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Was That It For This Round Of The "Housing Recovery"?

Tyler Durden's picture





 

In the seven weeks since Bernanke unleashed monetary policy hell on the world, much has been made of the 'housing recovery' and how his policy will help sustain this boomlet. Unfortunately, facts being those annoying things that they are, this is absolutely not the case. Aside from a one week knee-jerk ramp in refinancings - no doubt driven by every mortgage broker in the country dialing-for-dollars on the basis that Ben's-got-your-back - mortgage applications have fallen for five weeks in a row... We presume this merely means we need another moar unlimited QE - which given the fiscal cliff fiasco, is as likely as not. In fact, the next round of housing weakness, which is due imminently now that Obama has been reelected, will serve as the alibi the Fed needs to continue the unsterilized portion of Operation Twist 2 set to expire at the end of the year, and which as we explained, will mean that starting January 1, the Fed will monetize $85 billion/month in TSYs and MBS instead of just $40 billion in MBS.

 

Mortgage Applications have plunged five weeks in a row...

 

and as a reminder - Existing Home Sales vs Mortgage Apps...

 

Charts: Bloomberg

 


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Wed, 11/07/2012 - 10:44 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Lots of fixer-uppers on Long Island.....might want to wait a week....could be even cheaper then. Good thing FEMA is already in place for the next storm.

Wed, 11/07/2012 - 10:44 | Link to Comment ACP
ACP's picture

Depends on how much it costs to haul 'em back out of the ocean.

Wed, 11/07/2012 - 10:46 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Wow this is weird. The elections are over, and all of a sudden all the economic indicators have turned south again.

Huh.

Wed, 11/07/2012 - 11:09 | Link to Comment Leopold B. Scotch
Leopold B. Scotch's picture

All that destruction is great for the housing market! And GDP!

Wed, 11/07/2012 - 11:23 | Link to Comment Thomas
Thomas's picture

Knock me over with a feather.

Wed, 11/07/2012 - 12:06 | Link to Comment Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

looking forward to the year in review.  You should make a collection and publish it as a book.

Wed, 11/07/2012 - 11:45 | Link to Comment Lohn Jocke
Lohn Jocke's picture

Don't worry, this time it's different.

Wed, 11/07/2012 - 10:50 | Link to Comment krispkritter
krispkritter's picture

If Sandy wasn't a wakeup call to sensible people to get the fuck out of LI or NY in general, then you deserve everything you DON'T get from .Gov to help in your recovery. With RE still at bargain prices in much of the country, now is a good time to seriously consider moving the the best/safest area you find and afford. 

Wed, 11/07/2012 - 11:02 | Link to Comment jcaz
jcaz's picture

"bargain prices"....   Spoken like a true realtor......

 

Wed, 11/07/2012 - 11:08 | Link to Comment Spastica Rex
Spastica Rex's picture

There's never been a better time to buy. Hurry. I mean it: hurry. 

Wed, 11/07/2012 - 12:22 | Link to Comment krispkritter
krispkritter's picture

Yeah, yeah, I know...I was going to say 'rock bottom' but thought I'd sound like a used car salesman...and 'bottom' hasn't been reached yet...fingers outpaced the grey matter. Still, relative to what people were paying 5 years ago... ;)

Wed, 11/07/2012 - 11:08 | Link to Comment Chump
Chump's picture

Are you so financially independent that you can move without worrying about finding work and selling your house?

A lot of people are just trying to hunker down in place because they don't have the option of saying, "fuck this shit," and moving to the mountains, yours truly included.

Wed, 11/07/2012 - 11:39 | Link to Comment Spastica Rex
Spastica Rex's picture

>>>SHHHHHH!<<<

You'll beak the illusion!

Wed, 11/07/2012 - 12:18 | Link to Comment krispkritter
krispkritter's picture

Frankly if you're that tied into the Sheeple mindset then you need to be on here more. I'd be more worried about losing family ties than work or selling a lot with a foundation on it. So you think those 'paupers' living on LI or with oceanfront property most affected by this storm can't afford a home away from the higher taxes, high COL, absurd regulations, and the dangers of being washed out again next year?  This isn't the 9th Ward in NO.  No, not everyone can get out. But if you can and don't, what? Wash, rinse, repeat, and we'll have FEMA dig you out next year too? Sounds like a 9th Ward mindset, just a different pay grade. 

