From Marketwatch:
UBS sees home prices down 10% in 2007
By Janet Morrissey
Home prices will fall 10% on average in 2007 and it will likely take three years to clear out the huge inventory of empty unsold homes currently in the market, according to a UBS report released Monday.
A surge in new construction and a pullback in demand led to the inventory glut that’s currently plaguing the sector.
UBS analyst Margaret Whelan estimated that the industry overbuilt to the tune of 900,000 homes between 2003 and the first half of 2006. “Most of those homes are vacant,” which means they’ll rely more heavily on price discounting to get sold than if they were homes with people living in them, she said, during a conference call Monday.
“It will take about three years to shift all of that excess inventory,” said Whelan. As a result, she expects housing starts to fall 15% in 2007 from 2006 levels.
Whelan said there is currently a five-month supply of existing homes up for sale and a six-month supply of new homes on the market, based on current sales trends.
In past cycles, when inventory levels have reached four or five-months’ supply, “you’ve had a dropoff in real house prices,” said UBS chief economist Maury Harris.
Harris is predicting median home prices will fall 10% over the next year, and housing starts will fall by 180,000 units to 1.55 million in 2007 from 2006. He trimmed projected GDP growth to 2% from 2.2%.
Well, he said it.
According to Washington Post-
‘Greenspan, now a private consultant working on a memoir, said the housing downturn has “a way to go” before it hits bottom….’
During his last year as Fed chairman, he had said he did not see a national housing bubble, but rather some “froth” in some markets. Today, however, he attributed much of the recent housing boom to a “speculative surge” caused by global financial conditions that pushed mortgage rates down to very low levels until the last year.
Greenspan said he could not predict when home sales will start rising again, or when home prices will stabilize. But he said of prices, “it’s hard for me to believe that they can stabilize at the level they are now because we had too much of a speculative surge. We have to lose some of that.”
http://www.washingtonpost.com/wp-dyn/content/article/2006/11/06/AR2006110600588.html
News on homebuilder Dominion Homes, from Marketwatch:
[DHOM] Dominion Homes Q3 sales home 209 vs 433
[DHOM] Dominion Homes Q3 home delveries 338 vs 549
[DHOM] Dominion Homes Q3 net loss 73c vs 14c earns
[DHOM] Dominion Homes Q3 rev $64.9M vs $106.3M
A handful of other builders report this week.
jb
>> “It will take about three years to shift all of that excess inventory..”
Wow.. so, unless there’s a big surge in job creation, it will be 2010 before prices stabilize?!!
Harris is predicting median home prices will fall 10% over the next year
That’s nationally, so what can we expect for Northern NJ?
Paps,
That’s an interesting flip flop by Greenspan. He was pretty adamant their was no national housing bubble. Makes you wonder what changed his tune? I wonder if he was worried about tainting his legacy? I don’t remember exactly where I read it, but I did come across an article that Greenspan in his earlier days in the 70’s did a study about how home equity and home equity withdrawls can be used to stimulate the economy. I can only surmise that given the conditions post the bursting of the Nasdaq bubble, that this was one method of keeping the economy afloat under his watch. I would love to find where I read that article. I’ll have to dig around.
JB,
Interesting report on Dominion Homes. Also the action by H&R Block is to sell off this division before it causes any problems with their main business line. They don’t need any default issues on this business line to drag down the rest of the business.
Paps,
Froth, now speculative surge, pretty soon bust.
Paps,
Good catch! At least NAR can’t quote him now.
“At least NAR can’t quote him now”
thank goodness for that! They always seem to circle back to the sage words of Greenspan.
Greenscam trying to cover up for his wrongway policies of diluting us dollar value.
Greenscammer is the worse buble blower in history.
Greenspan’s froth looks like it’s now coming from the gaping jaws of a rabid ‘coon treed by some angry hunters
Dow up 120 day before elections………
I smell something…..
SAS
You think the market is frontrunning no DEM blowout?
I think so…
Check out this listing:
SAS Says:
November 6th, 2006 at 9:18 pm
I think so…
you may be on to something…..
Unreal, how do you quote something so that those cool quotes surround it?
Chi, sleeping much? :)
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