All That Is Wrong With The US Housing Market In One Chart

Tyler Durden's picture




 

If there was one chart that shows best what is happening with the bifurcated US housing market, it is this NAR breakdown of sales by pricing bucket. It shows beyond a doubt that courtesy of the Fed's policies there is not one but two housing markets in the US: that for the 1%, or those who purchase mostly homes in the top price buckets ($500 and certainly above), and that for everyone else. Guess where the bulk of the activity (i.e. flipping) is, and worse for the so-called recovery, where it isn't.

 

The logical follow up question: what percentage of total sales fall in any given price bucket? Here is the answer.

 

So 4.5% of the total US housing market, that costing over $750K is seeing a pick up in activity. The remaining, and cheaper, 95.5%: not so much.

Preemptive spin attempt warning: harsh snow in the winter fell only over houses that cost $500K or less.

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Thu, 05/22/2014 - 10:51 | 4784724 ZippyBananaPants
ZippyBananaPants's picture

where does the cardboard box on Market Street that I saw in San Fran fit into this chart?

Thu, 05/22/2014 - 10:52 | 4784726 FieldingMellish
FieldingMellish's picture

on the right.

Thu, 05/22/2014 - 10:56 | 4784752 takeaction
takeaction's picture

Wrong?  Here in Portland OR houses are being snatched up like crazy and the market is on fire.  I see SOLD signs everywhere, and my Real Estate friends are loving it for the moment.  With Interest rates this low for the moment, payments are cheap.  My house has Doubled in price over the las 24 months...I see the bubble...I am having a Garage Sale this weekend to get rid of all my Shit then on the market it goes...I see the storm...I am out.

Thu, 05/22/2014 - 11:26 | 4784867 thamnosma
thamnosma's picture

Portland seems the rage for the hip moneyed class now along with Seattle.  

Thu, 05/22/2014 - 11:47 | 4784940 davinci7_gis
davinci7_gis's picture

The new, new generation could care less about home buying and saving up equity..they are used to living paycheck to paycheck in apartments.. "all I need is a place to lay my head" attitude.  And why not? 45% of the population is on some form of benefit and 10million are on some form of disability.  The 20 million that are here illegally are getting by without paying any taxes at all (all income done on cash basis).

Every "young" American knows that the "gobment" will bail them out...until it doesn't...buy gold and silver and hide it well.

 

Thu, 05/22/2014 - 11:54 | 4784967 NoDebt
NoDebt's picture

That chart squares with my experience trying to sell my Mom's old house over the last year.  Put it up the beginning of July (right after the Fed announced they might 'taper' and rates shot up).  I was definitely in the 100-250K range.  Three price reductions (the third being a whopper) and finally got it sold last month.  

I watched as more expensive home kept getting snapped up, while cheaper units (like my Mom's) languished. 

ALL buyers were private parties, paying cash, looking to rent the place out.  And those guys don't pay "retail" for a house.  They pay "wholesale", since they have to make a profit on the rental.  

Now, the house isn't in some "red hot" real estate market.  Just your average suburban town with a good school district and modest taxes.  

Blackrock never called me.  No fix-n-flippers ever took interest.  Just private buyers of rental properties.

Thu, 05/22/2014 - 12:08 | 4785046 onewayticket2
onewayticket2's picture

47MM on food stamps, 10MM on disability.

baby boomers getting OUT of the market...forced to rent or double up to get by due to zero savings and bonds paying peanuts.

there simply are not enough heads to buy up the property and the remaining ones have gone full dependency.

 

Thu, 05/22/2014 - 12:20 | 4785110 Remington IV
Remington IV's picture

Plus 18,000,000 welfare and 12,000,000 section 8 housing ...

 

Obamanomics = welfare

Thu, 05/22/2014 - 12:33 | 4785155 zaphod42
zaphod42's picture

"Americonomics = welfare."

 

Been that way for a long time now; Bushes didn't help; Clinton didn't help; Obama doesn't have a clue.

Craig

Thu, 05/22/2014 - 22:23 | 4787243 asa-vet52
asa-vet52's picture

Raise the price and see what happens.

Thu, 05/22/2014 - 10:52 | 4784730 i_call_you_my_base
i_call_you_my_base's picture

That person is looking. Potential buyer.

Thu, 05/22/2014 - 10:53 | 4784734 Winston Churchill
Winston Churchill's picture

What size ?

Thu, 05/22/2014 - 10:54 | 4784739 Headbanger
Headbanger's picture

And where's chart for tent sales?

Thu, 05/22/2014 - 10:52 | 4784728 NDXTrader
NDXTrader's picture

Most of the guys on Wall St. see homes selling like hotcakes in the Hamptons and think we are in a housing boom

Thu, 05/22/2014 - 10:53 | 4784732 Dr. Engali
Dr. Engali's picture

Maybe we should add a new catagory for the amount of new tents purchased.

Thu, 05/22/2014 - 11:26 | 4784869 thamnosma
thamnosma's picture

And used vans, small RV's and other "mobile homes"

Thu, 05/22/2014 - 11:40 | 4784921 davinci7_gis
davinci7_gis's picture

Yeah, remember Chris Farley in his "Van Down by the River" sketch?  That's the norm today!

