Quadruple Dip: Housing Relapses As "March Is Turning Out To Be The Weakest Month Since Last October Re: Buyer interest"

Tyler Durden's picture

For months we have been saying that there is no housing recovery, and what little buying interest there was was driven purely by abnormally warm weather and still record low interest rates. Well, the seasonal aberrations are now over, and normalcy can return, but not before much demand was pulled forward (Cash for Caravans? Money for McMansions? Shekels for Shacks? Dough for Dumps?) to December-February courtesy of "April in January" and mortgage rates soaring to well over 4%, leading to a major tumble in MBA new home and refi mortgage applications (as noted here "So Long Housing - Mortgage Applications Collapse, And Sentiment Update"). So we won't repeat ourselves, intead we will give the podium to CNBC's Diana Olick who now finds empirical evidence of what we have been saying all along. From Olick:  "Housing was charging back. Spring sprung early. Sentiment among home builders doubled in six months. Any talk that the fundamentals might not be supporting the sentiment was met with harsh criticism. And then suddenly it wasn’t. A slew of new housing data last week disappointed the analysts and the stock market, and all of a sudden you started to hear concern that maybe housing wasn’t exactly in a robust recovery. From home builder sentiment to housing starts, to home builder earnings right through to sales of newly built homes, there was not one hopeful headline in any of it (except perhaps if you invest in rentals, as multi-family housing starts made more gains, but that is a contrary indicator to housing recovery)." And from the ground:"And then an email from a Realtor in New Jersey: “Just reviewed March buyer clicks, Google’s analytics on all the sites we monitor – March is turning out to be the weakest month since last October re: Buyer interest."

Speaking of rentals, recall: "The "New Normal" American Dream Of Renting Is About To Become Very Expensive" and so it is - rentals being one of the very few things in the CPI that actually are surging in price, expect Fed's inflationary beancounting to show price pressure, but luckily it will be more than offset as homes for sales quadruple dip and the housing sector relapses all over again.

More from CNBC on what has been paifully obvious to all those who live in the real economy instead of making their deliberations based on Suez Canal canoe indices, or Architecture billings or what not:

Now we start another week with another disappointment. Pending home sales, a measure of signed contracts for existing homes, not closings, fell half a percentage point month-to-month.

 

That may not seem like a big deal, but the analysts were looking for a small gain. No doubt the Realtors will point to the solid 9% gain from a year ago, but so much of that gain is based on a change in the foreclosure pipeline.

 

Last year the foreclosure process stalled. The “robo-signing” mess brought everything to a standstill, and that left investors with little to buy on the distressed side. Foreclosures began ramping up again in the late fall, and that led to a surge in investor buying. Was that the “recovery” we were seeing?

 

Investors are still rushing into the market, with distressed sales making up a near-record 48.7 percent of sales in February on a three month moving average, according to a new report today from Campbell/Inside Mortgage Finance.

 

Investors are now a full quarter of the market, and they are increasing their activity in short sales (when a lender allows the home to be sold for less than the value of the mortgage).

 

Don’t get me wrong, investors buying up the distress is necessary to cleanse the market, but it is not real recovery. Mortgage originations are at a 12-year low, despite record low rates. Normal, “organic” home buyers, move-up owner occupants, are not flooding back into this market. Rents are still rising.

 

Mortgage analyst Mark Hanson runs some disturbing numbers to back up his contention that Q2 will disappoint: “Investor sales volume up 37 percent YY for a whopper 69 percent of all YY existing home sales gains. First-timers are starting to look weak in Feb. The gains in first-timer and repeat sales can easily be explained by historic rates and weather and can easily reverse in a single month.”

Judging by the market reaction today, we expect everything to be limit up tomorrow as Case-Shiller posts the 7th consecutive drop in home prices. Or is it 8th? Frankly, it doesn't matter. All that does matter is how much more currency debasement will the USD sustain before it loses its reserve status.

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FOC 1183's picture

Where's Brusca??

ihedgemyhedges's picture

Leave Bob alone.  He's busy applying for Larry Yun's job....

Kayman's picture

You mean Leo Brusca ?

Come on People, put on your happy shoes; everything is peachy. Pass the hookah....

malikai's picture

Gross is probably having the biggest orgasm ever in the history of mankind right now.

