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Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk!
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Note: See me discuss this topic live on Bloomberg TV, Monday October 4th, 2010 at 4:30 pm!
The National Association of Realtors is a marketing engine, yet their
data and their economist’s opinions are quoted regularly in credible,
mainstream financial news shows and newspapers. WHY???!!! On that note… Bloomberg reports: Pending U.S. Sales of Existing Homes Increase 4.3%
Oct. 4 (Bloomberg) — The number of contracts
to purchase previously owned homes in the U.S. increased for a second
month, a sign the housing market is beginning to stabilize. The National
Association of Realtors’ index
of pending home resales rose 4.3 percent in August, more than forecast,
after a revised 4.5 percent gain the prior month that was less than
initially estimated. Compared with the same month a year ago, pending
sales were down 18.4 percent.
The rise is most likely due to investor’s active in the more
liquid low end of the market getting double counted as they flip
inventory. There is demand in the $275k and lower strata and there is a
steady stream of distressed properties as well. Investors buy the
distressed properties at wholesale prices and turn around and flip them
at retail prices (which were where the wholesale prices were just a few
months ago). This usually occurs in a few months, sometimes in less than
a month. The NAR numbers fail to filter out these investor flips, hence
practically all of this activity is double counted, and this activity
(the flip investor) is actually the hottest part of the market. Of
course, this is not addressed and the numbers are simply presented in an
unrealistic form.
Home sales have steadied after plunging in the months following the expiration of a housing tax credit. Unemployment
projected to stay above 9 percent through 2011 may depress demand in
coming months even as record-low mortgage rates and lower prices make
homes more affordable.
No, they have not been steady. See the chart below.
Housing is “bouncing along the
bottom, unable to gain any traction, but with little reason to believe
it’s going to go any lower,” said Eric Green,
chief market economist at TD Securities Inc. in New York. “All of the
froth has been eliminated from the bubble and all we need now is for
confidence to turn higher and job growth to accelerate.”
125% LTV loans, Freddie and Frannie distorting the market,
moratoriums and cessations on foreclosures (the only way to clear the
market and move towards true price discovery), tax incentives in a
falling market, MBS purchases, ZIRP, no mark to market – exactly how
does this guy figure all of the froth has been eliminated from the
bubble? If anything, .gov is trying their best to insert froth into a
burst bubble!
Economists
forecast pending home sales would increase 2.5 percent, according to
the median of 39 projections in a Bloomberg News survey. Estimates
ranged from a drop of 2 percent to an increase of 5.6 percent.
Adjust the NAR numbers for sales double counted as flips, and you will probably get a number closer to consensus!
“Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market,” Lawrence Yun,
the group’s chief economist, said in a statement. “However, the pace of
a home sales recovery still depends more on job creation and an
accompanying rise in consumer confidence.”
Much more on this guy in a minute, but first…
Orders at KB Home,
a California builder focused on first- time buyers, fell 39 percent
after the deadline for signing a contract to qualify for the federal tax
credit expired. Unemployment and foreclosures make it difficult to
forecast future sales, Jeffrey Mezger, the company’s chief executive
officer, said Sept. 24. “The housing market continues to face
significant headwinds from high unemployment and foreclosures, which are
impeding a broader recovery, and recent net order trends in the
homebuilding industry have injected additional caution into our
near-term outlook,” Mezger said in a statement.
Just open a hedge fund like Lennar! “More Doom and Gloom: Homebuilders Making Better Money as Hedge Funds than Home Builders“
Realtor.org has released the August pending home sales, which increased from a SAAR of 78.9 (of course, downwardly revised from the previous reading),
to 82.3 in August, a 4.3% rise on expectations of 2.1%, mostly on a
jump in South and West transactions, which increased by 6.7% and 6.4%
respectively. And add this to the plethora of data series which
consistently see prior numbers revised adversely: July data was revised
from a 5.2% increase to 4.5%.
