Thursday, June 15, 2006
Florida real estate & National - a Strong Housing Outlook
The following is an interesting article by Van Eck-Tillman Advisories, Inc.
As real estate owners, we focus on fact and not hype...(FYI Adrian Van Eck has not been wrong in 32 years)
GET READY FOR THE ALL-CLEAR SIGNAL IN HOUSING FROM ADRIAN VAN ECK!
He says most investors are real estate investors without thinking about it, because they own one or more homes.
When they do think about their holdings they have reason to be concerned. An army of self-anointed “experts” on financial TV broadcast stations now stare out at them and warn them that a horrible once-in-every-generation collapse in real estate and banking is rushing toward us, driven they claim by high interest rates.
Actually, mortgage rates are in a region where many housing booms traditionally begin. And this may come as a surprise to you, but A NEW BOOM IN HOUSING AND REAL ESTATE IS PRECISELY WHAT ADRIAN SEES COMING.
And before you protest that this is not what the men and women in the financial media are telling you, think on this fact: Adrian Van Eck has a personal history in this field going back more than 40 years. E
ight of those years were filled with meaningful contact with real estate developers, builders, Realtors and mortgage lenders. And the last 32 years have seen him develop a reputation as an editor - without equal for forecasting the future in both banking and real estate. This solid record of seeing ahead grows out of his incredible insight into the actions and intentions of The Federal Reserve System.
Read on
*******
Adrian Van Eck's Mortgage and Property HotlineFor: Thursday, June 1, 2006 THE NEWEST DATA FROM REALTORS - AN 11.7% DECLINE IN PENDING HOME SALES - IS CONSISTENT WITH MY VIEW THAT THE HOUSING MARKET IS STILL REACTING TO AN ENORMOUS NEGATIVE HYPE IN THE MEDIA.
I THINK MANY BUYERS HAVE MOVED TO THE SIDELINES WAITING FOR A COLLAPSE IN PRICES - A COLLAPSE THAT SIMPLY IS NOT IN THE CARDS.
A LOT OF THESE PEOPLE ARE GOING TO BE CAUGHT BY SURPRISE WHEN THEY DISCOVER THAT THE HOUSING TRAIN IS STILL IN MOTION AND WHEN THEY RUN TO JUMP ABOARD THEY WILL HAVE TO PAY MORE THAN TODAY'S PRICES! EVERYONE I TALK TO TELLS ME THAT “THEY HAVE HEARD” HOME PRICES ARE COMING DOWN SHARPLY RIGHT NOW.
WELL, THERE HAVE BEEN SOME CORRECTIONS IN A FEW OVERPRICED MARKETS, NOTABLY THE SAN FRANCISCO AREA. BUT FOR THE MOST PART, THE SO-CALLED PRICE DECLINES BEING RUMORED IN COCKTAIL PARTY AND BACKYARD COOKOUT GOSSIP AROUND THE NATION ARE NOT BACKED BY STATISTICS READILY AVAILABLE.
I am convinced that what is behind the gossip is the fact that many would-be sellers had posted their homes at greatly inflated prices earlier in the year. They had heard of prices going up at a 10% to 20% annual rate in a few isolated overheated areas around the nation and had convinced themselves that their house was worth maybe 20% above what they had been quoted by a Realtor. After their homes sat on the market for months, neglected by homebuyers, they have agreed to mark their price down to market levels.
That accounts for some ads in the newspapers with small headlines announcing “reduced 20%”. But a reduction in asking price does not constitute a true cut in home prices - even though that is the way many people mistakenly look at it. THE LATEST COMMERCE DEPARTMENT DATA SHOWS THE MEDIAN PRICE OF A NEW HOME ROSE TO $238,500.
THAT WAS A GAIN OF 2.8% FROM MARCH AND AN INCREASE OF 0.9% FROM A YEAR EARLIER. That sounds to me like a bull’s eye for the Federal Reserve. Fed Chairman Dr. Ben Bernanke is under increasingly vicious assault on Wall Street for “not being another Alan Greenspan.”
(THE BOND-MARKET-DRIVEN SPOKESMEN ON WALL STREET WANT HOME PRICES TO COLLAPSE, KNOCKING DOWN INTEREST RATES AND PUSHING UP BOND PRICES. GREENSPAN GAVE THEM THIS SWEET MOMENT TWICE AND THEY WANT IT AGAIN.) But Dr. Bernanke told Congress just days ago that he and the Fed watch housing closely and are satisfied that it is in the process of forming a soft landing. (That is the Fed's goal, he said.)
