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New Home Sales Plunge By Record 33%, Market Plunges To Welcome Double Dip
New home join the existing home sales double dip brigade, and plunge by an unprecedented 32.7%, nearly double the expected -18.7, compared to a previous reading of 14.7%. The government succeeded in making a mockery of this data series with all its ridiculous stimuli, and now we are officially in a housing double dip absent another massive stimulus bill. The median sales price of new houses sold in May 2010 was $200,900, lowest since December 2003, and a 9.6% drop YoY. Full report here.
Oh, and stocks plunge on the news now that there is no doubt which way the Head And Shoulders-shaped recovery is headed. The only reason the market is not down 10% at this point is because the Fed will imminently announce negative interest rates, as it continues to exhume the grave of JM Keynes.
Here is what the official entrance into a double dip looks like:
Even Goldman can't spin this abysmal result:
BOTTOM LINE: Home sales fall sharply in May to a new, all-time low following expiration of tax credit deadline. Prior figures revised down significantly. Report underscores challenges to builders posed by large overhang of unoccupied existing homes.
US-MAP:
New home sales -6 (2, -3).KEY NUMBERS:
New home sales -32.7% in May (mom, -18.3% yoy) vs. GS -25%, median forecast -18.7%.
MAIN POINTS:
1. Sales of new homes plummeted in May to a new all-time low of 300,000 (annual rate) following the April 30 deadline for contracts to be signed to qualify for the homebuyer tax credit. The report also featured large downward revisions to sales rates for April (446,000 vs. 504,000 previously) and March (389,000 vs. 439,000) that raise questions about the power of this stimulus, which was extended from a November 30 deadline (for completed sales) to April 30 (for signed contracts) and June 30 (for completed sales).
2. In all likelihood, sales will rise a bit in coming months, as the 300,000 figure reflects some acceleration of sales into previous months to get the tax credit. That said, the persistence of sales at such low levels (and the magnitude of the revisions) underscores the challenges facing homebuilders, whose projects must compete with a large overhang of unoccupied existing homes.
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This is/was so amazingly not a surprise. Tons of people, including me, saw this miles away.
You'd have to be as dumb as an economist to miss this one.
That is an ugly ugly graph. I don't see any good news there at all.
Stocks reacting well so far though.
The summer selling season may well be dismal. But numbers will
improve from this report.
Right. If this number were really bad or actually meant something, the stock market would be letting us know.
The stock market is our reality. Buy the dip.
Agreed. And, putting on my "Carnac The Magnificent" hat, I can most assuredly say: It will get WORSE.
Banks are holding their MBS crap, and when the race-to-the-door happens, it will absolutely annihilate the market. Fannie & Freddie will be broken up and shut down when we can't afford the monthly liability payments (that time has already passed, but the accountants are drunk-and-passed-out in the lavatory at the moment). Real people don't have jobs, and can't service the increasingly upside-down mortgages, which will further accelerate the decline. People that *can* pay on an upside-down mortgage will increasingly realize they are getting screwed by paying too much for their house, plus for houses they don't get to live in (because the government will "give" them to people for political favors).
Long-term, we will reach, and then overshoot, the mortgage-to-income ratio of 3:1. Inevitable. Unavoidable. Here comes another 20%-40% decline from today.
Yes, this is a default spiral. The only offsetting factor is massive currency debasement, and sovereign default. That's why it's not stupid to mitigate risk by looking for a foreclosure deal, although housing will *never* go back to previous levels -- the MBS market (e.g., leveraged speculation) will never return to its previous levels.
None of this is hard. That's why I say you must be as dumb as an economist to miss it.
I thought my tinfoil hat was pretty damn cool, until I saw THAT one. Covet, I covet.
Heehee. Funny.
"That is an ugly ugly graph."
Just Think:
We know the March/April revisions were for political purposes... not statistical accuracy.
Just think if there were no revisions:
March = 439,000
April = 504,000
May = 300,000
Now It's a 40.5% Drop, Not 32.7%
Then the drop month over month would have been real embarrassing.
I mention the useless month over month only because the Obummer administration and CNBC tout month over month ad nauseum...
so what's with them, are they just that dumb or just playing not too informed people and lying...at the end of govt subsidies, sales go down, as unemployment rate no different over past year...wow, who would have thunk it, cash for clunkers all over again..