On the topic of the National Association of Realtors, and their marketing gurus
chief economists, I assert that BoomBustBlog’s regular constituency is
much too bright to fall for the pumping of real estate by the economist
of a national realtor association. For those that may be a little more
trusting, or a little less mathematically inclined, I will walk through
previous proclamations that have come from the NAR and their chief marketing strategists economists…
July 2008 Yun stated “I think we are very near to the end of the housing downturn,” Yun said (AP News).
Lawrence Yun, chief economist for the
Realtors, said that the housing rescue bill should play a major role
in helping the housing market to rebound. He said an especially
significant feature is a tax break worth up to $7,500 for first-time
home buyers who purchase between April 9 of this year and July 1, 2009.
Yun estimated that up to 3 million first-time home buyers could qualify
for that tax break, providing a significant boost to sales at a
critical time. “I think we are very near to the end of the housing downturn,” Yun said.
As a point of reference..
Of course, I can go on…
In 2007 Lawrence Yun state there would be no recession in 2008, according to USA Today.
Of course, in that year I took the opposite side of that trade and said
very bad things were coming. As it turned out I was a tad bit
optimistic: Correction, and further thoughts on the topic, How Far Will US Home Prices Drop?, and Is this the Breaking of the Bear?
(Yeah, the Bear Stearns and Lehman Brother’s collapse were an easy
calls if you read the balance sheets and were realistic about leverage
and the real estate situation). This was also about the time I got into
it with GGP’s CFO for calling out their insolvency. He called me
names, and then they filed for bankruptcy. Of course, they had an
investment grade and buy ratings from the ratings agencies and the sell
side: BoomBustBlog.com’s answer to GGP’s latest press release and Another GGP update coming… (among over 700 pages of analysis, review the January 2008 archives or search for “GGP” for more research).
In my post “On the Latest Housing Numbers” of Tuesday, November 24th, 2009, I quipped.
Lawrence Yun, NAR’s chief economist volunteered,
“We have seen some bulk purchases by investors, but
we are not picking up that data through the Multiple Listing Service or
through our release data, but we do know that there is some bulk
purchases by investors who plan on releasing those properties within a
year’s time, when they see a better market condition.”
I don’t believe “better” market
conditions are coming any time soon. We are just coming off of the best
market conditions anyone will see in their lifetime. Those market
conditions were predicated upon unsustainable conditions, hence they
came crashing down. They are crashing down, not crashed – as in past
tense. I believe we have some ways to go. That is why I am not buying
real estate, and I believe that those that are jumping in now are
jumping in prematurely.
Personally, I don’t consider Mr. Yun to
be a credible source, either. He may be smart and capable, but the
extreme bias of his employer (the ultimate real property perma-bull)
and the incredibly biased reports of his predecessor color his opinions
by default. He is not nearly as bad as David Lereah (who was literally
sensationalist-style perma-bullish) was, but he is still not
objective. See The Reggie Middleton Real Estate IQ Test – Who believes the NAR?
This is an excerpt from that post on Tuesday, 08 January 2008
From CNBC.com: Home Sales Seen Holding Steady In Coming Months
Pending sales of existing U.S. homes inched lower in November and should hold
steady over the next few months, a real estate trade group said. (I
ask, “Why should they do that? Credit is tighter, recession evidence
is stronger. Supply is greater, and demand is lower. Hmmm, let me
consult the book written by that ex-NAR guru for the answer.” )The National Association of Realtors Pending Home Sales Index,
based on contracts signed in November, dropped 2.6% in November, to
87.6 from an upwardly revised 89.9 in October.Economists polled by Reuters ahead of the report were expecting
pending home sales to decline by 0.5 percent from October’s originally
reported 87.2.The November number was down 20% from a year earlier.
The pending homes sales data suggests that the volume of sales
will hold steady for a while before turning upwards before the end of
the year, said NAR chief economist Lawrence Yun.
With all due respect to Mr. Yun, Mr.
Lereah and the NAR, anyone swift enough to complete the registration
form for this blog should know, by now, to discount this association’s
data and opinions. They do not do the industry justice with this
nonsense. Realtors should actually be the first in the protest line.