Wed, 11/07/2012 - 12:32 | Link to Comment Chump
Chump's picture

Yes, I'm a sheeple because I can't force someone to buy my house, find affordable living in another area, and force people to hire me in that area.  What a dumb shit I am for worrying about things like sheltering and feeding my family.

No, not everyone can get out.

Exactly, which was the very point of my reply.

Wed, 11/07/2012 - 13:14 | Link to Comment Mudduckk
Mudduckk's picture

@Chump

Youve been harvested. Planted in the ground at a price to high. Suckered to stay by the power and pay...not seen elsewhere. thats ok. stay in there good serf. keep your head down and keep suckin'

up liquidty is what you crave. suck it up every day. even as the value of it comes suspect. unable to sustain. still believin it will. till the day comes youre all parched and shriveled up. no use to your book maker. so up youll be plucked against your will. only to be replaced by a new shill that believes in debt money.

so there you go down Arrow me now. even knowing that you woukd if you could but havent got the guts like so many others in your shoes. stop payin the man. call his bluff. crush his false manna today. he dont want your home. he dont have the stones to keep it up. not like you do my bro @chump and all the other bitchez in your shoes. 

no way no how if youd all jump in the same time. stratiegically default all together now like two school girls who make a pact to show the same day all pink and gay in the same pretty dress. same 

Wed, 11/07/2012 - 13:26 | Link to Comment Chump
Chump's picture

You're right.  I absolutely don't have the guts to risk starvation, federal prosecution, and the deaths of my wife and son just to fight "the man."

Instead, I'm going to let "the man" destroy himself and try to stay out of the way.  Meanwhile incoherent clowns like you can "go first," IYKWIMAITYD.

Wed, 11/07/2012 - 14:40 | Link to Comment Mudduckk
Mudduckk's picture

aw @chump, but youd look so good in pink. IYKWIMAITYD whatever that means. so good.

Wed, 11/07/2012 - 13:29 | Link to Comment Smiddywesson
Smiddywesson's picture

There's a lot of hidden costs to leaving your home town and support group as the fiscal collapse approaches.  I'd think twice before moving for the sake of moving.

Wed, 11/07/2012 - 11:16 | Link to Comment Atlasshruggedme
Atlasshruggedme's picture

Montana! - He is talking about moving to Montana!

Wed, 11/07/2012 - 10:50 | Link to Comment Jason T
Jason T's picture

Property taxes on LI are ridiculous.. why I moved the heck out of there let alone the entire model of Suberbia.. as is the case in point of what has happened with this storm.

 

Lots of fixer uppers upstate too.. a crap load cheaper and with far less property taxes and far more ability to be self sufficient.  My wood burning stove 5 ft from me is keeping me quite warm this 25 degree day ..and I've got plenty of fire wood I can cut from back yard.  

just saying, that model of suberbia is broken and done for.  

Wed, 11/07/2012 - 11:14 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

"that model of suburbia is broken and done for."

Gasoline prices, property taxes and crime have just begun to rise.  Suburbia is done.

Wed, 11/07/2012 - 14:33 | Link to Comment giddy
giddy's picture

...yes...and that's the point... no suburbs... no "upward mobility"... no "safety" in outlying communities... just inner-city expansion... trickle-up poverty and crime... 

Wed, 11/07/2012 - 22:25 | Link to Comment mharry
mharry's picture

Update,FEMA is closed because of bad weather. No, seriously.

Wed, 11/07/2012 - 10:43 | Link to Comment holdbuysell
holdbuysell's picture

Go ahead Bernanke, force it. If it (the financial system) breaks, it needed replacing anyway. Murphy said so.

Wed, 11/07/2012 - 10:43 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Paper prices versus physical prices.  Go try and get a loan.  Moreover, what has happened to rents relative to wages again?  The paper world is fucked.  Stand by for civil and world war when paper and physical prices completely decouple everywhere.

Wed, 11/07/2012 - 10:46 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

So...........when does the US meet and greet the debt ceiling.....again?

Just askin'

Wed, 11/07/2012 - 11:04 | Link to Comment Translational Lift
Translational Lift's picture

So.....now that obummer has been reelected I suppose he will be awarded 2012 Nobel Prize for Economics ........

