Angela and I spent the weekend looking at housing options here in Seattle. Sadly there is little sign of a slowdown here yet and renting is still considerably cheaper than buying. We also found a TON of new homes and condos for sale, and some of the new luxury condo buildings had converted to apartments.
This month, the signs of slowing demand for housing continues.
Home Builder Lennar Cuts Outlook Despite 33% Rise in Quarterly Profit
June 26, 2006
NEW YORK -- Miami home builder Lennar Corp. appeared to fare better than some of its competitors in the current housing slowdown as it posted 33% earnings growth and only a 3% decline in orders in its fiscal second quarter.
However, the company, like others in the home-building sector, reported softer market conditions and a pullback in demand. It trimmed its 2006 earnings outlook and warned that further reductions may be necessary as "market conditions are continually changing."
"The homebuilding industry has slowed, as evidenced by lower new orders and higher cancellations rates," President and Chief Executive Stuart Miller said in a statement. He blamed the pullback in demand to speculative buyers exiting the market and to changes in consumer sentiment toward buying homes.
Back in April, we started to get signs of a slowdown. It is curious that Atlanta made the list of "positive signs" since other data I have heard indicates Atlanta to be the most over-committed city in the US. Meaning that more people there bought homes with mortgages that they cannot afford to pay off than anywhere else. You say Tomato; I say Tomatoe.
Housing Strength Shifts to New Markets
As Real-Estate Boom Slows on the Coasts, Texas and Other Overlooked Areas Gain Heat
April 26, 2006
As home sales cool on the East and West coasts, some cities that missed out on the real-estate boom are becoming the strongest markets.
A look at inventories of unsold homes, prices and employment trends points to generally positive signs in Houston, Dallas and Atlanta -- cities that have seen only modest home-price gains in recent years.
Metropolitan areas whose housing markets look less healthy, at least in the short term, include Boston, Los Angeles, Miami, Minneapolis, New York, Philadelphia and San Francisco. All of them have growing inventories of homes and relatively weak job growth. As a result, houses that a year or two ago might have sold in hours now are languishing on the market for months, and some sellers are cutting prices.
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"We think that we're going to be in a flat holding pattern for the next several years," Mr. Otteau says, though at the top end of the market, there is "an extreme oversupply" of houses. In Spring Lake, N.J., known for expensive homes, there is a three-year supply of homes at the current rate of sales, and Upper Saddle River has a 21-month supply, Mr. Otteau estimates. He blames the state's loss of high-paying jobs in such industries as telecommunications and pharmaceuticals.
The picture is mixed in Phoenix, Las Vegas, San Diego and Washington, D.C. Inventories have surged in all four cities, particularly in Phoenix, as sales have slowed. But job growth is well above the national norm, and that should soften the landing. The Las Vegas market has "normalized," says Linda Rheinberger, president of the Greater Las Vegas Association of Realtors. Prices there are likely to rise 5% to 10% this year after jumping about 49% in 2004 and 14% in 2005, she says.
In Miami, a building boom has more than tripled the inventory in the past year. Even so, population growth should absorb any excess supply within 12 to 18 months, says Ronald A. Shuffield, president of Esslinger-Wooten-Maxwell Realtors, a big real-estate brokerage firm there.
The Detroit area, which missed the boom, is now being mauled by job cuts in the auto industry. "We haven't quite hit the bottom yet," says Dan Elsea, president of brokerage services at Real Estate One, a large brokerage firm in Michigan. For houses in the range of $400,000 to $1 million, he says, prices are down about 10% from a year ago. He calls it a good opportunity for investors.
