Home Sales Fall Off a Cliff

• Report this Comment On August 24, 2010, at 12:18 PM, BMFPitt wrote:

  "If you need proof that the homebuyers credit did nothing more than create obnoxious volatility"

  It also created mountains of debt for our children and did great harm to the economy. Don't foget about that.

• Report this Comment On August 24, 2010, at 12:43 PM, TMFCop wrote:

  Morgan,

  I'm not so sure there's a guarantee sales won't fall further. It's certainly easy enough to draw a straight line down from the path housing had been on previously to where it is now and ignore the tax credit jump in between.

  Calculated Risk shows inventory increased in July meaning there's better than a 12 month supply of homes on the market. That's going to decimate pricing further putting homeowners even further underwater. That's not a situation conducive to growing sales.

  Sales might rebound sometime in the future, but this is just the pain we needed to go through beginning two years ago. I'd say we've got some time to go yet before we see any real, sustained recovery here.

  Rich

  (who notes Zillow.com helpfully just sent me an email notifying me the value of my own house declined another 1.3% last month)

• Report this Comment On August 24, 2010, at 12:46 PM, plange01 wrote:

  home sales fell off a cliff two years ago and it will be a long time before they hit bottom....

• Report this Comment On August 24, 2010, at 12:54 PM, TMFHousel wrote:

  Rich,

  I, too, believe prices will continue to drop, mainly a factor of over supply. But the current months of supply figure is contorted by July's abnormally depressed sales report (inventory % sales = months of supply). It's just as skewed as April's number, which showed it at less than 6 months.

  As calculated risk notes, "The months-of-supply will probably decline in August as sales rebound slightly and some sellers take their homes off the market."

  I think we're mostly in agreement, though: we're a ways from being out of the woods.

  Morgan

• Report this Comment On August 24, 2010, at 1:10 PM, Ivan0310 wrote:

  This is all thanks to a Democratic congress which usually follows the rule of throwing money at any problem will make it go away.

• Report this Comment On August 24, 2010, at 2:26 PM, hbofbyu wrote:

  Really? Really? You mean Government can't create wealth? Somebody phone the White House!

• Report this Comment On August 24, 2010, at 4:22 PM, RaulChapin wrote:

  I would think that the 1994 levels plus or minus the % net change in population (in the home owner age bracket) would give a reasonable sales level going forward.

  It was 1996 when Alan Greenspan pronounced his famous "Irrational Exuberance" sentence. At that time he was aware of the formation of a bubble, a stock market bubble he would say, but it would not be far fetched to believe that some people were also starting to buy bigger better houses as early as then, driven by the low interest rates, the stock market gains in their portfolios or just the plain confidence that they had a guaranteed source of income for years to come.

  Of course the market usually goes much lower on the way down before it comes back to a reasonable level... I would think a year or two before we can see some stability settling in.

• Report this Comment On August 24, 2010, at 4:27 PM, plange01 wrote:

  a tall cliff.... expect to see homes sales and prices falling for at least two more years....

• Report this Comment On August 24, 2010, at 4:58 PM, bzhayes wrote:

  Well the stimulus did exactly what it was supposed to do... it stretched out the correction in the housing market so that people were better able to deal with it. The problem is that the stimulus didn't stretch out the correction long enough for the economy to come up underneath it. Stimulus is meant to calm people's fears in times of uncertainty. We still have lots to be afraid of.

  This just show we have a long ways to go before we fix all the problems 8 years of Bush created.

• Report this Comment On August 24, 2010, at 10:09 PM, TheDumbMoney wrote:

  Why is it that I can NOWHERE find a comparison to the previous month of last year?? Not a critique of you, why is nobody even mentioning such an analysis. Why are we obsessing about the fall off from a month prior here, re: the tax credit expiration?? Also, housing sales are cyclical and often seasonally-impacted anyway. Shouldn't somebody be at least seeing how this July compares with July 2009, July 2008, and July 2007 (I know, on that one). Is anyone remotely shocked that sales dropped a ton after the tax credit expired? Did everyone who actually is surprised miss the day in kindergarten when the teachers passed out common sense?

  Maybe the year-over-year news is also terrible, but I would at least like to see that comparison made.

• Report this Comment On August 25, 2010, at 10:16 AM, TheDumbMoney wrote:

  Dumb comment last night. I went back and found the stats saying that home sales were lowest since 1996.

• Report this Comment On August 25, 2010, at 11:11 AM, jjfoolguy wrote:

  The expiration of the home owners credit is not the problem. The problem is this:

  1) People cannot get the 20% they need to buy the house they want

  2) people are not willing to lower their house prices below what they paid to make the 20% referenced above doable.

  Until housing prices drop to a reasonable level (they have not yet dropped to a reasonable ratio of income), the problem will not be solved. We have a choice:

  1) inflate our way out

  or

  2) people take their medicine

  The government cannot and should not solve this problem. Over paying for houses is a personnel decision. If the Government wants to spur home sales, it should raise interest rates. If people knew higher interests rates were coming, they would look to buy now. This is the best way to get back to normal.

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