This page has been archived and commenting is disabled.
October Housing Traffic Weakest In Two Years On "Broad-Based" Housing Market Slowdown
In case the world needed any additional proof that the latest housing bubble (not our words, Fitch's) was on its last legs, it came earlier today from Credit Suisse' Dan Oppenheim who in his monthly survey of real estate agents observed that October was "another weak month" for traffic, with "pricing power fading as sluggish demand persists." This naturally focuses on the increasingly smaller component of buyers who buy for the sake of owning and living in a home instead of flipping it to another greater fool (preferably from China or Russia, just looking to park their stolen cash abroad). Quantifying the ongoing deflation of the bubble, Oppenheim notes that the "weakness was again broad-based, and particularly acute in Seattle, Orlando, Baltimore and Sacramento.... Our buyer traffic index fell to 28 in October from 36 in September, indicating weaker levels below agents’ expectations (any reading below 50). This is the lowest level since September 2011."
Other notable findings:
- The Price appreciation is continuing to moderate: while many markets saw home prices rising if at a far slower pace, 7 of the 40 markets saw sequential declines (vs. no markets seeing declines in each of the past 8 months). Agents also noted increased use of incentives. Tight inventory levels remain supportive, but are being outweighed by lower demand.
- Longer time needed to sell: it took longer to sell a home in October as our time to sell index dropped to 42 from 57 (below a neutral 50). This is typically a negative indicator for near-term home price trends.
Which is bad news for the Fed: recall that as the TBAC has been preaching for over half a year, unless the Fed manages to reflate the housing bubble to escape velocity speeds where the securitization product can become the equivalent of "high quality collateral", Mr. Chairwoman will be unable to step away from injecting the credit money flow, while in the process extracting so much more collateral that the market ultimately runs out of things the Fed can legally (or illegally) monetize.
Full note:
Another Weak Month for Traffic, Though Some Saw More Signs of Life in Late Oct.
• Pricing power fading as sluggish demand persists: Add the government shutdown to the list of recent buyer concerns. Even as mortgage rates pulled back (which had ostensibly been the main driver of weaker trends this summer), buyers headed to the sidelines in October, especially in markets dependent on the federal government or contractors as the government shutdown ensued. The end result was that after several months of weakening demand, price appreciation appears to be moderating in most markets. One potential bright spot is that we saw some comments from agents toward the end of the month highlighting a pick-up in activity after the shutdown and debt ceiling debate were resolved, though it wasn’t enough to move the needle on our index so we will watch closely in November.
• Buyer traffic falls again as government shutdown leads to further hesitation: Our buyer traffic index fell to 28 in October from 36 in September, indicating weaker levels below agents’ expectations (any reading below 50). This is the lowest level since September 2011. Agents had previously highlighted growing hesitancy from buyers given the sharp move higher in home prices and mortgage rates, but even as rates came in, buyer confidence took a hit from the government shutdown and debt ceiling debate, even in markets which on the surface wouldn’t appear overly reliant on the federal government. Weakness was again broad-based, and particularly acute in Seattle, Orlando, Baltimore and Sacramento. Dallas remained at healthy levels, while Denver, Houston and Vegas all improved sequentially.
• Price appreciation continuing to moderate: Our home price index fell to 57 in October from 72 in September, still pointing to higher home prices, but much less broad-based. In addition, 7 of the 40 markets we survey saw sequential declines (vs. no markets seeing declines in each of the past 8 months). Agents also noted increased use of incentives.
Tight inventory levels remain supportive, but are being outweighed by lower demand.
• Longer time needed to sell : Our home listings index pointed to stable inventory levels, but it took longer to sell a home in October as our time to sell index dropped to 42 from 57 (below a neutral 50). This is typically a negative indicator for near-term home price trends.
* * *
Oh well: the latest mass delusion of instawealth was fun while it lasted.
»
- 9596 reads
- Printer-friendly version
- Send to friend
- advertisements -
my house is on the market
this article is 100% accurate
low traffic for sure
I am looking to buy, and watched with dread as prices spiked 40 to 60% in hot markets in less than 2 years. For every bubble there are winners and losers. The pros, well-connected, speculators all win. People just trying to live their lives rather than gamble in real estate always lose.
Time for some lowball offers.
The $45B or so the FED has been printing to prop up housing is obviously a failure. The next housing crash promises to be even bigger than the first. Wait, rent, the buy sometime down the road when prices actually make sense.
Wait until 2015. The investor class will have pulled their profits and long since exited leaving the IPOs and muppet investors to a sell-off when cap rates are crushed. Less inventory in banks hands to hold back as there's little to no mortgaes backing Housing Bubble 2.0. Can't see what would stop the liquidation this time...
Its about location. many buyers are out there. The sellers cannot unload the homes based on what NAR states in price value. Too many homes to choose from. See below..
Yesterday, my phone was beeping with emails. The wife was going back and forth with counter offers on a house she likes. I told her to walk away from the deal. Naturally, I have to hear all the whining on how she loves this home. This morning she calls me. Mr. Atomizer, I just called the realtor and told them the price stands or we’ll just walk and find another home.
This house is not a need, but an addition. Mrs. Atomizer has to be reminded about price vs. investment value. I love her dearly, but when impulsive buying decisions come into play.. I mildly intervene. :>)
Walk anyway. Buy nothing higher than 50% of list.
And sell it the next day. Don't get buried in non liquid assets.
We are cash buyers. We don't flip. rather rent out.
