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Monday, February 02, 2009

Real Estate Data: December, 2008

A couple of days late this time around, but some good detail.

The Quick Summary
Inventories in terms of raw numbers continue to fall, but demand falls at greater rates. This has been the major battle for a long time, even before the credit crisis, and now, the wider recession.

Supply and Inventories
Permits, Starts and Completions, (PDF): Declined from one year ago by 50.6%, 45.0%, and 23.6% respectively. It should be noted that the December, 2007 numbers were already down by 31% to 38% from December, 2006. Single family permits are now 77.5% less than the peak in 2005.

Single family starts have again set a record low dating back to 1959, the onset of data. In but one example of the ripple effect here, architectural billings, (Who knew there was such an index?), have also reached record lows.

New Home Inventories, (PDF): Despite these drastic cutbacks in building activity, for way more than a year, new home inventories jumped to 12.9 months of supply. 6 months of supply would be nice to see.

We continue to note however that the raw number of new homes for sale is far less than a year ago, by 33.8%, thus inviting the question, "How much lower can they go?"

Existing Home Inventories: This category, representing 85% to 90% of the market, fell to a little more than 9 months of supply. The data should be treated with caution however, as we discuss below with respect to existing home sales.

Sales and Demand
New Home Sales, (PDF): The December numbers were 44.8% less than 2007. Illustrating the plight of builders, December, 2007 new home sales were already 40.7% less than 2006.

Existing Home Sales: Declined from one year ago by 3.5%. For the year, the drop was 13.1%. Data for existing homes however should be treated with caution for a number of reasons.

Foreclosures represent 45% to 50% of existing home sales at this point. The argument is made that there are several results from this phenomenon:
1) That low foreclosure prices drive existing home sales higher than they might otherwise be.
2) That foreclosures eat into what would have been new home sales.
3) That individual sellers, the true actors in a normal market, are unable to compete with foreclosed prices.
4) That there are two "shadow inventories" of existing homes not yet measured:
A) Those owned by banks, and not yet listed for sale.
B) Those owned by "sellers in waiting", and not yet listed for sale.
Forecasts?
No great revelations here, equilibrium will come when we see a whole laundry list of items such as lower prices, lower inventories, rising employment, restoration of consumer confidence, etc, etc. Foreclosures, which rose by a record 81% in 2008 will either rise or fall in 2009, depending on the analyst.

Thanks for stopping by,
Black Bear Realty Website
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Filed Under: Real Estate Statistics and Data

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