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Home Sales Plunge Most In 3 Years, Drop 8th Months In A Row

Tyler Durden's picture




 

Must be the weather... (though if you want to believe that, do not look at the regional breakdowns)... Pending home sales fell 10.2% YoY - the worst in 3 years (notably worse than the 9% drop expected by the meteorologists in the economics departments of the big banks). This is the 8th month in a row of home sales drops (pre-weather).

 

 

 

Don;t worry though - a glimpse at the charts shows things are stabilizing as NAR's Larry Yun suggests..

Lawrence Yun, NAR chief economist, said the recent slowdown in home sales may be behind us, while home prices continue to rise. “Contract signings for the past three months have been little changed, implying the market appears to be stabilizing,” he said. “Moreover, buyer traffic information from our monthly Realtor® survey shows a modest turnaround, and some weather delayed transactions should close in the spring.”

Umm, no.

 

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Thu, 03/27/2014 - 10:12 | 4598272 kliguy38
kliguy38's picture

muppets don't care......they're headed for the cliff and nuttin's gonna stop um......besides goldman told um to short gold....

Thu, 03/27/2014 - 10:24 | 4598332 Bay of Pigs
Bay of Pigs's picture

So when does Mr Bernyellin do his own version of the "helicopter drop"?

We do have a printing press after all don't we?

Thu, 03/27/2014 - 11:06 | 4598537 Mentaliusanything
Mentaliusanything's picture

No you don't have a printing press.  It has been foreclosed on. Auction to follow shortly. If the Reserve Currency prints ( the only Reserve Currency)  then ... Heuston .. we have a problem.  What the fuck was Bernanke thinking. The smartest man in the wood pile.. Aka thick as a log. Its going down and I do mean down, World wide. Actions have consequences. Zirp just allows cheap money to buy mirages. Whats it worth..What I fucking say it is. The golden rule has not been replaced. "He who has the Gold makes the rules". I just don't have any, so please forgive another log for the coming fire.( I don't know how to buy it.. entry costs seem high, like 5-10% and that is worse than Bank rape) 

Thu, 03/27/2014 - 11:29 | 4598616 Mentaliusanything
Mentaliusanything's picture

Actually I do have some but my Grandfather travelled around Asia in coastal freighters in very early 1900's. He never left home without it. No Visa or Mastercard back then. Whats A 1902 - 1920 Gold Eagle or Half Eagle worth + British Sovereigns ( they are big coins). Other than that Zip on my behalf. Apparently it got him from some Russian port (Vadalockshop or something.. and he was locked up by them 300 miles  back to Port Arthur in China.) you should read the Diary. It was a cruel World back then. The Russian guards liked Vodka back then. So a small Gold coin got them so pissed he took one fellows shoes and pistol after they passed out. (Sino-Russian War). Life was Cheap back then.

Thu, 03/27/2014 - 11:41 | 4598731 BKbroiler
BKbroiler's picture

Principal: Mr. Madison, what you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

Thu, 03/27/2014 - 10:47 | 4598441 rubiconsolutions
rubiconsolutions's picture

Thank God Fox News and MSNBC and CNBC keep telling me that the economy is improving because otherwise I'd start believing this crap.

yeah..../s

Thu, 03/27/2014 - 10:57 | 4598493 j0nx
j0nx's picture

Head to NoVa. $650k homes are flying off the shelves with multiple offers in less than 3 days on the market. Shit is nuts. Sold my hovel last summer and have been waiting for the crash which never comes. At this rate I'll be a renter for life.

Thu, 03/27/2014 - 10:11 | 4598273 101 years and c...
101 years and counting's picture

ahhh, so this is the reason for the blastoff in the ponzi.  wont last (again).

Thu, 03/27/2014 - 10:11 | 4598274 Cacete de Ouro
Cacete de Ouro's picture

Basements 'R US

Thu, 03/27/2014 - 10:12 | 4598277 vote_libertaria...
vote_libertarian_party's picture

stocks loved the news...errrrr....aaaaa....oooooo-k

Thu, 03/27/2014 - 10:12 | 4598282 greatbeard
greatbeard's picture

Mines been on the market for a month now and still no contract.  I knew something was up.  Maybe this week will be the week.

