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Don't Show The Exuberant Homebuilders These 2 Charts
NAHB homebuilder sentiment rose to 58 in November, from 54 in Oct, beating expectations but remains below the 59 cycle highs in September. Since those highs, Prospective Buyer Traffic is down the most but remains near cycle highs. The Northeast saw a huge spike in Prospective Buyer Traffic (from 39 to 51) and The West bounced back from its plunge in October.
So if everything's so awesome, what's wrong with these two charts...
It appears we have nothing to fear but the total and utter collapse of hope over harsh reality
Charts: Bloomberg
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Bullish.
banks aren't loaning and the old days of no money down are long gone.......gl trying to fight this next tsunami coming
You don't come here often, do you? I post that comment quite often.
Can I buy the sentiment all time high?
Some banks have tightened but the mortgage lenders associated with new house builders are still handing out very lax loans from what I see. They’ll “structure” your loan so you pay almost zero money down, somehow wrapping up all the fees and down payments, etc into the loan. Also, very loose “job verification” methods. For example:
“Do you have a job?”
“Yes.”
“That’s good enough for me…. Congratulations … You’ve got the loan!”
That’s why we’re seeing lots of “For Sale” signs in fairly new neighborhoods with houses only 1-2 years old. That's what I'm seeing, anyway. That's also why we're seeing a soaring foreclosure rate on fairly new houses in many areas. I do see bankers foreclosing at a much faster rate then in the past 7-8 years...almost like old times.
No worries, Fannie and Freddie will be riding over the hill to the rescue just slightly ahead of the four horsemen.....
No money down is back, at least in my neck o the woods
Bullardish!
housing prices are out of control, unless of course everyone in america gets a 100% raise
Reality makes my head hurt.
Just drink in those new highs on the DOW. The numbers on the DOW say things have never been better. The economy is at it's best in history. That MUST be reality, right?
Somehow, this all time best does not seem to making it's way to my paycheck but I am sure it will show up any day now and I can jump into that hot hot house market.
I'm going with median closet size, and secondarily ceiling height being key drivers of hedonic adjustments and pent up demand. Our 60's house back in Dallas with the small closets and 8ft ceilings contained happier people when built, probably, because they didn't have so much stuff nor aspirations for more stuff. Our new McMansion out in the sunny peoples' republic of California is another matter, with closets and storage so voluminous we'll have to work well into our 90's to cram full. Particularly with the miniaturizAtion trend, and digitization of books. What are we gonna buy to fill up the extra space. Thank gods for costco.
Interesting comment.
Interest only no doc ARM balloon payments and problem solved. Repeat afyer me. Theres never been a better time to buy a house and stocks
does anyone actually still believe that these numbers are real and not some input requested by the algo owners? it's nonsensical to discuss any of these data points anymore, they will be what the algo owners want. when they are not, they will be ignored and massaged into our reams by the media and spun as positive or one-time in nature.
don't be fooled by the hype
new home sales still cratered
and that doesn't take into account any games played by homebuilders to get sale (free granite countertops, solid wood floors, upgrade to stainless steel appliances)
http://research.stlouisfed.org/fred2/series/HSN1F
The pure data is still publicly available. Especially at the regional market level where sales are very closely tracked by the local associations and MLS systems. It is a bit harder to track national numbers from NAR because they are heavily "algo'd" to make the data do what they want. Remember that Zillow and Trulia do the same damn thing as the NAR! They twist their results beyond recognition to give you a "buy" signal. Always look for the pure data to compare (it takes work but it is worth it).
Mortgage applications are down. That means the traditional US home owner market has not really recovered. We are living on investment dollars coming here from other asset groups and other parts of the world (it is better to own a 3 bedroom house in Peoria than a condo in one of the Chinese "ghost cities"). Watch the Case Shiller research in the 10 and 20 city average, as well as your market if it is available. Watch what is happening with rents in your local, regional, and national level (that tells you allot about inflation). Follow your local markets, question everything, don't buy real estate unless it makes economic sense.
Agree with you on question everything, however many don't have a clue as to what to ask. Mortgages, let alone amortized interest, can be on par with particle physics for most borrowers.
Looking at the big picture.. wages are down, cost of living is up, foreclosures/derogatory items are dropping off credit reports, credit scores are up, average income earners are waking up to the downside of debt, bruised egos are healing up, rates are down, housing prices are up, government loans are affordable (short-term) and readily available, while lending standards remain ridiculous and tough (if anyone doesn't agree on this point, please show us why). Top that all off with cash and bitcoin purchases and we've got ourself a very special new kind of psychosocial rollercoaster coming up for the residential lending industry.. estimates be damned.
http://www.housingwire.com/articles/31026-lake-tahoe-real-estate-deal-br...
