"Welcome To The Housing Non-Recovery" In Three Simple Charts
Below is some more hard data where you won't find the much anticipated, 'any minute now', housing recovery. While the first chart shows the annualized new home sales sold data, which came in at meaningless 321K in January on expectations of 315K, and a meaningless drop from an upward revised 324K, all this shows is that 3 years after the "recovery", there is zero improvement in housing. In non-SAARed terms, there were just 22K homes sold in January. Naturally, this is to be expected because as long as the government continues to prevent true price discovery, there will be no real housing market. Which is just what the second chart shows: Completed houses for sale at the end of period dropped to 57K - this is the lowest point in the 40 years of this data series. Said otherwise nobody has any hopes that there will be a pick up in housing demand. And why should they - after all as the third and final chart shows, shadow inventory is at a record, and about to be unleashed on the market at bargain basement prices courtesy of the Robo-settlement, which in turn will drag down prevailing prices far, far lower everywhere. Welcome to the latest housing non-recovery.
New Homes for sale, courtesy of John Lohman:
Record low Completed Houses for sale at the end of the period:
And record high shadow Inventory:
Then again, since housing keeps hitting fresh record lows, it can only improve right? Just ask Cramer...
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Shadow inventory is another statistic that might be padded to soften the blow.
I've got some decent stats I can relate later today on shadow stuff. It certainly isn't going away.
The housing market's best chance is to catch some capital if/when it starts flowing out of the stock market in earnest and there is a rush toward hard assets. That's probably not going to happen this year, so for new homes in particular the best they can hope for is a flattish result, or maybe some small percentage gains over 2011 since some of the 2011 demand was pulled back into 2010 with that assinine tax credit they tried.
The bottom is is! It's a great time to buy a house, bitchez!™*
*Message brought to you by The National Association of Realtors™ (not an actual word), The National Association of Homebuilders® , The National Mortgage Brokers Association®, ReMax® and your local property assessors' offices.
** We are criminals, and we approve this message
but but bloomberg sez : "New Home Sales Data Point to Stabilizing Market"
Dead is considered stable, yes?
Well stated good sir! ;)
Well stated good sir! ;)
Well stated good sir! ;)
....as a realtor told me once "Home prices in California never decline."
Toying with the idea of finding half-dozen houses or so that I'd be happy with, then going and offering 1/3 to 1/2 the asking price...just to see what happens. One place I drive past daily has been on sale for 5 years, different realtors, FSBO, etc. So many people living in the golden age of inflated house prices.
I think the cats out of the bag now though. Real estate isn't that "hard" of an asset anymore. People have clearly seen their properties devalue in monetary terms and many have realized that even if they don't have a mortgage they don't "own" property due to property taxes and other means the government can use to steal the property.
We need to get back to allodial title.
Smartest comment on this thread!
Housing is now a depreciating asset. All the fraud in the world can't force people to buy a shit asset at turbo-inflated Bernanke prices.
US residential still has compression downward for an ADDITIONAL 50-75% decline in prices (in aggregate) from current levels (provided incomes do not continue decline in REAL, not bullshit Bernanke, terms).
Depending on how long this takes, one can expect accelerated depreciation as the shit quality homes deteriorate faster than pre-bubble homes not produced by Immigration and Customs Enforcement.
Hope & Change American Caliphate with Mugabe 2.
I can't help but wonder if the third graphic actually understates the seriousness of the housing picture.
As (total) foreclosures continue and exceed the number of new homes built, the total stock of housing that is unencumbered by a pending default or actual foreclosure diminishes. I guess the point (for me) is that the destruction of housing as a store of wealth continues as the number of households owning an unencumbered home continues to decline, with this decline being accompanied by an accelerating loss of value.
I agree. Now where have I heard about a rush toward hard assets....Wiemar. Oh this is gonna be good.
Now thru November elections, any government statistic will be padded or slanted as "better than expected".
And then what?
Right, padding stats has been the M.O. regardless of who's in office.
The charts look much, much worse when you take into account the average price paid per unit.
http://www.census.gov/const/uspricemon.pdf
Way less homes sold x way less price paid = way worse than the media/government is letting on.
The home builders have learned to survive in this environment, at least those that are still around. The longer term problem for housing is the millions of Americans 20%+ underwater on their mortgages, that is just not going to be resolved anytime soon. All the gears of the housing are gummed up with that and the distressed properties pulling down values. We're looking at 2015 for reasonable improvement at the earliest.
