Bay Area housing prices are finally falling, declining last month for the first time in more than four years.
This means that every buyer desparately trying to “get into something” before prices go up even further is going to take a new look around. It means that every seller holding out for that offer “over asking” is going to realize they need to get out.
Even more, it means that all the speculators will understand the party is over, and it’s time to bail. And, finally, the landlords with “negative cash flow” but thinking they’re making up for it with appreciation have to face it that they’re really just losing money. Not to mention all the people who are “over their heads” with mortgage payments they can’t keep up with.
In addition, prices for new homes tend to correct more quickly than those for resales, because home builders would rather drop prices than hold onto excess inventory.
… New homes, whose sales made up 12 percent of the county’s overall total, saw a median price decline last month of 9.4 percent, to $591,000.
Sales volume for all types of homes was down 30.6 percent in the county, in keeping with the trend seen throughout 2006.
The housing slowdown has turned some parts of the Phoenix and Las Vegas metropolitan areas into “ghost towns,” where many unsold homes stand empty, Janet Yellen, president of the San Francisco Federal Reserve Bank, said Monday.
Yellen said that she heard the ominous description from a “major home builder,” who told her that the share of unsold homes in some subdivisions around the two Southwestern cities has topped 80%.
Empty houses means sellers holding out… That’s a dam that’s really going to burst…