Wednesday, September 20, 2006
The bursting bubble hits the "upscale suburb" of Downers Grove.
Take this property in Downers Grove, an upscale community about 20 miles west of Chicago. Downers Grove has an average home price of $532,000. This house is priced at $409,900, well below the average.
Home appreciation was 10% in 2005 and has been steadily moving upwards since 2000.
These sellers never saw that 10%. They bought in 2004 for $393,000. They will, after paying realtors fees, lose money. Even if they got their full listing price now (it has already been reduced once from $423,900) they would already be in the hole $3,000 after realtor fees. And who is paying full asking price these days?
This is not an isolated case. Just down the street from the Downers Grove house is second home at 1411 35th Street that was also bought two years ago but for $390,000 and is on the market for $439,000. They may actually make a profit. But with all the tales of riches and people making $200,000 in only a few years, what is $10,000? Better than a loss, but hardly any consolation.
The housing market downturn has only just begun. If these sellers are already selling for losses, what will happen when the market turns really bearish? Sellers may have to come to the closing table with thousands in cash just to close the deal.
Crude oil down over 20% in two months. The culprit seems to be weakening global demand.
Fall is traditionally the peak delivery season for the diesel-thirsty trucking industry, but Wall Street analysts have warned in recent weeks that shipping volumes are not robust. The U.S. airline industry has also retrenched in the face of decreasing passenger traffic, according to data maintained by the Air Transport Association.
The latest Energy Department data showed distillate fuel inventories growing by 4.1 million barrels last week to 148.7 million barrels, or more than 11 percent above year ago levels. Gasoline inventories increased by 600,000 barrels to 207.6 million barrels, or 6 percent above year ago levels.
Crude oil inventories declined by 2.8 million barrels to 324.9 million barrels _ but that's still 5 percent more than last year and well above the five-year average for this time of year.
Light sweet crude for October delivery on the New York Mercantile Exchange fell $1.20 to settle at $60.46 a barrel _ the lowest close since March 20.
Bait and switch mortgage lenders. Not really a recession article per se. More like a change in psychology. When the housing boom turned bust people will look to blame someone. Not to imply that these people are blameless, more that people will notice malfeasance when they are hurting.