Good points, and agreed that 2015 would really be the absolute earliest we'd see an actual bottom. Other stuff that will continue to delay it:
1. Continued gumming up of MBS/CDS valuations.
2. Continued foreclosure law issues (it doesn't look like the recent settlement is going to prevent private class action lawsuits).
3. Prices vs. family income. Until we see that 3:1 historical ratio, it's going to continue to drag (which tracks back to the underwater mortgage issue you mentioned).
2015 consumer pricing:
New Toyota Corrola: $45k.
Slightly lived in 2500 sq ft McMansion: $85K.
Watching the Bernank do the Scaffold Shuffle: priceless.
I'm wondering where you live that 2,500 sq ft might be a McMansion. Guessin' it's neither Fairfax County, VA nor Fairfield County, CT.
In any enclave full of government workers or contractors, especially in the federal bloat areas in D.C., Virginia or Maryland, a McMansion must have a three car garage and a minimum of 3800 square feet to be deemed as such.
Let's not slander McMansions.
You must live in Ashburn! ;)
Better to slander the Beltway parasites who feed at Uncle El Sam Abdul's trough with the islamic. 2,500 sq ft McMansion sounds like Caliphate-pornia in the Valley.
Dude, you seem obsessed with Muslims. They are nothing more than the scapegoat of our times.
Better to slander the Beltway parasites who feed at Uncle El Sam Abdul's trough with the islamic. 2,500 sq ft McMansion sounds like Caliphate-pornia in the Valley.
If at any point there is massive sudden inflation there could be a bump up in home transactions just as a result of flight to real property. Just like there's all kinds of things artificially impacting equity markets, they are distorting housing as well. In the long run, housing will eventually turn around because demographics are on the industry's side, but there's no guarantee of how quickly that will happen given all the chaos in the rest of the economy.
The homebuilders are building apartment buildings and FEMA camps.
Isn't that when the kids of all those baby boomers sell their parents home and stick them in assisted living?
My math:
1945 + 70 = 2015
Unless said boomers are eating quality food and getting daily exercise (implies access to affordable health care), their bodies are going to be going kaput in increasing numbers about then...
Regards,
Cooter
The "home builders" now work at McDonalds.
Do you want fries with that bullshit?
Consider the source: NAR, JPM , MBA
Bloomberg sayys "new home sales data point to stabilizing market" BWAAA YAHAAAAAAAAAAAA. OH MY GOD THAT FELT GOOD>
the Titanic also eventually 'stabilized' nicely on the bottom of the Atlantic.
LOVE your humor!
Seeing as the chart source is the NAR my guess is it's much worse than pictured.
Right, the NAR data is not to be trusted. IF they show decline, it's much much worse.
Yep, when has a realtor EVER said its a bad time to buy a home? (give him a commission)
when has a mortgage company EVER said you should wait to get financing? ha, every commercial is rates are going up! (give him a commission.
When has a broker EVER said its not a good time to buy stocks? (give him a commission)
Any time is always a good time to give people a commission. LOL. People are just too stupid to realize that is what they are asking.
So true. I went to look at a house last week with a realtor and that's all that came out of his mouth:
I asked him if he ever heard of/read ZeroHedge, he just looked at me like I asked him something in a different language "Zero, what? No." Nice house. I just think I'm going to rent another year or two. The thought of buying a house at full price right now scares me.
There's some good deals on foreclosures though, the trick is getting them in a good location.
Personally I'd rather wait till the market actually demonstrates a more solid "rebound" vis a vis actual prices paid rising for a year, rather than take some ass hole's word for it, but you knew that already.
The guy has to sell to make a living. He's not going to tell you to wait on it.
Aesop: "Dis-trust interested advice."
Abject disreality from the shepherds at CNBC:
an upward revision to the prior months' data and a drop in the supply of properties on the market added to growing signs of a budding recovery in the housing sector...
Despite the weak sales last month, details of the report offered further fresh signs of green shoots in the housing market...
http://www.cnbc.com/id/46511706
Green Chutes = rotten bum.
Mustard seeds! (to make mustard for a baloney sandwich).
Charts Inverted FTMFW
Green shoots? no, that is MOLD growing on the ever growing stagnant housing market.
The
prevarication machine does not agree with you Tyler
http://www.bloomberg.com/news/2012-02-24/purchases-of-new-houses-in-u-s-...
