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Spot The "Housing Recovery" Disconnect(s)

Tyler Durden's picture





 

Confused about the latest disconnect between reality and propaganda, this time affecting the (foreclosure-stuffed) housing "recovery" which has become the only upside that the bulls can point to when demonstrating the effectiveness of QE now that the latest attempt at economic recovery has failed miserably both in the US and globally? Gluskin Sheff's David Rosenberg is here to clear any confusion.

The sputtering housing recovery

The 14% slide in the S&P 500 Homebuilding index from the March cycle highs may be telling US not to hold our breath over a near-term turnaround, either (the group is actually no higher now than it was in mid-October1). And the housing indicators are part of a bigger picture of a sharp slowing in the pace of overall economic activity. Consider that three months ago, 65% of the incoming economic data were coming in better than consensus views. Two months ego, that share of 'beats" came down to 47%. And in the past month, the share of economic data surprising the consensus to the high side has fallen to a mere 36%.

  • Household employment (-206k in March. the steepest decline in well over a year).
  • Real retail sales (-0.3% in March, down for the second time in three months).
  • Manufacturing production (-0.1% and also down in two of the past three months).
  • Core capex orders (-3.2% in February, and again, down in two of the past three months).
  • Single-family housing starts (-4.8% in March and negative for two of the past three months as well.
  • New home sales (-4.6% in February).
  • Philly Fed for April down to 1.3 from 2.0.
  • NY Fed Empire manufacturing index down to 3_05 from 9.24.
  • NAHB Housing Market index down to a six-month low of 42 in April from 44.
  • Conference Board consumer confidence index down to 59.7 in March from 88.
  • University of Michigan consumer sentiment down to 72.3 for April from 78.6, the lowest in over a year.
  • Conference Board leading indicators down 0.1% in March, first decline in seven months.

Source: Gluskin Sheff

 


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Tue, 04/23/2013 - 12:26 | Link to Comment FL_Conservative
FL_Conservative's picture

Glad to see the S&P retrace along with the EURUSD. /sarc  UFB.

Tue, 04/23/2013 - 12:33 | Link to Comment Edward Fiatski
Edward Fiatski's picture

"Only" $0.75 - $1.00 billion POMO today.

Esche ne vecher, tovarischi, or - there's still time. :)

Tue, 04/23/2013 - 12:40 | Link to Comment Ham-bone
Ham-bone's picture

and reality maters why or has what to do with our financial ponzi???

Tue, 04/23/2013 - 12:43 | Link to Comment Edward Fiatski
Edward Fiatski's picture

PPT Extraordinnaire.

Tue, 04/23/2013 - 12:49 | Link to Comment Colonial Intent
Colonial Intent's picture

They have been busy this last few years.

Tue, 04/23/2013 - 13:17 | Link to Comment Sofa King Confused
Sofa King Confused's picture

imgur.com/gallery/sdFNA

 

 

I like my socket pic better

Tue, 04/23/2013 - 14:00 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

I see a mobile home resurgence.   Hook one up to a hitch and ya gots instant location, location, location.

Tue, 04/23/2013 - 13:30 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Yeah, I have a tough time seeing where fundamentals matter given $85 bln a month.  I've seen a lot of guys on SA setting up shorts in anticipation of "sell in May".  No fucking idea why they think this is a good idea.  

Tue, 04/23/2013 - 13:14 | Link to Comment FL_Conservative
FL_Conservative's picture

OK, you can thank me for bringing this to the market's attention.

Tue, 04/23/2013 - 12:27 | Link to Comment ArkansasAngie
ArkansasAngie's picture

Deflation. 

I'd like to buy some more property at their economic value.  Too bad they aren't marking to market.

Tue, 04/23/2013 - 12:31 | Link to Comment WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

All of your (Forclosure) Stuffing are belong to us................turkey ass Bitchez!

Tue, 04/23/2013 - 12:48 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

It's never been a better time, to become an underwater debt serf. 

