Pop goes the bubble - - new home sales plunge 10.5% in Feb

Edited:

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-24T150111Z_01_N23390736_RTRIDST_0_ECONOMY-HOUSING-URGENT.XML

Sales of new U.S. homes plunged 10.5 percent in February, the biggest drop in nearly nine years, while prices fell and the number of homes on the market hit a record high, the government said on Friday in a report signaling significant slowing in the housing market.

<snip>

Economists, however, widely expect the housing market to weaken throughout 2006



Original:

No link yet, but CNN has that the Commerce Department reports sales of new homes plunged by 10.5 percent in February, biggest setback in nearly nine years.

nt

:)

Have a nice day.

that's causing the home sales to drop. If the media would stop focusing on the bad about home sales they would all rise.

***Sorry. I'm channeling scrub over here in Korea***

Note:

Sarcasm alert on.

who can afford a house haven't already bought one? With the historically low interest rates, most people who were going to buy a home have - unless job stability, income or credit kept them from qualifying.

So now, we have to depend on new households being formed to take up the inventory. Guy that gets a job transfer simply sells one place and buys another = net gain of 0 additional homes sold.

So you're right, it's not a huge bubble yet - but if they were counting on the gravy train to run forever, they were fools - real estate has always cycled - it has always led us into a recession - and when it picks up in response to some day lower rates/more people in the market - it will be the part that leads us out of the recession.

Well, in normal cycles anyhow - but the way ShrubCo has stacked the debt so high along with all of our manufacturing base going overseas, I'm not sure if the next recesssion won't be a full blown depression.

with the year long rise of foreclosures it's a serious problem

concentrating their efforts on MacMansions the average person just can't afford. Even if you can come up with the monthly mortgage payment the utilities and other costs kill you.

...real estate industry.

We were told previously that new home construction is going to be cut back considerably in 2006, and now we're seeing new home sales take a pretty good drop.

The real estate market is the last bubble, folks.

which is a small portion of all home sales. existing home sales aren't suffering yet.

towns. Some of my family live there and have been talking about For Sale signs all over town . Not many are selling. Prices are being lowered but not enough.

All I keep seeing is companies (Mostly home builders) buying land and building these new MPC's "Master Plan Communities". Which include golf courses, shopping malls, parks, hospitals and more.

jump in two years! WTF?
It was a lead in to a segment on RE agent tricks.

Now they are down for Feb.

A slowdown in gains would not be so bad, but a true bubble burst would be horrific for the US economy.

.....they're morons! unless you count tips for holiday entertaining, celebrity gossip, or self-aggrandizing conversation as "new", not one of those morning shows report a single, worth-while, or it would seem accurate, piece of information....

NEWS, real news -- what a concept!

... who has been trying to sell a condo (not their primary residence) in Harvard Square since LAST AUGUST.

The original asking price was $369,000. (Which was comparable to others in the building at the time).

The current price is $299,000 - and they STILL have no takers.

stand-still. Buyers are convinced prices will go down and sellers are convinced they won't. Buyers can't be convinced to raise offers and sellers can't be convinced to accept lower offers.

Clearly, it looks like things are on a razor's edge and people will either be convinced one way or the other which way the market is going to go. I think if one or two sellers in an area accept dramatically lower offers because they're desperate to sell, then prices are going tumble for everyone. But if sellers keep holding out, how long can buyers?

Bubbles and busts are full of this kind of strategizing. One factor that brings on a "bust" quickly and painfully is the realization by sellers, including home builders, that they are probably at the top of the market and it will only go downhill from here.

They panic, and they put their house on the market at the same time that others are coming to the same realization and are doing the same thing. It creates a vicious downward spiral (from the seller's perspective. Not so bad if you're a prospective buyer).

This is a partial explanation for increased home inventories in Feb 2006:

"While sales slowed, supply surged. The number of new homes available for sale climbed to a record 548,000 by the end of the month. At the current sales pace, that represents 6.3 months' supply -- the largest inventory of new homes since January 1996, the government report showed."

http://www.realtor.com/Prop/1052746489

Originally listed at about $329,000 and down now to $294,000.

