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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (16943)	11/27/2004 9:45:28 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Home sales fall again, but prices stay aloft business.bostonherald.com Home sales fall again, but prices stay aloft By Jerry Kronenberg Wednesday, November 24, 2004 The fat lady may be finally singing an end to the Bay State's long-running housing boom. The Massachusetts Association of Realtors reported yesterday that the number of single-family homes sold in the state fell in October for the fourth month in a row. That's the first four-month downturn since a November 2001-February 2002 slump in the wake of the Sept. 11, 2001, terrorist attacks. ``When inventory starts to increase, your market tends to slow down some - and we're starting to see that,'' said Judy Moore, president of the Realtors' group. The association said 4,200 single-family homes changed hands last month, down 5.4 percent from September and 28.8 percent from a 2004 peak in June. Sales also fell 5.3 percent when measured against October 2003 levels. At the same time, the number of houses on the market rose to a 6.9 month supply, from 6.3 months in September and 6.2 in October 2003. The median home's sale price also fell, to $344,950, dropping 0.9 percent from September to hit the lowest level in six months. (However, prices actually rose 12.4 percent when compared with October 2003 levels.) Economists say the combination of fewer sales, higher inventories and prices that drop month over month but rise year over year all point to a boom that's dying. ``If you look at all of the housing booms in history, they all end with the volume coming down first. Prices react later,'' said Karl Case, a Wellesley College economist who recently wrote the Brookings Institution study ``Is There A Bubble?'' Case said that as housing booms end, buyers make low-ball offers, sellers hold out for more money and few deals get done. Net result: big drops in volume, but only small price declines on those sales that go through. He and other economists say it would take a major recession, big mortgage-rate hike or other bad news to send prices plunging. ``To burst a bubble, you need something to burst it with,'' said John Bitner, chief economist for Lynn-based Eastern Bank. ``We think the pin would be a surge of mortgage rates, but we just don't see that happening.'' William Wheaton, a Massachusetts Institute of Technology economist, predicts Eastern Massachusetts prices will fall 10 percent to 15 percent in inflation-adjusted terms over the next three to four years. But the industry sees less cause for alarm. ``There is no bubble,'' said Moore, noting that combined 2004 house and condo sales appear likely to surpass 2003's record. Indeed, the Realtors' group reported yesterday that October condo sales rose 13.6 percent from year-ago levels, although volume fell 11.3 percent from September. Median condo prices hit $252,500, up 12.5 percent from October 2003 but down 2.8 percent from a month earlier.

To: yard_man who wrote (16943)	11/27/2004 10:00:23 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Housing experts say cash in now After prices in state jump 123% in 5 years, they fear bubble is about to burst By J.N. SBRANTI BEE STAFF WRITER Last Updated: November 26, 2004, 04:12:55 AM PST SAN FRANCISCO — National real estate experts have advice for California homeowners: Sell now. California home prices have soared 123 percent the past five years, so it's time to cash in, advised Anthony Downs, a real estate economics expert for the Brookings Institution, a nonprofit research organization. "Sell whatever you don't want to keep forever. No one knows where the market peak is, but this must be close to it," Downs said. He presented the keynote address this week at the 27th annual Real Estate & Economics Symposium in San Francisco. The event was sponsored by the University of California at Berkeley's Fisher Center for Real Estate and Urban Economics. Home ownership must be looked at as an investment, Downs said. So a real estate investment should be balanced with other assets, such as stocks, bonds and cash. "Too much investment money is looking for property" right now, Downs said, which makes it a seller's market. Downs wasn't the only expert at the symposium who predicted California's housing bubble soon will burst. "Home prices have moved up too far, too fast," warned Ken Rosen, who is chairman of the Fisher Center and of the Rosen Consulting Group, which tracks real estate markets. "We always get price corrections after (big run-ups) because homeowners cash out and move out of state." During the past year, Rosen said, home prices skyrocketed 31.8 percent in Sacramento and 32.1 percent in San Diego. In Atlanta, by contrast, prices went up 3.4 percent. Rosen said abnormally low interest rates have convinced many buyers — in California and nationwide — to jump into the housing market sooner than they typically would. He said new home sales particularly have increased because of lower mortgage costs. "These low rates have moved demand forward, so I think we're in for a correction," Rosen said. "Higher rates really are going to change things." Mortgage rates will rise this year, Rosen predicted. He expects the 10-year bond rate, which is used as a benchmark for many adjustable-rate loans, to rise from its current 4.2 percent to 5.5 percent by the end of next year. "There's more risk out there. When rates rise, there may be a deflation (of home values)," Rosen said. Rising adjustable mortgage rates also may cause problems for homeowners. "There is a chance for a price correction and defaults and delinquencies." Not everyone who spoke at the symposium agreed. Bruce Karatz is chairman of KB Home, one of the nation's largest builders. He sees more good times ahead. "The doomsayers have been predicting for a number of months that interest rates were going to go higher," said Karatz, noting that rates have stayed steady this year. "I don't see a tremendous fall off in home-buyer demand for some time." Among KB Home's many current developments are Oakcrest in Modesto, Bridlewood in Patterson, and Autumnwood Estates and Villas in Lathrop. Even if mortgage rates go up, Karatz is convinced homes will continue to sell. "Home buyers are driven by events, not by interest rates," Karatz explained. Builder argues rates' affect is small He said people buy houses when they get married or divorced, need more space for children, need less space because they've grown older, want a vacation home or need an investment. Karatz said those events will continue to happen, so homes will continue to sell. But some big-time real estate investors are moving money out of the housing market. The California Public Employees' Retirement System, the nation's largest public pension fund, is selling many of its real estate investments. Michael McCook, CalPERS' senior investment officer for real estate, said the retirement fund has more than $12.1 billion in real estate holdings. Some of those funds are invested with Hearthstone Inc., which is the financial backer for land development on 865 acres at Bellevue Ranch, the master planned community in north Merced. McCook said his fund plans to eventually own $16 billion in real estate around the world, but currently is selling some of its property and banking the profits. "There will be some great opportunities down the road to buy," McCook said. Right now, he agreed, is a good time to sell. Bee staff writer J.N. Sbranti can be reached at 578-2196 or jnsbranti@modbee.com. modbee.com

