Pending home sales dip in August
The latest pending home sales figures were just released, and they showed a 1.2% drop between July and August. That was the second monthly decline in a row and it left the seasonally adjusted index at 88.6, the lowest since April. Sales fell 2.4% in the West, 3.7% in the Midwest, and 5.8% in the Northeast. Sales rose 2.6% in the South.
We already knew the new home market slipped to a multi-month low in August. Now, it appears we're seeing the same deterioration in the "used" home arena. While mortgage rates remain historically low, buyers simply lack the confidence to step up to the plate and buy homes. They're worried about losing their jobs, and rightfully so. As a result, housing continues to act like an anchor around the neck of the economy, preventing a meaningful recovery.
We already knew the new home market slipped to a multi-month low in August. Now, it appears we're seeing the same deterioration in the "used" home arena. While mortgage rates remain historically low, buyers simply lack the confidence to step up to the plate and buy homes. They're worried about losing their jobs, and rightfully so. As a result, housing continues to act like an anchor around the neck of the economy, preventing a meaningful recovery.
posted by Mike Larson at
9:58 AM
3 Comments:
It's not 'confidence', Mike, it's price. It's amazing how homes seem to sell when they are priced low enough.
It's easier for families to cobble together a down payment, make the monthly nut, and absorb real estate tax increases when the price of real estate is low. And today's prices still aren't low enough.
If you follow individual properties, the 'deals' get snapped up right away. Like within days. The deals are few and far between unfortunately so the rest of the overpriced junk just sits, and the housing market continues to deteriorate as over-priced junk sit on the market. Demand for cheap properties in livable condition is most assuredly high, very high, and probably frustratingly high for a first time homebuyer like me. I see very modest homes in decent areas that haven't been updated since they were built in the 1950's with asking prices that reflect PITI's of $2,000 a month or more. Don't they see that few want to pay $2,000 a month for a house with a pink bathroom and a kitchen so old that it would make a grandmother blush? The rest of the properties with updated kitchens want $2,500 a month or more PITI and quite frankly, Aunt Sallie and Aunt Nellie already have my household for $700.00 a month and filling my gas tank isn't helping either...
Don't forget that my generation, the 20's and 30's somethings, we have tremendous student loans, and credit cards from easy credit, and probably a car note, and gas is $5.00 a gallon, and taxes are high, and the list goes on and on.
The real estate is there, and someone of the younger generation will eventually buy it and live in it. It's just that it has to be priced much much lower so that the younger generation can actually afford it.
That's it in a nutshell. It seems to obvious to me but so many others miss the forest for the trees.
By
Anonymous, at October 6, 2011 at 10:01 PM
First time homebuyers are the underpinning of the market. without them, no meaningful recovery will occur. And guess what, not only do they have job insecurity, they also have far higher debt loads. Most college grads today - who would normally be first time homebuyers - already have a mortgage payment. It's called student loans. Throw in some credit cards and a car note and BAM you have a dearth of homebuying. It's been the US policy for years to increase college tuition and make debt slaves of them all and now the chicken has come home to roost, so to speak.
By
Anonymous, at October 15, 2011 at 11:40 AM
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By
Alexander, at October 20, 2011 at 8:38 AM
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