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No Housing Recovery In These Three Charts

Tyler Durden's picture





 

One day, we hope, the broader public will realize that just as the Libor scandal was largely precipitated by the fact that it was a self-reported number and thus open to collusion and manipulation by the same people who set it, so any data coming out of the National Association of Realtors - an organization that by definition benefits from high prices and frenzied real estate activity - is total manipulated garbage (in fact courtesy of the massive 2011 restatement from the NAR several months ago we know just that). In fact, when it comes to the NAR, it is worse: as a reminder, US real estate transactions are nothing but glorified and perfectly legal money laundering, which is the main reason why the NAR has a waiver from regulation for anti-money laundering. Although unlike HSBC, the NAR's money laundering at least leads to benefits for everyone, in the form of perpetuating the delusion that US real estate is fairly priced in when a few robber barons from around the world become indiscriminate marginal price settlers eager to put their money in the "safety" of the US. And lately, with the latest forced delusion being that US real estate has bottomed and is rising even as the global economy is decelerating at the fastest pace in the past 3 years, the NAR serves a handy purpose: it provides a reflexive way of misrepresenting the underlying trends in real estate, suckering the marginal fool in once again, as it did throughout the period between 2000 and 2007. The question then is what does objective, unmanipulated data say. As the following three charts from Bloomberg confirm the last word one should use when discussing the US housing market, where as we already pointed out shadow inventory is once again building up while construction jobs have tumbled to decade lows, is "bottomed."

From Bloomberg Brief:

Key housing barometers are all moving in a sideways direction, implying neither definitive improvement nor continued deceleration.

 

The most leading of the housing/construction indicators is the American Institute of Architect’s Work-on-the-Boards survey. During June the headline Architecture Billing Index (ABI) was mired in contractionary territory with a reading of 45.9. This was the third consecutive sub-50 posting. This isn’t very surprising since executives have been quite vocal with respect to concerns in Europe, China and the increased potential contagion in the U.S. The CEO Roundtable sent a letter to Congress citing these three issues. In addition, a sizeable number of complaints were found in the Bloomberg Orange Book.

 

Lumber giant Universal Forest Products’ CEO Matt Missad said in the company’s latest earnings conference call, “We are watching our inventories closely and trying not to get too far ahead because we are concerned about disappointing employment figures and lack of  construction growth in the U.S.”

 

Rather than observe the trends in the Mortgage Bankers Association’s headline Mortgage Applications Index, which includes refinancing, a far better gauge of economic conditions is the Mortgage Purchases Index trends. This weekly representation of demand for mortgages related to home buying is little changed from levels registered at the bottom of the housing market collapse.

The level of residential housing construction is an important indicator, and has made little improvement since the apparent market bottom in 2009.

 

The sunken pace of residential construction spending in May was $268 billion – essentially the same levels seen in 1997. This  profoundly low level of activity is not limited to the residential sector; spending on commercial structures is currently the same as in 1996.

 

Since there is diminished activity, the need for workers in the construction industry has also stagnated. During June construction employment totaled 5.5 million workers – a near 30 percent decline from the peak in April 2006 and the same number as in mid 1996.

 

The Federal Reserve has kept its overnight borrowing target at near zero for more than three-and-a-half years. As a result, mortgage rates are at all-time lows with the average 30-year fixed rate lingering around 3.53 percent. Since adopting this accommodative policy there has been essentially no improvement in the level of new home sales.

And finally, here is the NAR's reflexive feedback: existing home sales:

Existing home sales have improved somewhat, but remain a far cry from pre-recession and pre-bubble levels. The gain is likely a function of the “haves” grabbing the foreclosed properties of the “have-nots.” This is proof that the Fed may be able to lead the horse to water with lower rates, but scant few are drinking up.

In other words, instead of "housing recovery" a much better phrase would be "the rich are getting richer", and everyone else can go suck a lollipop and watch their wealth evaporate courtesy of Z/NIRP.

