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Existing Home Sales Tumble, Post First Annual Decline In 29 Months On Day After Taper Begins

Tyler Durden's picture


If anyone is still wondering why back in June Zero Hedge first presented what the adverse impact on housing affordability as a result of soaring rates, today's NAR release on existing home sales should set all questions to the side. Because after rising in a seemingly relentless fashion, existing home sales have (and this is before the traditional downward revision by Larry Yun's conflicted organization which will expose all of its numbers as flawed regardless) finally hit a brick wall, and not only did November existing home sales tumble from 5.12MM to 4.90MM, missing estimates of 5.02MM, they also posted the first year over year decline in 29 consecutive months of increases.

Of course, as a reminder only 40% of house buyers actually use a mortgage, and the remaining 60%, as Goldman estimated recently, are all cash. Which means that not only are the all cash buyers fading out of the housing market at an ever faster pace, but if left only to the mortgaged-buyers, then watch out below.

Finally, and as usual, in addition to rising rates, Larry Yun was quick to cast blame on lack of inventory and supply. Perhaps he should speak to the likes of Bank of America which are keeping millions of empty units on its books following fraudulent foreclosure practices, in a desperate attempt to extract that one final bit of inventory subsidy from the housing market.

From the NAR release:

Existing-home sales fell in November, although median prices continue to show strong year-over-year growth, according to the National Association of Realtors®.


Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November from 5.12 million in October, and are 1.2 percent below the 4.96 million-unit pace in November 2012.  This is the first time in 29 months that sales were below year-ago levels.


Lawrence Yun, NAR chief economist, said the market is being squeezed. “Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit,” he said. “There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years.”


The national median existing-home price for all housing types was $196,300 in November, up 9.4 percent from November 2012. Distressed homes – foreclosures and short sales – accounted for 14 percent of November sales, unchanged from October; they were 22 percent in November 2012. A smaller share of distressed sales is contributing to price growth.


Nine percent of November sales were foreclosures, and 5 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in November, while short sales were discounted 13 percent.


Total housing inventory at the end of November declined 0.9 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, compared with 4.9 months in October. Unsold inventory is 5.0 percent above a year ago, when there was a 4.8-month supply.


The median time on market for all homes was 56 days in November, up from 54 days in October, but well below the 70 days on market in November 2012. Short sales were on the market for a median of 120 days, while foreclosures typically sold in 59 days, and non-distressed homes took 55 days. Thirty-five percent of homes sold in November were on the market for less than a month.


According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.26 percent in November from 4.19 percent in October; the rate was 3.35 percent in November 2012.

More so-called NAR "data"

All-cash sales comprised 32 percent of transactions in November, up from 31 percent in October and 30 percent in November 2012. Individual investors, who account for many cash sales, purchased 19 percent of homes in November, unchanged from October and from November 2012. Last month, seven out of 10 investors paid cash.


Single-family home sales fell 3.8 percent to a seasonally adjusted annual rate of 4.32 million in November from 4.49 million in October, and are 0.9 percent below the 4.36 million-unit level in November 2012. The median existing single-family home price was $196,200 in November, which is 9.4 percent above a year ago.


Existing condominium and co-op sales dropped 7.9 percent to an annual rate of 580,000 units in November from 630,000 units in October, and are 3.3 percent lower than the 600,000-unit pace a year ago. The median existing condo price was $197,400 in November, up 10.0 percent from November 2012.

What can we say: perfect timing for Ben to start tapering.


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Thu, 12/19/2013 - 11:21 | 4260637 FieldingMellish
FieldingMellish's picture

Taper hasn't begun yet. It was only announced.

Thu, 12/19/2013 - 12:08 | 4260818 thunderchief
thunderchief's picture

I have one property that I faithfully paid off over the years, and in the process I have learned a few things about real estate. Here they are...

1) You never own your property, the government does and can take it from you whenever they like.

2) You will be taxed to death, including your kids, to the point it will seem like a life of being raped, property taxes, death taxes, inheritance taxes and on and on.

3) You will be nickel and dimed to the point you will have spent as much over 30 years as it cost to build a brand new home on the same piece of land.

