Check Your Cliche at the Door...
"For the past five years, the housing bulls have been trotting out one rational-sounding argument after another to explain why the boom made perfect economic sense."
"Forget about a crash, they assured homeowners."
"Expect a "soft landing" where your three-bedroom colonial not only holds onto its huge price gains, but keeps appreciating at a "normal," "sustainable" rate of 6 percent or so into the sunset."
"It's time to examine the clichés that the "experts" - chiefly analysts and economists from realtors and mortgage associations - used to convince Americans that what they're seeing now could never happen."
"A year ago, the reigning cliché was that real estate had entered a new world of "no supply." Now, a record 3.85 million homes are up for sale, and buyers are getting scarce."
"No, the world hasn't changed. And the myths haven't changed either. Next time, don't believe them."
‘Already, the housing slowdown has begun damaging the job market. Builders, mortgage lenders and real estate agencies have stopped adding to payrolls. Defined broadly, the real estate sector has accounted for 44 percent of jobs created since 2000 and employs more than one in 10 American workers, according to Moody’s Economy.com.’
"Government index shows the largest quarter-to-quarter fall off in home price increases in three decades."
"The Office of Federal Housing Enterprise Oversight (OFHEO), said it was the slowest quarterly increase since the fourth quarter of 1999 and was the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975."
"OFHEO's numbers are generally regarded as the most accurate gauge of housing prices. Instead of measuring the average sale prices of homes, it compares repeat sale prices of the same single family homes."
"Even so, according to Jonathan Miller of Miller Samuel, an appraiser in New York, the slowdown may be even more pronounced than the numbers are showing. "The index may not reflect what's really happening out there," he said."
"Miller thinks that many sellers are holding out for unrealistically high asking prices, and the buyers actually purchasing homes are only the ones willing to pay those higher prices. "That's why there's been such a drop-off in volume," says Miller."
"To close deals with the on-the-fence or reluctant buyers, sellers will have to drop their prices and only then will the index reflect the actual market. The effect could snowball if sellers get a bit panicky and try to unload their properties quickly, before prices erode further."
"These data are a strong indication that the housing market is cooling in a very significant way," said James Lockhart, OFHEO director. "Indeed, the deceleration appears in almost every region of the country." Read the full government report.
"Gains in home values have been a major contributor to U.S. economic growth in the past four years. Consumers who feel wealthier spend more and save less. The personal savings rate has been negative for 16 consecutive months."
"Many consumers have also been able to borrow against their home's rising value, pouring hundreds of billions of dollars into the economy. Once home prices stop rising, however, it's more difficult to take cash out with a refinanced mortgage. "
'"Housing has played a much larger role in this expansion and will therefore play a much larger role in the slowdown," said Paul Kasriel, top economist for Northern Trust."