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Rosenberg Explains Why Not One New Home Priced Over $750,000 Sold In July

Tyler Durden's picture





 

The most damning words on the recent horrendous housing data come from David Rosenberg: and since he has long been spot on in his macro observations, the 15% or so in additional price losses anticipated, will make this depression a truly memorable one (we will investigate not only the surging supply side of the housing equation, but the plunging demand side in a later post), and will leave the Fed with absolutely no choice than the nuclear option: "If the truth be told, if we are talking about reversing all the bubble appreciation that began a decade ago, then we are talking about another 15% downside from here. The excess inventory data alone tell us that this has a realistic chance of occurring...The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes prices above $750k managed to sell in July. Answer — zero, nada, rien; and for the second month in a row."

From today's Breakfast With Rosie

Once again, the consensus was fooled. It was looking for 330k on new home sales for July and instead they sank to a record low of 276k units at an annual rate. And, just to add insult to injury, June was revised down, to 315k from 330k. Just as resales undercut the 2009 depressed low by 15%, new home sales have done so by 19%. Imagine that even with mortgage rates down 100 basis points in the past year to historic lows, not to mention at least eight different government programs to spur homeownership, home sales have undercut the recession lows by double-digits.

This is what we have been saying for some time, in the aftermath of a credit bubble burst and a massive asset deflation, trauma has set in. The rupture to confidence and spending from our central bankers’ and policymakers’ willingness to allow the prior credit cycle to go parabolic has come at a heavy price in terms of future economic performance. Attitudes towards discretionary spending, credit and housing have been altered, likely for a generation.

The scars have apparently not healed from the horrific experience with defaults, delinquencies and deleveraging of the past two years — talk about a horror flick in 3D. The number of unsold homes on the market exceeds four million and that does include the shadow bank inventory, which jumped 12% alone in August, according to the venerable housing analyst Ivy Zelman.

Nearly 1 in 4 of the population with a mortgage are “upside down” and as a result are now prisoners in their own home. We have over five million homeowners now either in the foreclosure process or seriously delinquent. The government’s HAMP program was supposed to bail out between 3 and 4 million distressed homeowners and instead we have only had a success rate of fewer than half a million.

Now back to the new home sales data. Every region in the U.S. was down, and down sharply. The homebuilders did not cut their inventory levels and as a result, the backlog of new homes surged to 9.1 months’ supply from 8.0 months in June, which means more discounting and margin squeeze is coming in the homebuilder space. As it stands, median new home prices were sliced 6% in July and this followed on the heels of a 4.7% drop in June. And, at $235,300, average new home prices are down to levels last seen in March 2003, down nearly 30% from the 2007 peak. If the truth be told, if we are talking about reversing all the bubble appreciation that began a decade ago, then we are talking about another 15% downside from here. The excess inventory data alone tell us that this has a realistic chance of occurring.

The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes prices above $750k managed to sell in July. Answer — zero, nada, rien; and for the second month in a row. Only 1,000 units priced above 500,000 moved last month. That’s it! Over 80% of the homes that the builders managed to sell were priced for under $300,000. Just another sign of how this remains a full-fledged buyers’ market — at least for the ones that can either afford to put down a downpayment or are creditworthy enough to secure a mortgage loan (keeping in mind that 25% of the household sector does have a sub-600 FICO score).

Remember that this is a July data point and we know that the NAHB housing market index, which has an historic 83% correlation with new home sales, dipped for the third month in a row in August, to 13 from 14 in July. So it’s not even safe to say that we have hit rock bottom. Moreover, when you look at the trendline in total home sales, it is plain to see what has happened from the impact of the now-expired housing tax credits — the subsidy did little more than distort the pattern of housing demand and actually pulled forward well in excess of a million units of consumption, at the expense of future growth. What does this mean? That demand will remain anemic and likely hit even new lower lows in coming months and quarters as we enter into the “payback time” phase.
This is going to sound like a broken record but it took a decade of parabolic credit growth to get the U.S. economy into this deleveraging mess and there is clearly no painless “quick fix” towards bringing household debt into historical realignment with the level of assets and income to support the prevailing level of liabilities. We are talking about $6 trillion of excess debt that has to be extinguished, either by paying it down or by walking away from it (or having it socialized).

Either way, this debt is somebody else’s asset (a bank? an insurance company? a pension fund?) so dealing with it is going to extract a pound of flesh from somebody. Or maybe, we’ll just kick the can down the road and leave it for some future taxpayer to worry about (nice endowment for our kids, don’t you think?). Sounds harsh, but there is no free lunch, that’s the lesson of this debt deleveraging cycle. The more the government tries to paper over the problems or attempts to seek its own equilibrium value of residential real estate, the longer it is going to take to find the bottom and move on from there. It’s time to move beyond the housing market and start dealing with the real crisis the country faces, which is job creation — or the lack thereof. Surely there is something more creative we can do than pay people to be out of work for 99 weeks in what has become a de facto welfare policy.
In terms of nuts and bolts, we are now tracking 1.3% GDP growth for Q2 (we shall find out more tomorrow) and thus far the momentum is so weak that we are tracking -1.9% SAAR for current quarter GDP — and the consensus is still, quite remarkably, at +2.5%!

 


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Thu, 08/26/2010 - 10:18 | Link to Comment Instant Karma
Instant Karma's picture

Really? Not a single new home priced over 750K sold? That's weird.

Thu, 08/26/2010 - 10:30 | Link to Comment Popo
Popo's picture

I call bullshit on that stat. 300k homes sold and not one over 750k? I'm having a very hard time thinking that's true. The average price of a Manhattan apartment is over 750k. This smells like nonsense.

Thu, 08/26/2010 - 10:32 | Link to Comment nedwardkelly
nedwardkelly's picture

The average manhattan apartment isn't a "New Home" it's an "existing" one.

I thought BS when I first read the title too, but it's talking about new homes, not existing.

Thu, 08/26/2010 - 10:40 | Link to Comment SheepDog-One
SheepDog-One's picture

'Avg apartment in NY' isnt a new home. I totaly believe no new home over $750K sold! Im in the construction trade, NOTHING is being built anywhere!

Thu, 08/26/2010 - 11:49 | Link to Comment bonddude
bonddude's picture

That is false. I'm no RE bull but that is false.

I know for a fact. Oh he said new? whatever.

Thu, 08/26/2010 - 11:49 | Link to Comment Marvin_M
Marvin_M's picture

Mr. Popo; the stats are annualized, but it is still shocking that none over $750K sold.  When we packed it in and moved out of CA mid 2004, the tipping point was a new development 1 mile from my home with 3K homes ALL priced over $750K!  Needless to say that "planned community" never quite went wheels up.  Only a few scattered McMansions, a storage facility and a lot of dirt.

Thu, 08/26/2010 - 16:11 | Link to Comment Canoe Driver
Canoe Driver's picture

btw ZH'ers, "less than 500" is effectively zero.  for statistical (macroeconomic) purposes at least.

Thu, 08/26/2010 - 10:38 | Link to Comment George Orwell
George Orwell's picture

I searched on zillow.com around my neighborhood.  Quite a few homes were sold above $700K in July.  But these are existing homes not new homes.  Rosie is talking about NEW HOMES.

Housing has not slowed down that much in the silicon valley.  The lack of NEW HOME sales above $700K is because there are very few new homes in this area. 

 

$1.3M http://www.zillow.com/homedetails/1411-Oak-Knoll-Dr-San-Jose-CA-95129/19...

$769K  http://www.zillow.com/homedetails/4895-Pebble-Glen-Dr-San-Jose-CA-95129/...

$900K  http://www.zillow.com/homedetails/1306-Centennial-Ct-San-Jose-CA-95129/1...

