Existing home sales numbers fell off a cliff in March, down 8.4% month to month and down 11.3% from March of 2006 (the latter the more important measure). Realtors are blaming it on the weather, yet again, and they do have some fodder for their argument. This February was the coldest on record since 1994, and February sales represent the March closings that we see in these numbers.
"This was not a good number; there's no way you can make this a good number. Bad weather in February is partially to blame for this, but also subprime problems," says David Lereah, Chief Economist for the National Association of Realtors. "There are a lot of high-cost borrowers right now that can't get a loan, so they can't buy a house."
Okay, subprimes and bad weather. I want to take it one further -- bad PR. The housing market slump may not be the worst in history, but I would venture to guess that it's getting more play than any other housing downturn in history. Trust me, I'm at the top of the blame list; this is my beat and I'll admit I've been getting more air time lately than ever in my almost 20 year career in news.
Why are we so obsessed with housing these days? I'm going to say it's because of the unique quality of this latest housing boom. Thanks to new mortgage products and new types of home equity lines, people really got a new sense of just how much wealth their homes could offer them on a short-term basis. Home renovations shot sky-high, the bulk of them financed by refi's and home equity lines. I'll admit it, I did it (love my new tub).
Even people who had no interest in selling their homes reaped the benefits of the boom in the form of short-term cash; some of them even parlayed their way into a second home, in fact, many of them did. Vacation home sales surged during the boom. And now it's all turning around.
But here's the thing: all real estate is local, and what's going on nationally is not necessarily what is going on on your block. I heard the greatest bite today from an economist in California, Dr. Raphael Bostic: "National housing markets are not really real and what each potential home buyer and home seller has to think about is the local dynamics in terms of their local area and their local market."
I look at my own market in D.C., which already bottomed out, and which seems to be surging back. Homes in my neighborhood sit on the market for about a week. A house across the street from me sold in one weekend last week. So why do all these numbers still bother me?
Again, the wealth effect. I see these national numbers and I start to get concerned that I'm not worth what I thought I was… Okay, my house isn't, but houses are so personal. I just feel, rationally or not, that because my biggest investment is my house, and because housing nationwide is on the skids, that somehow I shouldn't order that cool light fixture I saw in a catalogue yesterday.
I'm not going to go into the macro economic ramifications of what I just said, because there are currently 90 guys on CNBC doing that as we speak, but I will say that despite the fact that all real estate is local, I think all real estate owners feel national pain. We watch these numbers like we watch our checking account balances, and, invisible as it may be, there is a strong fishing line tying the two together.
Questions? Comments? RealtyCheck@cnbc.com