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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Mick Mørmøny who wrote (41805)	9/22/2005 1:29:32 AM
From: John Vosilla	Read Replies (2) \| Respond to of 306849

"The 19 Standard & Poor's-rated homebuilders who sold about 25 percent of the nation's approximately 1.6 million new single-family homes in 2004, earn about 50 percent of their revenue in just three states — California, Texas and Florida, according to S&P analyst James Fielding." We know in 2 of the 3 new construction should take a huge dive. But who else along with Texas could pick up enough of the slack? Even if they make up the volume somehow there is no way they generate those fat profits from bubble coastal markets.

To: Mick Mørmøny who wrote (41805)	9/22/2005 7:55:35 AM
From: Think4Yourself	Read Replies (2) \| Respond to of 306849

So Texas is a key market for homebuilders? Hurricane Rita is turning into a friggin' monster, with 175 MPH sustained winds and 215 MPH gusts. The sustained winds have increased by over 30 MPH in the last 24 hours and it is forecast to get even bigger/stronger before making landfall. Where it hits land, all the wood based houses for many miles around will be completely destroyed because no wood house can stand up to those types of winds. That includes brick homes because, contrary to popular belief, brick is not a structural component of a house. If this thing hits Galveston the homies will be busy for years. Anyone who stays in the known area of landfall should be eligible for a Darwin Award for their incredible stupidity.

To: Mick Mørmøny who wrote (41805)	9/22/2005 11:08:05 AM
From: Think4Yourself	Read Replies (3) \| Respond to of 306849

CNBC report just put an interesting spin on how California might be affected by Rita and Katrina. Seems most of California's power needs are satisfied by NG, and depending on Rita's destruction there might actually be a shortage of NG this winter. A shortage would result in a DRAMATIC price spike, which will probably derail California's economy. Those mc-mansion owners around the country are going to get hit very hard this winter with heating bills. Between Rita and Katrina this winter's bills could easily be twice those from last year. Amazing how a couple of hurricanes can derail an economy.

To: Mick Mørmøny who wrote (41805)	9/22/2005 12:49:43 PM
From: Mick Mørmøny	Read Replies (2) \| Respond to of 306849

Slower housing market predicted for 2006 Economist: 'Things are getting worse by the day' in state By Emmet Pierce UNION-TRIBUNE STAFF WRITER September 22, 2005 Rejecting the idea that a bursting real estate bubble could cause a sudden drop in California home prices, the chief economist of the California Association of Realtors yesterday predicted a gradual slowing of home sales and price increases during 2006. Economist Leslie Appleton-Young linked the cooling of the real estate market to the decline of home affordability. Graphic: Median home prices signonsandiego.com "We have a housing crisis in California," she told a crowd of about 1,100 real estate professionals at the San Diego Convention Center. "Things are getting worse by the day." Less than 20 percent of California households can afford to purchase a median-priced home, compared with nearly 50 percent of households nationally, she reported. In her forecast for 2006, Appleton-Young anticipates a 2 percent statewide decrease in single-family home sales. She predicts a 10 percent increase in the cost of a median-priced home to $575,500. Healthy by normal standards, that's well below the levels of recent years. There will be a "soft landing" for the slowing housing economy because the demand for homes far outweighs supply, she said. California typically gains nearly 250,000 new households each year, but only about 200,000 new housing units will be built during 2005, creating a shortfall of about 50,000 units, according to the Realtor group. Appleton-Young was a featured speaker at the association's annual Realtor Expo, a three-day event that ends today at the convention center. Her forecast focused on the state as a whole and didn't contain a breakdown of counties or metro areas. In 2006, not all communities in California will experience the double-digit median price increases of the past five years, Appleton-Young said. Some high-cost areas, especially those along the coast, face a possible leveling off. California's lack of affordable housing is reflected in a growing dependence on adjustable-rate mortgages, despite the availability of conventional loans with interest rates of less than 6 percent, the economist said. According to the DataQuick Information Systems research firm, San Diego County's soaring home prices began a cooling trend last year. The county posted a year-over-year median-price increase of 26 percent in October 2004. Since then, the rate of gain has steadily dropped. San Diego County's median home price of $493,000 in August was only 2.1 percent higher than it was the previous year, according to DataQuick, which uses a different methodology to compute the median than the Realtors' group. In contrast, five neighboring counties had double-digit price increases from August of last year. DataQuick analyst John Karevoll says the cooling trend seen in San Diego County may soon spread to other regions in the state. Turning to the recent destruction caused by Hurricane Katrina, Appleton-Young said the repair of storm damage along the Gulf of Mexico could boost the home-building economy. "It's going to be a very large fiscal stimulus," she said. Home prices in many California markets have doubled since 2000. Young said the increase in home equity has created a fiscal disconnect between established homeowners and those seeking to buy their first dwelling. "For the first time in history, households on a mass scale have tapped into that equity," she said. Owners who purchased before the current price boom got under way now are thinking of retiring early, buying a second home or purchasing a condo for their children, she said. "They have the means." Because of rising home values across the country, "over $200 billion per year in spending power has been added from the growth of borrowing against rising home prices," she said. " . . . There is little doubt that this borrowing has fueled consumer spending and that it will come to an end as housing price gains slow. It will be a drag on spending and job creation." She warned that growing dependence on adjustable loans with low introductory interest rates could lead to an increase in foreclosures in the years ahead. She told her audience to be aware that the state's housing market runs in cycles. "Housing prices do go down," she said. signonsandiego.com -------------------------------------------------------------------------------- Emmet Pierce: (619) 293-1372; emmet.pierce@uniontrib.com