It is their credibility that is being called into question, for this
is THEIR trade group. Credibility is the key!
Notice how accurate that NAR prediction was for 2008! From my blog post that day in 2008:
My take: I believe that my blog’s
readers are considerably above average in financial acumen and common
sense. The NAR is simply not an entity to be taken too seriously, due
to the obvious conflict of interest exemplified by their ex-economist,
[[David Lereah]], who published some of the most absurd BS I have
ever seen come from a nationally reknown organization. Examples of his
work from Wikipedia: Are You Missing the Real Estate Boom?:
Why Home Values and Other Real Estate Investments Will Climb Through
The End of The Decade, And How to Profit From Them was published in February 2005 at just about the tippy top of the bubble (that takes some talent). One year later in February 2006, as the market is already on it’s way down, Lereah retitled his book Why the Real Estate Boom Will Not Bust and How You Can Profit from It. Lereah’s previous book The Rules for Growing Rich: Making Money in the New Information Economy touting investment in technology company equities was published in June 2000 at the onset of the collapse of the dot-com bubble.
This extreme cheerleading has died down substantially, but the overly
optimistic spin is still evident with their new economist, Lawrence
Yun.
I actually believe the Case Shiller graph
above to be misleadingly optimistic due to my doubts about seasonality
filtering and the exclusion of investor related properties (flips, see
A reminder concerning popular housing indices) which are dominating the lower end of the market.
So on that note, I will present a graph that captures national
economic house sales activity superimposed against the Case Shiller
index, but before I do that let’s laugh at the NAR’s ex-chief marketing strategist economist…
Publications from Wikipedia
Lereah’s book The Rules for Growing Rich: Making Money in the New Information Economy[5] touting investment in technology company equities was published in June 2000 at the onset of the collapse of the dot-com bubble.
Lereah has produced four titles on real estate investing. His most
recent book, “All Real Estate is Local” was published by Doubleday in
2007. His 2005 book Are You Missing the Real Estate Boom?: Why Home
Values and Other Real Estate Investments Will Climb Through The End of
The Decade—And How to Profit From Them[6] was rereleased in February 2006 as Why the Real Estate Boom Will Not Bust—And How You Can Profit from It.[7] Before departing the NAR, Lereah wrote All Real Estate Is Local: What You Need to Know to Profit in Real Estate — in a Buyer’s and a Seller’s Market in 2007.[8]
|
|
Lereah’s book on investing in information technology appeared in June 2000 as the dot-com bubble collapsed.[5] |
Now, let’s put this all together to see what we get (reference each
date above to the chart below. Unfortunately, I did not chart the
dot.com bubble crash, which Mr. Lereah so accurately timed to the
contrarian side 
(literally, almost to the month), so we will have to leave that one out…
Subscribers have access to all of the data and analysis used to
create these charts, in addition to a more granular application, by
state in the SCAP template and by region in housing price and charge
off templates – see
House price data, 2nd Quarter 2010- Bank Charge-offs and Recoveries 2Q10
- The
very extensive SCAP Assumptions, showing the credit metrics banks
needed to submit for the stress tests of 2009, Updated for last quarter
on a state by state basis_09082010 Web
Click here to subscribe.
Next up…
- The Full Google Forensic Analysis: for all of those who wondered how
Google will make money from Android and the other initiatives it is
undertaking as well as how it will effect valuation, well here you go. - About the likelihood of those sovereign defaults: I will walk
through the near inevitable default of one European sovereign state, in
public! - Now that third quarter is over, and the housing situation still
looks ugly, how will the big banks fare after 100% pops in their stocks
the year before? Multiple forensic updates… - Do you believe this portable computer cum smart phone thing is not
only the wave of the future but the catalyst for significant corporate
wealth? Well, I do and I will browse through some of the potential
winners in the space. - Last but not least will be a very extensive forensic analysis of Apple.
