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Existing Home Sales Double Dip Deteriorates With Biggest Increase In Months Supply Inventory In 20 Years
The double dip in housing is getting worse by the month. After hitting a nearly 6.6 million in existing home sales in late 2009, the number has now plunged to 5.02 million, a decline of 0.9% sequentially, and a major drop from the artificially induced peak. Sales for single-family homes were down and were up for condos and co-ops, indicating a preference for smaller, cheaper units among a population concerned with record unemployment and expiring homebuyer taxes. The number came on top of expectations of 4.98 million, with the range being from 4.75 million to 5.2 million units. Sales in the Northeast and Midwast improved slightly, even as sales in the South and recently bubble West declined. Yet the biggest stunner was the months of supply on market which jumped by a 20 year high, from 7.8 months to 8.6 months.
The double dip in the data is unmistakable. Existing home sales SAAR:
And months of inventory:
As expected, the speculative snow scapegoating campaign continues: NAR chief economist, said widespread winter storms in February may mask
underlying demand. “Some closings were simply postponed by winter
storms, but buyers couldn’t get out to look at homes in some areas and
that should negatively impact near-term contract activity.” This is getting ridiculous and hilarious as the drop in SAAR rates occurred in the West (i.e., California), where last time we checked snow was just a little less of an issue. But whatever, the propaganda war must be won at all costs.
Full release from the NAR spin masters.
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This is NOT, I repeat NOT, a leading indicator. That is all.
I'm sure that given the magnitude of Bank leverage still around 30, and the continuing drop in housing prices that make up a large portion of their asset base
WONT HAVE ANY EFFECT on solvency or result in CREDIT CONTRACTION, and that certainly won't have ANY IMPACT on future asset prices or the US economy as DOMESTIC DEFLATION kicks in.
I'm SOOOOOO glad that there is no reasonable case for thinking that this could have any leading indicator status.
How is this a double dip? Why not a wave 2 towards improving (record) sales?
Also the increase in condo sales is most likely due to wholesale buyers purchasing the entire building off the bank only to divvy it up and turning a cool 20% profit within minutes.
Uh, it went up, it went down, it went up, it went back down - double dip
why not a wave 2 ? High unemployment,underemployment & low consumer confidence -
As for your theory on the wholesale buyers it is a possibility with people downsizing the American dream -but it just leaves that many more houses on the market .Inventory is climbing and will continue to as every up in sales will result in banks putting more shadow inventory on the market .
Double dip implies previous support is broken otherwise we have double dips all over the place........gold just double dipped a minute ago.
Also, based on the sentiment of all commentators, I may just start to turn my bearish level down a notch towards neutral.
But seriously, how could the hyper-inflationists on this site (about 90%) simultaneously be bagging the housing market? Makes no sense to me.
Technically you are right it hasn't broken support but it is damn close and fundamentally I dont see it having a problem breaking a support in the very near future . Demand for houses just isnt going to happen with high unemployment/job uncertainty. Banks have decreased lending and people in their minds feel they can't go to a bank for money out of fear of rejection becasue they hear all over the place how banks aren't lending.You can print all the money in the world but if there is no demand for something prices will remain low no matter what .
I think a lot of people here expect a second deflationary leg down before hyper inflation kicks in .
Not so fast: Huge issue for consumers to get mortgages on a flat in a building full of unsold condominiums. Feds backing away from that particular burning building.
What's amazing is that all the "snow" here in the north east saturated the ground so much that it has led to a record sprouting of For Sale signs.
They just needed water to grow...
It's all that "natural" fertilizer being laid down country wide by various Ponzi promoters and sundry politicians.
+1....
Took the old vette for a joy ride around town this weekend. One 1 dead end block 6 for sale signs, out of 9 homes. People truly have no fucking clue how bad things are going to get....forget about how bad things actually are now.
Wrote a little note to my local Pols pointing out that property values in decline plus increases in property taxes, leads to more declines; a vicious cycle.
Also pointed out that over the past 3 years the majority of homes are selling at up to 35% below town assessed values, with no bottom in site.
Response: f. u. pay your taxes and shut up.
Well, at least you received a response. My congress critter didn't even bother.
+1. That's the best comment which I've seen about the snow.
Tyler,
You must be crazy. Yahoo says the existing home sales report was good news.
http://finance.yahoo.com/news/Stocks-climb-after-home-sales-apf-2904857264.html?x=0&sec=topStories&pos=main&asset=&ccode=
Now that is funny.
Yeah that's because in the bizarro market, less bad = good.
Yahoo- you gotta love their optimism it defies statistics, data, and common sense.
Watch your back, Google, Yahoo is falling behind you less than expected.
"Tyler, You must be crazy."
Yeah, Tyler. Whatcha smokin'?
