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 | 3488613 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 | 3488646 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 | 3488668 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 | 3488698 Edward Fiatski
Edward Fiatski's picture

PPT Extraordinnaire.

Tue, 04/23/2013 - 12:49 | 3488733 Colonial Intent
Colonial Intent's picture

They have been busy this last few years.

Tue, 04/23/2013 - 13:17 | 3488897 Sofa King Confused
Sofa King Confused's picture



I like my socket pic better

Tue, 04/23/2013 - 14:00 | 3489276 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 | 3489050 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 | 3488839 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 | 3488617 ArkansasAngie
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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 | 3488634 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

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

Tue, 04/23/2013 - 12:48 | 3488721 ParkAveFlasher
ParkAveFlasher's picture

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

Tue, 04/23/2013 - 13:21 | 3488936 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 | 3488619 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 | 3488620 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 | 3488750 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 | 3488795 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 | 3489352 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 | 3489757 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 | 3488631 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 | 3488651 Toolshed
Toolshed's picture

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

Tue, 04/23/2013 - 12:37 | 3488666 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 | 3488768 de3de8
de3de8's picture

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

Tue, 04/23/2013 - 13:03 | 3488792 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 | 3488830 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 | 3489595 Son of Loki
Son of Loki's picture

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

Tue, 04/23/2013 - 15:39 | 3489781 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 | 3490528 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 | 3488788 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, 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 | 3489161 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 | 3488694 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 | 3488717 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 | 3488793 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 | 3490425 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 | 3488632 NEOSERF
NEOSERF's picture

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

Tue, 04/23/2013 - 12:38 | 3488653 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 | 3488697 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 | 3488735 DaveyJones
DaveyJones's picture

location, location, location

If feel the same way about the first amendment  

Tue, 04/23/2013 - 12:53 | 3488747 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 | 3488763 espirit
espirit's picture

Molon Labe.

Tue, 04/23/2013 - 12:58 | 3488771 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,


Coins for College




Tue, 04/23/2013 - 13:06 | 3488804 robochess
robochess's picture

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

Tue, 04/23/2013 - 13:06 | 3488805 robochess
robochess's picture

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

Tue, 04/23/2013 - 13:11 | 3488826 slyhill
slyhill's picture

Pissin Razors

Tue, 04/23/2013 - 13:30 | 3489026 Dagny Taggart
Dagny Taggart's picture

@DaveyJones - or past tense "Bent Amendments"?

Tue, 04/23/2013 - 17:40 | 3490317 tip e. canoe
tip e. canoe's picture

+ 1 gold record

Tue, 04/23/2013 - 12:35 | 3488661 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 | 3488722 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):

Tue, 04/23/2013 - 12:54 | 3488751 Spastica Rex
Spastica Rex's picture


Tue, 04/23/2013 - 12:48 | 3488724 DaveyJones
DaveyJones's picture

"spot the housing recovery disconnects"

Inside or outside of my neighborhood?

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