More Reggie Middleton on Residential Real Estate:
Yes, Housing Prices Have Much Farther to Fall. We’re Talking Years…
Because 105% LTV On Depreciating Property Wasn’t Good Enough for the US Taxpayer…
As I Made Very Clear In March, US Housing Has a Way to Fall
It’s Official: The US Housing Downturn Has Resumed in Earnest
- advertisements -
Reggie: great post. Shit, I may even subscribe...
kc,
apologies.
try at 30 min. here.
http://archive.wbai.org/
sept 28, talk back. tues. 3:00pm
Talk Back! All Tuesday September 28 3:00pm 2 hours Public Affairs Talk Back! All Tuesday September 28 3:00pm 2 hours Public Affairsfound it. hum, religion. i had to cheat to pass my catechism test for the episcopal church. i only did it for the wafer and wine.
i suspect you are foolin' wit' me gracie,
anyway, start listening past minute 30 to
minute 60 or so and there is a discussion
concerning collapsing affordability of re in
low income neighborhoods which is/will result
in millions of homeless people, all pointing to bigger
bonuses come year end, systemic importance
and all that. the first 30 minutes is a different?
problem also having to do with land and people.
religion
Huh!!??? I thought Episcopalians showed up late, sat in the back and put lots of money in the basket to redeem themselves for the all the drinking, adultry and sodomy they had during the week????
Test??? What fucking test ????
yep, sure of it. St. Pauls Episcopal Church.
blindman not so interested in the poor losing homes, i got my own battle going in real estate. i don't feel sorry for anyone. i been homeless for about 2 years. chase fraudulently evicted and locked me out of this toxic shithole condo. also, made me pay for the entire buildings property taxes that i bought a single condo in. raised my mortgage by $1500.00 a month to pay for the next years property taxes. no title was released at my closing, so had to go thru that hell a year ago. their was no title. couldn't come up with the correct figure amount owned on the loan to foreclose on me. what a fuking mess everything is. there i said it. i am fuked for the rest of my life. but i got a court date for a jury trial and we are adding defendants as we speak. we might even add chase and the title closer. and i put down $100,000. so i could afford the payments cause i owned a half million dollar house in corrupt santa fe, new mexico that my neighborhood was a protected herion dealing street by the police and they wouldn't do anything when gun fire went off. so i had to sell it and i lost my $300,000.00 cash i put down on that beautiful home with a jacuzzi.
.
Great post.
http://wbai.org/index.php?option=com_content&task=view&id=344&Itemid=142
.
minute 32 or so.
acs.
hey blindman, nothin evident with that video no minute 32 for me. maybe you, on a PC. on an old MAC not working.
Reggie, great job on Bloomberg today!
Reggie, you missed this little chart...
It superimposes the comments of the National Association of Realtors Chief Economist, over the average home price.
http://img151.imageshack.us/img151/2974/housingbellwetherisbv9.jpg
'Housing is “bouncing along the bottom, unable to gain any traction, but with little reason to believe it’s going to go any lower,” said Eric Green, chief market economist at TD Securities Inc. in New York.'
You know, this sounds familiar.
http://www.naplesnews.com/news/2008/jul/28/better-days-ahead-housing-mar...
“We’ve finally gotten to the point where we’ve reached a bottom as far as housing starts, existing home sales and new home sales. We’re kind of bouncing along the bottom. I don’t think we’re going to see any reduction in volume again,” said Timmerman, a senior associate with economic and financial consulting firm Fishkind & Associates.
Posted July 28, 2008 at 5:13 p.m.
The Real Estate Mafia. Liars Then, Liars Now (tm).
So with the chain of ownership thrown into the great acid pot, what remains? An occupant? A superior 'lord' (the State) that wants its yearly fee?
Should current occupants just 'homestead' their dwellings? And claim them through procedure and possession? If no other owner can show proof, who actually owns these 'properties', and what is the path of return?
Lareah the perfect contrarian indicator. His next book:
"Greek bonds for Dummies"
"The National Association of Realtors is a marketing engine, yet their data and their economist’s opinions are quoted regularly in credible [for retards], mainstream financial news shows and newspapers."
