American Home Sale Failures Suddenly Double In Q4 2016 - Signed, Sealed, No Deal

Tyler Durden's picture

A stunning new analysis from Trulia suggests that rising interest rates in 4Q 2016 may actually be having the desired effect of cooling home sales, despite the best efforts of Obama to keep the party rolling at the expense of American taxpayers.  Looking at homes that go from "pending" status back to "for sale", Trulia found that the number of home "sale failures" spiked in Q4 2016, to nearly nearly double the 2015 rate, with "starter homes" being most at risk.  

Nationally, sales have been failing at an increasing rate, rising to 4.3% in Q4 2016 from 1.4% of all listed properties during Q4 2014. On an annual basis, the failure rate has nearly doubled to 3.9% in 2016, up from 2.1% in 2015.

 

New homes and very old homes are least likely to see deals fail. As of Q4 2016, homes built in 2016 have among the lowest proportion of failed sales at 2.6%. That proportion increases steadily as age increases to an average of 5.2% in homes built from 1959 through 1969, then falls steadily to an average of 3.5% for homes built from 1900 through 1920.

 

Of all listings in the largest 100 metros, 7.1% of starter home listings failed in the most recent quarter, compared with 6.7% of trade-up homes and 3.8% of premium homes. For all of 2016, the failure rate was 6.3% for both starter and trade-up homes and 3.6% for premium homes.

 

During the last two years, the places with the most failed sales are predominantly in the West with Las Vegas leading the pack at 7.6% of all unique listings reverting back to “for sale” at least once.

 

During the most recent quarter, Tucson, Ariz., saw the highest rate of failed deals with 13.9% of all unique listings retrogressing. For all of 2016, Ventura County, Calif., had the highest fail rate at 11.6%, up from 3.1% in 2015.

 

Considering both the last two years and just the most recent quarter, Madison, Wis., has had the fewest listings fall back to a “for sale” status at 0.1% of all listings.

Not surprisingly, per Bloomberg, the highest rates of failure occurred in the subprime mecca of the American Southwest.

Mortgages

 

Meanwhile, starter homes performed the worst...

Mortgages

 

And while any number of things can cause a home sale to fall through, including lower than expected appraisals and bad home inspections, we suspect that rising mortgage rates are more likely the cause of the sudden surge in "failed sales" rather than a national outbreak of termites.  With Americans managing their monthly budgets down to the last penny, because you can "afford it" as long as you can cover the monthly payment, we suspect the 60bps rise in the average 30-year fixed mortgage rate during 4Q was just more than the fragile American budgets could bear.

Mortgages

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LetThemEatRand's picture

It's never been a better time to [try but fail to] buy a new home!

Life of Illusion's picture

rising mortgage rates

my ass, its the FED buying massive MBS (and QE) reinflating housing to levels no one can afford


yogibear's picture

That's right. Academic minions at the Federal Reserve are to blame.

847328_3527's picture

Increasing mortgage rates and sale failures somehow has to be twisted by cnn and npr to be raycist.

Alternatively, Russian agents are behind this failure of the housing bubble to keep inflating.

Stan522's picture

Hope this doesn't affect my plans to sell my home in kalifornia and move my family out of Lib land and into a state that appreciates my conservative values...

NoDebt's picture

Idaho?  The pickins' are getting pretty thin.

 

 

ebworthen's picture

Oh shit...2007-2008 redux?

Can't be...the FED...the Wall Street...oh wait...

NoDebt's picture

When 50 bps difference in your motgage blows everything up you know you're fucked but good.

As a side note, nothing would please me more than to see RE just fall right the fuck outta bed.  Absolute washout.  This is where it all started, this is where it will all eventually end.  

allamerican's picture

might have little more time sell cali.  fish heads going need postpone narrative reflation trade watching the 30yr ust yields pressing lower here......

847328_3527's picture

The RE correction is coming and coming hard. The energy disaster created by you know who has crushed Houston and other energy cities. The housing collpase in Houston where my cousin lives is in slow motion with commerical tenants failing to renew their leases despite a huge 30-40% reduction in rent. Houses For Sale are sky rocketing esp along the energy corridore (I-10) and in the Woodlands where they are getting creamed.

The entire Exxon village is still on hold and they halted relocating execs to the Hosuton area. Energy companies have not only a hiring freeze but also a pay freeze.

But the housing collapse and deep recession we are in is well known to anyone here who listened to Obama's farewell speech yesterday when he apologized for the entire failure of his 8 years, and the media and celebrities there bashed him relentlessly. You know how harsh these media people can be on poor Soweeto.

 

lol

Orly's picture

Not to mention the rentier class out in Pearland, Katy and Copperfield.

My new neighbour is paying $1300 rent for a three-bedroom ranch, reportedly at a steep discount because he is going to fix up the place.

Meanwhile, the neighbour on the corner has been diagnosed with kidney failure secondary to radiation treatments.  Good thing he and his young wife are paying "only" $1800/month in rent for their house.

Three years ago, they could have bought the place and paid less than a thousand in mortgage.  It is happening everywhere I look around here. The Energy Corridor has certainly put somewhat of a floor under house prices in the area, which is good.  What is bad is the rents are unsustainable and will eventually lead to empty houses, forced sales and declining neighbourhood standards.

The next three years is going to be insane.  Not at all pretty.

Buckle up.

