Analysts blamed the bigger-than-expected slump on the turmoil that hit credit markets and mortgage markets in August as worries increased over rising mortgage foreclosures. Have you ever closed a mortgage in 30 days? I have once in my life. I do not think the numbers reflect what happened in August and September and I would look for numbers that are even more terrible over the next few months.
Lawrence Yun, senior economist for the Realtors said, "Mortgage problems were peaking back in August when many of the September closings were being negotiated and that slowed sales notably in higher priced areas that rely more on jumbo loans," The real estate problem may peak in August but not 07 more like 09.
The slowdown in sales meant that the inventory of unsold homes rose to 4.4 million units in September. At the September sales pace, it would take 10.5 months to eliminate the overhang of unsold homes, a record length of time. Is it possible that the backlog will be 12 month by the first quarter 2008? Home builders can slowdown their construction of single-family homes but the condominium builder cannot stop. More and more inventory is coming on to the market each month and I think it may well take into 2009 before we see any significant decline in condominium backlog.
Mr. Yun said,” that the price declines should be put into perspective in that they are occurring after a five-year housing boom which pushed prices up to record levels”. What he did not say was that is true unless you bought in the last two years and if that is the case, you had no boom but pure bust. The Realtors are predicting that at year-end we will have the first year of a year over year decline in the price of housing in 40 years. I think we may well be in for a couple more year over year declines.