Fundamentally, it is a flawed world view:
Their world is so disconnected from reality that you can sit back all day and be continually amazed at their lack of common sense.
Mikla, I enjoy your analyses - they are spot on, except for one thing: they seem to assume sincerity. That is, it appears you think the money elite and their paid shills & minions in both academic (aka "economists") & political arenas actually believe in what they are saying.
I would suggest nothing is further from the truth; in fact, they know full well about the true nature of things and are purposely lying as a simple expedient to continue feathering their own nests. IOW, pure self-serving propaganda.
To derive the truth to your two points above, simply substitute 'say' for 'assume'. Their world is NOT disconnected from reality. In fact, they created the credit-money system we live in THE reality of our day, and they are not going to let it go down without a fight.
That is what this green shoots, TBTF, bail outs, austerity, etc. nonsense is all about - preserving the system they invented & imposed on humanity. I no longer care about the debate - this fucker is gonna fail. My intent is to help lead a movement to change the underlying system when it reaches a critical point of weakness.
These fuckers are going to get justice, even it requires extraditing them from the ME where they will have fled.
I think we agree. My only defense is that I see two groups: The ruling elite, rationalizing social control and support of the fundamentally fraudulent "system" through "economic assertions" that they themselves actually do not believe (e.g., they are lying). For example, it is on record that Fedspeak and Fed Chairmen intentionally assist their friends in front-running the retail investor and deceiving (lie to and intentionally mislead) the public.
However, there is another collection of mercenary idiots that got their "Economics" degree and now teach at the local community college, wear sports coats with worn patches on the elbows, drive a beater-car, and are entirely dependent on the state employee pension system because they don't even have the sense to balance their own checkbook. Many of these are mere socialists -- not evil, just emotionally unbalanced and incapable of reasoned thought. They are not in charge of anyone (though they wish they were). Rather, we can have pity for them because they are brain damaged due to their "Economics" schooling, and thus permanently disabled from rejoining the rest of society.
On the bright side, this second group creates for themselves various religiously-based support groups that they pretend to be academic forums. It would serve us both well to assist them in setting up a "leper" colony for their kind on some distant island.
[EDIT] Oh, so in summary, IMHO the second group really does believe. Just pity them -- they are literally brain damaged.
As for the first group, I agree with you -- I will shed no tears when their past capital abuses lead to a present capital punishment.
mikla...nice points, and do think the sometimes the biggest believers are just one rung down from the leaders who know they are lying arses...and there is people who sort weakly convince themselves and their fellow bubble world dwellers, just cause it allows them to prosper in their jobs, as Upton Sinclair said "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
Leo, it's dipping again!!! Buy, buy, buy, buy!!!!!!! Holy crap everything is on sale!!
BP
29.99 +0.31 (1.04%) Jun 23 11:02am ET
Houston, we have a bottom?
No
looks like the leak has blown a cork
The equity dip is only till 1:30 PM for gold opex. Afterwards, market should find all this news very supportive and move well into green territory...
It's funny 'cause it's true.
This reflection and conclusion is 110 % right, Sir,
DING DING DING.
We have a winner.
Yes indeedy, IBelievInMagic. Well said.
Pundits will now claim housing has seperated from the rest of the economy and it is just a double dip in housing the rest of the economy is fine...just like unemployment. I wonder how many other metrics have to depress before the 'recovery' is officially over?
This dumb ol' housing data is widely misinterpreted. It simply shows a broad trend to tents, trailers, and cave-style accommodation. Consumer spending, free from mortgage drag, will soon ramp up. Yay! It's all good.
Disclosure: long unicorns and gossamer wing futures.
From GS: We expect this downtrend in the housing markets to have virtually no effect on the equities. In fact, our great computers (which fill our hallowed halls) have been programmed to ASSUME CONTROL. Our circuit breakers will surely stop any major slides.
We are long: Coleman Camping supplies, Smith & Wesson, Bullets Inc., and BigLots.com.
We are short: (that's it, we're not very tall...)
It's also a hedonic adjustment showing no inflation. People are choosing to use lower-cost alternatives like refigerator boxes, meaning that aggregate prices are falling.
That is reminiscent of the "subprime issue is contained" comment..
"I'd like econ-quotes for 20, Alex."
"Who said 'The economy is reaching escape velocity?'"