:D

TGF Texas's picture

Houston at the end of day added 22,000 jobs last year. Energy is down, but H-town has become diversified enough to absorb downturn's in energy. Housing prices have stabilized, and started to return to normal from the highs of the energy boom. Commercial real estate is down, with vacancy rates in the teens, but that was expected after several years not being able to throw a rock in this town without hitting a tower crane. Industrial vacancy is at 6%, which is up from 2% during the boom, but is still one of the best rates in the USA. 

GraveDancer's picture

The Economic deleveraging of the western world is picking up speed. It wont be Bitcoin; it will have to be a new currency. Not a cryptocurrency but something which is tuned to the real world supply-demand dynamics.

Book> The Road to World War III: Can the Dark forces of anti-Freedom trump Humanity?


Kindle>https://www.amazon.com/Road-World-War-III-anti-Freedom-ebook/dp/B01MT31AXZ/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1483002008&sr=1-1&keywords=Road+to+world+war+iii

CaptainObvious's picture

I've had it with these motherfucking book pimps on this motherfucking plane!

GraveDancer's picture

You look like a potential customer. Welcome aboard! :)

Lore's picture

Re: "you can 'afford it' as long as you can cover the monthly payment..."

How bad do things have to get before the rational world puts a stop to this seemingly endless something-for-nothing culture?  And when SHTF, will the progressivists and psychopathic con banksters get their comeuppance in any meaningful and lasting way, or will they merely resurface after the dust is settled?

Golden Showers's picture

I thought renting was a starter home. Fact is that most "homes" need torn down. If the fucking thing is vacant more than 10 days, bulldoze it. What I see is that people who could buy a house, paying a third party bank, get cold feet? No. People are tired of paying inflated prices for shit, new or old.

Starter Sale Fails? Maybe people don't want to buy a liability for stupid high interest in a shitty location and even shittier locale?

Just because some mexicans slapped together a piece of shit house, or some dumb fuck built a 1 bedroom bungalo on 1/25 of an acre doesn't mean it's livable or worth shit. The only thing that makes property any value is CODES. Fuck Codes.

First you buy land. Then you fix what some asshole retard built and called an "improvement". Y'all look at it backwards.

CaptainObvious's picture

A-fucking-men.  I'd rather buy several acres of land and erect a cement cube on it than buy somebody else's slightly used McMansion with all of its integrated soon-to-fail components on a garden-plot piece of land.  It's the land that is worth something, not the crap shack imposed upon it.

Autonomous's picture

The percentage of people's working lives that goes to paying interest for basic shelter is unbelievable - it is a new form of slavery.

I am against the idea of having a mortage attached to your home. For nearly two decades now I have been living in a home I built with my own hands on land I purchased with cash. It was a lot of work and required learning many skills, but it is nothing in comparison to spending half of your working life making rent or mortgage payments.

The concept of owning a home without paying interest is also something that Moslems living in western societies are struggling with since usury is considered one of the "greater sins" in Islam. As you can imagine, there are very few home loan options that do not include interest payments.

Seasmoke's picture

Just imagine if Janet Bernanke gets rates above 6% !!!

CaptainObvious's picture

That's Mr. Yellen to you, sir.

Lost in translation's picture

Why would I buy a home and make myself a tax magnet for bankrupt municipalities?

Why would I buy a home in a country that is currently being invaded by 60-IQ Third World lowlifes, with no end in sight?

Better to live small, stay mobile, and forget the stick-built crapshack. It's an excellent way to lose valuable capital, nothing more.

Madcow Kaczynski's picture

I just got hosed by a buyer for my solar home in Cali. I'm going to sue the fucker. Then list my land for $50,000 more. Legally binding contracts are a bitch. But it's my bitch this time, haha

Stan Smith's picture

As someone who's in the RE and financial industry and been so for eons,  I can tell you lending standards amongst banks are still nearly as tight as they were when Dodd-Frank was rearing its ugly head.  Banks arent the issue here, at least not largely.

Brokers aren't back to the NINJA (No Income, No Job, Acceptable),  but they are weour his bubble was starting to take place in 06-08.

All that said, the things that lenders will accept as pertaining to inspections is tighter now.    A lot of that has to do with FHA.   Their standards for what was acceptable has always been tighter than conventional loans.   But there's just a lot less they accept in regards to the condition of a home than even 5-6 years ago.

Consumers being pickier is a big part of this as well.   Buyers want a updated or new everything, but arent willing to pay for it.    Want a new home?  Go build one.   Oh, wait... cant afford it?   Go join the rest of us and get to work.   Buyers will walk more than ever before over this sorta stuff.    Most RE board sales contracts are designed for the buyer to walk far more than it's to help the Seller keep a buyer around -- and it should be that way.  

 

jsgibson's picture

Check out this beauty - just 550K for a SFH in northern VA!

https://www.redfin.com/VA/Great-Falls/1065-Northfalls-Ct-22066/home/9125737

No bubble to see here folks.

Last of the Middle Class's picture

Umm, would any of this data come from NAR?  just sayin.

Ban KKiller's picture

Black Knight, Core Logic....lying scumbags who routinely use forgery and fraud in foreclosure cases. Eric Holder sucked their balls, willingly. Mnuchin...king Jack Off who had better stay home. Trulia? Another joke with any numbers you need. 

Where is Holder working now? Right, for bankster attorneys. A corrupt man.