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Bay Area housing prices jump 43 percent, but don’t celebrate

Wed, 10 Jul 2013 20:49:24 +0000

The area median home price shoot up by 43 percent to $620,000 in the Bay Area during the past year, according to ZipRealty.

Blanca Torres
Reporter- San Francisco Business Times

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The Bay Area housing market is on fire — and we’re about to get burned.

The median home price in the Bay Area ballooned by 43 percent during the past year to $620,000 in June, up from $435,000 a year ago, according to ZipRealty, the Emeryville-based online brokerage.

The Bay Area leads the nation in year-over-year growth, followed by Sacramento with 41 percent, Los Angeles with 31 percent, Las Vegas with 30 percent and San Diego with 25 percent.

Meanwhile, the number of homes on the market in the Bay Area has dropped by 32 percent to 7,961 from 11,662 a year ago.

The fire burns brighter in particular parts of the Bay Area (like San Francisco, where the median price hit $1 million in April).

Still, that type of growth is phenomenal — and likely unsustainable. So, how long before prices level off?

The drop in inventory indicates that we’re in a supply constrained market, which could entice more sellers to put their homes on the market.

“After months of runaway prices and a near-desperate inventory situation, the Bay Area housing market is starting to replenish itself,” said ZipRealty CEO and President Lanny Baker. “Home owners across the region now see increased values, tight bid/offer spreads and lightning fast sales, and they’re reacting by putting more homes, and particularly more attractive homes, on the market once again. It’s a welcomed break in the trend even if it ultimately means prices start to cool off a bit too.”

But, what do rising home prices really mean?

I asked economist Christopher Thornberg of Beacon Economics, who is best known for rightly predicting the 2008 mortgage crisis (even though no one agreed with him).

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/2013/07/bay-area-housing-prices-jump-43.html

Bay Area Housing Prices Take Big Jump

Tue, 18 Jun 2013 07:43:22 +0000

U.S. home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006.

A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover. The Standard Poor’s/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month. And prices rose in 15 cities in March from February. That’s up from only 11 in the previous month.

The monthly figures aren’t seasonally adjusted and may reflect the beginning of the spring buying season.

Prices rose in Phoenix by 22.5 percent over the past 12 months, the biggest gain among cities. It was followed by San Francisco (22.2 percent) and Las Vegas (20.6 percent). New York City had the smallest year-over-year increase at 2.6 percent, followed by Cleveland at 4.8 percent.

“Rising home prices may begin to alleviate a lack of housing inventory … by encouraging more homeowners to put their properties on the market,” said Maninder Sibia, an economist with Economic Advisory Service, in a note to clients.

“The housing market is clearly improving.” The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

The U.S. housing market is steadily recovering, buoyed by solid job gains and near-record low mortgage rates.

Sales of new homes rose in April to nearly a five-year high. And sales of previously occupied homes ticked up in April to the highest level in three and a half years. Despite the gains, a limited number of homeowners are putting their houses on the market. That’s helped lift home prices. And it’s made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.

The supply of available homes jumped in April, but was still 14 percent below its level a year earlier. Stan Humphries, chief economist at Zillow, a real estate data provider, said that the increase in the Case-Shiller index has been skewed higher by cities such as Phoenix and San Francisco.

Fewer homes are available in those areas because many homeowners still owe more on their mortgages than their homes are worth.

That makes it difficult to sell. Still, even excluding those markets, home prices are rising steadily nationwide, Humphries said. The increases are “certainly confirmation that the housing market is experiencing a brisk recovery,” he added.

The housing recovery is creating more construction jobs and bolstering the economy in other ways. Higher home prices make homeowners feel wealthier and encourages them to spend more.

Rising prices also encourage more would-be buyers to purchase homes, before prices rise further.

They also enable more homeowners to sell homes, by reducing the number of people who owe more on their mortgages than the homes are worth. Prices have been increasing steadily since last summer.

Still, they are about 29 percent below the peak reached in July 2006. Banks have raised their credit standards since the housing bubble burst and are demanding larger down payments. That’s made it particularly hard for potential first-time buyers to get a mortgage.

Copyright Associated Press

Article source: http://www.nbcbayarea.com/news/local/Bay-Area-Housing-Prices-Take-Big-Jump-209268641.html

Home prices increased at a six-year high late in 2012, SF had second highest …

Wed, 30 Jan 2013 09:06:01 +0000

WASHINGTON — U.S. home prices accelerated in November compared with a year ago, pushed higher by rising sales and a tighter supply of available homes.

