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Housing Repenetrates Alleged Bottom As NAHB Index Misses By Most In 22 Months
It seems all that confident over-extrapolating of warm-weather-based foot-traffic into closed sales and a recovery in housing was, as we vociferously warned, simply wrong. There's no schadenfreude here as this was too obvious for anyone except the blinkered hopium peddlers as even the NAHB is forced to admit things aren't so rosy in home-sales-land "interest expressed by buyers in the past few months has yet to translate into expected sales activity". The NAHB Index fell for the first time in 7 months, dropped the most in 10 months and missed those glorious expectations by the most in 22 months - quite an impressive set of statistics.
Chart: Bloomberg
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Huh? You mean folks aren't stepping up to buy houses, not signing up for mortgages with criminal syndicate banks? Who would have thunk it?
Again and again and again...until such time as these zombie banks are broken up, their ranks thinned, their corrupt leadership ditched...the Greater American Depression will roll on and on. It's pretty simple.
Wow.....and right after they've created or saved like 40 million jobs.
If one really believes that the Fed must continue to print, then borrowing money with a fixed-interest mortgage to buy a home, preferably with much land, water, and a gas well, can be a smart move.
It would be best to have an income that can increase quickly (nominally) with inflation, and is not fixed, like a pension. However, remember if the mortgage is fixed, then the monthly payment will decrease in real terms, while rents rise to keep up with inflation, so it can make sense for pensioners to have a mortgage.
Hourly wages tend to increase far faster than contract-linkled income like that of a physician or union worker.
With inflation, being short cash (long debt) and long tangible goods, like land, is where I would want to be. During deflation, not so much.
So the question is, do you think the central bankers will allow deflation, or must we print, print, print our way to prosperity?
What is the mechanism that gives average workers an increase in their wages that will allow them to pay off the newly acquired fixed rate debt?
Average workers should be able to easily pay the mortgage under current income. This isn't the lottery. It is just a way for pensioners and others to lock-in low "rents" if they believe inflation is going to be a problem in the future.
In other words, borrow if you can pay it off anyway? Why would inflation cause rents to increase? If people have less disposable income (due to higher fuel, food, etc. costs), then how are increases in rent going to be passed on? Where is the endless supply of credit worthy tenants at presently prevailing rents? If we can acknowledge that the price of housing will decrease with higher inflation, why will rents not follow suit?
I would never borrow money I did not think I could pay back.
Inflation causes the nominal value of almost everything useful to increase. Whether or not a house is useful depends on the specific instance and circumstances.
Nominal housing values can decrease during inflation, but only if the utility decreases faster than the value of the currency it is priced in.
You know this stuff, Macho. Read Orlov if you want to better guess how none of us might have to pay rent or our mortgage in the future.
Big assumption- you're leaving out supply and demand, and the fact that REAL supply is unknown.
My block is full of unoccupied "$500K+" houses that are neither for sale or listed on any real estate ledger- mostly, they're just dumb 2nd and 3rd home "investments" that will come to market once liquidity is an issue for the owners- will be an interesting price discovery.
At that point, the utility of those homes increases, while their prices decrease.
If these are the typical unoccupied $500,000 balloon-construction McMansion on an 1/8th an acre and you live in a state where moisture occasionally falls from the sky, then one could argue the utility of those "homes" is not likely to increase. The land, maybe, but not those empty houses.
..............................................................
What I am addressing is a question that does come up for many senior citizens in America these days. Many do not own a home free and clear, and they are living on a relatively fixed income.
Should they sell the home and become a renter or remain a borrower? Basically, under high inflation a borrower with a fixed payment amount (rate) is better off, while under deflation a renter (with a short lease) is better.
It occurs to me that on ZH we often rail about central bankers printing to infinity, but in the same breath disparage mortgage holders. Is this not a bit of a contradiction?
First, a house's utility is the same regardless of its price...
Second, debtors are exactly what gives rise to the power of central bankers... so no, it is not a contradiction... there may be certain circumstances that require prudent people to take on debt and pay the fiddler so to speak, but I think these are the exception and not the rule.