Scott Grannis had a good chart at http://scottgrannis.blogspot.com/2012/02/update-on-bursting-of-housing-price.html
He uses the Federal manipulated inflation number, wish he used the Shadow Stats real world numbers.
This is getting ridiculous. Mortgage rates at all time lows, The Fed and Obama throwing everything at it, and we STILL can't get new home sales up.
http://confoundedinterest.wordpress.com/2012/02/24/new-home-sales-decline-in-january-still-in-the-penalty-box/
It's still cheaper to rent right now instead of throwing your money away at a house that is consistently loosing value. Not everywhere but in most areas.
Oh, it's obvious when one considers the first rule of real estate.
"Pride before price."
If you bought a home (clear or mortgage) in the last 15 years you will brutally crucified -- mission accomplished! Equity was the ultimate gimmick (for those that didn't cash out).
Wages taking a beating, energy price racketeering, and home ownership will be the triple knockout to the VAST majority of Americans and their accumulation of wealth. Add to that inflation of around 8% REAL and the plundering is off the generational charts.
You Gen X/Y's are not going to be able to sustain anything at all related to wealth. Sorry!
The nearly non-stop commercials from the National Realtors Association about "now is the time to buy a home" and "the great American dream" belie a housing market recovery of any substance.
Persistent advertising is a sign of either attempting to increase sales and market share or get them out of the gutter.
The U.S. housing market is in the gutter as the charts clearly show.
Greece is defaulting on news that the American housing market has not recovered but instead is in a serious slump. The Troika have announced that Greek bailout money will be diverted to IOWA in order to kick start spending in the first time home buyer category.
Plus who would take out a 30yr loan knowing interest rates will only shoot up eventually to contain inflation. Royally screwed is the US housing market.
What? If you think interest rates will "shoot up" eventually, then now is EXACTLY the time to take out a 30yr fixed rate loan.
Well, anyone who doesn't have a fixed rate loan will be defaulting! More inventory into the system, and supply glut means your house value is underwater, no matter how cheap you think it is now. Businesses will go bust, and joblessness increases. Royally screwed.
Agreed, the only housing I'd buy right now is housing I can put renters in, where there will at least be some margin to offset potential asset value loss. More simply put, it's always a bad idea to borrow money if you're uncertain that your ROI is going to be more than the interest rate you're paying.
IF you can AFFORD the house AND have a cushion to ride out the coming economic catastrophy, NOW is the time to buy a house if you can get a 30 year fixed rate. The rates are being artificially supressed, therefore it is a perfect arbitrage and a great dollar short position without playing the FX market.
When they inflate the debt away, and they will, you won't care about the 'purchase price' -- the fixed payment will be chump change and the tax man cannot do anything about it...
Sure, you're right, it will inflate away. But if you're the only person left on the street while the rest of the neighbourhood vanishes, what good would that be to the value of your house. There's always winners and losers on either side of the ledger.
The other factor is what happens to your RE tax bill??
...and the RE tax rate. Collapsing home prices make for quite the budgetary quagmire for local gubmints.
Not to belittle the RE bill, but who says you will get any income in the future to pay off the fixed loan? That's the thing about biflation (goddamnit I hate that word), the cost of living increases while wages stagnate/decline...
Not to mention that banks would go bust with all those locked-rate loans!
Ah yes, the joys of unintended consequences.
When they inflate the debt away, and they will, you won't care about the 'purchase price' -- the fixed payment will be chump change and the tax man cannot do anything about it...
The "chump change" effect only occurs if your income moves, too. If it doesn't, then that "fixed payment" is going to be tough to service when every loaf of bread is relieving you of a $5 FRN. Homeowners are not CBs, mon frere.
Just speculation on my part, but if serious inflation ultimately rears it head, everything will chase the rate of inflation. Your wages may or maynot keep pace in real terms, but things that are fixed will be fixed.
Lots of examples where this was true in the past, including the US in the 70s...
I went through the exercise of modelling a modest vacation home purchase...(a rather nice spreadsheet if I do say)...
1) Able to pay cash outright but want to play the inflation trade
2) 30% down.... 15 yr fixed for the balance 1% capital upkeep, insurance etc...
3) The balance of funds (70%) are invested in oil/NG royalty trusts with larger current yield than mortage
Doing this only makes sense if you have cash flows that are "indexed" to your COL, hence oil/NG...