The Standard Poor’s/Case-Shiller 20-city home price index rose 5.5 percent in November compared with the same month a year ago. That’s the largest year-over-year gain in six years.

All but one of the cities in the index posted annual gains. The largest gain was in Phoenix, where prices jumped nearly 23 percent. It was followed by San Francisco, where prices rose 12.7 percent, and Detroit, where they increased 11.9 percent. The index does not cover the San Jose metro area. The real estate information company DataQuick, using a different way of measuring

price trends, shows the median price for existing single family homes there increasing 20.6 percent in December.

New York was the only city to report a drop from a year ago.

Prices also rose in 10 of the cities measured by the index in November from October. That’s up from seven in October from September. The biggest monthly gains were in San Francisco, Phoenix and Minneapolis.

Monthly prices are not seasonally adjusted and frequently decline over the winter. The 20-city index dipped in November from the previous month.

Steady price increases should help fuel the housing recovery. They encourage more people to buy before prices rise further. Higher prices also build homeowners’ wealth, which can spur more spending

and economic growth.

The data “show a broad-based recovery in housing activity and prices across the country,” said Michael Gapen, an economist at Barclays Capital. “We expect this housing recovery to continue in the coming years.”

The SP/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The November figures are the latest available.

The index began to show annual gains in June and have been larger each month since. Prior to that, the index had fallen for 20 straight months.

Despite the increases, prices nationwide are still about 30 percent below the peak they reached at the height of the housing bubble in the summer of 2006. They are now at the same level as in the fall of 2003.

Purchases of previously occupied homes rose last year to their highest level in five years. The National Association of Realtors forecasts that sales will rise 9 percent this year. Independent economists have similar forecasts.

Sales of new homes also rose in 2012, although they remain near depressed levels.

Stable job gains and record-low mortgage rates have encouraged more people to buy homes. And the limited inventory of homes for sale has made builders more confident to step up construction. The number of previously occupied homes has fallen to an 11-year low.

Millions of homeowners still owe more on their mortgages than their homes are worth, making it difficult for them to sell. That’s one reason the supply of homes is so tight. But higher home values are lowering the number of those “under water” and should encourage more homeowners to put their homes on the market.

More people are also moving out on their own after living with friends and relatives in the recession. That’s driving a big gain in apartment construction and also pushing up rents. Higher rents are encouraging investors to buy homes and rent them.

The tighter supply of homes pushed builders in December to start work on the most homes in 4 ½ years. Last year was the best year for residential construction 2008, just after the recession started.

Home builders are also benefiting from the rebound. D.R. Horton Inc. said Tuesday that its profit in the three months ended in December more than doubled and orders jumped 39 percent.

“D.R. Horton is the best positioned it has been in its 35-year history,” chief executive Donald Horton said. “We are looking forward to the spring selling season with optimism.”

Article source: http://www.insidebayarea.com/real-estate/ci_22472420/home-prices-increased-at-six-year-high-late

Apartment Demand Ebbs as ‘Avalanche’ of New Units Open

Thu, 04 Oct 2012 06:25:46 +0000

One of the biggest upsides to the downturn in housing has been a surge in demand for apartments.

Whether burned by foreclosure or afraid of losing money in homeownership, Americans have run in droves to rent. That resulted in a strong rise in rents and a big drop in vacancies over the past few years, as investors rushed to build more supply. Now, just as that supply is about to come on line, demand appears to be weakening.

Apartment vacancies fell by just ten basis points in the third quarter of 2012, from 4.7 percent to 4.6 percent, according to Reis Inc. While that is still an improvement, it is the slowest rate since the recovery began in 2010; vacancies fell by an average 35 basis points every quarter from 2010 and 2011.

“Demand for apartments still clearly outstrips supply growth, with absorption figures higher than construction, and vacancies declining. Still, there is cause for concern in the near-term that demand is abating for multifamily, just as a veritable avalanche of new projects begins to open their doors early next year,” notes Reis economist Victor Calanog.

The change in occupied apartments also slowed to the lowest rate of absorption since the first part of 2010 and represented less than half the quarterly average of the past two years. This is particularly concerning, given how many new apartments are under construction and scheduled to open in the next two years. Multi-family housing starts were up 37 percent in August from a year ago, according to the U.S. Department of Commerce.

