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The U.S. housing market will rebound eventually, according to a Harvard University report. Demographics and underbuilding are conspiring to up demand and revive home prices.
But that day still is a long way off, perhaps not until sometime after 2010, the university’s Joint Center for Housing Studies said in its 2009 State of the Nation’s Housing report.
For now, the housing center said:
“Clear signs of a recovery have yet to emerge, and job losses and the steady stream of foreclosures are keeping many markets under pressure. Sales of both new and existing homes continued to struggle to find a bottom through April.”
The annual state of the nation’s housing report — largely a review of data through 2008 — told us mostly what we already know: that housing market conditions deteriorated last year. Specifically:
- Housing starts were down more than 50% from 2005, the year the boom ended.
- Manufactured housing shipments decreased for a third consecutive year.
- Demand for new homes fell faster than production, resulting in a record supply of 12.4 months by January.
- Sales of existing single-family homes fell 30% from 2005.
- Sales improvements largely reflect purchases of foreclosed properties at fire-sale prices.
- Foreclosed homes accounted for a third of all existing home sales in the fourth quarter of 2008.
According to the housing center’s press release:
“First-time homebuyers are struggling to meet today’s stricter underwriting guidelines, household growth is well below long-term trends, and immigration has slowed; as a result, the share of homes for sale and vacancies stand at near record levels despite sharp decreases in housing production.”
The silver lining? Children of baby boomers, the “echo boom,” will be of age to form independent households in coming years, so that household growth from 2010 to 2020 will rival the decade of this past boom from 1995 to 2005.
May’s market from DataQuick …
- Weakest O.C. housing markets at the beach
- SoCal home price sees first monthly jump in 22 months
- 48 O.C. ZIPs had May sales gains! Did yours?
- Back above $400,000! O.C. home price at 7-month high
- O.C. foreclosures increased in May
Elsewhere …
what a mess!!! It looks like home prices will keep declining putting the people who buy today in the path to foreclosure.
My heart goes out to the thousands of people who are going to lose their homes to foreclosure this year.
http://rismedia.com/2009-06-17/foreclosure-sales-steadily-climbing-in-california/
the big tsunami is finally coming. Fasten your seat belts folks!!!
I love it how Dealeo keeps begging the government to make more easy money available. I see signs of desperation there. If demand for housing was so huge, he wouldn’t need any help from the government. Me, on the other hand want to the government to stay away and let demand and supply dictate home prices.
http://www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/
You’re sort of a dope.
Beats being a complete moron, like you.
It’s not my fault your dreams have been crushed.
You mean the dream where I didn’t pay for fraud equity and listen to an idiot tell me that homes in OC only appreciate and that buying a 30 yearold townhome for $500K was considered a “a deal of life time”? I’m still living that dream and loving it. Keep up the delusions.
Duh….
Harvard is living in the past.
On the future:
It looks like lending might loosen up soon:
“The government would give its seal of approval to a handful of mortgage types — a standard 30-year fixed-rate mortgage and perhaps a few varieties of adjustable-rate loans. For a loan to get the “vanilla” label, the lender would have to verify borrowers’ income and have them set aside money for property tax and insurance.
Borrowers would still be able to get mortgages that don’t pass the government’s vanilla test. But they would be warned about the risks.”
Translation: a slight change in disclosure.
But now you decide to erase 30 years of history? You know, loans based on the fundamentals of affordability, which itself is based on good job growth. We’re far from that in OC.
Who you going to trust Harvard or a local RE Broker?
I’m getting chest pains, I better call my local realtor. Someone broke into my house, I better get in touch with my local Realtor or even better, Super Agent.
yes, you better.
A realtor would never tell you to buy at the peak of the bubble, would he?
no, a realtor can see the future and they have taken the oath of honesty.
Don’t trust Harvard. Trust Chapman. Riiiight.
Don’t trust either. These predictions are all guesswork.
Actually Harvard COMPLETELY missed the housing bubble, so they don’t have much credibility in my eyes. How can a group focused entirely on housing economics completely miss an $8 Trillion housing bubble.
Listen to folks who have been right:
Ben Jones
Dean Baker
Paul Krugman
The Economist staff
Shiller
Chris Thornberg
Calculated risk/Tanta
(By the way, they all think we have farther to fall, particularly for mid- to high-end homes.)
