For sale: 4.58 million homes

News item from the LATimes: "The supply of unsold U.S. homes ballooned to an 18-year high in August as demand for existing homes fell to a five-year low, according to a report by the National Assn. of Realtors. The Washington-based trade group blamed the onset of the global credit crisis last month for the drop in sales.

"The unusual disruptions in the mortgage market resulted in a fairly high number of postponed or canceled sales," said Lawrence Yun, the group's chief economist.

NAR President Pat V. Combs: “The abundant choice of homes is permitting buyers to better negotiate price and terms.  There are good opportunities in the market now, especially for first-time buyers.”

The total inventory of unsold existing homes -- 4.58 million -- represents a 10-month supply at existing sales rates, and does not include unsold new homes.

Thoughts? Comments? Email story tips to lalandblog@yahoo.com.
Photo Credit: Reuters

Comments

[Jax]

"NAR President Pat V. Combs: “The abundant choice of homes is permitting buyers to better negotiate price and terms. There are good opportunities in the market now, especially for first-time buyers.”

The NAR would cheerlead someone beating a defenseless, 90 year old woman if they could make a commission from it. Any idiot can see that if you buy a home within the next two years (at the earliest), you will probably be paying way too much. Prices are going to continue to drop & drop & drop and there's really nothing that the government or anyone else can do to stop the avalanche of falling prices.
This should be a lesson to anyone who believes anything that most realtors will tell them.

[jb]

The "credit crunch" is only a small portion of the problem. The much larger issue is that the cat is out of the bag - no one will buy these insanely overpriced homes that have been pumped up by greed and fraud.

[Willie]

...and you know what is the worst part of the whole story? Is that houses will again be overpriced and unaffordable few years down road.

Been through at least 2 prior bubbles before this one. However, we have to recognize that this one may take a little longer to resolve itself.

[Reality]

Yes there have been bubbles before, in the stock market and in real estate, but they have only lasted a few years before things corrected and prices returned to normal (actual value), and the bigger and longer the bubble, the bigger and longer the correction.

[mark]

“The abundant choice of homes is permitting buyers to better negotiate price and terms. There are good opportunities in the market now, especially for first-time buyers.”

to better negotiate yourself getting screwed on a deal that will see your investment vaporize in the next 2 years?The panic hasnt even been touched yet.We are at the very early stages of a bear market in real estate.It will be very ugly.I see most valley homes plunging back to 200,000$ range.Why somebody would pay more than 250k to live in the hot and hhighly polluted valley is beyond me.
There is no more credit and this mania was created solely by fraudulent credit that would make any ponzi master proud.Expect a brutal market and 60%-70% price reduction.

[Charles Wilson]

Los Angeles Times
Feb. 8, 2008

Commenting on the asteroid that struck Southern California last week, killing 13 million and leaving 6 million homeless families, National Association of Realtor president Pat V. Combs urged a frightened public to look on the bright side.

"In one stroke, that hot rock eliminated thee-quarters of a million vacant homes and created enough demand to fill every unsold house in America," Combs said. "We appeal for the government to extend emergency interest-only, zero-down loans to anyone who can walk, so those homes can be filled and we can get on with business."

Combs denied that the NAR's proposal was ghoulish and self-serving. "Home ownership is the American dream," he said, adding, "Kids! It's perfect for you!"

[Matt]

NAR President Pat V. Combs-

This guy needs to be working at McDonalds, he would be great at selling Happy Meals!!!!!

Matt

[Michael Snyder]

Where is Mr. Combs going to come up with these hoards of first time buyers with at least $40,000 in their pocket? They're probably in line right behind the underwriters chomping at the bit for their chance to invest in California real estate. And this clown drug tests his employees... With his economic prospective he should apply for a position in the current presidential administration where reality is simply inconvenient and therefore ignored.

[Kathryn]

It'd be a great time for buyers if sellers weren't dillusional and would be willing to negotate.

[investorguy]

Tag sale!

[Ed]

"In one stroke, that hot rock eliminated thee-quarters of a million vacant homes and created enough demand to fill every unsold house in America," Combs said. .............. "Home ownership is the American dream," he said, adding, "Kids! It's perfect for you!"

"And oh yes," Mr. Combs was quick to add. "Regular sales commissions are now 12%, in line with tougher licensing standards and our ever-expanding sales efforts."

[Gina Isaac]

Foolish people...First of all, cities like Los Angeles & New York will not be hit the way you are hoping, for the mere fact that they are megalopolises. People in the city have money, and don't care as much as the poor folk, bottom line.

It's a Catch 22 - You can buy at a higher price with low interest rates, or you can wait, and buy at a lower price with a higher interest rate. Hhhmmm, which is the better choice??? Think about, do the math...

[Dr. JwB]

that's Gina Issac, Realtor (in case you couldn't guess).

Go ahead Gina, do the math for us.

[Mary G.]

People in the city have money, and don't care as much as the poor folk? Aren't cities full of poor folk? Oh, of course they don't buy homes. Including those poor folk like policemen, and firefighters, and teachers, etc. If only 15% of the people earn enough to afford a home in an area (such as LA and the SF Bay Area), then when a huge amount of houses start appearing on the market and aren't moving, the buyers pool might have to expand to more than 15%. The only way that happens is if the prices go down, no?

[D]

Mark wrote:
Why somebody would pay more than 250k to live in the hot and hhighly polluted valley is beyond me.

Mark, you are an elitist snob. As if there are no nice areas or people in the valley. As if the beaches in California aren't some of the most polluted in America.
Why I read this blog when it's filled with people like you I have no idea.