Reis estimates that accounting for delays and cancellations, between 160,000 and 200,000 new units will open in 2013. In 2014 that “total” figure (not adjusted for delays) exceeds 320,000. That is in the 79 markets it tracks, where only 41,000 or so units were built in 2011. The average annual figure from 2001 to 2008 was about 120,000.

Many analysts still believe apartment demand will remain robust in the near term, relative to where it has been historically, as so many potential home buyers are shut out of the mortgage market due to damaged credit. They also point to a shift in the homeownership mentality of younger Americans, who have seen what the housing crash did to their parents and who are gravitating more and more to urban centers.

“Renting an apartment offers extreme flexibility in today’s techie generation and offers sociability,” says Alexander Goldfarb of Sandler O’Neill. “It’s huge how much kids want to be with other kids, and apartments lend themselves well to that. We are not seeing a sudden wave of people moving out to buy homes, even though housing is finding a floor.”

In fact, Goldfarb says the move-out rate is now at 16 percent, below the historical average of 20 percent. The biggest issue for the big apartment REITs, like Equity Residential
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], he adds, is slowing growth rates. The stocks themselves are down and underperforming because investors expected this to be the peak year for the sector.

“Does that continue or do other trends boost them?” asks Goldfarb. “When you look at absolute growth rates, it will look very good relative to other sectors, and that will bring investors back to apartments.”

Goldfarb does not believe that the burgeoning single family rental market is taking share away from the multi-family sector, but others say it could play a role, especially for lower income families looking for more space. Investors in some of the hardest hit housing markets have been buying up as many distressed properties as they can find, citing new demand.

“I see unprecedented demand, more than I’ve ever seen in 15 years,” says James McClelland, CEO of Chicago-based MACK Companies, a rental property investment group. “Our waiting list is already up to 4 months. if you pass our criteria to become one of our renters you get the honor of sitting on a four month waiting list until the next home is available to you.”

The housing market may be recovering, but it is far from a robust recovery, and the lessons learned in the latest crash will likely keep rental demand high. Given where other commercial sectors are with vacancy rates, apartments are still the healthiest; it remains to be seen what all the new supply will do to the fundamentals over the long term. Analysts say 2014 is the year to watch.

Sector Watch: US-Based REITS

—Host Hotels Resorts
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—Simon Property Group
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—Equity Residential
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—Apartment Investment Management Co
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—Vornado Realty Trust
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—Boston Properties
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—FelCor Lodging Trust
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—AvalonBay Communities
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—American Capital Agency Corp
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—UDR, Inc
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—Essex Property Trust, Inc.
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—Camden Property Trust
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Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49271964?__source=RSS*blog*&par=RSS

Bay Area sees patchwork recovery from housing crash

Mon, 16 Apr 2012 06:21:57 +0000

Click photo to enlarge
The Bay Area’s recovery from the housing crash is proceeding ZIP code by ZIP code, with only a few upscale communities nearing the values they saw before the bubble popped five years ago.

It may take another three to five years for the entire region to return to a healthy housing market, one that sees prices go up every year in most areas, and has far fewer foreclosures.

According to an analysis by this newspaper of home values by ZIP code, with higher priced homes, such as the core of Silicon Valley and parts of San Francisco, have recovered much of the home equity lost in the crash. The data is for all types of homes: single-family, condos and townhouses. But neighborhoods with low-cost homes, especially those in parts of Alameda and Contra Costa counties, are still far below peak values, hurt by the waves of foreclosures that struck those areas.

The analysis of ZIP code data supplied by the online real estate site Zillow used April 2006 as the approximate peak in Bay Area home values, although different communities reached their highest levels a bit before or after that. After that, values gradually declined until crashing in late 2007.

“In the Bay Area, it’s incredibly sensitive to where you are,” said Richard K. Green, director of the Lusk Center for Real Estate at the University of Southern California. “Places like Atherton and Palo Alto are just crazy. San Francisco is not all the way back, but it’s getting there. Oakland

is still dead.”
Of the 204 Bay Area ZIP codes analyzed, the median loss in value from the peak stands at 30 percent. The top 10 best performing ZIP codes were in Silicon Valley. The bottom 10 were in Alameda and Contra Costa counties.

