Monday, May 26, 2008

"U.S. home sales dip as backlog at record"

Recent news from the U.S. to compare to our situation here in Canada. Due to differences in our two economies like the strength of Canadian natural resources combined with stricter lending criteria, fewer cases of fraud and lower exposure to the "asset backed commercial paper" (sub-prime) melt-down, things are not this bad here in Canada. I hope this article doesn't push an alarm bell for you. Perhaps its time to think about buying that retirement property in the U.S. you've always dreamed about. With the CDN dollar still strong vs the U.S. greenback and the decline in valuations to the south bringing proces down, it may be the perfect storm of opportunity many snowbirds have been waiting for. We strongly suggest you consult a real estate professional and consider tax implications (both income and property) as well as foreign ownership rules.

Reuters News Agency

Sales of previously owned U.S. home slipped last month and the backlog of unsold properties hit a record high, according to data yesterday that suggested the market's downturn still has a long way to run.
Home resales fell 1% in April to a 4.89 million-unit annual rate, the National Association of Realtors said.
The sales pace was a bit better than expected on Wall Street, but the stock of unsold homes surged 10.5% to 4.55 million units, leading economists to warn of further market woes ahead.
At the current sales pace, the supply of homes reached 11.2 months' worth, the highest since the trade group began tracking single-family and condo properties together in 1999. For single units, the supply was 10.7 months' worth, the most in 23 years.
"The increase in unsold inventory suggests that the housing downturn will continue on through this year and well into the next," said Moody's chief economist Mark Zandi.
The report showed the median home price in April was down 8% from a year ago, at $202,300. It was the second largest price decline on record, following the biggest drop in February.
"The big surprise was the inventory of unsold homes rising to a record level," said Rudy Narvas, a senior analyst at 4Cast Ltd in New York.
Other price measures have shown even steeper drops.
The Standard & Poor's/CaseShiller home price index of 20 metropolitan areas showed a drop of 12.7% in the 12 months through February, with prices down 15.8% from their June 2006 peak. The March index will be released Tuesday.
"With prices collapsing, the incentive not to buy a home is increasing by the week, and with inventory showing no sign of improvement prices will keep falling," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhall, New York.
Moody's Zandi said about one fourth of the sales likely were due to foreclosure, which he said was another negative sign.
NAR chief economist Lawrence Yun said that the foreclosed homes, which sell at substantially lower prices, were increasingly showing up in the existing homes sales data.
"Several markets are seeing a significant rise in home sales," Yun said. "These markets are also the markets that have witnessed a substantial decline in prices."
The trade association said last month's existing home sales pace was 17.5% below the rate of April 2007, with single-family home sales off 16.1% and sales of multiple family units down 27.9%.

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