A 0.9% increase in median New Home Prices is a soft landing from the ridiculous levels of price hikes during the two previous years.
From time to time I mention that the historic upward trend for home prices runs consistently at 5% per year. This average has persisted for decades, through war, peace, booms and recessions. It does not mean that prices follow the trend in lockstep. Sometimes they go above trend and have to come back down to the line. Other times they fall below trend and have to race to catch up.
(That is what happened early in this decade.) Some observers then decide that housing will continue to go up in price at such an accelerated rate. Others look at the situation with short-term blinders on and proclaim a bubble has formed and it must be popped, with home prices falling sharply. Both groups are wrong.
This is just a normal herky-jerky movement of home prices. They are driven in the end by the availability of money and the rising income levels of buyers. I told you a while ago that England was running ahead of us in its housing cycle. They had a period of shocking price gains, followed by a slowdown in buying activity. Recently, sales and prices turned up again, with the most-recent home price report up 4.9% in one year.
Here is the way Stanley Read of Business Week writes about what he calls a new English real estate boomlet: “Americans who lie awake at night worrying that the prices of their homes will fall off a wall like Humpty Dumpty can take comfort in the experience of Londoners. After house prices in the British capital racked up double-digit gains seven years in a row through 2003, forecasters predicted a nasty snapback.
So far it has not happened.” “In fact, there are signs prices are beginning to resume their upward climb. Sure, last year London's real estate market saw a sharp slowdown. Buyers, no doubt influenced by all the talk of a crash, kept their powder dry.
But that only caused demand to build up, and now the spark is back. First quarter sales grew 41% from a year ago. Instead of seeing houses languishing on the market, real estate sales agents say they can't find enough houses to sell.” (End quote). THE BANK OF ENGLAND TOOK STEPS TO STOP THE HOUSING DECLINE AND TURN SALES BACK UP. THE FEDERAL RESERVE WILL DO THE SAME HERE IF IT SHOULD BE NECESSARY. More next week. Adrian Van Eck. Next hotline updated no later than 3:00 P.M. Eastern on Thursday, June 8, 2006
As real estate owners, we focus on fact and not hype...(FYI Adrian Van Eck has not been wrong in 32 years)
GET READY FOR THE ALL-CLEAR SIGNAL IN HOUSING FROM ADRIAN VAN ECK!
He says most investors are real estate investors without thinking about it, because they own one or more homes.
When they do think about their holdings they have reason to be concerned. An army of self-anointed “experts” on financial TV broadcast stations now stare out at them and warn them that a horrible once-in-every-generation collapse in real estate and banking is rushing toward us, driven they claim by high interest rates.
Actually, mortgage rates are in a region where many housing booms traditionally begin. And this may come as a surprise to you, but A NEW BOOM IN HOUSING AND REAL ESTATE IS PRECISELY WHAT ADRIAN SEES COMING.
And before you protest that this is not what the men and women in the financial media are telling you, think on this fact: Adrian Van Eck has a personal history in this field going back more than 40 years. E
ight of those years were filled with meaningful contact with real estate developers, builders, Realtors and mortgage lenders. And the last 32 years have seen him develop a reputation as an editor - without equal for forecasting the future in both banking and real estate. This solid record of seeing ahead grows out of his incredible insight into the actions and intentions of The Federal Reserve System.
Read on
*******
Adrian Van Eck's Mortgage and Property HotlineFor: Thursday, June 1, 2006 THE NEWEST DATA FROM REALTORS - AN 11.7% DECLINE IN PENDING HOME SALES - IS CONSISTENT WITH MY VIEW THAT THE HOUSING MARKET IS STILL REACTING TO AN ENORMOUS NEGATIVE HYPE IN THE MEDIA.
I THINK MANY BUYERS HAVE MOVED TO THE SIDELINES WAITING FOR A COLLAPSE IN PRICES - A COLLAPSE THAT SIMPLY IS NOT IN THE CARDS.
A LOT OF THESE PEOPLE ARE GOING TO BE CAUGHT BY SURPRISE WHEN THEY DISCOVER THAT THE HOUSING TRAIN IS STILL IN MOTION AND WHEN THEY RUN TO JUMP ABOARD THEY WILL HAVE TO PAY MORE THAN TODAY'S PRICES! EVERYONE I TALK TO TELLS ME THAT “THEY HAVE HEARD” HOME PRICES ARE COMING DOWN SHARPLY RIGHT NOW.