Thu, 05/22/2014 - 12:11 | 4785059 thamnosma
thamnosma's picture

We can live in "minivan parks" and clean houses for the Chinese owners.

Thu, 05/22/2014 - 10:54 | 4784736 Snoopy the Economist
Snoopy the Economist's picture

So 90% of the homes sold are down ~ 7% on average. I expect this to be the average for the next 10 yrs.

Thu, 05/22/2014 - 10:53 | 4784737 Hippocratic Oaf
Hippocratic Oaf's picture

 'harsh snow in the winter fell almost exclusively over houses that cost $500K or less.'

Awesome.

 


Thu, 05/22/2014 - 10:54 | 4784738 cowdiddly
cowdiddly's picture

"Castles made of sand, fall into the sea-----eventually" Jimi H.

Thu, 05/22/2014 - 11:43 | 4784929 Black Warrior W...
Black Warrior Waterdog's picture

"There's a red house on the corner... financed with a no money down neg-am loan..." "

Thu, 05/22/2014 - 10:55 | 4784743 djcando
djcando's picture

Where is the "now living in my parent's basement" data?

Thu, 05/22/2014 - 10:55 | 4784749 AmericasCicero
AmericasCicero's picture

Dibs on the K st park benches!

Thu, 05/22/2014 - 10:59 | 4784760 Der Wille Zur Macht
Der Wille Zur Macht's picture

Nothing angers me more than this.

People getting squeezed out and being forced to cohabitate human sardine tins is no way to live.

 

Thu, 05/22/2014 - 11:02 | 4784773 Smegley Wanxalot
Smegley Wanxalot's picture

You speak as if the lives of the serfs are more valuable in the New World Order than those of sardines.

Thu, 05/22/2014 - 11:03 | 4784774 JRobby
JRobby's picture

All part of the big plan.

Please board the buses on your left between the two -20ft high chain link fences.

Thu, 05/22/2014 - 11:06 | 4784782 Pool Shark
Pool Shark's picture

 

 

Funny how when the most expensive purchase a person will ever make (a home) goes up in price; that's a good thing. But, if food or energy go up in price; that's a bad thing...

Everything that is financed is going up in price; thanks to the Feral Reserve.

Central Banksters' cheap money policies will destroy the planet...

 

 

 

Thu, 05/22/2014 - 11:15 | 4784823 gcjohns1971
gcjohns1971's picture

Everything financed MUST GO UP IN PRICE because of supply and demand.

Financing expands demand.

 

This is a great arrangment for the financially secure because they can pay the inflated cost of living out of cash, and loan the rest out to earn an interest rate from the poor.

This is not so great an arrangement for the poor or the young because the artificially inflated prices make financing a required necessity, and the interest payments become a significant barrier to class and professional mobility.

Thu, 05/22/2014 - 11:10 | 4784809 gcjohns1971
gcjohns1971's picture

It has worked for Europe.

They've even spun it as being environmentally responsible, easier to deal with, more sophisticated, more sociologically correct, more fashionable, etc...

Think about it.  In big cities (vice the multitude of small ones in America) people do their time at work ("Doing Time" is an apt description) and then after satisfying the overseer they an debauch themselves in whatever way they please. 

The ability to form businesses in these cities is extremely restricted to those who are aligned with the Masters, and prices and overhead costs are intentionally inflated to absorb most or all of the relatively-higher wage one gets there.  That way all money comes from and goes back to the Masters, and they need only expend the minimum of a worker's labor in real property to support the life of their human capital.

Of course...

It also means that self-reliance is impossible, which in turn means that the sardine is obligated to do whatever they are told.

So, it is a pleasant sort of slavery for the time being.

Of course there is also the low birth rate it generates, that put the squeeze on everything.   So the collars and manacles may not be so comfortable in coming years.

Thu, 05/22/2014 - 11:18 | 4784835 dontgoforit
dontgoforit's picture

You should see how it is in some areas of China, Venezuela, etc.  People share the same place and sleep in shifts.  Many times they are what we call mini-warehouses with a pull down front door.

Thu, 05/22/2014 - 11:01 | 4784764 Spungo
Spungo's picture

w00t, winning the war against the lower and middle classes!

Thu, 05/22/2014 - 11:02 | 4784766 RaceToTheBottom
RaceToTheBottom's picture

I believe that was two charts not one.  Truth in advertizing matters.

Thu, 05/22/2014 - 11:02 | 4784772 gcjohns1971
gcjohns1971's picture

If the newest bubble is in the high-end market then that is where I would expect the biggest drops to come...all things being equal.

How to play this?  Short high-end builders?  Invest in foreclosure lawyers?

Or...given that we live in an Oligarchy... perhaps we can assume they will try to get more cash out of the middle class, causing the the bottom to drop out of the lower-end housing?

