Today’s Gazette relays the following reports from AP:
State home sales post double-digit decline
Home sales in Massachusetts are down by a double-digit percentage for the third month in a row…
…a 15 percent drop in single-family home sales in November compared with the same month a year ago…
Condominium sales fell 23 percent in November.
Condo prices are down 4 percent…
Single-family housing activity lowest since 1991
…Construction of single-family homes fell by 5.5 percent to an annual rate of 829,000 units. It was the eighth consecutive drop in single-family starts…
In an ominous sign for future activity, the government reported that applications for building permits fell for a sixth straight month… the slowest pace for building permits since June 1993…
Analysts expect the weakness to intensify in coming months…
See also:
Wall Street Journal: “Fraud Seen as a Driver In Wave of Foreclosures” (12/21/07)
Of course, the Atlanta scheme wouldn’t have worked if not for appraisers willing to approve values far in excess of what builders were charging for new homes…
In some neighborhoods, the fraud scheme itself may have artificially raised values. Another explanation is that the appraisal market is fiercely competitive. Experts say some appraisers may offer inflated values in exchange for their standard fee of several hundred dollars — a strategy that can win business without exposing an appraiser to charges of fraud. “Appraisers get sucked into these schemes because they are starving for work and many of them don’t know what the heck they are doing,” says Carl Heckman, co-founder of the Georgia Real Estate Fraud Prevention and Awareness Coalition, composed of appraisers, lenders, mortgage brokers and residents.
In the neighborhoods where the Atlanta scheme operated, values have plummeted. Many homes associated with the scheme are now in foreclosure. Some have sold for as low as 50% of what buyers in the fraud ring paid. “The banks are getting more and more aggressive in their pricing because they don’t want to own these homes,” says Warren Lovett, a real estate agent with Coldwell Banker in Atlanta.
Mr. Lovett has taken listings for about 60 foreclosed properties this year. He estimates that half of the foreclosures he’s encountered are due to fraud.
Krugman, NY Times: Home Prices Have Plenty of Room on the Downside (12/14/07)
To restore a historically normal ratio of housing prices to rents or incomes, average home prices would have to fall about 30 percent from their current levels…
How will it all end? Markets won’t start functioning normally until investors are reasonably sure that they know where the bodies — I mean, the bad debts — are buried. And that probably won’t happen until house prices have finished falling and financial institutions have come clean about all their losses. All of this will probably take years.
Financial Week: “Lennar dumps 11,000 home sites for 40 cents on dollar” (12/3/07)
Republican: Florence condo units sold at half-price (12/4/07)
Gazette: “Foreclosure deeds double in area counties” (12/6/07)