Fixed :-)
NAR is a pump monkey for the realtors. Like the ratings agencies, they can't be jailed for misinformation, miscalculation, deviant projections, etc. Thus they are a worthless source of information.
In fact, I'd bet NAR coined the old yarn " they ain't makin' no more land, don't ya know."
Shall we guess the title of Lereah's next book?
how about ...
How to Retire in LUXURY by trading high-leverage forex on your credit card
Housing prices are gonna drop a lot more, they have to, demographics say so. America is replacing its native population with a far less educated, less healthy, less industrius population, this will result in both lower taxes revenues and less disposable income and higher expenses for healthcare.
This means less money for housing.
America is becoming more Socialist=less efficient, this means less money for housing.
America has a huge boomer retiree bubble with pensions mostly unfunded, those elderly are homeowners and will be forced to sell, this will depress housing prices to below building costs.
The replacement buyers are for the most part illiterate uneducated indigent immigrants.
The only way for the state to raise housing costs is:
And those 3 solutions (which the state is already doing) will actually make things worse.
Lower loan standards will lead to more defaults, housing restrictions will raise taxes, depress wages, and lead to less disposable income and lower home prices, and population increases from indigent illiterate aliens will raise deficits and increase taxes.
I do hope they give you more time "next time" Reggie. Glad you impressed them enough to invite you back.
Great interview on Bloomberg Reggie.
The Bberg staff did a great job letting him speak and giving him the opportunity to make his point with supporting evidence.
Reggie great stuff;;;;;;;;;;;;;;;;
Lets try to keep in mind that any home building took place for one reason--FALL HOMES SHOWS--yes these guys are still trying to keep the parade of homes alive--look for another round of small builders --as Reggie puts it
GOES BUST--cant wait for the Spring Home Show
i posted here earlier but its now gone.
anyway, great work as usual reg. what is going on is criminal. the msm is nothing but propaganda. the fact that it is still working at all is amazing. tptb are screwed bigtime and they need to keep it going until after the elections . then this sucker is going down.
They all need to pack in. I hear Macy's needs to hire people to annoy customers with cologne samples this holiday season.
"I used to be a realtor, would you like to sample this new fragrance?"
OR
"Could I interest you in a short sale that would go fantastically with this fragrance?"
Etc........
H U G E
S C O R E
I'm spending time in Patras and so far it's an eye opener. Rather than elaborating now I'll try to put together a more indepth post when I've had time to collect my thoughts and data. It's not pretty. The cab driver easily showed me 40 incomplete multi-family/condo with commercial storefront space. Billions of Euros must be tied up with interest accumulating; and this is just Patras. Who is loosing money on these stalled projects? buying Greek bonds won't finish the buildings let alone find buyers and lessees; not to mention the finished and occupied projects plastered with for sale signs. Ponzi 101.
Asset deterioration (natural or otherwise) is the plan.
I know Lereah and he is a pompous ass of the maximum kind. He has always thought he was beyond reproach. Bastard.
Well at least in Maryland they do not appear to be that bad. A friend of mine just bought a Bank Forclosure in Ocean City Md. as a second home. My Son just got out bid on a Short sale for a Waterfront Home above the $500,000. range. So, I do see a pickup from the people I know.
Keep in mind that these are pending sales not closings. There is a big difference as some buyers will not qualify, some homes will not Appraise, some homes may not pass the Home Inspection, some sales will be voided by the Banks because of the halt in Forclosures because of Document Fraud. These homes will be put back on the Market and again when re sold again will count in the numbers in the future.
Look to Japan for a road map. Home prices dropped for over 10 years after their credit/debt bubble burst.
They also used Q.E. to stop asset price drop from crushing the banks. We did the same thing.
The price you are paying is all smoke and mirrors, the shadow inventory, if no bailout prices would be much lower. The Q.E. floor will not hold long term, like Japan prices will keep falling for years ...
