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.