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Article from this month’s Economist mag. There are some similarities with Spain. One of the comments at The Economist website made the interesting point that higher house prices are good for older people who own property and bad for younger people who don’t, yet all the money the government has borrowed to throw at the housing market to support prices will have to be paid back one day by those very same younger generations.
Housing sales
Grinding to a halt
Loss of a credit collapses the marketAug 26th 2010 | Washington, dc
THERE was always some concern that the Obama administration’s attempts to prop up the housing market with a generous housing-tax credit could end badly. Opponents of the policy—worth up to $8,000 for first-time buyers—argued that it would merely move sales around, from after the deadline to before, and could produce a slump when the deadline passed. Such fears helped clear the way for an extension of the programme from its first 2009 deadline to April of this year.
Despite some effort, Congress in the end decided against a second extension. With the support of the credit gone, a period of housing-market weakness was inevitable, but the actual decline has been distressingly bad.
On August 24th the National Association of Realtors reported that sales of existing houses for the month of July—the first in which most sales were started after the deadline—fell 27% from the previous month. Single-family houses sold at the slowest rate since 1995.
Those grim figures may not be a one-month fluke. New home sales are counted when contracts are signed, which means that July was the third month of data after the credit had expired. It was also the worst on record (the previous low came in 1981). Sales of new houses were down 32% year-on-year and down 80% from July 2005.
These rock-bottom sales figures indicate that housing markets in some cities have all but ground to a halt—despite extraordinarily low mortgage-interest rates. They may also presage a new period of declining prices. Falling prices could drive more homeowners into foreclosure, which is the last thing most markets need. At current low sales rates, it may take a decade to clear the backlog of houses owned by the banks.
If there is a bright side, it is that these numbers may force policymakers to reconsider a housing-policy approach that has clearly come up short. In the meantime, any hope that housing construction and employment may begin contributing to growth has been soundly squashed.
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It’s an odd state of affairs in the US. There are so many quality new homes around, often large, well equipped etc but just no buyers and we’d buy there if we could.
I wonder whether their administration will relax the rules for other’s including Brits etc who can visibly show means that they can support themselves whilst having private medical insurance.
It could help their sales a bit, I would think a couple of hundred thousand Brits might consider living there then, and a lot more from other acceptable countries.
The UK needs homes like those too, ship-em-over 😉
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Saw this in a Florida newspaper
Average mortgage rates down to 4.67%
Inventory rose slightly to 16,563
New listings , 4388
New contracts, consistant with previous months , 3,793
Homes pending down on previous month 9133, but higher than 2009, 7,713
Sales closed, down on last month, but higher than 2009.
Average days on the market, 85.
House sales up 39.54% over this time in 2009.
Sounds a lot better than spanish figures!
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Interestingly, this article claims that despite the market slowdown in the US, the American property websites have had a surge of interest:
http://www.clickz.com/clickz/news/1730001/real-estate-sites-enjoy-benefits-market-slowdown
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hmmm! I think we are just passing time until someone comes on who is interested in the spanish property market 😆 Or maybe it is because whatever happens in the USA reflects on the European market. News today is that the UK house prices are down for the second month. Suppose that means that there is even less equity for people from the UK to buy in Spain.
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Meanwhile, returning to topic…. 🙄
Have just read an interesting fact:
The US has 2.3 million fewer people employed than they had in 2001, yet the population has increased by 26 million.
That is one heck of a whoopsy-inbalance. Where on earth does their housing market go from here, unless the Government buys all the unsolds and offers them as council housing to the increasing (and unemployed) population.
The UK Government has said that 100,000 houses a year need to be built just to accommodate the influx of migrants, let alone our own existing families in need. With UK’s unemployment increasing and first-time buyers being scarce on the ground (shaking the apple tree up top) maybe we’re like a micro version of the US?
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