4) Your neighborhood will go to hell, because people are not like you, and not as responsible as you.

5) Renters are even worse and complete slobs, even if you treat them great. That is why most belong in big corporate apartments where they can be threatened like most who work for big companies. Run a mom and pop rental house, do everything right and see what assholes and slobs your average American family is.

6) Property management companies are even worse, even the best.

7). Fuck real estate, buy physical gold and silver

Thu, 12/19/2013 - 14:02 | 4261190 BKbroiler
BKbroiler's picture

Fuck real estate


This year I had the option of buying a small home in cash or putting 20% on a building and renting out the bottom 2 floors.  In both cases I would live for free, but I went with the small home because coming home to tenants, repairs, ie:more work, after working all day was not worth it to me.  When I leave work I want to leave work.  

Thu, 12/19/2013 - 11:19 | 4260639 Sudden Debt
Sudden Debt's picture


Thu, 12/19/2013 - 11:39 | 4260713 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

NAR (Natural Ass Rapists) or (Narcotic Asset Rehypothicators)

Thu, 12/19/2013 - 11:42 | 4260718 duo
duo's picture

no, this is the beginning of the sudden stop of all spending by the private sector as the horror of Obamacare takes effect.

Thu, 12/19/2013 - 12:51 | 4260959 darteaus
darteaus's picture

Now THAT is going to be a might big straw on the economy's back. Add in: the duration of the "bull" market, the TOTAL economic cluelessness in DC, EU and JPN "leadership", MASSIVE US, EU and JPN debt, and the near end of the typical 5-7 year real estate cycle and you have a serious burden.

Thu, 12/19/2013 - 13:16 | 4261019 Professor Fate
Professor Fate's picture

Yup!  Obamacare will suck the last vestiges of discretionary income right out of the middle class...guaranteed.  The biggest net tax increase in history and right in the middle of one of the deepest recessions / depressions on record.  Images of Choom and his Wookie will be immortalized in the history books as an example of what happens to economies when dolts and idiots have a free hand.

Fate the Magnificent
"Push the Button, Max"

Thu, 12/19/2013 - 13:49 | 4261141 SDShack
SDShack's picture

Yep, 0zer0care sticker shock becomes 0zer0care WALLET shock Jan 1, 2014. Enjoy this Christmas season because this year the Grinch comes after New Years Day to steal everything you have left.

Thu, 12/19/2013 - 12:43 | 4260937 darteaus
darteaus's picture

I heard that yesterday.

Thu, 12/19/2013 - 11:22 | 4260648 ChaosEquilibrium
ChaosEquilibrium's picture

ZH is spot ON!!


FED tapering has nothing to do with employment or a "STRONG ECONOMY"


IT was due to a technically broken collateral market!


The FED tightening into a collapsing up CAPITAL CONTROLS AND BAIL-INS!!!


AMERICA........You have been snookered, manipulated, and left out to dry(DIE)!!!

Thu, 12/19/2013 - 11:31 | 4260677 Winston Churchill
Winston Churchill's picture

You've got it.

They think all their preps  are ready.

Capital controls are already in place , simple to lower the limits on

transactions.Bail ins.That what those billions of hollow point are for.

Its all downhill from here.

Thu, 12/19/2013 - 11:51 | 4260752 ChanceIs
ChanceIs's picture

It was due to a technically broken collateral market...

Am not sure what you mean here.  Are we talking trading technicals...e.g. 50 day moving averages? Housing as collateral certainly has "broken."  That started in June.  There is some chicken and egg question there.  Did the all cash buyers dissapear first - maybe it was the renters - maybe it was the rising interest rates.

If - as I think you are suggesting - the Fed is responding to the fact that the collateral supporting all leverage in this over levered economy is evaporating, then they are about 5 years behind.  Of course it would have taken until about 2012 for the housing market to correct to natural levels if left unmolested.  Now it will take until 2016.

