US Housing market continues plummet

The big news of the day yesterday was the ongoing misery of the US housing market that seems to continually surprise and astound economist and journalists everywhere.  July sales dropped a record 27% to their lowest pace in 15 years.  Soft landing anyone?

“This is a worrisome report and while it reflects the volatility caused by the end of the (government home-buyer) tax credits, it also indicates a deterioration in the underlying trend for housing demand,” said Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch in New York.

“For the overall economy, the dangerous link to housing is home prices and this report signifies that home prices should fall considerably faster, which could tip the economy back into a recession. We are, however, not quite there yet but this is a worrisome report.”

Have we mentioned that this is a worrisome report?  It’s not all bad though, national median prices are actually UP!

With home sales tumbling, the inventory of previously owned homes for sale rose 2.5% to 3.98 million units from June, representing a supply of 12.5 months — the highest since at least 1999 and up from June’s 8.9 months.

The jump in the supply of homes was almost double the six to seven months’ supply considered to be a healthy level.

Last month foreclosed properties accounted for 22% of sales while short sales made up 10%. First-time buyers accounted for 38% of transactions, the lowest in 12 months.

The national median home price rose 0.7% from July last year to $182,600.

Wait a minute.. median home prices under $200k?!?  I’ll take three!
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Anonymous
Anonymous
10 years ago

@oneangryslav2:

To the extent that 86pct of our exports head there. The continued dismantling of the US growth machine coupled with our inevitable housing crash makes for an ugly decade ahead. Whereas previous generations will be remembered for winning global wars and expanding prosperity we will probably go down as the generation that lost the plot.

swirlyman
swirlyman
10 years ago

The Zero Hedge blog has a post with a pdf on the current state of the Canadian housing market. Lots of excellent charts and graphs comparing income and prices, etc.

http://www.zerohedge.com/article/elusive-canadian

Anonymous
Anonymous
10 years ago

Downtown vs the Burbs is ENTIRELY irrelevant. All that matters is rent vs. the full cost of owning for similar units in the same area.

jesse
10 years ago

@VHB: "Is it possible that the bond market is going to rain on our crash again?" It's a lot like taking heroin. First shot's a blast, then it's diminishing returns. Or so I've heard. We can do a bit of math on interest rates and take a good guess though. The variable rate has little room to move. For those who will or have gone variable, affordability doesn't markedly change. The 5 year posted mortgage rate went from around 7% to 5.25% in 2008-2009, a 1.75% drop or 15% "step change" in monthly payments. This time we could expect maybe a 0.75% drop or so, or about 7% step change in monthly payments. This improved affordability is muted because the previous drop and lower prices likely borrowed future demand. It's hard to say what the governments will do but, at… Read more »

showman
showman
10 years ago

Wow, can you be any more of a twit than to rag on one of the best character actors of the past five decades? Don Knotts is a legend in the acting business.

http://www.threescompany.com/tcompany/www/cast.ht

oneangryslav2
oneangryslav2
10 years ago

I really don't understand how Canada's economy continues to grow, given what's happening south of the border and the fact that the US is our largest trading partner.

From Mish, I learn that since 2006, almost as many residents of the US have been added to the food stamp roll as there are residents of Canada. Yup, just under 30 million extra USers are being provided with food stamps (for a total of about 40 million) since 2006.

http://globaleconomicanalysis.blogspot.com/

Best place on meth
Best place on meth
10 years ago

@Stu:

Thanks to men like your dad, the Germans will never attack Pearl Harbour again.

Stu
Stu
10 years ago

Hey crew Stu here, Stu. Now we're living in uncertain times, even the Kings are paying millions to that handicapped looking kid the Canucks used to have. One thing you can count on is suburban condos here in lotus land. You might pay a bit more than rent but a little sacrifice can pay big dividends. Think of the sacrifice Stu's father made fighting the Japs in Burma. Fought malaria as well as the kamikaze. Owning real estate is a right worth fighting for.

Anonymous
Anonymous
10 years ago

Remember the Canadian guy on the Tom Vu infomercial? He only made 12K on his deal….must have not been from Vancouver.

Come to my seminar!

Anonymous
Anonymous
10 years ago

C'mon, lets not pick on Surrey….they got the most housing starts this month. Ed Hardy should be opening up shop soon.

As for DT…little culture, little excitement, and way too many "try hard's" and shoebox millionaires.

Jimmy
Jimmy
10 years ago

Jim Bob Says:

August 25th, 2010 at 6:49 pm

But please, buy more real estate, it worked for Tom Vu, and it can work for you.

———————————————–

I wonder how many people on this site actually watched Tom Vu's infomercials that were on TV about 20 years ago. He was hilarious with the beautiful women on the sailboats.

Anonymous
Anonymous
10 years ago

@Anonymous:

"I’m with 99, the burbs are a better value than renting DT and there are way less douche bag posers than in Vanhattan!"

Yeah, no Ed Hardy-wearing douchebags in Surrey…… right?

