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Existing Home Sales Miss (Again); Weather & "Unsuitably High Price Levels" Blamed
Following January's disastrous dive in Existing Home Sales (which must be weather, right? Nope!) to a SAAR 4.82 million homes, February (with its even worse weather) saw a 4th month of missed expectations with a 4.88mm print against 4.90 mm expectations. As always, weather was blamed - which is odd given that the only drop in sales that occurred happened in The Northeast which accounts for just 12% of total transactions. Perhaps more worrisome is NAR's Larry Yun noting "unsuitable price levels" as a reason for weak sales due to low inventories (despite inventories rising 1.6% in February?!). May be it's time to blame The Fed... for not creating more rich people to buy more houses...
Another month, another miss...
As Home Prices remain higher YoY....
- *FEB. MEDIAN HOME PRICE RISES 7.5% FROM YEAR AGO TO $202,600
Northeast sales fells 6.5% MoM, The West rose 5.7% MoM with the The Midwest flat and South up 1.9% MoM.
NAR's Larry Yun explains...
“Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country."
but adds...
although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”
..
“Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”
And begs The Fed to not raise rates...
“With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages,”
Charts: Bloomberg
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Look at the high end. Plenty of luxury buyers etc. Like I said, I see plenty of inflation in anything associated with maintaining a high standard of living. Welcome to the new fuedal age!
get long black markets and sharecropping, beat the rush!
But I just bought a cup of coffee @ Starbucks whose beans were 100% Negro-picked. So I support diversity! RaceTogether. And Eracism.
Of course prices are out of reach. What the hell do they expect when Blackrock can buy unlimited housing and price everyone out of the market? At least the CEO made 600 million last year. That seems right. This whole thing is sickening. NEWSFLASH: Home appreciation only helps speculators. The rest of us, who don't want to move, or sell, are stuck with higher tax bills and get no benefit from the "housing recovery".
Just wait until they start dumping their housing stock on the market due to slipping prices.
If they manage to raise interest rates, that will do it. Or if the laws of supply and demand somehow come back into vogue, and home prices reflect median wages, that will do it as well.
Or maybe not. Maybe banks and private equity will keep buying on free gov money, raising values and turning us all into renters. At least then I can burn the place down and not feel as bad about it.
Taxes, man. 35% on my earnings, 4% PER YEAR on my house, just take my blood you fuckers!!!
Yeah, and that $202K is just the median price. Look at the average and those big dollar homes would skew it even higher.
We would never get to this place if the fed allowed deflation.
In some markets nothing more than a crack shack is 500,000.
I am sorry but as single guy I would rathe sleep under an overpass.
20 to 50 thousand is more than reasonable for any pre 80's house.
The Federal Reserve has to pump this stock market to further at all costs.
The only thing that will bring free markets back is an absolute free-fall of the dollar and a currency crisis.
When the Fed loses control the free market returns.
real estate can't be fixed. keep pumping stocks. last move.
Dedollarization!! It's what's happening.
This has to be BULLISH for stawks! I see green shoots! Buy stawks! /sarc
FUNDAMENTALS ARE IRRELEVANT.
Inverse new relationship - "Doomier" ZH gets, trying to call breaking point, higher "markets" go.
News flash redux x88 - It's ALL rigged.
It'll eventually all crash again, but not for any suddenly "realized" reason related to (lack of) fundamentals.
Ok, that is pretty funny. Asking prices based on the "easy money, easy credit" years are yet to be purged from the system both privately owned and bank owned. It is a lot of inventory. But few seem to be coming to terms with this situation.
Suspended in time for now. Bring on an organized wave of "strategic defaults" and push all of this shit on to the balance sheets of the banks.
"Oh No Bluto!!" My FICO score will be impacted! No! that's is the same mentality you see from junkies when their dealer is swept off the streets.
Fucking credit addicts, tools.
Credit is a good thing when managed properly in both micro AND MACRO arenas. WE DON'T KNOW HOW TO DO THAT.
There's a lot of people left to inflate them out of their underwater mortgages.
We'll see
The nature of the credit Ponzi does not allow for sustainability. The only choice is between boom and bust.
I was speaking to a county official this morning.
Seems they've finally had enough of zombie houses sitting there racking up code violations.
They are going to foreclose on them for the unpaid fines and bring them back onto the market.