Maybe you are talking about the collateral on the Fed's balance sheet and how the Fed was quickly becoming (had become) insolvent.  Don't tell me you think that they have stopped thinking that they can print forever!!!  Thing that makes the most sense to me is that Bernanke wanted to emboss his legacy by showing that the tapering had begun on his watch - you know - to prevent a real bond bubble.

I can see the December 2014 cover of Time Magazine - Janet Yellen - Biggest Bagholder of the Year.

Thu, 12/19/2013 - 12:40 | 4260932 darteaus
darteaus's picture

IMHO, Ben ANNOUNCED a 15% taper to cover his withdrawal. Now if inflation blows up, or the economy craps out and Yellen prints like Zimbabwe, he can argue, "It wasn't me!"

Thu, 12/19/2013 - 11:22 | 4260653 Tanzhosen
Tanzhosen's picture

Zero Hedge really can be a laugh some times.  Existing home sales tumble because of lack of inventory and buyers still futily angling for the deals of 2 years ago that have all dried up, that's why yesterday housing starts hit the highest in 6 years.

If you want to make the argument for why the housing market might be entering another bubble, that's an interesting conversation, but this story is just one big yawn.

Thu, 12/19/2013 - 11:35 | 4260704 Winston Churchill
Winston Churchill's picture

I don't know where you live.If its stateside, try driving

around residential districts at night.Most roads have empty houses

being held off the market.In S.Florida even short roads have

4 or 5.

Shortage of inventory.In your dreams.

Market rigging and more mal investment.

Thu, 12/19/2013 - 11:45 | 4260730 Tanzhosen
Tanzhosen's picture

I guess maybe in the exurbs?  Those areas may never recover.

Housing inventory stats are what they are.  12 months supply when the bubble popped, 4 months now (6 months considered 'healthy').  You can try to get a pulse for things all you want 'driving around', but you are deluding yourself.

Thu, 12/19/2013 - 12:00 | 4260770 Dingleberry
Dingleberry's picture

People aren't buying homes.......hedgies and the like are.

I was/am in the market and track RE religiously.  Had a RE agent and all.  He told me the deal: it's all cash buyers buying the good properties. I waited it out and did not make offers on what was obviously overpriced abodes, and saved easily 10% as many sold later at that discount or more.

As always in RE,.....location, location, location......but in general: 

the time to sell was spring. Now, good luck getting full asking with rates going to 5% easily, unless (as it is increasingly looking like) we go into another formal recession, and judging by jobless rates and what may portend with Obammaycare.

In that case, it's over due to economic contraction.

I was in coastal FL recently, and there was a for sale sign about every 5th-10th house.  My guess is that the gov getting out of the flood insurance biz will crush the market there along with the 5% rates, or even 4%.

Normal people cannot afford 5% rates. Hedgies who get free money from the fed can.

There you go.

Thu, 12/19/2013 - 12:05 | 4260794 Tanzhosen
Tanzhosen's picture

How in god's name is 5% a high rate on a mortgage?  For the last 40 years, 5% is an insane, unheard-of low rate.  It only looks high compared to the 4% rates of recent years, but the historic average is 7%-8%, and we saw 15% in the 80s.

And this is Zero Hedge, for crying out loud, the land of perpetual forecasting of huge inflation (including calls for hyperinflation, though those seem to have died down recently).  If you believe in all that stuff, a 5% rate is a negative real interest rate, you are basically being paid by the bank every month for your house.

Thu, 12/19/2013 - 12:19 | 4260849 tarsubil
tarsubil's picture

You're assuming that the price of the house is fair. If I buy a Dodge Dart at 1% for $60,000, the bank won't be paying me.

Thu, 12/19/2013 - 12:25 | 4260864 Tanzhosen
Tanzhosen's picture

Sure, and I can't speak to your neck of the woods specifically, but all over America that are places selling for 13x or less (closer to 9x where I live) annual rent.  That's a fair price no matter how you slice it.

That's why all these cash purchases are flowing in from around the world, incidentally: they offer very attractive rental income relative to price. 

Thu, 12/19/2013 - 12:29 | 4260881 Alea Iactaest
Alea Iactaest's picture

Free tip (perhaps worth what you paid for it): If you post more than 2x to a given thread there are very good odds you are a troll.

