The Commerce Department reported that new-home sales rose 2.8 percent in July. In the West sales went up by 22.4 percent.
Before you believe the pundits (who, in 2005 ,repeatedly said there was no housing bubble) touting this as a possible bottom for our housing bust, consider these facts about this report:
#1. This is just about new homes!
#2. The vast majority are offering huge buyer incentives and price reductions to move inventory!
#3. The increase was over June 2007. Sales are down 10.2% compared with July 2006!
#4. The data used was before the severe credit squeeze forced mortgage lenders to tighten qualifying standards and make nonconforming mortgages, including jumbo mortgages, harder to obtain.
#5. Usually the government makes large revisions to this data. Plus, the standard error of 12% is so high, that the government cannot be sure in most months whether new home sales rose or fell.
[tags]housing market,new home sales,real estate bubble,housing bubble[/tags] San Diego home sales
Well, with lower prices, and thousands in buyer incentives, sure sales will be up slightly. But, the down-trend is still in place. Be sure to put your seat belt on in the coming months.
San Diego Realtors
No one put a gun to Bear Stearn’s collective head and made them spread risk ineffectively and invest in sketchy sub-prime mortgage securities. They did it all by themselves. Yet here we see a government-backed takeover to shore up confidence in a financial system that seems unable to take care of itself. Laissez-faire? Quite the opposite, it appears. What kind of message does this send to other financial institutions? Can they now expect similar access to the “discount window” that had been reserved for institutions that work with taxpayers, not investors?
Kelly
California Laser Eye Surgery
Measuring the percentage of total mortgages in foreclosure does not tell the whole story. Late payments on credit cards, revolving charge accounts and automobile loans are worrying the Fed also. And the number of mortgages in foreclosure today also does not speak to the number that are expected to follow.
Kristen
San Diego Cosmetic Surgery
Instead of giving a bunch of money to different levels of government, why not directly incentivize investors to pick up those houses and get them rehabilitated and back on the market? We all know that local and state governments are not the most efficient handlers of these situations. If they put stuff out for bids, the crisis will be over before they are able to move. If they don’t, they will send work to their friends… regardless of their ability to efficiently do the work.
Heather
San Diego County Medical Research