Tue, 04/23/2013 - 13:21 | Link to Comment Simplifiedfrisbee
Simplifiedfrisbee's picture

Last year, around my neck of the woods, the only homes springing up near market value would prop up contingent the moment they were listed. Not a chance the average person could buy. The response from many realtors? We have an all cash buyer. That went for the majority of homes at near value. 4-5 months later, they are showing up on the market again for 100k more than the listing price and the great thing is they are listed as not a flip, not a short sale, not a Reo. Frauds never been so flavorful.

Tue, 04/23/2013 - 12:39 | Link to Comment francis_sawyer
francis_sawyer's picture

If you want to get the TRUE version of 'REALITY' you have to stick a paper clip into one of those outlets...

~~~

Silly people will never learn... It's not REAL ESTATE, or STOCKS, or anything else that are being magically lifted with regards to their relative value... It's joobucks... When joobux finally collapse, the values of anything will be discovered in the market... Until then, it's all a game of magically propping up joobux [or keeping them relevant] to make everything else seem like it's worth something...

Even bitcoins... The day the dollar collapses, your bitcoin chits will be worth exactly squat [because nobody is going to trade ANYTHING, for some random array of digital 1's & 0's]...

Tue, 04/23/2013 - 12:28 | Link to Comment Ancona
Ancona's picture

I guess if you call vulture firms swooping in and buying up foreclosures ten at a pop for fifteen percent of the existing loan value a recovery , [then renting them out as slumlords will do] then hallelujia! We're in a fucking recovery!

Tue, 04/23/2013 - 12:52 | Link to Comment DaveyJones
DaveyJones's picture

all I can ever think is my God, they can barely keep the market alive with never before seen criminal interest rates. What happens when that breaks? And it will break

Tue, 04/23/2013 - 13:02 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

The alternative is for the Primary Banks to write off the excess capacity, and bulldoze the places.

If they won't do it voluntarily, then maybe the Gov can do something useful for a change and force them to do so.

/ But that would be too obvious for Obama or Bernanke. /s

Tue, 04/23/2013 - 14:11 | Link to Comment Imminent Crucible
Imminent Crucible's picture

The Govt could force the primary dealers to write off their losses and take the hit?

 I guess you didn't see Blazing Saddles, where the black Sheriff puts a gun to his own head and says "Nobody move or the nigger gets it!" That's how the flow chart works today; the TBTF banks don't just own the govt; they ARE the govt. JPM and GS head up the Treasury Borrowing Advisory Committee, which tells the Treasury how much debt to issue and at what maturities.

Tue, 04/23/2013 - 15:35 | Link to Comment DaveyJones
DaveyJones's picture

or from History of the World PT 1:   "it's good to be the king"

Tue, 04/23/2013 - 12:29 | Link to Comment NakedEconomics
NakedEconomics's picture

If you expect gold to rise, due to FED QE extravaganza... Then wouldn't you expect real estate to rise as well?  Why should we expect these two "hard assets" to go in different directions?  (assuming you believe gold should go higher)

Tue, 04/23/2013 - 12:34 | Link to Comment Toolshed
Toolshed's picture

It's simple really.......too much housing, but not enough gold.

Tue, 04/23/2013 - 12:37 | Link to Comment NakedEconomics
NakedEconomics's picture

Hmm, this can't be it.  At least not where I live... We're at housing supply lows that are unprecidented.  Granted, this could be manufactured lows thanks to Wall Street hedge funds.

Tue, 04/23/2013 - 12:56 | Link to Comment de3de8
de3de8's picture

You must live in one of the gov't funded areas.

Tue, 04/23/2013 - 13:03 | Link to Comment Poetic injustice
Poetic injustice's picture

Yes, it's nice to see that Section 8 people are also reading this blog.