Please don't feed the trolls.

Thu, 12/19/2013 - 12:30 | 4260887 Tanzhosen
Tanzhosen's picture

Got it - any and all debates should be resolved in 4 total messages.  Wouldn't want either party to be in danger of learning something, now would we?

Thu, 12/19/2013 - 12:53 | 4260957 Dingleberry
Dingleberry's picture

You know that most people don't care about price....they ONLY care about payments. And they are stretched, which is why rates are a killer.

When rates rise, what happens to principal in order to afford it?

You are correct about rates being insanely low. But incorrect about rents to ownership costs in most areas.

In case you did not notice, cities everywhere are going broke and "homeowners" are paying (much) more for less.

Taxes going up. Insurance going up. Water bills going up. All muni costs are going up, city, county and state.  At least where I live.

Why don't you ask a builder what it would cost to replace a house that burns down since about 5-7years ago.....of course, no inflation now is there? Hence the insurance rises.

Notice how your streets don't get plowed as much? Noticed how you kids classrooms are more crammed?

That's what I see.  So I stayed liquid. And looks like I will reap the rewards for waiting past this last mini bubble. I already did not lose about 50k by waiting. I intend on wating a bit more and see what happens to price when rates hit 5.

Then again....I could always move to Detroit and get a bargain price on a "house".

Thu, 12/19/2013 - 13:06 | 4260990 Tanzhosen
Tanzhosen's picture

In a vaccuum, the effect of higher mortgage rates (which I agree are likely coming) should be downward pressure on prices.  However, given current monetary policy, higher rates are going to be correlated to (and indeed, somewhat caused by) other indicators which are themselves bullish for housing prices.  So the wait-and-see approach can be dangerous.

Ultimately, if you are paying $1000/mo for rent and see a comparable place for $120,000, I don't see the point in waiting to see what higher rates will do.  They could correlate to even higher prices for the reasons I just mentioned, and now your mortgage is higher.  Whether that option is available to you, though, depends on where you live.

Thu, 12/19/2013 - 13:52 | 4261159 Nostradumbass
Nostradumbass's picture

Where I live in southern California, we rent a 2000 ft.sq. house for $2150 monthly. No way to purchase this home for less P/E than about 16:1 which would be $413,000. And this would be an absolute rock-bottom low price inconceivable in the neighborhood at this time. More likely to sell for $480-500K which is 19:1.

This is unaffordable and overpriced by any measure.

We are moving out at end of January and will travel full-time for awhile. Saving money all the while...


Thu, 12/19/2013 - 14:26 | 4261273 darteaus
darteaus's picture

And your budget is $2150/month!  That will go far in S. America where the dollar is still king!

Thu, 12/19/2013 - 15:05 | 4261381 Blankenstein
Blankenstein's picture

We are not just going to have the effect of higher rates pushing home prices down, but also the reduction in FHA limits.  As soon as that price support is taken away, look out below.  FHA mortagages are now about 35% of the market.  

Thu, 12/19/2013 - 12:38 | 4260920 darteaus
darteaus's picture

Where do houses sell for 9x rent?

Here in Silicon Valley you are lucky to get 4% (25x), unless you want to go slumlord.

Thu, 12/19/2013 - 13:40 | 4261103 Yenbot
Yenbot's picture

That's why all these cash purchases are flowing in from around the world

Where did I hear that before? Oh, yeah- Weimar Germany...

Thu, 12/19/2013 - 13:45 | 4261128 Tanzhosen
Tanzhosen's picture

Wow, lot's of ZH'ers from Weimar Germany.  I really ought to have more respect for my elders.

Thu, 12/19/2013 - 14:25 | 4261264 darteaus
darteaus's picture

Uh, nobody said they were from Weimar Germany; troll.

Thu, 12/19/2013 - 14:23 | 4261259 darteaus
darteaus's picture

"When Money Dies" describes the situation where foreign students would buy houses in Germany with their semester's pocket money.

