Dow Jones has some informative articles about housing this week. First, today in
MarketWatch we find that
U.S. July existing home sales plunge to two-year low. An annualized rate of 6.33 million is not a horrible number, but it is notably lower than expected. Inventory continues to increase, giving more than a 7-month inventory (highest in over a decade). These are not good numbers.
Meanwhile, we find that Refinancings rise to five-month high. Good news? Maybe not. Yes, long-term rates have dropped to the lowest in five months, but they are dropping in the face of an effort by the Fed to get interest rates higher. Nominal 30-year mortgages are back below 6.00%. 10- and 30-year treasuries are stubbornly below 5.00%. That is good news for borrowers, if they can afford to borrow, but as we will see that may not be the case.
Yesterday, Marketwatch was telling us that
Builders sour on condos, love apartments Affordablity falls to record low in second quarter. Developers are switching back to apartments because there is such a large overhang of condos, yet afforability has decreased, even in this soft market. How bad is afforability? It depends on where you live. Most of the Great Lakes states are fairly affordable, but:
For the seventh consecutive quarter, Los Angeles was the least affordable big city, with just under 2% of the homes affordable for a family earning the metro median income of $56,200. The median sales price in LA was $521,000.
All of the least affordable cities -- except New York City -- were in California. Other unaffordable California cities including Anaheim, Salinas, Merced, Modesto, San Diego, Santa Cruz and Santa Barbara.
Finally, today's The Wall Street Journal has a front page article (paid subscription) Housing Slump Proves Painful For Some Owners and Builders. This isn't just a soft market. Prices in many areas are decreasing. Luckily for most sellers, they aren't as soft as the example in the article. A seller, expecting to sell her house for about $1.1 million settled for less than half of that in Herndon, VA. Yes, she was overly optimistic in the first place and one example does not constitute data, but the general trend is poor for the housing market. Prices may be dropping depending on location, completed sales are decreasing, inventory is increasing, and the stock market has been very hard on companies in the housing industry. It should be an interesting ride. I hope you don't have to sell your house any time soon.