The reason to do a 15 year (not 30), is that it is very hard to be cash flow positive with RE taxes...
After 15 years, you own the place, the cashflows from the trusts more than take care of the taxes and upkeep...
Well that works in theory, but in reality most people buy a mortgage payment. So if rates are artificially low right now, when they go up people will not be able to afford the same house. So in effect your house is overvalued in relation to what the price will be with normal interest rates.
So as rates rise, home values will drop. That makes people leery about purchasing a house at the current propped up levels.
Notwithstanding is that many are not secure enough in their employment to take out a 30 year loan on a house.
Housing is in the coffin corner. They cannot drop rates further and risk another runaway bubble (people are too fearful about that now), and they cannot let rates rise as that will add to the underwater section of housing causing a reinforcing downward pressure on pricing.
Basically we are f*cked.
pods
'Oh, rates may go up, so I better take out my slave loan today then!'
Its NEVER the time to take out a 30yr mortgage you damn fools there is no such thing as FREE LUNCH BORROWING your way to riches!
Dog, with all due respect, I disagree. There are times when it makes perfect sense, and this is one of them. IF you can afford the payments and can get a 30 year fixed rate at these subsidized terms, you'd be crazy not to. This may be one of those once-in-a-generation events. These rates do not reflect true market risk - one should take advantage of them while they are around.
unless they devaluate the dollar.
It's not the 30 year loan that's the problem in your scenario. It's housing prices tumbling further.
And XHB almost a double of its lows from October 2011.
Everytime someone says something about fundamentals driving stocks i throw up in my mouth.
Since 2008, stocks have raced up on down on sentiment and speculation, rather than on any actual valuation work.
"speculation" is nothing more than a transmission mechanism of taking central bank liquidity and putting it to work via the path of least resistance, i.e., the stock market.
Want to blame someone? Blame the ChairSatan.
Agree 1000%
Inject $7 TRILLION dollars into world markets in 5 short years, and it will find a 4x levered ETF home.
Done. Blame fully assigned.
I blame the Christians, the Jews, the Muslims, the blacks, the bald white rich guys, the industrialists, the working man, the unions, the liberals, ....
<deleted>
Bullish!
TOL is up today, it must be bullish
/snark
Tyler, quick Q about the 2 trillion over the last few months, has it come from LTRO and the central bank swaps revealed last year? Excuse me, I'm new at this...
While You Were Sleeping, Central Banks Flooded The World In Liquidity
The banksters loaded our youth down with school loans. So you can count those people out. Saturate everyone with debt and eventually it's default time. Nobody pays.
Student loans are the next bubble to burst. Only with those, the carnage cannot be walked away from.
Debt serfs.
pods
Speaking of the youth,
How many are forming families, and thus necessitating the purchase of a new home? Not so many, I suppose.
How many have secure, stable employment generating cash surplus, and thus necessitating the purchase of stocks? Not so many, I suppose.
So here's the Boomer generation, loaded up with these two "assets", heading into retirement, needing someone to sell to.
Who's buying? Certainly not the youth. They can't.
And there you have it.... a deflationary spiral in the "assets" you thought you owned but now own you.
Yup. Japan 2.0
http://www.bankruptcylawyersanjoseca.com/2011/02/wealthy-deciding-to-wal...
Oh yeah, then there are those zero-down NINJA neighborhoods:
Suburbs to Slums: Age of the New Suburban PoorYou mean like Stockton? http://www.moneynews.com/Headline/Stockton-California-Bankruptcy/2012/02/24/id/430436
Ms Whitney was just a little too early with her muni calls IMO.
This is what happens when you have a corrupt and inept President/Congress, with loyalties to one party, coupled with a complicit media that will do anything to cover up the ineptitude, so as to protect their favorite President. He's half-black after all, and any suggestion that he is a clusterfcuk of a failure means you are racist or ignorant or both.
The utter collapse of the housing market over the past several years is one of for the record books. A collosal failure of government intervention and social(ist) engineering, which has ruined the financial well-being of hundreds of thousands of families across this once-great nation. Home ownership is the last pillar of middle class self-sufficiency and the pols just crapped all over it and set it on fire.
Well done, douchebags.
Thanks very much for that. I'm constantly trying to tell the sheeple about the smoke and mirrors in play, I just wish people would wake up to this fraud...