Thu, 12/19/2013 - 15:00 | 4261362 Blankenstein
Blankenstein's picture

5% isn't a high rate historically, but if it occurs in the current market, housing prices will be toast.  Why do you think the Bernanke, after the housing market had slowed to a crawl,  pulled out all the stops to keep rates historically low?  So the banks could unload their inventory onto the herd with the help of the NAR and their media propaganda blitz.  People cannot afford these insanely high home prices (with exhorbitant property taxes) even more so with higher interest rates.  

Thu, 12/19/2013 - 12:32 | 4260894 darteaus
darteaus's picture

"Housing stats are what they are."

Whether that statement is a fact or a belief is the bone of contention here.

Thu, 12/19/2013 - 11:43 | 4260724 indygo55
indygo55's picture

Ive got several homes in my area that are empty and no sign. Its all over. The banks are holding them off the market. There's plenty of homes, they just aren't on the market until the banks can get more money for them. Its widespread and its well known.



Thu, 12/19/2013 - 11:48 | 4260748 Tanzhosen
Tanzhosen's picture

Is that where you get your news?  That's an amazing website, looks like the author managed to upgrade from scrawling articles on the wall in his own feces.  Good for him.

Try selling in a major metropolitan area.  As even ZH says, in most places you will be flooded with full-price all cash offers.  Or you can trust your .info friend who says 90% of foreclosures are being held off the market, because everyone knows that banks love to manage empty properties indefinitely.

Thu, 12/19/2013 - 11:55 | 4260766 ChanceIs
ChanceIs's picture

Tell us about the prospect of all the home equity loans collapsing as the rates reset.

Thu, 12/19/2013 - 11:56 | 4260772 Tanzhosen
Tanzhosen's picture

Why?  It sounds like you've got the measure of that situation already.

Thu, 12/19/2013 - 12:58 | 4260977 adr
adr's picture

Wow, this great housing market must be why my house has sat unsold for six months with an asking price $20k below what I paid for it at the market bottom in 2009.

On my block alone there are six empty homes that aren't listed for sale anywhere.

My neighborhood is 92% white with a median income of $52k. Middle class America. There is no slum and no section 8. Must be why investors are staying away.

There are a few hot markets in the USA. The rest is trash.

Thu, 12/19/2013 - 12:01 | 4260783 Tsar Pointless
Tsar Pointless's picture

Well, I live in a quasi-metropolitan area (Pittsburgh), and I see more existing homes that are empty than for sale around where I live. Certainly, I haven't seen many "Sold" signs over the past few months.

Oh, and that wonderful "best new homes sales number in six years" thing from yesterday turned out to be not so much when you look at the uncooked, unseasonally adjusted numbers. I did. Perhaps you should, too.

Click on the PDF hyperlink next to "Current Press Release" and see for yourself.

Thu, 12/19/2013 - 12:07 | 4260800 Tanzhosen
Tanzhosen's picture

Oh, and that wonderful "best new homes sales number in six years" thing from yesterday turned out to be not so much when you look at the uncooked, unseasonally adjusted numbers. I did. Perhaps you should, too.

I referred to no such number.  I pointed to most housing starts in 6 years as further evidence of the lack of housing.

Thu, 12/19/2013 - 12:15 | 4260840 Winston Churchill
Winston Churchill's picture

Prolly has more to do with the developers seeing a chance to unload their landbanks.

The land itself is not selling, only way to get rid of it is build it out.

I've seen this movie before , back in the 1970's.

It doesn't end well .

Thu, 12/19/2013 - 12:50 | 4260956 CrashisOptimistic
CrashisOptimistic's picture

You're all over this thread.  And that's fine (can you give your locale?)


Have any comments on this link?


Note those levels are those of the 1960s with 50 million fewer people in the country.

Thu, 12/19/2013 - 13:13 | 4261002 Tanzhosen
Tanzhosen's picture

Southeastern US (not Florida).

That is a fairly stunning chart.  Hard to see how sales levels like that constitute a bubble, isn't it?

