Despite the repeated denial by those in the REIC (real estate industrial complex) over the past 2 years, the numbers don't lie. And the numbers from the 4th quarter of '06 were not pretty, especially in locales with unusually bloated prices - does that sound familiar to you?
'NEW YORK (CNNMoney.com) -- The slump in home prices was both deeper and more widespread than ever in the fourth quarter, according to a trade group report Thursday.
Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter a year earlier, according to the report from the National Association of Realtors (NAR). That's the biggest year-over-year drop on record and follows a 1.0 percent year-over-year decline in the third quarter.
The most recent median prices are down even more: 3.4 percent since hitting record highs in the second quarter. Almost three-quarters of the markets, reported on by the group, saw declines in median prices over the past six months, with eight reporting double-digit declines.'
And what about those aforementioned bloated markets?
'Vacation markets, where investor-buyers had driven up prices during the building boom of 2005, were particularly hard-hit.
The Sarasota-Bradenton-Venice, Fla., market saw the biggest year-over-year decline in the fourth quarter, with prices plunging 18 percent.
When looking at the change between the fourth quarter and the second-quarter peak, the Palm Bay-Melbourne-Titusville, Fla., market saw the biggest drop, with median prices plunging 19.5 percent.'
Really, is anyone surprised? Unfortunately for those in the larger metro areas of our state (Orlando, Tampa, Miami-Palm Beach), the realtors have been dramatically UNDER-reporting the median sales prices for the past 2 years. Now that prices in these markets have started to fall dramatically, it won't make the news because the previous year comparison numbers have been cooked (to a crisp!).
In the smaller Florida markets however, the realtors haven't been able to disguise the sales prices so easily, and that's where we've seen the biggest news reports of declines.
Back to the article. Despite all the bad news, the used-car salesmen from NAR (National Ass. of Realtors) keep on shovelling the bull$hit.
'Examination of data within the quarter shows home prices stabilizing toward the end," said a statement from David Lereah, the NAR's chief economist. "When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices.'
Remember, this is the same guy (I always get a chuckle when I see others refer to him as "David Lie-area") has been predicting a "soft landing" and a "quick turnaround" since 2005. During this time period, sales have continued to drop, inventory has climbed to new records every quarter, and foreclosures have skyrocketed. I just want to know - how does he do it, lying to the public, over and over and over again? But wait, there's more - this time from the president of NAR.
'NAR President Pat Vredevoogd Combs, a Grand Rapids, Mich., realtor, admitted the group doesn't expect to see a big gain in 2007 statistics.
"Right now, buyers are responding to seller pricing and incentives, and there's a bit of a pent-up demand as a result of buyer hesitation during the second half of 2006," she said in the group's statement. "We're not looking for big changes, but a gradual rise in sales and home prices is projected - that will be good for the overall housing market and related industries."'
Where does she come up with these figures? Again, inventories are at an all-time high, 2.1 million homes are sitting empty, and every major historical indicator says home prices (especially in Florida) must drop at least 30% before getting back in line with median incomes.
The facts: prices are NOT going to rise in 2007, sales are going to continue to drop, and the overall housing market is going to be in bad shape until prices get back to historical trend lines. At this point, the only real question is how long before the price correction goes into full swing.