From Marketwatch:
U.S. April pending home sales fall 3.7%
By Rex Nutting
“Pending home sales fell in April for the third straight month, further evidence the housing market is cooling rapidly. The pending home sales index dropped 3.7% in April, the National Association of Realtors said Thursday. The index is down 12.8% from its peak in August and is down 11.7% from a year ago. “I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year,” said David Lereah, chief economist for the realtors. “Over time, homeownership remains the best investment a family can make.” The index fell 9.8% in the West, 5.6% in the Midwest and 5.5% in the Northeast. The index rose 1.4% in the South.”
From the NAR:
April Pending Home Sales (PDF)
Unadjusted Year over Year Changes
U.S. -12.8%
Northeast -10%
Midwest -18.4%
South -7.7%
West -18.7%
What!? No mention of expected 5% appreciation in 2006?!
Lereah is really a piece of work…
Here’s a substantial home in Ridgewood that’s been sitting for awhile:
http://www.realtor.com/Prop/1055678619
Was at $900K, now at $860K.
Index Based on Pending Home Sales Slides – NAR
Pending home sales, the leading indicator for the housing sector, are continuing to ease, according to the National Association of Realtors(r).
The Pending Home Sales Index,(a) based on contracts signed in April, fell 3.7 percent to a level of 111.8 from an index of 116.1 in March, and is 11.7 percent below April 2005. This marks the third consecutive monthly decline.
The index is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.
David Lereah, NAR’s chief economist, said various housing and economic indicators have been moving in different directions. “When some measures are up and others are down, it tells us that we’re in a period of transition. Pending homes sales probably give us the best measure for the overall direction of the housing market, which is falling from historical highs,” he said. “I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year. Over time, homeownership remains the best investment a family can make.”
I feel that pending sales is the best leading indicator for home sales and it continues to show a very weak market. However Lereah continues his blatant shill tactics by stating that sales more more or less level out toward the end of the year. Will he ever admit he has been wrong and we are in a period where housing prices will decrease? This guy and the NAR is a disgrace.
Hey David, maybe they’re friendly Indians over that hill. :0
Let’s face it, the guy is nothing more than a tool of the NAR sales organization. Just how does he know that we have hit the bottom of a trough? Does he have some information that leads him to believe that the next six months will not see a continued deterioration?
From now on, take anything that comes out of his mouth as a spin that has been approved by the NAR to hopefully stem the tide of decreasing home prices
Just finished the daily scan of listings, and there are a BOATLOAD of houses that had been “Under Contract” (past Attorney Review) but are now back on the market again.
Nice houses too, on good streets, etc.
Buyers are wising up.
Yesterday on the radio (NPR) he actually made a “slightly” concerned statement.
http://tinyurl.com/qu9rz
Sky-High Housing Prices Boosting Rents in U.S. (617 words)
“May 31, 2006, Day to Day
Sample
MADELEINE BRAND, host: And now to the housing market, where millions of Americans have sunk billions of dollars of wealth. Rising interest rates mean mortgage payments are going up. That is bad for homeowners, and it’s also bad for renters. According to the National Association of Realtors, rents will rise more than five percent this year. That’s double last year’s increase. David Laray is chief economist with the group, and he joins us now. And Mr. Laray,…”
Tell me…someone please tell me who can afford to take a mortgage on a 500k house, have the 100k down payment and can afford to pay $800.00 a month in taxes????
certainly not anyone I know.
“Normalized markets”
Take the marbles out lereah.
BOYCOTT BIDDING!
Noth’ing Strave realtors STARVE!
Greedy Grubbing Sellers Worry! WORRY!
Bbabababababba Booooycottt Bidding
Bob
Take out a 50 year Interest ONLY ARM with a teaser rate.
You gotta get in according to real estate spinmeisters. TIME TO BUY!
NOT! NO MAAS to RIPOFF PONZI SCHEME HOUSES.