National Association of Realtors and every cornhole Cali newspaper says the bottom is in, time to buy, hurry act today while supplies last!
Plus Cramer the Clown said the bottom was in months ago.
Tyler... either you or Cramer need to put down the crack pipe for your own good...
We know Cramer isn't frothing at the mouth and bouncing off of the walls like a hype... now do we.
The real estate industry is based on lies and propaganda to make sales.
Seems interesting that those with a vested interest in making a sale, or seeing sales or prices rise, are always the same suspects working for the "association" of retarded property pimps.
Only the real estate industry?
Looks like Chindit13's writing to me..
It is, if you're short Centex and Alabama heritage.
Something to think about now and remember going forward:
"Temps do not buy houses."
Homebuilders gain, too. Obviously the market could care less.
Everybody "knows" that this market is going to rally until at least May, and the S&P will go to a level of 1270-1300. At which point, there will be a horrible correction, but there will be plenty of time for speculators to unwind their positions in an orderly manner.
Watch out for August, when it will be just too damn hot for potential homebuyers to go out.
I say the ceiling on this market is a long way away. Full of helium, rising without disturbance, not a care in the world, into the sky blue sky.
I wonder are they able to keep a straight face while writing about the affects of snow. We had a ridiculous amount of snow this winter and it had a combined impact of maybe 6 hours (TOPS!) for the entire winter (time taken to repeatedly clear my driveway).
I was almost expecting to see words such as "nesting" as in the following.
"Sales were depressed because of the nesting instinct all humans exhibit during large snow falls, when the impulse is to build a nest and copulate furiously. Expect to see an explosion of baby food, diapers and rattle sales beginning the 4th quarter 2010."
I fully expect a batch of babies named Ben, Timmy and Barack.
I don't know about the "build a nest" part, but "copulate furiously" I can handle. :D
Only if "Darth" is their prefix...
Haven't seen that one yet, but it'll come. "Markets are up today because housing sales are far less terrible than we thought they were. They were only terrible because of all this CRAZY snow that just doesn't happen every year around this time. More good news though, we expect a significant increase in diaper sales in approximately 9 months, as while people weren't out buying houses they were busy huddling together naked to conserve body heat"
You people in the States better wakeup.
http://worlddarkestdays.blogspot.com/
The United States wants to come into your State like the IMF, you know what that means right?
If the NAR economist is wrong about the real estate thing, he can always get a job at BLS or CBO.
Look at existing home inventories, the double dip has started while median home prices continue to tank. No rush to buy a house! More Fed money printing and tax credits coming onto the US Gov smoldering stinky debt pile.
In Cali, there are 630,000 homeowners who are in foreclosure or 30 days + late and are not even listed on the MLS.
www.doctorhousingbubble.com
doctorhousingbubble is one of my favorites. He is non stop on the factual analysis.
Guys like him are why the Internet needs to be censored and controlled by the responsible corporate/government leaders of Amerika... The teaming of the NSA and Google is a start...
It makes the head spin that this level of inventory can be kept hidden from public view. It has nothing to do with the skill of the Ponzi and everything to do with the level of denial the average American is willing to engage in.
I was in the line at the local post office (longer these days because of shortened hours and less staff) and I struck up a conversation with the person behind me. We were discussing the unemployment rate and he mentioned the government says it is around 10%. He laughed when he said it, demonstrating his contempt. I asked him if he believed the government and he snorted and said no, it was much worse. I then informed him of the"official" U-6 number of 17%+ and that startled him. He then said "But the government says it is only 10%." He then told me he didn't believe me and turned away to end the conversation.
It was OK for him to say his government lies but no OK for me to say so. And I was quoting the official U-6 number. While people profess not to believe the government, they secretly hope the government isn't lying too much. When faced with the fact they are, they will revert back to the standard infantile response of defending the government.
I can call my mom a whore but you can't.
Or its just too much reality.
I do the same thing and emphasize, before I tell them 17%,that U6 is the broadest measure of unemployment as measured by the government. Then I tell them 17% and repeat that this is an official Government figure. Always met by silence....
"Or its just too much reality."
That's exactly what is going on. When people are in denial, too much realty has a tendency to upset the apple cart. In fact, this is one of the ways to cope, by "admitting" that there is some lying and corruption so they can ignore the even worse state that currently exists. By agreeing to "see" some of the lying, they don't have to acknowledge all of it. It allows for a deeper denial state.
Like I said.
"While people profess not to believe the government, they secretly hope the government isn't lying too much. When faced with the fact they are, they will revert back to the standard infantile response of defending the government."
Their infantile response, when presented with facts that dispute their concocted worldview, is to defend their government, the very government they don't believe in the first place but desperately wish they could.
