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Guest Post: Housing Recovery - Hope And Reality

Tyler Durden's picture




 

Submitted by Lance Robert of StreetTalk Live

Housing Recovery - Hope and Reality

home-sales-newandexisting-052512

Every year for the past three years there have been recurring calls for a housing bottom and recovery. The importance of an eventual recovery in housing should not be dismissed as it is a critical component of an economic recovery due to the large multiplier effect of each dollar spent. The recovery in housing would signal that a foundation for a more lasting economic recovery would be in place. That is the hope anyway.

However, as we have discussed in the past (see here, here, and here) the reality is that while housing construction and sales may have bottomed after the largest decline in history, it is highly likely that a correction in prices likely has further to fall particularly if interest rates rise for any reason. The one overlooked issue is that while it is likely that housing may have found its natural bottom — a bottom and a recovery are entirely different things.

During the past couple of weeks there has been a tremendous amount of ink spilled in the press about home sales, both new and existing, starts and permits which all showed some very modest improvement. It is important to note that the improvement in the data is welcome news. It is a bit premature, however, for it to be called a recovery. With mortgage rates currently below 4%, employment somewhat stable, major banks continuing to stall the foreclosure process and the home buying season moving into full swing — we should see improvement in the housing data. If we weren't — that would be very bad.

The current "bottom," and I use that word loosely, in housing appears to have occurred in late 2010. However, we also saw a "bottom" in 2009 as well. With continued support to housing from artificially depressed interest rates, bailouts, write downs, forgiveness, tax credits and incentives — housing data does appear to show a bottom.

The most recent release of April's data, on the surface, appears to support the media's proposition that housing is in a continued recovery process. Not so fast. The problem with the April data, on a seasonally adjusted basis, is that this was the warmest April in six years and the second warmest in the past 31 years. The unseasonably warm weather, combined with the lowest amount of precipitation in a decade, has artificially influenced the adjusted data in much the same way as we have previously discussed regarding the employment data. While April did show a rebound it came on the heels of two monthly declines and failed to fully recoup the previous losses. What was worse is that on a non-seasonally adjusted basis this was one of the weakest Aprils in the past decade for existing home sales.

housing-starts-completions-052512If you look at the first chart you can see that even with the many supports discussed above combined with depressed prices and unseasonably warm weather it takes a rather strong magnifying glass, and much "hope," to say that a recovery is here.

 Apart from new and existing home sales the housing starts, permits and completion data does not look much better. Considering these data points are still at the lowest levels since data began to be collected there is very little evidence that a recovery is officially underway. When these data points are combined with new and existing home sales we can argue the case for a housing bottom. However, a bottom and a recovery in housing, as stated previously, are two vastly different things.

This is evident by the data coming from the home building companies themselves as they continue to curb their inventory. This is a needed but defensive posture by the homebuilders and inventory has declined to a 5.1 month supply. Even given lower inventory levels it is still taking nearly 8 months to complete a sale. The reality is that the demand for homes remains extremely constrained and any negative shock to the economy could quickly turn the recent modest improvements back on their head.

home-renters-vs-occupied-052512

Digging Into The Real Housing Situation

In order to really know what is going on in housing we need to look at the proverbial "forest for the trees" by examining what is happening to the total number of houses. We know that many housing units have been converted into rental properties in recent months as excess homes are sitting vacant. As full-time employment remains elusive, a large and available labor pool suppresses wages and access to credit remains tight - the dream of "home ownership" has slipped from the grasp of many Americans. However, as the population continues to expand, "renting" becomes the preferred choice. The chart shows the percentage of homes that are "occupied", either by a renter or homeowner, as a percentage of the total number of housing units in the U.S. There are two important issues in this chart. The first, and most obvious, is surge in homes being rented versus owned. The second is that home occupancy rates are only 1/2% higher today than they were during the recession. As I stated before — you must look very hard to find a housing recovery here.

home-vacant-heldoffmarket-052512

One issue that will continue to confound the real estate market in the near term is the level of inventory that is being held off market for various reasons. This does not include the shadow inventory held by banks which is an additional issue. As we have stated in previous reports the housing market is driven by the activity "at the fringes" between those actively seeking to buy a house versus those with "for sale" signs in their yard. Today, roughly 1/3 of all homeowners are under water on their mortgages. Therefore, it is no surprise that many are holding homes as long as possible hoping for a price recovery. However, at some point these "vacant" houses, along with the excess shadow inventory and trapped homeowners, will come to market either due to force or desperation. The excess supply will continue to pressure home prices, more supply than demand, in the future further exacerbating the problem for those already drowning in their home.

