Asheville Mountain Real Estate Blog

Asheville, NC real estate for sale. Information for buyers, sellers and mountain homeowners, without pressure. Rich content for those who are far away about what it is like to live here through the generous use of media. And some nostalgia with our, "Baby Boomers' Fun Stuff", Thanks for stopping by.

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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Saturday, February 09, 2008

Pending Home Sales-December 2007

The last key statistic for December 2007 was released a couple of days ago. The pending home sales index provides no solace for sellers, indicates no movement by buyers, and totally conforms with the full set of 2007 housing numbers. The standoff continues.

The full December stats can be viewed here, but the quick summary is as follows:
New Homes:
Inventory is 60% above "normal", while new permits, starts, and completions were down 31%-38%. No region of the country escaped such numbers, and in the South, new single family permits were down almost 44%.

New home sales were down 41%, the largest drop since the database began in 1963, while median prices dropped 10.4%, the largest drop since 1970.

Existing Homes:
At 10.7 months' supply, the highest December inventory on record. Sales of existing homes hit a new low for the current cycle, and the largest drop in prices yet.

So What About the Pending Sales Index?
At a level of 85.9 for December, 2007 vs 113.3 a year ago.

Comments by Others on the PHSI
From The Wall Street Journal

From Paper Economy, we are informed that the South was down 27.0% as compared to December 2006. The national average was 24.2%

The Big Picture has a nice graph from the 2005 housing peak to the present.

The outlook...inventories in all regions will have to fall. This will have to be triggered by lower production, more declining prices, and stability in the credit markets before anything approaching normal supply and demand arrives.

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Friday, February 08, 2008

Guilty Plea in Village of Penland Scam

The Village of Penland, NC, (unincorporated), is located not far from here, and WAS, before the real estate bubble burst, perhaps best known for the renowned Penland School of Crafts.

Since June of 2007 however, the major news from that part of the world has given us a local window into some of the less scrupulous parts of the housing bust by way of a local real estate development gone bad. NC Attorney General Roy Cooper said at the time:
"These developers squandered more than $100 million in financing, leaving consumers stuck with property that isn't worth what they owe on it," said Cooper. "We're putting a stop to this scheme before any more consumers get caught up in it."
Additionally, it was alleged at the time that:
...the defendants promised consumers that they would profit from the Village of Penland without ever having to invest any of their own money. The developers used several different schemes to entice consumers to use their credit to purchase lots. In one scenario cited in Cooper's complaint, the developers told consumers to apply for credit to buy 10 lots for a total of $1.25 million and promised to buy back the lots at the same price within three years. Consumers were told that these ten lots would then be developed and that they would receive $100,000 when each home sold.
The Asheville Citizen Times reported yesterday that the first guilty plea has been returned. The Charlotte Observer has more. The maximum penalty is 5 years in prison, $250K penalty, and 3 years probation. It looks as though individual investors will have to seek separate recourse.

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Thursday, February 07, 2008

Baby Boomer Thursdays: February 9, 1964

This week's baby boomer fun post...

44 years ago on February 9, 1964, the first American TV appearance of The Beatles. For many of us, it is one of those "Where were you when..." kind of moments.

2 Minutes and 25 Seconds from The Ed Sullivan Show, a Sunday Night staple to begin with.

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Yet Another New Twist From Builders

A while back, we wrote an article that actually gained some national attention. We examined how the rhetoric and prevailing strategies of real estate change more slowly over time than the actual supply/demand factors would warrant.

In brief, the dialog of the housing market initially avoided any suggestions for lower prices, almost as though the industry and media were afraid to admit that necessity. Instead sellers were advised to seduce buyers with "incentives".

These lures included anything from new automobiles to swimming pools, anything but a price cut. Buyers were not seduced, demand fell, and inventories reached for the sky.

By the Fall of 2007 however, the mainstream media began to speak openly about drastic price decreases as the best weapon. Some went so far as to call it car dealer tactics. All along, it might be said that builders, not individual homeowners have led the way here.