“It comes down to whether these are areas with a lot of unemployment or a lot of jobs,” said Svenja Gudell, senior economist at Zillow. “Is there a lot of negative equity and an oversupply of homes? That will put downward pressure on prices.”

The good news is that real estate agents say those low prices are beginning to attract buyers.

Cheryl and Ken Mensing bought their first house this month after 28 years in a mobile home. There were nine bids on the 4-bedroom, 2-bath foreclosure in the Santa Teresa area of San Jose listed at $429,000. The couple won with a bid of $442,000.

Mensing said she and her husband saw prices edging up and decided that the stars were aligned for “a leap of faith” into the housing market.

“The prices finally came into where we could actually afford them and get into the market,” she said. “The interest rates were so low, so we thought this is the time — now or never. We just closed our eyes and jumped.”

Their agent, Eric Sjoberg of Century 21 in San Jose, said he thinks the South Bay is “past the tipping point. I’m starting to see increasing values incrementally in many, many of our markets.”

But while one neighborhood may be on the road to recovery, others in the same city may still be struggling. The variation between neighborhoods is evident in San Jose, where one ZIP code (95116) bordering the city’s east side had home values in February that were still 52 percent below the Bay Area’s peak in April 2006, while another (95129) in West San Jose was only 11 percent under.

To the north, in the upscale areas from Mountain View to Menlo Park, two Los Altos ZIP codes (94022 and 94024) are 5.6 and 3.7 percent below their highest point. One ZIP (94306) in Palo Alto is back at its peak. Parts of San Francisco are within 15 percent or less of their highest values before the bubble burst.

“There are two things going on,” said Jed Kolko, economist with Trulia, an online real estate company. “There has been stronger job growth in San Francisco and in some of the areas with a lot of high-tech jobs. But more importantly, these are areas that didn’t see the overbuilding during the boom.”

The East Bay is more challenged, especially eastern Contra Costa County. One Antioch ZIP code (94531), for example, is 64 percent below its high point. But Lafayette (94549) has regained all but 23 percent of the value it lost in the housing crash.

Mary Chatton Brown, an agent with Prudential California Realty in Orinda, said she has one client doing a short sale and another facing foreclosure. She recently sold a home that fetched a price below its appraisal.

“I have been in business quite a number of years, and I have been through a lot, but never like this,” she said. “This is very unique. That’s why everybody’s walking around thinking, what’s going to happen? When are we going to get through it?”

Not for a few more years, according to Home Value Forecast, which provides analysis and forecasts of the housing market.

“In general, the Bay Area’s held up better than other hard-hit markets around the country,” said Michael Sklarz, president of Collateral Analytics and contributing author of Home Value Forecast.

“We think the market’s hit bottom and we’re in the midst of a gradual recovery which will start accelerating over the next three to five years,” Sklarz said. “What people don’t understand about real estate markets is they are very long drawn-out cycles.”

Homebuilders are seeing signs of a modest recovery in some parts of the Bay Area, and are launching new single-family and condo developments. The San Jose metro area is back to its typical level of home building, according to Trulia.

“We think the recovery’s going to be ZIP code by ZIP code,” said Michael Maples, co-founder of Trumark Homes in Danville. Trumark is starting one single-family home development in San Jose this summer, and two in Sunnyvale later in the year, for a total of nearly 250 single-family homes and townhouses.

In anticipation of the recovery, Toll Brothers’ Northern California Division has been acquiring single-family lots over the past year — 24 east of Walnut Creek, 71 in Brisbane, and 51 in Sunnyvale.

“We do feel a little bit better about the market,” said Gary Mayo, Northern California group president of the national homebuilder. “There are people sitting on the fence not wanting to make that major investment until they can see some positive signs in the economy. We see those signs all over the Bay Area.”

Also investing in the housing market is San Francisco-based 643 Capital Management, which owns 600 foreclosed houses in the Bay Area and plans to buy more. Gregor Watson, the fund’s co-founder and managing partner, said he expects “modest appreciation for four or five years. There’s light at the end of the tunnel, but that may be a long tunnel,” he said.

At least some builders are counting on tech workers to help spur the housing recovery.

“My hope is the tech boom that’s creating all these jobs will spill over into the rest of the nine-county Bay Area,” said Doug Bauer of TRI Pointe, which plans to open a luxury home development in the San Jose foothills this month. “As prices of homes become too expensive for somebody making $80,000 a year, they’re going to have to head back into Contra Costa County. It’s like we repeat ourselves every 10 years.”

