The Globe and Mail: Gloom surrounds U.S. housing

by Alex Stenback on December 2, 2005

Good article from The Globe and Mail (of all places) culling together and summarizing the major factors pointing to a potential slowdown in our national real estate market.  Definitely worth the read, but we’ve bulletized the key points below:

1. Demand is now being driven largely by speculation and second homes.
2. Home ownership rates are creeping downward while new-home sales are surging, which may indicate the last phase of the boom.
3. Housing affordability is at a 14-year low.
4. The inventory of unsold houses is at its highest level since 1986.
5. Delinquency rates are rising, especially in the sub-prime market.
6. The number of months it takes for a house to sell has risen to the highest level in at least a year.

But it’s not ALL gloom and doom at the Globe and Mail – The upshot, though mostly hopeful speculative ruminations from various smarties:

1. "The market is moderating; whether it is going to burst is another story," Mr. Grassino said. He thinks there could be corrections, "but it won’t be a countrywide thing, by any means."
"Improving labor markets and the recent pullback in mortgage rates could turn this into the slowest of soft landings," said Michael Gregory.

Again, two key points as we fret the B-word: 1) Real estate does not crash nationally, but locally [we're likely OK] and 2) It is not a foregone conclusion that rates will continue to rise, and stable to falling rates will make difficult any real "crash" in real estate.
ยทThe Globe and Mail: Gloom surrounds U.S. housing.

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