No more negotiaton of code fines. pay up in full or lose it.
You've got pensions going to investment bankers on interest rate swaps on one end, on the other end- there are no jobs that would support the houses and I doubt these tax dodging realtors taking out counterfeit subprime loans for tax breaks are thrilled with property taxes, city taxes, etc.
LA is creating artificial shortage of housing with guess what? Law suits. The law schools at USC, Pepperdine, Marymount Loyola and UCLA have finally served their purpose in keeping the shabby depreciating run down rat infested old houses "with character" NIMBYism alive (aka. money sheltor for investors who paid for the complexes "with cash" and rent only one icky unit out for a whopping $3100/studio in a crime infested dirtier area to finance the cost of the entire property with one tenant).
http://www.latimes.com/local/cityhall/la-me-0320-apartment-vacate-201503...
Because they're too stupid to use the Law Schools' access to lobbyists to get tax breaks on international investments because the money is global now.
What to do wack-a-doo.
Let's see, invest where the money is at? OR fuck people over because of a monopoly of power in the hands of a few? Which is easier?
There's this property that the city already approved of on Sunset and Gordon that has already been built "on an earthquake zone" and already half filled with tenants. Just NOW. After the tenants had been living there for some time, the La Mirada Ave. Neighborhood Association decided that they prefered that the grunt workers in entertainment traveling all the way up from Hollywood/SM to Burbank via 405 parking lot structure instead of the like others congested 101 North bound during rush hour which is a much shorter commute, since uh.... entertainment brings moolah into the city? The seedy "business owners" in glass offices with a view on permanent lease pay their $3000 taxbreaks for affirmative action quota for admins who might have a highschool diploma and require everyone else to speak Spanish for her; is going to prop up the rents at $3100/studio or a modest apartment in Compton with hedgerows.
So like, they just NOW decided to pull some eminent domain b.s. and nobody spoke about compensantion to move the tenants everywhere in a "housing shortage".
See, you don't need the banks to directly fuck up people's lives. This is why lawyers are such a heavy handed asset.
My county is not claiming eminent domain.They don't want these houses.
I've looked at a lot of these zombie house, its not at all unusual for fines
of $150k plus to be already liened on them, and the banks still don't rectify the
violations so they continue to rack up at $1-300 per diem.
Uptil now the banks could always negotiate them down by 90% so they didn't give a shit.
It also held up prices.This change of attitude by my county, is going to have a big impact of prices.
The cure for high prices is high prices. lol
..and the cure for debt destruction, is more debt. Future destruction date TBD.
We have to increase debt without increasing debt - the Krugman institution.
Why would a bank that has been re capped on the home by the bailout, dumped on the CB door step for another cash for trash infusion and still have the asset lower the price, what's the incentive? Free Markets my ass
Watching this whole thing has become beyond pathetic. "Let's lower rates to zero and keep them there to both make home prices more affordable on a monthly carry basis, while raising their prices at the same time"
The public cheers this BS on as they take on ever greater debt to afford all the things the government intervened in to help make "affordable" like college, housing and healthcare.
Good thing the gullible populace equates a monthly payment to affordability instead of the actual purchase price, otherwise there would be blood in the streets. Must have been thought of by an evil genius with a finance and marketing MBA from Harvard.
True there was government intervention but for the most part it was to backstop the bankster's irresponsible issuance of mortgages, student loans, auto loans, etc..
Private banksters are keeping rates low. Private banksters are issuing debt at a never before seen level. The government pawns just backstop this shit.
They *JUST* backstop it?
Without that backstop, it couldn't happen in the first place. This falls right at the feet of our fascist overlords.
Arson investigations still don’t outnumber exiting sales.
Good ole' Larry saying all manner of BS (see what a blessing have no crediblity left can bring one?), to cover up the exit of "investors" from the market.
Obama's program to fund bankster spin-offs, now branded Real Estate Investors, is winding down after gifting the rich guys billions more. Lots of the "investments" continue to sit empty, unless they have been filled with Obama gifted Section 8. My middle class neighborhood has been gifted with three of these families thus far. (Luckily, they actually seem like they want to join the neighborhood, not bring it down).
And the Fed Reserve is pretending to "wind down" their trillions in bad investments, so that cheap access is fading too.