The same dynamic goes on in dysfunctional families, such as when the father is molesting the child. The wife will admit nothing or sometimes admit the father is doing something, like being very "playful" or " attentive". By doing so, she can safely ignore the depth of the wrong doing. The child goes through similar steps to cope with a terrifying situation in which the child is powerless. Both the child and the wife will actually defend the father if he is confronted by others for his terrible behaviour because to not do so would mean they must recognize their own part in the dysfunction. Since every one is in deep denial, what's another few steps deeper when the alternative is the ugly reality they've been running from all along?
The public is facing a Daddy (government) that is no longer protecting but rather is now molesting.
Yep, understood.
Interesting, but very destructive response.
"Interesting, but very destructive response."
Denial is by its very nature self destructive. Anytime you deliberately obscure your "vision" you are hurting yourself. This is why denial takes place within the mind, away from prying eyes, where we are all alone and accountable to no one but ourselves.
It seems tied in with the self hate we all carry from living the inauthentic life. While we might have a happy face planted on our puss and even feel "well adjusted", being well adjusted to insanity is not a good thing. This is why there is such pressure to herd, to go along with the majority. It allows for little to no self reflection because everyone else is doing the same thing.
If you haven't read Wendell Berry yet, I think it would be a good fit
http://www.amazon.com/Unsettling-America-Culture-Agriculture/dp/0871568772/ref=sr_1_4?ie=UTF8&qid=1269375861&sr=1-4-spell
I didn't know this author. I do now. Thanks.
If you read it. let me know what you think..
I remember a similar thing in Moscow in 1989. You couldn't get fresh food anywhere, all the shops were empty but the roads were full of trucks. My guide explained that the party made the drivers take to the streets empty and move around all day, to make it look like the economy was functioning, but everyone knew they were empty. You could feel that the fear of the Stalinist era had been replaced with contempt.
My experience of the US is most people are ignorant of how brainwashed they have been by the notion of the America, that they don't want to face up to the ugly truth. This is why the powers that be know they can get away with the big lie (Iraq, 9-11, Iran-Contra) rather than the little lie (Watergate, Lewinski). The little lie is acceptable as they can see this as human frailty, but the big lie must be ignored as it threatens a core aspect of one's faith in the nation.
I don't know how this is going to end, but I suspect not well.
I see what you see CD. When you try to explain what is happening to people, there is this visceral reaction that it is somehow unpatriotic to question the moves by or reports from our government. Honestly, I almost wish there were some sort of massive, well-orchestrated, behind-the-scenes effort underway to hold things together. The reality is that many (but not all) people remain very much in denial (as are, I am guessing, the Fed and Treasury), and the market 'rebound' of the past 12 months and easy/free money Fed policy has simply acted to reinforce the perception that late 2008 was a hiccup, not a seismic shift. Specific to this thread, home sellers are still in denial evidenced by the continuing spread between list and sales prices (and ultimately fair value, which is lower yet). For now, I have stopped trying to convince anyone that things are other than rosy and on the upswing, and content myself with reading here to get a better sense of what is really happening.
"In Cali, there are 630,000 homeowners who are in foreclosure or 30 days + late and are not even listed on the MLS."
That's because there's still a chance they may actually make another mortgage payment someday. Seriously.
Also, it is real hard to sell at a loss.
When I was amateur trading, the hardest thing I had to learn was to cut my losses by selling my losers. Very hard to put into practice...We would like think that all the Turkey's will eventually get back in the cage, but what happens is we end up losing all the Turkeys
Quick, break out the spinmasters on all media outlets asap.
BTW - Notice FNM is up today? Bizzarro
The first time home-buyer credit must be doubled!
Highlights from the demorats' new housing law:
(1) Nobody can be turned down for a mortgage, regardless of a preexisting inability to ever pay it off.
(2) Everybody must get a mortgage.
That's the policy.
I thought that was health care/insurance...
It is common knowledge at least in our neck of the woods in the Philadelphia area that the tax credit is no longer a big factor, and time has basically run out for new construction deliveries.
I think the "green shoots" news media and the $8,000 tax credit have artificially supported prices over the past 6 months.
Where will the new homebuyers come from?
Existing homeowners will certainly not be "moving up."
Any new homebuyer thinking of buying a home did their best to accelerate their purchase to qualify for the tax credit.
Throw in increasing unemployment, under-employment, state and local budget debacles that will lead to public sector layoffs...
and the amazing number of homes that AVAILABLE TO BE SOLD, but NOT ON THE MARKET YET because the banks have not even made a dent in the foreclosure arena...
Not pretty.
And clearly a LEADING INDICATOR.
Care for chips with your double dips?
NO, no, no, you guys at ZH just don't get it. Pretty soon there will be less than a million homes sold, so when the housing market finally does get back to 2 million the media will be trumpeting the fact that housing sales have gone up 100%!!!! (just like the stock market "recovery," get it?)