Lost Wages's picture

We have some money trapped in a 401K with limited mutual fund options, so I put a third of it into Gross' PTTRX last month because it seemed like he knew what he was talking about. Hopefully that corrupt crony Gross has our rehypothecated retirement frontrunning some sweet, sweet Ctrl-P.

francis_sawyer's picture

So does this mean that Obama is actually OVERPAYING for Peggy Joseph's mortgage?

lolmao500's picture

This is clearly the bottom! That means bullish!

Greater Fool's picture

If I had a hundred bucks for everytime someone has tried to call a bottom on this market from 2007-present....

The Alarmist's picture

... You would be the person to whom all that stimulus spending went.

Mercury's picture

Speaking of rentals, recall: "The "New Normal" American Dream Of Renting Is About To Become Very Expensive" and so it is - rentals being one of the very few things in the CPI that actually are surging in price, expect Fed's inflationary beancounting to show price pressure, but luckily it will be more than offset as homes for sales quadruple dip and the housing sector relapses all over again.

Well, time to buy a rental property while rates are still relatively low then....

LawsofPhysics's picture

Bingo, just make sure your tenants are gainfully employed first.

Mercury's picture

There’s the obvious future uncertainty of how  your municipality is going to treat you as a property owner but:

 

a crappy real estate market + relatively low fixed  mortgage rates + inflating rents = an attractive capitalization rate for prospective landlords

 

– especially if they chose to live in the building as well.

Vampyroteuthis infernalis's picture

No jobs means no houses means no sales. You can buy every mortgage up and it doesn't matter if J6P is unemployed. Rents will fall since they seem to continue building there.

MachoMan's picture

Exactly.  I'm dipping my hand in the landlord market locally, but it's with the understanding that not only will RE fall in price, but rents will follow.  This is why only a very, very select few purchases ever get made...  I'm looking at a 25% drop in housing prices and 25% drop in rent and if I can still make solid scratch, then I pull the trigger.  In the end, it's a simple question of diversification as well as converting ethereal dollars into something tangible...  [it really hasn't been too many decades since people paid rent in barter...  whether it be hogs, chickens, jewelry, or even labor].

lazarus's picture

Just last year Craigslist in Boston had a woman offering titf*cks for rent . . .

LawsofPhysics's picture

Yes,  I have been considering rentals in college towns, especially those with strong funding prospectives for "re-re-educating" America.

What happens when the water/sewer/security/municipal pensions all go bust is another matter that insures printing at some level and higher local taxation.  The difference between local taxation and federal taxation is when your local taxation goes up (at least on my neck of the woods) it is easy to find the county commisioner and local representatives and call them out on to the carpet.  these people know they will be hung at some point, hence they are very willing to "keep it real" as it were.  So to reiterate your point, being local is the key because it has been my eperience that if you don't keep pushing back on your local commissioners and reps, the will eventually screw you.

MachoMan's picture

These facts are what hedge fund managers...  and even the federal government does not understand.  Real estate is local...  and the wanna be landlords out there are going to get a rude awakening when they get yokeled.

Curt W's picture

Property tax rates are skyrocketing as counties adjust their revenue streams.  My property tax doubled from 2005 to 2011

francis_sawyer's picture

...next CPI formula = "ex" food, energy & OER

Lost Wages's picture

Shekels for Shitholes works for me.

LawsofPhysics's picture

The spin the MSM trys to put on this should be entertaining.  popcorn anyone?

Ralph Spoilsport's picture

The local real estate people agree there is no housing recovery around here. One new house under construction in the last year and the buyer is having trouble making his next payment on the construction loan.

asteroids's picture

Housing. The Death of the American Dream. Worse, it'll turn into a nightmare before this is over.

MachoMan's picture

Entitlement.  The Death of the American Dream.  Worse, it'll turn into a nightmare before this is over.

Fixed it for you

The Alarmist's picture

Entitlement.  The Lunesta-induced version of the American Dream. 

There, fixed it for both of you.

TeresaE's picture

Obesity, the Death of Health Care Insurance

Hurricanes and inflation, the Death of House Insurance and FEMA flood insurance.

 

The list goes on and on.  They are killing everything.  Simply everything, including our will to stop them.

j0nx's picture

Certainly not what I'm hearing and seeing here in the DC area. Good houses all have bidding wars on them with 4 and 5 contracts and people with so-so credit are being approved for loans. Just saying..

Of course my hood isn't included in that due to highillegal alien and section 8 residency. Good old murphy...

