Yet more on home sales & prices
By Lee Russ
Sunday, December 03, 2006 at 11:05 AM
The pace of new home sales fell more than expected in October, although prices showed strength after a couple months of weakness, according to a government report.
Before you get too upbeat about that "prices showed strength" bit, though, you need to take a look at a few more details.
First, the CNN good news applied only to "new" homes. As to existing homes (used ones, in pre-PR language):
Tuesday the National Association of Realtors reported the largest drop in existing home prices sales on record, on a year-over-year basis.
Second, the decrease in number of new units sold, combined with an increase in price of the ones that did sell, raises the serious possibility that the high end is still moving, while the rest of the stock is stagnating or declining in value. And that would be consistent with an economy in which the middle class is moving either up (a small percentage) or down (a much larger percentage).
Taken together, the picture looks like this to me: the wealthy are wealthier than ever, and are willing to pay pretty good prices for the privilege of living in a brand spanking new house. The rest of the potential home-buying universe, especially the mid to lower middle class which typically buys existing homes and the lower priced new homes, is hurting.
With this economic slump, more and more people are becoming more desperate of money. For some homebuyers, this is a good opportunity for them to purchase a house since several homesellers give it at a lower price. However, the Federal Housing Authority says it doesn't have enough resources to properly screen lenders. Obviously, if the FHA can't tell shady lenders from legitimate ones, we are headed toward another round of predatory lenders and home foreclosures as a result. Maybe if the FHA hires me I won't need a payday loan to make all my bills on time. I think the Obama administration should definitely put some of the bailout money that is still left toward straightening this mess out. Not only will it stimulate the economy by giving jobs to some of the unemployed Americans out there, it'll make sure we don't just repeat the same cycle over again. After all the work that has gone into bailing out mortgage lenders, it would be a real shame to see another wave of predatory lending put us right back where we started. To read more about the FHA, visit your payday loan source.