Wed, 11/07/2012 - 10:49 | Link to Comment Dr. Engali
Dr. Engali's picture

I've been trying to sell my house for a year now and nobody can get financing. Now everybody that is coming through is looking for a land contract.

Wed, 11/07/2012 - 10:51 | Link to Comment surf0766
surf0766's picture

Soon your house will be taken.

Wed, 11/07/2012 - 10:52 | Link to Comment Dr. Engali
Dr. Engali's picture

Let them have it. We are in a nation of takers anyway.

Wed, 11/07/2012 - 10:54 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Answered my question.  Yes, I have a couple rentals for sale, good first homes in good locations.  Lots of interest, no one can get financing.  Remind me why we saved the banks again?

Wed, 11/07/2012 - 10:57 | Link to Comment Dr. Engali
Dr. Engali's picture

Stockholm Syndrome

Wed, 11/07/2012 - 11:16 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

'We' 'saved' the banks to save your world.

LOL.

Wed, 11/07/2012 - 11:31 | Link to Comment pursueliberty
pursueliberty's picture

Depending on where they are on the scale of median price in your area I highly advise you to owner finance them. 

I know a woman (realtor) with 7 very nice homes she owner finances.  She lists them for sale with the requirement they pay her x amount down come income tax return time.  There are a whole lot of people who get a suprising amount back on tax returns, like $8k+.  People take better care of the home, are responsible for insurance/repairs/property taxes, and if something happens you kick them out and move on to the next "buyer".  They'll pay a lot more for a house also, on top of higher interest.  I know one of her tenants.  He is a commercial painter, self employed, and hasn't had good credit for 15 years.  He makes 6 figures.

 

My wife is a successful realtor and she isn't seeing any change in people unable to get financing.  It is extremely common for people in the lower end market to have shit credit.  She hasn't had a deal on a home above $150k not go through due to financing in three years.  She has buyers at this very moment from $75k-$350k, all pre qualified of course, not counting two investors who are always buyers.

Wed, 11/07/2012 - 11:45 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"She has buyers at this very moment from $75k-$350k"

-----------------------------------------------------------------------------------------

So, in the ghetto of any major city (where the jobs are), nice.

Yes, already considering owner financing.  Apparrently it is true, the only way to rob a bank is to become one.  

Moreover, how will this be sustained again if wages are declining or flat in the face if increased taxes?

Wed, 11/07/2012 - 11:55 | Link to Comment MachoMan
MachoMan's picture

Can't be sustained indefinitely...  however, this is one of the few ways for plebs to actually catch some of our fiscal and monetary prolifigacy...  it isn't just directly getting the money that's important, it's also getting beneficial policies put in place that you can front run/utilize.  Albeit pennies in front of the steam roller.

In the end, everything is tied to wages.

Wed, 11/07/2012 - 11:37 | Link to Comment A Nanny Moose
A Nanny Moose's picture

something about burning the vilage to save it

Wed, 11/07/2012 - 12:14 | Link to Comment socalbeach
socalbeach's picture

Why did we save the banks? Simple, to protect bank bondholders from taking losses.

http://www.hussman.net/wmc/wmc111003.htm

"Look at Bank of America's balance sheet, for example. Reported assets are $2.261 trillion. Against that, liabilities to depositors amount to less than half that, at $1.038 trillion. Add in $239 billion for securities that they are obligated to repurchase, $129 billion in trading account and derivative liabilities, and $155 billion for accrued expenses. Now you've covered counterparties, as well as vendors or others who might have invoices outstanding. Even then, and you're still only up to $1.561 trillion of the liabilities. The remaining 31% of Bank of America's liabilities represent obligations to its own bondholders and equity of its own shareholders. This is well beyond what is sufficient to buffer any loss that the company might take on its assets, while still leaving customers and counterparties completely whole. To say that Bank of America can't be allowed to "fail" is really simply to say that Bank of America's bondholders can't be allowed to experience a loss.

What "failure" really means is that bondholders lose money, and the operating part of the institution is taken into receivership, sold for the difference between assets and non-bondholder liabilities, and recapitalized under different ownership. Often the only thing that customers and depositors notice is that there is a new logo on top of their statements..."

