Saturday, October 22, 2005

Housing Problems

This article quickly summarizes the data indicating that housing is having some serious problems now. It also slams the media for spinning the statistics to make them look favorable for housing. (And this one discusses how investors accept statistics at face value only to their peril.)

The facts are that house sales have increased but prices have declined over the last few months (that's good as how else can lower prices get locked-in if there are no sales?). And tightening lending standards, increasing mortgage rates, revisions to the tax code vis-à-vis real estate, etc. will only make matters far worse.

Here in Marin, according to the Marin Report (see table) the median price of a house has already fallen 13% over the last three months from a peak in June at $1.0335 million to today's $0.9 million.

Below are just the conclusions of the article:
There is always a way to spin a story and make it look like things are not so bad especially when so much is at stake but the following facts cannot be changed

1. Housing prices have been dropping for 3 months in a row.

2. In many cities the more expensive houses are taking longer to sell.

3. Inventories are slowly building up, nothing dramatic yet but that’s how bubbles usually pop.

4. Mortgage rates are rising across the board. The 30-year mortgage has just hit a 15-year high.

5. More and more individuals are slowly starting to look into the option of renting VS buying. In time this will gather even more steam

6. Real Estate is also taking a breather in several hot international markets; China, Australia and Britain are the main ones that come to mind.

7. A revision in the US Tax code could also have potentially detrimental effects on the housing sector.

So one can sit down and pretend everything is fine or pay attention to what’s really going and then take appropriate measures to protect oneself. In the end patience and perseverance are always handsomely rewarded; buying a house now is not the smartest thing to do. Paying down one’s debt and trying to put as much money away for a rainy day are the things that should be on top of the prudent investors mind.

4 Comments:

Blogger LABubble said...

This comment has been removed by a blog administrator.

Oct 22, 2005, 2:22:00 PM  
Blogger LABubble said...

Typo on your post, item 4. Rates are at a 15 month high, as the article says, not a 15 year high.

Will the bulls ever concede?

Oct 22, 2005, 2:23:00 PM  
Blogger Marinite said...

No, that's what the article says; I just cut and paste. It's a typo though

Oct 22, 2005, 9:15:00 PM  
Blogger sf jack said...

When is the IJ or (that lame excuse for a major city paper) the SF Chronicle going to run a story on this?

The fact Marin median prices are down 13% since June.

Of course, medians are effected seasonally every year - last year they were down $25k from June to September - this years its $133k.

That's a news story.

Oct 23, 2005, 9:30:00 PM  

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