BOOOOOYCOTT!
Bob
NO BIDS NO NOTH”’ING!
MAK’EM LOSE SLEEP AND WORRY ABOUT IT. MAKE REALTORS THINK ABOUT THAT NEXT COMMISSION CHECK.
PUT THE PRESSURE ON
BOYCOTT BIDDING. NO BIDS NO MAAS TO RIPOFF PONZI SCHEME HOUSE PRICES.
Bob
Bob,
Can’t you get your thoughts into one post?
lereah’s spin does this to Bob. Maybe spitzer can start some suit against this organization for possible misleading info.
BOOOOYCOTT BIDDING!
Bob
Lets see,
500k house
– 100k down payment
______
400k mortgage
Monthly payment about $2,600 a month
$2,600 mortgage
+ $800.00 property taxes
_________
$3,400.00 just to live in the house without cable, food, furniture, car payment, car insurance, utilities, etc.
You would have to be making about $5,700 a month after taxes to afford anything under this scenario, which means you would be pulling in $68,400 a year after taxes…which means your before tax income would have to be roughly about ???
I don’t see it anywhere in the NYC metro area (including the 5 boros, Northern NJ, Rockland, Westchester or Long Island). All I see are million dollar condos, & $900,000 McMansions being built every where.
Every article is about the next trendy neighborhood. It is sickening especially since everyone has a ton of money to pay for overpriced property & rents in the NYC area.
And of course you have all these 20 somethings with their Abercrombie Wardrobe ready to spend $1 million dollars on a one bedroom condo in Chelsea or $700,000 to live in Jersey City with $700 in HOA fees. Not to mention that they are all putting 20% down as required by condo boards are drive Porsche Cheyennes & BMW 5 series.
Of course on my $75,000/yr salary, I am practically living in poverty in a rent stabilized apt. in Flushing Queens.
{{{You would have to be making about $5,700 a month after taxes to afford anything under this scenario, which means you would be pulling in $68,400 a year after taxes…which means your before tax income would have to be roughly about ??? }}}
Which is nothing for NYC considering what people spend on clothes & dinner every day. Paying $5,000 for rent or PITI is the norm.
{{{You would have to be making about $5,700 a month after taxes to afford anything under this scenario, which means you would be pulling in $68,400 a year after taxes…which means your before tax income would have to be roughly about ??? }}}
Assuming your monthly mortgage payment plus taxes are $3,400, you would need to make $136,000 using the 30% of income rule of thumb.
So how is a working family of four with median income of $60K getting by?
A starter home in mediocre condition even in a subpar town is $379K.
How are people affording this?
No one can survive on $60,000 these days anywhere in the NYC metro area.
Classism is at an all time high.
There is a mass exodus out of everyone not making in the six figures. It figures why rents & home prices continue to spiral higher in the NYC metro area, and why your average buyer is a 25 year old single person with an annual income of $300,000 a year.
$60,000 isn’t even enough to rent a studio in Queens at market rates or anywhere outside of central suffolk county of southwestern NJ
What employee at 25 makes $300,000 a year?
“I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year,” said David Lereah, chief economist for the realtors.
what is this guy smoking?!?!?!???? If he just put ‘2010’ at the end of his comment, maybe he’d have some credibility.
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low_rate_loans is hand-in-glove with those realtors.
Bob – its time to bycott low_rate_loans.
Anybody? Who at 25 years old makes $300,000? Anyone? Anyone? Bueller?
I know plenty of young folks that live like they make $300,000.
But know very few that actually do.
grim
Relax!
Many morons are in over their heads and are sucking wind. Buying a house with a risky loan is going to be a nightmare.
They ARE OR WILL BE SOON a bagholding underwater mortgage slave. It ain’t going to be fun for these big boasting spenders.
kick back and BOYCOTT BIDDING!
look all you want and make criticisms all you want, BUT NO BIDS…NO NOT”””ING.