This is a nice area and homes here typically sell in 1-2 months. This thing's been on the market now for *5* months!

And these houses and apartments are largely empty. The builders build on speculation and that speculative bubble is deflating as I type.

home would be over a million. In my suburban neighborhood there is nothing under $343K, and that is for a one-bedroom 780 sq. foot "condo."
It's insane.


http://realtor.com/FindHome/HomeListings.asp?locallnk=yes&frm=byzip&mnbed=0&mnbath=0&mnprice=300000&mxprice=99999999&js=off&pgnum=1&lnksrc=&fid=so&stype=&mnsqft=&mls=xmls&areaid=91377&poe=realtor&zp=91377&sbint=&vtsort=&sorttype=&typ=1&typ=2&typ=4&x=59&y=8

How the hell do people afford to live out there?

mortgaged to the hilt. I know a husband and wife both lawyers who sold a relatively modest home they bought several years ago for a tidy $400K profit, paid off their student loans, and bought a $1.5 million dollar McMansion with $150K down. They have 2 mortgages. One for a million. The other for $350K. I kid you not. He's a supervisor in the county Public Defenders office. She works out of the house on workers comp cases. He drives a leased beamer 700 series. She drives a huge gas guzzling SUV. She's had multiple plastic surgeries and is only in her early 40's. They vacation in Hawaii every year. They are in debt up to their asses and could care less. And they aren't the exception to the rule in this area. They are typical. Around here it's all about appearances.

House prices have already leveled off and are starting to come down in their neighborhood. Nothing over $1.4M today, so they've dug a hole for themselves already.

Even in So. Cal. there's a limit to what people will spend for a poorly built (but big) tract house on a small lot.

maybe not that extreme, but they are living large on credit, or using their home equity to support their life style.

I know many people who make 2-3 times what I do, but they live paycheck to paycheck. I think alot of people's life style is going to catch up with them, including my sister.

3 generation mortgages, i believe they are called.

I will be debt free at 51. Thirty year mortgages at thirty five years old are for suckers, IMHO. I do not want to be worried about a house note when I am 65 years old. Imagine what my health care will cost in 30 years. Add a nice 700 a month house note onto your health care at 65, not gonna happen to me.

Hubby and I were debt free by 51. We're 57 and 58.

People have been brainwashed to believe that it's not smart to pay off a mortgage.

Have you notice if you and your husband seem healthier and more stress free than your friends.

however, I have to be honest that there are stresses that come from other sources, although on the whole I'm not a person who's easily stressed. Hubby is though:) Different upbringing.

I see you live in Michigan too and I am not a native Michigander. When I first moved here 14 years ago I couldn't get over how materialistic people in the tri-county area of Detroit were. They seemed so competitive about their jobs, cars, houses, etc.

I try to practice voluntary simplicity. I have a nice house and we have relatively new vehicles, but they're paid for. We maintain our vehicles and keep them for approximately 10-15 years. By the time we're ready for new ones, we have save the money to pay cash. I left a corporate position to work in the public library 4 miles from my house. Saves a lot on gas! I seldom buy new clothes. We don't subscribe to newspapers or magazines. We downplay Christmas. We seldom eat out. Our lives are routine and we are content. But maybe that's due more to our ages. People tend to appreciate the small things in life more as they age (but not always). I do have a relative who's older than me and he and his wife still haven't gotten out of that "I am what I own" cycle.

... it is amazing how easy it is to delude yourself that something you want to do is actually sound financial management.

Back in the go-go years, there was a time when you could reasonably expect to make more by investing your money in the stock market than the interest on your mortgage. At that time, not paying off your house was a justifiable management tactic.

Now, those days have been over for a long time, but folks still cling to the old rules.