WELL, THERE HAVE BEEN SOME CORRECTIONS IN A FEW OVERPRICED MARKETS, NOTABLY THE SAN FRANCISCO AREA. BUT FOR THE MOST PART, THE SO-CALLED PRICE DECLINES BEING RUMORED IN COCKTAIL PARTY AND BACKYARD COOKOUT GOSSIP AROUND THE NATION ARE NOT BACKED BY STATISTICS READILY AVAILABLE.
I am convinced that what is behind the gossip is the fact that many would-be sellers had posted their homes at greatly inflated prices earlier in the year. They had heard of prices going up at a 10% to 20% annual rate in a few isolated overheated areas around the nation and had convinced themselves that their house was worth maybe 20% above what they had been quoted by a Realtor. After their homes sat on the market for months, neglected by homebuyers, they have agreed to mark their price down to market levels.
That accounts for some ads in the newspapers with small headlines announcing “reduced 20%”. But a reduction in asking price does not constitute a true cut in home prices - even though that is the way many people mistakenly look at it. THE LATEST COMMERCE DEPARTMENT DATA SHOWS THE MEDIAN PRICE OF A NEW HOME ROSE TO $238,500.
THAT WAS A GAIN OF 2.8% FROM MARCH AND AN INCREASE OF 0.9% FROM A YEAR EARLIER. That sounds to me like a bull’s eye for the Federal Reserve. Fed Chairman Dr. Ben Bernanke is under increasingly vicious assault on Wall Street for “not being another Alan Greenspan.”
(THE BOND-MARKET-DRIVEN SPOKESMEN ON WALL STREET WANT HOME PRICES TO COLLAPSE, KNOCKING DOWN INTEREST RATES AND PUSHING UP BOND PRICES. GREENSPAN GAVE THEM THIS SWEET MOMENT TWICE AND THEY WANT IT AGAIN.) But Dr. Bernanke told Congress just days ago that he and the Fed watch housing closely and are satisfied that it is in the process of forming a soft landing. (That is the Fed's goal, he said.)
A 0.9% increase in median New Home Prices is a soft landing from the ridiculous levels of price hikes during the two previous years.
From time to time I mention that the historic upward trend for home prices runs consistently at 5% per year. This average has persisted for decades, through war, peace, booms and recessions. It does not mean that prices follow the trend in lockstep. Sometimes they go above trend and have to come back down to the line. Other times they fall below trend and have to race to catch up.
(That is what happened early in this decade.) Some observers then decide that housing will continue to go up in price at such an accelerated rate. Others look at the situation with short-term blinders on and proclaim a bubble has formed and it must be popped, with home prices falling sharply. Both groups are wrong.
This is just a normal herky-jerky movement of home prices. They are driven in the end by the availability of money and the rising income levels of buyers. I told you a while ago that England was running ahead of us in its housing cycle. They had a period of shocking price gains, followed by a slowdown in buying activity. Recently, sales and prices turned up again, with the most-recent home price report up 4.9% in one year.
Here is the way Stanley Read of Business Week writes about what he calls a new English real estate boomlet: “Americans who lie awake at night worrying that the prices of their homes will fall off a wall like Humpty Dumpty can take comfort in the experience of Londoners. After house prices in the British capital racked up double-digit gains seven years in a row through 2003, forecasters predicted a nasty snapback.
So far it has not happened.” “In fact, there are signs prices are beginning to resume their upward climb. Sure, last year London's real estate market saw a sharp slowdown. Buyers, no doubt influenced by all the talk of a crash, kept their powder dry.
But that only caused demand to build up, and now the spark is back. First quarter sales grew 41% from a year ago. Instead of seeing houses languishing on the market, real estate sales agents say they can't find enough houses to sell.” (End quote). THE BANK OF ENGLAND TOOK STEPS TO STOP THE HOUSING DECLINE AND TURN SALES BACK UP. THE FEDERAL RESERVE WILL DO THE SAME HERE IF IT SHOULD BE NECESSARY. More next week. Adrian Van Eck. Next hotline updated no later than 3:00 P.M. Eastern on Thursday, June 8, 2006