 

Thu, 08/26/2010 - 10:40 | Link to Comment nedwardkelly
nedwardkelly's picture

Your first link:

12/22/1988 Sold $495,000 -- $212 Public Record

New...?

Second was built in 1959, same as 3rd

Thu, 08/26/2010 - 12:10 | Link to Comment pooplagrande
pooplagrande's picture

That is a pretty resilient place (venture, big tech, stanford, etc.), but if there is another leg down, and it looks like that is a good possibility, these houses will fall...and maybe dramatically. If you really look at them (the 1.3M house for example)...it would be hard to defend that price. Without a strong regional economy, San Jose is kind of burnt.

Thu, 08/26/2010 - 10:45 | Link to Comment quintago
quintago's picture

First of all, his statistic is for new homes only. He should make this more clear.

Secondly, Rosie either doesn't know how to read data, or he's just a glorified viagra salesmen trying to find a limp economy anywhere he sees it.

The data doesn't mean 0 new homes over $750K sold over the past two months, it means less than 1,000 of them sold over the past 2-months. If 499 homes sell, it doesn't show up on the data.

Run and tell that homeboy!

 

Thu, 08/26/2010 - 10:54 | Link to Comment Citizen of an I...
Citizen of an IKEA World's picture

First of all, his statistic is for new homes only. He should make this more clear.

How is the title not perfectly clear on that point?

Thu, 08/26/2010 - 11:57 | Link to Comment giddy
giddy's picture

...apparently you are not alone... lots of folks on this blog are clueless when it comes to reading/analyzing/understanding housing data...  

Thu, 08/26/2010 - 15:21 | Link to Comment thesapein
thesapein's picture

well put

Thu, 08/26/2010 - 16:17 | Link to Comment Rusty Shorts
Rusty Shorts's picture

 - so, for every new house sold, two are foreclosed on? Anyone have the stats?

Thu, 08/26/2010 - 10:46 | Link to Comment Joeman34
Joeman34's picture

I know for a fact this stat is false.  My girlfriend is an interior architect and closed on more than one +$750m property in July [I know if 2 for sure]. 

From an anecdotal perspective, I'm perplexed at the housing data being reported based on how busy she has been lately.  She just recently started her own company and has so much work she's actually turning down jobs.  I know the housing market is bad [maybe not so bad here in greater Chicago], but you couldn't tell by observing her business.

Thu, 08/26/2010 - 10:58 | Link to Comment Astute Investor
Astute Investor's picture

Interior architect??  Do you mean interior designer?

I too live here in Chicago.  Real estate is slow, but certainly things are selling.  It's mostly existing homes and condo/co-op resales.

Not sure about Rosie's figures, but I don't put too much stock in anecdotal evidence about high-end property sales.  There is always some hedge fund trader or HFT guy who can pony-up the dough for a high-end home regardless of market conditions.

Thu, 08/26/2010 - 11:28 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

In Chicago, where the cry "Wait 'til next year" is a common refrain, the condominium market is getting its own version of a losers' lament: "Wait 'til 2013."

If you are a condo investor, owner, builder, Realtor or anybody else with a vested interest in rising condo prices, the market probably won't appear stable for three years. That consensus view emerged Tuesday in interviews with condo experts commenting on the latest data on housing, numbers that threw the stock market into a tizzy.



The consensus view among condo experts is that the market likely won't appear stable for another three years.
(Sun-Times File)

The report for July showed the volume of sales for all homes -- condo and single-family -- declining nationally and in the Chicago area from July 2009. In both cases, the decline was about 25 percent. The same data from Realtors groups showed that prices nationwide were essentially flat, while in the Chicago market they registered a year-over-year dip of 9.6 percent.

Drilling into the numbers shows that condos are behaving differently from the rest of housing. The Illinois Association of Realtors said that for the Chicago market, condo sales in July were down 28 percent compared with July 2009, but average prices rose about 1 percent.

Benson said prices are rising in buildings that are mostly owner-occupied and have condo associations with ample financial reserves. "The downtown Chicago market has the greatest supply of inventory and therefore is at the most risk of loss of value," she said.

 

http://www.suntimes.com/business/roeder/2634486,CST-NWS-roeder25.article

Thu, 08/26/2010 - 11:29 | Link to Comment Joeman34
Joeman34's picture

No - there is a difference between interior architect and interior designer.  Designer does drapes/colors/pillows.  Interior architect plans space, designs kitchen layout, electrical layout, bathroom layout...etc.  You need a degree/license to be an interior architect/space planner.  Any idiot can be an interior designer...

Thu, 08/26/2010 - 11:35 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Correct-

My bud just recieved his degree & was at the top of his class. He interned at the merchandise mart for 3 months but was just let go because of the economy.

 

Is she looking for help?

 

 

Thu, 08/26/2010 - 11:40 | Link to Comment Joeman34
Joeman34's picture

Sucks for your friend.  She's not hiring at the moment - doesn't want to expand in case the economy/market deteriorates further.  Happy to make the connection, though.  It never hurts to network...

Sat, 08/28/2010 - 10:10 | Link to Comment moneymutt
moneymutt's picture

its hard to judge general economy by such a small business....I'm in construction and it sucks, I know many small business trade guys out of business, scratching and clawing to get work and yet, when I call contractors on the referral service, for say, a small concrete sidewalk at my house, or for hardwood floor re-sanding, several have told me they are booked solid for two months. A small general contractor remodoler/handy man guy I know that hires subs a lot says 2 out of 10 guys he hires are way busy cause they got on Angies List or some such but the rest are broke.

I found a guy on Google that just does legal egress window installs and window wells for them which he has been doing for five years, same business, and says this year his best year ever...he thinks its due to his prominent ranking for typical search terms on Google (and he does a great job for reasonable price - but he says referrals not a big part of his business).

So even a diasterous construction economy some trade guys are thriving...you friends situation may be same, she just found right group and got good work of mouth with right clients, who knows.

Depressions are depressing, but that does not mean no one makes money, the whole economy is not shut down. Fewer people do well on average, fewer people get lucky on average, but there is still money to be made...

But gone are the days that if you have a decent education and show up at work/job hunt everyday you are guaranteed a decent middle class lifestyle...that is over. That is what is dragging on most people.

Thu, 08/26/2010 - 11:34 | Link to Comment Joeman34
Joeman34's picture

And BTW... that's why I pointed out the 'anecdotal' basis.  I understand the weakness in anecdotal observations and don't need you to junk my post.  I was providing evidence to refute the point made above that no +$750m homes have sold.  Not very astute of you...

Sat, 08/28/2010 - 10:26 | Link to Comment Astute Investor
Astute Investor's picture

I didn't junk you so you can relax - take up your beef with the other 8 posters.  I assume you were as high-minded despite the snarky comment at the end of your post.  People tend to be a little myopic and see things based on their personal circumstance or those of people close to them.

I didn't say that I agreed with Rosenberg's statement or that no properties over $750k had sold.  My point was that I wouldn't make any conclusions about the broader real estate market based on business activity at a newly-formed, sole proprietorship.

We have been looking at real estate in Chicago for over 2 years in the high-end.  Most stuff still way overpriced in my opinion.  Still, there is always some kind of market for real estate, particularly at the high-end where buyers are less sensitive to mortgage rates, prices, etc.

So an "interior architect" is simply an architect that focuses on interior spaces rather than designing structures?  My sister and brother-in-law are architects and you are either a licensed architect (with or without a focus on interiors, structures, landscape, etc.) or your not.

 

Thu, 08/26/2010 - 16:04 | Link to Comment reading
reading's picture

As has been noted several times, Rosie is referring to NEW homes.  As in not existing homes being re-sold.