In this economy, and the most likely economic climate for years if not decades to come, debt, any debt, is bad news.

or not. I've always been my own person and don't follow conventional wisdom. I do what I think is right for me. I'm not materialistic nor are my six siblings. If we have a roof over our heads and enough to eat and our health then we are content. We were brought up with very little and our parents taught us to value contentment and peace of mind and the little joys of life and not long for "stuff." I wish my parents were still alive to thank them, but as is usually the case, I've grown more appreciative of their teachings as I've aged.

the usual repug lites your health care costs could be 0, nada, zip. That is if we were a society that cared about one another.........forget it, sorry I ever mentioned it.

In my area outside of Tampa.

Homes are slashing prices and still sitting. I dabble a bit in real estate and own some properties. Things run in cycles, but people refuse to believe it. I watched Las Vegas blow up almost overnight, prices doubling within months. People kept saying "This is Vegas, everybody wants to live here, it will always go up." Then in Florida people say the same thing "This is Florida, it will always go up." Not true.

I cringe at my friends (who I thought were smart) say this.

I think some areas will crash hard, while others will have a softer landing. For instance, Salt Lake City is still selling homes at a brisk pace and prices are rising while Vegas has come to a halt.

Also, I watch these homes that have been sitting now, and I think the sellers just don't get it. I see a home that is priced at 349k sit for 3 months and they drop the price to 345k. Either the realtor is lying or in denial, or the buyer is in denial. I remember Las Vegas coming to a halt and realtors still saying "now is the time to buy, it's a hot market!" Which, of course, was a total lie. Reminded me of the talking heads on cable news at the end of the dotcom craze.

I blame everybody for the "boom." So many realtors do nothing but lie lie lie. Brokers who push inexperienced buyers into using interest only loans to "Get more house". Buyers who naively think the sky is the limit and it's all easy money from here on out. In the end it is Joe Public who gets stuck holding the bag.

Well not really, we aren't as bad as California or even Seattle. But that house would go for more than twice that if it were next to mine.

I guess when my son gets back from years in Korea, he should look in Kentucky if he wants to buy a house. He has learned tolerance of living in a foreign culture so he should be able to adapt to living in a red state.

You just have to put up with a fair amount of the pseudo-Christians that attend one of the Six Flags Over Jesus megachurches here.

The first drop was in single family houses in the outer burbs and for a while the condos in Boston and Cambridge were still holding their own. It is troubling that they can't move a condo in Harvard Square because that area is usually the last to show signs of weakness.

are highly volatile. this statistic is meaningless out of context.

I've been writing about real estate for 16 years, and i had to cover these monthly reports for seven of those. trust me.

SO should we trust you to say the housing bubble is not going to crash?? Should we trust you to say that new home sales are not trending downward and prices are not under pressure around the country??

I would be interested in know how many more new houses can be built without there being a huge surplus.. What affect on the market would a huge surplus have on the sales of new and existing homes..

are generally built after they are sold, so there's no surplus of empty new houses out there. even condominium/town house developments are built in phases, and usually are 50% or more pre-sold before the phase is begun, with the hope of having it 80% or more pre-sold by the time the phase is completed.

Home sales are tied to interest rates. When interest rates rise, there's a lag, as home sellers don't discount their asking prices, but buyers have less buying power because of the rates. Gradually that adjusts.

Also, this is one of the slowest home buying periods of the year. Things pick up in March, April, May and June, as people look to move into new school districts before September.

To get a better sense of home sales, you should look at a 12-month rolling average. How are sales over the last 12 months vs. the previous 12 months.

I think because of interest rates, home sales may slow slightly, but if home sellers adjust their asking prices, it'll still be a robust market. The same can be said for commercial real estate, which saw its strongest year ever in 2005.

Duplexes and Single family housing like you can not believe. There was a letter to the editor in our local paper this week with some interesting statistics. The market on our island- two beach towns is down 70 percent and 80 percent. We have a full time population of about 5000 residents. There are currently over 600 brand new properties on this market and there are three high rise condominiums that are starting to be built. None of these are sold. The lowest price on the island is 350K. And still they are building....it makes no sense.