Again, its all about location. I don't have patience for sellers who owe to the bank, and try to nickle & dime me. By this afternoon, the seller of that home will cave in and accept our offer. Mark my words.
The zero mortgage landlord scenario is certainly better than mortgage payment as part of your monthly expenses, but I am loathe to do it because that seeming reliable income stream that pretends to be insulated from wall street bullshit is simply not.
Macro still controls it. If tenants lose their jobs, you are screwed.
But ya, location location, I know folks who are zero mortgage landlords and their formula is own no property more than 1/2 mile from a university with lots of foreign students. Those kids don't know anything and their parents are paying their bills. Or at least that's the theory.
Never buy near a university, then your considered a slumlord. Think oceans or top cities to live. The 45+ age serves as a stable tenant.
I know me too - why could I not have made this decision 6 months ago?
Mr. Chairwoman has a dry pussy.
Is it also a wrinkled hairless pussy like Dr. Evil had?
In other words, she has run out of tools in the toolkit.
when did my wife become the head of the fed.....
At least banks aren't still sitting on millions of foreclosed houses, waiting for the non-existent market recovery to sell them into the market. And at least banks are not still booking said houses on their balance sheets at market high prices.
Don't be so sure about that first part cause I saw something here perhaps yesterday saying some 53% of unsold homes are being held off the market.
Maybe I can find it.
Forgot my /sarc tag. Yes, millions and millions of houses are waiting in shadow inventory. Banks can't sell them because they would have to book a loss, and further drive down prices in the process by increasing supply in the face of falling demand. The housing non-recovery recovery is a complete joke and meaningless because it will collapse the minute that inventory hits the market.
If Wile E. Coyote doesn't look down, he won't fall. Simple as that.
I've noticed a huge jump in "pre-forclosure" properties on Zillow lately - they outnumber the houses on the market in some areas.
It's much much worse than ZH knows.
There is some local talk that banks/mortgage holders of foreclosures have formed LLCs and are selling the house to themselves above "list" to camouflage statistics. A few even formed their own RE brokerage to save the 6%.
i can say this as a buyer with my two properties sold: inventory low but, half coming on is bank (steaming piles)owned and it appears as, to be rush to get-um-done while market is cooling down. realtors are a day late on pricing-as always; listing high at top of echo bubble. i am going to very patient as month to month in maint free is OK...
or some idiot on craigsl. lists way to low...
thanks for the comment and you clearly had something to say, but you gotta put a bit more time into it because what you said is almost incomprehensible.
Don't take offense, it happens a lot.
And doling out bonuses on these bullshit valuations. Drunken John Wayne said it best; "it's gettin to be regoddamndiculous!"
Traffic is down but pent up demand is up - still bullish.
You mean holding millions of units off the market to create a shortage equals "pent up demand"?
Bullish or bullshit?
I'm what you would call 'pent-up' demand (like not shooting your load for 4 years) but I'm not financially suicidal either.
Scroll back a few days to the Trulia article.
The basis of the pent up demand theme is "household formation derived from population gain". Trulia debunked it. The kids in the basement are staying there. Household formation isn't happening. They almost explicitly said that the basis for all future real estate industry optimism has been destroyed by this new social development. If the kids don't move out, there is no demand.
You can't form a household on parttime earnings.
Maybe listing my house as a raffle might generate some interest, looks like I am pretty much pinned in place along with a lot of other folks in even worse positions.
..there are laws against private raffles eh?
It has rolled over here in Northern Nevada. My underwater home had been making steady gains but now shows a 3k drop on Zillow over that last 30 days. Dead cat bounce is over.
Real Estate Agent Kimmie says: "Never been a better time to buy!"
Don't worry..."This time it's different"
Seattle did get ahead of itself.
I'm in SoCal just about at the epicenter of the last bubble and the suckers are out in droves looking for a "good deal" so they can flip .....bring on the dancing horses...
whip-a-shitty! so-cal!
+1 ac3. muppets lining up for a slaying out here. scary thing is no one knows with any level of certainty which way this bitch is going to go from an RE perspective. deflation=RE tanking, continued inflation=increase. where else other than gold/silver can cash be parked and get a reasonable rate of return that's inflation proof? foreign money is flooding socal market like crazy. joe sixpack couldn't compete for a purchase if he wanted to in this market.
continued inflation=increase
Not necessarily. If inflation continues to hit the food and energy sector that is going to squeeze a lot of industries people. A house valued against what one can p[ay for it either through cash or borrowing. Steady inflation in consumer goods would be VERY deflationary for housing. Especially in light of the insane amount of investor buying. Got to rent to somebody, and if that body is facing shrinking wages and increasing costs in food and energy kiss your cap rates goodbye.
Chinese have our money given to them by our traitor politicians brokering desls for our wealth engine our industry to the chinks. Those bastards don't create wealth they steal it from corrupt and treasonous politicians and greedy CEOs Let the hangings begin.
@ nihilist, I agree with your comment from a bird's eye perspective i.e. national but taken from a localized view I dissent. In the SoCal area it appears that the steady inflation viewable in consumer goods has been ignored by the typical moron. Value deflation seems to have fooled the masses. We are on our way to a more Euro style normal: pay the same and get less. Local market shows rents increasing while vacancies decrease. The investor $ is really what's driving prices what with a third of all transactions being all cash. I don't know if it's the POMO being pushed into hedge funds who are buying investments with crap cap rates or Chinese money flooding in but the "American Dream of Homeownership" is pretty much demolished for most.