Worst Month For New Home Sales In 6 Years
Here's a cute but meaningless graphic from ABC News that illustrates a very important statistic: New home sales are down. Way down. 8.3% down. It's the worst month for new home sales in 6 years.
Why is this important? Because even though home builders were having so-called "blow out sales," it doesn't seem to be working. The price of a new home is dropping:
During the past year, sales of new homes have dropped some 21 percent, which is forcing builders to provide huge incentives to move the houses they've completed.Inventories are up too, so it seems as if the "blow-out" deals are only going to get more "blown-out," so to speak.For August, the government said the median price of a new home sold was $225,700 - 7.5 percent lower than the same period last year. That's the biggest drop in 37 years.
Our advice? If you're currently negotiating a deal on a new home—don't settle for a plasma TV or some free appliances. Put on your negotiating pants and your asskicking boots because you're in charge.
Worst Month for New Home Sales in 7 Years [ABC News]
(Photo:ABC News)
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Comments:
I continue to remain jealous of a close friend looking to buy his first home this winter/early spring. While I don't think we're at the bottom yet, it's such a buyer's market that it kills me to be on the sideline and happy with our current home.
Its not a "Buyers Market" yet. Its just seems to be the start of a reasonable return to normality...
Why does everyone keep calling it the subprime meltdown. Its the overpriced real estate meltdown. Loan rates are still very low. So its the size of the loan thats the problem. The fact the bank/lender knew that before making the loan is a whole other issue. And no it's not a buyers market just because you don't have to lube up when going to make a purchase. Everything is still way overpriced.
@nweaver: I agree. I'm currently looking for homes in the suburban Chicago area and the inventory isn't as great as I thought it would be - unless of course I want to buy a forclosure home 'as-is'. People are not dropping their prices enough either - at least not in the range I'm looking at.
My negotiating pants are still at the cleaners. They didn't get the stains out properly, and I think I'm going to sue them for $57 million.
Its called a market correction - the endless growth seen previously is over, and these developers are a bunch of idiots. They can all just burn in their stupidity.
I say good. The growth that we saw during the past few years was rediculous and unsustainable. All of the speculators hoping to get rich quick are losing their shirts.
I think the time to buy is still a few months away still.
I think it depends on where you live. I wouldn't call it a buyer's market in California. Maybe in "The Cleve".
Sadly, prices will have to drop by over 60% to enter the "rationality" that we had ten years ago. (Only sad because it can't happen soon enough).
I live in Fairfield County in Connecticut. Our home prices aren't going down. They're rising steadily, and they've been doing so throughout this "meltdown." I still can't afford to buy anything. What I wouldn't give for some foreclosures in my neighborhood!
@timmus: Timmus, I don't think people are holding out so to speak. They purchased the home for more than it's worth, and to break even they have to sell the house at the ballooned price that no one wants to pay for. If it's an older house, a person probably got a second so they could buy a gas guzzling truck and are now upside down on the house. It's going to get pretty vicious in the next few months.
@loquaciousmusic: You are at the tail end of a whiplash. Eventually the rising prices will catch up with you as well.
The worst is yet to come. We still have 1 1/2 years of falling home prices.
When some of the dives I have looked at start to have realistic prices, instead of 600,000 asking for barely a pot to piss in, then it will be a buyers market.
All this proves that realitors are evil, and sellers are greedy bastards.
I cant tell you how much I get off on watching the two neighborhood flippers loose hundreds of thousands of dollars. And with many towns and cities making live in laws to prevent all this bullshit going on, in the next few years much of the damage realitors/flippers/ and loan companies have done should be repaired.
I just want to see what prices will go down to after mid-Ocober.
Yeah, the way I see it, this is what it looks like to have all the people buying homes to flip them for profit driven out of the market. I fucking hate this!
HOMES SHOULD NOT BE VIEWED AS A FINANCIAL "INVESTMENT." They are places to live, and I think it's a ROYAL SHAME that speculators and the like have driven up the price of homes so radically that everyday people (you know, the majority of the population) cannot afford a decent abode.
God forbid that a new family starting out wants to buy a home & start a family. Not on one income. Probably not on two anymore. Screw this 1%-10% drop B.S. Home prices shot up 300% over the last 10 years. Call me when they drop to pre-1998 levels.
@randombob: There is a lot of truth in that. Real estate is supposed to be a great investment, and probably is. But your home isn't- it's a necessity. Got to live somewhere.
A drop in new home sales is good, that means producers will start making fewer of them and supply will tighten and prices will remain stable. Average sale prices are only down under a half a percent this month.
Nothing to see here, yet.
I'm wondering what is going to happen in Los Angeles. I live in a part of LA that was HEAVILY built up, and a massive condo structure on the nearest main corner from me is still being built while all this is happening, and has been in the process of building for the three years I've lived here. Also, our mayor last year was talking about building ten new condo buildings downtown to turn Los Angeles back into a nice community. So I wonder if that's going to happen now. Downtown still has 60K homeless people, and if the building market is going to slow horribly, I don't know if people are going to want to move in anymore.
With the help of a spreadsheet I've been carefully tracking listings on realtor.com for my town since last month. Hard to say what's going on, but it appears only 1 to 2% of listed homes are selling each week and inventory has risen from 146 homes when I started to 158. That said, it amazes me how many people are holding out for amounts that clearly nobody is going to bite on. But every week there are a few homes that get a 3 to 7 percent price drop.