This Isn't Their Moment (New York Magazine, Nov. 8th) “The tough thing is, the market went down. A lot of people are offering 10 percent less.” Experts say it’s best to hold onto real estate for a couple of years to avoid paying capital-gains taxes and to weather changing markets like this one. (When the market was sizzling, homeowners could sell in a year and make at least 10 percent. If that year was 1999, it was more like 25 percent.) But if you bought recently and have to sell now, you may be in a position not heard of since the early nineties: You can actually lose money on a New York apartment... But selling prematurely isn't always a problem... One apartment, in Morton Square, went in one day for full asking. “If it’s great and priced right, it’ll sell".
Real Estate Bubble Bursts While Home Sales Fall Across Nation (New York Times, Nov. 7th) Pheonix: "Until last year, Fulton Homes’ developers were able to raise prices on its new homes by $1,000 to $10,000 almost every week.“People were standing in line for lotteries. Now they just don’t show up. Such cancellations often mean forfeiting as much as 5 percent of the price. The reason? The prospective buyers got cold feet or simply couldn’t sell their old home. Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005. Sales cancellations among big builders are running as high as 40 percent, double the rate a year ago. New home sales are down by more than 20 percent from their peak last year. And that reported drop does not take account of the extras builders are throwing in free or at steep discounts to lure buyers, which means that effective prices are even lower. The reversal in fortune is at its starkest here in the West. For-sale signs in some new subdivisions are so common that Janet L. Yellen, the president of the Federal Reserve Bank of San Francisco, recently described them as “the new ghost towns of the West.”
Home Sales, Prices Down In Denver (The Denver Business Journal, Nov. 7th) "Home sales and prices continued to slide in October, according to Denver-based Metrolist. The average price of all single family homes dropped from $283,131 in September to $280,551 in October.
U.S./International Mortgates and Real Estate Lending
Will Mortgage Power Reignite Housing Bubble? (Reuters UK, Nov. 2nd) London: "Mortgage lenders' willingness to let first-time buyers borrow ever-larger multiples of their income may ring alarm bells for those who remember the housing market boom, and subsequent crash, two decades ago. Consumer borrowing and personal insolvencies are already at record highs and interest rates are rising -- hardly an ideal time for people to be mortgaging themselves to the hilt. Lenders, however, are confident they are not exposing themselves or their customers to undue risk. They point out that interest rates globally are more stable and capital markets more developed than in past decades. Abbey, Britain's second largest mortgage lender, said this week it would offer homebuyers up to five times their single or joint salaries -- well above the three to four times advertised by most high street banks."
Macro Impact, and Will a Housing Crash Cause a Recession?
September Consumer Borrowing Falls (The Boston Globe, Nov. 8th) "Consumer borrowing fell in September by the largest amount since the recession of the early 1990s. The Federal Reserve said yesterday that borrowing declined at an annual rate of 0.6 percent in September, compared with a 4.6 percent rate of increase in August. Borrowing fell $1.2 billion in September -- the biggest drop since a $1.78 billion decrease in April 1992. The overall economy has lost momentum due to the housing slump."
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