Has the U.S. Housing Market Peaked?
Thursday, Nov. 17, 2005 5:07 p.m. EST
The five-year boom in the U.S. housing market has peaked and prices are set for a decline, according to the National Association of Realtors’ chief economist David Lereah.
Existing home sales actually set another record in the third quarter of 2005, and prices rose nearly 15 percent. But Lereah told USA Today: "We’re fairly confident that third-quarter home sales will prove to be the high point of the five-year housing boom.”
Said Marshall Prentice, president of DataQuick Information Services, which recently issued a report on the housing "bubble”: "The big question is still whether the real estate market will end this cycle with a crash or with a soft landing.”
There have already been signs that the red-hot housing market has begun to cool – as predicted by NewsMax – as mortgage rates steadily rise:
# Home sales in Los Angeles’ San Fernando Valley plunged at an annualized rate of 16.1 percent in October, to their lowest level for that month in five years, the Daily News of Los Angeles reported.
# In 28 of 35 ZIP codes tracked by the Van Nuys, Calif.-based Southland Regional Association of Realtors, listings averaged between 61 and 120 days on the market, while in recent years many homes were being sold within days.
# Southern California as a whole saw a 10 percent drop in home sales in October compared to the previous month, according to DataQuick.
# In six of the 147 metropolitan areas studied by the Realtors’ association, prices actually dropped in the third quarter.
# The Commerce Department recently reported that a record 493,000 new dwellings went unsold in September.
# In Arizona, it now takes 35 days to sell a home, compared to just one week in May, NewsMax reported in early November. In Phoenix, the inventory of homes for sale has climbed to 17,000 from 5,400 three months ago.
# Home construction in October dropped by the largest amount in seven months and building permits posted their biggest drop in six years.
# With buyers becoming increasingly selective, and sellers asking unrealistic prices, the result has been a "standoff,” according to a front-page story in the Wall Street Journal, "causing the number of sales to drop – a classic ending to a period of unusually rapid house-price increases.”
# The Journal also reported: "Most experts agree that this is certainly the end of the ‘boom phase’ – that five-year period during which the average home price spiked 50 percent, doubling the value of so many homes.”
# Money magazine is warning investors not to buy property they intend to "flip,” pointing out that the inventory of unsold properties is increasing.
# The man Fortune magazine says is "the best real estate investor on the planet today," Tom Barrack, said he’s getting out of the U.S. real estate market in the belief that the "bubble” will soon burst.
Said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.: "If you talk to people who follow the housing market, we have passed the peak.”