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Guess Who Is Propping Up The US Housing Market
A month ago we showed a chart that, in our humble opinion, summarized all that is wrong with the US housing market. The chart in question showed the April breakdown of existing home sales on a Y/Y basis by pricing bucket.
Needless to say, what the chart showed was the symptomatic, and schizophrenic, breakdown of US housing into two camps: the housing market for the 1%, those costing $750K and above, where the bulk of transactions are mostly between non-first time buyers, and typically take place as all cash transactions, and the market for "everyone else" which continues to deteriorate.
Moments ago the NAR released its May data, which on first blush was widely lauded as bullish: the topline print came at a 4.9% increase, rising from 4.65MM to 4.89MM, above the 4.74MM expected. Great news... if only on the surface. So what happens when one drills down into the detail? As usual, we focused on the last slide of the NAR breakdown, located at the very end of the supplementary pdf for good reason, because what it shows is hardly as bullish.
So how does this "housing recovery" in which the NAR has proclaimed the "sales decline is over" look on a granular basis.
The answer is below, and it is even worse than the April data. It also explains why first time buyers have dropped to even further cycle lows of just 27%, down from 29% both a month and year ago.
This is bad because while in April there was a modest increase sales in house buckets from $250 all the way up to $1MM +, in May the only bucket that had an increase in sales from a year ago was that exclusively reserve for the ultra-richest, i.e., those who benefit the most from the Fed's non-trickle downing wealth effect policies. In fact, on a price bucket basis, the May data was unformly worse than April!
The logical follow up question: what is the total percentage of sales by given price bucket? The answer, once again, below.
Housing recovery? Maybe for the richest, and even they are far less exuberant about purchasing $1MM+ mansions. For everyone else, enjoy "plunging" hedonically-adjusted LCD TV prices. Everything else is, well, noise.
Source: NAR
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What's the standard security on those multi-million USD houses anyway? Are the buyers ultra-paranoid or completely clueless?
Pretty clueless. Most are in gated communities but the rent a cop security
is a joke.
I had a doctor client once that lived in a cookie cutter house ,inside a development of similar
houses..
He had 4 Monet's on his wall with no security.
The security is that most house burglars will leave those on the wall believeing them to be replicas.
Besides if they were stupid enough to take them and try to sell them then the paintings would surface...and the burglars would be caught...
(Pssst...I have got the Mona Lisa for sale. Wanna buy it? Or...BUST ME AS A BURGLAR OF THE LOURVE.)
He just needs to make sure that his Gold is in a place that is in the open and unrecognizable as Gold. Hint...Black paint and pails of Oil in the garage work wonders.
Been in the market to purchase after one year of renting, in the Chicago Northwest suburbs. Homes/townhomes are up 40 to 50 k for homes that last year were in the 120 to to 160 area. Watching them being snapped up within 2 weeks of listing. In some cases with multiple bids over asking price. I have lost 2 bids this way. What is going on? I am not seeing what many posters are experiencing concerning any downturn in the market.
It has simply become impossible for a family in the DC area not making $150+k to own a home in a nice area with good schools. Make anything less than that and it's a townhouse in an illegal alien/section 8 infested hood for you. Even SFH in an illegal alien infested town are almost out of reach for anyone not making $100k plus. Curiously enough one of the few enclaves of RE that has not risen a dime in the past year is the townhouse development where I sold my TH a year ago and broke even after 5 years of being underwater. That hood in manassas park is probably the single biggest black hole of RE known to man due to illegal aliens and section 8 losers. I love my job but I have come to the conclusion that there is no way that we can continue to live in NoVa when everything but my salary continues to rise exponentially. I can move to NC or Texas and make half of what I make here and still be far better off from a housing perspective.
DON'T GO TO N.C. ...ULTIMATE HI-TAX, LOW-WAGE SHITHOLE (WITH ITS HEAD UP ITS ASS); TEXAS FAR BETTER. NEW MEXICO HAS A $20 BILLION O&G SOVEREIGN WEALTH FUND THE CONSERVATIVES PLAN TO USE A PART TO CUT ALL THEIR INCOME TAXES TO ZERO. AND THEY CAN DO IT.
http://www.santafenewmexican.com/news/local_news/state-permanent-funds-s...
NM also has private LLCs, to funnel money through and, you don't have to be a resident to open one. I wouldn't actually live there; would be afraid of being gunned down by the PoPo.
I would like to study up on this. Where to look/begin..?
and high income people in SF can move to areas around Reno and use their former State Tax grab to support a house payment. and people can move to WA State and drink good water instead of the recycled sewer water that is going to be provided in Cali.
We moved from Reston to a small college town in the Shenandoah Valley. Paid $200,000 for a home that would be $750,000 plus in and around the beltway. Four bedrooms, finished basement, two-car garage, hardwood flooring throughout, family room, mud room, foyer as big as a bedroom, fireplace. Built on one half acre. Built in 1962 by people who cared what they were doing. You can breathe the air here and drink the water. Virtually no crime here. In DC you typically could not jog between three and seven because of the air pollution from the cars and the drinking water came from the Potomac River. Crime in Reston was starting to go through the roof when we left. Would not go back.
