For a detailed description of the just announced Housing Bailout, check out Calculated Risk here.
Here’s the latest from the Minneapolis Area Association of Realtors this week…the trend continues…pending sales up…listings down. The market is trying to make it’s way in to more balance.
New listings continue their seasonal upward movement, with 1,780 homes for the week ending February 7. This is a 16.2 percent decrease from the same week last year—an ongoing good news trend for an oversupplied market. For the same time period, there were 745 pending sales, an increase of 17.5 percent compared to last year at this time. Sales have increased more steadily than new listings so far this year, which has helped reign in our Months Supply of Inventory to a healthier 7.7 months—down 13.5 percent from last year.
Active listings for sale continue to trail year-over-year numbers. There are currently 25,537 homes for sale, a 12.4 percent decrease from last year. Thankfully, increasing affordability means that a healthier share of these homes should find true romance with a buyer than in previous years.
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Since there has been so much talk in the media about this is the worst economic period since The Great Depression, I thought I would play off of that topic with some commentary on compression…specifically, price compression.
The Congress just passed the $787 Billion stimulus plan and in it was another $8,000 tax credit apparently now only for first time home buyers. You see, many in the business believe that we need to get the first time home buyers back and then everything can start moving again. Sorry, I think they are wrong.
What’s happening as the credit availability continues to contract, prices on the highend are getting compressed. We don’t see the compression so much any more on the low end. When I mean low end, I mean under $250,000.  The mid range would be $250,000 – $400,000…higher end $400,000 – $800,000 and luxury over $800,000…super luxury I suppose north of $1.5 million. In any event, a $600,000 house is starting to look a lot more like a $500,000 home in this market and a $500,000 homes is starting to look like a $400,000.  A $1.5 million home might well be a million dollar home today.
Between the investors, scavengers, and first time home buyers, the low end is being taken care of and I would expect to see some price stability there this year. Washington and the real estate lobbiest such as the National Association of Realtors believe that we can start the economic engine of the home buying cycle by getting first timers back in to the market in a big way. That’s a nice step, but I do not see this having much of an impact on the rest of the market in ’09.
There is more pain ahead for the mid, upper and luxury brackets this year…just my opinion of course.
I was scanning the web tonight for news and saw this seemingly coordinated cover story from BusinessWeek in time for the rollout this coming week of the Obama Administration’s new $50-$100 billion plan to save housing.
While I have no doubt Wall Street bankers have played a roll in the problem this country faces with regards to the housing crisis, this piece looks to me like a set up for new massive government intrusion in to the housing market.
At least they got one thing right…the Hope Now Alliance, and frankly, any and all of their talk about foreclosure remedies are nothing but PR stunts and political cover.
Secretary Geithner announces his new plan this week on Wednesday. I can’t wait to see what kind of mess he proposes now.
Home buyers and sellers don’t realize how much the government is changing the rules virtually on a weekly basis. They change the rules for investors. They change the rules for mortgage borrowers. They change the rules for tax incentives. They change the rules on allowing banks to foreclose on people.
I don’t mean to sound like a complainer. I usually am not, but I’m tired of the government constantly mucking things up. They aren’t trying to fix things. They are trying to keep their jobs and their political positions of power.
To the struggling homeowner, I’m sorry to say I think you’re on your own. To the homeowners who have continued to pay their bills on time, I’m sorry to report the system is likely to become very unjust in the next few weeks when Secretary Geithner rolls out his new loan modification and foreclosure mediation plan.
For my children and my future grandchildren…I am sorry that this generation has decided that their immediate needs were so important that we have decided to saddle you with another $4-5 trillion in debt.
I’ve had a sense that properties over $400,000 have been difficult to sell in this current real estate environment. So, I thought I’d take a look at Plymouth. The data I pulled from the MLS really surprised me even though I am well aware that the market has been soft.
I evaluated the 3 month period of November 2007 through January 2008 vs. November 2008 through January 2009. This included all residential units – single family, townhomes, condos. Source: RMLS 13 County Metro. The table below tells the story: (Click table to enlarge in a new window)
Unit sales are down 53% and transaction volume (i.e. dollar volume) is down 60% for the past 3 months compared to the same period the previous year. The other interesting note is that the most expensive home to close in Plymouth in the past 3 months was only $679,000.
If you are thinking of selling your home this spring and it’s more than $400,000 you must be aware of how challenging it is and these data points only demonstrate the difficulty.
The news is reporting this morning that the U.S. House of Representatives and U.S. Senate have agreed on a compromise stimulus bill to the tune of $789 billion. Apparently contained within that bill is a tax credit for home buyers for up to $8,000 when they purchase a home in 2009. As soon as I learn more specifics, I’ll publish them.
In addition, the $7,500 tax credit provided to first time home buyers in 2008 no longer has to be repaid according to the news reports. Â That credit issued last year was originally intended to be an interest free loan that the home buyer would eventually have to pay back once they sold their home in the future.
Here’s the Wall Street Journal story this morning.
The word on the street is 2009 will start to see prices really take a hit on the upper bracket. The very low end of the market was decimated in 2008. Now with the stock market collapse, the appetite for luxury houses has been and will continue to be tempered in 2009.
Here’s a CNBC story that was published yesterday…”High-End Housing Ravaged by Stock Market Selloff.”
