A 4.8% Drop in Home Prices For May, 2008

July 24th, 2008

MoneyhousesmallHousing prices dropped 4.8 percent in May from the previous year according to the Office of Federal Housing Oversight. The most severe hit occurred out west where housing prices fell 14.5 percent while prices actually rose in the West South Central region of the country (Oklahoma, Arkansas, Texas and Louisiana).

What does this mean? Overall the housing market is still declining. Sellers are still being confronted with competition from foreclosures and when they find a buyer, banks are being very tight lending money.

Eight out of nine regions showed declines as the worst housing slump in more than a quarter of a century deepened with banks cutting lending following $400 billion in mortgage-related losses and writedowns. Treasury Secretary Henry Paulson last week asked Congress to approve legislation allowing the government to extend credit to Fannie Mae and Freddie Mac and buy their stocks if needed to stem further declines in housing.

A new law including provisions for stricter regulation of the government sponsored enterprises “may have a positive impact on future house price performance,” Ofheo Director James Lockhart said in a statement.

Prices fell the most from a year ago in California, Washington, Oregon, Alaska and Hawaii, which recorded a 14.5 percent drop. Florida, Georgia, the Carolinas and states in the south Atlantic fell 5.8 percent, Ofheo said. In New York, New Jersey and Pennsylvania the decline was 2.1 percent.  via Bloomberg.com

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A 4.8% Drop in Home Prices For May, 2008

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Japan’s Zephyr Co Collapses, Sparks Commercial Real Estate Fears

July 22nd, 2008

The credit issues that we face in the United States are being mirrored in Japan. Zephyr Co., a midsized developer in Japan, went under yesterday. While that would not make much of a wave in the U.S., Japan’s central bank tends not to let businesses like this fail. But with the credit crunch happening world wide, the central bank is not in a position to prop everyone up.

So companies that were considered safe in Japan now have investors worried.

Japanese banks, reeling from the credit crunch, have been tightening lending to real estate companies now seen as risky as sales of apartments weaken and the outlook for the world’s second-largest economy dims.

Many developers are now looking to shore up their finances by selling vacant land and buildings, but the extra supply has depressed prices and potential buyers are finding it more difficult to secure loans.

“Even if they sell excess property, buyers would not pay much and seek a big bargain,” said Yutaka Kakizaki, a real estate sector analyst from Chibagin Asset Management, adding that this meant developers end up selling property at a loss.

“It will just be a matter of time until we see the next (corporate failure),” Kakizaki said.  Forbes.com.

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Have We Touched The Bottom Of The Real Estate Market?

July 15th, 2008

One thing about societies reaction to bad news, we always react the worst when after the bottom has passed. Barrons.com has an article today on why many experts outside of the hyperventilating media are thinking that we are quickly approaching the bottom of the market nationally or all ready there.

Take a look at this…

YES, THE SUPPLY OVERHANG still is humongous, but at least the numbers are moving in the right direction, as even Treasury Secretary Henry Paulson noted last week. Speaking at a Federal Deposit Insurance Corp. conference, Paulson declared that “we are well into the adjustment process.” Inventories of new single-family homes are down 21% from a 2006 peak, he observed, while “existing-home sales appear to have flattened over the past several months, indicating that demand may be stabilizing.”

Still other numbers suggest prices are close to bottoming. The S&P/Case-Shiller Index for April, released just last month, showed the biggest year-over-year price decline yet, of 15.3%. Buried in the numbers, however, and widely ignored in the media, was the news that home prices actually rose, albeit slightly, between March and April, in eight of the 20 markets covered by the index (Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Portland, Ore., and Seattle). This was in sharp contrast to the readings for March, which showed prices falling in 18 of the 20 surveyed markets. Also, the pace of monthly price declines is starting to slow in most of the markets with negative readings. via Barrons.com.

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Have We Touched The Bottom Of The Real Estate Market?

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