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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FL_Conservative's picture

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

Edward Fiatski's picture

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

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

Ham-bone's picture

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

Colonial Intent's picture

They have been busy this last few years.

Sofa King Confused's picture

imgur.com/gallery/sdFNA

 

 

I like my socket pic better

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.

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.  

FL_Conservative's picture

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

ArkansasAngie's picture

Deflation. 

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

WhyDoesItHurtWhen iPee's picture

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

ParkAveFlasher's picture

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

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.

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]...

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!

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

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

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.

DaveyJones's picture

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

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)

Toolshed's picture

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

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.

de3de8's picture

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

Poetic injustice's picture

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

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.

Son of Loki's picture

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

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.

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?

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.

Missiondweller's picture

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

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.

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?

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.

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.

NEOSERF's picture

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

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.

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.

DaveyJones's picture

location, location, location

If feel the same way about the first amendment  

Cognitive Dissonance's picture

All your amendments are belong to us.

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

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

 

 

 

robochess's picture

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

robochess's picture

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

Dagny Taggart's picture

@DaveyJones - or past tense "Bent Amendments"?

Uncle Zuzu's picture

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

Oops, make that 10% slide...

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

DaveyJones's picture

"spot the housing recovery disconnects"

Inside or outside of my neighborhood?