Whoda thunk it !
immigrants? rental markets for communal living arrangements? 12 people per bedroom?
Just walked back from speaking with property manager of my HOA about getting another copy of master deed because I forgot which neighbor I lent mine to. Property values came up and she said, "they(condos) are selling it's just all foreigners. "Did you see all of them at the pool Saturday?" One of the maintainance guys said, "All them scarves is gonna stop that dang pump up man."
how can total sales be up 4.9% when only one bucket is positive, and at only 4.0%?
I think the 4.9% sales increase is month-over-month, while the "buckets" are year-over-year.
gracias
You get a chance to buy about once a decade. Nothing pays like patience. I DO NOT subscribe to the advice tha tsince you are going to live in it, it is OK whatever the prcies happen to be. Again, nothing pays like patience, but that also requires critical, independent thinking which is discouraged and mocked at all levels of education system.
The teachers are clueless idiots, too. I know one who panicked to buy last year right at the top on the chart. They wouldn't listen to reason. The realtor conned them perfectly with the old 'buy now before rates rise'. Saving a few bucks a month meant more to them than saving thousands on the purchase price!
Move along, nothing to see.
All around me the *huge* ranches have been bought up by well known multinationals converting their obamabux into assets... slave holding assets. FRB is just another weapon.
Don’t forget that “cash buyers” use something other than the object as collateral -- usually securities based loans, which are subject to margin calls.
Friend of mine works for Fannie Mae. Between fees and down payments, you need about 20% up front for an FHA loan right now.
FHA loans require 3.5% down (10% if your FICO is really crappy) and associated fees can be rolled into the loan.
"With an FHA loan, lenders will allow you to spend up to 41 percent of your pretax income on debt. Some lenders will stretch that to 43 percent for borrowers with an excellent payment history. (Use your own discretion on whether you should stretch your budget to spend that much of your pay on debt payments.)"
http://www.newsday.com/classifieds/real-estate/how-to-tell-when-an-fha-l...
urprisingly poor credit. The government allows lenders to establish their own minimum credit score to qualify for an FHA loan, and it's usually quite low, typically between 580 and 620. (Anything below 620 is considered a subprime score.)
Borrowers with credit scores between 500 and 580 may qualify if they meet other underwriting standards, but they must make a larger down payment. Borrowers with credit scores under 500 are not eligible for FHA financing.
http://www.newsday.com/classifieds/real-estate/how-to-tell-when-an-fha-l...
Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. An FHA down payment of 3.5 percent is required. Borrowers who cannot afford a traditional down payment of 20 percent or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.
http://www.zillow.com/mortgage-rates/finding-the-right-loan/fha-loan/
1) "Owning" property in the US, for any length of time, is "at your own risk" now.
2) People don't "own" shit. The BANK does.
3) Unless you know how and are proficient at flipping a house to make money/can DIY fix up a house, it is a losing proposition.
4) I intend to "own" NO real estate of any kind in the US.
5) Thus, credit "scores" (made up and promoted by the same banks that - if held to the same standard, would score hideously low) MEAN SHIT TO ME.
(Talk about fucking rich, these cunt banks have the motherfucking gall.....)
6) NO credit cards. Pay cash. NO current debt. Vehicle paid. LAUGH at credit offers. PURPOSELY keep my credit score shitty TO not get offers. Still get them.
Self-insured. NOT on any gubbermint dole/EBT/whatthefuckever....
Shop local. Pay AS LITTLE TAX AS YOU CAN - BUT PAY THEM.
Credit Unions vs. TBTF banks. BE self-sufficient. Have a plan.
FUCK Uncle Sugar.
I agree, but edaguy is being dishonest saying that one has to come up with 20% for an FHA loan. He seems to be implying that standards are stringent, which they are not.
I have been helping my son buy his first house. The thing that seems to have hugely changed from the last time I bought a house is the parasite factor. The transaction parasites are now taking about 3X on a similarly priced transaction compared to what they were taking when interest rates were in the 5% to 8% range.
Transaction parasites are all of those people who add ZERO value to a transaction but are required by the crony banking and taxing bodies, including: bank fees, credit checks, title fees, insurance of a variety of kinds, lawyers, recording and transfer fees etc.
This may be a clue as to why there are fewer transactions. Agents still get their cut, but now piled on top of it are disproportionate fees to transaction parasites... which in the past were almost trivial.
I'm selling my L.A.-area suburb place. Don't want to put too many FRNs into it in order to get a "better" price, just want to GTFO of the market, yesterday.
I've given up on warning loved ones, who believe prices "will only ever go up." Stupid fucks DO NOT GET that their "appraised equity" = dogshit when wages are falling and unemployment is rising (to say nothing of shadow inventory). Who's going to buy their stucco and 2x4-built "palace"..?
As someone else here on ZH recently posted, I will never own another house again.
