Saturday, September 08, 2007

Housing Sales to Drop 25% in 2008?

It was reported in the Orange County Register that executives at Countrywide Funding expect retail loan volumes to drop 25% next year and that they are going to lay off 12,000 people as a result. I don't think it's any stretch to say that this also means that there is going to be a 25% drop in home sales as well.

Let's have a look at July sales for the last three years and my estimate for 2008 based on Countrywide's figures:

Clearly sales in Orange Country are falling precipitously year on year and will continue to do so at least into 2008.

What's most striking and a bit difficult to derive from the graph, is just how far housing sales volumes are going to drop from their peak in 2005. In 2005, OC saw 4,341 homes change hands, based on estimates derived from Countrywide's numbers, we we only see anemic sales of only 1,793 units in 2007 or over 2,500 fewer units. That's a decline of nearly 59%.
UPDATE: Based on recent sales figures, I'm going to revise my estimates and am calling for monthly volumes under 1,000 units for some months next year.

So ask yourself this question: "Would I want to buy stock in a company where sales were going to drop nearly 60% over a four-year period?" If you answer "no", then you shouldn't even consider buying a house this year or next. If you answer "yes", I've got some .com-era stock options I'd like to talk with you about.

Viva los Osos!


Anonymous said...

OMG, I would be so embarrassed to be the writer of this article. This is why the public is so confused. I wouldn’t be interest in buying anything this person sells, neither stock nor advice. Fewer units are not equal to lower price. I love the new Math! Ha ha! The numbers total number of sales in Orange County that he is quoting leaves me rolling on the floor laughing.

The truth is, the lowest month this year saw over 1400 sold transactions in Orange County, with the average month being over 2000 sold units. A far cry from what this article would have you believe. If this writer would have spent any real time to research he wouldn’t be embarrassed now. This is all posted in the Multiple Listing Service and easy to find.

In conclusion, if you see the Wizard, please ask for a brain!

HB Bear said...

Are you honestly trying to suggest that lower sales volumes don't precede declines in price? Isn't that exactly what happening right now?

I'd like to point out that the comments section of my blog is for intelligent discourse. If you can't keep up, please don't post.

The data are correct and are sourced from Countrywide. If you have issue with them, contact Countrywide.

Finally, I doubt you'd have the stones to do it, but I'd be willing to make you a $100 bet that the RE market will be slower and lower in 2008. Care to take me up on that?

Yeah, I didn't think so.

Anonymous said...

Sign the Financial Petition:

Susan Shite said...

Interest article. See the forecast for Orlando median home prices in Orlando

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