NAR Economist Says Flippers Could Get Burned

There was more bad news on the housing market today as one of the biggest home builders in the US cut its profit forcast in response to diluted demand in a slowing housing market. KB Home's CEO says that both new and resale homes are taking longer to sell. From the Associated Press:

"Our earnings expectations for the third quarter and full year reflect an increasingly challenging housing market, where the supply of new and resale home inventories has built up in recent months in markets that have experienced rapid price appreciation or substantial investor activity, or both, in the past few years," said Bruce Karatz, chairman and chief executive.

Bloomberg.com expands on that quote by explaining that Karatz is concerned about "flippers," property investors who may be attempting to exit the market en masse. Bloomberg.com quotes David Lereah, chief economist for the National Association of Realtors, as saying "People who purchased last year with the intent of flipping are likely to get burned."

Meanwhile, the lack of affordability in Los Angeles again made headlines in the LA Times:

The city of Los Angeles has made little headway in expanding the supply of housing for low- and middle-income residents because old affordable units have been destroyed almost as quickly as new ones have been built, according to a new study.

The analysis, to be released today by the Southern California Assn. of Non-Profit Housing, is likely to fuel an increasingly heated debate about housing and gentrification in the city.

I just mentioned the condo conversion issue yesterday in reference to another story about Standard Pacific Corp's decision to pull out of a condo project downtown.

Lereah, however, is optimistic about the big picture for the nation. As reported by Bloomberg.com:

"We'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory,'' David Lereah, NAR's chief economist, said in the report released today in Washington by the real estate industry's largest trade group. He didn't provide a monthly median estimate.

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