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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (36106)	7/15/2005 2:23:43 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

There seems to be certain themes or variable in these press stories. 1. The news reports acknowledge the big surge in listings and for sale inventories. Then they go to the industry or realtors, who claim some of these new listings are fishing for high prices, and that suddenly homeowners have fallen in love with Lookie Lous. Perhaps so, but how does that explain the literal frenzy of price reductions that is occurring in formerly hot markets? I believe there is an increasing sense of urgency to got out, far less to get in. 2. The stories acknowledge the surging inventory, but claim there are "also a lot of purchases". Well, that's somewhat counterintuitive if overall inventory for sale is surging higher in leaps and bounds. Secondly I wonder now about the purchase index used by a source like MBAA? Those are purchase applications, not closed sales . There is a difference in a cooling market, more "applications" will NOT close. There is also tons of speculation on "under construction" units, and attempts to flip those pre-occupancy. We need to find ways of tracking all these aspects. Net net there probably is still plenty of activity, but it's slowing, and not nearly as strong as being reported. 3. The stories claim prices are still firm or going higher. Usually they quote "slowing" yoy, whereas my sense is that prices flattened in the spring, and are now turning south. The median price that they use fails to recognize that most of the two million new units built in the last year are higher end homes. Builders don't service the low end market, it's a filter down process to the lower end market of older housing stock. Many other sources point out how much bigger and luxurious houses are. So I question using median price as an apple to apple comparison. Additionally even in the resale market, folks have spent a ton of money on remodeling, etc. Some of that can actually be passed on in a resale, but again not apples to apples.