Ultimately there is only one truth to whether there is really a housing recovery or not. How many people own a home? If new and existing home activity, as seen in recent reports, is truly on the rise then we should see the number of individuals that are "home owners" on the rise as well.

home-ownership-rate-052512

The chart shows the home ownership rate in the U.S. As of the latest quarter the level of home ownership has declined back to levels last seen in 1980 before the Savings & Loan crisis. That particular real estate related debacle had a profound effect on the real estate market at that time as homeowners mailed their keys back to the banks. It was then that the government set up the Resolution Trust Corporation to efficiently dispose of the houses that were required to be foreclosed on. While the level of home ownership "bottomed" in the early 80's it took more than a decade before housing, and consequently home "ownership" truly began to recover.

While there is a tremendous amount of hope for a housing recovery in 2012, just as there has been during the last 3 years, the simple reality is that a "real recovery" may be a very long time away. A weak economic environment growing at a sub-par rate, burdened by excessive debt levels which sap potential growth, high unemployment and rising temporary work suppressing wages, tight credit standards and trapped borrowers all work against a housing recovery at the current time. Unfortunately, for many Americans, the dream of home ownership turned into a horrifying nightmare. The psychological impact caused by the housing bust is also something that will impede a real housing recovery in the future until the painful memories have faded into the mist.

Is there a bottom in housing? It is entirely possible. However, for all the reasons stated herein, both financial, economic and psycholgoical, the "calls" for a housing recovery may be a bit premature. This is particularly true if our estimation of an economic recession in the next 18 months comes to fruition. The strains on the housing market caused by a recession will cause a secondary decline in housing. The reality of a recession is not a question of "if" — it is only a question of "when" and how bad will it be?

 

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Tue, 05/29/2012 - 18:11 | 2473569 HelluvaEngineer
HelluvaEngineer's picture

It's a great time to buy, rent, or burn a house!

Tue, 05/29/2012 - 19:57 | 2473768 world_debt_slave
world_debt_slave's picture

better success catching a falling, double edged, light speed, and multi-dimensional knife

Tue, 05/29/2012 - 22:06 | 2473981 Xkwisetly Paneful
Xkwisetly Paneful's picture

Left out deconstruct.

For the zerobrains outcome to materialize-sky rocketing commodity prices and a no bottom ever housing market- homes will eventually be deconstructed for the underlying raw materials.

Of course that is not happening in anyone's lifetime around here, leaving the imbecile to predict one comes down while the other goes up-or shockingly another two huge wrong calls by the zerobrains crowd.

Where's the gold recovery hope and reality?

Tue, 05/29/2012 - 22:25 | 2474028 reader2010
reader2010's picture

Jim Rogers says the money can be made by converting those into pig farms.

Wed, 05/30/2012 - 05:08 | 2474468 HungrySeagull
HungrySeagull's picture

Well, some homes were worked on only to sit unlived... I suspect soon the scavengers will come.

Vultures, all.

They forgot one thing.

We are upgrading, adding on and making changes etc to support our paid for home into something that will bring even more money and raise value when, if ever it is time to sell.

It takes huge amounts of cash to make it happen.

Sat, 06/02/2012 - 13:54 | 2487418 slewie the pi-rat
slewie the pi-rat's picture

like what?  most of my friends who want to own a vault just buy a vacant bank

one guy with whom i did some deals about 25 years ago already had bought a bank building and rented out office and retail space

  • the vault still works, i'm sure, right?
  • yep!
  • what doya keep in there, jim?
  • bodies, slewie:  bodies!

now, i knew he was connected, but that was totallyRidiculous!

Wed, 05/30/2012 - 00:34 | 2474208 Rubbish
Rubbish's picture

Love the weaponry angle, just bought a tack driving scope for my .22 LR. Screw the house payment.

Tue, 05/29/2012 - 18:12 | 2473573 fuu
fuu's picture

"This is particularly true if our estimation of an economic recession in the next 18 months comes to fruition."

WTF have you guys been?

Tue, 05/29/2012 - 21:18 | 2473933 Yes_Questions
Yes_Questions's picture

 

 

Xactly.

Tue, 05/29/2012 - 18:13 | 2473576 SHEEPFUKKER
SHEEPFUKKER's picture

Bubbles don't just burst and then come right back. 

Tue, 05/29/2012 - 19:02 | 2473684 Seer
Seer's picture

Yup.  And when one bursts it doesn't reform on the very same thing.  The capital flees to another target, which, like everything else, piles up until IT pops; and only after this shift plays out would there be any such "return" to the previous crime scene (housing).

Tue, 05/29/2012 - 19:16 | 2473703 GubbermintWorker
GubbermintWorker's picture

Bonds..........Treasury Bonds.

Tue, 05/29/2012 - 22:07 | 2474002 max2205
max2205's picture

Stocks. Stocks. Stocks. Blow Ben blow

Wed, 05/30/2012 - 05:09 | 2474470 HungrySeagull
HungrySeagull's picture

Burn Baby Burn.

There corrected for you.

Sometimes I wonder if wall street has slaves sweating in the toil and labor shoveling falling paper into the furnaces to generate power and keep the traders above comfortable.

Tue, 05/29/2012 - 22:08 | 2474004 Xkwisetly Paneful
Xkwisetly Paneful's picture

so I shouldn't be expecting gold to hit $2000 again anytime soon?

