Biggest Drop in House Prices in 38 years
Thursday, October 26th, 2006
By Michael Lombardi, MBA for Profit Confidential
Startling statistics reported yesterday by the U.S. National Association of Realtors:
— The median price of a home sold in the U.S. in September, 2006 fell 2.2% from September, 2005–the biggest year over year drop since 1968.
— The median price of home sold in August, 2006 was revised, down 2.2% as well from August, 2005.
— Inventories of homes for sale are up about one-third from last year at this time.
— Former “hot spot” vacation home in areas in Florida have seen their inventories skyrocket up to 200% from last year.
While realtors will continue playing their new song, “housing prices and activity are just returning to normal levels,” industry insiders are concerned the bust will grow deeper. At a conference for a major realtor this past month, realtors were told to urge their sellers to lower asking prices to reflect the current market environment. (Obviously, fewer sales mean fewer commissions for realtors. Hence, realtors need to get those asking prices down to spur activity.)
No, in the most predicted Federal Reserve meeting this year, the Fed did not raise interest rates yesterday. The Fed is watching the housing market like we all are to see just how deep the knife will cut. I’m reading and hearing more stories of “flippers” and speculators who were caught in the marker downturn.
Hopefully, I’m not focusing too much on the U.S. housing market for my readers. I believe it’s important that I bring the real events in the U.S. realty market to your attention since I’m concerned a continuing decline in housing activity will have a severe negative impact on the U.S. economy in 2007. Be prepared for the softest economy we’ve seen in years in 2007.
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