Mon, 08/30/2010 - 13:38 | Link to Comment sceptic164
sceptic164's picture

It is hard to believe any questionable statistic posting on this site after reading the piece on Illinois' pension problems.  The author of that piece mentioned that the IL TRS investment return for 2009 was -22% while the SP500 returned 20+% for 2009.  The article used this to highlight the mismanaged of the fund and the state's finances.  The problem with the stat though is it the TRS return for the year ended Jun 2009.  It used the SP500 return through Dec 2009 however.  The TRS return for the year ended Dec 2009 was +15.4%.  Big difference.  It is amazing how numbers can be manipulated to back up one's arguments.  Is the same thing going on with the housing stat of no homes being sold over $750k for june or july to argue how weak the housing sector is?

Thu, 08/26/2010 - 10:20 | Link to Comment peripatetic86
peripatetic86's picture

I find that really hard to believe.  What country?

Thu, 08/26/2010 - 10:21 | Link to Comment Plainview
Plainview's picture

great stat; pretty shocking.

Thu, 08/26/2010 - 10:21 | Link to Comment Tic tock
Tic tock's picture

Nah, prices -and wages - in the upper brackets have been at silly levels. We're here because of Greed, it's everywhere. 

Thu, 08/26/2010 - 10:38 | Link to Comment hugolp
hugolp's picture

No. We are here because there is oxigen in the air. Its everywhere.

Without oxigen, humans could not breath, there would be no humans and there would be no crisis.

Thu, 08/26/2010 - 10:43 | Link to Comment Bearster
Bearster's picture

doesn't that sound just a bit trite and stale--even to you?

Didn't we have greed in 1800?  1850?  1900?  1950?

EVERYone wants to increase his position in life.  Most people condemn this in others, while pursuing it for themselves.

The problem isn't greed.  The problem is the government has replaced money with credit,  markets with interventions, and individual decision making with central planning.  The results are always the same.  In the Soviet Union, central planning led to too many shoes of size 5 and too few of size 10.  In the USA, it led to too many houses (among other things).

 

Thu, 08/26/2010 - 14:00 | Link to Comment hbjork1
hbjork1's picture

Bearster,

I wasn't around in 1800, 1850, or 1900 but I was around in 1950.  There was lots of greed but there was no conception of the levels and methods that we have been able to develop in our modern world.  

I have posted this before it is worth note that in 1950 a respectable farmer living in a "remote" area 4 miles out of town came to town and shot a certain individual because it was certain that he had stolen a pig.  He didn't kill him; just a wound but justice was swift and sure.  The shooter was arrested, brought to trial, convicted and given a suspended sentence. 

The shooter was eventually and for many years on the school board and a respected citizen.

However, in this country at least, the means for the levels and means for the scale of the greed that exists today (largely through the courtesy of the political establishment) had not yet been invented.  

Too many people are "overdriving their headlights". Be careful who you vote for.  

Thu, 08/26/2010 - 10:23 | Link to Comment themosmitsos
themosmitsos's picture

I read this, and I believe you're being honest....BUT THAT JUST CAN'T BE TRUE?!?!?! CAN IT?!?!!

IN THE ENTIRE United States?!?!?!

I mean that's just mindblowing! I know the caveat is *NEW* home, but STILL!!!

Thu, 08/26/2010 - 10:24 | Link to Comment TheFantasticMonkey
TheFantasticMonkey's picture

I don't by the headline. I can tell you for a fact that we had probably in the area of 30 - 40 purchased over $750,000 in our zip code alone - 92130. Sucks for me because I rent here, but there were definitely homes over $750,000 selling in 92130, 92067, 92014 & 92075.

Thu, 08/26/2010 - 10:31 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Agreed, I know for a fact that statistic he quoted is not accurate.  He should be more careful before quoting things like that, because it is too easy to disprove.

Thu, 08/26/2010 - 15:26 | Link to Comment thesapein
thesapein's picture

You guys, it's in the article and in every other post, NEW homes, not existing home sales.

Probably also says something about the quality of "modern" construction, too. Who would want the stuff we make today anyway?

Thu, 08/26/2010 - 10:38 | Link to Comment nedwardkelly
nedwardkelly's picture

Try here:

http://www.zillow.com/homes/92130_rb/0-_price/0-_mp/#/homes/recently_sol...

 

Shows no homes built in 2010 sold for over $700k in the last 90 days in that zip code. I guess it could be a new home built in 2009, but I tried that as well and it said zero homes built in 2009 were sold for over 700k in the last 90 days in that zip code either.

I know zillow should be taken with a grain of salt, but generally the public record info is accurate.

If you zoom out to state level you can see some homes that will list as being constructed in 2010, but when you click in on the detail they'll have prior sale records in 2009. For ex.

http://www.zillow.com/homedetails/15223-Earlham-St-Pacific-Palisades-CA-...

Thu, 08/26/2010 - 10:52 | Link to Comment packman
packman's picture

Zillow's sales though typically come in months later.  E.g. when I bought my current house I don't think the sale showed up on zillow for almost a year.

 

Thu, 08/26/2010 - 11:55 | Link to Comment dogbreath
dogbreath's picture

a friend in Santa Fe says there have been only 5 new homes started this year there.  he does the high end carpentry so I think he was only refering to the that category.  last year he said there were 35 new homes started. 

 

Thu, 08/26/2010 - 12:03 | Link to Comment giddy
giddy's picture

...oh fuck... let's just blather-on and on about how "wrong" he is with everyone citing some property they "know" which sold recently... get-a-grip... the housing titanic is sinking fast... look at the forest... not the trees...

Thu, 08/26/2010 - 10:24 | Link to Comment septicshock
septicshock's picture

I was dumb enough to buy a home last December. The house was 50% off. Well, I guess I should have waited a lot longer. Does it really matter? With hyperinflation coming, I will be able to pay off the mortgage with worthless paper soon enough.

Thu, 08/26/2010 - 10:49 | Link to Comment ATG
ATG's picture

What if hyperinflation doesn't come because Federal Reserve banks don't want to write off their mortgages?...

Thu, 08/26/2010 - 10:58 | Link to Comment Chump
Chump's picture

Then priorities change.

Fighting zombies > Paying mortgage.

Thu, 08/26/2010 - 15:31 | Link to Comment thesapein
thesapein's picture

unless all that paper of yours has to go to paying energy bills and buying food, but at least your debt will shrink even if you don't pay it, under those conditions.

Thu, 08/26/2010 - 16:43 | Link to Comment Helix6
Helix6's picture

Re: With hyperinflation coming, I will be able to pay off the mortgage with worthless paper soon enough.

The problem is that hyperinflation doesn't necessarily result in higher salaries.  Only higher prices.

I personally don't see hyperinflation in the near-term.  True hyperinflation starts with a loss in confidence in the currency, but is sustained by a wage-price spiral.  With unemployment what it is, and with continued outsourcing of jobs, it's hard to see how the wage part of that dynamic will kick in.  More likely will be just a slow downward spiral in standard of living - first eating out and going out will go, then other trips by car that are not strictly necessary, then new purchases of nonessential items, then cell phones and college education.  This spiral can continue for a long time, as the Great Depression illustrates perfectly.

Sat, 08/28/2010 - 10:22 | Link to Comment moneymutt
moneymutt's picture

if there is hyperinflation, it is likely to occur in the things that were deflating when HOUSING was hyperinflating previously...everyday goods, food, oil, gas especially imported products, may get quite pricey down the road, but doubt that will translate to housing and wages much...

read Mish's blog sometime, with debts being defaulted on left and right and with most of the money supply being credit/debt, the money supply, despite FED's every attempt otherwise is still contracting. If I own a mutual fund or have a pension fund that lent money to someone to buy a house or an office building and those buyers are defaulting on those loans, my "money" is gone, poof. Almost all money comes into existence when a bank lends it to some one. When they default on debt, poof its gone. When bank no longer wants to lend, businesses/consumers no longer want to borrow, or no longer are worthy of being lent to, no new money is created because no one is lending. Poof its gone. The Aussie economist Steven Keen has shown bank reserves follow bank lending, not other way around.

