Existing Home Sales On The Slide
According to an article on MortgageNewsDaily.com, the pace of existing home sales has dropped at a faster rate than it has in 18 years. In other words, the rate of sales fell in March by 8.4 percent. This is the fastest decline in sales since January 1989, and has dropped actual sales numbers to their lowest level since 2004.
Does anyone else here remember the 90's? I owned a home in that time period; prices really bottomed out and stayed low for quite some time. In fact, I bought a condo just as the market was failing in 1991, and I spent most of a decade trying to keep the balance on the mortgage loan lower than my home's falling value. I ended up holding that condo until 2002, when I finally was able to sell it for a paltry $10,000 more than I purchased it for. Once I paid real estate fees and considered the money I'd put into the place for decorating and renovations while I owned it, I probably sold at a loss.
Since the early 2000's, the prices of homes have been booming -- until recently. Like virtually every cycle on earth, there are boom times and there are bust times. While there are good strategies being put in place by lenders and government in order to keep subprime borrowers from losing their homes in the current downturn, it's certainly not clear that the housing market is out of trouble. While stable lenders are taking steps to protect borrowers, there is an ongoing bloodletting in the subprime lending sector. According to the Implode-O-Meter, the number of lenders that have gone bust or otherwise ceased operations as of April 26th is now 63. That number has only been tracked since December 2006. (Heck, I didn't think there were that many lenders in the subprime market!)
As lenders exit the market, they are not able to help those they lended to who are in financial trouble.
I do think that we'll be seeing a deepening of the housing market problems before we see a real turnaround. There may be glimpses of hope -- like this month's new home sales numbers which are up slightly from January and February -- but we also have to put this in context: March sales are up over revised numbers for the first two months of this year, which were actually revised downward from what was originally reported. This is part of the story that often gets lost in "soundbite" reporting: data for the current month is often revised up or down, without a hint of that in the media. The real trend is then lost. Lately, the "good news" has often been based on numbers that were later revised downward.
One has to wonder if the March numbers will be revised downward too.