Rising Supply of Homes for Sale Worries Some
August 12, 2005, Wall Street Journal — Signs of a possible peak are appearing, perhaps in part a reaction to widely publicized warnings from Federal Reserve Chairman Alan Greenspan about “froth” in the housing market and a torrent of media reports about the “housing bubble.” “We’re beginning to see that the housing market is cooling…
August 12, 2005, Wall Street Journal — Signs of a possible peak are appearing, perhaps in part a reaction to widely publicized warnings from Federal Reserve Chairman Alan Greenspan about “froth” in the housing market and a torrent of media reports about the “housing bubble.” “We’re beginning to see that the housing market is cooling a little bit,” says Mark Vitner, senior economist at Wachovia Bank in Charlotte, N.C…If the sales rate slows, the inventory would start to look more plentiful. “We’re hearing from some really big Realtors that there is a little slowing [in the housing market] this month,” says David Lereah, the chief economist for the Realtors’ association.
If mortgage interest rates keep rising, as they have recently, home sales will slow, says Mr. Lereah. “Many times I have said housing has peaked, and I was wrong,” he says. “Still, I think we’ve peaked and we will come down a little bit.”
Meanwhile, builders have been putting up new homes at a breathtaking pace. New homes that either were completed or under construction totaled 354,000 in June, up from 320,000 a year before, according to the Census Bureau. So far, many home builders say they can’t keep up with demand and aren’t worried about inventory levels. While they note that orders for new homes are soft in a few markets, such as Denver, South Carolina and the Washington area, there’s continued strength in San Francisco, Las Vegas, Phoenix and South Florida. But, warns Ivy Zelman, a housing analyst at Credit Suisse First Boston in New York, “If the music stops and the sales rate declines, then you’re going to have a lot more supply” of new homes on the market.
Rise in Supply of Homes [Wall Street Journal]
I can’t believe it, my co-worker just bought a car for $16804. Isn’t that crazy!
I apologize. I got an error message when I first submitted my comment, so I typed a new one & resubmitted. I didn’t intend to post 3x. Sorry to all.
Are people’s memories really that short? The early 1990s aren’t ancient history. Are we in a housing bubble? I honestly don’t know. I can understand how some reasonable people think we’re not, while other reasonable people think we are. What I don’t understand are how some people claim that NYC real estate is a sure thing, or that NYC has never had a real estate bust, or that prices can’t remain depressed for years and years on end.
Are we in a housing bubble? I don’t know. I can understand how some people think we’re not, while others think we are. What I don’t understand are how some people claim that the market realistically can’t go down, or that NYC has never had a real estate bust, or that prices can’t remain depressed for several years. Are people’s memories really that short? The early 1990s weren’t that long ago.
Are we in a housing bubble? I don’t know. I can understand how some people think we’re not, while others think we are. What I don’t understand are how some people claim that the market realistically can’t go down, or that NYC has never had a real estate bust, or that prices can’t remain depressed for several years. Prices collapsed in the early 1990s.
Bad new construction is something Consumer Reports recently covered:
http://www.consumerreports.org/main/content/display_report.jsp?FOLDER%3C%3Efolder_id=372399&ASSORTMENT%3C%3East_id=333143
What is so ironic about this bubble is that people afraid of getting left out of the wonderful long-term investment of owning a home are buying homes that are built for the short term. NYC sees this in new construction all the time – from luxury apts to small multifamilies in the boros. NYC is full of smart people, but most of them who buy homes don’t know enough about construction to know crap when they see it.
I also lived in NYC during the boom & bust real estate cycle of the late 1980s-early 1990s. If you bought in 1987, you had to wait 6-7 years before the bottom, and prices didn’t get back to their old levels until about 1998-99. I remember a friend’s parents bought a studio in their upscale pre-war full service UWS coop for $25,000 after the studio had languished on the market for 3 years. They use it as guest apartment for their vistors. Now, she said studios in her parents’ coop sell in the $400K’s.
I lived here during the crash post-`87, when some smaller apartments downtown in Manhattan which had sold for $130-150K plummet to 50-60K (if they sold at all). I purchased my own large one BR in Brooklyn Heights for 105K in `94, and must have looked at thirty or forty places over months with no pressure because the market was glutted with low-priced apartments. So a big drop is quite possible, if apartments sit on the market for a while. During the late `80s until the start of price increases in mid-late `90s, studios and one BR places did not sell at all. Larger places were selling but at extremely low prices. In ’93-’94 I looked at two BRs in Heights/Boerum Hill/Cobble Hill that were all in mid-100Ks.
Not sure about the Brooklyn markets, but Miller Samuel, Inc. data showed a 45% drop in the median price of a Manhattan coop from the late 1980s peak to the early 1990s trough. A 45% fall, or even anything close to that magnitude, sounds like a bust to me.