We are in a deflationary spiral, money supply is crashing...does not mean somethings won't get expensive, but not likely to be the house you bought, which you and most anyone else would need credit/debt to buy. If housing goes to cash only basis, you'll be underwater 10 fold.

Thu, 08/26/2010 - 10:25 | Link to Comment e1618978
e1618978's picture

2nd month in a row?  This is impossible, as just in Boulder County CO there were 14 million dollar sales in June, unless this info is wrong:

http://activerain.com/blogsview/1739286/boulder-county-home-sales-for-we...

Thu, 08/26/2010 - 10:53 | Link to Comment packman
packman's picture

That doesn't break out new vs. used though.  All 14 of those could have been used.

 

Thu, 08/26/2010 - 10:31 | Link to Comment juno9604
juno9604's picture

FYI - The New Home Sales Report records the numbers in 1000s of Sales.  For homes over $750k, they reported (Z) which means "less then 500 units" which may be, but is probabistically not in fact Zero Homes Sold.  (Z) New Home Sales over $750k were also reported in June and March of 2010 and in August of 2009.  Aren't things bad enough without what appears to be intentionally misleading commentary? 

Thu, 08/26/2010 - 10:32 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

thanks, that makes more sense.  I agree, he really discredits himself when his misinterprets the data like that.

Thu, 08/26/2010 - 11:07 | Link to Comment aheady
aheady's picture

Definitely.

Thu, 08/26/2010 - 17:00 | Link to Comment Helix6
Helix6's picture

Rosie's becoming a Salon monkey...

Thu, 08/26/2010 - 10:43 | Link to Comment Biggvs
Biggvs's picture

Thank you - gotta love Zero Hedge, where there's always someone around who knows the technical details, whatever the topic.

Thu, 08/26/2010 - 15:37 | Link to Comment johngaltfla
johngaltfla's picture

Correctomundo. It means less than 500 sold nationwide, not ZERO. I think some people read the census reports incorrectly regarding real estate, especially the new home sales reports and permits/starts. You have to look to the NSA data which is more accurate AND you have to understand that "new home sales" means contracts accepted, not processed, financed or closed. From my friends left in the industry only about 51% of all contracts accepted, especially non-conforming (he thinks that might be only 25% accepted) can get financing. The banks are worried about having to eat all securitized paper shipped back from Fannie and Freddie in the future so they are just saying no unless you have sterling credit, a decent down payment, and live in an area with some prayer of building equity.

 

The really shocking number was not Rosie's headline, but that for $400K plus, less than 2500 NEW homes got a contract nationwide. Not exactly an awe-inspiring number and in no way will that clear the books or lots sitting waiting on the next sucker.

Thu, 08/26/2010 - 10:31 | Link to Comment jal
jal's picture

 

"... It is people pulling out money to subsidize living expenses. "

Gee! Someone has finally figured out that people are living beyond their paycheck/revenue streams.

Why do you think all the investment advisors have always been saying "... you need millions to be able to retire and not use up your "Capital". If your advisor put the money into a strip mall then you cannot sell the strip mall and use your capital without destroying the economy.

 

Gee! Those well to do retired people are even going to need to try to find buyers for their McMansions as they try to downsize.

Good luck on what is coming down the road.

jal 

 

Thu, 08/26/2010 - 17:04 | Link to Comment Helix6
Helix6's picture

Re: Gee! Someone has finally figured out that people are living beyond their paycheck/revenue streams.

People need to shred their credit cards.  They would begin living within their means instantaneously.

Thu, 08/26/2010 - 17:06 | Link to Comment Helix6
Helix6's picture

Re: Gee! Those well to do retired people are even going to need to try to find buyers for their McMansions as they try to downsize.

Yup.  What jal said.

Thu, 08/26/2010 - 10:31 | Link to Comment TheFantasticMonkey
TheFantasticMonkey's picture

Oh, I think the key word is "NEW" homes. Lots of existing homes over $750k sold.

Thu, 08/26/2010 - 10:34 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

that could be - the builders are smart in avoiding the high end mcmansion market, there is a glut of those.  Our housing stock is going to adjust to reflect our new wealth distribution, and McMansions are not going to be part of the equation.

Thu, 08/26/2010 - 11:05 | Link to Comment Bruce Krasting
Bruce Krasting's picture

I don't think lots of existing homes ^750k were sold.

Thu, 08/26/2010 - 10:35 | Link to Comment Tyler Durden
Tyler Durden's picture

There is a small but material difference between New and Existing homes

Thu, 08/26/2010 - 10:42 | Link to Comment SheepDog-One
SheepDog-One's picture

2.5 year supply of existing homes sitting empty, and thats 2.5 year supply in a regular non collapsed housing bubble. You know those existing homes after a few years of sitting empty just have to be torn down, not worth fixing the non-maintained property from the roof down.

Thu, 08/26/2010 - 10:48 | Link to Comment Hephasteus
Hephasteus's picture

All the expensive homes have "large open spaces" which makes them bad places to make meth as they don't have enough smell and disaster barriers.

Thu, 08/26/2010 - 11:02 | Link to Comment william the bastard
william the bastard's picture

Those are the homes designed for indoor boo-yah farming

Thu, 08/26/2010 - 13:18 | Link to Comment Canoe Driver
Canoe Driver's picture

Heph,

  Now you're a man who really understands where the situation is heading.

 

+1000

Thu, 08/26/2010 - 11:59 | Link to Comment superuser
superuser's picture

+1 (for the pun)

But why the distinction btwn new home sales vs. existing home sales above $750k (besides the more direct impact of new home sales to homebuilders)?

Thu, 08/26/2010 - 10:35 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Rosie makes another good point here. We are near a crisis point in liquidity for high end homes. People are getting desperate. Prices are falling fast for $1mm homes.

I live in the land of +750K homes. This is what I had to say on this the other day:

 

Note: In my neck of the woods (N. of NYC) there was a lousy selling season (ends August 1). It was better than 2009. There is still a tremendous overhang of properties. Increasingly, bank owned REO is a factor. There are many “must sell” homes. A number of these have quietly dropped the asking price another 10%. There does not seem to be elasticity of demand. There are cheap mortgages and cheap houses and no demand. I have to believe that this is occurring in other parts of the country.

Thu, 08/26/2010 - 13:07 | Link to Comment giddy
giddy's picture

...ahem... pardon me... but isn't "THE POINT" Rosenberg is making (by using number of new property's built to sell over $750K which are NOT SELLING) is to illustrate housing-inelasticity... which impacts the ENTIRE FINANCIAL UNIVERSE... when you nit-pick numbers you miss trends... and the trends are what matters...

Thu, 08/26/2010 - 10:36 | Link to Comment lilimarlene1
lilimarlene1's picture

Does this author check Zillow? I mean, c'mon. 

http://www.zillow.com/homes/saddle-river,-nj_rb/

I smell bullshit when I smell bullshit.

Thu, 08/26/2010 - 10:57 | Link to Comment packman
packman's picture

???

That link shows "no results found".

 

Thu, 08/26/2010 - 13:21 | Link to Comment Canoe Driver
Canoe Driver's picture

ok, this thread is too long now for some of you to still be failing to realize that the post is limited to NEW homes!!  please read the post before adding your inane commentary.

Thu, 08/26/2010 - 10:36 | Link to Comment Oswald Spengler
Oswald Spengler's picture

Those $750K homes will soon be public housing inhabited by Obama's community minions and after a month or so of trashing the places, they will look like public housing.

