US HOUSING SLUMP GAINS MOMENTUM
- From: bromselick@xxxxxxx
- Date: 20 Aug 2006 15:15:54 -0700
Your editor is in the land of sunshine, plastic surgery and
overpopulation: Los Angeles. While out for a jog around West Hollywood,
evidence of the real estate bubble is everywhere. Almost every single
house was being renovated, every car that drove by on the steep roads
was
a pick-up filled with laborers, ready to work on these homes perched
precariously on the side of the hill.
And the housing bubble is deflating, even in formerly "hot" markets
like
Los Angeles. The LA Times reports:
"Southern California home sales fell to their lowest level in nine
years
last month as price appreciation continued to decelerate, data released
Tuesday showed.
"'I don't know how soft the landing's going to be,' Eli Broad, Los
Angeles
philanthropist and founder of giant builder KB Home, told Bloomberg
News
on Tuesday. 'I think we're in for a period of a year or two years where
housing prices are going to go down or stay stable, but certainly not
go
up.'
"At the very least, 'current trends suggest that the market is heading
into a lull,' DataQuick analyst Andrew LePage said."
According to the article, houses are sitting on the market for a lot
longer than they used to, which could account for all of the
renovations
we stumbled upon.
This week, the National Association of Home Builders/Wells Fargo index
of
builder confidence fell to it lowest level in 15 years, from 39 to 32
for
July. This is the seventh consecutive monthly decline.
"'Two big factors are coloring builders' perceptions of the market
right
now, rising sales cancellations and substantial growth in inventories
of
both new and existing homes,' David Seiders, chief economist at the
National Association of Home Builders, said in a statement. 'We expect
the
erosion in market activity to continue through most of this year before
stabilizing in 2007.'"
While most are finally admitting that there is - or was - a housing
bubble, what analysts and experts are at odds about is how far housing
will fall, and its impact on the economy. Some feel that there is only
a
correction in our future, not a complete collapse.
Of course, there are those on the other side of the fence (ourselves
included) who think that with the over-inflated market, and
overextended
borrower, a soft landing for housing is just not possible. Look out
below!
The Daily Reckoning - Weekend Edition
August 19-20, 2006
Los Angeles, California
by Kate "Short Fuse" Incontrera
.
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