Las Vegas home prices are down to levels not seen since 2000 - so the whole speculative fever and THEN SOME has been erased... and 3/4ths of all home sales in the past month were recent foreclosures. It's now been a year since that trend starting appearing and it will only grow from here [Mar 25, 2008: WSJ - Wave of Foreclosures Drives Prices Lower, Lures Buyers] So our framework is playing out perfectly - we will see a surge in transactions (see title insurers) but the prices will be atrocious. This "should" be bad to new home builders as it pressures their prices but in this market, everything is traded in lockstep so what's good for home transactions will be seen as good for home builders... no need to apply logic. Bulls will apply some circular logic about how this will drive down inventories, not realizing to be competitive new home builders are going to destroy their profit margins to keep pace with these rock bottom prices created by a tsunami of foreclosures. Wait... the home builders don't have profit margins to destroy anymore. Carry on - buy home stocks.
Don't even ask what the EXISTING home owners must be thinking right now - almost anyone who bought this decade is now underwater in Vegas. And trapped unless they have cash to bring to the table to "get out of jail". And we're still not going down in price unless you believe March was the bottom. [Dec 8, 2007: Analysis - What Should Housing Prices Be Today?] [Feb 13, 2009: US Home Prices Fall to 2003 Levels]
Via Bloomberg
- The median home price in the Las Vegas area fell to $144,000 last month, the lowest since 2000, as a rise in foreclosures lowered the value of single-family houses and condominiums, MDA DataQuick said today.
- March’s median in the Las Vegas metropolitan region was down 4 percent from the previous month and down 42 percent from a year earlier, the San Diego-based real estate research company said in a statement. The median was last lower in December 2000, when it was $143,000.
- Almost 74 percent of all previously owned homes that sold in the Las Vegas area last month had been foreclosed upon in the prior 12 months, MDA DataQuick said. Almost 2,800 foreclosed properties sold in the area last month, said the company.
- The decline in prices in the Las Vegas area helped boost sales. (economics 101 still works) A total of 4,268 new and existing single-family houses and condominium units sold in the area last month, up 29 percent from February and up 35 percent from a year earlier, MDA DataQuick said. [Mar 28, 2009: Some Real Estate Markets Warming Up]
Look for a new wave of walk aways in latter 2009 and 2010 as people look around incensed they are living in houses with mortgages 1.5-3.0x time the size of their new neighbors. My prediction for 1 in 4 Americans being underwater by the time this is all said and done might of been conservative.... [Mar 9, 2009: One in Five Houses Underwater] Not to mention all the foreclosures coming from job losses in the next 18 months. All those losses goes to bank balance sheets and Fannie/Freddie (and then the Federal Reserve balance sheet)... green shoots everyone. No mind numbing losses to be seen here - move along.
[Apr 23, 2009: As More Homes Fall Underwater Trapped Americans Cannot Migrate]
Apr 8, 2009: Recession Causes Relatives to Move in Together & Sharp Drop Off in Divorces. Housing Bubble 2.0? (Not)]
[Dec 24, 2008: Median Home Prices Fall Most Since Great Depression]
[Jul 10, 2008: Foreclosure Activity Map]
10 comments:
TM: Another source of homes waiting to be sold are rarely talked about and those are people who want to sell but have not put their home on the market. These are another group of shadow home sellers; I heard about this from someone looking for a home in a large metro area in the midwest. He said that 75% of the homes for sale in November, 2008 were off the market by February, 2009 --not because they sold but because the owners took them off the market. It seem improbable to have a recovery without home prices or the housing market stabilize.
If you like 3G/4G/smartphones just buy QCOM. They are DOMINATING wireless sector. Settled two huge lawsuits now with both NOK and BRCM which will free up a lot of legal fees. Its the ONE TECH STOCK I have faith in besides AAPL.
Agree 100%
Many of these shadow sellers however are going to not be sellers anytime in next few years once they see prices.
Many who pulled back the home not wanting to sell 5-10% down, are now going to be facing 20%+ down.
There are not V shaped recoveries in housing, at least historically.
Even with 4.6% mortgages mortg apps down 18% from prev week - ppl will see this by June when spring season over. Then we begin drum roll for 2010 housing recovery ;)
Whoops, under the wrong topic. :)
Anon I do like QCOM
also Chinese have gone CDMA big benefit for them and the darn BRCM thing finally being over (even at high cost) also good. One of many I've been looking over. Thanks
Anon, you can copy and paste to the right topic than hit the little garbage can next to your comment and it will erase it from here. if you like. thanks.
Qualcomm, Homes - potato, potato!
Wow, SQNM press release after hours. Turned out to be a huge scam! Down over 50% in AH trading. Ouch. I really hate biotechs/medical stocks.
Truly a "house of cards"
Yep, one of my thoughts of late is that as the default wave grows (homes, CCs, etc.) and housing prices continue to sink, less and less people will have any compunction about walking away from their debts. The stigma will be less since "everybody's doing it" and we've set up so much moral hazard that you'll almost be a fool not to if you're in any kind of money pinch. The bankruptcy courts are gonna be busy. In fact, they're already being overrun.
Also think about how many people with 3 mo foreclosure moratorium and 6+ months to get kicked out of house have been skating by with no home payment for better part of a year. That's fair and just.
But it sure helps with keeping consumption going. Lots of extra money for the malls.
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