Dan in Calgary
Dan in Calgary
10 years ago

Anonymous, regarding your comfortable position and "Possibly, so please don’t spew blanket statements like “owning is more expensive then renting” right now, when that is not always the case". Good for you! You're an exception to the general rule. Well done!! Did I "spew"?. I thought I merely generalized. Definition of spew: "spit: expel or eject (saliva or phlegm or sputum) from the mouth". Were you trying to be offensive? btw, are you counting correctly? Just curious. You're obviously comfortable with where you are, so it doesn't really matter whether your math is wrong. I wouldn't normally bring this up, but you suggested your housing costs are low "because I put 20% down". For example, what is the opportunity cost on the 20% you put down? If I owned a $2 million dollar house outright, what is it costing me?… Read more »

Limey_
Limey_
10 years ago

“Vancouver is just too expensive for what it is.”

For me, that just says it all. I've just got back for spending 3 weeks there. I loved it, it's a great place. But it just ain't worth th money – not by a long chalk.

Jim Bob
Jim Bob
10 years ago

@Arnold Palmer:

Take a look at the solution for US recessions over the last 30 years. Lower and lower interest rates. The US interest rate has been at zero for a long time now and hasn't been able to recover. The engine of the world's economy has just run out of fuel and we're stuck in a pile of shit. But please, buy more real estate, it worked for Tom Vu, and it can work for you.

Best place on meth
Best place on meth
10 years ago

@ThisTimeIsDifferent: #98

Good article, this part made me laugh:

"A broad group of analysts and commentators, ranging from industry participants to academics, have been willing to publicly entertain a number of explanations ranging from the somewhat plausible to the laughably arcane."

He must have been reading from the book of Somerville.

Anonymous
Anonymous
10 years ago

I'm with 99, the burbs are a better value than renting DT and there are way less douche bag posers than in Vanhattan!

oneangryslav2
oneangryslav2
10 years ago

@Anonymous:

And yes it would be cheaper to rent where I live but only by around $150-$200 per month. I would rather pay that premium just so I don’t have to have the hassle of a landlord, again personal choice.

My b.s meter is red-lining right now. Please fill us in on the specifics. How long is your mortgage term? Rates? Monthly mortgage payment, insurance, strate fees.

What is, in actual dollars, the rent for a unit comparable to yours.

Anonymous
Anonymous
10 years ago

99 reporting in: Yes there is a travel time to my daily commute, however it's only about 35 minutes each way, and I use transit not my personal vehicle. (Lots of time to surf VCI, and look at all the new builds still going up along the skytrain line.)

Prices downtown where my friends live are extremely overpriced as you can imagine, Yaletown, Mid-Town and International Village. I would not be able to get the same value for my dollar downtown.

And yes it would be cheaper to rent where I live but only by around $150-$200 per month. I would rather pay that premium just so I don't have to have the hassle of a landlord, again personal choice.

Anonymous
Anonymous
10 years ago

@Anonymous: 99 – Apples to oranges. What is the cost of renting in the burbs where you live? What is the cost of owning dt where your friends are?

Anon
Anon
10 years ago

@Post 99 Anonymous Did you include cost of commuting to work, and loss of productivity due to sitting in traffic and having less time to recharge with your family & friends? Living in the suburbs can not be compared to living downtown unless you can include the following factors: Travel time: Suburbs to downtown takes at least an hour each direction. That's 2 hours lost a day. In minimum wage terms, that's $16 you're not being paid for as part of a work day. Transportation cost: a 2010 TDI is estimated to cost $0.50 per mile including gas, maintenance and depreciation. Or There's transit @ 2 or 3 zone rates. Opportunity cost: Because you have 2 hours less in a day to recharge, you have less energy to focus the next day, less time to improve your skills, or less… Read more »

chip
chip
10 years ago

@oneangryslav2: I keep waiting for Americans to arrest their drift toward a Europe-like twilight and rekindle the spirit of entrepreneurialism and limited government that made their country so dynamic. I'm not sure it's going to happen. "ASPEN, Colo.–Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes. Otellini's remarks during dinner at the Technology Policy Institute's Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: unless government policies are altered, he predicted, "the next big thing will not be invented here. Jobs will not be created here." The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to… Read more »

paulb.
paulb.
10 years ago

New Listings 173

Price Changes 83

Sold Listings 111

Anonymous
Anonymous
10 years ago

@Dan in Calgary: I'm currently owning (condo in the suburbs) and my total monthly housing costs are less then most of my friends that live in comparable condo's downtown. Is it because I put 20% down? Possibly, so please don't spew blanket statements like "owning is more expensive then renting" right now, when that is not always the case.

ThisTimeIsDifferent
ThisTimeIsDifferent
10 years ago

The Ellusive Canadian Housing Bubble: Summer 2010 Edition -Canary in a Coal Mine

Some interesting stuff here…

"The current housing market has the potential to explode, with a single spark causing a vilent cocllapse in prices."

"properties in Vancouver are 35-50% above their fair value"

http://www.scribd.com/doc/36383418/The-Elusive-Ca