Which means the 29 hour baristas and Wal-Mart employees better figure out how to make $1000 in payments a month on less than $1000 in bring home a month.
Yep, prosperity and housing rebound is surely right around the corner.
Or, the cover up of the intentional destruction of the middle class continues unabated. Nah, couldn't be that.
Rent: still climbing (giving tuition and medical care a run for their money).
When my property taxes keep skyrocketing the rent I charge has to follow. I'm not taking a loss due to irresponsible government tax and spending.
Near unsuitable levels? Somebody wake me up when we actually get to "unsuitable price levels".
how about Ludicrous price levels?
I know a couple of people trying to sell their houses right now. They bought between 2005 and 2011. All real estate is, of course, local. Here in Minneapolis, some areas didn't really fall much between 2008 and 2011. The double-digit annual increases stopped, but the prices didn't really get back to "reasonable" territory, as figured by what a house cost in 1996 or so and extrapolating forward by rates of inflation and income appreciation.
These people are getting tons of walk-throughs, because they are nice homes. Not the far-flung particle-board developments. But the prices being offered are far more in line with historical prices than bubblicious valuations. So people who have a $350,000 mortgage and perhaps $50,000 equity are being presented with offers of perhaps $250,000. These people can't sell at a $50,000 loss. They need to get $400,000 minimum, and that ain't gonna happen. They need to get clear of the old mortgage, pay off a car or two, and put something down on a new place to live. Ain't. Gonna. Happen.
Sure, on the super-deluxe end houses are selling. Those are people with equity and price flexibility, selling to other people who have the money to spend. The low-end of the market is screwed because the wages earned by first-time homebuyers have declined in real terms since 2000. They're the ones who aren't getting approved for mortgages, and are choosing to rent rather than buy because they know these 1-bedroom crackerboxes that sold for $50,000 in 1996 are in no way worth the $175,000 they're being offered at by the people who bought them in 2009 for $140,000. Yes, I'm talking about my first house. I'm the guy who sold it in 2009 for nearly 3x what I paid for it 13 years prior, to a guy who thought he was going to flip it (In 2009??!!!??). So I put 50% down on my next house, and almost no matter what the RE market does here, I'll be more or less OK.
A thing is worth only as much as someone will pay for it. That's one of the first truisms of market economics, isn't it? I don't remember anything about market price being set by how much one needs to come up with.
So there's another wave of foreclosures and/or bankruptcies coming, because the people I know trying to sell their homes are doing it because they won't be able to make the payments for long.
Thanks for your "local" comments. Always good to hear actual goings on in other places.
True it is local, but the Fed's interventions have raised house prices everywhere.
" thing is worth only as much as someone will pay for it"
for RE - it is either worth some present value of the cash flow stream it generates (absent P/E bubbles)
or ----
the present value of the buyer's income NET - plus or minus the prevailing financing norms for leverage
the more local income - the more the property is worth in a given area
for ART you may be right
NAR now tracking tv sales because the box of any 50" or greater will be considered a newly livable, chic hut.
.
Here in the Atlanta, North Atlanta area, houses are selling quickly. These are existing 2000sq-ft homes in the $150k to $220k range. Most homes get contracts within 2 weeks of listing. Selling like hot-cakes!
This is all existing home sales, not new homes. The new home market seems to be less brisk.
LOWER HOUSING STARTS ALWAYS BLAMED ON WEATHER, OBAMA CONSIDERS BANNING THE WINTER
The White House wants to impose sanctions on Winter, to discourage it from affecting key economic indicators in the US.
Source: www.financialpaparazzi.com
Banks are not foreclosing on homes.
This maintains the price and demand illusion.
Maintains the bubble in RE.
This is calles Stealth Austerity.
"Unsuitably High Price Levels"
The boomers in California are stuck on that acid trip that started many moons ago- way in 1969 during the Summer of Love? They still have yet to sober up and figure out the obvious before they choose not to flip property with counterfeit subprime backed teaser rate loans backed by the mere illusion of government bonds.
Can you see government bonds after a few drops of liquid blue?
"Following January's disastrous dive in Existing Home Sales..."
Correction: "Following January's disastrous dive in ASSUMPTIONS ABOUT Existing Home Sales..."
There, fixed. ASSumptions (make) = ASS (of) + U + ME