Housing Market: Bad Omens

This rather (ahem) ominous pic is in tribute to Business Week's article on the omens of housing. It touches on most of the points we bloggers are already familiar with--the expansion of Midwest into bubble markets while the coasts fall into slumps, the admission that the markets aren't bouncing like the traditional media claimed they would, and the acknowledgement that the continuing drive for more development is "pushing against capacity."

One paragraph caught my eye in particular:

The home-price data from the Office of Federal Housing Enterprise Oversight [OFHEO], which reflect a carefully constructed index based on "repeat sale" information, revealed a powerful 11.9% rate of price increase in the fourth quarter that was not significantly different than the 13% growth rate for prices in 2005 overall.

The OFHEO is basically the watchdog agency of Fannie Mae and Freddie Mac, designed to make sure they still have all their books in the black and aren't offering too many loans that will overextend their portfolio. However, there is a lot of question as to whether or not OFHEO is utilizing its own data selectively. The legendary Bubble Meter has been exploring this issue extensively, and you can read about some of his findings here and here.

The Housing Bubble Casualty relates another sobering aspect of the post-boom market...all the realtors fleeing the industry like the Jews from Egypt. Unfortunately, Ben Bernanke is neither Alan Greenspan nor Moses:

I have met with several of my friends that are also account executives in the industry. One of them told me that only one person in their region ‘commissioned’ last month. For a territory that is used to doing 30-50 million per month, they did only 10 million. There was a time not too long ago, where the top rep in this territory was doing more than 10 million a month. I talked to 2 other reps where nobody in their regions hit their numbers. All but one of these reps is about to start looking elsewhere for work.

This can only mean a bonanza opportunity for FSBOs and such to prove that you don't need fly-by-night, quick-buck types to do the do when it comes to buying your house. Don't let the door hit you in the tuckus on the way out, chumps!

Posted at March 16, 2006 02:37 PM

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This rather (ahem) ominous pic is in tribute to Business Week's article on the omens of housing. It touches on most of the points we bloggers are already familiar with--the expansion of Midwest into bubble markets while the coasts fall into slumps, the admission that the markets aren't bouncing like the traditional media claimed they would, and the acknowledgement that the continuing drive for more development is "pushing against capacity." One paragraph caught my eye in particular: The home-price data from the Office of Federal Housing Enterprise Oversight [OFHEO], which reflect a carefully constructed index based on "repeat sale" information, revealed a powerful 11.9% rate of price increase in the fourth quarter that was not significantly different than the 13% growth rate for prices in 2005 overall. The OFHEO is basically the watchdog agency of Fannie Mae and Freddie Mac, designed to make sure they still have all their books in the black and aren't offering too many loans that will overextend their portfolio. However, there is a lot of question as to whether or not OFHEO is utilizing its own data selectively. The legendary Bubble Meter has been exploring this issue extensively, and you can read about some of his findings here and here. The Housing Bubble Casualty relates another sobering aspect of the post-boom market...all the realtors fleeing the industry like the Jews from Egypt. Unfortunately, Ben Bernanke is neither Alan Greenspan nor Moses: I have met with several of my friends that are also account executives in the industry. One of them told me that only one person in their region ‘commissioned’ last month. For a territory that is used to doing 30-50 million per month, they did only 10 million. There was a time not too long ago, where the top rep in this territory was doing more than 10 million a month. I talked to 2 other reps where nobody in their regions hit their numbers. All but one of these reps is about to start looking elsewhere for work. This can only mean a bonanza opportunity for FSBOs and such to prove that you don't need fly-by-night, quick-buck types to do the do when it comes to buying your house. Don't let the door hit you in the tuckus on the way out, chumps!