Thu, 08/26/2010 - 10:52 | Link to Comment Hephasteus
Hephasteus's picture

They'll zone them for a special not your own damn house home schooling since they won't have to pay a teacher budget. Stick them in fannie and freddie and write 100 securitizations on each one and Viola!!!! we're rich again.

I've really got to stop learning about the financial system. I'm starting to think like them.

Thu, 08/26/2010 - 12:06 | Link to Comment giddy
giddy's picture

...it's wise to know your enemy...

Thu, 08/26/2010 - 10:37 | Link to Comment lilimarlene1
lilimarlene1's picture

Oh, ok...I didn't catch "new," either.

Thu, 08/26/2010 - 13:22 | Link to Comment Canoe Driver
Canoe Driver's picture

Brilliant!

Thu, 08/26/2010 - 10:39 | Link to Comment I think I need ...
I think I need to buy a gun's picture

I think the key term is "NEW" as in newly built....builders probably have cut back as well....

Thu, 08/26/2010 - 10:44 | Link to Comment SheepDog-One
SheepDog-One's picture

Damn straight builders have cut back! My family us in upper-end home construction and not a single new home has gone up anywhere in this area for over a year. All work is up in Vail or Aspen where a few new homes are going up, but thats it.

Thu, 08/26/2010 - 10:41 | Link to Comment juno9604
juno9604's picture

There is a very large, material difference between New and Exisiting Home Sales.  New Homes Sales for July were reported at an annualized rate of 276k.  Existing Home Sales, reported on Tuesday August 24, were at an annualized 3.83mln rate.  "Everyone is entitled to their own opinion, but they are not entitled to their own facts".

Thu, 08/26/2010 - 10:43 | Link to Comment the grateful un...
the grateful unemployed's picture

okay so pick a year on that chart, where you think the economy will finally land. Bob Prechter thinks DOW 1000, which on a timeline is the 1980's? Now see where the median home price was in the 80's and think, this is where we are going. Of course Demographics play a huge part. The Midwest is dying, so prices there should be a few STD's below median, but it is also a smaller percentage of total inventory. Places like Atlanta have worse water problems than Phoenix. Sea water technology should help places along the coast. Where are the jobs going to be? The move toward living in  inner city high rises has also helped destroy the housing market. So we have to look at the broad picture, just like employment, its bleak.

Thu, 08/26/2010 - 10:48 | Link to Comment aheady
aheady's picture

I'm a bit skeptical as well... New or not, it doesn't seem right. Shit, this sold on the VA Eastern Shore on July 20 (not new but nevertheless):

http://www.navica2.net/displays/?n=356&i=649548&k=A3xJx5sk

Edit: Sorry that MLS link didn't work. Anyway, it was a 5BR bayfront estate listed at $1.6m that sold for $1.3m.

Thu, 08/26/2010 - 10:44 | Link to Comment tradefotox
tradefotox's picture

Naples Florida 80+ sales over $750,000 in JULY

Thu, 08/26/2010 - 10:45 | Link to Comment Abigail Adams
Abigail Adams's picture

In my still economically robust college town, the number of home sales have stayed high, as people are always coming and going. What I have noted is that the McMansions on the hills around town are selling in the $600,000s, used to be $800,000s +.

Thu, 08/26/2010 - 10:45 | Link to Comment samsterns
samsterns's picture

Monkey,

 

Are you sure that these NEW homes sold for above 750K was sold between July 1 and July 31?  I doubt it.  No new homes are selling at all im my area above $750K and I live in the Bay Area in CA.

Thu, 08/26/2010 - 10:51 | Link to Comment Rogerwilco
Rogerwilco's picture

Here in 81502 we have a 2-3 year backlog of unsold RE. In the face of this awful oversupply, a bizarro mashup (Habitat for Humanity and some freak branch of ACORN) is starting on 52 brand new houses. Obama bucks at work, stimulus at its best!

I predict in a year or two the Feds will be paying the state to bulldoze them as part of some housing recovery/price stabilization plan.

Thu, 08/26/2010 - 10:48 | Link to Comment sheep92
sheep92's picture

Toll brothers sold 750 homes last quarter at an average selling price of 575K.  Do you really think they sold not a single one over $750,000?  Nonsense.

There are bunches of new condo/coop developments in NYC where almost every apartment is over 750K. Think that ZERO were sold last month? Also nonsense.

 

Thu, 08/26/2010 - 10:49 | Link to Comment rufusleaking
Thu, 08/26/2010 - 11:28 | Link to Comment Miss Expectations
Miss Expectations's picture

No lot size indicated.  I hate that.  If it's on less than 1 acre, why bother?

But, if you want to spend around $750,000, here's my pick (and she's a beauty):

http://www.trulia.com/property/3004183085-731-W-Main-St-Washington-NC-27889

 

Thu, 08/26/2010 - 12:19 | Link to Comment Hephasteus
Hephasteus's picture

That was built in 1829. The warranty has to be up by now.

Thu, 08/26/2010 - 13:10 | Link to Comment RockyRacoon
RockyRacoon's picture

Thanks, but no thanks.  My furniture just would not fit... in the pantry.

Thu, 08/26/2010 - 13:48 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Very pretty home. But all I see is a continuous never-ending paint job staring me in the face.

When the middle class has finally been reduced to true slave class, can I live in the slave quarters out back.................which doubles as my outhouse? Brings new meaning to the phrase "don't shit where you sleep" doesn't it?

 

Thu, 08/26/2010 - 19:39 | Link to Comment RockyRacoon
RockyRacoon's picture

It's like owning a nice car, CD.  If you have to worry about where you park it, you shouldn't have it.   I saw a lot of roof that needed repairs all the time, so that means this house is not for me. 

Thu, 08/26/2010 - 10:55 | Link to Comment bankonzhongguo
bankonzhongguo's picture

 Walk your neighborhood.  Walk it and figure out how much of all of this is already at your front foor.  Take your spouse and kids and try to guess which vacant house is an unmarketed OREO, or that out of town "investor" or someone that just walked away.  These are important metrics, becaue you can Zillow and Trulia all day long, but the real motivated buyer needs price discovery and until the; shadow inventory, the pocket listings, the short sales, the strategic defaults, the non-cash flowing rentals and the like join the ranks of a genunie sale, well there won't be price discovery and no recovery.  An American system built upon the value-added of smoke and mirrors.. Don't forget.  They will devalue the currency, but not the debt.

Thu, 08/26/2010 - 11:07 | Link to Comment Thunder Dome
Thunder Dome's picture

How can currency devalue without debt devaluation?  Recipe for riots.

Thu, 08/26/2010 - 13:10 | Link to Comment RockyRacoon
RockyRacoon's picture

Walk?  In my neighborhood?  Ha!

Thu, 08/26/2010 - 10:56 | Link to Comment williambanzai7
williambanzai7's picture

Buy a home, build a mosque.

Mayor Bloomberg

Thu, 08/26/2010 - 11:16 | Link to Comment Beard of Zeus
Beard of Zeus's picture

Knock down skyscrapers, get a mosque.

 

Mayor Bloomberg

Thu, 08/26/2010 - 10:57 | Link to Comment juno9604
juno9604's picture

New Home Sales (Report is entitled "New Residential Sales") are reported monthly by the Census Bureau.  Existing Home Sales are reported by the National Association of Realtors.  Both outfits have extensive websites with the ACTUAL REPORTS on them.  Note, the original article is very thin on proof of any statement; there can be no conclusion without facts, only conjecture.

