U.S. Nov. Previously Owned Home Sales Rise to Record

U.S. Nov. Previously Owned Home Sales Rise to Record (Update2)
Dec. 29 (Bloomberg) -- U.S. sales of previously owned homes rose to a record in November, buoyed by job and income growth, making 2004 the best year ever for the industry.

The Washington-based National Association of Realtors reported today a 2.7 percent rise to a 6.94 million annual rate for the month after October's 6.76 million pace. This year, 6.14 million previously owned homes have been sold, surpassing last year's record of 6.1 million in 2003. (Barron's, citing an analyst, had forecasted existing home sales flat in November, at an annual pace of 6.75 million, which was also the median of 46 economists surveyed by Bloomberg News where estimates ranged from 6.25 million to 7.02 million).<snip>

"2004 was a record and I think 2005 would be a little better than 2003," when 6.1 million previously owned homes were sold, said William Emerson, chief executive officer of Quicken Loans Inc. in an interview from Farmington Hills, Michigan. ``When you see job creation, people feel stronger about how they want to spend their money. When they do that, it bodes well for housing.'' Quicken is the largest U.S. online mortgage lender.<snip> (Note that a fall 05 softness in pricing is forecast by some folks at Bloomberg)


The National Association of Realtors' expects average mortgage rates of 6.4 percent in 2005 compared with 5.8 percent so far this year. <snip>


http://quote.bloomberg.com/apps/news?pid=10000103&sid=aU1nlxf_.Lvk&refer=news_index

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=1&u=/nm/20041229/bs_nm/economy_homes_dc

when all of the new houses are sitting empty and new house construction is crashing and people are buying old because that's all they can afford.

Old Houses, in established neighborhoods are considerred much, much, much safer investments that New Houses in newly incorporated areas.

Its a weird oddity of the Real Estate market - when housing markets are booming, new houses are the luxury product (i.e. most sought after), as they will grow at astounding rates.

However, when housing markets cool off, the old houses, in established neighborhoods become luxury products, as all of a sudden a measly annual 3-4% gain looks much more appealing than a 20% loss (or a 20% overpayment).

Old Houses are not like old cars - they dont depreciate in value... excepting modulars, of course.

is when you look at the price, tax and land the house sits on, buying something 20 years old is sometimes the better deal.

Where I live, a 3000 square foot home on a 1/4 acre is 800k. I bought my house which is the same size, 1/2 acre of land, 20 years old and 4 blocks away for half the price. In addition, my kids go to the same blue ribbon school as the new home owner. And my taxes are half.

With low interest rates I will build the addition I want which will increase my house to 4000 square feet, still pay less in tax and my mortgage will still be manageable.

People are looking at refinancing with additions because it is still less than purchasing new.

None of the glue particle board stuff. Real wood.

They sold their built-in-1911 house in Seattle and bought a built-in-1974 house in Albuquerque; escrow closed on both the first week in December.

And both houses have far more floorspace and larger lots than equivelent newly built houses in the same area. It's also cheaper to buy the existing and remodel to taste than it is to buy new with everything already built in.

Haele

In the game of "musical houses" it's nowhere measured whether people are selling in order to find more affordable homes or not or in what proportions. Clearly, there will always be those whose incomes are rising (either due to privilege or career cycle) and those whose incomes are falling (either due to general economic hardship or end-of-career cycles). The question I would have is: What are the proportions of people "buying up" vs. people "buying down" and how many are "cashing out" and going into rentals or other housing arrangements in an increasing population base?

On edit: I find it particularly diffcult to make comparisons between home sales statistics of the last 9 years and those statistics of longer ago. Since the forgiveness of capital gains taxation (of up to a cumulative $250,000 per person) went into effect about 8-9 years ago, far more people are "buying down" and using the realized equity to pay off bills.

in order to see if the surface story ("rose to a record ... buoyed by job and income growth") is as uplifting as it sounds

I wonder if 'the reporter' or 'editor' (names at bottom of the Bloomberg article) considered them, or did they just regurgitate a press release from the National Association of Realtors?

"Thanks for your note. We try to avoid interpreting the
'goodness' of economic indicator trends on the Bloomberg economy team because what's "positive" for one segment of the economy is often 'negative' for another. That said, higher home sales aid economic expansion. With regard to whether people are buying up or down, I can tell you that the data I have seen indicates they
are paying more. With regard to whether or not people are renting more, I can tell you that homeownership rates are very high on a percentage basis which is insulated from population growth distortion. The exact numbers are in my housing stories. I've got deadlines to meet, so I'll end now... Thanks again for reading... "Victor



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I note that intheflow raised the good point of foreclosures ... how does everything add up?

Previously-Owned Home Sales Driven By Florida Rebound

POSTED: 8:12 am EST December 30, 2004

The best month on record for sales of previously-owned homes nationally is partly due to the post hurricane rebound in Florida.

The National Association of Realtors says November's sales of existing homes was up 2.7 percent over October to an all-time monthly high of 6.9 million houses.

The previous monthly high record pace of sales was set in June 2004. In Florida, the latest numbers seem to indicate the state has shrugged off any lingering effects of four hurricanes. November sales of existing single-family homes rose 9 percent from a year ago.

http://www.local6.com/news/4035258/detail.html

Didn't the Bloomberg article attributed this 'best month on record' to being "buoyed by job and income growth"?

:shrug:

"WASHINGTON (Reuters) - Sales of existing U.S. homes unexpectedly rose by 2.7 percent in November as low mortgage rates fueled a record pace of home-buying, a trade association report showed on Wednesday.

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=1&u=/nm/20041229/bs_nm/economy_homes_dc

it's just confusing to me
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'the post hurricane rebound in Florida' - AP


"buoyed by job and income growth" - Bloomberg

I find it amazing that I also use the term "musical houses". Wow. I think mine is termed for a different reason than yours. I am trying to find my final property before it's impossible to afford. And as I buy and sell, I feel that at some point I may get stuck without what I want. Thus, the musical chairs style.

I am selling my property. And the potential buyers I've had have been horizontal buying. The latest is a doctor from the Bay Area. And for him, my property is a bargain. So that could be considered buying down.

Now I found a place that was closer to what I want than what I have. But since it's in Oregon, the price is lower. So I'm buying down. But Oregon is on it's way up, quickly.

I don't think there's much buying up, if you want my opinion.

Nationwide: http://money.cnn.com/2004/08/16/real_estate/buying_selling/foreclosure2Q/

38% in Phoenix: http://phoenix.bizjournals.com/phoenix/stories/2004/05/24/daily9.html

28.4% in Denver: http://www.insidedenver.com/drmn/real_estate/article/0,1299,DRMN_414_3317736,00.html

Up about 24% in most of Caifornia:
http://www.realtor.org/rmodaily.nsf/0/e0f780d2b48b35f086256ed8004cb5d6?OpenDocument

Ohio has largest forclosure rate in the country: http://www.realtor.org/rmodaily.nsf/0/a0445a356c14b36f86256f190052491d?OpenDocument

Houston foreclosure rate "highest in 15 years": http://recenter.tamu.edu/news/recon0109.html

etc., etc., etc...