Can the Fed prevent deflation?
If the M1/M3 multiplier is busted, then the Fed would have to print tens of trillions of dollars.
http://research.stlouisfed.org/fred2/graph/fredgraph.png?bgcolor=%23B3CD...
http://research.stlouisfed.org/fred2/graph/fredgraph.png?bgcolor=%23B3CD...
if you can't follow the above link, google m1 multiplier chart
but the fed is no longer able to leverage money up, instead, it's below 1. The lever is working against them.
MSM is doing its best to lure suckers, er, buyers in... heard a piece on the radio this morning about how big speculators are swooping in to buy up the "bargains" to create home rental portfolios... smells more than a bit suspicious to me.
Agreed- same old story- gotta pump that market.....
it's probably 50 or 60 million by today minus those 12 secret service guys
Am I the only one who gets TD's tagline???????
Sounds like Peter North is in the house.................
Hahaha, nice.
+1
You don't hear "repenetrate" very often.
It only seems to be used when talking about housing or the half of Americans who pay taxes.
"income taxes", not "taxes".
Virtually all americans pay taxes.
That's true, but government handouts more than make up...which is also why some politicians don't mind raising taxes. They just steal more money to make up for it.
Hooray for escapekey. I almost barf when that stat is quoted again and again about income taxes.
Spirit airlines had not started labeling the taxes on their airfare as "Government Cut" and "Your government tax rate for this selection is x%". More small businesses should do that.
And after 18 years of marriage, you can remove the "re" and your statement still applies.............
and it's not the bottoms that are most often "alleged". it's usually the other side.
http://theboxhouston.com/1905681/dude-looks-like-a-lady-10-celebrities-c...
Goes with "assymetric".
Peter North did a bit of gay porn.
Cuming in the back door with all that liquidity. I wondered if they paid their $47 but this still leaked? I guess my Peter North "pulling liquidity" thought the other day is taking root.
As excerpted from Did Bernanke Permanently Cripple the Butterfly That Is US Housing? The Answer Is More Obvious Than Many Want To Believe
This near cessation of foreclosure activity has materially dropped the shadow inventory numbers, but has done so in a way that is quite misleading. Those foreclosures either will happen and become REOs or distressed property sales that are currently averaging a discount of ~25% to conventional retail sales (thus further pressuring sales prices), or will result in the properties being put directly on the market at steep discount (again, further pressuring sale prices). Basically, the foreclosure backlog is simply accumulating in the background and will print a very sharp spike upwards one way or another once the foreclosure and fraud issues of the banks are sorted out – even if they are sorted out to the detriment of the banks. Despite this reprieve in foreclosures, the ratio of shadow inventory to home sales is not decreasing. This is a double negative, for shadow inventory is decreasing (albeit for very artificial and temporary reasons). The reason for the lack of movement in this very key figure is that housing sales are actually declining both on a seasonally adjusted and non-adjusted basis – and if these figures were to be adjusted for “true” inflation, would look much worse. This leaves the ratio of delinquent and foreclosure activity to sales relatively static. One can surmise what happens when the foreclosure backlog that was caused by the bank’s myriad legal issues clear up.
The most valuable chart in the study just released to subscribers,
Shadow Inventory Update -- March 2011 shows how quickly one can expect the shadow inventory to be consumed by the sale of homes. To make a long story short, we still have quite a ways to go before we reach the pre-bubble levels, and that is without taking into consideration the foreclosure moratoriums. Keep in mind that these numbers do not include the pent up shadow inventory that is being hidden by the foreclosure crisis. That additional inventory on top of a slowing housing sales metric can easily tack one to 4 years onto the inventory numbers.