Wed, 11/07/2012 - 10:53 | Link to Comment LawsofPhysics
LawsofPhysics's picture

See my post above.  I guess the real question is how will you will respond when the state takes your house in order to keep those pension obligations afloat for just a bit longer.

Wed, 11/07/2012 - 11:18 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

They won't take the whole house, just a piece.  Every year. 

If you destroy a guy, you can't juice him.  Loansharking 101.

Wed, 11/07/2012 - 11:29 | Link to Comment malikai
malikai's picture

That's the thing about government though. They don't do loansharking like the pros. They don't understand the business. They do understand the business of destruction, though.

Wed, 11/07/2012 - 13:35 | Link to Comment Smiddywesson
Smiddywesson's picture

They won't take the whole house, just a piece.  Every year. 

If you destroy a guy, you can't juice him.  Loansharking 101

Yes, but there's also carpetbagging, where they take your house for the insiders, who then rent it back to you.

Wed, 11/07/2012 - 11:46 | Link to Comment MachoMan
MachoMan's picture

@ Dr. Engali:

How expensive of a home relative to your local median household income?  Here, they're still giving out loans like hotcakes for anything 3x or less...  Further, as one would guess, the number of transactions past the 3x point begins to taper off rather quickly...  been that way since 2009 or so though.

Also, your note about land sale contracts is pretty interesting.  Goes to show what "real" rates of interest are...  clearly homeowners (debtors) are going to want plenty of spread on their existing mortgages...  8-10%+...  The only thing to watch out for is the old maxim "equity abhors a forfeiture".

Wed, 11/07/2012 - 10:52 | Link to Comment Lendo
Lendo's picture

I wish there was a housing recovery.  I'd patiently wait to sell until I could get my downpayment back and then go buy money.

Perhaps I'll utter the same shit that everyone else does about a recovery and coax myself into actually believing that.

Wed, 11/07/2012 - 10:53 | Link to Comment DeadFinks
DeadFinks's picture

Edward G. Robinson as Johnny Rocco in Key Largo: Yeah. Thats it. Moar. Thats right! I want moar!

Wed, 11/07/2012 - 10:53 | Link to Comment MiddleageThinni...
MiddleageThinninghair's picture

The treasuries $TNX and $TYX appear to be breaking to the upside this morning... yeah more money ... more fear??

Wed, 11/07/2012 - 11:00 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Dunno bout a housing recovery, we really need a flipping recovery. You know, the something-for-nothing economy 

Wed, 11/07/2012 - 11:05 | Link to Comment Miss Expectations
Miss Expectations's picture

Aren't we on the cusp of "Cash for Underwater Homes?"  Everyone who had flood insurance will get a check for their underwater house.  If you're retired, isn't this the opportunity of a lifetime to get the hell out of New Jersey, Staten Island and Long Island and escape high taxes?

Sandy Claus for some.

Wed, 11/07/2012 - 11:11 | Link to Comment Spastica Rex
Spastica Rex's picture

Krampus for others.

Austrian, on my pop's side.

Wed, 11/07/2012 - 11:19 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

Housing recovery?  See youse in 2030.

Wed, 11/07/2012 - 11:34 | Link to Comment Lndmvr
Lndmvr's picture

Southwest Iowa crap hole experience. Bought in 2008 June, just before the crash. I have an offer as of yesterday while on market 7 months. They are young, and qualify for a rural home loan. I have to kick them back $3000  for closing costs. They put down nothing. I end up losing about 20k overall. At this point I just hope it closes.

Wed, 11/07/2012 - 11:48 | Link to Comment MachoMan
MachoMan's picture

Yep.  If you're not paying closing costs, you're not closing...  and the saddest part is that you can't ask for any earnest money because they don't have it lol...  total crapshoot on closing...

Wed, 11/07/2012 - 11:58 | Link to Comment narmbs
narmbs's picture

Come on, the first chart is the Mortgage Applications for Refinance Index and the second chart is the Mortgage Application for Purchase Index. Both indexes have "plunged" before and housing has continued to do well. Your charts are very misleading. Looking at both indexes on a 3 year basis, this plunge seems to be little more than a typical mean reversion. You may be right about housing in the long run, but this is just terrible analysis.

 

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