Thu, 05/22/2014 - 12:24 | 4785128 zaphod42
zaphod42's picture

Just so you don't think those low end houses cannot drop in value, price for a 10,000 sq. ft. mansion on 2.5 acres in Detriot in 1984 - $35,000.  Same place today, $15,000, and you have to clear the wreckage yourself.  

But, you can farm the land! (And, park your Winnebago there?)

 

Craig

Thu, 05/22/2014 - 13:07 | 4785300 Blankenstein
Blankenstein's picture

A home costing $35,000 in 1984 would not be classified as a mansion.  Maybe a former mansion.

Thu, 05/22/2014 - 11:04 | 4784779 youngman
youngman's picture

Winnebagos are selling too...many people are taking the home on wheels style...

Thu, 05/22/2014 - 12:14 | 4785074 nobodysfool
nobodysfool's picture

That (homes on wheels) will soon be declared illegal on many counts by the New Regime.  It's an obvious attempt to dodge the Tax System by not owning actual property, which can not be tolerated. The additional pollution is an obvious detrement to green earth policies, which will not be tolerated. The unnecessary additional wear & tear on our infrastructure is unacceptable and can not be tolerated.  So let it be written, so let it be done.  Be afraid, be very afraid.

Thu, 05/22/2014 - 13:29 | 4785376 JRobby
JRobby's picture

Motor homes will be stopped, searched and confiscated by DEA. Anyone on board is an enemy combatant and will be detained indefinitely.

In remote areas, an RPG will be used to save time and relocation costs.

 

Thu, 05/22/2014 - 11:04 | 4784781 fonzannoon
fonzannoon's picture

I woould like to see these charts with a gun ownership chart overlapped. My guess is the under 250k home crowd owns substantially more of them and if they ever decided to knock on the doors of the over 1mm crowd and ask to live in the east wing there is not much that could be done about it.

Thu, 05/22/2014 - 11:07 | 4784790 RaceToTheBottom
RaceToTheBottom's picture

Still trying to get uninvited from the neighborhood parties, I see.

Thu, 05/22/2014 - 11:20 | 4784840 fonzannoon
fonzannoon's picture

alright I have a neighbor story for you. So one of these neighbors calls me up to grab a beer a week ago ( I swear I don't know why, I am generally grumpy and unpleasant). Anyway we get out and after some basic chit chat I say "what's up?". He (35 yr old dude approx) says "I have a problem". Long story long he tells me he is unmarried (everyone assumed he was, and he and his girl have 2 kids). He says he bought his house before meeting his girl and she moved in and whamo she gets pregnant. Kid 1 happens. Their marriage hits the rocks and of course the obvious solution was to have kid 2. She does not work and he has a solid job making good coin. He tells me that they hit the rocks again and now she is rapidly planning their wedding. He thinks it's because she wants to lock herself into not just child support, but also alimony. He thinks that if he tries to push off teh wedding or say he does not want to get married she will bounce, take the kids and immediately find another dude to play daddy while he works 14 hours a day. He asked me what I thought. I told him that he either has 30 sexless years of resentment filled marriage with a solid chance of it ending with her walking with alimony, or he can detonate the thing now and both their lives will be a financial mess and they will just spend the next 20 years driving each other crazy. 

He asked me what I think he should do. As if I am suppsed to have an answer for this.

Thu, 05/22/2014 - 11:28 | 4784868 Dr. Engali
Dr. Engali's picture

He should probably dig in deeper and have two or three more kids. That will help him clear his mind.

Thu, 05/22/2014 - 11:28 | 4784882 QQQBall
QQQBall's picture

Fonz... Ask your neighbor to look up Palimony in wiki

Thu, 05/22/2014 - 11:30 | 4784887 tarsubil
tarsubil's picture

He should stop being a retard for starters.

Thu, 05/22/2014 - 11:49 | 4784948 fonzannoon
fonzannoon's picture

No shit. I basically told him that he has correctly identified the two choices in front of him. But that is suburbia out by me. Every house needs a 3 ft thick steel door to keep the skeletons from falling out when they load up the minivan to go to baseball practice and act like the cosby family.

Thu, 05/22/2014 - 12:01 | 4785006 Hulk
Hulk's picture

You left out the nail gun option fonz...

Thu, 05/22/2014 - 13:42 | 4785423 ElvisDog
ElvisDog's picture

The solution is simple - unless he is really attached to his kids, dump the gold-digging girlfriend and satisfy his sexual needs with high-end prostitutes. He'll spend less money in the long-run and have sex with better looking women.

Thu, 05/22/2014 - 11:54 | 4784971 Winston Churchill
Winston Churchill's picture

A hitman is much cheaper.
The advice I got years ago from a senior partner of one of the big four accountancy firms over a business problem.
Even supplied a contact phone number.
No names ,no packdrill.
I didn't, but it was close.

Thu, 05/22/2014 - 12:09 | 4785048 Yen Cross
Yen Cross's picture

      He could try the old magic disappearing act Fonz. After he transfers his house, and assets (assuming he has any equity or assets) into someone he trusts name.

     He should probably learn how to use birth control so he doesn't find himself in the same situation again though.

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