Finally...

Posted by: Toddi Gutner on February 28, 2006

It’s finally here—statistically speaking—the declining housing market. Though most of us have been blogging about this slowly leaking bubble for the last six to nine months—the cold, hard numbers are out: New homes sales fell for the fourth straight month in a row(declining 2.8%), and the inventory of unsold homes rose to nearly a 10-year high (up 2.4% or a 5.3 month’s supply). This, despite the warmer weather which most expected to boost home sales. The housing slowdown, according to Global Insights latest forecast, will be gradual and take place over the next 3-4 years. That’s just one forecast, but probably fairly reasonable. Given these lastest stats, do you agree?

Reader Comments

anonymous in Chicago

February 28, 2006 5:53 PM

Do I agree about the slowdown? If the rest of the country becomes a reflection of what's happening to Detroit, yes. Downsizing, job loss, high property tax & utility bills, high local government deficits...how long can people afford to pay 50% of their earnings towards housing? Not very.

james haft

February 28, 2006 7:05 PM

For every report of the imminent crash of the housing market there is a report of the resilience of another regional real estate market or a report that the softening will be mild and transient.

I guess it is just human nature to sit around and try to bet on when the sky will fall. Maybe we should be more focussed on value investing for the long term and on housing as a form of shelter. ;-)

jh

Bubble Butt

March 1, 2006 2:04 AM

I agree. Unfortunately I feel there still are a couple more years of continued pain ahead. So, it is still not the time to buy a house. Why try to catch a falling knife, when you can wait for it to hit the floor and pick it up?????

Andy

March 1, 2006 10:46 AM

Forecasts are always too conservative. Reality is volatile, it usually swings high and low, much faster than people expect. If the housing market does go down, it'll probably go down more and faster than the average forecast.

Wes

March 1, 2006 12:19 PM

Don't call the bubble too soon! We will all know it's over when June/July comes around and the spring advance that all the realtor-types are hyping did not materialize.

The housing slowdown, according to Global Insights latest forecast, will be gradual and take place over the next 3-4 years.

Uh huh....just like the stock market slowdown was supposed to be gradual, then it hit WHAM, like a hammer smacking a desk.

Soft landing is really nothing more than a prayer, the best possible outcome in this situation. Realistically we have never seen a bubble of this magnitude and no one, not even Mr. Greenspan, knows if there might be a trigger that suddently unloads the weapon that will wipe out billions (Trillions?) of dollars of wealth.

To BA Or Not To BA

March 2, 2006 1:22 AM

It's a reasonable forecast. My untrained instincts say the depth and the speed of this burst would surprise most. Economists are making cautious forcasts. Those associated with selling real estate are trying to spin at as much as possible. But the word on the street tells a much different story.

I would say that the housing values will fall as much as 33% in real numbers (inflation adjusted) in most "hot" markets like Phoenix, Bay Area, Florida, Boston etc. And it will take less than 3 years, that is by the end of 2008. This particular year, people will wake up from their dreams, and get a good strong dose of reality.

Although the tide turned last summer, 2006 will be remembered as the year of the burst.

hp

March 2, 2006 4:48 PM

we've moved from a theoretical conversation of bubbles, panics and manias to covering the actual declines

Pop.

this mania is now over. And it's a long, long, long way back (to the median)

Because of leverage, this was the biggest financial bubble in recorded human history, it was worldwide, and it's reprecussions will be felt for a generation

RohanG

March 3, 2006 5:16 PM

Is the bubble leaking, I don't know. But, can we stop tying slower new home sales and warmer than normal winter weather.

In this day and age with housing data easily attainable and transparent (see google and zillow) it is no secret as to what one's home is worth.

So while we are we stuck on this warmer winter idea, how about we make a correlation between housing slow downs and global warming.

Jack Ian Mayer

February 24, 2008 12:16 PM

Usually things tend toward the middle of dire and exuberant predictions. Also the world is awash with the will and specie to translate disire into American real estate and tangibles albeit in selective areas. All this supposes cheap money.($) Ive noted the completed liquidation of excess by savy Americans eg Ferrari collections and such to foreign hands. The last evidence of the string hands to weak was evidenced by the sale of Rockefeller Center and Pebble Beach to the Japanese. We'll be OK. By the way, dont the Chinese have better ie more productive places to put their recent big booty then into out debt instruments? Their inteligencia will move here (perhaps the U.S. Midwest a relative bargin). We will be just fine. My bet is a sector by sector weaning and observable recovery within 365 days. The next bubble is a Gore led green one. (though not my idea; do see how)

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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