.
If you want to keep your $1 million crib and $20k / year property tax, you can keep your $1 million crib and $20k / year property tax.
i build a new cabin
every 20 years
if i need it or not ...
I do not know how they calculate their numbers but I can tell you that the major markets in Texas; Dallas, Houston, Austin are doing extremely well! Buyers in these markets are making above market offers and good listings are selling on day one with multiple offers. I joined ZH early in its beginning and love the site. People need to keep in perspective that there is not doom and gloom every where. There is actually a lot of prosperity being created right now. Now, do we eventually get to that point of a system failure? Maybe and probably so. But don't go broke waiting for that to happen. Just know when to get off of the train. There will always be a train to get on, hopefully you choose the right train. The world is not going to end and blow up. Unless God chooses, which he maybe choosing. But it won't end because of some dumb ass politician. It may very well change the world, but it won't end. There was life after Rome. I believe that the ZH audience is not much different than most audiences and that some will prosper and many will fail. I hope you prosper!
the immigrant children from central america cross the rio grande one day and pony up a suitcase of money for a downpayment the next. then they invite the whole family to live. six of em per thousand square feet, they run a landscaping business by day, and do restaurant prep work all night. then they send whatever money is left at the end of the month home, so more of them can make the trip. i think their plan is going to work out.
Thank You, Engineer Bob. On behalf of my fellow ZHers, I say to you;
I will not hesitate to fart in your presence should we ever meet.
I think I speak for the group on that.....
Tell God........next time you talk to him, to SHOW THE FUCK UP WITH ABOUT 2,000 OR SO LIGHTNING BOLTS, WOULD YA?
Texas should split from the rest of the country. Nice to know the "JR's" are prospering. Well, some are. If those cities are the "Lone Stars" of the state, then good for you.
I just BET you aren't looking to expand in oh.....say....EL PASO or LAREDO....eh hombre? I think not.
The "80/20" rule eh? How............piggy-backish of you.
Careful about including all ZHers.
Various cities and states are doing just great and have not participated in the angst that those others have.
This country is too big to have general statements made about it.
South Carolina was right back in 1860 and should have been permitted to leave the union, as well as the others who wanted to.
That motherfucker Lincoln, and his accomplice Davis, ruined the one chance we had and were willing to die for, to stop the One Worlders from taking over everything.
By now, we would not be talking about a Central Bank for the U.S., the FED would be some sociopaths' wet dreams, and a flourishing, competitive economy would be providing jobs for anyone who wants to work.
Anything is better than the likes of Mississippi made a Welfare State, contributing nothing but CO2 into the air.
Perhaps one dumb ass politician won't end the world, but 535 of them are working hard on it.
Perhaps one dumb ass politician won't end the world, but thousands of them worldwide are working hard on it.
FIFY
World War III. Coming to a theater near you where it will be Audience Participation Night, where no "Special Effects" are needed because Reality prevails and the blood and carnage will fill the theater.
Get your tickets...get your tickets...the price is right...get your tickets.
The central bank machine just keeps on chuggin'. Some months will be up and others down in the RE numbers, but nothing is going to collapse as long as the machine is cranking out dollars. But when geoploitical events put oil on a moon rocket, you are going to see all that suburban property turn to dogshit, and the big city stuff soar.
Long Detroit RE?
It's foolish to make these kind of predictions when you don't need to do so. Oil is likely more subject to ultimate oligarchic control than any other commodity in the world.
Temporary rises in price are immediatlely brought down by whatever forces there are including the most important one: as the pump price approaches 5.00 FRNs, the volume drops in concert. The people speak loudly, no matter that they are forced to. They can not afford 5.00 gas. It's almost as certain as you can be about anything in this world. Without some violent muslim ragheads somehow owning the main sources in the middle east, turning off the spigot, it ain't happening.
I'm certainly not going to buy a city property anticipating your dogshit collapse.
Natty dreadlocks?
Nar: sell my two myrtle beach ocean front properties at 2013 market value cost or take your magic wand and insert it into your asshole. Blows a kiss.
Thanks all for posting your experience in the various markets around the country. It's been illiuminating to see them in some enclaves I thought might be a possibility for a potential upcoming relo.
This is one thread I'm going to print- to- file.
What it tells is how disparate this country is. There is no "there" there when it comes to statements like the "U.S. housing market is ......(this or that)".
Regions, states, and even breakdowns by city are far more indicative of what's happening and from the looks of it, those who are critical of posters whose experience is very positive (or negative) need to chill out. This is valuable information from 'the street' and not some hidebound lobby like the NAR with their propaganda.
If we could burn propaganda no one in this country we'd never be short of energy.
People are animals.
Treat them accordingly.
Housing market failing where indexes reach all time highs.
http://bullandbearmash.com/chart/philly-housing-daily-barely-moves-marke...
There was never a housing recovery - still well below 2006.
That May $1 Million print is just Barry Rosenstein. It's not even a story of the 1%ers, its really the 0.01%ers.