Thanks for the population info. I was amazed at the traffic backups and all the new building! I hadn't been there since the 80's.

I saw on the news a 75% increase in premiums! Eastcoast/gulfcoast property is going to be hard to hold on to.

http://www.washingtontimes.com/business/20060227-093417-4703r.htm

Unsold new houses hit record
February 28, 2006


ASSOCIATED PRESS
The backlog of unsold new homes reached a record last month as sales slipped despite the warmest January in more than 100 years.
The Commerce Department reported yesterday that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month.
That was the slowest pace since January 2005 and left the number of unsold homes at a record high of 528,000.

"Carolina Lakes" just south of Charlotte. It will have over 4000 residences by it's completion. They are lining up to buy them. The initial phase is close to sold out and just opened to the "public". Last fall and through the winter you had to be a VIP and have been invited to their private "seminars" to even be ALLOWED to buy. I live two miles away and expect the price of houses in our 2 year old master planned community to increase over the next few years. The wait time on a new home can be tough if you are relocating, so existing homes become more attractive.

I expected the bubble to burst, but I thought the air would come out more slowly.

Anyone? Anyone? Bueller? Bueller?

my realtor told us she has a realtor friend in the Reno area and things were flattening out. That was the end of last summer. My niece wants to buy a new house and her realtor told her to sell their house now and wait for six months to buy.

oh that was USED homes, nice how they cover their tracks

New Home Sales Down by Most in 9 Years
New Home Sales Plummet in February by Largest Amount in Nearly Nine Years

By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON Mar 24, 2006 (AP)— Sales of new homes plunged by the largest amount in nearly nine years in February while the median price of a new home dropped for the fourth straight month, providing fresh evidence that the nation's once-booming housing market is cooling off.

The Commerce Department reported that sales of new single-family homes dropped by 10.5 percent last month to a seasonally adjusted annual sales pace of 1.08 million homes. It was the second straight monthly decline and was much bigger than the small 2 percent dip that Wall Street was expecting.

The drop in new home sales followed news Thursday that sales of previously owned homes actually rose by a stronger-than-expected 5.2 percent last month following five straight monthly declines. Analysts said the trend in both reports pointed to a slowing housing market after five record-setting years.

The slowdown in sales was putting pressure on prices. The median price of a new home sold last month dropped to $230,400, down by 1.6 percent from January and off 2.9 percent from February 2005. The median is the mid-point where half the homes sold for more and half for less.
(snip/...)

http://abcnews.go.com/Business/wireStory?id=1764464&CMP=OTC-RSSFeeds0312

I think the big housing bubble that so many are worried about has more to do with interest rates and foreclosure rates than it does with month-to-month sales variations or regional ups and downs in prices.

I've been trying to amass more info about the bubbletrouble than that provided by our dumbed-down, sound-bite media. Not trying to be a know-it-all here -- far from it -- I'm looking for help from any of you who can put complex financial info layperson's terms for me. So far, this is the picture I've got:

Something like 50% of the mortgages written in 2005 were interest-only, ARMs, or sub-prime (believe I got this number from Bill Bonner's Empire of Debt). Should mortgage interest rates go up, say from 5% to 7%, property owners see their monthly payments go up 40%. They can't make payments, property is foreclosed.

If there is a steep rise in foreclosure rates, this puts Fannie Mae and Freddie Mac in worse shape than they're already in. Furthermore, they've bundled mortgages together as mortgage-backed securities and sold them to all sorts of investors (oh the poor PBGC) and they can no longer back them up. The government certainly doesn't have the cash to tide them over. Major problem.

Financial collapse? I think the question is How Big a financial collapse? Bigger than the S&L scandal of the late 80's? Small recession or big depression?

I weathered the S&L years in Texas OK, and I didn't lose anything when the tech bubble burst, and I'm not a loony who thinks the world will end in 2012. But the housing thing is so complex and multi-layered, I'm still not sure what to make of it.

at least three states that I have read about in the last three weeks: Texas, Michigan and Massachusetts.