You have to ask yourself, if the 'recovery' is so 'fragile' that things like a non-zero Fed rate would crush it, is it really a recovery?
depends on your perspective, if you are a regular person, making less, working longer hours or are unemployed, its no recovery...but if you are rich, have lots of money in stock market or are a bank and kind borrow money from Fed for nothing and buy Treasuries with it...its a nice profitable recovery...
so when they say recovery, remember WHOSE perspective they are coming from...that is why a jobless recovery is not a contradiction in terms to them
Gotta love equivocation!
The hits just keep on rolling....
Who cares about home sales - the new iPhone hit the shelves today!
New economic indicator that measures people's willingness to be foreclosed on only to discrectionary spend and help support Steve Job's mind control.
And there are reports that Kindle sales have been brisk.
See, we can ignore reality if we try hard enough!
This is a space/market where I have some insight & "inside" scuttlebutt...
The Kindle and Nook are already being tagged as 'flops'. The iPad has sold well to this point, but sales numbers are slowing faster than expected... it seems the non-Apple market is not jumping on the iPad the same way they did for iPod/iPhone.
Expect all of the above to miss expectations going forward, including big downside misses over the holiday sales season... and yes, that includes Apple, too.
Consumer discretionary peaked long ago, and even Apple/gadgets will go out with the tide... this market is rolling-over despite manipulation/Cray support... and that's saying something.
Harry, I'm glad you're in bed with us. It's strange, but I'm still glad.
OT: I work a large and reputable ink cartage company and we just got a massive rush order in.
Make sure Turbo Timmy signs for it
Did the order read "Need maor red and cowbell"?
Ragnarok
" I work a large and reputable ink cartage company and we just got a massive rush order in."
Your company hauls ink? Is that by horse cart? And why is ink like a billion dollars a barrel?
Really? God, my delivery must be awful. Let me break it down for you:
1) Joke, I don't work at a ink company
2) Deflationary housing news
3) Fed orders ink to print to inflate asset prices
Don't worry I won't quit my day job.
Thanks, that helped.
It looks like market participants with long positions in unicorn and gossamer wing futures didn't expect this piece of news.
Tyler, love the site. Ever considered getting a real server?
Maybe a virtual server?
Have you donated towards the site's costs?
Obviously, with enough traffic to slow the site and constant adds on every page, I doubt ZH would even notice a small denotation, unless they're asleep about what they're charging these advertisers. Btw, many times, it is the adds that slow the page loads, because it's part of the deal that the adds must be waited on, even when the ad servers are slow.
I would note, I was watching for this headline on MW for a long time, and it didn't appear till after ZH.........another scoop !
The other reason there isn't a 10% drop is the one you guys have pointed out for a year now. No one is trading. This market no longer has anyone in it. What do the computers care?
The super fast text reading Algos might care.
Shhh...they're listening....err reading.
Not until THEIR homes start getting foreclosed on. Watch for a change when the CRE crap hits the fan for real. There's nothing sadder than a once proud super computer trying to stay dry under a freeway overpass.
Surpised they're not blaming this on oil spill live cam hypnosis.
....and in other news....the US gets another goal taken away
Water is wet.
Fire is hot.
US Economy is, and has been, in a depression for the last 2-years.
And the US Men's metric football team is again getting screwed by FIFA officials.
Yep, all is right and well with the world today. Carry on.
VIX moving on up
. . . to the beast side.
Americans are apt to be unduly interested in discovering what average opinion believes average opinion to be.
John Maynard Keynes
This is the "strong summer sales" season. Grabbing popcorn and waiting for the show at the "slow Fall season"
Well, this IS the "summer of recovery"
Time to invest in cardboard manufacturing as there is soon to be a bubble in refrigerator boxes...sold new without the fridge. Get in while prices are low.
What's amazing to me is that the DJI is only down about 20 right now.
The unicorns at the Fed are shitting skittles and magic fairy-dust is on back order.
Flash Crash!.....What a Feeling!!
oh jeez emptor... major flashback to "Flashdance" and Irene Cara "What a feeling"... I am sure there is some correlation between our current situation and her amazingly prescient lyrics:
First when there's nothing
but a slow glowing dream
that your fear seems to hide
deep inside your mind.
All alone I have cried
silent tears full of pride
in a world made of steel,
made of stone.
......
What a feeling.