Contact Pete Carey at 408-920-5419.

Article source: http://www.mercurynews.com/business/ci_20402461/bay-area-sees-patchwork-recovery-from-housing-crash?source=rss

Bay Area home prices expected to stabilize in 2012

Mon, 09 Jan 2012 10:58:31 +0000

After years of decline, housing prices are expected to stabilize or even increase in some parts of the Bay Area this year, according to a new forecast.

Stabilizing prices are a sign of a healthier market, even though homebuyers still face challenges — tight credit, not many homes for sale and competition from investors paying cash.

In a report to be released Monday, Clear Capital, a real estate valuations company in Truckee, predicts that prices will remain almost flat this year — compared with a 4.7 percent drop in 2011 — in the San Francisco-Oakland-Fremont metropolitan area, including Contra Costa County. Silicon Valley should see a 1.6 percent increase in home prices, compared with a 2.5 percent drop last year, the company said.

“This region overall is doing pretty well,” said Clear Capital research director Alex Villacorta.

In three of the past four years, Bay Area home prices have declined from the previous year, including a dramatic 35 percent drop for the San Francisco metro area in 2008 and a 28 percent drop in Silicon Valley that year. Only in 2010 were there slight increases, followed by last year’s drop.

“We haven’t seen any stretches of normal activity for the last 20 years or so” in the Bay Area, he said, noting that prices had rocketed upward in the years before the decline. “It’s really been a roller coaster, with exception of now, when things are settling and leveling off.”

Nationally, the company

sees a 0.2 percent gain in home prices in 2012, compared to a 2.1 percent drop in 2011. The San Jose area’s expected performance was in the top third and San Francisco was in the top half of 50 major metropolitan areas analyzed.
Across the country, housing could help repair the economy, said economist Sung Won Sohn at Cal State Channel Islands. Sohn, who recently released his own economic forecast, is predicting a housing-led recovery for the U.S. this year based partly on low interest rates and renewed multifamily home construction, which usually brings gains in the overall housing market. And prices, he said, are about as low as they can go.

“No one is expecting a dramatic fall in house prices,” Sohn said. “That gets people buying houses.”

The Bay Area, especially Silicon Valley, is already doing better, he said, “because the underlying economy seems to be doing better. I think we will see a somewhat faster recovery in the Bay Area.”

In the past two years, home prices bobbed up and down in response to government programs to encourage sales, as well as fluctuations in the number of foreclosures and short sales, in which homes are sold for less than is owed on them.

But agents say too few homes are on the market, and buyers still face tight credit.

“People are in escrow forever, and they finally give up,” said Richard Calhoun of Creekside Realty. “That is what I see as the biggest hindrance on the market.”

Investors paying cash for lower-priced houses remain a big obstacle for people like Nicole Collison, 25, a San Jose schoolteacher trying to buy her first home.

Motivated by the high rent she’s paying and the market’s current low interest rates and prices, Collison has looked at nearly 50 houses since October and bid on half a dozen of them, only to lose out every time to cash buyers.

“We’re always outbid,” she said. “It has been quite a challenge.”

But she hasn’t given up.

“We’re going to keep at it. We’re hopeful after the beginning of the year more things will come on to the market.”

In the East Bay, about 20 percent of the homes are selling rapidly, said Unhei Kang with Grubb Co. in Berkeley. A nicely presented home in a desirable area will draw multiple bids, she said.

“I don’t know what the future will hold, but to me it seems like it is stable. There are definitely buyers out there. Maybe it has to do with the low interest rates. A lot of buyers are feeling it’s not going to get any better than this,” Kang said.

The housing market is “spotty” in Contra Costa County, with some areas doing well and others not, said Barbara Safran, president of the Contra Costa Association of Realtors. “I think we’ve dropped about as low as it can get, unless some crazy thing happens in the economy and the world.”

The median price for single-family homes dropped about 4 percent last year, Safran said, with condos dropping about 4.6 percent.

“We’re predicting that it’s probably going to stay the way it is for a while. I think we’re going to continue to see a lot of short sales. The foreclosure market is still iffy. It’s a question of how quickly banks are going to put out those foreclosures.”

Contact Pete Carey at 408-920-5419.

Bay Area home prices

San Jose metro area
2011- down 2.5%
2012 forecast – up 1.6 %
San Francisco metro area
2011 – down 4.7%
2012 forecast – up 0.1%
source: Clear Capital.

