It's RIP for the housing boom

Last Tuesday saw the release of July existing-home sales that were slightly below expectations. For the housing market, one piece of data in the National Association of Realtors report portends the end of ever-higher prices: The supply of homes on the market now stands at 2.75 million -- the highest since May 1988.

A Commerce Department report Wednesday adds weight to the evidence: New-home inventories have grown about 15% since July 2004, to 460,000, the highest level since the Commerce Department started tracking new homes in 1963.

Housing ATM: RIP
Given all the multiple-property buying that's occurred, the accounts in the media (I'll share two of them below) and what readers of this column have observed with their own eyes, this news is somewhat surprising. However, it was inevitable that inventory would start piling up at some point. The time, as it turns out, is now.

There was another sign of the times in "Bidders win unseen lands, discover they bought trouble," a story in the Aug. 17 edition of my Seattle Times. The story details how buyers are clamoring after what can only be described as dubious properties, held by an outfit called Auction Acres. That doesn't sound like someone you'd want to do business with, especially when you read the fine print, which the writer (with the assistance of a real-estate attorney) describes as follows:

"Unlike a traditional real-estate sale, where the buyer gets the title while paying off the loan, the Auction Acres contracts give buyers use of the land, but the seller keeps the title until the full sales price is paid off. ... So the contract allows the company to keep the land -- and all the previous payments -- if a buyer defaults, no matter how much they've paid. The auction company can also borrow against the land."
--------------------------------------------------- BILL F.......

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