Or is it?

The U.S. central bank and much of Wall Street think old rules don’t apply anymore, and that a recession next year, while possible, is unlikely.   But how will this time be different?  Will the problems stay in housing or spread?

A Citigroup research note on retailers have a neutral outlook on the … retailers in our coverage universe … and are keeping a close watch on the housing market as it progresses through 2H06.  Why do I quote this?  Because instead of predictions, it gives a good idea of what experts are looking into and how they are feeling about the market, which will greatly influence it.

The better than expected November retail numbers seem to point at the housing bust might not significantly impact retail sales.

With a slowing economy, it is important to listen to what they have to say as to have the slightest idea what could happen.  Eventually, people decide.

Click here for the Calculated Risk article.

There are a few friends I would love to get in touch with again. 

Lately, a dear old High School friend of mine got in touch again through my blog.  I am very happy to be in touch with William again.

Nowadays, with searches made easy with help from the Internet, it is easy to find out about long lost friends.  This is a call into the Intenetether. 

Can you hear me:

Shervan Baghaie
Joe Weed
Tanith from Mamaroneck High School
Leonie
Luke
Jan (featal blues)

Keywords Mamaroneck, Ecole Active Bilingue, ISP, ACP, AUP

Here is a look at what is happening next door.

Average                 October 2006     November 2006     % Change
Asking Price            $795,275          $836,757              5.2%
Sales Price              $756,301          $806,711              6.7%

% of Asking Price     95%                 96%                   1.0%
$/SQFT                   $439                 $460                   4.8%
Days on Market        111                  89                     -19.8%
Total Transactions     64                   60                     -6.3%

In an interesting twist, high home prices are back because of falling  prices elsewhere.  With less first-time home buyers this year, its lowest since 1987, down at 36% from 40% in the previous three years.  I have long said that first-time buyers play a crucial role in the housing market but have been unfortunately blocked out of the market.  They make up an important link of the entry-level properties that trade up.  They drive a demand or a push that affects higher-priced homes.

As sellers began cutting asking prices while rates on fixed-rate mortgages were lowered, gives us a surge of interest from first time buyers.  45% first-time buyers bought their home with no money down, according to NAR, up from 43% a year earlier.  With the average rate on a 30-year fixed-rate mortgage at 6.16%, the lowest level since October 2005, according to HSH Associates, it is attracting them back.

Yet, we still have a way to go, according to Bank of America analyst Daniel Oppenheim estimates it would take a further 7% fall in home prices, combined with a 4% annual increase in nominal incomes, to bring affordability back in line with average levels over the past decade by 2008.

Obviously, many would-be buyers are taking a wait-and-see approach as we have witnessed this last year across the city.

Even though this article talks about the country in general, it could spell out a trend to watch out for.

        Bdr    Bth    SqFt    List $    L$/SqFt    Sale $    S$/SqFt    S$/L$    DOM
Min   1       1       649     499,999 403         0           0             %         26
Avg   1       1.75  925     516,333  589        0            0            %         103
Max   2      2       1238   549,000  845        0            0            %         216

These are only the active so we can’t see the sale price.  I will post more with sale versus listing price later, as that is a very important factor to analyze the market.  However, you will note that the average time a home remains on the market is over one hundred days, so calculate your mortgage well.  Unless you go in the market at a very reasonable, as you can see in the Minimum average, you might save some money and frustration.

Predictions are a fools game in my opinion.  You virtually have a 50% chance of being right.  There is not enough data to clearly draw conclusion as to how people will react.  The lucky winners get to boast.  However, we are curious by nature and what we see greatly influence the reality of things.  If the news media writes enough about one subject and presents its vision of it, it eventually becomes real.  Case in point when between August and October we had a chance for a great market market well balanced between buyers and sellers, the media was splurging headlines of doom, effectively scaring away some buyers.  Lucky and smart were those who read beyond and acted on some very nice properties and walked away with great deals.  Times have passed, and we are now into a new market.

NAR predicts a better real-estate market for 2007, hoping median prices rise by 1.4% in 2006 and another 1% in 2007.  They also believe the number of existing-home sales will be better  by 4.6% than this quarter by the end of 2007 and new-home sales after falling 17.7% this year will fall 9.4% in 2007.

Zillow adds more features, such as listings to its site that lets homeowners and Realtors post for-sale listings for free.  Zillow is aggressively placing itself as a must for real estate tools but those posts rely "on sellers to voluntarily post information" on for-sale properties.  You can bet some over-zealous owners might inflate their properties a bit.  It will be interesting to watch.

The rest of the article talks about several trends throughout the country.

Last month was the slowest it has been since 1997 with prices leveling off.

Yet prices have appreciated in our necks of the woods according to the median price $487,000 last month, up 0.6 percent from $484,000 in October and up 1.7 percent from $479,000 for November a year ago.

Here are some numbers gathered by Calculated Risk. 

Southern California Median Home Prices
Area    Nov ’04    Nov ’05    Nov ’06    Pct Change
Los Angeles    $416K    $497K    $510K    2.6%
Orange County    $541K    $616K    $616K    0.0%
San Diego    $487K    $518K    $482K    -6.9%
Riverside    $346K    $405K    $426K    5.2%
San Bernardino    $284K    $350K    $380K    8.6%
Ventura    $507K    $612K    $562K    -8.2%
Southern California    $415K    $479K    $487K    1.7%

New and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month was down 7.8 percent in October, and down 26.2 percent from 27,637 for November a year ago, according to DataQuick Information Systems.  Even though the decline is normal for the season, it is a good indication that last year’s crazy transactions are well over.