Wed, 05/30/2012 - 05:12 | 2474475 HungrySeagull
HungrySeagull's picture

Define soon.

when gold was 250 about decades ago, interest payable to you approached 15% in some banks.

No one imagined it will be 500 then 100 then make a run for 2000.

Unfortunately the 50 dollar run back in the Hunt Brothers time and the last year's assault was suppressed.

The more they suppress it this year the greater the power it gains.

In about 10 years or so Silver and Gold should be something worth fighting for.

Stack it and quit worrying about a buck here and ten there.

Tue, 05/29/2012 - 22:31 | 2474036 thiscreepingmalaise
thiscreepingmalaise's picture

sheep fucker? Really? That's the best you got?  

Tue, 05/29/2012 - 18:16 | 2473584 No One
No One's picture

"The importance of an eventual recovery in housing should not be dismissed as it is a critical component of an economic recovery due to the large multiplier effect of each dollar spent."

has someone done a study on the multiplier that these QE's, Bailouts, etc. have had on each dollar parked on a shaky balance sheet?

Tue, 05/29/2012 - 21:24 | 2473947 Yes_Questions
Yes_Questions's picture

 

 

Shakes the Balance Sheet Clown.

 

Available office parties, weddings, Bar mitzvahs and Gang Bangs.

Tue, 05/29/2012 - 22:27 | 2474031 reader2010
reader2010's picture

The bust was artificially engineered in the first place, so that those big capital holders can finally lower the living standards in the West before they move their entire farming machinery to the East/South. 

Tue, 05/29/2012 - 18:19 | 2473594 devo
devo's picture

I have a feeling we'll be having this same conversation in ten years.

Tue, 05/29/2012 - 19:04 | 2473688 Seer
Seer's picture

Own any carrier pigeons?  Just trying to figure out how we're all going to communicate after it all crashes... (and it WILL crash long and hard before 10 years' time)

Wed, 05/30/2012 - 00:39 | 2474221 Rubbish
Rubbish's picture

Blanket and a camp fire.

Tue, 05/29/2012 - 22:33 | 2474039 thiscreepingmalaise
thiscreepingmalaise's picture

when a problem comes along.........you must whip it!

Tue, 05/29/2012 - 18:20 | 2473597 Mark123
Mark123's picture

It is my understanding that almost all mortgages are now guaranteed by the government (i.e. taxpayer subsidized).  Until that changes there will be no recovery because uncle sam is broke and is quickly going to be forced by its lenders to stop supporting the market.

 

Just imagine what would happen if tomorrow we went to a free market system and all mortgages/loans had to be retained by the banks who issued them (no actual or implied govt backing).  I would guess that house prices would collapse by at least another 99%......

Tue, 05/29/2012 - 18:22 | 2473604 devo
devo's picture

You know, I was going to write the exact same thing, but I'm a lazy American and figured someone else would do it. Thanks!

Tue, 05/29/2012 - 18:32 | 2473631 Ned Zeppelin
Ned Zeppelin's picture

It is quite true that well over 90% of all mortgages right now are through Fannie, Freddie, FHA or VA.  Once the private MBS bubble burst, the private mortgages were gone, the hole filled by the Feds,  There is no real interest on the part of any bank with half a brain (OK, that might be questionable to begin with but stay with me) to hold the paper on a conventional residential mortgage loan (look at the rates, with nowhere to go but up) so acting as a servicer for federal program mortgages is the only game in town. 

Right now, today, if those programs were to go away. . . . there would be no housing market. Period.  It would all be local and sporadic, with much higher interest rates to compensate for the need to hold the paper for an extended period (Duration risk). 

C-O-L-L-A-P-S-E

Tue, 05/29/2012 - 23:16 | 2474105 brettd
brettd's picture

How many homes DO NOT have a mortage?

If you own your home outright, does that make you the 1%?

Tue, 05/29/2012 - 23:49 | 2474154 Fox-Scully
Fox-Scully's picture

Whats a mortgage?  Doesn't everybody pay cash?

Wed, 05/30/2012 - 05:15 | 2474477 HungrySeagull
HungrySeagull's picture

We are outright and our utilities cost less than local rent. I suppose that makes us the 1% but you must consider much much much more expensive things like access to a light jet, limo etc etc... things that will make you a target.

Half the area is HUD. The rest is elderly housing.

Yes they are building new homes not far away.

Will we move? Possibly. Dopes it matter? No.

Wed, 05/30/2012 - 07:03 | 2474628 neidermeyer
neidermeyer's picture

In Florida abour 45% of homes are mortgage free ... The remaining 55% are mostly underwater ... I see a scenario similar to my aunt in Brooklyn ,, she bought a house in 1973 at the bottom of the market and can barely make the tax payments ,, the residents in her neighborhood are now either rich Muslim immigrants or old people barely hanging on.

