Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Saturday, January 27, 2007

Cross Your Fingers & Toes, Click Your Heels Too...


WASHINGTON - New home sales fell in 2006 by the largest amount in 16 years.

"The housing bust is occurring after a boom in which sales of both new and existing homes set records for five consecutive years. The lowest mortgage rates in four decades powered a surge in sales that was bolstered by investors making purchases in hopes of turning around and reselling the properties for quick profits."

"Analysts attributed the big declines in 2006 to a cooling of that speculative boom. That reversal has given the housing industry its toughest downturn since the recession of 1990."

"The slowdown trimmed 1.2 percentage points off overall economic growth in the July-September quarter. Analysts are looking for an equally severe hit in the final three months of the year, with housing expected to be a continuing drag in the first half of 2007."

"David Seiders, chief economist of the National Association of Home Builders, said he looked for home prices to continue to be depressed in 2007 as builders scramble to reduce near-record levels of unsold homes."

"The cutback in building has led to thousands of job layoffs in the construction industry.The report on new homes followed a report Thursday that sales of existing homes dropped by 8.4 percent last year. That's the biggest decline in sales of previously owned homes since 1989."

David Lereah, chief economist for the Realtors, said that 40 percent of home sales in 2005, the peak of the housing boom, represented purchases by investors and people buying vacation homes. "With fingers and toes crossed, it appears that we have hit bottom in the existing home market." said David Lereah.

Atta boy... go ahead and wish really really hard and click your heels three times and repeat, "Real estate always goes up. Real estate always goes up. Real estate always goes up."

You might want to get yourself some ruby slippers too. They won't help anything, but they might make you feel better.

"The boom drove prices up at double-digit rates and caused a stampede of investors = (speculators) into the market who purchased housing hoping to sell = (flip) the homes for big profits."

"The number of default notices lenders sent to Sonoma County homeowners more than doubled in the fourth quarter of 2006, compared with the same period in 2005, and was the highest in nearly a decade, according to DataQuick Information Systems."

"Interest-only loans and mortgages with minimum payment options proliferated in Sonoma County as buyers looked for ways to reduce monthly payments to purchase homes as prices soared."

1 Comments:

At 1/28/2007 08:47:00 AM , Anonymous tom stone said...

when i read the comment about David Lereah in ruby slippers my mind added spandex hot pants and one of those red white and blue halter tops that are all glittery...saw something like that in sf recently...but the person wearing it looked a lot happier than David Lereah.

 

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