Bein's believin'.
I can have it all, now I'm dancing for my life.
I work with agents across the country daily.
I am being told there are no buyers and that this is worse than 2008. I think I mentioned this a couple days ago on ZH.
You did, but some d-bag tried to intrrupt stating that his "friend in Charlotte said it is their best month ever"!
really? I just spoke with a real estate agent and she said the market is "warming up", that I "need to move fast", that "buyers are coming back into the market", and that if I wait too long I "may miss the great values".
Meth is one helluva drug.
Residential real estate is a great bastion of livin' on tweaker time.
http://www.youtube.com/watch?v=CViD-pnqItM
The Untied States will end when Justin "What's German?" Bieber's voice changes.
Imagine being on a show and the host has your name all over his shirt:
http://www.youtube.com/watch?v=DkKqihEUmH4
Hey, WW, the Coast is clear! There's hardly any tarballs!
http://www.youtube.com/watch?v=KBVA9bHL890
I'd like to see her say "parts per million toxicity" ten times fast.
The Democratic Republic of North Korea should hire her to get more supporters:
http://www-tc.pbs.org/wnet/need-to-know/files/2010/06/worldcup1.jpg
Real estate brokers don't want to lose their jobs either.. as long as you buy, they make money, so of course they're going to feed you a line of "cherry bowls and honey coated bullshit" to make you think about spending money.
A real estate broker cannot truly lose their job if free markets are permitted to work. If home prices fall then the commisions will fall however everything in the economy is supposed to be moving in tandem so cost of living is more affordable.
The free market is lurking in the closet and is dying to be unleashed but they fear it because his name is deflation currently and they have no intention of allowing serfs to level the playing field one ounce. And they will try to reinflate with the serfs money for their own benefit. It is truly sickening.
Semantics aside as far as losing the "job" is concerned.. if the home prices fall, they lose commissions and let me tell you, brokers can be REAL bitches and VERY competitive when this type of thing ISN'T happening. Reduce their commission and you'll have some serious competition among brokers. Add on top of that, that people just aren't buying homes as pull ahead demand has abated... well, I for one see some movement out of that job market and into other fields.
My mother went through that crap for 13 years before she had enough of it and became an RN. It was one hellacious job at times, and I can recall her having sold many houses/properties with a good commissions coming only to be attacked by other brokers claiming this and that about referrals and who showed what, when and who was first in even taking the call to the (at the time) potential buyer. Ugly shit, my friend.. ugly indeed. So when I see comments like this by brokers claiming fairy tales and pots of gold for everyone, I'm immediately skeptical because when the market is good, people come to you, period.
I live in a fairy tale Manhattan real estate market. I have no doubt the rest of the nation is suffering and competition is incredibly fierce because there are so few viable buyers. What I am trying to say is that if the government just let the free market work instead of trying to mark up prices you would very quickly see how a 50% drop in home prices spurs home sales. My contention is that home prices are 50%-75% marked up at current levels and banks are hoping to fool as many responisble savers with jobs remaning into purchasing their overvalued homes. It is a dangerous game.
Thanks for clarifying. With this, I agree 1 brazillion percent.
Very True. Big Money don't want debt free serfs. They always want to collect interest payments and extract usefull wealth from serfs. So debt based assets have to always rise faster than wage, so that wealth can be extracted. That is the whole point of inheritance tax, keep children of serfs always in debt. Only Big money has 1031 exchange for Real Estate and trusts etc which are tax free. Gold is their number one enemy, which can hide wealth and also is internationally accepted currency(or can be converted)
Theoretically correct. But, if you were a 'real estate broker' who hadn't had a closing for 12-24 months, would it feel like you were 'employed'? Number of transactions are down 70% in my county. Average sales price is down 35%.
It would be stupid to buy a house until we know where the bottom of this market is. Propping up the housing-corpse isn't helping us.
Do you really think the serfs are going to fall for this? Seems like quite a few are not falling for it (yet, at least).
Wait until she says "buy now or be priced out forever."
Here in Calgary, Canada (with our "dirty" oil riches) - real estate is stagnant. New listings have exploded. Sales are very scarce. Price reductions are becoming more frequent.
I just had two friends in Calgary buy ridiculously overpriced condos downtown a couple months ago. Calgary is way over built, I warned them, but they didn't listen.