Wed, 05/30/2012 - 00:32 | 2474204 Dingleberry
Dingleberry's picture

Ned is correct.  The Gov is the entire market.  No sane bankster or investor (or you) would touch backing mortgages for a few percent interest.  They would demand at least 7-10 percent for full doc loans. And you could guess what that would mean to prices......people buy payments, not houses.

Tue, 05/29/2012 - 18:58 | 2473650 vast-dom
vast-dom's picture

SHORT THE PLANET.

Tue, 05/29/2012 - 18:20 | 2473599 narnia
narnia's picture

I wish I could short suburbia.

Tue, 05/29/2012 - 18:23 | 2473608 Tinky
Tinky's picture

Too late; Howard Kunstler snapped up all of the best options years ago.

Tue, 05/29/2012 - 18:33 | 2473634 Ned Zeppelin
Ned Zeppelin's picture

you mean Jim Kunstler of The Long Emergency and Clusterfuck Nation fame?

Tue, 05/29/2012 - 19:22 | 2473711 Tinky
Tinky's picture

Yes, James Howard...

Tue, 05/29/2012 - 22:24 | 2474027 YC2
YC2's picture

20 mins into my ambien I figured it all out.  

 

WATERWORLD

 

with Kevin Costner

 

Rated Arrrrr

Tue, 05/29/2012 - 18:20 | 2473601 Jack Burton
Jack Burton's picture

It is quite true that any possible recovery in average house prices across the nation will be shot down in flames when a new technical recession takes hold in the USA. No matter the subsidies, the low interest rates and the tax breaks and hype, if the US goes into recession, the nation's workers will find it hard to buy a house and hard to get a mortgage.

The European, Japanese and perhaps even Chinese economic slides are going to affect an already debt soaked America. Remember too that the USA faces needed austerity to bring government spending down to a level tax revenues and borrowing can fund. This austerity, though badly needed, also bring with it a deep cut in spending into an already weak economy. US austerity will need to be decades long as the debt overhang is massive.

To sum up, their are a great mant reasons why the US economy will be dragged into a jobs killing recession and world wide economic and financial crisis. NO WAY this feeds a bullsih US house price jump. On the contrary, housing is dependent on workers incomes and job security, both are under grave threat!

Housing is toast, even if their may be local regional hot spots for real estate. The broader picture is one of more economic pain and NO reason to bid up house prices.

In fact, in my local area, the inability of people to afford to buy a house or their inability to get a mortgage with their weak downpayment abilities and threatened income earning abilities has put these people into the rental market. The rental market locally is coming under higher and higher demand. Some people I know who rent are faced with rent increases and landord demands for longer term lease deals. If the renter doesn't accept the new stricter terms, lots of renters are in line for the apartment.

Tue, 05/29/2012 - 19:10 | 2473695 Seer
Seer's picture

As usual, great post.

Further adding to the death-spiral is the fact that all this reduction in mortgage activity is also a BIG reduction in revenues for municipalities; municipalities then have to cull jobs, resulting in more foreclosures, lost revenues; and on and on down the rabbit hole...  A shame, as some municipalities are likely decent ones; they'll have been crushed by the trickery of the white-shoe-boys (who control the Federal govt and, the game).

Tue, 05/29/2012 - 19:34 | 2473734 pursueliberty
pursueliberty's picture

My wife has sold around 10 non investor homes this year.  Only one was a conventional loan, the rest were USDA and a single VA. 

 

USDA is 100% financing.  No money down, no skin in the game, you don't even need to have $100 in your checking account.  As a matter of fact, one of the buyers couldn't afford a uhaul to move.  I think the minimum credit score is around 620.  How are these loans not asking for a foreclosure?

 

I have no problems finding great renters.  I've got a house that will be vacant in september that I plan to go up around 25% on.  I'll clean the carpet and mop and move in the next one.  Current tenant built a new home, but waited about 18 months to figure out what they wanted to do.

Tue, 05/29/2012 - 20:23 | 2473841 Overfed
Overfed's picture

Sux that you can't have a USDA loan if you already own a home. :-(

Tue, 05/29/2012 - 21:21 | 2473941 pursueliberty
pursueliberty's picture

You really should think outside the box, if you do indeed meet the income standards for a USDA loan.

What is to stop you from calling your current home a rental?

Wed, 05/30/2012 - 12:11 | 2475954 Overfed
Overfed's picture

The credit report that shows a mortgage company as my only debt.

Tue, 05/29/2012 - 21:29 | 2473951 media_man
media_man's picture

Residential real estate will continue to decline until the employment situation reverses itself.  Why would anybody want to take out a 30 year mortgage to buy a home, only to be stuck with it when the layoff notice arrives?  Given the low return & high fixed costs (points, transfer taxes, maintenance) buying a home is a sure fire way to go broke.

Permanent professional jobs are all going the temp contractor route.  That won't change.  It may take some time but most people will wake up to that reality, & the notion of "owning" a home will have to be radically altered.  At the very least, eliminating the high fixed costs of buying / selling will need to be drastically reduced or eliminated. 

