Across the board, using perhaps the gloomiest language yet this year, realty market sources on the ground around the nation found little cheer in a housing market on the verge of hibernation.
Anecdotal evidence from Federal Reserve's 12 district suggests further that this winter's housing market could get slammed by a deep freeze that won't thaw in the spring.
As the housing market cycles down into what's traditionally the slowest buying season of the year, the seventh of the Federal Reserve's eight Beige Books a year, tells the tale of a tired and trying housing market.
Tight credit and higher energy prices are the primary culprits blamed for turning previous market froth into a frosty precursor of what could become a Big Chill.
Adding commentary rather than statistical evidence about the nation's housing market, the Beige Book gathers anecdotal information on a variety of economic indictors, from agriculture, consumer spending and energy, to employment, industry performance and wages.
Comments are solicited from representatives of the reserve's dozen district branch banks as well as from economists, market experts and other sources in those districts.
District-by-district, from the October 17, 2007 Beige Book, here's what sources in the field had to say about the residential real estate market since August.
Boston, First District -- There was some positive August-to-August data from state real estate associations showing increases in sales and median prices for homes and condos, but the Book reported that data conflicted with more comprehensive information that included foreclosure sales, for sale by owner listings, and new home sales. Sources say, overall, prices and sales are down in Connecticut, Massachusetts, New Hampshire and Rhode Island. Unfinished condominium developments (some with only 10 percent to 15 percent of units sold) are in "very bad shape" as talk heated up over converting condos to rentals.
New York, Second District -- Housing markets were mixed with New Jersey homebuilders reducing construction levels. Builders "all but ceased seeking approvals" for new developments. New home prices fell 10 percent as new home and existing home sellers tried to get ahead of the market by pricing properties more realistically. New York State real estate associations said both sales of existing single-family homes and prices were down.
Conversely, the Manhattan market remained steady and "relatively strong" with condo and co-op sales rebounding more than 60 percent from a year ago. Likewise some Manhattan rents were up 15 percent from a year ago due to a dearth of available units.
Philadelphia, Third District -- A source said flatly, "The middle is dead" in the district's new and existing home markets with little more activity in the high and low ends. Builders reported making "large price reductions with little effect on sales." Exiting home sales declined since August in nearly all corners of the district. Sources did not expect a turnaround any time soon, due also to large inventories. Several sources said they expected housing demand to "remain subdued for some time." Buyers will "recognize a deal, if you give the houses away," said one source.
Cleveland, Fourth District -- Sources said a late summer surge in sales was considered a seasonal adjustment rather than a trend. New homes sales were down compared to the same period last year, builders discussed reducing workforces, and cancellations and price discounts were up, but inventories were shrinking somewhat. Sources remained uncertain about the timing of a turn around.
Richmond, Fifth District -- Area real estate agents reported "generally sluggish home sales," with two advising sellers "just sit and wait" and "stay where you are unless you absolutely have to sell." Scattered reports said conditions were improving and expectations were growing for improved home sales in the coming months. Home price appreciation was "very modest." Rents were reported as "firm" with vacancy rates "unchanged."
Atlanta, Sixth District -- Homebuilders and real estate agents said new and existing sales remained well below year-ago levels in September as the pace of new home construction "continued to decline sharply" as inventories rose.
Chicago, Seventh District -- "Residential construction and home sales continued to weaken in most areas of the District." Tightening credit for jumbo mortgage loans was specifically mentioned as contributing to the declines in local housing markets. Builders added price discounts and incentives, but showroom traffic became more sporadic and many customers were forced to withdraw from contracts after failing to sell their own home.
St. Louis, Eighth District -- Home sales weakened more throughout the District. Compared with the same period in 2006, August 2007 year-to-date home sales increased 1.4 percent in Louisville, but declined 3 percent in Little Rock, 7.4 percent in greater St. Louis, and 13 percent in Memphis. Residential construction continued to decline. August 2007 year-to-date single-family housing permits fell in all major metro areas compared with the same period in 2006.
Minneapolis, Ninth District -- Residential construction remained slow. The value of permitted units in the Minneapolis-St. Paul area was down 38 percent in August from a year earlier. In contrast, a representative of a western Montana builders' association described recent activity there as consistent with recent strong years. In Sioux Falls, the value of new residential construction in September was down slightly from the previous year.
Kansas City, Tenth District -- Residential real estate activity declined further, home sales weakened in September and were expected to slow further with flat home prices and rising inventories. Demand for low- to mid-priced homes remained strong, but sales of higher-priced homes were weak.
Dallas, Eleventh District -- Lower priced homes felt most of the market softening as builders curbed construction and took the edge off inventories. Sources pushed out their forecast for recovery of the housing sector to 2009. Apartment demand picked up, and rental rates increased, causing sources to reveal optimism. There was concern that competition from rental housing will increase when the peak of adjustable rate mortgages reset in 2008.
San Francisco, Twelfth District -- Tighter lending standards for home mortgages took greater tolls on sales of new and existing homes in most areas. Title and escrow sources said sales activity "fell as much as 40 percent" in some areas during the last few months. The reduced pace of home sales restrained price growth, particularly for lower-priced homes, which have been most affected by changing credit terms and conditions in the subprime-mortgage market.
Published: October 19, 2007
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Broderick Perkins parlayed a career in old-school journalism into a
contemporary digital news service that really hits home.
The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services.
The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home.
Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News.
Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake.
He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications.
In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.
Broderick Perkins parlayed a career in old-school journalism into a
contemporary digital news service that really hits home.