Keep in mind a friend or family member can still be a bag holder.
Yun is a lying douchebag and the guy before him was an even bigger lying douchebag
It's all a big scam. I aint buy'n nuttin and aint short'n nuttin. Just watching the gubmint waste more money on circus clowns...
Real estate is a proxy for economic growth. Yun is a paid whore, who will always point out that now is the best time to buy a new home. "The best time" is always now, and now is a moving target. Yun makes other economists almost seem honest. He is so transparent, that only those who have never heard his constant optimism would pay him any heed.
The engine of growth is currently running on one cylinder, the fuel line is clogged and the operator is in a drug induced haze and busy tossing bales of currency out of helicopters, but only targeting them to land on TBTF banks. We are in the land of the lost, watching our robot government repeat the same failed efforts over and over. Somehow this beast must be put out of its misery so that, new efforts can be tried, before the last cylinder fails and the engine dies for good.
There used to be a website called bubble-meter.blogspot .com .. It died recently under the stewardship of some RE booster that must have bought it from the founder. David, the founder also started DavidLerahwatch.com and tracked all the misinformation coming from DL as well as later L Yun. There were many linked local realestate blogs that were tracking the bubble back in 05 and 06 but many died of exhaustion but they were funny. Bubble heads we were called.
The selection critera for the Lerah or Yun's job must involve incriminating photo's. How do they get the taste of the condoms out of their mouth
I will say it again - this is headed to another bailout of the banks - this time it will be a backdoor event because the plain folk are finally on to the bankers and politicians shenanigans. Somehow or other, the federal government eventually will agree to assume (buy this shit from the banks) these mortgages because it is so messed up. Our friends in Washington DC will cry from the highest hill that for the "public good" the federal government MUST let the banks get back to their business of working hard to rebuild a strong and sensible financial system for our great country (barf barf). For the common good the government will create another incredibly expensive and complex bureaucracy to untangle this mess - essentially a taxpayer funded virtual public housing project.
That's the cool thing - anything they try to do is going to sink RE prices
reggie your research is so superb and excellent, a little over my head. but that is awesome your on BLOOMBERG. congratulations on this wonderful wonderful occurrence. i can't see it cause i have to listen to a dumb ass realtor tell my attorney all his lies. i could probably be a realtor if it only takes half a brain of
N On sense.
oh maybe TD will have a video i can see later. this is so exciting.
This what you're looking for? http://www.bloomberg.com/video/63473396/
that link didn't work. you are weird he isn't bust bust blog. your a troll maybe, go away.
This situation is similar in its perversity (if in converse) to the uber-anti-gold-propagandist, Jon Nadler, the official spokesman for Kitco, a precious metals trading company, whose website features his daily harangues on the tremendous "risk" of holding gold, the eternally poor prospects for its future price, and in which he frequently mocks, ridicules and attacks his self-styled "Radical Extremist Goldbugs" at great length and in a postively breathless and hysterical manner. He has been consistenly and spectacularly wrong, wrong, WRONG about gold since he began being featured by Kitco four years ago, even denying that gold has been in a decade-long bull market while somehow simultaneously declaring that its price is in a bubble (!), and yet, THIS is the man that almost every mainstream media news organ will go to and quote regarding the gold market. It is comical, infuriating, and surreal.
Hi akak, enjoy your posts. Kitco and the pool accounts, Nadler talking their book "sort of speak".
I had a very informative 1 hour phone conversation with Jim Rickards, (well worth his fee). Am holding physicals. In Pittsburgh, pa, contractor. Are you
stateside?
thanks,
bob
Hey Bob,
Yes, I am a US resident, although I do not live in the continental USA --- had to flee the mindless conformity and shallow, materialistic, hyper-consumerist dystopia years ago.
Wow, ONE HOUR with Jim Rickards? Now THAT is a conversation that I would have liked to have had as well!