Thu, 03/27/2014 - 10:16 | 4598295 fonzannoon
fonzannoon's picture

Yellen's 6 month comment was the head shot for real estate. If there are any buyers left, and it has been made clear rates will go higher....then even before that happens they just made sure real estate is toast. 

The fed threw employment out the window. Now they threw real estate out the window....makes you wonder what they actually do give a shit about....

Thu, 03/27/2014 - 10:18 | 4598306 corporatewhore
corporatewhore's picture

they give a shit only about themselves.

Thu, 03/27/2014 - 10:18 | 4598310 Rubbish
Rubbish's picture

Last one out is a foolish fucker.

Thu, 03/27/2014 - 10:55 | 4598482 new game
new game's picture

fonz-spot on, cross currents as the confusion of policy is becoming more and more obvious.

but, when the swan flies rates will revert to the the 30 year trend...

Thu, 03/27/2014 - 10:19 | 4598312 NoDebt
NoDebt's picture

Good luck.  Took me 9 months to sell my Mom's old place.  Nice unit in a good school district with low taxes.  I priced it originally at $225K, based on similar units selling in the $220K range in early 2013 (before rates shot up, courtesy of the Bearded Potato opening his big fat yap).  Long story short, I just sold it for $170K last month.  All buyers were cash-only investors.  Not one single nibble from somebody who wanted to buy it to live in it.

Thu, 03/27/2014 - 10:48 | 4598444 FreeNewEnergy
FreeNewEnergy's picture

NODebt, sorry about the selling price on your mom's home, but your story is very interesting. While home sales have been declining for a long time, prices keep going up - though your story seems to belie that.

Since the bulk of home sales are being made all cash, by investors looking to rent them out, I wonder if they are overpaying.

Usually, investors in rentals want their up-front costs low, so they finance. On a deal like yours, say 10% down and a 30-year at 4-5%.

All cash is a symptom of the oversupply of freely available worthless, shit FRNs floating around. Obviously, such all cash investors are the likes of Blackrock and others with tons of cash on hand.

But, let's see where they're headed.

Cash buyer paid 170,000. If they're lucky, they can rent out the place for $1500/month. Take out taxes, maintenance and insurance, maybe 1300 a month, if they have no vacancies, and I'm being generous here.

That's 15,700 a year. Not bad. They will recoup their initial investment in about 11 years, kind of like buying a stock with a P/E of 11. And, if they believe in the wisdom of Larry Yun, they'll be able to sell that house for more than they paid, of course, after the multiple tenants have thoroughly trashed it a few times, the roof, bathrooms and rugs all have to be upgraded, etc.

But, the Blackrocks of this world won't want to hold it until they're fully paid off, will they? They want to flip that bitch after a couple of years. If the market is down, and they only get 140,000 in two years, well, they broke even and had so much fun being a landlord.

Truth is, Blackrock scum hire property managers (expensive) and would like to package these rentals into a security (they've already done that) with a 7-9% yield (good luck), so, they're leveraged. If the market turns on them... and what if the rental market crashes?

They're fucked. And I can think of no more surly assholes to take it up the yingyang.

RE is 30-40% overpriced almost everywhere. Wait. Patience is a virtue.

Thu, 03/27/2014 - 11:04 | 4598525 RSDallas
RSDallas's picture

Free, yes I can tell you the investor is overpaying in Dallas, Texas.  It is very important to point out that the slowdown in the Dallas area is not because of a lack of demand.  The lower sales numbers are a result of extremely low listings.  I mean, think about what the Fed has done through their zero interest rate policy.  Anyone who could has already refinanced at a sub 4% rate and therefore this group of potential listings are going to stay put in their homes.  The low hanging fruit is gone so now the purchase (investor or otherwise) demand is exceeding the supply and henceforth we have prices rising at an alarming rate.  i suspect that this is happening in all of the markets that were not as severely impacted form the sub prime fiasco.  I say beware when you start seeing higher listing rates.  This should be an indication of a top.

