http://www.usatoday.com/printedition/money/20051116/1b_housing16.art.htm
check it out, kinda interesting i guess, whats everyones take on it?
It’s about the same as all other articles on this subject.
‘We’re really sure this is the end of the housing boom’ then goes on to say that home sales outpaced this month last year by 1%.
They’ve been saying that the housing boom was going to end for over a year now…
Be aware though that these numbers are misleading when they say that home sales dropped 10% from September to October.
This is the slow time EVERY YEAR for real eastate. I work for a wholesale lender and ever year we see a huge drop off in production (this included 2003 when rates were at historically low levels) from September to March. Late March everything starts to pick up with April - July as the strongest months historically. So keep that in mind when the media throws the spin for the next few months that “home sales have dropped off in the last couple of month” because while this is true, the cause and effect of that drop off they conveniently leave out.
DFW,
A minor clarification - actually, what they said was, “Still, DataQuick Information Services released a report Tuesday showing Southern California’s housing market remained strong in October. A total of 28,489 homes were sold during the month — a roughly 10% drop from September, but a 1% gain from a year ago.”
This would, in fact, reflect a generally slow time for real estate (drop this year and last year) as folks head into the holidays. Though this data was for SoCal, I think it probably reflects the real estate market as a whole.
Keith
Exactly. This is a slow time for real estate which is the same every year. It is, as you pointed out, indicative of the real estate market as a whole. My point was that the relative slow down from September to October of 10% doesn’t really indicate the ‘softening’ of the real estate market going forward because this is a cyclical function that happens every year, regardless of it being a hot market or a cold market.
The mere fact that comparing October 2004 to October 2005 shows that there has been a 1% gain in home sales is more predictive than comparing September to October.
It would do no good to say that ice cream sales in January of 2005 were less than 50% of that of July 2004 because clearly more ice cream is sold in the summer than in the winter. What would be predictive of the ice cream market is a study on the sale of ice cream in the same span of time from one year to the next.
Again, I’m not saying that the market isn’t cooling, I think that in areas of the country it certainly is. My point is that these ‘statistics’ they through out are not in any context that makes sense.
Case in point: Suppose I say … DID YOU KNOW THAT IN 2004 MORE THAN 1 in 7 Families OWNED A GUN!!!
Would this mean we need more or less gun control? Well wouldn’t that only be relavent if fewer families owned a gun in 2003 than 2004. But what if the number was 1 in 2 families in 2003? Again, context is what matters, not the actual statisitc.
Gun control. We won’t go there on this forum. 
However, living in SoCal, I can attest to a “slow down”. Not in the chicken little the sky is falling kind of slow down, but a slight softening. True that we are in the period of sales that tends to be slower than the spring. However, the slow down hasn’t been in prices in my area. Prices are different for each of the major counties in SoCal. Each county has different pros and cons that affect prices. Generally I am seeing prices level off. They are not jumping as rapidly as they were, but not falling either. The Days on Market has gone from the previously insane <7 days to the more moderate and expected 30-60 days. Again, this is fluctuating depending on the particular market you are in.
I think the RE market will be just fine for the next year or so. However, historically the California market shows a cycle that is up, then down, then up. you can pretty much count on an 7-9% return over the long term in SoCal. Again, individual return may vary. I can look at homes that were purchased in the 70’s and pretty much guess what they would be worth today. Sure enough, I am usually within in 10-20k of what they are listed for. I can do the same for a house recently purchased.
For example own home. Today it is valued by the market to be worth well above what I paid. However, I can pretty much determine that it will be worth less by 2009. However, it will still be well above what I paid for it. Again, this is based on past returns and is a guess.
I am looking to 2007-2009 for that great “bust” that has been hailed. And of course, it will all depend on when you purchased and why. You smart and experienced investor will be fine. The average homeowner that buys a home to live in and wants nothing more than a “safe and secure job” provided by his employer that bought 2005-2006 will likely be lamenting the value of his home in 2008-2009. However, if they hold another 10 years to say 2015-2018 they will be glad they did.
Why do I say 2007-2009 will be the great “bust?” Several reasons. I am speaking of my local market only. 1) The transition in administration will likely give rise to changes in taxes.
2) There are currently several tax advantages that will expire between 2008-2010 unless renewed by congress. One such is I believe in 2008. The current 15% Long-Term Cap Gain will increase to 20%. I suspect that many investors that were considering selling already will rush to sell before that takes effect. This may result in an oversupply of homes. = drop in home prices.
Again, if you bought well below market you will be fine! As always purchase the cash flow, not the house.
I think that every adult should be required to carry a gun in public at all times.
In Houston where I live the market has been slow and steady for years. That reduces the temptation to rely on real estate appreation and I look for created valuation (distressed sellers) and cash flow from rentals. What causes slow downs in Houston is job busts. With the price of oil, we are still sitting pretty.
I think that every adult should be required to carry a gun in public at all times.I think many in Arizona may agree with you! I know I do. In AZ you can carry a loaded firearm, just don't conceal it. How do you plan to protect yourself in the event of a large-scale natural disaster such as Katrina? But like I said, we won't go there on this forum. :)
I have seen several large employers in Houston go “bust.” Enron and my company are 2 examples. (My company was not Enron, but will remain anonymous.) They moved tons of employees to Houston then began to lay off hundreds within a year later. I am sure that the “Enrons” and other similar job losses in Houston have not exactly been a boom for real-estate. I have heard that the market there is picking up though. As always, Real Estate is a local market.
I go the opposite way. I think there should be a gun inside every home, but none on the streets.
And here in Chattanooga it’s BOOM time. We’re getting the runoff from Nashville and Atlanta as people want a little less hectic lifestyle, and the developers are going NUTS!
WebEagle,
TN has been doing well for a while now hasn’t it. I have seen lots of interest in the Chattanooga and other major TN cities in the last year or so.
All good points. Glad to hear that the Houston market has been getting a bit warmer.
Since we’ve gotten to the notion that real estate is a local market, maybe we can discuss something.
Since 1980 Texas has been the slowest appreciating market of all states. Now, there were the oil issues in the mid 80’s that created depreciation in the market from 83-88 or so and that accounts for alot, but does anyone have any sound theories on why the national growth average was 13.4 % for 2004 but Texas grew at only 4.8%?
I am having a hard time figuring out why. As you may have guessed I live in the Dallas Fort Worth Metroplex but I’m quite curious if any Texas investors (and more specifically any Metroplex investors) feel the appreciation is so low.
I still stand firm in the belief that even if you set every financial analyst head to toe you would never reach a conclusion! That is one mans research! Just because that is what he found still does not amount to much with that thought and $1.00 you can now go get a cup of coffee at McDonald’s! Just think it used to be a quarter! Talk about inflation!
By the way carlittle you can carry a firearm unconcealed in 15 states that I know of! Isn’t that a GREAT THING an armed society is a very polite society!! Here in Colorado you can get a concealed permit as long as you have no felony’s!
I have seen several large employers in Houston go "bust."The major thing about Houston is that the economy has diversified. Houston used to be only energy. Although energy is still the major employer, we also have medical (both hospitals & research and manufacturing) computer & electronics, and chemicals. As this diversification has helped buffer any slowdowns, it also is a drag on any growth. We were able to absorb the Enron layoffs, as well as the Katrina influx and not really felt it. But we also don't have great number of people moving here from the frozen north like Arizona or Florida. That, I think, is keeping a lid on real estate appreciation.
Also if criminals knew that everyone they approached was armed and also every bystander, it would put a new light on crime.