Wed, 05/30/2012 - 00:47 | 2474240 Rubbish
Rubbish's picture

Just rent an industrial unit and pretend your in business to survive. Pull an RV inside and good to go. Fire depts. are being cut anyway so inspections will be lax, leave your doors locked, make them make an appointment.

 

Industrial units are less than 1/2 the price per sq. ft. of apartments.

Wed, 05/30/2012 - 05:17 | 2474479 HungrySeagull
HungrySeagull's picture

There are some who live in storage units for 50 a month. The smell of frying chicken off the single overhead light wiring gives them away.

Tue, 05/29/2012 - 18:24 | 2473609 The Alarmist
The Alarmist's picture

Boomers are all retiring and downsizing.  Next generation are debt serfs.  Immigrants are picking fruit and veg or scrubbing toilets for fairly decent money considering the investment they make in skills, but they only buy one house for each 20 or so of them.

So, where is all this demand supposed to be coming from?

Tue, 05/29/2012 - 18:46 | 2473652 Vince Clortho
Vince Clortho's picture

Central Bankers buying more vacation properties.

Tue, 05/29/2012 - 20:03 | 2473783 Bunga Bunga
Bunga Bunga's picture

Next home buyer generation is broke on arrival.  I wonder how first time home buyers can get a loan when they must show their balance of 100k+ in student loan debts.

Tue, 05/29/2012 - 23:22 | 2474113 Matt
Matt's picture

If this Fukushima thing drags on, 40 million Californians may need to move East. Who knows, maybe a few million people from other parts of the Pacific might move over, too. That'll help demand for housing on the East Coast a bit.

Wed, 05/30/2012 - 05:18 | 2474481 HungrySeagull
HungrySeagull's picture

California can drop into the Ocean on the next big one.

I would miss the Produce and some other good stuff shipped east. However we will adapt.

Wed, 05/30/2012 - 00:34 | 2474209 Dingleberry
Dingleberry's picture

kids today aren't even buying cars. The only thing they can afford is the latest iPhone. I doubt they will be buying homes en mass. Not with their debt oads.

Wed, 05/30/2012 - 03:07 | 2474391 hidingfromhelis
hidingfromhelis's picture

You couldn't pay me enough to live in Massachusetts either.

Tue, 05/29/2012 - 18:33 | 2473630 FinalCollapse
FinalCollapse's picture

After all that pumping we are about to enter another leg of serious deleveraging. They try to stop it for sure and PPT is working tirelessly but the forces of gravity (or demand/supply for all these clueless Keynesians) will prevail. 

They called RE bottom for five years in row - always around the spring/early summer timeframe. Their sesonality adjustment algorithms do not reflect the current market dynamics, so everything that is claimed to be SA carries large error (paging Calculated Risk). Every year the SA algos see the bottom - and this year is not different.

The US job disaster, the EU recession, the China hard landing, the Japan slow moving fiscal train wreck - where these people get their supply of hopium? Fuck - I like what  they smoke and how it works...Send me some please...

 

Tue, 05/29/2012 - 18:36 | 2473639 Seasmoke
Seasmoke's picture

they get it from Obamas buddies in Hawaii

Wed, 05/30/2012 - 08:51 | 2474932 beachdude
beachdude's picture

That would be Kenya.

Tue, 05/29/2012 - 18:57 | 2473669 Lucius Corneliu...
Lucius Cornelius Sulla's picture

You'll know the bottom is in when we go a summer without anybody calling a bottom.

Tue, 05/29/2012 - 18:33 | 2473635 gatorengineer
gatorengineer's picture

how come conistently more homes are completed than started....

Tue, 05/29/2012 - 18:34 | 2473636 Seasmoke
Seasmoke's picture

While there is a tremendous amount of hope for a housing recovery in 2012......

 

2012 is now 5 months old and time is running out , so once again they are wrong.......but they can try again in 2013 , as there is no consequences in being wrong

Tue, 05/29/2012 - 18:56 | 2473662 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I love the so called "Home Ownership Rate".  If you have little or no equity then you "own" an expensive call option on piece of property.

Tue, 05/29/2012 - 18:59 | 2473671 westboundnup
westboundnup's picture

Over the Memorial Day Weeekend, I spent time at the beach in NJ.  In addition to the numerous "For Rent" signs, I would estimate that 15% - 20% were on the market for sale.  Many of those properties had been listed for > 24 months.  For those properties which have been on the market for > 12 months, the price reductions were insignificant, and appeared to have no impact whatsoever in inducing buyers.  While vacation home markets are harder hit in bad ecomonmic times, it's reflective of the current state of the housing market.  On average, properties located w/n 1 block of the beach were valued at $2 million and up.  At a certain point, you're looking at a very select pool of potential buyers, which would exclude: middle to upper middle class families and eldery couples. 

