My best effort at summing up this report with a picture.
According to the newest release from the National Association of Realtors (NAR), existing home sales collapsed in July, dropping 27.2 percent from the previous month, hitting the lowest levels since 1996.
According to Lawrence Yun, Chief Economist for the NAR:
“Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs”.
Where to begin with this statement… I guess I would mostly take issue with the last sentence, where he says that “the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs”. This is similar to me saying that “the amount of money in my checking account could pick up quickly, provided I hit the lottery”. It is a technically true statement that has little grounding in any sort of probable reality. There is little to suggest that the economy is going to all of a sudden start adding jobs. Almost everyone is saying this is going to be a protracted recovery, and the possibility of a double dip recession is very real.
Additionally, there is now 12 months of supply on the market. A normal market has less than 6 months worth of supply. This number is especially bad. It means a glut of homes will remain on the market, likely leading to further home price declines, decreased equity, and possibly more foreclosures as more people find themselves hopelessly underwater on their mortgages.
I suppose if there is some sort of silver lining right now, it is that mortgage rates are incredibly low. If you are already a homeowner, and you meet the qualifications, now would be a great time to refinance your home. If you are going to buy a home despite the economy, you’re going to be able to lock in an extraordinarily low rate.
Loading ...
Ice Tbone
August 24, 2010 @ 2:55 pm
We all knew that once the home buyer tax credit expired sales would fall. How far they will fall is anyones guess.
Reply