The most striking thing about real estate in the Village on the Edge of the Rainforest right now is just how oblivious everyone is to what is going on in the United States.
On Tuesday, a report said that sales of existing homes in the USA plunged 27.2% in July to the lowest rate since the National Association of Realtors began counting in 1999.
Confidence in real estate in the United States has evapourated. As a result, so have sales.
Nothing seems to be able to change that. The interest rates for 30 year mortgages are at historic lows. Generous tax breaks abound. Goverment subisdies ($8,000 gifts just to buy) aren't working.
Real Estate continues to plunge.
And perhaps the most damning statistic to come out is the fact that sales of expensive homes in America have completely evaporated.
Guess how many homes priced above $750,000 managed to sell in July?
Answer — zero. That's right... zero.
And that's been the case for the second month in a row.
In the Village on the Edge of the Rainforest, the month of August is coming to a close and real estate sales are on pace to tank for a third consecutive month. August 2010 will be the 2nd worst August in the last 15 years.
Confidence is evaporating. People are starting to understand.
And this is all happening despite a 5 year mortgage rate that has dropped even lower the past month.
I have always maintained that we will see a correction of a minimum of 40% for houses and 50% for condos. I suspect the reality will be more like 60/70 or more.
Popular opinion is that the market will rebound in October in the same fashion that it bounced back last time.
Baring the introduction of American-style 30 year fixed mortgage rates at levels similar to the current 5 year rates, I don't see any rebound happening.
We shall see.
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