I think that the stats for MA are in the western part of the state, but sad nonetheless.

we have a winner. Look at the terms of those IO and option ARM's and you will see very low 12 and 24 month teaser rates. There is about 1 trillion dollars of mortgage debt that will reprice in the next 12-24 months. In many cases the monthly payment will triple, in a much larger number of cases it will double (this assumes no more rise over current interest rates--yea right) Now, add in insurance increases, energy increases, tax increases (can we say re-assessment; you get the picture. The price of homes are determined by the monthly cost of ownership and the monthly wages of buyers. Think about that--real wages are down while, energy, interest, insurance, taxes are all up big--what is left--the principle of the note (selling price-down payment.)

Just because it is slowing in one place, does not mean there is a nationwide "bubble." In the past 2 weeks, the real estate market where I am is jumping. There were quite a number of million+ homes that have have gone under agreement. If a house is priced right for its local market and the buyer is there, it should sell.
What has been happening here, is that where before there was one house and 5 buyers, there are now 5 houses and 5 buyers.
I was visiting family in Myrtle Beach, SC last month and the amount of new construction was insane. Where the heck do they think people are coming from to move there? Prices are high there and there really aren't a bunch of high-paying jobs to support the prices.

above

older homes because developers have flooded the market with new neighborhoods (most of which are completely disconnected from anything resembling a town). They've increased the foreclosure rate in a state that already has a high one anyway (Indiana).

So...as an owner of a 130 year old home I can only hope that the development of farm land stops, and folks quit buying the tin can homes.

judge the housing market buy. It sustains an inflated market but tells us little about the majority of the homes in this country. Either way it is just a justificaiton for subdividing arable land.

We live in Northern California and can't afford to buy a house. We are renting a small 2-bedroom (about 900 square foot) duplex. If you'd buy a 2-bedroom house the same size, you'd need at least $300,000.

I feel sorry for all those people who bought a house for more than it will be worth if the trend continues. However, that doesn't mean that I don't look forward getting my hands on a affordable house.

The people who bought houses and now may find themselves in a negative equity situation will only have suffered from their own greed.
Lower new house sales will create an oversupply situation which should not only bring the price of new ones down but also have a knock on effect on the prices of existing housing stock. Aside from that if you'd been through the period in the late eighties when UK mortgage rates hit 16% you'd be more than careful about the size of the mortgage you have.

And by hot, I mean burning fucking hot.

An old house that we sold three years ago resold last month for nearly $500k - more than $100k over what we'd sold for (and we made a 660% profit over the course of a bit more than a decade). When we sold it, it sold the day after its open house. Same thing this time- day after the open house.

I'm still shocked that houses are selling so fast and for such high prices. Another good friend of mine sold one of his houses in February and it sat on the market for less than a week.

and I am speaking as a homeowner.

There are too many people in this country who simply cannot afford to buy a house at current prices. I would be quite happy to give up some of the profit I have made on my house since I bought it if it helps people become first time homeowners. The profit is all on paper anyway-- it's not like I would be writing a check.

I would welcome a 25%-30% fall in real estate prices.

Land, material and labor continue to rise. Builder's would have to cut their margins to cut their pricing.

I've been waiting for the bubble to burst to snag
a bargain on some republican fat-cat's seized estate.

But of course... I'd have the place fumigated and de-loused.

The property management company that I work for is regularly signing on new properties that are built and sold to investors. These are homes that are never lived in by the owners costing over $450k.

What they don't realize is that there is no corresponding job growth/wage growth in our town. So we have a supply of expensive homes being purchased on the pure speculation that they can cover costs for long enough to watch prices rise and flip the property.

There is no possible way that the costs of these properties are being covered by rents. In fact, many renters have simply stopped paying rents regularly with the confidence that they will not get evicted. The truth is that they won't if they simply pay rent 3 months out of 4 the owners will allow that rather than run the loss of an eviction and turnover.