 


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Tue, 07/24/2012 - 08:47 | Link to Comment LongSoupLine
LongSoupLine's picture

but, but CNBS said housing has turned!

Tue, 07/24/2012 - 08:53 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Yeah....but what did CNBC have to say about it?

 

Tue, 07/24/2012 - 09:02 | Link to Comment jwoop66
jwoop66's picture

Them?  They said, "thank you Dear Leader for saving us, our legs tingle for you"

Tue, 07/24/2012 - 09:11 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Now I'm confused....cause I thought that was MSNBC.

 

Oh well......might as well have everyone pissed off at us.

 

Tue, 07/24/2012 - 09:20 | Link to Comment Peter Pan
Peter Pan's picture

Of course housing has turned. Like a lamb on the spit.

Tue, 07/24/2012 - 08:48 | Link to Comment Hopium Dealer
Hopium Dealer's picture

No housing recovery? I hear many Obamavilles are spouting all over the country! How is this not a green shoot?

Tue, 07/24/2012 - 09:02 | Link to Comment AU5K
AU5K's picture

Buy a block of properties, pay cash (which is why the purchase index is not increasing), then rent them out.  Nice return + possible appreciation.  Much better than 1% 10 year bond.   Unintended consequences in action.....

Tue, 07/24/2012 - 09:06 | Link to Comment duo
duo's picture

those blocks are reserved for personal friends of TBTF bank execs.

Tue, 07/24/2012 - 09:52 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

Indeed and just in case people think that's just a smart remark

 

A Huge Housing Bargain -- but Not for You

http://www.thestreet.com/story/11224917/a-huge-housing-bargain--but-not-for-you.html

 

Investors With Ties To Buffett, Soros, Obama Plan Mortgage Eminent Domain Grab

 

http://www.futureofcapitalism.com/2012/06/investors-with-ties-to-buffett-soros-obama-plan

Tue, 07/24/2012 - 09:05 | Link to Comment duo
duo's picture

If every business is sitting on their hands until the election, why would any sane person take on debt to buy an overpriced house?  I'm amazed that the mortgage app number is as high as it is, but it could be fudged or better yet, doesn't reflect that fact that unless you're putting 20% down and have a 830 FICO, that application isn't going to turn into a funded loan.

Tue, 07/24/2012 - 08:51 | Link to Comment GMadScientist
GMadScientist's picture

Anyone who calls a housing bottom before there's another 10% drop in average prices is lying and stupid.

Tue, 07/24/2012 - 09:48 | Link to Comment OutLookingIn
OutLookingIn's picture

We may live in hope that its only 10%!

The gorilla in the house that hardly anyone is considering, is the onset of age in the baby boomer segment of the population. With 10,000 boomers retireing per month - each and every month for the next few years.

These newly retired persons will be looking to downsize or just plain sell out in order to afford to retire. This will add more supply to the already over-supplied housing inventory.

Anyone considering to buy now, will find their motgages underwater withing a short time, unless you are a member of the robber elites parking your cash in rental properties, looking for more than a 1% return.

Much more downside in housing to come before it starts to get any better.

Tue, 07/24/2012 - 12:33 | Link to Comment cbxer55
cbxer55's picture

That is 10,000 baby boomers retiring per day, ACE!

http://pewresearch.org/databank/dailynumber/?NumberID=1150

Month my ass. I got 14 more years to go.

Tue, 07/24/2012 - 08:51 | Link to Comment General Decline
General Decline's picture

I have been noticing houses starting to come out of the ground again in some of the partially built subdivisions in my area. My neighbor is a brick layer and is suddenly busy again for the first time in a couple years. My question is why would anybody pay full rippin retail for a house when there are so many empty ones sitting out there for cheap. Are people really that stupid?

Tue, 07/24/2012 - 08:54 | Link to Comment GMadScientist
GMadScientist's picture

Are you really asking?

Tue, 07/24/2012 - 08:57 | Link to Comment Spastica Rex
Spastica Rex's picture

Was that a rhetorical question?