I wish they taught economcs and financing in grade school (any economics except Kenyes that is...). It takes an ignorant populace to allow the banksters to screw up things this bad!
Life and its finances are business and areas worth learning up on. Re: the second part.. there are many sides as parties to that one.
either sentiment catches down to sales
or
sales catches up to sentiment
i know which one i'm going with ...
man the bullshit is suffocating.....
And to think these homebuilders are constructing dwellings with fuel systems that will be obsolete in a generation or so.
Naw. How could we ever run out of debt? Inconceivable.
Just in time for winter to roll in and ruin everything. Life was good until that damn snow in winter......
I was part of the prospective home buyer traffic, mostly because I like when attractive women lie to me and call me all the time......but no really I wanted to see what was out there.
I am blown away that in most metropolitan areas, not all mind, a 3 bedroom 2 bath house with a yard will run you at least $200k, houses that probably 15-20 yrs ago would have been around $65k.
SO yeah a lot of people are looking, but people are stupid enough to buy. Well expect for the few in my neighborhood where I currently rent, you know, those foreclosures that are up right now and the houses are selling foreclosed still for $500k
Welcome to reality. Lubes to the left and leave your pants at the door.
I was drivng on "the good side" of State U town recently and saw that McMansion devlopments are back in full swing.
Sorta makes me wonder how Talega, CA is doing.. they were all in McMansion (for bust) during the last go-round..
You can now buy a formely 600K house for 400K in my area. If you talk to a realtor, they tell you that the market is back near where it was. Painful...as both are way too high for what people earn in the area.
Look, all you need to know is that there has NEVER been a better time to buy a house.
You're missing the >sarc< tag, I would assume?
lots of m/f activity in SoFla, but few sales except at the lowest end. $200k plus s/f new seeing little traffic; mortgage personnel at major banks are going, going........
Real Estate is not like the stock market. Speculators expect to escape the downdraft in stocks and live to speculate another day. Not so when it comes to condos, co-ops, and townhomes.
There are 2 co-op apartments up for sale in my brother's building in Manhattan's west side. Neither one sold last month and the asking price has been reduced 5% for this month.
the vacation/second home market i follow the year over year inventory of homes is +17%
this will not end well
Despite years of watching this charade, I still continue to be amazed at the amount of energy the market puts into tracking "exuberence" indexes. My cynical side considers this a complete waste of time, because how the average people reacts to a poll question about how good they "feel", often has no relevance at all to WHAT is actually going on in the economy. Bad polls frequently trail the actual downturn by a wide margin, and "good" polls are often nothing more than people trying hard to stay positive in the face of adversity.
My more rational side, tends to cut people a bit of slack, because 'hope' that life will get better is what keeps most of us going.....but trying to hype this desperate 'hope" as a meaningful indication that the economy/housing/whatever is "getting better" remains the 2nd height of idiocy....(the absolute height of idiocy are the people who actually consider these polls to be meaningful with regard to policy and planning).
The Arsewhole builders collude to RIG THE SURVEY, simple US0fCorruption, like everything else. Like "forward operating earnings" LEGAL FRAUD !
this survey is useless
rife with "survivor's" bias
only a fraction of homebuilders are still around from recession ... and so what if they are somewhat bullish ... sales are still waayyy down
Banks are playing stocks and making way too much profits off of Federal Reserve intervention. Why do anything tough and risky like loaning money?
Make way more trading stocks and cooking the bank books.
Fuck the NAHB and NAR until the shit show stops! That would require an ethical action on their part to fight the Fed and feral Federal government.
Sent-i-mental case.
I'm as bearish as the next guy, but come on. Correlating a percentage index with a unit and trying to draw a conclusion from their divergence? Home sales increased almost 100% between '11 and '14. Of course more builders are optimistic than before. And mortgage apps going down? How about you clean up your data and remove the re-fi transactions (the cause of the boom between '11 and '13). While correlation doesn't equal causation, this is a whole different level of misleading. I expect better from ZH.
Fact is all the new homes in my area are 400k minimum which means property taxes are 10k each year. The wages aren't there to support it. Either prices drop to 250k or sales will collapse. That's a real disconnect nobody can deny
The real deal about RE (and all anyone needs to know) is this:
The RE market cannot handle anything much north of 4%.
Period. Full stop. End of story.
All markets (including RE) are based on the margins.
This market is propped up by one thing and one thing only:
Biblically low interest rates.
When and if that changes....even the Feds printing presses won't be able to save you.
And prices will (finally) reflect reality.
When and if that time comes.....Look out below!!!!!!!!!!!
Was having a morning coffee bullshit session with a colleague. Said one of our client's who has a business and has commercially banked with the royal bank for over 8 years declined his small expansion loan. The business has done well, his credit is stellar - but this had nothing to do with it. They wouldn't even consider doing the deal under the small business loans act (SBLA). They recommended that he go to the BDC. And herein lies our niche market. But, thats not the point I'm trying to make.