Article source: http://www.mercurynews.com/business-headlines/ci_19691779

Vacant Homes Will Drown Housing Recovery

Fri, 29 Jul 2011 16:14:57 +0000

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A real estate source I knew recently told me about a guy he knows in Atlanta who has been hired by several different banks to winterize their REO’s (real estate owned, i.e. the bank-owned foreclosures).

The homes are abandoned and empty, and clearly the banks think they’re going to stay that way for a while.

The winterizer didn’t want to do an interview, for fear he would lose his clients, the banks, who might not want us all to know about this.

A new study by an economist at the Cleveland Federal Reserve finds today’s foreclosures stay vacant far longer than the historical norm. Studying one Ohio county, Stephan Whitaker found, “foreclosed homes go through more than a year of very high vacancy rates following the auction and are substantially more likely to be vacant up to 60 months after the foreclosure.” The higher the poverty rate in the area, the longer the property stays vacant.

Foreclosed homes obviously lower the value of surrounding homes, but Whitaker says the damage can go on much longer than we might think. “The data suggest that foreclosure may permanently scar some homes,” he writes in his research.

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Predicting Home Prices Is Now Impossible

Thu, 16 Jun 2011 09:58:25 +0000

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When Robert Shiller, co-creator of the SP/Case-Shiller Home Price Indices , speaks, he tends to make headlines, and yesterday was no different.

Claiming that he wasn’t making any predictions, he predicted that home prices could fall another 25 percent.

“That wouldn’t surprise me at all,” he hedged. And there was the headline, tragic as it is.

I happened to be at the conference yesterday where he said that. In fact, I was a speaker/panelist at the Standard and Poors “Housing Summit 2011: Boom, Bust and Beyond.” And, no offense, but that wasn’t the headline. What really struck me was what he said right before that.

“Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can’t forecast the future because you have no comparison.”

That was not only the headline, but the theme of the conference, as I sat on a panel with economists from SP, Experian and Columbia Business School. Chip Case was there as well, disagreeing with Shiller on several points.

Audience members, largely from the finance industry, kept asking the same question in different ways, ‘When is this all going to get better??’

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Can Lack of Inventory Save Housing?

Wed, 18 May 2011 02:14:25 +0000

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The current supply of homes on the market is the best indicator of the future health of the housing market.

Let me say that again: Inventories matter.

Despite the fact that inventories of newly constructed homes fell to a 7.3 month supply in March from an 8.2 month supply in February, builders put 10.6 percent fewer holes in the ground in April.

You would think that all this new job creation, which usually goes hand in hand with housing starts, would push the starts up. Nope, both starts and permits fell in April.

Now a lot of folks are blaming this phenomenon on the weather, with tornadoes and rain throughout much of the Southeast. “The National Climatic Data Center reported that April ‘was an historic month for severe weather across the Southeast region,’ If we exclude the 23 percent m/m fall in housing starts in the South, overall starts would have risen to 599,000,” notes Capital Economics’ senior economist Paul Dales.

I’m sorry, but I really don’t buy the weather story. Yes, I’m sure it had some effect, but permits were also down 4 percent, and home builder confidence is stuck in the basement, with builders reporting weak buyer traffic and a drop in sales expectations over the next six months. This does not make a builder build.

So back to my inventory issue.

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Why Housing Is Going Through a Double Dip

Wed, 23 Mar 2011 17:53:57 +0000

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The sales pace of newly built homes is now at the lowest on record.

Sales dropped nearly 17 percent in February after a big drop in January. Put that on top of the nearly 10 percent February drop in existing home sales reported earlier this week and the incredibly low level of mortgage purchase applications, and you get a clear case for a double dip in housing.

Remember, this number from the Census is based on contracts signed in February, not closings, like the existing home sales number from the Realtors. That means it is a real indicator of how the Spring market is starting.

“Further, the plunge in new home prices [down 8.9% year over year] does not bode well for existing sales prices in February, which will close in March and April and be reported by NAR in April and May,” notes analyst Mark Hanson.

I really don’t have to tell you that, since the vast majority of you voting on the blog cast the double-dip vote yourselves. The question now is: How long will it last? As I noted yesterday, more than a hundred economist and housing types surveyed by MacroMarkets said there would not be real recovery in housing until 2013.

I want to talk pros and cons.

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