Most importantly the forces driving this market ARE NOT LOCAL!! Many of my property owners are from out of the region, out of state, or even out of the country. Some have never seen the properties that they own. What they are all counting on is that enough retirees will move in to cover their butts by renting for a year while they have THEIR mcmansions built.

I don't think it's going to work even though my job depends on it. You simply cannot run an economy by constantly flipping overpriced properties, somebody, somewhere has to make a living wage where long term payments on all of those properties are realistic.

who bought Amazon stock at $100 in 1999-2000.

for decades---the NYers were buying these old farms and using them as tax shelters while fixing up the houses as showpieces for their weekend guests. Then lots of NYers and people from cities all over created a demand to live in this desireable region with the beautiful farms and houses. Now it's becoming an ugly bedroom community just like any other with the McMansions and ugly developments and prices are starting to go down b/c there are so many houses for sale. It's still expensive, though.

Last summer, my husband and I were looking and couldn't afford a thing. Just a week ago we started looking again and prices have dropped drastically. I was told by three agents that the market around here (NW Ohio) was very soft for sellers.

this could be the tip off!!!

Its like the 1920's stock market the speculators never thought it could go down...

The Real Estate Market is the middle class wealth...

I desperately want to sell my house 30 miles south and move into the city. Every damn thing we do is in the city. But to get an approximate equivalent to my current house - small 3 bedroom, 1 bath built in 1952 - in the city would cost me almost half a million dollars. Out of the question. I don't know how the hell anyone can afford to live in Seattle. I sure as hell can't, and I make good money.

then it is the Californians who are coming north to find housing bargains. After all, $400k seems like a bargain to someone from San Fran.

What they are doing is leveraging their $650k two bedroom Marin bungalow to buy a $400K rental in Portland. The people who've been doing this for a few years now have five or six properties all leveraged off of one original property and mortgaged to the hilt.

On paper they are making money hand over fist. On paper. If they have a run of bad luck and their renters quit paying on two or more properties at once they have to cash out on at least one. If the economy in general takes a hit this whole ponzi scheme goes bye-bye.

I can't wait. I work for the smug bastards and I hate em.

... the first and most important is "easy credit". The housing financing agencies of the Federal Gov't as well as private underwriters have eased up on qualifying requirements to the point that they are no better than the credit card companies at assessing risk and risk aversion.

Add to that the large number of junk loans being made that are interest-only, zero-down, etc - these simply encourage people to buy more house than they can afford. When they walk away, it hurts the whole market, which hurts everyone.

The second is speculators who by and large are created out of thin air from the "easy credit" situation. Folks get it in their heads that housing only goes up, up, up, they leverage their asses off to purchase properties on speculation, and they are the first to bail when the realization that there will be no easy profits hits them.

Poo-poo the bubble at your own risk. Given the financial climate, relaxed qualifying rules, and human nature, a bust is not a matter of if, only when. Existing home sales numbers provide some solace, but I'm still betting on a long term major crash.

in early '90's and they wanted to sell the house around '95 b/c hubby got job elsewhere. But they couldn't get $135K for it after putting $30K into repairs.

That bubble burst over a period of about 5 years. I bought my condo in '98 after prices started to rise again, from a guy who owned it for 3 yrs. and bought it in '95 at the lowest point for $25K less than I paid. Still, my condo is now worth about 120% more than what I paid so I didn't do too badly.

The thing is, you can't time a bubble that is bursting over a period of years. You never know when the low or high points are. I've watched this housing market closely over the past couple of yrs. b/c I'd like to sell the condo and get a detached home. Prices in my area are headed down and there are many, many houses and condos to choose from, both new and old. If I had reason to move NOW, I would just make an offer I thought reasonable given current market conditions. No one knows when or where the bottom is.