Tue, 05/29/2012 - 19:19 | 2473705 Seer
Seer's picture

"At a certain point, you're looking at a very select pool of potential buyers"

What that saying? "buy the cheapest house on the most expensive block"

A house that I'd sold prior to the bubble collapse was in an upper-class area (well, relative to the municipality that I resided in, but it wasn't a mansion (like others, but it did have a water view).  Had told my then wife that folks a but further up the hill would one day wish that they had our house (less debt load and more energy efficient): house has been remodeled and now it assessed value is now less than what I'd sold it for.

Tue, 05/29/2012 - 19:24 | 2473715 pursueliberty
pursueliberty's picture

Vacation, or second homes, in waterfront locations are a odd bird.

 

My wife and I rented a condo for the summer on a popular lake.  This lake features properties from low 100k to well over a million, with most single family homes being in the $350k range.  We had looked at this lake since around the crash, 08 or so, and soon realized it was a pipe dream to pay the somewhat reduced asking prices on these properties for rental pontential.  I believe most of the homes are owned by boomers, who either purchased in the late 80-90's, or built during the boom.  Homes sit for sale, often switching agents a few times, but the prices drops are so small you don't see them.  It is turning into a retirement community and a lot of the properties aren't going to be affordable for the future generations at current pricing.

We rented our condo for three months paid upfront, for around 25% less than a 15 year payment with 20% down, not counting insurance, association fees, and property tax.

My wife, who is a real estate broker, has a friend in Destin FL who said ocean front sales are kicking ass this year, with prices increasing and multiple bids on foreclosed inventory.

Tue, 05/29/2012 - 20:20 | 2473835 Arnold Ziffel
Arnold Ziffel's picture

Pull up a Zillow map for ANY town ....hundreds of "red" houses...all for sale, most listed for over a year.....

I don't see a recovery for a generation for two.

Tue, 05/29/2012 - 19:03 | 2473687 luna_man
luna_man's picture

 

 

A sure sign of the bottom in housing, will be when, you see not ONE vacant home!

If it's vacant...It's available!...FREE FOR ALL!!

 

So, make sure your home isn't taken for a vacancy!

 

 

Tue, 05/29/2012 - 19:15 | 2473699 GubbermintWorker
GubbermintWorker's picture

 oops

Tue, 05/29/2012 - 19:18 | 2473704 Snakeeyes
Snakeeyes's picture

Here is what i said on Fox Business at 5pm today.

http://video.foxbusiness.com/v/1662105593001/sanders-nothing-to-feel-con...

Between grim employment and the tax onslaught at the end of 2012, watch out!

http://confoundedinterest.wordpress.com/2012/05/29/case-shiller-house-pr...

Tue, 05/29/2012 - 19:45 | 2473747 hairball48
hairball48's picture

I just watched your clip with the empty headed "Talkin Tits" blonde on FOX.

You were/are correct. Unfortunately, we're going to get MORE gov't intervention in the economy in the coming days, weeks, months, not less.

Real wealth has been borrowed and consumed for decades.

There is none/little capital(real wealth) left for investing in housing. The sheeple need to forget that "home ownership" dream. 

Tue, 05/29/2012 - 20:14 | 2473816 Bunga Bunga
Bunga Bunga's picture

At least the talking tits have many hopes.

Tue, 05/29/2012 - 20:07 | 2473792 kekekekekekeke
kekekekekekeke's picture

congrats ^_^

Tue, 05/29/2012 - 21:00 | 2473908 WonderDawg
WonderDawg's picture

You blew the final question. When she asked you what one thing would fix the economy (we all know there is no one solution, so the question was loaded, but...) the correct answer would simply be: FairTax.

Tue, 05/29/2012 - 19:51 | 2473759 TSS
TSS's picture

There might be a good awnser for that bottom. I'd suggest checking out ginnie mae financial audits. While their own site says they do not sell MBS's, in the 2010 financial report they suddenly had $4.2 billion worth in income from "morgages held for investment", which wasn't there at all in the 2009 report. in the 2011 financials that's grown to $6,2 billion. Also their budget is growing at a billion per year, to the point where they are already getting more money yearly then NASA. In a recent speech (may 10th i belive) bernake himself said banks had been investing in "agency backed MBS's". Could that be government agency, perhaps?

These homes are kept off the market because that's the counter bubble they are inflating to counter the burst bubble from 2008, turning the USA real estate market into the Spanish real estate market, where houses of very poor quality are built and kept purely as a tool for investment (In the US they are already built, just delinquent or foreclosed). Nobody has to live in these houses, they just have to "exist" so people can invest in them. It'll be a while before anybody notices, because that bubble is inflating at the same speed the last bubble is (still) deflating, so it looks like a bottom. But what's really happening is each house that drops out of one bubble by foreclosure gets swept up in the other bubble and no longer used as living space but as investing space. This feeds the 2nd bubble while doing nothing whatsoever about the reason the first burst, or people not being able to afford homes, thus pressuring prices down even further.