Tue, 07/24/2012 - 08:58 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

That's the way I took it.

 

Tue, 07/24/2012 - 09:47 | Link to Comment General Decline
General Decline's picture

Yes. Of course it was rhetorical. The clearance rack is my favorite place to shop. I saw potassium iodine pills on the clearance shelf at Walmart the other day. LMFAO. $7.95 for a 30 day supply. Didn't buy any, though.

Tue, 07/24/2012 - 09:18 | Link to Comment GMadScientist
GMadScientist's picture

If you have to ask,...

Tue, 07/24/2012 - 09:05 | Link to Comment BandGap
BandGap's picture

Are you really remarking on his really stupid question?

Tue, 07/24/2012 - 08:58 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

I know some.  Americans don't want a "used" house, and they don't want to shop on the Clearance rack either.

Tue, 07/24/2012 - 09:33 | Link to Comment blindfaith
blindfaith's picture

Well, many may be shopping for a used Yahama motorcycle box to live in if they don't get over the snobery.

 

In the late 70's/early 80's, there was another home 'slow down' and construction workers were idle all over the place.  I remember seeing a bumper sticker on a contractors truck that said" If I am out of work, I am on welfare, and you will be soon too"  Seems those words are more true than he imagined.

Lets not kid ourselves about any politian promise about jobs, or turning around anything...they can't do it.  The problem is world wide, the answers are not in sight.  But sell you the BS they all will.

The bond market is telling the world that it will ba a generation before things change.  Why else would you lock your money up for 10 or 30 years at a rate that inflation doesn't cover?

The day the US Military says enough, things will change, not before.

By the way....the TBTF are still under the taxpayer protection that Bush enacted and Obama continues...that includes GE and IBM ( remember???).

Tue, 07/24/2012 - 10:15 | Link to Comment TrainWreck1
TrainWreck1's picture

This right here.

Lots of spoiled kids (usually daddy's girl) can still sweet talk their father or nag their spouse into a brand new car/house etc.

Let's also not forget the 'urban revitilization' projects, which give brand new houses to section 8 folks. Your tax money buying votes, as usual.

 

Tue, 07/24/2012 - 10:32 | Link to Comment Never One Roach
Never One Roach's picture

Massive dormant problems with a "preowned" house or RE. Just ask me (and my lawyer who took $128,000 to get the title cleared). He earned it though and aftet two years oif court battles with the title insurance lawyers, we fiannly won. Title defects are rampant since closings were flipped like crazy and the paperwork was often defective.

Good luck to all buyers/risk takers.

BTW, title insurance is not cracked up what it is supposed to be. Better read lots about it online beofre you think it covers you.

Tue, 07/24/2012 - 11:14 | Link to Comment JohnKozac
JohnKozac's picture

Labor is so cheap now houses can be built for $42 square foot. Paying more is not wise...unless your house looks over the ocean, etc. Labor is the major cost of box building.  Actually, materials are also plunging due to oversupply with massive excess inventories.

Tue, 07/24/2012 - 09:05 | Link to Comment Unbezahlbar
Unbezahlbar's picture

Two Years of Pain for Melbourne Housing, Say Top Bank Analysts
Tuesday, 24 July 2012 – Melbourne, Australia

 

The average capital city property is already down by around 8% from the start of last year. But it seems that sellers are finding it hard to accept that this figure could possibly apply to their home too.

Melbourne property prices are rolling over really quite sharply now, and are tracing the steepest decline of all the cities by far....It has a long way to fall to return to the historic trend. But if you think the outlook for Melbourne already looks bad...it gets worse.

from: The Daily Reckoning, Australia ed.