Dealeo:
You know what your enemy is?
An educated buyer that fully understands the risks of accepting risk of rate fluctuation that seemed to have burned so many in the past two years - even when short term rates have been historically low.
If you remember - most educated buyers that know how to properly manage their risk have not contributed to the last run up in pricing and its subsequent collapse when they realized that risk.
The risk of buying today is even much higher for the SAME PERSON than it was in 2004, given all factors being the same. AND PRICES ARE NOW BELOW 2004 PRICING!!! Facts can be a real biatch sometimes - yes? That means someone who plans on leveraging the ARM for affordability had better not have a family to feed, or plenty of cash in the bank to manage that risk and be able to buy out of their loan if need be.
I hope that the people leveraging these new products are limited to those with the funds to make money off their own cash to accept the increased risk - and not the idiot that would take on more risk than someone with the income and cash to mitigate the conitingecies of accepting rate and pricing risk.
THESE ARE NOT AFFORDABILITY PRODUCTS FOR THE LAST FRICKIN’ TIME!!!
This is a national story. Local markets will vary widely. Recovery will come quickly to more desirable areas that traditionally lead the market. Hey, I wonder where that could be??!!
Especially with such a strong job market like we have.
Yes, we in OC are doing okay. There is no housing problems in OC. Wait is OC part of CA? Buy now or be left out forever, right RE salesboys?
http://dealbook.blogs.nytimes.com/2009/06/19/moodys-joins-sp-in-warning-on-california-debt/
Nonsense. Harvard is totally missing the demand side of the equation. Sure, any simpleton can look at data, see a trend from the last two years, and point the arrow in the direction of the trend to come to a conclusion things will keep going down.
But the smart people see the bottom was earlier this year and they are buying like crazy!
Who’s demanding OC RE based on today’s prices and economic prospects?
The ones that will face foreclosure down the road in 2012. That’s who. But, hey, lets listen to the big RE crooks on this blog continue to lie to us. They’re hungry you know. Oh well. They should be able to afford hambuger helper in times like these!
Haha, Ithinknot is another sucker thinking she can wait to buy in 2012 when in fact she will be totally priced out of the market.
Flippers and first time buyers. Mostly investors. Real people can’t qualitfy for a 500k loan anymore.
Lots of people are! Obviously plenty enough to bring prices up over the last eight months. If you are sitting there wondering who can afford to live in this area, then you need to take a good hard look at yourself and consider what you have done wrong to get yourself in a relatively unwealthy situation.
Never heard Harvard and Simpleton in the same sentence.
How about this: Anyone who thinks getting a degree from Harvard confers wisdom or the ability to predict the future is a simpleton.
Just an observation Crystal. Nice Stripper name - male or female.
Gunner = daft
what demand??? only 2600 sales in May = 45% below avg.
“California Collapsing”
http://www.moneyandmarkets.com/california-collapsing-34271
LOL! Nice sarcasm!
•Demand for new homes fell faster than production, resulting in a record supply of 12.4 months by January.
This is one area I have not seen the register cover. What is the inventory of new homes in Orange County? How does that compare to historical numbers.
I would like to see the Register cover the huge shadow inventory. But then again, RE advertising may drop.
Foreclosures since January 1, 2007 = 18,347
http://mortgage.freedomblogging.com/2009/05/19/banks-seize-fewest-houses-in-17-months/10755/
Foreclosures (1/2007-present) = 18,347 foreclosure units
Foreclosures in MLS:
10,988 units sold through MLS
409 units active in MLS
239 units in backup offers in MLS
906 units pending sale in MLS
12,542 total units found in MLS
Foreclosures picked up on the courthouse steps (using a conservative 10% rate of 3rd party sale at auction):
1,835 (of 18,347) total units sold to 3rd parties
18,347 foreclosure units – (12,542 MLS units + 1,835 auction units) = 3,970 foreclosure units being processed by lenders (a four month supply)
You mean to tell me that there’s 12542 foreclosures in the system right now and that’s a basis for telling me that home values are going to continue to go up?
Wow, you ARE dense! Those are gone already.
Okay, so when do you expect foreclosure and shortsales to be only 10% of the RE market? That’s when I’ll be buying a home.