Watch the starving realtors squirm and the sellers flinch and papapapapa PANIC!
bababababa
Boycott Ponzi hoouses.
Bob
Don’t be fooled by the show. Anyone today can have a fancy car or buy some clothes or talk a good story.
Alot of these big spenders be hitting the bottle late night twisting and turning in bed.
It is NOT worth it.
Boycott the insanity
Bob
“Anybody? Who at 25 years old makes $300,000?”
First-year associates at top law firms who’ve graduated from a top-tier law school.
so when does something give.
thats why i ask about all the new condos and townhouses coming on the market.
i look at the taxes as say, who’s ‘buying these things.
a townhouse,,, not a house
with 10k a year taxes.
something has to give
I bought my first home, a 2 bedroom condo in Lodi, NJ back in 2000 with 5% down. My monthly mortgage plus PMI plus tax & insurance was about $1500. I thought at time with my lifestyle, I’ll never have discipline to save enough money to buy my dream home, so I bought that instead. 4 years later I sold it and made enough money for 10% down on entry level home in Fair Lawn. Again it’s not Chelsea and the commute to NYC by express bus is not that fun, but I am glad of my decisions. (express bus, station to station is about 35 min)
I guess I was lucky to ride the upward trend in real estate. No such luck any more if housing busts. I understand the market got really crazy (similar 2 bed condo in same building was sold last year for $285k!) but I would not wish for the bottom to fall out on housing price. It will hurt someone like me as well as the flippers and investors.
https://melissadata.com/lists/ezlists/ezHomeowners.aspx?zip=07410
https://melissadata.com/lists/ezlists/ezHomeowners.aspx?zip=07621
How much would you think is reasonable for a median house price? My hope is that this downward trend stops at some point and stablizes at a healthy level.
IKY
“”Anybody? Who at 25 years old makes $300,000?”
First-year associates at top law firms who’ve graduated from a top-tier law school.”
No way. Nowhere near it. First years make 125K. At the very very top tier firms (and these are small in number) they are at 145K (but with lower bonuses expected than in past years). Total compensation can bring you to 175-185K or thereabouts for the well paid (and I would guess most are closer to 150-160), which is certainly a lot of money but nowhere near 300K (unless you have two married lawyers both at big firms – of course, they will never see each other, but hey, what’s a marriage versus nearly 400K a year?! Priorities people, gosh!:)).
Also, don’t forget that most lawyers have law school debt, which can run upwards of 100K or more per person (one of my friends got up to 120K). If they make 145 K a year, that will be all the money they make – many will use their bonus money for the first few years to kill the loans. Also, because of their hours, many of these big firm associates live in NYC, with all of its expenses. So in fact they are not as flush with cash as you think. And again, they’re smaller in number than you think – at the top of the internet boom (shortly before I graduated law school, and I remember when this happened) the largest firms with the largest incoming associate classes had a little over 100 attorneys hired per year – they quickly cut those numbers and I had a lot of friends laid off. There are a lot of associates still, certainly, but not enough to buy up all of these overpriced houses!
I always thought it was the finance people that made money like that – however, do they really make that at 25? I would guess no for the most part.
top law school grad. at top firm
150k tops
I myself was wondering last week about price / income relativity, and came across an analysis of why prices are not related to income, but couldn’t get the entire thing because I don’t subscribe.
Anybody have any info or translation for
http://tinyurl.com/nqr37
I think it’s all recently -inherited money.
Dead boomer money. Overworked boomers with spoiled kids who lived at home until they inherited.
No way are recent homebuyers in their twenties (or even early thirties) doing it on their own salaries.
re: 25 year olds etc.
Relax. I actually feel bad for what will happen to them in the next five years. Keep your eyes on your own situation. No one looks out for your interests better than you. Focus your effort and creativity there…..
BOYCOTT BOB….BOYCOTT BOB….
CAN HE JUST SHUT UP ALREADY?