Tue, 04/23/2013 - 13:11 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Houses have big lots, spread across the country, necessitating the expense of a car, and gasoline, and the house itself does not benefit from efficiencies of population density, namely shared utilities (implying lower labor & material costs i.e. one gas line feeding multiple dwellings).  What we have is houses that no one wants, because they are ridiculous pains in the asses to pay for, live in, and maintain, in areas that no one wants to either raise children in or grow old and die in.

Tue, 04/23/2013 - 14:55 | Link to Comment Son of Loki
Son of Loki's picture

Moar taxes, moar utility hikes, moar maintenance costs, moar repairs, moar home insurance increases...it never ends.....

Tue, 04/23/2013 - 15:39 | Link to Comment DaveyJones
DaveyJones's picture

and their size and distance were built in a temporary "reality" that is quickly slamming back down - cheap energy and cheap credit. I hear the two are related.

Tue, 04/23/2013 - 18:26 | Link to Comment Oldwood
Oldwood's picture

Yes. The new American dream is to live in a shoebox size apartment stacked twenty high where you can hear and smell every fart of your neighbor. Better still, and we are well on our way, we can all just live in our midsized (what we used to call subcompact) car that we can't afford gas for. Yep, everything is turning up roses. And why would we want to have children when its actually all about me? How are we going to afford Obamacare AND feed our kids? I mean afterall, Obamacare does mean we will live forever, right? Who needs kids?

Tue, 04/23/2013 - 13:03 | Link to Comment Ham-bone
Ham-bone's picture

my guess is they are different based on how they are purchased...

RE / CRE based on 3% to 20% down (lotsa leverage...good on way up, bitch on the down side) @ ultra low rates with little concern for buyers ability to pay thanks to FHA, Fan/Fred ultimately buying up 90%+ mortgages.  Shadow inventories, new inventory creation due to above false signals.

Paper metal - see above

Phyzz metal - no leverage, no interest rate impact, and thanks to crashing price of copper and other base metals, new inventory will be cut back while money supply (plus gov credit creation...ie, student loans, car loans, mortgages, etc) continues to be funnelled...but leakage is always the problem and the leakage will surface in oil and PM's again.

Tue, 04/23/2013 - 13:46 | Link to Comment Missiondweller
Missiondweller's picture

That would be due to Private Equity buying not new household formation. The difference is short term vs long term demand.

Tue, 04/23/2013 - 12:49 | Link to Comment Duke Dog
Duke Dog's picture

Hmmm. let me think for a moment, well the first couple of things to come to mind are taxes/insurance/maintenance costs/vacancies/holes in walls/stolen plumbing fixtures-pipes/artificially low interest rates that can only go up from here/millions of foreclosed-pre foreclosed homes held off market/huge transaction costs on both ends/ etc..... Actually, I can think of about a thousand fvcking reasons real estate could go down and gold should go up. jd.

Tue, 04/23/2013 - 12:48 | Link to Comment Professorlocknload
Professorlocknload's picture

If one can buy a house for $50k with cash yielding .000, and get a net yield in rents of 7% with depreciation shaving off any tax liability, why not RE as a suppliment to Au?

Tue, 04/23/2013 - 13:02 | Link to Comment espirit
espirit's picture

Rentee's are animals, and if one gets on disability the courts won't evict.

I'd rather hit myself in the head with a hammer.

Tue, 04/23/2013 - 18:03 | Link to Comment AGuy
AGuy's picture

I don't the net yield is anywhere near 7%, Rentals still required the owner to pay prop taxes, maintaince, and Insurance. I expect that the margins on rentals are very slim, especially if one considers most of the people that have good steady jobs, had already bought a home during the bubble and still are paying their mortgage, The stock or rentees is of less quality (already got foreclosured, Bad credit, Student loan debt, CC debt, etc). Sooner or later the Rental Bubble is going to pop. Already local gov't are raising property taxes because of problems with underfunded worker entitlements.

