Nov 2005 - 2.12M. Revised to 2.14M.
[*]Housing starts tumble in Oct 2005 - 2.01M. Revised to 2.02M.
[*]Housing starts strong in Sept 2005 - 2.11M. Revised to 2.13M.
[*]Housing starts dip in Aug 2005 - 2.01M. Revised to 2.04M.
[*]Housing starts in July 2005 - 2.04M revised.

Home Builders
[*]Aug sentiment falls further: 37.
[*]July sentiment at 15-year low: 39.
[*]June sentiment at 11-year low: 42.
[*]Builder confidence falls again in Apr 2006 - to 50.
[*]Home builder sentiment to 3 year low. Although, at 55, it is still above the 50 needed to indicate positive outlooks.
[*]One in 5 builders reporting increased cancellations. Causes claimed: 45% can't sell old home, 1/3rd cite financing and rising rates, 15% cite job losses.

Misc. Data
[*]1st quarter 2006 prices fell 3.3% from 4th quarter 2005.
[*]2005 prices up ~10%. Down from 13.6% rise in 2004. The pricing slowdown occured at the end of 2005, signalling 2006 may have even lower pricing gains. Average and median prices fell in Dec, 2005. Different report of same thing says 13% increase for 2005 but slowed in 4th quarter.
[*]Feds proposed tightening rules on risky mortgages - Jan 2006. In 2005, 40+% were ARMs or interest only. Tightening here would clearly slow sales as fewer people will qualify.
[*]ARMs starting coming due in 2006. ARMs started to become widely used in late 2002. The 3-year ARMs are now coming due. Average estimated increase in mortgage payments: $385/month.
[*]2006 Projections on sales, pricing, and interest rates. Expected price increase of 5.8%, continueing the trend of lowered gains. Probably in reflection of the expected interest rates of 6.9% by the end of 2006.
[*]Home ownership is down for working class in 2003 (latest data released Mar 2006). Although, a drop of 3% over 25 years is basically nothing.

 

[catnap1972]

All lies!!

Housing starts are the best they've been since the Middle Ages.

Only the pessimistic letists can't seem to grasp that.

 

[Genx87]

Originally posted by: catnap1972
All lies!!

Housing starts are the best they've been since the Middle Ages.

Only the pessimistic letists can't seem to grasp that.

1st post in and this thread was already crapped.

/bravo

 

[jlmadyson]

It is difficult to say at this point where housing overall is headed for 2006. Certainly a lot of volatility, although home mortgage applications were up slightly in the last report from the The MBA, while 30-year rates fell, next report is due out the 1st. At this point, I tend to agree with:

New-home sales this year probably will fall to 1.17 million, still the third-best on record, after 2005's all-time high of 1.28 million, the National Association of Realtors said on Feb. 7.

Text

 

[1EZduzit]

They just sold some farmland next to me the other day for $1100/acer. You can rent most any farm ground you want in my area for $35 to $50/acre. That's just craziness. It seems to me that people are getting out of the stock market and buying real estate. If everything crashes at least they own something besides paper.

 

[catnap1972]

Originally posted by: Genx87

Originally posted by: catnap1972
All lies!!

Housing starts are the best they've been since the Middle Ages.

Only the pessimistic letists can't seem to grasp that.

1st post in and this thread was already crapped.

/bravo

No problemo--just saving you guys on the right the trouble :thumbsup:

 

[Whoozyerdaddy]

Originally posted by: catnap1972

Originally posted by: Genx87

Originally posted by: catnap1972
All lies!!

Housing starts are the best they've been since the Middle Ages.

Only the pessimistic letists can't seem to grasp that.

1st post in and this thread was already crapped.

/bravo

No problemo--just saving you guys on the right the trouble :thumbsup:

Housing sales and value increases in selected markets had been on a record pace for a long time. Did you think that they could maintain that pace forever? The housing market is still very strong by historic standards, it's just off the record levels of the last couple years. While some markets are correcting themselves now, others continue to rise and some new markets previously unaffected by an up tick are on the up tick now.

All in all, things look pretty good.

 

[Train]

The housing market will drop, thats for sure, but I don't think it will crash. Like Greenspan said "it will likely have a soft landing"

There are too many smart consumers out there who realize prices are inflated, and are waiting til they come down to buy. When prices fall, there will be plenty of people waiting to catch them.

 

[DealMonkey]

I'm so tired of the media crapping all over the housing market. If they're not careful, all of their pounding of drums for a housing recession will become a self-fulfilling prophesy. In any event, this month-by-month analysis of the housing market is beyond lame. Even newbie sales agents know that the market is stagnant from mid-November through the end of January. It's not news. The "seasonal doldrums" in the housing market happen every single year.