To: yard_man who wrote (16943)	11/27/2004 10:07:40 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Professor Piggington October data is in. Inventory was up and sales were down, as it's been since June. And like September, prices were ever so slightly down. What is striking to me is that the obvious decline in demand has taken place in an environment of declining mortgage rates (rates went from 6.29% in June to 5.72% in October). The market's behavior in the last few months belies the oft-repeated theory that housing will do fine as long as rates stay low. Even with low rates, speculative frenzies can exhaust themselves: eventually, everyone who wants to be in the market is already in and there are no more buyers. I believe we've been seeing the start of that phenomenon for the last few months, although the downturn has been tempered by declining rates. Once rates start rising again I believe that demand will dry up a lot faster, and that we will start to see prices accelerate to the downside a lot faster. This may already be happening, as rates have been rising since the election, but we won't know until we get the next couple months' data. read the rest here: piggington.com

To: yard_man who wrote (16943)	11/27/2004 10:14:46 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Don Coxe investorshub.com

To: yard_man who wrote (16943)	11/27/2004 10:42:06 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Three Ways to Judge the Dollar By JONATHAN FUERBRINGER Published: November 28, 2004 HOW bad has the dollar's decline been? The shorthand these days is to say that the dollar has fallen 37 percent against the euro since the dollar's peak against that currency in July 2001. But another way to calculate the decline is from the values of the euro and the dollar on the day the euro made its debut, Jan. 1, 1999. At the time, the euro was worth $1.1667, and many analysts expected it to strengthen and the dollar to weaken. Since then, the dollar's decline of 12.2 percent is significant, but not severe. From that perspective, the weakness of the dollar may be overstated. Then there's the Japanese yen. From the dollar's high against the euro in July 2001 until Friday, the dollar had fallen just 18.4 percent against the yen, half its decline versus the euro. The Bank of Japan has spent 35.3 trillion yen, about $34.4 billion at current exchange rates, to prop up the dollar and keep the yen from falling further. The Japanese have reported no currency intervention since March. That suggests that the dollar could decline more against the yen than against the euro in coming months, to catch up with its fall against the euro. But analysts are betting that the Bank of Japan may be in the market again soon, slowing the dollar's fall. Finally, consider the broadest measure of the dollar's strength, the trade-weighted dollar index compiled by the Federal Reserve. On that basis, the dollar has dropped just 14 percent since July 2001. That decline has been smaller because China has kept its currency, the yuan, pegged to the dollar, offsetting the impact of other currencies' declines in the Fed's overall dollar index. This means that if and when the Chinese loosen their dollar peg or let the yuan float freely, the dollar could have an enormous fall against the yuan. And that would be enough to bring the dollar to its weakest level since it began trading freely in the early 1970's. DATA WATCH This is a big week for economic reports, ending on Friday with the jobs numbers for November. The last report, which said 337,000 jobs were created in October, was a huge surprise; the number was nearly twice the consensus forecast. For November, analysts are expecting a strong but more modest figure of 200,000 new jobs, according to the median consensus forecast gathered by Bloomberg News. Another report, on the Institute for Supply Management's manufacturing index for November, is expected to show a small increase, to 57 from 56.8 in October. While a reading over 50 means that the manufacturing sector is growing, the index is down from 62 in July. nytimes.com