As Bob & Chicago said,
Relax! Have a beer, etc…
It will take awhile for this foolishness to be flushed out.
The easy credit bubble has enabled way too many people to live beyond their means. What’s more, it has covered up the fact that (according to one study, I forget where) most people are not really living that large but are spending more than ever on the basic fixed expenses: home, health insurance, and education.
Andy
BTW before anyone asks, most young MBAs right out of school are not making 300k either
in my circle of friends (late 20s, all went to top schools), I know exactly two people who make $300,000+. even among a group of people who earn well above average, $300,000 is exceptional.
BTW, neither of them owns a place or is planning on buying anytime soon.
And all this time I thought I made pretty good money for being under 30.
grim
(and yes, I’m under 30)
Grim,
Wow, you are in my age group. :)
I’m not sure who makes 300k /year, but as a tax professional with a CPA and MS degree, the market comp rate is approx 140-160k incl bonus. While 300k would be nice, I need a life and I still wouldn’t buy an overpriced colonial or split level home built in the 1960’s. 2008 or bust!
>>Just finished the daily scan of listings, and there are a BOATLOAD of houses that had been “Under Contract” (past Attorney Review) but are now back on the market again.
unrealtor, i’m one of those people. we knew we were paying premium for this house but we assumed it needed little to no work. well the home inspection occurred and it had some major problems to the tune of $45k even before looking at anything cosmetic. we exercised our home inspection contingency clause and cancelled the contract. buyers are wising up and want value for their money.
have another story of a guy that works for my friend in a retail store. he pulls down about $75k. not bad for a retail manager. if you saw what the guy buys, wears and where he goes, you’d think he makes $250k. meanwhile he’s $25k in credit card debt, has zero saved in the bank, no retirement money stashed and lives check to check.
don’t let the glitz and glammer fool you folks. live responsibly and within your means. to do anything else is increasing the likelihood that external factors you can do nothing about can ruin you.
Successful traders in NYC can make 300K at 25 (traders quite often do not need an MBA degree so they start younger).
Its not common though. However, a successful trader can make in the millions by the time he or she is 30.
many people around here definitely live well beyond their means. the old money effect is exaggerated, as is the assumption that all 1st time buyers are making $300,000+.
sellers are deluding themselves if they think some 25 yr old trader is going to drive out to the suburbs in his ferrari to buy their $1 million raised ranch
richard,
I can relate to your story. I know some one in his late 20s who (last year) was in debt for over $65K. His school loan was $25K and the remaining $40K was owned on car and credit cards. That time (August last year) the creditors were already calling him 4-5 times a DAY. He was paying minimum payments on some of the card and was constantly looking for those promotional offers, like: 0% for X number of months so he could transfer his debt from one card to another. Last week, I heard that he just both almost new (6 month old) BMW M3 series. I guess some people never learn unless it’s too late.
Maybe the realtor postcards should include this bit of info. “April Pending Home Sales Drop 11.7% YOY” instead of a recipe!
“And all this time I thought I made pretty good money for being under 30.”
I guess it is amazing that because of the internet we make assumptions and are able to have a respect for someone’s work without regard to their age…
No. I never guess under 30 — sorry I didn’t even think under 40 !
KL
P:S
Grim, please no more personal information, I have a vision (-:
that whole under 30 thing threw it off – just a little bit.
KL
I have a friend that is 35…has 190k in student loans…(started in the mid 90’s at 90k…has never made one payment)…has had 5 new cars since graduating..declared bankruptcy..upgraded his car after that..and now has a house…doesn’t lose a wink of sleep..and actually jokes and makes fun of his collectors…only in america..! :)..now who is the smart guy??
Ok.. Ok.. I lied about my age.
grim
grim,
how do you hold a paying job and do this at the same time?
I’m not sure how I got here but am glad I came across your blog. Thx.
Steve @
http://www.lifeincome.org