OT: On my last couple visits to Calgary I noticed that the entire city is pregnant, young families everywhere.
Granite countertops and stainless steel make people lose their inhibitions
Don't forget open concept.
DIY tv can't go an hour without someone busting down a wall to create an open concept kitchen with granite countertops and stainless steel appliances.
Feh.
condos always go down first, and hardest....that sounds obscene, where's MsCreant...
Here in Hongcouver,its a stable housing market built with grow-op money and Chinese Red army purchases.
Canadian Gov was very aggressive with real estate stimulus measures, and managed to head off a sure crash in early 2009... unintended consequences (they really are a bitch aren't they) resulted in a massive bubble, which is just beginning to deflate.
While overall I'm not a big fan of the author (somehow I just can't get over his DOW 20,000 1999 call during the dot com fever days). Here is a link to a Canadian Blog that deals with the issue in depth, and truthfully... for those interested (this is a sample piece... links to many more at home page).
http://www.greaterfool.ca/2010/06/20/denial-3/
"There's a sucker born every minute" ...
"...she said the market is "warming up", that I "need to move fast", that "buyers are coming back into the market", and that if I wait too long I "may miss the great values"."
Translation: My kids are eating popsicles for dinner and I have another semester of community college tuition to pay for, so please jump in and made an offer on any house... plenty to choose from. I don't plan on being an RE agent next summer, so you have to buy now if you're so stupid/charitable to actually consider buying a house in this bubble-inflated market.
Bob:
From my understanding the May/June/Jul season the most active for housing. I can only imagine how bad the fall numbers are going to be. Of course, there is the strong possibility that the gov will provide a new tax credit, perhaps to the tune of $10,000 to keep the housing market from falling into cardiac arrest. So, if the numbers continue to remain this bad and are even worse then the 2008 numbers, then a new tax credit should be expected relatively shortly. It is key to note that the gov has a HUGE interest in keeping home values inflated to a certain level as we are now all on the hook for $5.5 trillion in mortgages held by the twin goblins FAN and FRE
Let me know your thoughts
I have no idea what the government is going to do. I have seen more irresponsibility of the government in 2 years than I thought possible in an entire lifetime.
The problem with the homebuyers tax credit was that it robbed from future demand. The wealthier individuals know bad things are coming in the economy so they are being frugal (affecting top end), the poor people can't get the cash for the downpayment because there is no tax credit (affecting bottom end)
You are right in that this is historically a great time for real-estate but not when there is no money. When the money is gone, it's time to move on.
The agents are expecting anywhere from 10% declines to 20% declines depending on their area. Many are getting second jobs bagging groceries...no shit.
Actually it has been 10 years of irresponsiblity in government. If you think Bush and his sidekicks were responsible, you would be dead wrong. Greenspan and derivatives..need I say more?
I'll see your 10 years and raise you 90 years.
+1000
Except here in Manhattan. We are back to pre-Lehman bubble prices. Why?
Because Wall Street received their money and were protected from enduring a depression and the big banks are on such a hiring spree that our apartment prices are being marked up again. I have the same feeling in our pricing as I did in July of 2008. It is not natural
Im sure the collusion between all the top RE brokers has no impact on the pricing!!!
I am only referring to leasing. The demand here is incredible simply because there are just very few apartments and everyone wants to live between 25th & Houston Street. A majority of the graduates in the world all want to come to this little isle and live out their film/tv induced fantasies and even more want to attend NYU. One of the benefits of being the 21st century Rome is that it is fairly immune to the disaster occuring across the rest of the U.S.
Right after Lehman rental prices fell to post 9/11 pricing because of the Wall Street job loss. The moment the Wall Street jobs returned it was bubblelicous all over again. Remove Wall Street jobs from the equation and the city would die a slow death since everyone is reliant on the excess of Wall Street.
John: I agree, the MPD is the ticket to a great NYC life....crawling distance from Provocateur!!!! :-)
MPD?
Sorry you did a fly by on me which happens to me frequently when reading ZH. Please explain.
Meat packing district..below 23rd not past Houston!!!!
Pop smoke..... Let's see if I can see the purple haze from the city by the bay :)
Rents fell but not quite to post 9/11 pricing. Maybe the next meltdown in finance can do the trick.