 

Tue, 07/24/2012 - 09:15 | Link to Comment otto skorzeny
otto skorzeny's picture

I think builders are basically building them at cost just to have some cash flow. materials have not dropped much thanks to ZIRP 4EVER.in our ares alot of old cooters building shitbox Del Webb homes to die in (village loves it beacause they have $7K property tax bills and put no burden on infrastrucure-including no snow removal/kids in school)- can't we do like the eskimoes and put these old fuckers on an icefloe out to die? oh yeah-4closures are shooting back up around here :-)

Tue, 07/24/2012 - 10:02 | Link to Comment OutLookingIn
OutLookingIn's picture

Why an iceflow? How about a death camp?

Call it what it is - mass murder.

With a name like "otto skorzeny" who was a high level murdering NAZI SS during WWII, responsible for the GI POW's machine gunned down in a field outside Malmedy, during the battle of the bulge, you have the right attitude!

Go crawl away back into the wordwork you cockroach.  

Tue, 07/24/2012 - 14:39 | Link to Comment otto skorzeny
otto skorzeny's picture

what's your point?

 

Tue, 07/24/2012 - 09:20 | Link to Comment Toolshed
Toolshed's picture

Are you serious? Of course they are. In fact the sheep are far more stupid than you can begin to imagine. Very sad indeed.

Tue, 07/24/2012 - 08:55 | Link to Comment the not so migh...
the not so mighty maximiza's picture

Massive fraud at all levels in the entire real estate market.

Tue, 07/24/2012 - 08:57 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Did we miss any other sectors?

 

Tue, 07/24/2012 - 08:58 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

Right. It would be easier to list the industries without massive fraud.  Wait, lemme think...

Tue, 07/24/2012 - 09:01 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

By all means......take your time.

 

Tue, 07/24/2012 - 09:21 | Link to Comment Rainman
Rainman's picture

Two-thirds of record past due student loan debt is hitting those who are 39 years old or younger.

 

http://www.doctorhousingbubble.com/wp-content/uploads/2012/07/Past-due-balance-by-age.png

Tue, 07/24/2012 - 10:17 | Link to Comment G-R-U-N-T
G-R-U-N-T's picture

"Two-thirds of record past due student loan debt is hitting those who are 39 years old or younger."

 Time for Obama, the deliverer of continued irresponsible behavior, to offer bailouts for all student loans! 

"If you've got a business, you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet."

In order to avoid the hard work necessary to hack out a living in our imperfect world, Obama, the mystic, chooses to live in his imaginary, artificial, manufactured alternate reality, along with the dumb shits whom live in a state of unconsciousness which seems to be a large voting block these days. Ugh!

Tue, 07/24/2012 - 10:17 | Link to Comment GetZeeGold
GetZeeGold's picture

 

Time for Obama

 

He's so good.....word is he's going to wait 3 days before the election....and then he's going to fix everything. Watch and see.

 

Tue, 07/24/2012 - 12:12 | Link to Comment Temporalist
Temporalist's picture
Gordon Crovitz: Who Really Invented the Internet?

"But full credit goes to the company where Mr. Taylor worked after leaving ARPA: Xerox. It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today.

According to a book about Xerox PARC, "Dealers of Lightning" (by Michael Hiltzik), its top researchers realized they couldn't wait for the government to connect different networks, so would have to do it themselves. "We have a more immediate problem than they do," Robert Metcalfe told his colleague John Shoch in 1973. "We have more networks than they do." Mr. Shoch later recalled that ARPA staffers "were working under government funding and university contracts. They had contract administrators . . . and all that slow, lugubrious behavior to contend with.""

http://online.wsj.com/article/SB1000087239639044446430457753906300840651...

 

According to Wired it was both private and public that invented the internet.  I'll stick with private though because government claims private ideas as their own

http://www.wired.com/wiredenterprise/2012/07/xerox-internet/

 

Tue, 07/24/2012 - 08:58 | Link to Comment RobotTrader
RobotTrader's picture

Where is the chart of the XHB compared to GLD this year?

Tue, 07/24/2012 - 09:21 | Link to Comment GMadScientist
GMadScientist's picture

Where's the relevance in comparing a 4th order derivative of the economy like ETFs instead of objectively looking at its actual performance?