... I guess the real point of my post, which I did not really make well, is that ordinary folks start "speculating" on real estate when prices are rising, thinking that trees grow to the sky. Since this is often one's biggest and most ill-liquid investment, things can get rough in a hurry if you are caught in a down market, and RE markets are cyclical just like the stock market.

and being knocked down ..but condos now are at a crawl..where they were selling faster than you could list them..inland they are much cheeper..250..give or take..depending on location or if near water..

hope that helps..but i have two friends realtors and they are starting to hurt..it has slowed so much...commerical is still selling and developing but housing slow

fly

They are old farts like me who bought houses when they were still affordable by average people.

The piper's packing up his pipes and he's gonna be coming over with his hand out, Mr. and Mrs. Top-heavy-on-our-Mortgage...

Who's the Fool now? My rent's STILL only $425.

Homes in our area rarely are sold in a short period of time. I have seen many homes on the market for as long as one to three years. The median price of homes is about 125,000 dollars. Our home was assessed at $54,000. New home construction according to the local lumber company is way, way, down. I talked to someone in the unemployment office and they said that the stated 4.9% unemployment rate is way understated. It is more like 10% minimum. They said that the stats are being cooked so people will not panic and believe that the government policy is not working.

Homes in our area rarely are sold in a short period of time. I have seen many homes on the market for as long as one to three years. The median price of homes is about 125,000 dollars. Our home was assessed at $54,000.

Where could home values be *that* low? Your area must be severely depressed economically? What's the average wage?

The poster who reminded us that real estate prices are always local is correct.

I bought a family home because I wanted to be the 3rd generation owner of Grandpa's house. I'm fortunate enough to be in a prime neighborhood and have a rental unit to help with the mortgage. Grandpa was an engineer and the house was built like a fortress.

The decision to purchase was made easier by the historical 12% per year price growth over the past 10 years, a pattern unlikely to change regardless of national housing trends because of conditions local to the Alaska economy and the price of oil. I don't intend to sell it, and hope that it will pass on to another generation when I'm gone.

And here, $54k would buy you a 10 year old doublewide in a mobile home park, median prices are in the $300k range.

If I told you then everybody would want to move here. I have two neighbors, one from Connecticut and one from England who were able to pay cash for their homes because the housing is so cheap in this small community. Yes this is a economically distressed area of the U.S. Did you read where * was having a press conference in Cleveland, Ohio and blurted out " doesn't anyone work in this town." Well a similar situation exists here. The unemployment rate is running around 6 to 8% and has been for the last several years. Most of the manufacturing plants were closed down more than 10 years ago and only food service, retail sales, and health service jobs have replaced them. The rate of unemployment could even be higher than that. I was told that if a person worked at least 20 hrs/week then they were considered full time. If people ran out of unemployment, stopped looking for employment, or were looking but couldn't find work then they were not considered as unemployed.

a house in my area just sold (this week) for over a million dollars. This is Los Angeles County but still it was just a ranch style tract home, nothing special.

It's called a 'correction' and a drop of 20-30% was inevitable. As long as you have a decent amount of equity and are able to manage your payment comfortably everything should fine. The people living on the margin are the ones that should watch out. Them speculators with interest only adjustable notes are ones that the bankers will burn

Where I live a house that i would consider a typical middle class house was selling for around 110,000 when clinton was president, and at the time i just graduated high school ('98) and could get a job anywhere making $11-$12 and hr. Now the same house is 190,000 to 250,000, and when i got layed off last march i was out of work for 6 monthes cause i couldn't find a job that paid $10 and hr. Now my girl just got out of college and is an rn, and we were looking at houses, and i told her we'll wait for a little cause the price has to come down. There is no way people can afford those prices with the way the job market is, and if no one is buying then the price has to come down. And like i said to her, I don't want to get stuck with a 200,000 mortgage on a 150,000 dollar house.

breakfast discussion of the month? For builders: how to stop overbuilding and getting caught in the downdraft. The problem has more to do with excessive inventory (resale) and builders continuing to flood the market with new homes.

And builders are all trying to outdo one another with employee discounts, free $75K options, etc. ad nauseum.