The deflating balloon. Nobody to sell to. Nobody's got enough money or enough credit or expectations. Neighborhoods are being blighted by foreclosures and rising inventory. Renting is becoming a desirable option for many to keep costs low and options open, including the need to exit neighborhoods that are going south.
For potential buyers there's also the looming threat of property tax increases (along with all other manner of taxes), increasing cost of local services, increasing bank transaction costs and fees (and consumer credit), increasing insurance costs, uncertain trajectory of energy and material costs going forward.
Of course deflating incomes and retirement assets values loom large.
shouldn't your profile pi cavier bowl be empty?
I'm about 8 miles from the WH here in the nation's capital.
Homes are still selling here in my 'hood... go figure.
DaBoyz are on a hiring spree.
Something must be around the corner. You realize that secretly Janet Napolitano wants to be prezident. She may get her wish based on some of those executive orders coming out of the WH.
K street hookers gettin' paid, yo!
it was a record year for lobbyists also, lobbyists doing great!, when crony industries are fighting change, corrupt congress members and lobbyists get big pay days...
That's it! Time to abandon home sale programs and immediately enter into home giveaway programs.
What double-dip? More like a double-bottom. Have no fear my children, I will show you that the sun is still shining! Plenty of liquidity out there to drive risk assets much, much higher.
Plenty of liquidity huh? Are you Timmay's speech writer?
The Treasury is selling hundreds of billions of bonds/notes/bills monthly, and that's sopping up an enormous amount of liquidity. If the TBTF financials would rather speculate in equities or buy treasuries than lend to SMB businesses, how is that positive? Pretty soon the middle class will have spent anything they once had in an IRA or 401k just to pay the bills. Where will this country be then?
"What double-dip? More like a double-bottom."
Prices are at 2003 levels? Housing prices back to 2003 levels? Housing in the USA was already overinflated by 2003, buddy. Keep walking - down. 25 years in California Real Estate (leads in and out of recession) investment says you are wrong. In the nicest way possible, of course.
20 years in SoCal
1998 prices is where I place the start of the RE bubble - bubbles always (yes, always - name one that hasn't) fully retrace so I am expecting (and waiting for) 1998 prices (while laughing and shaking my head at all the suckers still buying - I got burned out trying to talk sense to them several years ago)
SoCal RE cycles tend to run 6 or 7 years up and then 6 or 7 years down - RE peak was in 2005/6 so add 6 years of downtime and we might get a bottom around 2011/12 - more likely is 2014/2016 - in the 2014/16 timeframe I expect to transition out of the precious metals and back into residential RE (small apartment buildings) - will take the gains from the PMs and pay cash for income producing RE
oh yeah, almost forgot, after they pop bubbles tend to not only fully retrace, they tend to overshoot the starting point so 1998 is probably too conservative to use as a target - another poster on this thread is suggesting 1993 prices and I'll go along with that number
the big question I have is this: WHICH bubble is being retraced right now?
> RE bubble that started in mid-to-late 1990's (was it the $500K capital gains exemption that kicked off the bubble?)
> greenspan bubble that started in 1987
> equity bubble that started in 1982 (look at a long-term chart of the equity markets - kicked off by dropping interest rates?)
> economic bubble that started in 1971 when Nixon closed the gold window
we can hope that we are ONLY retracing the 1990's real estate bubble - I suspect that we are retracing the economic bubble that started in 1971 - a retrace of the 1971 bubble would take RE back to its historic value where 2-5 ounces of gold would buy a nice house or farm
"another poster on this thread is suggesting 1993 prices and I'll go along with that number."
Been through three socal cycles. 1993 prices would be beautiful. 15-25K a door for nice multi-family. 30-50% yoy cash on cash return. And you can forget all about the stock market. And focus on broken toilets, but only if you are self managing.
If that's true, I can wait till 1993 prices return (in 2013?), then trade my (now at $15K/oz) gold for a few houses. Sounds good.
Absolutely no doubt that there is a bucketload of liquidity out there the problem is that above mentioned "liquidity" is now largely hot money, not the buy and hold suckers of yesteryear.
If confidence breaks do you really believe the hedgies and prop desks are going to want to be left holding the bag?
For sure there will be another run up in asset prices across the board in the future, the question is whether confidence can hold over the next 2 months or we have another dump before the next run up.
How much does Kkkrugman pay you to say these things?