 

Tue, 07/24/2012 - 08:59 | Link to Comment max2205
max2205's picture

Zillow = old NAR mouthpiece

Tue, 07/24/2012 - 08:59 | Link to Comment hugovanderbubble
hugovanderbubble's picture

Short LENNAR

Tue, 07/24/2012 - 09:14 | Link to Comment Doña K
Doña K's picture

Careful as some of these builders buy up depressed properties, renovate and resell. That's why they are still out there surviving the carnage.

Tue, 07/24/2012 - 09:01 | Link to Comment apberusdisvet
apberusdisvet's picture

Once you eliminate the 50% of households on the govt teat,  the next generation of potential homeowners mired in student debt, the "real" under- or un-employed of 20%+, those that lack the necessary credit history/down payment (note: I realize that there is overlap in these categories), where are the millions of qualified buyers required to fuel a housing recovery?

Tue, 07/24/2012 - 10:01 | Link to Comment VisualCSharp
VisualCSharp's picture

The answer is that there are very few. When the entire world economy is based on debt, and servicing that debt becomes a burden too large to bear--as I argue it is now--then no one will have any extra debtmoney with which to "buy" a house.

Tue, 07/24/2012 - 10:59 | Link to Comment JohnKozac
JohnKozac's picture

'The Aliens' are going to buy them. As long as they don't smash up into Mars on their way to Earth, the NAR expects millions of them to be arriving any day now.

Tue, 07/24/2012 - 09:05 | Link to Comment Yes_Questions
Yes_Questions's picture

 

 

NActual Recovery

 

Tue, 07/24/2012 - 14:47 | Link to Comment Blankenstein
Blankenstein's picture

 

 

National Association of Racketeers

Tue, 07/24/2012 - 09:17 | Link to Comment Shizzmoney
Shizzmoney's picture

Here in MA, housing is "recovering"

http://www.boston.com/businessupdates/2012/07/24/the-warren-group-mass-home-sales-june-post-best-month-two-years/awlXKggqkEnCKFlVqc3BfI/story.html

http://www.boston.com/realestate/news/2012/07/23/boston-condo-median-sale-prices/icX0zPLDuoZQrAAb9V7qAL/pictures.html

But a few caveats to this:

A) Income inequality is growing here in MA at an accelerating rate.  Basically, unless you come from a well-to-do family, you are having a hard time raising a family here.  It's doable to live around here if you are single, but I even know a few couples, both spouses in VERY good professions like Sales Exec for a Major Hotel Chain, Optometrists, and a English Professor, who are moving out because they would, you know, actually like to afford a home, car, AND a save.... except being forced to pay for a rising cost of living.

B) However, if you are a rich person, this is a GREAT time to buy and take on debt.  With ZIRP-to-NIRP interest rates, mortgage rates are at all time lows.  If you have the collateral, the ball is in your court...and you generally have a step ahead vs those who are first time buyers...but those first time buyers maybe not the unlimited capital and credit rich people do.  I just had a scientist friend put 50K down on a condo, get approved, and only loses that shit to some guy who came in last minute and outbid him by 25K.  Not exactly a fair system.

C) Another interesting trend that people want condos/home NEAR cities, not out in the suburbs like in the olden days.  People want more public transit access, not less (because it's a household balance sheet hedge versus potential rising oil prices).  That means housing in cities, especially in technology centers, are going to rise....and suburbian homes are going to fall off a cliff (along with cities with high unemployment).  And suburbia has NO where near the resources, money or manpower wise, to handle the problems that come with property value decline. 

So, is it really "recovering" when the home is out of the average hard working person's reach?  Is it really a recovery when 15-20% of the people own houses and the rest of us are sitting in overpriced flats (due to lower vacancy rates) in overcrowded neighborhoods?

Tue, 07/24/2012 - 10:17 | Link to Comment Oleander
Oleander's picture

I live out here in the rural woods closer to Prov. than Newton and Brookline. 