And I never disputed that housing sales were low, but prices are undoubtedly higher, while foreclosure rates and REOs on the market have dropped off a cliff.  I think when you combine your chart with the chart for housing starts, it makes sense in that context that the low number of sales is simply due to the low inventory, which is the cumulative result of the 5 years post-bubble.

Thu, 12/19/2013 - 13:23 | 4261025 CrashisOptimistic
CrashisOptimistic's picture

I'd say no.

New housing starts includes apartment buildings, as well as single family houses. 

The definitive chart we're discussing of single family homes is trans decade.  And no, don't focus on "bubble".  There are 50 million more people walking around than the 1960s and yet sales (and they have to be started to be built to be sold) are at 1960s levels.

This is not inventory held off a market.  This is new houses.  That allows one to exclude "inventory held off the market" which can obfuscate the measurement.  This chart is the pure measurement.  It is the picture of devastation for one reason only -- because devastation is reality and there's no indication of it ever getting better.

Note the recoveries of the past.  They asserted in months or a year.  Not six. 

This is forever. 

Thu, 12/19/2013 - 13:25 | 4261058 Tanzhosen
Tanzhosen's picture

It's also devastation that we already knew about and experienced (and yes, are continuing to experience).  We had the worst housing bubble in the history of our continent.

So we had toxic levels of inventory, 12 months at one point!  So housing starts dropped off a cliff and stayed there, and so too purchases.  Clearly though, purchases have now overtaken starts, and the REO market has been almost entirely cleared out (unless you find anecdotes more compelling than hard sales data).  So inventory is now 50% under a 'healthy' market.  This is not a healthy market, on that I think we can agree, but I believe your chart is perfectly consistent with a market that has been healing for quite some time now.

Thu, 12/19/2013 - 14:01 | 4261187 CrashisOptimistic
CrashisOptimistic's picture

Guy, how can there be inventory of new single family homes.  They are new.  Is there really any spec building going on that is not multi family?

The chart is not apartment buildings under construction.  New single family homes.

No one keeps them off the market.  They're not in foreclosure inventory.  It's a pure measurement.  The market is not healthy?  There is no market.  There are 50 million more people walking around not buying a house because their personal real income is in relentless, perpetual decline.

It's been five years since the crash and the levels are 1960s.  There is no room here to look for a bright future.  Victory is achieved by declining slower then everyone else.  That's the future.

Thu, 12/19/2013 - 14:08 | 4261210 SDShack
SDShack's picture

How many of those 50 million are still living at home? Why can't those 20-somethings afford these insanely low rents, low home prices, and low mortgages you say that are out there? Why does 0zer0care keep these same people on their parents insurance until they are 26? Try looking at household formation versus age, and family size versus the 60's or 70's. Also look at minority occupancy family size per unit. No one but real estate trolls believe housing is anything but another bubble, being blown higher by the investor class, not the working class. The reason is because the average American can't afford to own a house anymore. Try looking at average household income growth or wage growth versus average housing cost increases. The average American is being squeezed out of property ownership by design. 

Thu, 12/19/2013 - 13:24 | 4261046 WTC-7
WTC-7's picture

Haha.  Lack of housing.  That sounds familiar...

Thu, 12/19/2013 - 12:08 | 4260817 FreeNewEnergy
FreeNewEnergy's picture

indygo, thanks for the link. A little dated, but still relevant.

I agree with you about the REO being held off the market. In just a cursory travel around my neighborhood in the suburb of Irondequoit, just north of the city of Rochester, NY, there are two or three houses vacant with no for sale signs on every street, and, this is a very stable area with low cost of ownership (outside of the absurd tax rates).

The obfuscation of the real estate market by the banks' withholding properties off the market is nationwide. My uncles in Florida say the same thing is occurring in their neighborhoods.

As for the cities, forget it. Between tax defaults (not being resold into the market, but tax liens sold to private investment firms) and bank foreclosures, most American cities are going to become havens for squatters, if they haven't become such already.

We are truly screwed. The "taper" announcement by the Fed yesterday - offset by moving the goal posts vis a vis 6.5% unemployment - was nothing more than a smoke screen by which the chairman could vanish into the ether.