Thu, 03/27/2014 - 11:21 | 4598613 new game
new game's picture

having just returned from tyler, marshall and longview and considering a cash purchase of a home, i agree with your post 100 percent.

but i will say coming from MN, 150 k buys a hell of a nice home around tyler....

Thu, 03/27/2014 - 12:44 | 4599068 Blano
Blano's picture

I'm amazed at the number of real estate flipper ads I hear on the radio that are coming through town. 

Thu, 03/27/2014 - 12:51 | 4599095 Miffed Microbio...
Miffed Microbiologist's picture

Those and the " buy a car for nothing down and no payments for a year" ads. Drove me crazy enough to get Pandora.

Miffed;-)

Thu, 03/27/2014 - 23:05 | 4601420 Housing Analyst
Housing Analyst's picture

Nonsense. Housing demand is falling in Dallas simply because of massive overpricing of a depreciating asset. Houses in this case.

Thu, 03/27/2014 - 11:24 | 4598589 new game
new game's picture

excellent post! but one more tidbit. i have sold. i have put the money in the bank. it get shit. comparing two simular properties, rental vs ownership and basic math, the result is this- 400-500/month difference(piti) less maintenance. if i buy turnkey home, then maint minimal, then 400 x 12 divided by substantial down 100k, = 4.8 percent return.

key numbers in this analysis:100k down 

purch price 225-250

financed amt=140k at 3.25 percent, 30 yr, 5:1 arm conventional.

closing cost=4500

savings or cost of money erosion= about 5 k / year renting.

even if the price crators i continue saving 5k per year unless rents fall out of bed.

maintenance costs are the wildcard and also time or length of ownership.

5 plus years, so that equels 25 k and/or a 10 percent price depreciation, equels break even based on simple cash flow.

decisions decisions. wtf!

 

 

Thu, 03/27/2014 - 13:08 | 4599179 TruthInSunshine
TruthInSunshine's picture

Property taxes on owner occupied home = 2.2k to 30k annually

Property taxes on non-owner occupied renter home = 1.5x that

Thu, 03/27/2014 - 13:28 | 4599250 pig lipstick
pig lipstick's picture

Yes, all write offs.

Thu, 03/27/2014 - 10:13 | 4598283 ebworthen
ebworthen's picture

Cue the National Association of Realtors (N.A.R.) blaming the weather - and paying to run a slew of "Now really is the best time to buy a home" commercials on "Dancing with the Stars", "The Voice", and the MSN and Yahoo! websites.

Thu, 03/27/2014 - 10:21 | 4598323 corporatewhore
corporatewhore's picture

perhaps it's the realtor's image that is causing the decline?

you know, the soft gauzy pic of a female real estate agent found on shopping carts or local newspapers and websites.  Bleach blonde, chiclet teeth, mouth slightly parted and gleeming with red lipstick----just dying to screw you.....financially and otherwise.

Thu, 03/27/2014 - 14:14 | 4599451 NihilistZero
NihilistZero's picture

Just for fun you guys should visit: http://davidlereahwatch.blogspot.com (David Lereah was economist of the NAR during Housing Bubble 1.0)

The archives from 2007 are classic comedy.  Expect Lawrence Yun to parrot many of the same talking points as the crash continues.

Thu, 03/27/2014 - 10:13 | 4598286 spastic_colon
spastic_colon's picture

so whats a trader to do.....hammer PCLN, AMZN, GOOG, AAPL, NFLX, and TSLA back to positive on the ZH downtick call....its almost uncanny......add in some bad home sales and voila! / s

Thu, 03/27/2014 - 10:16 | 4598300 Caveman93
Caveman93's picture

Mupppets outta money?

Thu, 03/27/2014 - 10:18 | 4598309 orangegeek
orangegeek's picture

Nope, Blackstone hedge fund is having a hard time renting what they bought - what they bought were tear downs (bank foreclosure inventory with no up keep).