Thu, 08/26/2010 - 11:04 | Link to Comment DonnieD
DonnieD's picture

What is the definition of a new home sale? I find it impossible to believe that some wealthy person in the US didn't close on a new home over $750k over the past 2 months. You'd have a better chance of winning Powerball than for this to happen.

Either Rosenberg doesn't understand the data or he is being incredibly misleading.

Thu, 08/26/2010 - 11:07 | Link to Comment Species8472
Species8472's picture

"at least for the ones that can either afford to put down a downpayment or are creditworthy enough to secure a mortgage loan "

 

You left out about 1/3 of home owners who own free and clear without debt! Not everyone in this country is in trouble. If they can sell, they will pay cash for the new abode.

Thu, 08/26/2010 - 11:23 | Link to Comment Hamsterfist
Hamsterfist's picture

How many of that 1/3 are retired or at the end of their working careers?  How many of that 1/3 are made up of the working age, middle class?  You know the engine of the economy.  I would guess not many.  

Thu, 08/26/2010 - 12:24 | Link to Comment nedwardkelly
nedwardkelly's picture

At least 1 of them isn't retired yet :)

Thu, 08/26/2010 - 12:55 | Link to Comment Hamsterfist
Hamsterfist's picture

Exceptions are never the rule.  I would guess the large majority of those 1/3 are like I described.  Also doesn't change the fact that 2/3, or you know the majority, do NOT own their homes.

Fri, 08/27/2010 - 19:44 | Link to Comment Species8472
Species8472's picture

I know lots of folks who bought in their mid 20's, early 30's, got 20 yr mortgages, did not pull equity out or constantly trade up, payed off the mortgage and are now in their late 40s early 50s. These are the same folks who ran their cars into the dirt, saved and received interest instead of having auto loans, and have paid cash for their last several cars. They (we) are now trying to not get screwed by the government as we run the last lap before retirement.

Thu, 08/26/2010 - 11:18 | Link to Comment wang
wang's picture

The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes prices above $750k managed to sell in July. Answer — zero, nada, rien; and for the second month in a row."

of course Dave is talking new homes but the resale market is a different story - this is just one market with multiple (resales) over $1m, $5m and even $10m in the month of July

 

http://www.naplesnews.com/photos/galleries/sets/home-sales-sw-florida/

 

this house for example sold in mid July for $9m

http://www.richardprebish.com/property-search/recently-sold

 

 

Thu, 08/26/2010 - 11:17 | Link to Comment israhole
israhole's picture

Lots of land and rural properties sold last month.  Great bang for the buck, and since many people no longer have jobs to go to in congested areas, they're getting some space between themselves and the coming riots.

Bought another 24 acres myself last month, and so did a buddy who bought the land adjoining mine.

Thu, 08/26/2010 - 11:20 | Link to Comment Beard of Zeus
Beard of Zeus's picture

$5MM+ beachfront properties in places such as CA are still selling, though the sweet spot would be homes under $500k where the market is still active.

 

Tellingly, ominously, many of these homes are being snapped up by foreigners from Asia and Middle East.

Thu, 08/26/2010 - 11:20 | Link to Comment VWbug
VWbug's picture

the stat of no new sales above $750k does seem very suspect...but anyway i still think the real shock is 267k new sales at an annual rate...

and everyone is touting the housebuilders as value buys here...I dunno...I can't see how they all survive for long at those rates?

anyway, glad i am getting a chance to re establish my short position.

Thu, 08/26/2010 - 11:23 | Link to Comment Monetary Lapse ...
Monetary Lapse of Reason's picture

New homes = construction = jobs, material sales, economic activity.  Existing homes sales = a realtor keeping their job.  Different animals (and implications) altogether.

 

Downsize Bitchez 

Thu, 08/26/2010 - 14:28 | Link to Comment Rusty Shorts
Rusty Shorts's picture

Different animals indeed.

Thu, 08/26/2010 - 11:28 | Link to Comment jedwards
jedwards's picture

ok nm isee the headline

Thu, 08/26/2010 - 11:30 | Link to Comment Rob Deep
Rob Deep's picture

Not one home sold over 750k in July? Well he is one that sold for 1.8M down the street from me. Says the sale date was 7/26... maybe they didn't "close" until later, but nevertheless...

 

http://www.zillow.com/homedetails/1317-Royal-Saint-George-Dr-Naperville-...

Thu, 08/26/2010 - 11:31 | Link to Comment Herknoid Weaver
Herknoid Weaver's picture

Scary Statistic. I sent that stat about 750k new homes around the office here at our firm. I hope they are pissing in their pants. The guy in the office next door said "not true he had a client close a 1.2 mil home in July". Of course I found out it wasnt new and used to be valued well over 2 million.  I can say, coming from an office which has 15 brokers  that most of these guys are asleep to what is going on. They listen to sell side mutual fund wholesalers.  Scary to think about who is managing peoples money. Its all about getting that 1.5% management fee.  I guess it doesnt matter anyway we are all going to be using a currency that is backed in carbon credits. We will be charged 50 cents a fart and Chile night will be off in households across America.

Thu, 08/26/2010 - 11:32 | Link to Comment eatthebanksters
eatthebanksters's picture

I follow a small market on the left coast closely...I used to make my living off of it until the subprime collapse.  We have had sales abobe $750,000 but FAR FEWER than even several months ago.  What I have seen is the larger mcmansions, that used to trade in the high $2m and up range, are now being listed at short sale price about 60% of of their peak prices...this is in keepin with what Rosenberg is saying.  Good luck to the banks, they are about to finallyget what they deserve, a big shit sandwich.

Thu, 08/26/2010 - 11:48 | Link to Comment the grateful un...
the grateful unemployed's picture

on the lower left coast, the whole exurbia movement is dead. people are concerned with moving close to their jobs (LA Times) but this demographic, the working poor lets call it, a rhetorical term, is looking for cheap existing housing, of which there is plenty i think. buy a house built in the 50's for a couple hundred thou'. Maybe the flipper has to eat his improvements and you get a few amenities. (there's almost always a flipper involved) the best house in our hood, probably a mil a few years ago, sold at auction for 225, and the people who bought haven't enough money to do anything with it, and it needs a lot of work. i see our city buying up land like crazy, mostly road right of ways, but some eminent domain, a run down motel for a car dealership. ch ching. eventually they will suck up blighted neighborhoods, and turn them over to their developer pals. so yeah, things are getting worse before they get better, and the Washington stimulus, government stimulating government is paying dividends, but hard to front run that action.

Fri, 08/27/2010 - 01:02 | Link to Comment HedgeOn
HedgeOn's picture

+1

Thu, 08/26/2010 - 11:34 | Link to Comment glenlloyd
glenlloyd's picture

and home prices will drop below the long run trend before they return to trend. Nothing ever settles back exactly at the trend, so it's likely we'll see in excess of 15% price declines ahead.

Thu, 08/26/2010 - 11:35 | Link to Comment functionform
functionform's picture

Read the title and shush.  Good god.  

Regardless, this is definitely damning.  Democrat karma I guess from the Clinton era...  Barack never stood a chance!  I wonder what super optimistic economist thought throwing more money at the problem would help...

Sat, 08/28/2010 - 10:40 | Link to Comment moneymutt
moneymutt's picture

so if Bush Sr had gotten re-elected, and we had some other Repub for 4 years before W, meaning Repubs would have had complete control of Prez and Congress from 1994 to 2006, everything in housing market and US economy would be grand right now? Didn't W have complete control from 2000-2006, did he undo the Clinton deficit (oops there wasn't one - W and Repub brought it back) did W stop the loose lending practices and unregulated derviatives market that fueled Wall Streets ability to fuel housing lending? Rember entire state of CA was almost all private lending, ala coutnrywide, as CA housing was too expensive to conformto FHA, Fan, Fred...Suprime market was private MBS junk being sold to stupid investors...or were hedge funds a Obamonics before he was even a Senator?