Thu, 12/19/2013 - 12:52 | 4260960 CrashisOptimistic
CrashisOptimistic's picture

Note from this link above:


That has nothing to do with houses held off the market.  That is just devastation with 50 million more people alive than when those numbers arrived in the 1960s (and during a trough then).

Thu, 12/19/2013 - 12:17 | 4260845 constantine
constantine's picture

"Existing home sales tumble because of lack of inventory and buyers still futily angling for the deals of 2 years ago that have all dried up, that's why yesterday housing starts hit the highest in 6 years."

This is a misallocation of capital.  Of all the people that I know around the country, I don't know a single one that thinks that their house has enjoyed any of this appreciation that the statistics speak of.  Given the massive amount of overconstruction that occurred this decade, I don't see why anybody should be excited about increased home production.  I suppose we would be happy to learn that people are getting jobs running around in human-sized hamster wheels, if the banks started building them.  Bizarro-economics.  Hamsterwheel-economics.

Thu, 12/19/2013 - 13:37 | 4261091 WTC-7
WTC-7's picture


Agree on misallocation. Disagree on appreciation.  In my SoCal market prices increased 24.7% YOY.  I  was able to take advantage of that increase personally and flipped a turd for a huge profit. I even moved into said turd and lived there while rehab was done in order to maximize profit.  At the end of the day, I got 15% over my ask in one day on the market. Chinese buyer, all cash. 

That being said, the current pace of appreciation cannot continue and we are at a peak.  What happens from here is anybody's guess.  It is clear that investors are slowing as there is no $ to be made at the current price points, at least in my market.  The organic market (1st time, move up, etc.) appears to be rather dead.  Increase in rates and new QM rules as a result of Dodd Frank taking effect 1/10/2014 (loan size limits down, max DTI reduced, etc.) will also have a negative effect on prices.

Again, I speak from experience and am active in my own local market.  I cannot speak for other markets as RE is truly localized.

Thu, 12/19/2013 - 13:56 | 4261176 Blankenstein
Blankenstein's picture

Your post is a big yawn.  Another troll who got his "learnin" from NAR commercials.  Sorry, but why did the Fed have to take unprecedented measures to prop up the housing market if everything was so great?  You are also neglecting the property bought by specuvestors, both large and small, during the last couple of years.  They are either going to have to rent those or flip them leading to ....... more inventory.  There are a reported up to 20 million vacant housing units in the country.  Sorry Charlie, that is not a lack of supply.  Take your NAR propaganda elsewhere.

Thu, 12/19/2013 - 11:24 | 4260662 rlouis
rlouis's picture

It's time for the fed to show some balls - why buy paper, they can buy the real thing. 

Thu, 12/19/2013 - 11:30 | 4260673 buzzsaw99
buzzsaw99's picture

Yun spews unmitigated bullshit in such vast quantities that it is quite simply amazing.

Thu, 12/19/2013 - 11:53 | 4260764 orangegeek
orangegeek's picture

Philly Housing Index - an index of housing stocks - is still a long way from 2005


These NAR surveys are suspect at best.  NAR is a marketing machine - everything is up/everything is rosy



Would be nice to see a credible report of all the "foreclosure inventory" going back to 2006 and sitting hidden in banks financials.

Thu, 12/19/2013 - 12:05 | 4260799 tarsubil
tarsubil's picture

In other news, a local alcoholic is reconsidering his planned reduction in drinking from 8.5 liters of vodka a week to 7.5 liters in light of more stress in his life caused by his wife's increased nagging.

Thu, 12/19/2013 - 12:09 | 4260810 Kasperfx
Kasperfx's picture

in my WPB nabahood of around 60 1 + acre lots from todays price rage of 500k to 2m  i count 6 uncompleted (completey stoped construtions ) 4 forclosers and 8 for sale homes all of witch have been siting for the past 6 to 12 months, no one buying them even after substantially decreasing prices... i say this recovery is all smoke and mirrors , and theirs plenty of home owners who would side with this fairytail because  it makes them feel and look richer. 