Leo, take a step back from your trading desk, go outside and venture through a neighborhood, tell me what you see? I live in a very nice neighborhood, one that when houses bottom in 2 years I would love to purchase one. There is a house for sale on EVERY BLOCK (sometimes two!!!). I have counted around two dozen houses in just the one mile radius of my relative neighborhood (rough estamate). Only ONE has sold! Note none of the said houses were for sale before April. The one sold because it was the only one that had a remotely fair asking price ($300,000 for a 3 bed 2bath and all the other similar homes are asking $450k-$700k). Home owners will have to lower these prices by 33% this summer to sell them! And once again, this in a nice University neighborhood, in a city that is powered by hydro-electricty, surrounded by organic farmers, 2 hours from the relatively clean Pacific, 2 hours from the most prestine mountains, and 2 hours from the Greenest city on the planet-Portland. Yes, this is God's country. I welcome all behaved ZHers to move here. Please do not tell anyone else ;)
Good luck Leo! And I mean that....
this is a subliminal green shoot right ?
it is gut-shot induced snotjaculate
The government also succeeded in making suckers of all those recent buyers lured by its ridiculous stimuli!
your avatar is +1000
What is very telling here is that the government has FAILED without doubt.
TARP was for nothing...and was an add on in costs and debt....proving the ineffectiveness of govt. "idiocy"....
..............................................
The only tool left...that government could invoke is tax structure change.
A broad based consumption tax,,,,and the elimination of the personal and corporate income taxes will be the only way out.
To date this is not being considered....which is like waving a red FAIL flag for anyone that has an inkling of common sense....already knows....
Congrats to the Obama admin for complete and utter failure....
Agreed, but no mainstream candidates even talk about reform of the tax system except Ron Paul and Huckabee. I wouldn't hold your breathe.
Wow, eliminating the income and corporate tax and a consumption tax...hahahahaha! That is fucking hilarious. I would love to know how you expect the government to function without revenues to sustain itself. Consumption will be getting reduced as people are starting to save again. Are we to completely eliminate all entitlement programs (i.e. Medicare, Medicaid, Social Security, fUnemployment, etc., etc.)? That would just exasperate the situation. Now a reduction in taxes along with reduction in government spending would be more along the lines of reality.
how you expect the government to function without revenues to sustain itself
He's proposing a broad based consumption tax, I am assuming he is referring to the Fair Tax (23%-27%) pushed by those like Neil Bortz and Mike Huckabee. Under the Fair Tax you get a prebate for the necessities of life.
I understand that, but if consumers are only buying to sustain how can we support the entitlement programs? They consumption tax is a good idea, when things are great and the average person has a near zero savings rate, but what about in times like these? Think about all the people that survived the depression and how they really did not spend that much. My grandparents had the same furniture for decades, drove a car until it had to be replaced, and actually had more money in a savings account than a checking account. This economy will be getting worse, and our leading idicators are still pointing south even on discrectionary spending. Soon there will come a day when not everyone is swinging from Steve Job's nuts, and clamoring to buy the overpriced crap he is peddling. So I would agree with the consumption tax once we have a sustaining economy and get rid of the baby boomers on entitlements.
I agree with him to an extent, but did not state that. I just think that it would be a terrible idea at this point, but there will be a time when it is a feasable idea to implement. First if we can start getting a government that has a surplus instead of a deficit, we can reduce taxes and slowy bring on a federal consumption tax. But I guess a government with a surplus will occur when all the Victoria Secret models show up at my door to drag me into my bedroom.
I hope major tax reform becomes a core topic of campaigns in 2010 &12. I just want the topic to become widespread so we can start hashing out the details of something better, no matter what that is.
+10000000
Gee the fscking Gummit might actualy have to cut back. Oh Shit! People might save money first before buying shit, rather than putting it on their CC or HELOC their homes. Savings = pools of capital for investment, rather than huge chunks of leverage that must be paid back with interest. Investment = jobs. The sky is fscking falling without all that damned debt.
You are looking at that which is seen, and that forgetting which is unseen...The bad "economist"
Won't that be a GREAT day!
"Even Goldman can't spin this abysmal result"
I loved the assmunch CNBC had on right after the data. He said you have to "average" the April and May data and realize that it was an increase over 2009's numbers.
Of course what the dillweed failed to mention is that 2009's numbers were lower than 2008, 2007, 2006, 2005, 2004, 2003, 2002, 2001, etc.