Tue, 04/23/2013 - 12:29 | Link to Comment NEOSERF
NEOSERF's picture

All of these would matter....but they don't.

Tue, 04/23/2013 - 12:38 | Link to Comment Dr. Engali
Dr. Engali's picture

I know we are having a housing boom because the teevee told me so. On a similar note I wish that people would take down all their for sale signs around here; they're cluttering up the nice quiet semi -vacant neighborhood.

Tue, 04/23/2013 - 12:45 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I was just in a local Real Estate agent's office yesterday discussing other things when I asked for her opinion regarding the sudden flurry of "For Sale" signs popping up all over the place on the main route near my present home. At first she started to give me the "market improving" speel, but then when she saw my face she toned it down and admitted it was a very local bull market caused by some commercial property being developed and not county (or country) wide.

Real Estate is always and forever all about location, location, location.

Tue, 04/23/2013 - 12:49 | Link to Comment DaveyJones
DaveyJones's picture

location, location, location

If feel the same way about the first amendment  

Tue, 04/23/2013 - 12:53 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

All your amendments are belong to us.

<We'll just let you think you still have unlimited access.>

Tue, 04/23/2013 - 12:55 | Link to Comment espirit
espirit's picture

Molon Labe.

Tue, 04/23/2013 - 12:58 | Link to Comment DaveyJones
DaveyJones's picture

My son just graduated music school and we keep toying with band names. You just inspired me:

Bend the Amendments

was also thinking

Not the Osmonds,

Dog House,

Breaking Plates,

and

Coins for College

 

 

 

Tue, 04/23/2013 - 13:06 | Link to Comment robochess
robochess's picture

"Dog House" is taken by a band in Florida. How about - Rue The Day

Tue, 04/23/2013 - 13:06 | Link to Comment robochess
robochess's picture

"Dog House" is taken by a band in Florida. How about - Rue The Day

Tue, 04/23/2013 - 13:11 | Link to Comment slyhill
slyhill's picture

Pissin Razors

Tue, 04/23/2013 - 13:30 | Link to Comment Dagny Taggart
Dagny Taggart's picture

@DaveyJones - or past tense "Bent Amendments"?

Tue, 04/23/2013 - 17:40 | Link to Comment tip e. canoe
tip e. canoe's picture

+ 1 gold record

Tue, 04/23/2013 - 12:35 | Link to Comment Uncle Zuzu
Uncle Zuzu's picture

"The 14% slide in the S&P 500 Homebuilding index from the March cycle highs ...."

Oops, make that 10% slide...

Tue, 04/23/2013 - 12:51 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Posting this chart to all housing threads.  Hard to escape what it says, with 40 million more people who could be buyers (than there were in the 1960s, when home sales were higher.  Yes, higher, far higher):

 

http://research.stlouisfed.org/fredgraph.png?g=7iv

Tue, 04/23/2013 - 12:54 | Link to Comment Spastica Rex
Spastica Rex's picture

redacted

Tue, 04/23/2013 - 12:48 | Link to Comment DaveyJones
DaveyJones's picture

"spot the housing recovery disconnects"

Inside or outside of my neighborhood?

Tue, 04/23/2013 - 12:52 | Link to Comment dbTX
dbTX's picture

Another summer of recovery.

Tue, 04/23/2013 - 12:57 | Link to Comment espirit
espirit's picture

There's rescue, but the finality is recovery.

Tue, 04/23/2013 - 12:58 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Contrary to the quasi-religious precepts of modern fiscal and housing policies, not everyone can or should 'own' their own home.

Although this is Sacrilege to the Housing Industry (builders, banks, mortgage companies, title companies and realtors), more people need to rent. Or live in an extended family housing -- like the rest of the planet.

Tue, 04/23/2013 - 15:32 | Link to Comment therearetoomany...
therearetoomanyidiots's picture

OR...return to an economic model that allows less wealthy people to be able to afford a loan.