I think you guys are missing something. This is gonna be BIG!
The many hundreds of thousands of folks who haven't made a mortgage payment in the last year or so and have not been served with a "Notice of Default" will be TRADING UP soon.
Full disclosure: 500% long homebuilders, consumer discretionary and fertilizer stocks.
I don't get it Trading up how?
Moving into an empty house in a more affluent neighbourhood?? Like moving from a tent under a bridge to a house with an actual roof on top of it?? Yeah, well its not like anybody is paying for it.
Too much reality.
Back to my glass menagerie.
I've been advising my renting family and friends that they are better off than mortgage owners like me due to the immense mobility they have in the present job/economic environment. Most of them have deferred all house buying plans indefinitely. Only those who know for sure that they can plan to stay in the house for 10-15 years are slowly looking, because they know that they will not get their money back till that time.
Kalki
Same here. I should put the House in Ca, the only one with a mortgage, on the market and just dump it. Its only going to get worse. Hate having illiquid assets..2nd time for Ca too
I've said it before and will say it again - when it comes to this housing cycle. If you were in the southern california market when it started tanking in summer 1989, you watched a market hit bottom mid 2006 (7 years). Then, you enjoyed LOW single digit gains off the bottom until 2000 (3.5 more years). Things didn't really get rolling until early 2002 (2 more years). Add it up - anyone that says we are coming out of anything Real Estate related is... WRONG. And while you are at it, look at the factors that drove pricing down in the 90's and weigh those against where we are now. I come to this site because my naivete in finance cost me money. But in Real Estate - I hit it out of the park. And I am renting now (and sitting on rentals that were purchase prior to 2000). Don't let anyone convince you that Real Estate is a "buy". If you can get a cash on cash return that you are happy with, fine, buy. Need a domicile, and don't care about a loss, or, appreciation, buy. Investing for the eventual appreciation play - sit on your hands for a while.
In Sept of 90, I sold $40k of MSFT so I could make a down payment
on a bay area house and then northern ca essentially followed your schedule. BFML....
Now that the Heath Tax bill has passed the "current administration" can get on with QE2.
What, and give up so easily on cap and trade?
I kinda live at the edge of suburbia in Jackson, MS and on my way to work there are about 5 or 6 home communities that were started post-2006. All the builders of the communities but one have gone under. Neighborhoods 1/3 of the way finished without the possibility of ever being completed. However, the one that didn't go under thought he was being smart when back in June he started the construction of about 15 new homes to take advantage of the credit no doubt (even though the prices are slightly out of first home pricing territory). Nevermind the fact that within a 2 mile radius there are dozens and dozens of identical brand new homes sitting empty in all the other foreclosed neighborhoods. Anyway, of those 15 now complete, he has sold about 3. The rest sit as empty as all the others in what used to rolling cow pastures.
A foolish builder and perhaps an even more foolish bank backing him.
The cows probably provided more landowner ROI.
Green sharts are breaking out all over, I tells ya.
Been renting and simply can't enter into a transaction in this kind of market. It would be different if I could get a house I really liked for a good price compared to my salary but people have bid up housing to where you think every single homeowner makes $300K+. There is just no way I'm going to get into a massively leveraged illiquid investment that stretches my budget in the least and that I have no hope of getting back out of at a fair fundamental price. I want a low price - and that means lower than fundamentals not 2006 fantasyland levels.
The only thing that makes me lean slightly the other way is that if the government really does something insane to save this thing, I want to be a direct beneficiary too and not just write my tax check for everyone else who screwed up. Of course my wife who is an avid HGTV watcher and is still convinced our whole family would be better off if we had bought in 2005-2006 is also a nudge on this (apparently a family requires 4000 feet under air to not be deficient in some way). Hell, we probably saved either a couple college educations or a default on that one as most of our friends have taken MAJOR equity hits. Screw it - I pay roughly in rent what my taxes/insurance would otherwise be. I live in a reasonably good neighborhood, send the kids to private school, and sock away money monthly unless we do a big trip or something. Plus if my industry takes a hit I have a lease rather than a house to deal with.
This is what happens when you try to rig a market - people stop playing as they can't value or gauge their real downside. I laugh every time someone brings up that $8K credit - that's a drop in the bucket compared to my downside and even if it mattered it's only value is to keep up the price of the house by at least that much. Show me value and I'll buy, otherwise from the recent numbers we seem to be getting short on 'bigger fools' and those willing to finance their idiocy.
Keep the wife in check, you're right on this one.
+1
The other problem with buying property in this market is the state government's need to raise the tax base to compensate for the current shortfalls. New property owners are going to find that their taxes are going up in spite of the fact that the property is selling for less.
How's that housing bottom call going Cramer?
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