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NAHB/Wells Fargo Housing Market Index is now below where it had been in April 2006
Posted on 8/16/22 at 12:57 pm
Posted on 8/16/22 at 12:57 pm
Aka the eve of the sub-prime bust
Not comparing the two or saying it is going to happen again but it is interesting to see many key factors starting to line up as they did before.
NAHD Index Chart
May 2006 it was 51. As of yesterday, it is 49. Anything below 50 is considered a housing recession.
Hmmm raising rates and out-of-control house prices. That sounds familiar
A 30% YoY increase in inventory? Well, that just happened a month ago in July
LINK
Reuters had a report today that stated "Housing starts plunged 9.6% to a seasonally adjusted annual rate of 1.446 million units last month, the lowest level since February 2021"
LINK
Subprime Mortgage Crisis Timeline
Not comparing the two or saying it is going to happen again but it is interesting to see many key factors starting to line up as they did before.
NAHD Index Chart
May 2006 it was 51. As of yesterday, it is 49. Anything below 50 is considered a housing recession.
quote:
June 2004-June 2006: Fed Raised Interest Rates
By June 2004, housing prices were skyrocketing. The Federal Reserve Chairman Alan Greenspan started raising interest rates to cool off the overheated market. The Fed raised the fed funds rate six times, reaching 2.25 percent by December 2004. It raised it eight times in 2005, rising two full points to 4.25 percent by December 2005. In 2006, the new Fed Chair Ben Bernanke raised the rate four times, hitting 5.25 percent by June 2006
Hmmm raising rates and out-of-control house prices. That sounds familiar
quote:
September 25, 2006: Home Prices Fall for the First Time in 11 Years
The National Association of Realtors reported that the median prices of existing home sales fell 1.7 percent from the prior year. That was the largest such decline in 11 years. The price in August 2006 was $225,000. That was the biggest percentage drop since the record 2.1 percent decline in the November 1990 recession.
Prices fell, because the unsold inventory was 3.9 million, 38 percent higher than the prior year. At the current rate of sales of 6.3 million a year, it would take 7.5 months to sell that inventory. That was almost double the four-month supply in 2004. Most economists thought it just meant that the housing market was cooling off, though, because interest rates were reasonably low, at 6.4 percent for a 30-year fixed-rate mortgage
A 30% YoY increase in inventory? Well, that just happened a month ago in July
LINK
quote:
November 2006: New Home Permits Fall 28 Percent
Slowing demand for housing reduced new home permits 28 percent from the year before
Reuters had a report today that stated "Housing starts plunged 9.6% to a seasonally adjusted annual rate of 1.446 million units last month, the lowest level since February 2021"
LINK
Subprime Mortgage Crisis Timeline
This post was edited on 8/16/22 at 12:59 pm
24
Posted on 8/16/22 at 12:59 pm to stout
quote:
May 2006 it was 51. As of yesterday, it is 49. Anything below 50 is considered a housing recession.
#NOTARECESSION
Posted on 8/16/22 at 1:01 pm to stout
MLMs about to be stacked with former Realtors.
Posted on 8/16/22 at 1:03 pm to stout
Not gonna get a White House tweet about this, are we?
Posted on 8/16/22 at 1:07 pm to stout
quote:
Prices fell, because the unsold inventory was 3.9 million, 38 percent higher than the prior year.
Is unsold inventory an issue now?
This post was edited on 8/16/22 at 1:08 pm
Posted on 8/16/22 at 1:10 pm to SammyTiger
As I posted it is starting to become an issue. A 19% increase in June and a 30% increase in July. Those are YoY increases but that is how it has always been tracked. Take it as you want as the inventory last year was low so seeing a 30% increase may not be all that alarming if it were the only thing happening but there is a pattern as I pointed out in my OP. Many of the same things are happening as they did previously.
Posted on 8/16/22 at 1:11 pm to stout
That's a strange chart. The numbers on the bar graph don't jive
Posted on 8/16/22 at 1:12 pm to Sao
Yea someone fricked up 2013 but the numbers are accurate
Posted on 8/16/22 at 1:12 pm to stout
That bust was a totally other thing, caused by the proliferation of vast number of foreclosures. This will be a market correction.
Posted on 8/16/22 at 1:13 pm to stout
Look, all that matters here is that a bunch of elites will get wealthy again and funnel money to the Uniparty, mainly Democrats.
When this happens, we will then blame Trump somehow, and the same elites that created this problem will once again get off scott free. Well, by "free", I mean increasing their personal wealth by like 500% (see Liz Cheney as your latest example).
American citizens will go back and forth arguing over why Trump is or isn't at fault, the MSM will lie, and life goes on.
When this happens, we will then blame Trump somehow, and the same elites that created this problem will once again get off scott free. Well, by "free", I mean increasing their personal wealth by like 500% (see Liz Cheney as your latest example).
American citizens will go back and forth arguing over why Trump is or isn't at fault, the MSM will lie, and life goes on.
Posted on 8/16/22 at 1:17 pm to stout
What does this all mean though
Posted on 8/16/22 at 1:18 pm to C W
quote:
That bust was a totally other thing, caused by the proliferation of vast number of foreclosures
Obviously
quote:
This will be a market correction.
Technically 2007 was a correction too. A bust is still a correction. Just different factors but I think it's naive to think a bust can't happen now. I have heard all of the reasons people give. Housing shortage, equity, etc but there are other factors facing people today that we didn't deal with in 2007.
It will never be as bad as 2007 but too many people are downplaying how severe it can be just like in early 2006 when all of this started happening. I remember because in 2006 I was one of them and had one development that my investors and I had to abandon and a few specs that I had to practically give away. We all thought it would never end.
FWIW, I was a Realtor and developer from 2001 through 2008 and since then have flipped sides and own a mid-sized regional firm that manages foreclosures for several banks and equity firms so I am not talking out of my arse like many.
This post was edited on 8/16/22 at 1:22 pm
Posted on 8/16/22 at 1:19 pm to SammyTiger
quote:
Is unsold inventory an issue now?
No. Inventory is very low.
Posted on 8/16/22 at 1:19 pm to GreatLakesTiger24
quote:
What does this all mean though
That its time to end the Fed
Posted on 8/16/22 at 1:19 pm to stout
Nowhere to go but down from here.
Posted on 8/16/22 at 1:21 pm to RealDawg
quote:
No. Inventory is very low.
Its relative really. Inventory is low in some areas and in certain price ranges. Again, the same thing happened in 2006. The hardest hit areas all had low inventory hence the major developments happening at the time. Those were also the hardest hit areas and why it was a "bust" but the slow down started in lower demand areas first just as it is now.
ETA: We have now seen 3 straight months of inventory increasing. Those same 3 months are also historically the busiest months for the market. That is concerning
The supply of homes for sale across the US grew at a record rate last month - mortgage costs are cooling down the housing market. Active listings nationwide jumped 31% from a year earlier, a record-high increase for a third straight month
This post was edited on 8/16/22 at 1:25 pm
Posted on 8/16/22 at 1:27 pm to GreatLakesTiger24
quote:
What does this all mean though
It means it is almost time to buy Real Estate. Take your crumbs were you can get them. At least that is my plan
Posted on 8/16/22 at 1:29 pm to Johnpettigrew
weird because i was told i was an idiot by many realtors for not buying a house in the last year and a half of so 
Posted on 8/16/22 at 1:32 pm to GreatLakesTiger24
quote:
weird because i was told i was an idiot by many realtors for not buying a house in the last year and a half of so
Banks and sheriff sale's don't pay commision. Also, if I have a chance, I will be asking for reduced rates to close a deal. They had their chance. Now it is mine.
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