One question for Lawrence Yun, Who is going to fuel the spike? Last I knew the average income for most American's is on the decline. Not to mention that the credibility of Americans is in the toilet as well. Without the toxic mortgage tools of the past there is no possible way there can be an increase in sales or home values either. The increase in recent sales as you pointed out is a direct cause of distressed REO sales and investors. Now that Mortgage Gate has arrived you will see their inventory dry up and the market will come to a screeching halt. There have been mostly one and dones, meaning no move up sales, just simply either a first time buyer taking advantage of a distressed REO or an investor buying up an empty house and flipping it. The home prices have not met the income levels yet and with unemployment rising I don't see it happening anytime in the near future. Try to get a mortgage without 20% down and see what happens...Have no fear the Government is here. They may finance a loan up to 100% ltv just to keep the pipe dream alive. Remember that much of America's so called wealth is tied to real estate so build up the levees and keep the flood waters at bay as long as you can. With a record number of foreclosures happening now, a record number of people in default and a rising number of personal bankruptcies in the works, I ask the question one more time... Who is going to buy all the existing inventory and the tsunami of shadow inventory that is rolling in behind it. Lets just keep playing pretend so the banks can keep their solvency just a little longer. And lets just keep pumping taxpayers, or should I say China's money into Fannie and Freddie so that in the end they will be so bankrupt the damage will be irreversible. Keep pulling the wool over the sheeple's eyes so the American Dream can live on, or should I say so the financial ponzi can survive?
I totally agree with you, who is going to fuel the spike. It's not going to be the babyboomers, because some of them will try to cash out or sell their house in order to help in retirement . Other babyboomers will need their houses to live in because of the financial situation, they won't be able to sell their houses. Other's will be foreclosed on because they used their houses as a bank and refinanced for trips, school tuition and other things. It won't be the 20 to 40 crowd, they have lost jobs and are straddled with massive debt from schools that come up to about the price of a standard home. We are in a situation where the banks and govt. are artificially keeping the housing market up but people don't have the money to buy houses at these artificial prices today (and it can be argued in the past also). The price of housing has to come down and come down hard.
Also who is going to by an mortgage backed securities anymore, nobody overseas thats for sure. Those people have been burned, they won't be burned again. The only places that will buy these anymore is govt. institutions in the US. Hey can someone explain to me the program of asset destruction that a few posters talked about which they said was planned.
Completely agreed... I am in the 20-30 crowd with a solid job and almost no debt (car), and even if I did want to buy a house, there's no way I could afford one anytime soon. (Note: I am in NorCal) I know a bunch of people who believe the housing downturn is over and I have watched them buy homes in the last year or so, only to see them go underwater already. There simply is no demand for housing, nor will there ever be until people like myself can actually save money and put 20% down.
Another interesting tidbit I will throw out there is the rate of marriages and folks in relationships. I would say that if I wasn't single, and I had a significant other who also worked full time, we could probably afford a house fairly comfortably. However, there was a report recently that said marriages were at an all-time low per the census: (Link below) This will mean even less couples who might have been able to purchase, won't be able to because there is no combined income when they are single.
http://news.yahoo.com/s/ap/20100928/ap_on_bi_ge/us_census_recession_s_im...
And don't forget about our children that have now jumped on the rat wheel owing more then 1 TRILLION in total student loan debt that has to be paid..no exceptions. Can you believe the gen y's owe more then all the credit card debt in America? Unbelievable! Might just as well scratch them off the American Dream list as well.
http://www.globalresearch.ca/index.php?context=va&aid=12754
Of course if no bank can show clear title to the loans it is trying to foreclose on, then foreclosed property might be in legal limbo and ineligble for sale to anyone at any price.
This could conceivably short term stablize prices for owner occupied homes up for resale that are not in foreclosure, or new construction, at the cost of destabilizing the entire banking industry.
http://www.businessweek.com/news/2010-10-04/citigroup-ally-sued-for-rack...
"...foreclosed property might be in legal limbo and ineligble for sale to anyone at any price."
This is the material value of systemic fraud.
The only solution to deal with that fraud is deterioration of the assets, which some would argue is the 30-year plan.