As you can see, the credit (delinquency measures) metrics are actually moderating slightly over the last few quarters, but have increased over the last two. This is a negative sign considering all of the efforts that have been made by the government and the banks to reduce that figure. The foreclosure inventory, although lulled somewhat, is still slightly on the rise. This lull is synthetic and temporary, a by-product of congressional pressure and legal issues pressing the banks to undergo voluntary and involuntary moratoriums on foreclosure activity. The consequent movement to be expected as these moratoriums are lifted, the banks work out their legal issues, and the properties move one way or the other will cause a very dramatic spike in the shadow inventory numbers. This spike will occur on top of slowing housing sales, dramatically reduced housing prices metrics and potentially deteriorating credit metrics (if the most recent trend continues). If that is not enough good news for you, the Goldilocks scenario of the perfect interest rate environment for real estate needs to (and probably will in the near to medium term) come to an end. See The True Cause Of The 2008 Market Crash Looks Like It’s About To Rear Its Ugly Head Again, With A Vengeance Friday, March 11th, 2011. Our calculations available ot subscribers show a very bleak outlook for housing. It is not as if there is no precedence for such. Take a look at the Japanese situation, and this is not taking into consideration the recent issues of the earthquake, tsunami and radiation poisoning and nuclear meltdown. Few things are as detrimental to property values as radiation poisoning!
A lesson to be learned: Beware for when a true black swan event occurs...
Further reading:
Go long Tents....
$10 trillion in mortage debt, you got students with $1 trillion in student debt, new jobs created are paying on average 40% less than jobs lost in the recession = no housing recovery for an entire generation
Broke people stopped buying overpriced crapshacks in the middle of the desert? Shocking!
But, but, interest rates are at all time lows..... oh wait a minute, crap credit scores, no jobs, no income. NINJA loans 2.0 anyone??
My favourite piece of propaganda over here in the UK is that "housing affordability has greatly improved" - yeah, Sherlock, what happens when interest rates rise from these historic lows? What will happen to your finances, when the 2.99% 2-year rate you locked in can't be refinanced for anything less than 4.99% down the road?
Oh, better not discuss that in the media.
No fixed rate?
Fixed rate beyond 5 years is ludicriously expensive. If the rate doesn't get you, then the up-front fees will.
Spot on, wages and tax reciepts tell the true tale. Going to be a bad time to be a landlord when local governments raise your taxes and then try and tell you what you can or can not charge for rent (price fixing). Miss Whitney was correct, but she forgot that all economies and politics are indeed local. Many local governments will have to increase taxes to simply continue to deliver services (and I am not talking about social services, I am talking about things like sewage, road maintenance, water...)
Sure, they'll have to increase taxes if they want to try and eat their cake and have it too. Weed out the unnecessary beaurocrats and paper pushers, and I think the budgets will allow for some road maintenance and sewage (aside from the fact that these things are perfect for and often recovered with excise taxes).
The problem is that you can't get blood from a turnip... and, ultimately, local governments do not get to "push things through" without answering for them... until very recently, my city has denied dozens of proposals to increase sales or property taxes... we're still low for the state and really, really low for the country. Eventually they'll collect the last marginal penny and will be forced to reconsider...
We've come full circle... where a conglomeration with a focus on local autonomy cannot form a viable nation... and a single nation that punitively usurps local control falls prey to the rudimentary constraints of central planning. Bouncing between the poles some more... never finding stasis.
nothing like a good REpenetrate
Exuberance is a transitory, barbarous relic.
lol
Downloading the Zillow app is not translating into actual sales?! What is this? 1999? My clicks are worth something, damnit!!
Just goes to show you: sales people are forever and always full of shit.
Oh Cramer, where art thou, LOL!!!
Who said they could report any bad news? Terrorists hating America ...
So all this liquidity isn't helping the housing market, and only propping up the big banks, structural inefficiencies, and prior malinvestments.
p.s. Demographically (25-35), all the prospective home owners are living in their parents basement, and are heavily in debt from student loans.
If the idiots would stop artificially supporting the house prices and allow the market to clear some of these people might be able to afford to move out and buy a house.
Houses would be cheaper, but I'm not sure that necessarily means they'll be affordable... we still lack a mechanism for job/wealth creation.
In the early twentyth century over 40% of people owned their own business. Onerous regulations have prevented many a person from starting their own business these days...
Somewhere, right now, Bill Gross is sitting on his Stratospheric pile of MBS's...and smiling.
