Saturday, July 28, 2007

The housing slowdown could last at least until 2009

No Housing Turnaround for Two Years?

Home sales continued to slide in June, stoking fears that the slowdown could last at least until 2009


First, it was the second half of 2007. Then it was 2008. Now analysts are saying the national housing market may not rebound until 2009

On July 25, the National Association of Realtors reported that
sales of existing homes fell 3.8% in June to a seasonally adjusted annual rate of 5.75 million units, contributing to the bleak-and-getting-bleaker outlook.


"Current inventory levels make it almost a sure thing that prices will continue to slide." On July 11 the NAR said existing-home prices would recover in 2008, rising 1.8%, to a median of $222,700 after a 1.4% decline this year. But Newport thinks otherwise. "Our view is that the downturn [in sales] will
continue into 2008," he says. "Given the level of unsold homes, however, nominal home prices will probably not rebound until 2009."


On July 26, the Census Bureau will announce the rate of new-home sales in June. In May, sales of new homes fell 1.6% to a pace of 915,000 units, while supply climbed to 7.1 months, from 7 months. At the moment, it's looking like June's report could kick off another year and a half of bad news.



The experts are often conservative with their estimates. I would venture a guess that a real turnaround won’t get under way until 2014. Every quarter we get a later date for the turnaround of the housing market. Watch as the experts’ predictions stretch to meet mine.

It’s not a hard prediction to make. There are so many pressures mounting on the economy that the dynamics of housing alone can no longer be counted on. A global credit bottle neck is about to occur which will largely be due to the failure of derivates leveraging involving hundreds of trillions of dollars. A negative American savings rate is in itself a time bomb.
The bad news is bound to get worse.
Vern

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