Existing home sales are at their lowest levels in four years. Inventory is at its highest level in 15 years. Many think the housing slump is far from over – but just how bad it is out there? The guys turn on the webcam to find out from Fast Money viewers who are trying to sell their homes.
Joe from Miami owns a condo which has been on the market for 10 months. There have been no buyers. Joe says he dropped the price more than 20% - $65,000 – and still not a single offer. However, Joe is a mortgage broker and he believes the housing market is actually turning – it’s the condo market that is in bad shape.
Guy Adami and Pete Najarian agree. Condos are overbuilt, especially in the Miami area. And Eric says he’s still skeptical in the entire space. The decline isn’t over, and it is poisoning almost every area of the market except for the high-end, which remains relatively strong (call it the "wealth effect" - the high-end is always one of the last parts of a market to be hurt by a recession).
Len, a resident of Cleveland, is building a new home which is about to close, but he cannot sell his old one, which has been on the market for three months. “We can’t even get anyone to look at it,” he says, let alone any buyers. He even dropped the asking price 5% to the level of the county appraisal.
This is an example of the inventory overhang, which is the biggest – and possibly the only – problem affecting the housing market. Publicly traded home builders haven’t stopped putting inventory on the market, Jeff Macke says, in an attempt to create an illusion of growth.
When these companies stop flooding the market and the inventory gets better, then it will be time to get back in, Eric Bolling says. Until then, stay away.
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Trader disclosure: On June 25 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (.VIX), (TIF) Bolling Owns (SZE), (VE), Gold; Bolling Is Short (FXI) And Owns (FXI) Puts; Bolling Is Short S&P Futures; Bolling Is Short Nasdaq Futures; CNBC Is A Service Of NBC Universal And Dow Jones; GE Is The Parent Company Of CNBC