The point is that were he to provide his house as collateral (2nd mortgage or an extended LOC), then they could dance, if and only if there was enough free and unencumbered equity. Otherwise, not interested. My impression is that Schedule A banks are simply not equipped, nor are they interested in ascertaining risk beyond mortgage risk. They want to do as little as possible and collect fees - thats it. Forget about the welfare of the client - forget about serving as an integral element to helping others move from a less to a more desired state. Forget about becoming a valuable partner to this gentleman who has an opportunity, can demonstrate the opportunity with proven cash flow and stewardship of his existing business. What a fucking slap in the face. Nope. Not interested. In other words, banks have become blood sucking inconveniences - that force people to hold their money with them - that they (the people) think there are no alternatives. This is all they do.
In other instances, rather than establish a commercial loan against the business, Schedule A's will force the client to take on the business loan as a personal loan because - guess what - its tied to his house. What a terrible piece of business advice and counsel. We see shit like this every day. It is good for us, I suppose. But we can't be all things to all people as we are a small organization with limited resources. I find it frustrating watching good strong businesses be put through a bureaucracy not unlike the government, just to hear ....NO, can't help you.
But, we will work with him. We will help him succeed. And when he succeeds, we will succeed. Its a simple formula really - Luke 6:31 - yet so powerful and rich with its own prosperity. I learn new dimensions to it everyday. We live and breath it like most entrepreneurs. Schedule A's and government, it seems to me, couldn't care less.
Similar in the US.... Many banks don't want to touch small business unless they already have enough cash/collateral (in which case they didn't need the load). Depends on locality, type of business, and age of the business of course....but often small businesses have trouble.
I don't post much but sorry but this actually looks more like early positioning for a housing recovery. I don't know about you guys but here in NYC, business sentiment is getting better and our business is actually understaffed relative to expansion over the last 5 years. During social meetings many including myself are looking to buy real estate but there is not enough supply hence the low mortgage applications. The prices are pretty high but people are still buying what they can because they desperately need housing. While there will be slowing growth periods and even contractions, everyone here agrees that the housing demand is very strong compared to supply. There is also not enough land to build on which can explain the low build numbers. *shrugs* :)
Thats because the fed stole 4 trillion from the rest of the country and sent it to NYC
I suspect you are in, or related to, the 'financialization' industry---the industry that destroyed America...???
I have owned an apartment complex in the Midwest for many years and we are currently experiencing the largest number of vacancies we have ever had. Many houses in my area are empty or under leased. In 2005 and 2006 prior to the housing collapse many people were looking at second homes, today not only have they shed the extra home many have doubled up with family or friends reducing the need for housing.
I have been busy trying to make sense of the current economy, this is not an easy job. We are pushing on a string and calling it demand when someone who can barely pay the rent is encouraged by the government to buy a house they can neither afford or maintain. We have a shortage of "qualified" buyers and renters. More on this subject in the article below.
http://brucewilds.blogspot.com/2013/12/super-low-interest-rates-disservi...
Please note, I understand some areas are doing much better not averaging things together housing is about done. Many of the new units being built are rental units using cheap Wall Street money looking for a day when inflation kicks!
AdvancingTimeFri, 10/03/2014 - 19:10 | 5286872
I have owned an apartment complex in the Midwest for many years and we are currentl
AdvancingTime
Thu, 09/18/2014 - 09:18 | 5229586I have owned an apartment complex in the Midwest for many years and we are
AdvancingTimeFri, 10/17/2014 - 10:52 | 5346583
I have owned an apartment complex in the Midwest for many years and we are currently
In fact: http://www.zerohedge.com/search/apachesolr_search/%22I%20have%20owned%20an%20apartment%22 17repeats
SPAM https://www.youtube.com/watch?feature=player_detailpage&v=g8huXkSaL7o#t=63
The NAHB are no more than cheer leaders for the status quo. Why is anyone questioning their exuberance?
The real cheerleaders are over at the National Association of Realtors.
With mortgage applications hovering around all time lows and the majority of "sales" being just investors sloshing properties back and forth, they'll lie right to your face and tell you the sun is shining and the birds are singing.
As a mortgage underwriter for King Kong Bank, if the house is available for sale, we can get you a no money down loan if your disadvantaged or a person of African decent. NACA, USDA Loans, Community Bond Programs insured by Obama and friends are here to help us not discriminate.
Now, if You have the 3% down and are not a Platinum/Gold customer, and can afford the closing costs, I am going to ask for DNA, Follicle samples, cat scan, colonostaphy, family tree info, and sex with your wife if you want to try and get my approval.
I am sure the same builders who have a line of credit with us go through the same process every month, however theirs includes anal sex every month for themselves and their wives and mistresses if we can find any.