 

[dullard]

Originally posted by: DealMonkey
In any event, this month-by-month analysis of the housing market is beyond lame. Even newbie sales agents know that the market is stagnant from mid-November through the end of January. It's not news. The "seasonal doldrums" in the housing market happen every single year.

Which is why I post annualized rates (seasonally adjusted rates to remove the "doldrum" effect).

Originally posted by: DealMonkey
I'm so tired of the media crapping all over the housing market. If they're not careful, all of their pounding of drums for a housing recession will become a self-fulfilling prophesy.

All markets go through booms and busts. Simply calling a bust a bust does NOT create a boom. Simply calling a boom a boom does NOT create a bust.

 

[bdude]

Originally posted by: Genx87

Originally posted by: catnap1972
All lies!!

Housing starts are the best they've been since the Middle Ages.

Only the pessimistic letists can't seem to grasp that.

1st post in and this thread was already crapped.

/bravo

i laughed

 

[senseamp]

Record housing starts + lower new home sales = higher inventory = lower prices.
I am loving it. Gonna get a house in a couple years.

 

[Todd33]

Originally posted by: senseamp
Record housing starts + lower new home sales = higher inventory = lower prices.
I am loving it. Gonna get a house in a couple years.

You forgot higher interest rates.

 

[TylerP]

I am hoping for a housing bubble-pop. Cause that is when I swoop in and clean up nicely.

 

[dullard]

Originally posted by: TylerP
I am hoping for a housing bubble-pop. Cause that is when I swoop in and clean up nicely.

Welcome to Anandtech.

You and millions of other investors who are waiting for prices to drop. Because of them, housing prices are unlikely to fall nationwide. They are already falling in some isolated regions, but don't expect the fall to be big or necesarilly in your location. Todd33 got it right - the higher interest rates will wipe out most of any savings you get by waiting for prices to fall.

 

[charrison]

Originally posted by: dullard

Originally posted by: TylerP
I am hoping for a housing bubble-pop. Cause that is when I swoop in and clean up nicely.

Welcome to Anandtech.

You and millions of other investors who are waiting for prices to drop. Because of them, housing prices are unlikely to fall nationwide. They are already falling in some isolated regions, but don't expect the fall to be big or necesarilly in your location. Todd33 got it right - the higher interest rates will wipe out most of any savings you get by waiting for prices to fall.

Fortunaty interest rates are still quite low. THe current average is below what I am finaced at. I would have refinaced when it was lower if we had planned to stay in this house longer.

 

[Whoozyerdaddy]

Originally posted by: TylerP
I am hoping for a housing bubble-pop. Cause that is when I swoop in and clean up nicely.

That's the thing... there isn't A bubble. I think Greenspan made the best comparison when he said it was more like a foam. Lots and lots of little bubbles.

My contention all along in this issue has been that there will be a very few, isolated, real bubble bursts. But for the most part what I think you'll see is an extended flattening of prices.

One of the things that will cause housing prices to drop is the cost to replace an existing home. When it becomes cheaper to build new, existing home prices will fall. However, with the recent spat of hurricane destruction and the associated rebuilding effort combined with the overall population growth in the US (about 3% per year), building materials are going to be in short supply and thus higher in cost. This means it becomes more expensive to build than to buy existing which in turn makes existing homes more valuable.

I don't believe that explosive rises in value like we've seen in Las Vegas, California and Hawaii can be sustained but overall with conditions like they are, I would expect to see property values continue to rise for the next several years at least.

 

[TylerP]

Thanks for the welcome.

I needed an eviorment that was of a greater respect than Hardocp.

And Anadntech is it.

I should have been more clear in my comment, cause I wasn't talking about investing or waiting for lower prices. Though, in many markets the prices are severly inflated.

I also agree that there isn't A bubble, but more of a regional pockets.

That is what I am talking about, the regional aspect of the market. If the 'bubble' 'breaks' in three markets that I am in, I will be able to afford the place (custom built + land) of my dreams at a much lower cost (not just in price) to me.

Plus, my business will take off.

 

[senseamp]

I have no idea why people are loaning money at 4.52% APY for 30 years instead of 4.73% APY for 6 months. They must think we are going to have these really low interest rates for the next 30 years, or they don't care about losing their money to inflation.

 

[piasabird]

I think what I have seen is the price on housing is rising too fast for many people to be able to afford a new house. I think there was such a low interest rate in housing for so long that many people that could not previously afford a house went out and purchased one if they could and the demand for housing climbed and then the price rose sharply. I think now we are at the top or near the top of the curve moving upward.

A lot depends on the region you live in also.

 

[LegendKiller]

It's called a humped yield curve. Short term rates are higher than long term because that is the expectation for future interest rates. The yield curve can be seen as an unbiased predictor of future rates.