....and an accelerating wave of new foreclosures is coming to a market near you, putting more homes under water and creating more incentives for 'short sales' or walk aways.....if the housing market were an airplane, we'd call this a 'graveyard spiral'.
We can talk about housing and make predictions until we all go blue in the face. The reality is that any meaningful improvement in house prices, house sales, house construction etc are all primarliy dependent upon more jobs that are also well paying and not just subsistence level.
Merchant builder puts, anyone? Might be the best investment for the rest of the year, excluding PMs of course.
An expansion of the sound bite from the NAHB press release is as follows:
This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery—particularly tight credit conditions for builders and buyers,
So we have record low interest rates but "tight credit conditions." That is common-speak evidence that ZIRP is only intended to prop up the balance sheet of the lenders, which remain festooned with the previous wave of non-performing loans.
Face it, RE prices are the last thing that are going to recover.
if NAHB data were food, people would call it "slime on a shingle"
Little Timmy and his friends are arguing over whether or not people can put gas in their cars and the MSM is shocked that people aren't buying houses. As usual, I'm shocked that they're shocked.
True stories to which many of you can probably relate:
Most of my parent's wealth came from housing. It's not that they were speculating or flipping. In fact, it was just the opposite. They bought a home, lived in it for 15 years then bought another home and lived in it for 20 years. Their current home is owned free and clear.
I have both made and lost money on housing. If I average it all out I'm probably at about a break even. I currently own one rental which use to be my personal home (good positive cash flow). I currently rent while I search for arable land to which I shall retire.
I have advised my kids against buying housing any time soon. They are in agreement with me. They know times have changed. They do not see housing as my parents did. The kids view it as cumbersome and risky.
California's home ownership rate is back to early 1990's levels....per Dr. Bubble chart
http://www.doctorhousingbubble.com/wp-content/uploads/2012/04/california-home-ownership.png
Yep, TPTB want to eliminate even the thought of ownership. That is for them, not for the sheeple and debt slaves.
With boomers retiring starting this year, I believe we will see many of them wake up and realize they are trapped. They refinanced in 2003 and have more than 20 years left of mortgage payments but not 20 years left of earned income. Their SS checks will in no way cover their living costs and that mortgage, no matter how low interest rates go.
This is the shadow shadow inventory. Boomers who will be forced to walk away or short sell because they can't afford the mortgage on SS.
Green Shoots, Not
Red Roots
green shoots turned into "dandelion lawns"
Goldman and Pimpco are already in place to sell mortgage backed securities. It is a done deal.
My wife is in real estate and she says the only thing that is moving is the low priced houses where people who have cash can purchase. The other area that is seeing some activity is with local banks financing homes they currently have on their books. The high end housing is seeing low to no movement. She also cmment on the surprising amount of listings that came on the market this spring.
same thing here in what is, relatively speaking, a really solid housing market.
The people who went out and got the 6x+ average family income houses are going to eat their shirts before this is over... many are STILL current on payments, but have no idea they're already bankrupt... having never set aside the money necessary to cover the deficiency should they seek to mitigate their loss when it finally becomes apparent to them. It's the age old problem, I'm making $X today, why won't that continue for the next 30 years??? I mean, what's the worst that could happen?
In Maui county alone there are around 1000 homes being held by the banks that have not hit the market.
No bottom in sight yet...
Your logic resembles a good sword weilded by a skilled warrior who also has a machine gun and no one else even has a fucking crossbow.
Your logic resembles a good sword weilded by a skilled warrior who also has a machine gun and no one else even has a fucking crossbow.
http://confoundedinterest.wordpress.com/2012/04/16/nahb-homebuilder-opti...
Another indication that the Fed will do QE3!!!!!!!!!!!!!!!!!!!
We have new homes for sale five blocks from us, 3 bd/2ba, 1600 feet for 160K and up. 2000 feet for 200K. Yet my older 3bd/1ba, 1250 feet with additional 16x24 block workshop and a 14x12 covered Patio is valued at 67K. And they wonder why new homes aren't selling.....