And Now, For Something Completely Different
The Wall Street Journal informs us today of something new, at least to our eyes.
As the housing slump drags on, some builders have a deal for potential buyers: Sign a contract, and if the cost of comparable homes drops before closing, you get the lower price.
This is being led by some fairly large names in the business, it makes interesting reading. One wonders about the exact criteria and mechanisms which would trigger such price protection programs. Some have argued that this strategy means the big builders are not expecting further significant erosion in home prices.

Time will tell on both questions.

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Saturday, February 02, 2008

December National Housing Statistics

Yep, it's that time of month, the numbers have come out little by little for the past 12 days or so so, lets round em up.

The Quick Summary
Essentially, the December numbers continue a trend seen for many months now; the largest declines in production yet, with some of the highest inventories and lowest demand on record.

Supply Factors: Too Much Inventory
New Home Inventories, (PDF): With current demand, inventories now stand at a 9.6 months supply. The highest level of the year, 60% above the so called normal.

Permits, Starts, Completions, (PDF): Compared with last December; Permits down 34.4%, Housing Starts down 38.2.%, and Completions down 31%.

Perspective on New Homes From Other Commentators:
The Wall Street Journal pointed out that these figures represented a 14.2% decline from an already bleak November, 2007 level, and was the slowest pace of construction since May, 1991.

Money CNN chimed in as follows:
For the year, housing starts fell 25 percent to 1.35 million. That decline represents the biggest drop since the recession year of 1980 and the third largest drop since the Census Bureau started tracking this activity in 1959.
Paper Economy examines the US by region, in its normally thorough manner. Once again, no area of the country escaped. In the South, single family permits were down by more than the national average at 43.9% compared to December, 2006.

Housing Intelligence points out, in an exceedingly simple supply/demand framework:
This is a reflection of builders pulling back hard on new production to get better aligned with a significant decline in demand.
We have written for months along those same lines. Builders have throttled back for more months than we can recall by 20-25% or more, yet inventories have still risen. It is a trend that will contribute to equilibrium at some point, but not without requisite decreases in prices, and stability in mortgage markets.

Existing Home Supply, (PDF): The year ended with a 9.6 months' supply level, which is 45.5% more inventory than one year ago, but is down from the 2007 high of 10.7 months' supply, and down 7.4% from November, 2007. Calculated Risk puts added perspective here:
The typical pattern is for inventory to decline about 13% in December, so this decline was less than normal. This is the highest December inventory level in history.
Demand Factors: No Sales, Falling Prices
New Residential Sales, (PDF): The numbers speak for themselves, 40.7% less than one year ago.
Money CNN informs us that this is the largest drop since the Census Department began keeping records in 1963. The year 1980 holds second place at a mere 23% decline. Median prices fell by a rate not seen since 1970.

Paper Economy does its usual regional analysis. The South was spared slightly, with new home sales declining by 36.3%, a bit better than the nation as a whole.

Existing Home Sales, (PDF): We will leave perspective here to more illustrious observers:

Interest Rate Roundup is succinct:
There wasn't much holiday joy for the real estate market in December. Sales slumped to a fresh cycle low, while prices dropped by the largest margin yet.
Money CNN shows us just which records were set in this sub part of the market, while Paper Economy shows us the magnitude on a region by region basis. In this case the South fared slightly better.

What Will Stop the Slide?
In the most basic terms possible these factors would work well; 1) A 40% decline in the number of houses for sale, 2) Brought on by less building and lower prices, 3) Stability in credit/mortgage markets.

Of interest to all would be ideas as to how low on those prices. The big news of the past 10 days on that front was a study by Merril-Lynch making the case for 25%-30% reductions over the next three years.

Double digit declines in price are not really a new idea. When we did our August roundup, we linked to this article at Money CNN which spoke about such things.

Stay Tuned,

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