I'd also like to add that even if the price of a house went from 300 -> 200 and the interest rate went from 6.5 -> 8.5, the person who bought the 200k house will pay 254,604.75 for 200*8.5 in interest as opposed to 275,496.10 in interest for 300k@6.5, on an after-tax basis.

So, the person who waits a year or two to experience a 33% drop will not only save more money in interest payments, even if rates increase ~30%, but he will also be able to invest more due to lesser payment, thus earning him greater yield on non-invested cashflows.

Furthermore, the 300k investor will have lost 100k in equity.


If you bought within the last 6 months you are screwed. If you buy within the next year, you are screwed.


I don't subscribe to the "many regional bubble" hypothesis. Never before in history has the bubble and preceeding appreciation been so expansive and rediculous. Previous bubbles have been contained to regional markets in 1-2 areas. This bubble is dozens of markets, some clustered others dispersed. 1-2 bubbles isn't bad and won't affect macro-economics. However, dozens of large regional bubbles will destroy the national market.

Good luck to the tools of the realtors who thought there was no such thing. You are no smarter than the suckers who got worked over by Blodget, Grubmann and the rest of the bubble mechanics.

 

[Engineer]

Originally posted by: piasabird
I think what I have seen is the price on housing is rising too fast for many people to be able to afford a new house. I think there was such a low interest rate in housing for so long that many people that could not previously afford a house went out and purchased one if they could and the demand for housing climbed and then the price rose sharply. I think now we are at the top or near the top of the curve moving upward.

A lot depends on the region you live in also.

My guess is that is why you are seeing quite a few interest only loans. Also, so many people buying property just to fix it up and flip it in a short time for a big profit. Driving property through the roof. Sort of the rush to get gas when it was rising to $3.00 per gallon, not realizing that they were driving it up all that much more via supply/demand.

 

[charrison]

Originally posted by: Engineer

Originally posted by: piasabird
I think what I have seen is the price on housing is rising too fast for many people to be able to afford a new house. I think there was such a low interest rate in housing for so long that many people that could not previously afford a house went out and purchased one if they could and the demand for housing climbed and then the price rose sharply. I think now we are at the top or near the top of the curve moving upward.

A lot depends on the region you live in also.

My guess is that is why you are seeing quite a few interest only loans. Also, so many people buying property just to fix it up and flip it in a short time for a big profit. Driving property through the roof. Sort of the rush to get gas when it was rising to $3.00 per gallon, not realizing that they were driving it up all that much more via supply/demand.

I dont see anything wrong with buying a house and fixing it up and flipping it. For those with the capital to risk, more power to them.

 

[Engineer]

Originally posted by: charrison

Originally posted by: Engineer

Originally posted by: piasabird
I think what I have seen is the price on housing is rising too fast for many people to be able to afford a new house. I think there was such a low interest rate in housing for so long that many people that could not previously afford a house went out and purchased one if they could and the demand for housing climbed and then the price rose sharply. I think now we are at the top or near the top of the curve moving upward.

A lot depends on the region you live in also.

My guess is that is why you are seeing quite a few interest only loans. Also, so many people buying property just to fix it up and flip it in a short time for a big profit. Driving property through the roof. Sort of the rush to get gas when it was rising to $3.00 per gallon, not realizing that they were driving it up all that much more via supply/demand.

I dont see anything wrong with buying a house and fixing it up and flipping it. For those with the capital to risk, more power to them.

Never said anything wrong with it. Good ole capitalism at it's best. Simply stated that it's driving prices up artifically in the short term. Will correct itself over time as all markets do. People "RUSHING" to beat the crowd in owning that house will thin and the market will level. I also agree...more power to them. If someone is willing to buy it, why not.

 

[dullard]

Originally posted by: LegendKiller
I'd also like to add that even if the price of a house went from 300 -> 200 and the interest rate went from 6.5 -> 8.5, the person who bought the 200k house will pay 254,604.75 for 200*8.5 in interest as opposed to 275,496.10 in interest for 300k@6.5, on an after-tax basis.

So, the person who waits a year or two to experience a 33% drop will not only save more money in interest payments, even if rates increase ~30%, but he will also be able to invest more due to lesser payment, thus earning him greater yield on non-invested cashflows.

Throwing in tax just confuses things. (1) You forgot state taxes, (2) Not everyone is in the same tax bracket, (3) The tax deduction will vary quite a bit over the life of the loan. So lets just use the real dollar value: $382633 and $353617 respectively for your numbers.

However, your numbers are a bit suspect. Housing dropping 33% is quite rare. The biggest drops I could find were ~26% (Austin late 1980s and Oklahoma City mid 1980s). A 2% gain in interest rates is quite common especially considering we were right near 5% to begin with. Heck, far more than 2% rise is common.