BOTH parties and the FED messed up our economy big time, both thru NO regulation and policing of financial markets like that had kept us stable for 60 some years and thru govt interference. BOTH the private market and govt policy was too loose and exuberant and too risky...

As long as you think whole problem was Dems, or all govt, we are screwed as we will just re-elect what we had from 2000-2006, and that didn't freaking work..that was bubble time. It was a Dem Prez, Clinton, and Repub congress that passed Gramm bill that rolled back on the 30s era banking regs, and a Dem Senator, Dorgan that clearly state in 1999 that such dergulation would lead to a banking crash that would lead to taxpayers having to bail out to big too fail banks in 10 years....But go on thinking if we could just get Repubs back in charge all will be well....and you will get the representation you deserve.

 

Thu, 08/26/2010 - 11:35 | Link to Comment tony bonn
tony bonn's picture

this would be good news except for the fact that satan's fed is propping up the banksters....the red ink should flow like a mighty river to demolish financial crooks but it is being stanched by tourniquets issued by pomo, qe, and a horde of fraudulent accounting practices....fasb is a cabal of thugs....

this soviet economy shall not long endure....

Thu, 08/26/2010 - 11:42 | Link to Comment Precious
Precious's picture

Actually there was one new home sale above $750k and it was made to someone named Keith Olberman.  Joe Biden is going to hold a press conference in front of the house at 14:00 hours today to present a Medal of Honor to the new homeowner on behalf of the President.

Thu, 08/26/2010 - 11:39 | Link to Comment 3ringmike
3ringmike's picture

i'm one of the hoard just waiting for the signal.

Thu, 08/26/2010 - 12:04 | Link to Comment Segestan
Segestan's picture

That chart looks about right. Projects are very hard to get and every contractor has to bend the rules, ( affirmative action-wages) just to Hope to stay alive. And we aint seen nothing yet. The nation has built on credit and jobs availability .. which we now have little.  I don't agree with the 15% downgrade... how about 50%?

.....unless we have a massive dollar devaluation.

Thu, 08/26/2010 - 12:45 | Link to Comment benb
benb's picture

A further 50% drop in prices in the next couple of years sure seems possible at this point.  Especially if we have a big spike in energy prices.

Thu, 08/26/2010 - 12:21 | Link to Comment tom
tom's picture

This statistic needs further clarification: corporate developers sold zero new >$750k homes. These stats wouldn't catch non-corporate.

It's understandable why corporate developers have abandoned the high-end market, as there is so much inventory of existing high-end homes being held off the market by banks. See Reggie's blogs.

Thu, 08/26/2010 - 12:42 | Link to Comment jmc8888
jmc8888's picture

Housing can and most likely WILL fall about 90 percent from here.  If we don't switch, it will never go back up!

In the depression (something a lot nicer than what we'll face...by FAR), homes, flats, apartments that were brand new, 2 years old, were selling for 2/3 off the COST to build the property. 

Last I checked, moving down 15 percent from here would be a drop in the bucket.   We are going to move far lower than the year 2000 housing prices.  Think more like 1970's. 

People will be LUCKY to get even THAT.  There's no fixing the system, without getting rid of the problem.  No banker, and very few politicians on either side want to fix it.  Glass/Stegall.  No Glass/Stegall, and those 1970's prices, will still be bubblelicious, and in constant perpetual deflation, while the cost of real goods goes hyperinflation before deflating into nothing.  Of course fixing it at any point stops the process.  But while they could have done Glass/Steagall at any time, instead they went with perpetuating the outright fraud.  Passing Glass/Steagall AFTER the derivatives implode, is pretty much worthless.  Passing it AFTER bailouts are given and the money flows into other markets, is pretty much worthless.  Well, worthless to save what we currently have.  It would still have everything to do with righting and creating a better playing field. 

Glass/Stegall before the crash, or enjoy decades of pain most likely.   All needless, all for naught.  Enjoy the new dark age. 

It's never been ABOUT housing, housing is a SYMPTOM, it's GLASS/STEAGALL that is the ISSUE. 

All the games we hate and that are destroying us would be illegal under Glass/Steagall.  Their effects, their distortions, the missallocation through them, all would be gone/wither away.  Leaving a much better capitalist structure.

The crash will be all about monetization to legitimize the fraud.  We blow up the system by printing, to pay for the fraud, and thus launder their fraud money, which upon that time is only fraudulent debt.  Glass/Steagall means that debt, doesn't need to be printed for, or paid back, because it isn't REAL.  It's FRAUD. 

Thu, 08/26/2010 - 23:01 | Link to Comment Johnny Bravo
Johnny Bravo's picture

LOL.  Some people huff paint, obviously.

Thu, 08/26/2010 - 12:37 | Link to Comment juno9604
juno9604's picture

This is just silly; the data is widely available and indisputable; New Home Sales reported by Census every month at the Department of Commerce.  Existing Home Sales reported by National Association of Realtors every month.  Why is this even being speculated, raged about, extrapolated upon and misinterpreted? 

This guy's article is pure nonsense and full of speculation, false conclusions, fake correlations and not a single fact.  The paranoid on this site might like to ponder the agenda of this  "salesman" so fondly known as "rosie". 

New Home Sales link to this morning's report below. 

http://www.census.gov/const/newressales.pdf

Existing Home Sales here for cryin out loud!  

http://www.realtor.org/press_room/news_releases/2010/08/ehs_fall


Thu, 08/26/2010 - 13:25 | Link to Comment Biggvs
Biggvs's picture

Thanks for the links. The implication that absolutely zero new homes were sold at $750k+ is obviously a mistake, at best. But claiming the article doesn't contain a single fact is a bit silly too, as some of it is straight out of the report.

Thu, 08/26/2010 - 12:42 | Link to Comment juno9604
juno9604's picture

This site needs a fact checker that knows economic data (and markets and can clean up the horrific, long winded, illogical, lingo-y writing. If they had one, they would never have published this nonsense!  I read this site and quickly lose interest because it appears a lack of knowledge is being snowed under by a blizzard of words.  What' up ZH?  Hire a sharp penciled editor then these baseless fatalistic fantasy pieces would disappear.  

Thu, 08/26/2010 - 12:52 | Link to Comment tahoebumsmith
tahoebumsmith's picture

Going down the list of comments I can pick out one by one the people that are either upside down in their home or at the tipping point? Playing defense. And I can definately tell which ones live in this beautiful bankrupt state of California! Give it up folks, we still got -25% to go before we hit bottom.  And when we finally catch the bottom feeding Carp, it will probably take about 10 years to bring it to shore! I said it yesterday, the bottom will be 1999 prices in most areas. It's simple supply and demand economics, and when the house of cards completly blows over, the supply will be mind boggling!

Thu, 08/26/2010 - 19:13 | Link to Comment ToddGak
ToddGak's picture

I say great, bring it on.  Maybe I'll actually be able to buy a house in California.  My wife and I have combined gross income of around $160K, and we can only afford to buy either a tiny house in a terrible neighborhood, or a decent house that is 60 miles away from where we work.

Thu, 08/26/2010 - 13:00 | Link to Comment tom
tom's picture

Okay, I checked and actually Rosie is misreading the data. The report only gives estimates of the numbers of new homes sold in thousands of homes. So the "Z" in the >$750k column means less than 500, which is a puny number for the whole US of A, but isn't the same as zero.

http://www.census.gov/const/newressales.pdf

Thu, 08/26/2010 - 13:07 | Link to Comment juno9604
juno9604's picture

Thank you for checking Tom.  Am delighted someone is interested in the facts.