Thu, 03/27/2014 - 10:17 | 4598301 orangegeek
orangegeek's picture

Philly housing index rolled over in February - was at 213.

 

http://bullandbearmash.com/chart/philly-housing-index-daily-falls-channe...

 

Currently his 192.4 low today - about a 10% drop in 3 weeks. 

Thu, 03/27/2014 - 10:20 | 4598318 SheepDog-One
SheepDog-One's picture

Oh so this is why stawks flash crashed higher so fast.

Thu, 03/27/2014 - 10:21 | 4598324 1fortheroad
1fortheroad's picture

Have to get to 1850 or the ponzi Dies

Thu, 03/27/2014 - 10:23 | 4598327 q99x2
q99x2's picture

Gold under 1300.

The Chinese might be making gold with a fusion process now. The costs are probably a little higher than 1300 at this time.

Thu, 03/27/2014 - 10:29 | 4598352 youngman
youngman's picture

My penthouse in Downtown Denver has been for sale for 5 years....lots of showings..no takers....no offers....I am priced less than the unit next to me sold 2 years ago....to many forclosures to clear out first....good news they are clearing out...but at much lower price per square foot....gives me a bad comp....but at some point people will go back to a good location over a better price....I have that...I have it leased now....so just a non working asset at this point...but any of you pot heads out there...I am close to 200 pot shops..lol

Thu, 03/27/2014 - 10:36 | 4598369 corporatewhore
corporatewhore's picture

your final point should be the lead sentence in your ad!!!!

Close to 200 pot shops and a gorgeous view from the top of an Eight Mile High Denver top location.

Get going dude

Thu, 03/27/2014 - 10:43 | 4598413 the grateful un...
the grateful unemployed's picture

seems to me there are fewer properties on the market, maybe its just discouraged buyers (like discouraged workers) if you sold a property you werent living in what would you do with the money, invest in stocks? rents seem high, maybe a lot of people are becoming landlords, collecting rent looks better thatn short term interest rates.

Thu, 03/27/2014 - 10:44 | 4598426 graymnzrc
graymnzrc's picture

A very close friend of mine just sold his house in Pa in one day. 

 

Just sayin...

 

Don't get me wrong, I am a ZH fan but I don't understand how folks here are insistent that Gold is the only answer. If hyper-inflation occurs, won't other hard assets also rise in value in dollar terms.

 

Usually when an adage like "Diversify your assets" has been around for a long time, it's for good reason.

 

Oh, and by the way, if you don't think the American Dollar is worth anything, please feel free to send all of your "worthless currency" to me. I will make good use of it for you.

 

Good Luck and Health to All ZH'ers and thank you for this site.

Thu, 03/27/2014 - 10:52 | 4598467 corporatewhore
corporatewhore's picture

there are always exceptions to the rule.  a one day home sale this day and age is either a fluke or luck, both, idiot/uninformed buyer or trust fund baby who doesn't know the value of a what used to be a dollar.

your reasoning behind diversification is correct.  Housing however should not be viewed as an asset this day and age but rather an affordable expense.  It's an ongoing altering perception change since those of us born within the last 60 or so years only recently discovered that housing not only can go down but also can go bust.

There also are pockets of real estate that are always on the up like Washington DC and perhaps even on a localized basis.

Thu, 03/27/2014 - 10:59 | 4598501 Bay of Pigs
Bay of Pigs's picture

Nothing wrong with RE and productive farms, etc...and holding some other assets. Not sure who told you otherwise. Lots of guys here are diversified and solid preppers.

The gold mantra here is for insurance against currency devaluation and loss of purchasing power (inflation), and a form of savings and wealth preservation. 

BTW, this article paints a pretty bleak picture on home sales, don't you think?

Thu, 03/27/2014 - 11:00 | 4598506 SheepDog-One
SheepDog-One's picture

And where is this 'Pa' you speak of supposedly located?

Thu, 03/27/2014 - 14:10 | 4599435 graymnzrc
graymnzrc's picture

Bucks County, Pa. Just north of Philly.