It's kind of the opposite here. Our older/more depreciated homes are going for ~$100/sq. ft and the new construction is going for the same price... basically no one has been accountable for the decrease in the value of their homes through their use of the homes... very strange... I suspect your locale will be our future.
Sounds like NO ONE is willing to take a loss on their poor investment decisions. Enjoy yer house, at least you know what needs fixin'...
Seems to me that the public information available on Zillow and elsewhere works against sellers who aren't in the same galaxy on the asking price versus their original purchase price. For example, a quick look at Zillow shows a home purchased in 2004 for 140k (with the land having been purchased the year before for 20k). It was put on the market in 2009 at 260k. They have since dropped it to 230k, with Zillow saying it is worth $207k. Who was going to offer them 260k with Zillow telling people it was only worth 207k? I suspect the sellers have HELOCs they are desperate to cover. We have no idea how much of their own money they invested in the build, but it looks like they are trying to make a huge profit in a bad economy to the uninformed public. I think I might offer them something in the $190s and see what happen.
Another example is a house that was purchased in 2009 for 99k and is now on the market for 140k. I contacted the realtor on this one to see if the owners had made upgrades to justify the price and was told no, but since they had purchased it at foreclosure in 2009, the house was worth more.
Add in the fucked land recording system,courtesy of MERS and the banks.
That's going to take 10 years to rectify, and nobodies even started yet.
Chances are any bargain out there is a "gold plated turd".
The keyword to a sustainable healthy RE market is "ORGANIC" until we get their RE no mater were you live is falling and IMHO with all their low interst rate, Gov interventions and banks clearing assist we are no were near it so look out below!
The keyword to a sustainable healthy RE market is "ORGANIC" until we get their RE no mater were you live is falling and IMHO with all their low interst rate, Gov interventions and banks clearing assist we are no were near it so look out below!
"interest expressed by buyers in the past few months has yet to translate into expected sales activity"
Yeah, and I'm "interested" in that new Mercedes on the dealer's lot...
"interest expressed by buyers in the past few months has yet to translate into expected sales activity"
Right.
Buyers? What are these people smokin? Buyers actually *purchase* things.
Remember...COFFEE IS FOR *CLOSERS*
Hit the water cooler you cretins...
"interest expressed by buyers in the past few months has yet to translate into "expected sales activity"
ether does the wave of shadow inventory coming to market in the net 3 to 4 months.
http://realestate.msn.com/article.aspx?cp-documentid=21179977
I bet most of this 'recent interest' is just underwater homeowners who are renting out their homes, looking to establish a basis for tax filing, clicking on each others' houses on Zillow.
On the graph you can see where Faber and Buffet bought but then ompfh nothing. Japanese housing went down for 30 years and then they had Fukushima. I think it has to go down at least until the collapse of the EU and the revolutionary war between the US and the NWO ends. NAHB that.
That's why we have the NAR's Larry "Fucktard" Yun to lie to the upside for us...
The answer to this is obvious to give banks more money to cover their losses, and let none of the money circulate in the public so you can pretend prices won't rise when you give money to banks. The end result is the wonderful effect that the public gets no debt relief from the government caused housing bubble, and they get to pay for their house twice via the inflation caused and or the tax burden that will be imposed due to the bank bailouts.
think they better give Sheila Blair a call ........quickly
Housing Repenetrates Alleged Bottom As NAHB Index Misses By Most In 22 Months
And the f***ed up robot response....IYR rallies 1%
Who would have guessed real estate isn't rebounding? Wait till Wall St. assholes start getting fired. I want to see carnage in lower Manhattan real estate. Let's hope these assholes who call each other selling financial "products" are homeless and in time for me to snatch some nice pawned wines and louis vuitton boat shoes.
Diabolically clever. Too bad for the investor pools... tho the financial terrorist in me thinks this is a brilliant plan. Move that shit to a private balance sheet. Let the dweebo 401k and K-1 investors eat loss. Bonuses for the bankers who facilitate the "investments". Hip fuckin hooray1