Latest Bubble Prick?

[Realistbear]

http://money.cnn.com/2006/02/24/real_estat...tions/index.htm

Experts say jump in cancelled orders for new homes is latest sign of how investors inflated the real estate market recently, and how the market is due for a downturn.

NEW YORK (CNNMoney.com) - Home builders are growing concerned about an increasing number of cancelled new home orders, which experts say could be a sign of an underlying weakness in the recent run in home prices.

Specifically, the cancelled orders could be the latest warning sign that buyers who were turning to real estate as an investment, rather than for their own housing needs, are shifting out of real estate. And that could mean that in many hot markets, the air is about to come out of over-inflated real home prices overall.

The worldwide HPC marches on.

[Van]

Thanks RB.

Interesting to note that most of these US reports aren't mentioning IRs. It's a given that Fed rates are going to at least 5% before the end of H1, so there really is no respite for the US at the moment (even accepting that US mortgages are very different to our own).

[billy-g]

So are there any numbers to be had, percentage comparisons compared to sales going through etc?

Come on, thats poor. If a bull posted the opposite, there would a be a scream for hard data, cries of VI spin and so on.

Without hard numbers, its utterly meaningless. With a CNN source tag, that makes it even worse; they are famous for 'any headline as long as it shocks' type reporting.

Edited February 25, 2006 by billy-g

[Realistbear]

So are there any numbers to be had, percentage comparisons compared to sales going through etc?

Come on, thats poor. If a bull posted the opposite, there would a be a scream for hard data, cries of VI spin and so on.

Without hard numbers, its utterly meaningless. With a CNN source tag, that makes it even worse; they are famous for 'any headline as long as it shocks' type reporting.

I am afraid CNN are not exaggerating. My old home town of San Diego is the US bellweather for the upcoming crash. Recent data from reliable market tracker Dataquick revealed a drop in the median price (most reliable guide) of new homes in San Diego in excess of $100,000.00 IN ONE MONTH:

http://www.signonsandiego.com/news/busines...-bn13homes.html

But, in the new-housing category, which included newly built homes as well as apartments converted to condos for sale, there was a $104,000 drop from $539,500 in December to $435,000 last month.

The situation is continuing to deteriorate throughout the state with huge growth in inventories and dissappearing buyers:

http://www.signonsandiego.com/news/busines...orniahomes.html

And here it is direct from the horses' mouth (admitting dropping orders):

http://www.thestreet.com/_tsclsii/stocks/h...s/10268207.html

"Our results to date in fiscal year 2006 reflect these broader market trends," KB Home said. The builder said that in the first two months of the year it has had an increase in order cancellations, as well as fewer new orders.

Government filing by homebuilder confirms dropping orders and cancellations (VIs in the US can't spin the truth--they get sued heavily by shareholders and fined millions by the SEC):

http://sanjose.bizjournals.com/sanjose/sto...tml?jst=b_ln_hl

There you have it, CNN are right on the mark with their news. If anything, they have understated the situation.

Edited February 25, 2006 by Realistbear

[billy-g]

Thanks Realistbear, thats a little more like what I'm talking about. I was in San Diego for 8 months in '97, and even then, one thing that came home about the property situation is that SD has had some rocky rides in the past. Previous experiences ingrained on peoples minds shall we say.

Lovely place though, if I had the money, I'd look to get a holiday home there of some kind.

[Realistbear]

Thanks Realistbear, thats a little more like what I'm talking about. I was in San Diego for 8 months in '97, and even then, one thing that came home about the property situation is that SD has had some rocky rides in the past. Previous experiences ingrained on peoples minds shall we say.

Lovely place though, if I had the money, I'd look to get a holiday home there of some kind.

If the correction continues along the lines it has begun you may be able to afford quite a nice Condo for a bargain price! However, San Diego used to be a great place to live. I was there 1971-74, 87-89, 98-05 and have seen a steady deterioration in quality of life. Too many people, too much traffic, overpriced everything and some real problems down the road with water supply. The Great Crash (1989-96) saw 30% off most properties and we got out at the top in 1989 and almost at the top in 2003. One thing is certain, what goes up always seems to come down.

[billy-g]

Thanks Realist, I'll actually start keeping an eye on that. My big hobby is aviation; I have a PPL, and its so much cheaper to fly in America, especially out in SD, that I'd love it if I could make it financially viable to hold a Condo or something there and use it to get my hours fix twice a year. The wife loves the place as well. Got to be cheaper than the Coronado in the long run as well

I didnt know about the issues you have raised though - that'll be the difference in living someplace, and just being a rose tinted spectacles visitor I guess.

[Realistbear]

Thanks Realist, I'll actually start keeping an eye on that. My big hobby is aviation; I have a PPL, and its so much cheaper to fly in America, especially out in SD, that I'd love it if I could make it financially viable to hold a Condo or something there and use it to get my hours fix twice a year. The wife loves the place as well. Got to be cheaper than the Coronado in the long run as well

I didnt know about the issues you have raised though - that'll be the difference in living someplace, and just being a rose tinted spectacles visitor I guess.

Coronado is a fantastic place and the crowds are kept away by the fact that it is an "Island" and nowhere to park. The beach was rated in the top 3 in the world by a recent TV program as it is huge, has acres of white sand and the old Del Coronado Hotel where they shot the film "Some Like it Hot." Prince Edward stayed there also so it has some old-world charm.

You can buy a decent Condo in the area (Not on Coronado though--probably the highest prices in the area next to La Jolla) for around $350k as the discounts are building and that is cheap compared with the horrible little flats you get in England for the same price.

[billy-g]

Yeah, I've stayed there quite a few times now and loved it every trip. Its one of the few places I like to go where there is enough of the Wifes interests close by so she doesnt get bored as well.

350k for a good Condo is a lot cheaper than the last time I was there! March last year was the last trip, so your spot on, prices have DEFINATELY dipped.