ElvisDog's picture

Umm, DC is not representative of the rest of the country. It has the lowest unemployment rate and highest median salary due to so many people working for the govt.

The Alarmist's picture

DC ... Can you be any closer to Apartheid in the modern world?

kridkrid's picture

location, location, location.  Real estate, no matter what the national trends, still has a local flavor.  But don't' let the DC area fool you.  There is no aggregate recovery... there won't be an aggregate recovery under our current monetary system.  Post collapse and the next thing... who knows.

Kayman's picture

"Certainly not what I'm hearing and seeing here in the DC area."

Best indicator of all that the economy sucks; housing is booming for those that receive government checks. 

shushup's picture

Why would anyone sink their money in housing when the government is so openly proping up the stock market? You can get rich buy AAPL,PCLN, CMG and ISRG. Why put your money in a house that will not appreciate at all?

shushup's picture

I don't know how they expect housing to recover when they are encouraging stock market investment.

ziggy59's picture

Shit for sheeple

tony bonn's picture

this data is yet one more reason why the fed will launch Fedomatic, the print at home money solution used by fed agents nationwide. Now you, too, can print money with the same software which fed banksters use to create trillions of dollars in stock index saving funds....Now you can stay at home to monetize whatever you like....Have excess trash? monetize it with Fedomatic....Need a new McMansion? Fedomatic is your first choice to create tranched mbs for immediate bank approval....yes folks, the days of limited money are long gone...do your patriotic duty and buy fedomatic today so that you too can start bailing out yet another another national security treasure like aig, goldman sachs, or your next president's campaign fund!! only your imagination limits what you can do with home security monetization. now, for a very limited time, fedomatic is free to the first 1 million buyers of our fabulous housing collection....blah blah blah

Jim in MN's picture

Wake me when the average American has $50-100K in cash lying around for the NEW NORMAL in down payments.

May have something to do with a yet-to-be-realized significant uptick in disposable personal income per capita, net of punitive charges for utilities, state fees, etc.

AIN'T GONNA HAPPEN PEOPLE.

riphowardkatz's picture

simply not true. Friend just bought a 300k house on 70 income with about 8% total closing costs. Why are you making stuff up?

MachoMan's picture

This.  I'm not seeing any decrease in the ability of most to borrow the shit out of money...  especially if you already have a lot borrowed ;)

The simple fact is that the banks can't give money away...  most people know better.  Maybe if rates were -5% you might get some takers?

Chupacabra-322's picture

@ riphowardkatz, I agree. 

Just put an offer on a short sale for 326,000k with 30k down.  Agreement states bank has to pay total closing costs or no deal. 

The Alarmist's picture

Yeah, DTI >4x ... Seems like happy days are here again.

RagnarDanneskjold's picture

China's housing market is more important, it will determine whether the global economy continues mild growth or falls into recession. 

Chinese luxury home prices continue to decline, reaching nearly 50%; Aoyuan project faces cash crunch?

Village Smithy's picture

Diana Olick is a) hot, and b) one of the few people at CNBS who is not a complete shill. No doubt she will soon be fired at which point I'm sure Ivy Zelman would be happy to hire her. Good luck Diana!

Dingleberry's picture

"Buy now....or be priced out FOREVER!!"

A public service announcement brought to you by your friendly neighborhood realtor

digalert's picture

How many good people have been screwed by MSM propaganda since 2009? The Bamster and the Bernank saved us from the brink, prices never lower, interest at historic lows, buy now!!!

TeresaE's picture

 Good call, but it started in earnest during the dotcom/Y2K temporary insanity and boom years.  TPTB are just getting much better at delivering their messages to a more distracted, apathetic and stressed populace.

Widowmaker's picture

What dip?  There has been no crash for RE to even begin to find a bottom.  We've had zero price discovery in housing for 4 years of fraud selling to bury the Inc. fraud-shit under the rug.

Only suckers are buying homes -- no matter what "deal" you think you're getting it's nothing compared to the bag you will be holding.

riphowardkatz's picture

Because the Widowmaker said so, dammit! Please let us know when the coast is clear. Thanks widowmaker your insights are invaluable or are they without any value? Haven't decided yet.

MachoMan's picture

What bag?  If the home is bought without any leverage...  and is a simple matter of portfolio diversification...  and all title issues are good to go...  I don't see the problem...

unionbroker's picture

im going to convert my basement into bedrooms and rent it out to 4 students at 900 a pop . Why work whe i can let Japan co. support me