Thu, 08/26/2010 - 13:08 | Link to Comment Trifecta Man
Trifecta Man's picture

According to the government data in table 2 at http://www.census.gov/const/newressales.xls , the number of new houses sold in July and June has table entry (Z), which means 500 or less were sold in the $750,000 or more category (see notes at table bottom).  It may not be correct to say "zero, nada, rien;"

Thu, 08/26/2010 - 13:14 | Link to Comment Manny
Manny's picture

The article talks about not a single NEW home over $750k selling in July.

Wonder if someone can provide the stat for how many EXISTING $750k homes sold in July. And what the drop/increase compared to previous month, previous year ?

Thu, 08/26/2010 - 13:31 | Link to Comment RSDallas
RSDallas's picture

Dallas, Texas (no surrounding areas) had 2 single family new construction homes from $750,000.00 and above that went under contract in July.  These have not closed.  They have only had a contract written on them.  There were 7 new single family homes from $750,000.00 and above that actually closed in Dallas, Texas in July.

There have been 4 single family homes that are new construction placed under contract (not closed) for the month of August.

There are 50 new construction single family homes under construction or finished available for sale.  There have been a total of 36 single family homes closed to date that are new construction.  On average, the builders received 97% of the asking price and the homes were listed for an average of 336 days.

The challenge in Dallas is that there are currently 461 pre-owned homes available for sale from $750,000.00 and above.  There are 33 homes under contract awaiting a closing and there have been 186 pre-owned single family homes closed to date. 

There are no town homes, condos or zero lot line properties in any of these numbers.  This is also MLS reported data, not private transactions.

There appears to be an imbalance in the pre-owned market, but not the new construction market.  The sheer numbers of new construction homes available have come way way down from the pre-bust years.  It looks like the builder has adjusted to the market , but the pre-owned seller may experience more pain.

 

 

Thu, 08/26/2010 - 13:34 | Link to Comment tom
tom's picture

But I don't see anything the least bit paranoid in Rosie's views.

If you know any recent home buyers in high-end neighborhoods, you know the story. It's a well-off community, where most people have the means to ride through bad times, and anybody who just "arrived" is going to cling on to that dream tooth and claw. When foreclosure is unavoidable the bank holds the house off the market, lest it push the whole neighborhood's valuations down, and encourage anybody else revealed to be underwater to walk away. There are a lot of upper-middle and high-end neighborhoods that have been keeping this up for two years already. It gets exhausting. Some of them will keep on hanging on. Some of them will capitulate.

I see a lot more pressure right now on the low end. The tax credit mattered more to the low end. The tendency of bottom-fisher speculators to pull back together with the natural buyers has been amplified by all the weak macro news. Look for more capitulation in the low and lower-middle segments, soon.

Thu, 08/26/2010 - 13:39 | Link to Comment juno9604
juno9604's picture

Nationwide Sales Prices for July Existing Homes - which were 3.83mln on an annualized basis are as follows;

Home Priced up to $100K were 22.3% of Sales

         From $100-250k were 43% of Sales

         From $250k-500k were 23.9% of Sales

         From $500k-750k were 6.9% of Sales

           From $750-1mln were 2% of Sales

           Over $1mln were 1.9% of Sales

 

 

 

Thu, 08/26/2010 - 13:39 | Link to Comment redpill
redpill's picture

What this really illustrates is how flawed the Census New Home Sales methodology is.

There were over 600 new homes over $750k closed in July, probably more as that figure is still preliminary.  Well off from a year ago to be sure (~-40%), but nevertheless they are there.

While the Census tracks contracts and not closings like the above indicates, I can guarantee that number will not be zero in the next two months.

The thesis is likely still valid, but should prompt one to consider getting a better data source.

Thu, 08/26/2010 - 13:49 | Link to Comment juno9604
juno9604's picture

This data for Existing Home Sales is not from Census; it's from the National Association of Realtors; it counts completed transactions.   It is very difficult, nigh impossible, to prove an argument without facts; sentiment, yes, argument, no. 

I am not a housing expert but this information is freely available; this dude's argument is a salesman's pitch, not that of an economist or statistician.  You can argue statistics with Realtors or Census (seasonal adjustments for instance) but the FACT is, these data are part of the National Accounts and are widely used in economic models worldwide.  As noted earlier, 'everyone is entitled to their own opinion, but not everyone is entitled to their own facts'. 

There were in fact, according to the New Residential Sales data, less than 500, as indicated by (Z) New Home Sales in July.

Not to be a pain in the ....but when I read this article and the comments my head almost popped off.  It would be interesting to know, perhaps, what this dude is selling. 

Thu, 08/26/2010 - 14:02 | Link to Comment redpill
redpill's picture

I'm not sure if you were responding to my comment, but the figures I presented are neither from the Census nor the Realtors.  They represent New Home Closings.

Fri, 08/27/2010 - 00:59 | Link to Comment HedgeOn
HedgeOn's picture

I know Rosie and he's not trying to "sell" anything.  He was one of the few who got the 2007 recession call right.  He may have got this statistic wrong but he is a prolific writer.  We're all entitled to a flub every once in a great while.  He's not ridiculous like Zandi or Bianco or the other 'tards that work for the sell-side.  Believe it or not - he's one of the good guys.  He rails against Wall Street's bias for perpetually pumping stocks and the perma-bull bullshit.  I followed his analysis recommendations in 2008 when all we heard was "Goldilocks" economy on CNBC and made a cool 30% in under 2 months in the contrarian trade which was Treasuries and he also is a big fan of gold.  Not sure if anyone knows who Hugh Hendry is (manager of the Eclectica hedge fund) but HE is a huge fan of Rosie.  Whether it was 0 or 500 - the real point is the number, nationwide, still sucks. 

Thu, 08/26/2010 - 14:33 | Link to Comment juno9604
juno9604's picture

Existing and New Home Sales are completed transactions (closings).  Not sure where else data of this granularity is available.  New Home Sales in July of 2009 (1yr ago) for homes $750k and higher were 1,000 so they could be down by 50% or more.  The bulk of sales (64% in July) take place between $150k and $299k. 17% of homes sold in July were $100k or less, 10% of sales were $300k to $399k.  Only 1% of Sales were at the $750 or higher price level. 

What is interesting perhaps is the fact that higher priced homes are retaining their value on a percentage basis on a much higher rate than 70% of lesser priced homes.  In fact, NAR suggests that price retention at higher price points is keeping the Median Home Price stable...at least in the July data. 

Thu, 08/26/2010 - 15:36 | Link to Comment redpill
redpill's picture

Census New Home sales are sales contracts, not closings.  They also do not take into account cancelled contracts.

Existing Home Sales are based upon closings on homes listed in MLS and then statistically extrapolated to represent an entire area (or the nation).  It is a much better sample size than the Census data and thus more accurate with a much smaller percentage error, but it is not an actual figure.

Thu, 08/26/2010 - 14:36 | Link to Comment juno9604
juno9604's picture

Red,

FYI...there were 500 or less New Homes sold in at $750 and above in July 2010 (on an annualized basis).  Of Existing Homes, 3.9% of July Sales were above $750k. 

Thu, 08/26/2010 - 15:33 | Link to Comment redpill
redpill's picture

juno, what I'm trying to explain to you is that the data you are referencing is wrong.  There is data available with greater granularity.

 

Thu, 08/26/2010 - 15:24 | Link to Comment Spigot
Spigot's picture

Let's just put it this way...its numbers on record, having to do with mortgages for those figures. Since 95% of the financing for mortgages today come via Fannie&Freddie, and their limits for lending are below that $750,000 figure, and other lenders are bleeding like slaughtered cattle on a kill ramp, you can bet there's literally ZERO activity occuring.

Outright sales for cash or trades probably are happening, but not via standard mortgage pathways.

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