I cannot figure out why new homes keep going up. There are new homes that are almost 2 yrs old still empty. I check zillow all the time and houses are not moving in my town. We do not have a mbta line here so driving is the only way to get around.  There has been an increase in copper pipe theft though.

 

Tue, 07/24/2012 - 09:12 | Link to Comment Jason T
Jason T's picture

Remember, home buiders were allowed to get the taxes they paid BACK against losses as part of stimulus package.  We bailed out home builder stocks for goodness sake!

Tue, 07/24/2012 - 09:34 | Link to Comment EmileLargo
EmileLargo's picture

The question is how many downside risks there are from here. The market may not "recover" for some time but the combination of mad money printing and currency destruction has to to start impacting housing at some stage. Even if more houses can be built and there is unsold inventory, I doubt that they can be built faster than Uncle Ben can print money.

Tue, 07/24/2012 - 09:52 | Link to Comment VisualCSharp
VisualCSharp's picture

Why build? There are millions of vacant homes and no money to spend on them, let alone new housing. There is no demand for new housing and there won't be. The Ponzi has dried up, folks.

Tue, 07/24/2012 - 10:01 | Link to Comment FieldingMellish
FieldingMellish's picture

Housing is primarily demographics driven and its all pointing down at the moment.

Oh yeah... and fuck you NAR and your 6% commission. .. fucking leaches.

Tue, 07/24/2012 - 10:02 | Link to Comment bondman1
bondman1's picture

There are a long list of positives for the US Housing market! Goldman Sachs outlines them in a report released yesterday afternoon! They see a strong recovery starting now! In a note to clients, they raised their rating on the homebuilding industry to attractive from neutral.

 

Tue, 07/24/2012 - 10:29 | Link to Comment j.tennquist
j.tennquist's picture

You lost me on the last sentence:

In other words, instead of "housing recovery" a much better phrase would be "the rich are getting richer", and everyone else can go suck a lollipop and watch their wealth evaporate courtesy of Z/NIRP.

So, the rich are getting richer buying foreclosures in a market that shows no sign of recovery and could possibly (if not likely) lose more value...  (??????)
Oh, I see.... the more obtuse things get the hard it is to read the tea leaves. 

Couldn't you just sum it up that a fool and his money are easily parted? Oh, and include the graphics.

Tue, 07/24/2012 - 10:39 | Link to Comment Snakeeyes
Snakeeyes's picture

FHFA house prices were up in May, but other economic indicators are down. No credit, how do we have a SUSTAINABLE recovery?

http://confoundedinterest.wordpress.com/2012/07/24/recovery-house-prices-increase-while-flash-pmi-richmond-fed-down/

Tue, 07/24/2012 - 10:58 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

Another ? would be - How do people get a loan? Banks aren't lending

How Bernanke Can Get Banks Lending Again

 

http://online.wsj.com/article/SB10000872396390444873204577537212738938798.html?mod=googlenews_wsj

 

Just Kidding we all know the chair satan would never do that and besides Wall St. doesn't need loans

 

Wall Street's hottest investment idea: Your house

http://finance.fortune.cnn.com/2012/07/24/wall-street-foreclosures/

Tue, 07/24/2012 - 11:19 | Link to Comment Dareconomics
Dareconomics's picture

Of course, this is different from  a housing recovery. The MSM assumes that once something hits the bottom it starts rising again. Try telling that to Wile E. Coyote.

Housing is directly linked to the fortunes of the American worker. Once the economy starts growing again causing a drop in unemployment, upward pressure will be exerted on wages. A real, sustained rise in wages will eventually translate to higher real estate prices, a recovery. No matter what numbers you see that give you hope, there is only one way of this. 

But house prices are rising? No.

But foreclosures are falling? No.

But sales have increased this month? No.

All of those numbers are easily manipulated by NAR and banks with way too many bad mortgages on their hands. Just watch the employment data, and you will be fine. 

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