Thu, 12/19/2013 - 12:09 | 4260811 bankonzhongguo
bankonzhongguo's picture

Ran into a young couple just yesterday.  They over bought their first house at the 2006 high and lost it by 2009.

They have been saving their pennies and after a year of searching in some forsaken central valley shadow market have found another winner - $285,000 for 1800 sqft in a 20+ year old 3/2 on a fast street.

They are so proud their offer has been accepted they are walking the holiday parties with photos of their new "dream home."

These guys are paying $155/ft for a 20 year old house.  There are over 100 bank owned non marketed vacant houses within 1 mile radius, but because supply is so tight, those few nitwits like these guys are single-handedly pushing the market values up.

My "zillow" price has marched up by $1000 each week for the last 3 months based on no new comps.

Meanwhile local jobs are at best declining slowly verses inflation.

The fix is in.  More debt for the stupid.

Thu, 12/19/2013 - 12:25 | 4260863 tarsubil
tarsubil's picture

The idea that the banks would keep those 100 homes off the market in order to mark to fantasy is crazy. I mean, the banks never lie. /sarc

Thu, 12/19/2013 - 12:13 | 4260830 starman
starman's picture

Who needs homes when you can live free in tent cities !

Thu, 12/19/2013 - 12:36 | 4260917 Harry Dong
Harry Dong's picture

True story. I'm putting in an offer for a 2nd house. Even if prices go down20% I still think borrowing as much as possible on a thirty year will be just the gas 5 years from now.

Thu, 12/19/2013 - 12:40 | 4260927 Harry Dong
Harry Dong's picture

Note. If I said arm, than you have permission to shoot me

Thu, 12/19/2013 - 13:46 | 4261123 1835jackson
1835jackson's picture

It's a sham. People are broke. US home owner dream is over. Why?

1. Interest rates are going up from here on out even if Yellen pumps more in. Think bond vigilantes.

2. Incomes are not going up except for the elite.

3. Home prices are bubbly and less affordable.

4. New qualified mortgage rules take affect Jan 10th making it harder to qualify dumb borrowers. Then in March the new funding fees hit lenders from fannie and freddie. The govt wants out of the mortgage game. This would make a 4.625% rate more like 4.875% even with a FICO of 720+

5. Overall the market will demand higer interest rates despite what the fed does. This is in my opinion the big one. 

6. Finally, jobs that pay well are simply going away. Technological advancement etc. Leaving the renter class and the elites.

Thu, 12/19/2013 - 13:58 | 4261184 Rentenmark
Rentenmark's picture

I can only comment on the Real Estate market around Chicago and here is what I've observed:

Built a house in the city in 2005 and sadly had to sell it at fire-sale prices to get out in 2009.  That same house sold again in the spring of this year for about 5% more than what I sold it for. That's about 1% per year!  That tiny gain won't even come close to covering the transaction fees and taxes for the sale (about 8% of the sale price).

My wife continues to hold her condo in the city as a rental since the property is so upside down that it makes no sense to sell it.  Short sales and foreclosures in the building have cut the value of the unit in half.  The good news is the distressed sales appear to have run their course, but even then we'll be renting the unit for a while.

I live in northwest Indiana, basically a Chicago suburb, and am considering buying a foreclosure as a rental.  There are tons of foreclosured starter type homes in working class type neighborhoods.  I was out yesterday looking at some of these properties and noticed many others that were not in my listings, or had signs on them (tip off was unshoveled snow on the driveways).  It would appear there is plenty of inventory, both available and hidden.

The only "hot" areas around Chicago that I am familiar with appear to be the affluent western suburbs.  There are several mansions being built (10000+ SF).  I cannot imagine these are on spec, but we'll see when they are done.  There are also many large custom homes going up that are probably in the $1.5M to $3M range.

Very few condominium projects being built in the city, but several apartment buildings.  There is a prominent property on Wacker Dr (along the river) that was originally intended to be a 90 story condo/hotel.  Construction was stopped after about 30 floors when the bubble burst.  After a few years of inactivity, it is being constructed as a 50 story (or so) luxury rental building.

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