The Palm Beach Post reports on the tightening credit:
“Lenders once eager to extend credit are seeing mortgage defaults pile up and are tightening loan standards in response. While there are plenty of would-be buyers, the number who can qualify for a home loan is shrinking.”
“The pool of available buyers also is drying up: 1,143 buyers moved in during the second quarter of this year, down 29.6 percent compared with the second quarter of 2006.”
Even though they are seemingly unaffected by the real estate market, another company headquartered in South Florida is blaming poor earnings on the housing market:
“Office Depot (NYSE:ODP) Inc., the nation's second-largest office products retailer, said Thursday its profits dipped 8 percent in the second quarter as weak sales in North America offset double-digit growth in international revenues.”
“The Delray Beach-based company said North American sales were hurt by the continued weak economy, with slumps in furniture and technology sales due to changes in the housing market and higher fuel and construction costs.”
“'This trend significantly impacted our furniture business which continued to experience soft sales,' North American retail division president Chuck Rubin said during a conference call.”
“Rubin said the company is 'seeing early indications of a tough retail environment' for the next quarter because of slowed consumer spending.”
The Sun-Sentinel explained how the housing downturn is affecting the overall market:
“It was one of the worst days of the year on Wall Street Thursday, when investors' worries about the housing market and the subprime mortgage crunch deepened.”
“Stock prices have been on an unusually stable path for much of the year since February, rising on a stream of strong company profit reports. Even as the housing market meltdown continued and foreclosures were on the rise, investors seemed to count on low interest rates and a wave of leveraged buyouts to continue to lift stocks.”
“The bottom dropped out Thursday.”
"A significant worry had emerged Wednesday, when the nation's largest mortgage lender, Countrywide Financial Corp., said late monthly payments were increasing among borrowers with good credit who had taken out home equity loans."
“That shook investors because, previously, the trouble in mortgage lending was limited to the riskiest borrowers who had subprime mortgage loans. Many of those borrowers have been losing their properties in foreclosures.”
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4 comments:
As I own homes in both South Florida and Toronto Canada, I follow each market closely. Here's a sign the slowdown hasn't happened (yet) in Toronto.
http://www.thestar.com/Business/article/240381
It reminds me of when my uncle dragged me out to line up for condos in Boynton Beach two years ago in the middle of the night. Surely this means the end for this market is near!!
I have all of my savings invested and so this week has been particularly hard.
But this morning I saw CEO of Hovanian(sp) on CNBC. He made the comment I've heard before that the downturn in RE is all psychological and I have to say it made me angry. The problem is affordability, which is a fact that they RE associations, builders etc want to ignore. No matter what BS they throw out, I know that the Realtors are largely (if not solely) responsible for the stickyness of the prices here in South Florida.
I know that the RE associations are using their muscle to stop the flow of news to the public. They are trying to position themselves to be able to tell us whatever they want about the state of the market. This worries me. There are ~650 people who bought homes in July and I know they were lied to by their Realtors.
anon, how can you say those 650 people who bought homes were lied to by their realtors? Do you think everyone is that stupid.
The real estate market is just fine for many of us. Only 10 - 15% of the market is affected by the sub-prime mess. Not everyone bought in the last 5 years. The rest of us who bought 5+ years ago, and thats 85% - 90% of the market is just fine thank you. We have good long term standard mortgages, with lots of equity in out homes. We can afford to move up if we choose to, or even purchase a second home for retirement, or vacation purposes.
Don't be so angry that there still is a large sector of the population that can afford to and are smart enough to purchase RE with a long term view.
"The real estate market is just fine for many of us. Only 10 - 15% of the market is affected by the sub-prime mess."
Only 10% - 15% are affected by the subprime mess?
So, what do you think will happen when the banks foreclose on 10% - 15% of the properties and they're dumped on the open market? What do you think will happen to home prices then?
After the 10% - 15% are dumped, all of us, all 100% of will be affected.
I bought my home back in 1999. On paper, it's tripled in value and I haven't taken out any new loans. I have Save our Homes and don't plan on moving any time soon. So, I won't be directly affected.
However, there are loads of other stuff I have to deal with. I have to deal with the paper loss on my home when the price drops in half. It will still be worth more than I paid for it, but it still sucks.
I also have to deal with my neighbors who have moved out due to foreclosure. No one mows their yard and their house looks like crap. I worry the neighborhood kids will break in and wreck the place.
Most of all, I worry about our economy. I am a restaurant manager and my business is very dependent on a good economy. People don't go out to eat when they can't afford it. I'm already seeing the effect and I suspect it will get much worse. My bonus, which is dependent on revenues, is going to be WAY down this year and I attribute it straight to the housing crisis.
You may not think you're being affected because you're in a comfortable financial situation like me, but you are and I think it will get much worse.
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