California needs an 8.0 earthquake and a few repeats of the Oakland HIlls and Topanga Canyon wildfires. Florida some Cat 5 hurricanes. Nevada the resumption of atomic testing and this time have them in Las
Vegas and we might get rid of enough excess housing inventory to make
a dent in the problem.
We have an extreme shortage of inventory.
Extreme shortage of demand too. ie: 2600 deals in May
No we have shortage of non-artificial markets. Get the Fed out of the market and you’ll quickly realize that the RE market “recovery” is a mirage. Good luck on selling your home when mortgage rates are back at 7+% when (or if?) we recover from the is CA depression. We are just setting ourselves up for an even bigger disaster.
Different dynamics going on in different areas. Coastal California suffers more from people being so underwater on their loans they can’t sell or they are unwilling to sell because they refuse to accept what their house would fetch if they aren’t upside down on their loan.
Inland Empire, Central Valley, Nevada, Arizona, Florida just have too much housing
extreme shortage of inventory?
Wait - I thought an extreme shortage was defined as having less than 1.5 months inventory.
Hmmm - 9100 available units / 2600 sold units doesn’t come close to that number
Oon the other hand - we may have an extreme shortage in the sub $500K range - which means exclude most of the nicer areas. The nicer areas actually have plenty of inventory - sitting their stagnating for the most part.
Dealeo and reality seem to not agree with each other.
Dealeo - you have little issue with those bearish on RE - you have a big issue with just reality.
seems many forgot the recent headlines back in May - the foreclosure spike (after a moratorium)
and hence the government still feels the need to let those defaulting to live rent free for another 3 months
So what do you want to bet that we will see another spike in 3 months or so?
Given current UE rate? Any takers? Dealeo?
yeah - that’s a sign that we hit bottom alright
Um, I’m speaking of inventory for average families who can’t afford the beach and won’t live in a slum.
You define extreme shortage as 1.5 months? Wow, that’s what I call an emergency, not shortage.
Is that why almost every open house I’ve looked at is an empty short sale?
Why are you looking at all? Don’t answer, you are all looking. Hypocrites, every last one.
I look because eventually I will buy a house. Besides it is fun to see Realtors froth at the mouth when I make offers at 30% off list. Oh sorry Dealeo, hope I didn’t hurt your feelings.
Cracks me up every time an angry bear claims to be so disgusted with Real estate then they spill the beans that they are home shopping and shopping mortgages.
Harvard blew it when they were cheerleading the housing bubble like they were paid by NAR. Like USC and its Countrywide affiliation, Harvard’s center of real estate study is financed and sponsored by the housing industry. So bias is expected. But worse they provided the intellectual cover for the housing bubble to get to where it is today. University is one place where academic integrity is often firewalled from outside influence, yet money and corruption seem to sieve right through in the last several years, especially at these private institutions. Too bad.
Harvard is a joke. Their Bschool grads have been running corporations into the ground for decades. In fact, all Ivy league school grads are way over-rated. Today, the post grad ‘network’ is what attracts candidates, not the value of the education offered.
Here’s a look at Harvards call on RE in 2005 and 6….. LOLLLLLLLLLLLL
http://www.calculatedriskblog.com/2009/06/harvard-on-housing-2005.html
The worst possible news for housing….
Attitudes are changing
Nearly half of American adults who participated in a recent survey said they no longer believe that homeownership is a realistic way to build wealth, the National Foundation for Credit Counseling reported on Monday.
http://www.marketwatch.com/story/many-say-homeownership-no-longer-a-path-to-wealth
The bulls of this site must be ridiculing this data on a “tongue-in-cheek” basis, (another more rude interpretation is that they actually believe what they are saying, and thus are completely witless).
The graph of the story indicates the billions of dollars that have been withdrawn (cashed out, spent on granite counter tops, luxurious new flooring, toy haulers and toys to fill it, “German autos”, etc.) by lots and lots and lots of people.
For perspective: In OC, the value of homes sold in the last year amounts to something on the order of 20 billion.
If there was a way to help the permabulls understand why the economy is in broad decline, their understanding of this data would be a necessary ingredient. No such luck though – it eludes them.
The fact that they can’t “grasp” the personal debt issue . . . is central to their naïve understanding of practically everything involving money or value.
Here’s to you, Real Estate Hawker-men of genius (frosty glass raised).
Does anyone have Lee’s prediction for the Median SFR prices?