I don't have the heart to tell him that he may have priced it too low. The area is very prone to family/move up type buyers but (unlike a prior poster) I have no idea who bought it.

BTW- I am not down on Gold/Silver or Brass/Lead for that matter. I am just saying that ignoring all of the other asset classes isn't necessarily a sound strategy. If the dollar falls percipitously, won't the price of homes (in dollars) go up too?

Thu, 03/27/2014 - 23:00 | 4601407 Housing Analyst
Housing Analyst's picture

How bad were his losses?

Thu, 03/27/2014 - 10:51 | 4598470 FreeNewEnergy
FreeNewEnergy's picture

The crash cometh like the seven year itch.

Thu, 03/27/2014 - 11:12 | 4598548 elwind45
elwind45's picture

Everyone is waiting on the collapse of something first? Not just a little but alot of deflation before anyone wants anything not even dollars(?)

Thu, 03/27/2014 - 12:34 | 4599019 whidbey-2
whidbey-2's picture

The markets are going to correct, but bonds yields will drop.  Real  estate may pick up for a while. I firmly believe that housing is NOT a good investment in a unstabale economy long run. Invest your money in good dividend stocks and pay rent so you are free to move for work.

 But, equities are the story.  The Fed policy over the last few years has screwed up a great deal and that will lead to some serious adjustments.  Gold could rise, the dollar might climb (not expected if gold rises). Ever notice that things are becoming inverted recently?

Thu, 03/27/2014 - 12:54 | 4599109 pig lipstick
pig lipstick's picture

I cannot figure out if most of these posters on ZH are just purposely ignoring the ecomonics of rental units to further their argument, or if they are just in the dark not understanding how this works.  All of these seemingly professional number crunchers leave out the KEY to rental ownership:  DEPRECIATION.  I can buy a $1,000,000 4 plex in California and the tax write off alone is $1,000,000 divided by 27 (years).  Thats a $37,000 write off per year in a 40% MIN tax bracket is $15,000 MIN tax savings.  Even if the property breaks even with revenue, I STILL make money at even a 3% cap rate!  My mortgage gets paid down by about $1000 per month (net worth increases $1000 every month), AND I pocket the tax savings.  As much as I absolutely believe real estate is overpriced, the fact is, there are people like me, EVEN AT THESE PRICES, where ownership is still quite attractive.  Rental rate risk??  Yes, always there, but how often have you seen rents DECLINE in your life, and even if they have or will, the tax write offs provide a backstop.

 

Thu, 03/27/2014 - 14:21 | 4599486 gregorios
gregorios's picture

You make a good point. However, I believe you are leaving out capital gains for when you sell:

 

The depreciation you are taking in your example of $37K per year for 27 years will eventually lower your basis. When you go to sell, I believe you will owe capital gains on the difference between your sell price and the basis. For example, if you depreciated the property to zero in 27 years and then sold it for $2 million, I believe you would owe capital gains on $2 million. Correct??

Thu, 03/27/2014 - 16:59 | 4600230 pig lipstick
pig lipstick's picture

Gregorios:  Many years ago, my Accountant made a very good and simple point to me when I complained about having to pay a large check to the IRS.  He said "Would you rather make money and have a tax problem, or not make money and have no problem?" But to answer your question, yes, there will be capitial gains, but these laws change all the time...percentage of total gain, how many years you own it, and whether or not it is rolled over to another real estate inivestment, are all current factors.

Thu, 03/27/2014 - 22:59 | 4601400 Housing Analyst
Housing Analyst's picture

You're purposely ignoring the fact that cap rates are negative at current asking prices.

 

Look out below.

Thu, 03/27/2014 - 14:46 | 4599634 corporatewhore
corporatewhore's picture

Yes home sales are down.

But I just looked at zillow for my suburban community and foreclosure listings and preforeclosures are up.  Right now standing at 125.

Makes me just want to buy.  Why catch a falling knife?

 

Thu, 03/27/2014 - 22:58 | 4601397 Housing Analyst
Housing Analyst's picture

Get what you can get for your house today because it's going to be much less tomorrow for many years to come.

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