I belive this is also why ginnie mae is involved. Because when this next bubble pops, with no money left to rescue fannie or freddie, "Ginnie Mae securities are the only MBS to carry the full faith and credit guaranty of the United States government". So when Ginnie goes, it's an automatic bailout for any investors, wether the people have bailout fatigue or not. Also as i understand it, freddie mac and fannie mae where never explicitly guarranteed by the government, only implicitly. Ginnie is 100% backed at all times.

IMO, what's happening is simply the banks sucking the last bit of money from the american people before the whole house of cards comes crashing down, while having their final losses (in order to keep making money to the end) paid back by the taxpayers after it's fallen down. Pure genius if you ask me.

Tue, 05/29/2012 - 21:32 | 2473956 Seer
Seer's picture

I think this is less of a bubble and more of a safety-net that is, clearly, full of holes. When the private sector pukes it runs to govt to bail it out. Housing was bailed out but the "net" has not placed a floor because it's riddled with holes*.

* Main one being that the pre-2008 bubble burst era will NEVER be replicated because there's not enough resources to produce this level of consumption (of physical resources).

The banks have ALWAYS sucked down money, they're fucking banks!  Now that the music has stopped and MANY find no chairs we complain about this behavior?  Play their game and YOU LOSE.  They, however, are nearing their end, in which case I wouldn't shade this as though they're going to get away... no, the bigger they are the harder they fall; AND, THEY W-I-L-L FALL!  If you're too close you'll get creamed...

Tue, 05/29/2012 - 22:54 | 2474081 OhOh
OhOh's picture

"While their own site says they do not sell MBS's, in the 2010 financial report they suddenly had $4.2 billion worth in income from "morgages held for investment", which wasn't there at all in the 2009 report. in the 2011 financials that's grown to $6,2 billion. "

 

Didnt the chinese have investments in them. Mayebe they are getting out?

Tue, 05/29/2012 - 19:55 | 2473769 spinone
spinone's picture

Only monkeys pick bottoms.

http://www.youtube.com/watch?v=7hqq3bIJEhA

 

Tue, 05/29/2012 - 19:59 | 2473774 azzhatter
azzhatter's picture

Well we've had several years of real wage deflation since the bubble burst. Hard to see the middle class come roaring back into the housing market driving prices up. And I'm guessing we've raised loan underwriting standards beyond a mirror under your nose and a pulse check. So that combination alone tells me while we may be finding a bottom, there is no way we are going to see any real appreciation.. Nothing says we can't hit bottom and stay there. A lot of the market is still deeply underwater.

Tue, 05/29/2012 - 20:00 | 2473776 q99x2
q99x2's picture

I think the Fukushima housing market has finally bottomed.

Tue, 05/29/2012 - 20:03 | 2473784 asteroids
asteroids's picture

Move to Canada eh? No housing problems here. In fact there are still bidding wars in some places.

Tue, 05/29/2012 - 23:29 | 2474130 Matt
Matt's picture

Keep an eye on the price drops, de-listing/re-listings, etc:

http://vancouverpricedrop.wordpress.com/

The Housing Bubbles in the major cities are starting to pop, it's going to be epic. 

Saskatchewan will probably hold up, unless people stop eating food and needing potash.

Tue, 05/29/2012 - 20:40 | 2473871 goodrich4bk
goodrich4bk's picture

Home inventory is a misleading metric.  The focus should be on bedroom inventory, because that's where the first time buyers are locating after college.

Tue, 05/29/2012 - 20:41 | 2473875 Stuck on Zero
Stuck on Zero's picture

Yep.  Home ownership has come right back to 1980 levels and ...  the people of this country are $12 trillion poorer.

 

Tue, 05/29/2012 - 20:55 | 2473890 Cabreado
Cabreado's picture

There will be no "bottom" in anything until the underlying problems are addressed.

Testament to the idiocy of those in command, in fact there would be a "bottom" in all sectors if the populace recognized... even an effort (that morphs into trust).

As that is not forecasted, the turmoil will continue,

as will the linear-thinking, self-serving lies of those who pretend to call what's what, somehow neglecting chaos and trying to get away with it.

ps. not really talking about this article directly, which I think is pretty good.
It's the "calling of the bottom" that hits a nerve, in the midst of neglect of much greater underlying issues.

Tue, 05/29/2012 - 21:16 | 2473928 Yes_Questions
Yes_Questions's picture

 

 

DEPRESSSION.  Get it right.

Unless money starts to move through the hands that spend on things, the Depression will remain, terminal.

A fuck story for all to see and lament for years to come this current money-economy is and you can bet your sweet ass the owners could care less.

When you speculate in real estate

you buy a condo in Miami

when you live in Miami underwater and unemployed

you take illicit white powder drugs in some South Beach club

when you take illicit white powder drugs in a South Beach club

you end up on a Miami sidewalk chewing off someone's face.

 

Don't end up on a Miami sidewalk chewing off someone's face!

