Monday, February 25, 2008

Existing Home Sales Hit 9-Year LowMonday
Martin Crutsinger, AP Economics Writer

WASHINGTON (AP) -- Sales of existing homes fell to the lowest level in nearly a decade in January while the median price for a home dropped for the fifth straight month. The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by four-tenths of one percent last month to a seasonally adjusted annual rate of 4.89 million units. That was the slowest sales pace on record going back to 1999.

The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago. It was the fifth straight monthly price decline and underscored the continued pressure facing housing, which is struggling to emerge from its worst slump in a quarter-century.

Ha ha. Struggling to emerge? Try again Martin. This is just the begining. It will be struggling to emerge about a year, maybe two from now. This "slumping" market is not even close to emerging from anything. There was a 5-6 year bubble the likes of which have never been seen before - and may not be seen for generations. A massive bubble like that doesn't just correct overnight. It takes years and years. You want proof. Just look at NASDAQ in 2008 compared to 2000. Not even 50% of 2000 value after 8 years. And my comparison the housing bubble dwarfs the NASDAQ bubble in dollar terms.


Investors, while still wary of recession, grew hopeful after the National Association of Realtors reported existing homes fell less than forecast. Some experts interpreted this as a housing market on the verge of bottoming out with a rebound expected to start toward the end of this year.

May I ask who the hell these investors are? So the NAR comes out with the worst numbers in 9 years. And this is even worse than it sounds. The US population has grown by about 10% in those 9 years. If the number of homes sold is at 1998 levels, it is actually far lower on a per capita basis. But it wasn't as bad they thought so all is well and the bottom is here. Just like the bottom was here in Q4 2006, and Q1 2007 and Q2 2007 and Q3 2007. Keep hoping, praying and dreaming everyone.

Here is another piece of the puzzle the MSM and investors miss out on. The median price of a house is down 4.6% from last year. That is to say 4.6% in nominal dollars. Inflation - and by this I mean real inflation not the bullshit inflation number we are fed by the Fed - is at least 5%. So the real (real as in adjusted for inflation not as in not fake) price of a median home is down in the 10% range over the past year. Again not that anyone in the MSM would care to notice.

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