These people are trying to tell the sheep that the all clear has been sounded and to pile into equities NOW!
I just wonder how all those people feel about Cramer's "Buy the Homebuidlers" call from several months ago now.
Because they got reamed and still can not sit comfortably.
I own a small construction company in NJ. I could have told you that. All my work right now is on rehabs and foreclosures, or for motivated sellers. Ryan is dead, Hovnanian is also dead. All of their developments that I see, have stopped, completely. The only new construction I see in my area is a Sikh church and a funeral home. Commercial construction is also dead. The entire market needs to reset. Actually, I guess you caould say the entire economy needs to reset.
There ya go... Funeral homes taverns and churches are probably the next big thing in construction.
All kidding aside, I'm seriously considering buying a bar/restaurant/night club that's for sale down the road from me. They're asking way too much for it, considering the location and condition, though. They're asking $1.2. I think it's worth about $850,000 at best. Like I said, the market needs to reset.
Wait for the foreclosure, then submit an even lower offer to the bank.
Freewheelin Franklin
Don't do it. In times of trouble people always think bars and restaurants will turn a profit. Most go under.
Add a funeral home on one side and a church/synagogue/mosque on the other and you'll have a gold mine! One other thing: good tequila!
Wait.
And then wait some more.
Thanks, all. I think I'll wait. I saw the listing, it was sold for $1M, 4 years ago, the new owners put $200,000 into it. That's $1.2. It's been sitting empty for about a year. It has a 2 BR apartment and 5 acres of developable farmland (no frontage). I'll wait.
Ah, the infamous real estate cost theory of value.
This is the ENTIRE point....
The REVENUE for govt. from a 15% consumption tax only would dwarf the revenue from the current tax system many fold....
The current policy is one of cutting down more orchard trees ....and expecting a lot more fruit.
The orchard has to be expanded and replanted in order to extract more fruit.
This administration is all about punishing people to influence behavior rather than providing incentives to reward good behavior. That type of thinking is very ingrained in one's personality
+++
"The entire market needs to reset. Actually, I guess you caould say the entire economy needs to reset."
With that statement, I fully endorse you to be President, Treasury Secretary, and Fed Chairman. That is what I have felt this entire time. Trying to prop up a falsely inflated economy is like trying to blow up a busted balloon.
Fat Freddies Cat coulda told ya that.... How is that hat wearing?
it would have reset if we had let it crash...but FIRE industry and banks can't let our congress let us do that...so instead we do a Japan..
as Michael Hudson says, a debt that can't be paid, won't be paid...wipe em out, and voila, we have cheap everythind and economy is hopping again...
No surprise here. They already flubbed when they extended the first tax last fall and more people were put off by feeling rushed into buying homes for the sole purpose of the tax credit. They then saw the tax credit extended and their $8,000 in "savings" evaporate in their home value. So then pent up demand was pulled forward once again by extending the credit however more where now leary and simply willing to wait for a better home price and feel confident that the credit would either be extended or increase.
The government did manage however to sucker in a few people and timed it with income tax returns purposely in an attempt to lure a few souls who still had jobs to expend their precious savings and believe they were getting a deal in both home value and the tax credit along with low rates. So now we have all that cash thrown into a whole and I assure you home prices will touch early 90's or late 80's levels before this all ends. We will however have a whole set of new buyers underwater shortly because the government manipulated them into buying homes that were still overpriced and the reason is we are going to see a massive amount of job loss in the coming year that will exceed the Lehman job loss spike. Within 2 months we should be back over 500K claims and an army of pissed off people without jobs and without benefits.
The Fed, the government and the banks were pulling out all stops for a do over. Well you do not get 6 do overs and it is time to pay the piper. They truly and honestly all must be flabbergasted that the spending spree and unprecedent nuclear option spending and policy has not returned home prices to previous levels. They have embedded themselves so deeply now and we are also going to see municipal and state job loss concretely affirm we are in a Depression that will exceed that of the 1920's because the debt we have now has assured us of that.
These are grown men and for supposed leaders they sure do not act responsibly.
Not to worry on those unemployment figures, JM. As massive numbers of newly unemployed are added to the rolls, equally massive numbers of long-term unemployed will have worn out their statistical welcome and will no longer be counted. Result? "Unemployment has stabilized."