 

Tue, 05/29/2012 - 21:18 | 2473934 kuso
kuso's picture

Where do the Celtics turn for scoring after they shoot 39 percent, and miss 10 of 21 free throws, and get destroyed on the boards? Ray Allen's damaged ankle has left him a shell of himself. He has no lift on his 3-point attempts, the shots low, flat and constantly clanking off the rim. He missed six of seven overall shots, and worse, four of seven free throws. Bad enough, but a career 90 percent free-throw shooter is in the low 60's in these playoffs. He was so flustered with those misses at halftime, he left the locker room

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Tue, 05/29/2012 - 21:58 | 2473991 Seer
Seer's picture

Hey, Tyler, how about banning this poster?  Been here for 6 days and has ONLY posted promotional shit for shoes?

Tue, 05/29/2012 - 21:24 | 2473946 Vendetta
Vendetta's picture

Dead cat bounce, that is all

Tue, 05/29/2012 - 21:59 | 2473993 Seer
Seer's picture

Slinky down the staircase...

Tue, 05/29/2012 - 22:11 | 2474008 FrozenOut
FrozenOut's picture

Q: How can the values of all companies increase without limit?

A: Human beings can increase their productivity.

Q: Why can the values of houses increase without limit?

A: Err...

Tue, 05/29/2012 - 23:29 | 2474016 tahoebumsmith
tahoebumsmith's picture

The American Dream was once considered a nice house with a neatly manicured yard encompassed by a white picket fence. Today the American Dream is a house of cards made from synthetic plastic waiting to collapse at any minute. MBS ,CDOS, Wall ST. GREED killed the American Dream dead in its tracks. Now that they are trying to spackle and paint their terd with TALF, ZIRP and all the other Smerf names they can come up with, they are running out of options. Riddle me this O'l PAPA SMERF...When everybody has refinanced at 3.9% or lower and you have to raise the interest rates to combat inflation, what the frick are you going to do? Who is going to buy a house and WHO would ever consider a refinance? The last 4 years have been the biggest economic mistake this country has ever made. They have successfully painted themselves into a lose,lose corner and left the taxpayers holding a 10 TRILLION dollar tab just to try and cover up the greed bubble they created... There will be no TRILLION Dollar bailouts next time, you numbfuck Keynesians are pretty much done the way I see it. Here,,, buy this house BITCHEZ, You can buy it cheap and .GOV will finance it with no money down for 40 fricken years... Good luck with that...http://archialternative.files.wordpress.com/2011/02/house-of-cards.jpg

Tue, 05/29/2012 - 22:31 | 2474035 harleyjohn45
harleyjohn45's picture

I live in central Florida, and I have rentals.  You can buy small concrete houses for under 20k in foreclosure.  Maybe 8k to renovate.  These are 1000 sq ft with a carport.  They rent easily for 500.00 per month.  Way better than money in the bank.  They are in blue collar neighborhoods, but rent well.

Tue, 05/29/2012 - 22:42 | 2474055 knowshitsurelock
knowshitsurelock's picture

All principle enters commerce as debt, but the interest is not created.  Debt gets paid down with actual value added GDP, and then the money supply can increase and keep the scam going.

In a deflationary period, where there is not enough production to offset the debt, the system turns on itself and begins to cannibalize itself until it completely consumes itself. 

Keynesian economics is a failed experiment, and all that bad paper is parked in credit default swaps, owned by the retirement funds, and it takes about a trillion dollars just to kick the can down the road six months.

A two percent move (think MF Global) in the wrong direction takes the whole bubble down.   While were talking about the housing recovery, the underlying problem of mortgage backed securities derivatives (leveraged 50-100 to 1) is mostly ignored, and the domino effect which will occur when we can no longer kick the can down the road will be massive.

Wed, 05/30/2012 - 05:11 | 2474472 writingsonthewall
writingsonthewall's picture

Every year for the past three years there have been recurring calls for a housing bottom and recovery.

As there was throughout the great depression - come on guys - don't you recognise history repeating itself?

 

If this revelation is news to you - then you know NOTHING.

 

The same will happen to the stock market (eventually) - 2008 / 2009 was not the bottom.

Wed, 05/30/2012 - 07:30 | 2474683 boa74520
boa74520's picture

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Wed, 05/30/2012 - 10:33 | 2475473 Morrotzo
Morrotzo's picture

90+ percent of the "market" is backed up by the government, which really means a giant backdoor tax on productive people who don't own homes or mortgages.

The "shadow inventory" is 9+ million homes.

The so-called next generation of homeowners (bitch, please) rent and live with their parents at historically high levels. Furthermore these people have at least 1 trillion dollars of debt just from college loans. How are they supposed to do the 25 percent down, 30 year fixed living the dream with 2 kids 1 dog and a white picket fence load of crapoloa with that much debt just from the college loans?

There is never going to be a recovery. Companies are posting record profits. They want uncertainty and debt slaves getting paid peanuts without benefits and vacations and not daring to say so much a peep about it. This is the New Normal. There is no going backwards to some 1950s daydream.

 

 

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