Has the smart money reached the decision that things ahead are only downhill?
Ahead of tomorrow’s GDP report, which is expected to revise growth from 3.5% down to 2.2% , combined with today’s manufacturing report may have been the tipping point.
The Home Builders are writing in more and more red ink.
No wonder, there was a sharp sell off in China, US and other markets.
K Hovnanian’s net orders dropped -27.3%.
WCI’s Tower Orders dropped -118%, 22 more cancellations than new contracts signed.
Traditional Home orders plunged -96% .
The backlog continues to drop. If orders don’t improve in the coming quarters, the current backlog will be cleared in next two quarters at the current rate.
What would be next for WCI then?
Looks like Bill Gates is getting investment advice from some one just as rich.
He has expressed bearish sentiment on the dollar in the past. Two of his recent actions are definitely worth mentioning.
This month his foundation dumped all the home builder stocks.
And looks like he is dumping Miscrosoft shares big time.
May be The World’s Richest Man will not lose his (dollar) wealth in this Economic Crisis.
May be even grow it, provided he invests wisely.
The National Real Estate Auction Corp. is planning its first Arizona auction from 8 a.m. to 5 p.m. March 24 at the Phoenix Convention Center.
I think many more will be held through out the US in the coming months and years.
What we have seen this month so far…
The sub prime lending sector is caught on fire.
Housing Starts fell 14% from prior month, and 38% from a year earlier.
Toll backs down from calling a bottom, “There are too many soft markets at this stage of the selling season to call a general upturn in the new home market “
For whatever reason, K Hovnanian is holding back its results for the quarter ending Jan 31. Last year the results were released on Feb 22.
What else is due in the coming week
1. January New Home Sales on Tuesday. Could they be as bad as the starts?
2. NAR Existing home sales on Wednesday. How much has the resale inventory swollen?
3. Preliminary Q4 GDP Growth Rate on Wednesday. Will it be revised down to 2.0-2.2% from the Initial 3.5%?
If so what will that do to the Dollar, and inversely to Gold?
4. OFHEO’s Q4 Report on Thursday. Further confirm the housing slowdown.
The Jan 2007 Housing Starts Are out.
The Seasonally Adjusted rate is down 37.8% from a year before.
And is down 14.3% from the previous month.
This is despite the unusually mild winter weather in December and January.
Winter has arrived a couple months late this year. The seasonally strong February is turning out to be the start of winter this year.
This weather will bring down the Housing Starts in February, and then the seasonal adjustment will further under measure February.
The February numbers which come out next month will be really really interesting.
Data Quick released the So Cal Data for Jan 07 today.
San Diego continues it’s bust.
Ventura County is now the second to join the busted list, as it trends steady decline in the median, and had negative year-over-year appreciation for 5 months in a row now.
Orange County is down to 600K from a peak of 646K in Jun 06, but is yet to post a negative year-over-year decline.
Due to a change in Data Quick’s methodology, the historic medians have been revised. But the change is less than one percent on average.
Found this advice on Yahoo :
“If you live in a high-cost metropolitan area, the equity in your current home can buy a heightened lifestyle somewhere else.”
Classic herd mentality. When home prices were rising, every one wanted to buy one.
Now the mob mentality to rush for the exits, when the prices are dropping.
Who will get crushed in this stampede?
Thanks to a reader who emailed This Promotion by DR Horton in the Granville Estates in Brentwood, CA.
This is the same community which I had visited in November and had found a dozen spec homes for sale.
I think this is just the beginning. There are several more to come, with even heftier price cuts.
The Census Bureau released The Fourth Quarter Housing Report earlier this week.
The number of Vacant Homes for Sale has increased 34%, to 2.1M in 2006-Q4 from 1.56M in 2005-Q4.
Region wise ,
Northeast - Up 27% from 218K to 278K
Midwest - Up 20% from 459K to 553K
South - Up 42% from 628K to 891K
West - Up 49% from 260K to 378K