[Gina Isaac]

Those that are savvy know that the real estate market is cyclical, as is everything else. What many forget is that buying a home is a long term investment, NOT typically short term. Again the market is cyclical. Like any investment, timing is key. Many also forget that there are tax benefits to owning a home. Rentals are almost as expensive as a home mortgage. Why throw away your money if you can AFFORD a home to call your own??? Again the market is cyclical.

Doesn't matter much to me, either way, there will be business to be had, and many great opportunities ahead. My advice to the "home-buying haters" is stop "HATING" on those who are able to buy home. Let people live their lives the way they see fit and keep your negativity to yourself.

Cheers.

[waitingitout]

Gina, Gina, Gina.

So the people who save their money waiting for home prices to fall into an affordable range are "foolish." And what about the folks facing foreclosure and short-sells who took your advice and bought over their heads because you told them their equity would only increase?

You see, Gina, this is why people like me don't trust people like you.

People in LA had money during the last crash, and the one before that, and the one before that too. Didn't keep prices from falling 30+% in real terms then, and it won't now.

[Jax]

Uh, Gina..............So is Miami and just recently, some condos have already sold for only 50% of what the identical units sold for six months ago. If you believe in your statement, please go out today and buy several of these ridiculously, over-priced properties in SoCal and let us know every six months how much money you have lost.

[Willie]

Second the motion from Dr. JwB. Please Gina do the math for us since your knowledge is so vast and your foresight enlightening!

[RA]

Gina- Rentals ARE NOT almost as expensive as a home mortgage, and that doesn't even consider taxes and insurance. I pay $1800 a month for a nice 2 bed 2 bath 1300 sq 2 story apartment in Pasadena in a good neighborhood near Cal Tech. If you look in my neighborhood on Zillow, youll probably pay $600k for a similar townhome or condo. No lender is going to give out an ARM or IO right now, so youd have to go fixed. A 30yr fixed jumbo is at about 6.5-7.0%. That would mean a monthly payment of about $3800. More than twice what I pay in rent. You do the math. Oh wait, you think its a good idea to pay a dollar to get back 30 cents.

[campechano]

Ay ay ay....Gina.....What is going to take for people like you to see what's happened here. You must be blind. LA, OC and San Diego will see readjustments in the 40% range more or less depending on the neighborhood, etc.
Excellent, Excellent observation by RA. That is precisely the point right now. Things are not going to et better for the real estate market ntil rent, salaries and the price of homes all come back into line. Anybody who took math in high school can tell you that.

[Max]

"It's a Catch 22 - You can buy at a higher price with low interest rates, or you can wait, and buy at a lower price with a higher interest rate. Hhhmmm, which is the better choice??? Think about, do the math..."

Boy, Gina, that one is just too easy. If you buy at a lower price with a higher interest rate, you can always refinance later at lower rates. If you buy at a higher price with low interest rates, however, you can NEVER renegotiate price. Fool.

[Max]

Gina says: "Again the market is cyclical. Like any investment, timing is key."

You are correct. Buying now would be POOR timing, because you are buying at the peak of the real estate market's current cycle.

"What many forget is that buying a home is a long term investment, NOT typically short term."

But that's no excuse to buy an asset while its price is falling. Using that same logic, it would have been a good idea to buy Yahoo and Amazon.com stock in March of 2000, as the bubble had begun to burst (much as this bubble has just begun to burst) at their peak, because over the long term, they will EVENTUALLY become a good investment again. Like the old Wall Street saying goes, "Never catch a falling knife."

[Joe]

What do you expect a starving r.e. salesperson to say? Gina, I hear that Yugo dealership calling you. Your old job is waiting!

[lbids]

to pile on Gina, buying at the lower price/higher rates also 1) gives you a lower property tax base forever and 2) since you are paying more interest, a higher potential tax deduction.
An Gina seems 100% sure interest rates will go higher as home prices fall. I guess she knows something we all don't.

[Jeremy (jemarqu)]

In the last few months interest rates haven't changed much. Unfortunately for some people the prices have.

[Annonymous For This Post Only]

While scrolling down reading these posts, I was first typically annoyed by the people who mask clapping their hands gleefully with a cynical I-told-you-so/prices will crash attitude. I'm usually on the more conservative side about prices. This does not mean I don't think a price correction is in order. It only means I have empathy for the people who are losing their savings and more because they bought a house at the wrong time.

When I read Gina's comment, my jaw dropped. Her reasoning is downright ridiculous. Of course it's wiser to buy lower ... even when high interest rates might swallow up any monthly overhead savings. Buying high with a low "fixed" interest rate is a short walk to possible disaster.

My property is safe because I have rentals that more than pay monthly overhead costs. I have owned my property for a little over 20 years too. But I'm not breathing a sigh of relief. I see what's happening in my neighborhood. Houses have been sitting empty for months. Sellers -- all nice, hard working professionals -- who bought elsewhere now are in serious trouble. They have lowered prices at least 25% without a nibble. They're really stuck because -- as many here correctly state -- prices will keep falling. Who in their right mind would buy right now?

Gina, now is the time for you to build a potential client base by offering logical advice. Los Angeles is a great metropolis that will rebound eventually. But I personally would not touch any property that is not at least 50% of the early 2006 price. It's that bad. I'm unhappy with the reality. But you need to do a reality check.

[Problemwithcaring]

To REALLY pile on Gina (who apparently has no problem piling it on some hapless buyer) she is trying to sell a 97 year-old craftsman (that hasn't been on the market in 30 years) for $34 per square ft MORE than the comps in the neighborhood. In the current market! (http://losangeles.craigslist.org/lac/rfs/426886178.html)

This in light of the fact that the last house she sold, was at 100K off the original listing price.

Her clients LOVE how she gives it to 'em straight!

[Martin]

Poor Gina .... you got some comeuppance. I don't like it when people attack others' opinions here. But you take the prize for the biggest mis-statement I've ever read here.