{"id":4592,"date":"2011-04-24T15:35:25","date_gmt":"2011-04-24T19:35:25","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=4592"},"modified":"2011-04-25T11:05:05","modified_gmt":"2011-04-25T15:05:05","slug":"housing-prices-1990s-levels","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/04\/24\/housing-prices-1990s-levels\/","title":{"rendered":"Housing’s Struggles Continue As Some Prices Roll Back to 1990s Levels"},"content":{"rendered":"

It seems the Federal Reserve may maintain some excuse to keep printing money. Hundreds of billions printed in the name of economic recovery and inflation can be seen almost everywhere except the housing market, one of two of the Fed’s main targets – the other being employment. (See “Inflation Watch<\/a>” for running highlights of stories on rising prices and related news.)<\/p>\n

While I have argued in the past that the housing market will not recover until 2013<\/a>, bouncing along the bottom on the way there, I continue to be stunned by some of the dire statistics. The latest rounds of housing data have included some stark milestones.<\/p>\n

In “Atlanta’s median home price falls again<\/a>” (April 20, 2011), the Atlanta-Journal Constitution (AJC) reports that Atlanta’s median home price slid to $100K, a drop of almost 15%. Incredibly, this plunge takes the Atlanta market to levels last seen one year after the 1996 summer Olympics. For the entire U.S., the median single-family home price fell 5.3% to $160,500. Home sales volume dropped 6.9 percent. (Numbers are year-over-year and come from the National Association of Realtors).<\/p>\n

(Long-time readers know that Atlanta holds a special distinction for me as this was the city where I finally decided to join the housing bubble<\/a>. My parallel plans to position myself to buy into the fallout from the bubble did not quite work out the way I had hoped<\/a>!).<\/p>\n

Good Morning America (ABC News) summarizes the latest numbers as “Home Sales Up, Prices Down<\/a>” and takes us on a tour of the country to see what $100K buys these days. Atlanta is the feature city where a nice home 20 minutes from downtown formerly selling for $242K is now going for a song at $52K. It has four bedrooms, 2 1\/2 baths, a 2-car garage, and 2000 square feet of living space.<\/p>\n

Sales of homes $100K or less are up 9.6% nationwide. In the South, sales of these homes are up 13.6%. In the West, these homes have flown off the shelves at a 44.6% pace.<\/p>\n


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The New York Times writes about the impact on builders in “Builders of New Homes Seeing No Sign of Recovery<\/a>” (April 23, 2011). The feature tale of woe is KLM Builders in Richmond, IL, a distant suburb of Chicago. Last year, KLM matched the U.S. government’s $8,000 tax credit for new homebuyers, but the company only sold 20 houses all year. The latest deal is a $17,000 credit at a local General Motors dealership. KLM has sold seven homes since March with this promotion. It is no surprise that home prices in Richmond have plummeted back to levels last since in the mid-1990s.<\/p>\n

The article references some telling statistics (emphasis mine):<\/p>\n

“Sales of new single-family homes in February were down more than 80 percent from the 2005 peak, far exceeding the 28 percent drop in existing home sales. New single-family sales are now lower than at any point since the data was first collected in 1963, when the nation had 120 million fewer residents.<\/strong>”<\/p>\n

“Four out of 10 sales of existing homes are foreclosures or otherwise distressed properties”<\/p>\n

“Single-family home construction fell 21 percent to an annual rate of 422,000.”\n<\/p><\/blockquote>\n

KLM is clearly lucky to even be alive. In a CNBC interview last month<\/a>, Toll Brothers (TOL) CEO Douglas Yearley noted his company’s competition has been “decimated.” Most local builders have gone out of business in the last few years. Of course Yearley observed that he is very comfortable with TOL’s competitive position.<\/p>\n

Some other interesting and important nuggets from this interview:<\/p>\n