Crash!
by Osman Parvez Oh no, could it be a real estate CRASH? The New York Times headline today announced a second consecutive month of slowing sales. What's the scoop? Sales are falling off a cliff, right? We must be nosediving into economic oblivion. It certainly sounds that way from the attention grabbing headline. You might think sales have dropped 20% or more. Well, not exactly. November sales nationwide were off by 0.1% from the same period a year ago. How many homes is 0.1% of our national market? 10,000. In November 2004, NAR reports 6,980,000 homes were sold. In November [...]
Home Ownership in Denver Increases
by Osman Parvez Home Ownership in Denver Increases. According to a study cited by this article, as of 2004, 71 percent of metro Denver households owned their own homes, compared with 66 percent in 1995 while the annual average metro Denver mortgage dollar volume rose to $10.6 billion from $4.2 billion, a whopping 155 percent, between 1992-94, the first period studied, and 1999-2002, the last period studied. Interestingly, this mostly "good news" article ignores the white elephant of risky mortgage products coupled with risky borrowers. Given the large percentage increase in subprime lending in Colorado, it comes as no surprise [...]
Mortgage Applications and Building Permits
by Osman Parvez Home mortgage application rates have been on a decline for the third week in a row. However, the overall picture is still mixed. Yes, buyers are acting more rationally by choosing to lock-in fixed rates. Inventories are up, perhaps fueled by sellers fearing a downturn. Yet, new home sales are also up 13%, hitting a new record while existing home sales are down m/m but up y/y. Meanwhile, the economy grew a blistering 4.3% in the quarter, despite higher energy prices and the hurricanes, while so called "core inflation" rose 1.2%, less than estimated, and down from [...]
Existing Home Sales Drop?
by Osman Parvez The New York Times got it wrong. It's what happens when you want to write (or are told to) about the real estate bubble bursting, but the numbers don't exactly support your thesis. A recent NY Times piece reported a 2.7% drop in existing home sales. The author notes that homes still showed increased appreciation nationwide, "by 16.6 percent to $218,000 compared to the median -- or midpoint -- price in October 2004." Ok, given this information, a reader might think the 2.7% drop is referring to the same period, year/year (October 2005 vs 2004). Oops. The [...]
Fed Meeting Minutes Released
by Osman Parvez After the minutes of the Fed's November 1st meeting, according to the Wall Street Journal, "Investors cut the odds of future rate increases. Instead of expecting the Fed to stop raising rates once its short-term rate target, now 4%, reaches 4.75%, investors currently give slightly higher odds on a halt occurring at 4.5%." The next policy meeting is December 13th, when according to interpretation, the Fed could begin becoming more opaque with its policy decisions, no longer signaling to the market its intended course of raising or lowering rates. For you Bubble Watchers, the following minutes noted [...]
Upcoming Market Indicators
by Osman Parvez Tuesday, Nov. 22 The Fed will release minutes from its interest-rate policy meeting of Nov. 1. Will the Fed continue to increase interest rates to keep inflation from rising? Wednesday, Nov. 23 This is the final November University of Michigan consumer sentiment index, an important indicator for holiday shopping. Remember, psychology is an important factor and consumer sentiment is a big indicator. The Mortgage Bankers Association will release its weekly index of applications for home mortgages, a leading indicator for the housing market. The index has risen for the past two weeks. Wednesday, Nov. 28th Existing home [...]
Housing Market Cooling?
by Osman Parvez Since Toll Brothers (TOL) announced it was lowering its earnings estimates for the quarter, housing markets across the country seem to be reverberating. A rash of new articles about the cooling market have also emerged. Here's one from the New York Times. Keep in mind that our region was hailed by economists as an example of a soft landing only a few months ago in this article, also from the New York Times. The areas that saw the greatest appreciation are those that are now most at risk. As noted in our research piece on the bubble [...]