For instance, perhaps the wizards on Penn Ave and ivy league elite could figure out a way to get more jobs that pay, oh, I don't know, more than 8.50 an hour, actually have some benefits and security?  

What I've seen mostly is EVERYONE in retail sector (all of obama's jobs created or saved - and when it comes to that, doesn't the media and the king himself cut him short on jobs saved?  Shouldn't he get credit for all the jobs that existed that didn't get cut? ) is that you are hired at min wage or just above (750-10 an hour) but only as a temp employee, no benefits and you start out 'part time' working close to 40 hours a week but then they cut back (most likely so that you don't fit into the definition of a permanent employee.  

Seemed to work okay up until oh, say, the Clinton Years...that's when it started coming apart....that whole, you know, Nafta thing...corporate global expansion, cutting lunch hour to half hour to get an extra 2.5 hours a week out of ya, then oh, having to work 45 hours a week (cuz you didn't get lunch anymore at all), and then handing out yearly reviews to people that say you are average because you only work the required number of hours a week and don't do extra, yada yada.

Tue, 04/23/2013 - 13:07 | Link to Comment bonzo112358
bonzo112358's picture

If this doesn't signal bubble then I don't know what does.

http://www.redfin.com/CA/West-Hollywood/562-Westbourne-Dr-90048/home/6816965

Tue, 04/23/2013 - 13:29 | Link to Comment Defenestratus
Defenestratus's picture

I keep waiting for this mythical "recovery" so I can sell my money pit of a house outside of Atlanta that I haven't lived in for 3 years.

Tenants take care of the place but I'm fething sick of dealing with it.

 

Tue, 04/23/2013 - 13:39 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

In my area there are 2 foreclosed houses that are unlisted for every 1 listing.  Inventory managment is pervasive.

Tue, 04/23/2013 - 13:49 | Link to Comment Missiondweller
Missiondweller's picture

I've noticed that in the area I'm interested in buying. I'm expecting lower prices one year from now.

Tue, 04/23/2013 - 14:01 | Link to Comment Atlantis Consigliore
Atlantis Consigliore's picture

I got flip me house from DEM Demctratz FH maomma, loan, nuttin down,  on my bama phone;

wif said she works as cleanin woman, makes $90,000 year  food stamz,  for my nut.

got loan, and i been watchin da TV on free cable cuz im on welfare, and got da Trump touch,

an flip my house to nuther sucker for 50% profit,  he don said his wif work unemploymt offce.

see it worx;  im buyin nuother house on credit for $ 300 thousand, sayin Im a phone man.

aint Bamaphones great?   suckerz

Tue, 04/23/2013 - 14:10 | Link to Comment 1eyedman
1eyedman's picture

theres a bubble in the use of the word bubble

Tue, 04/23/2013 - 14:55 | Link to Comment GoldRetriever
GoldRetriever's picture

BlackRock is having such difficulty renting their foreclosure-to-rental properties that they just renamed the division:

 

BlackMold

Tue, 04/23/2013 - 16:28 | Link to Comment realtick
realtick's picture

the next wave down is going to be a doozy

I'll Blow Your House In

http://chartistfriendfrompittsburgh.blogspot.com/2013/04/ill-blow-your-h... $MACRO

Tue, 04/23/2013 - 17:50 | Link to Comment optimator
optimator's picture

Exactly how much did the Rich get Richer and the poor, pooer?  Here's PEW research, www.pewresearch.org/

 

Wed, 04/24/2013 - 00:56 | Link to Comment knowshitsurelock
knowshitsurelock's picture

As long as our government is backstopping the pile of crap housing sitting in the REO dept's of the banks to the tune of 80 billion a month, and that supply is slowly entering the market at full retail as demand dictates, then what could possibly go wrong?

Wed, 04/24/2013 - 00:58 | Link to Comment knowshitsurelock
knowshitsurelock's picture

As long as our government is backstopping the pile of crap housing sitting in the REO dept's of the banks to the tune of 80 billion a month, and that supply is slowly entering the market at full retail as demand dictates, then what could possibly go wrong?

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