Will Housing Data Show Improvement This Week?

Some data is already out and there have been survey results and reported anecdotal evidence that, on balance, are upbeat. We will have a lot more information about whether housing market optimism is warranted by the end of the week.

Mixed Reports of Improvement for High End Home Market Awaits Data

According to the Daily Real Estate News from Realtor.org, Kathleen Doler reported in Investor’s Business Daily on 10/15 that anecdotal evidence is coming from several realtor sources that upper end home sales are picking up improving. The evidence to support that is not is yet in. The latest data from the NAR (National Association of REALTORS®) as of the end of August shows sales of homes priced above $2 million fell 39.1% year over year. Just one day earlier, Reuters’ Nick Carey reported that anecdotal evidence was indicating that the market above $1 million was showing a decreasing number of buyers. We’ll just have to wait for the September existing home sales data to come out in a few days.

Homebuilders’ Sentiment Declines

Shobhana Chandra, writing for Bloomberg, reports that the NAHB (National Association of Homebuilders ®) monthly survey is down from last month in all three survey categories: current sales, prospective buyers’ traffic and outlook for the next six months. A quote from Chandra:

“I would regard today’s numbers as a temporary blip,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “Once we smooth through that volatility, home sales will continue to improve. The tax credit isn’t the only thing that’s helping sales.” The drop in prices, which has made buying more affordable, and a general improvement in the economy are among the factors that will contribute to a rebound, she said.

According to Chandra, the impending end of the first time home buyers’ tax credit may be the major contributor to the decline.

Economists Predict Improving Housing Market

Realtor.org has a report from a Bloomberg survey of 53 economists. Some of the conclusions:

• Construction starts in September are expected to hit a 610,000 annual rate, the most since last November.
• Sales of existing homes likely rose to a two-year high.
• Because of fear of a relapse, the Federal Reserve is predicted to leave interest rates low for a few more months.
• Building permits, a sign of future growth, probably rose to a 590,000 annual pace, also the highest level since November, the Commerce Department is likely to announce.
• The National Association of Home Builders/Wells Fargo index is expected to rise to 20 from 19, the economists say.

We already know that the last prediction is wrong: the index fell to 18 instead of rising as predicted. (See news in Homebuilders’ Sentiment section above.) The rest of the data will be out later this week.

Data Due This Week

The Dept. of Commerce will announce the September housing starts number tomorrow (Tuesday, Oct. 20). The NAR Existing Homes Sales Price results are due on Friday, Oct. 23. One other data announcement will come on Thursday, Oct. 22 when the FHFA (Federal Housing Finance Agency) reports the HPI (House Price Index) for conforming mortgages in September.

What is the Outlook?

I have made it clear in recent an article last week that my analysis indicates that the trend which so many are viewing with hope is really quite dismal. Many things need to change with employment, foreclosures very poor projections for 2010 housing sales in order for any significant stabilization to take place in housing prices, especially above the $200,000 region, say nothing of housing prices not falling further. An instablog over the weekend provided a link to an article discussing the pending disaster with FHA. FHA is now underwriting about 90% of all mortgages.

If we get any good news this week, there will be many who will say it is just more evidence that the housing crisis is over. With all the data that they will have to ignore to reach that conclusion, I am convinced that they have no idea that a hurricane has an eye.

Comments

[lower98th:]

www.daytondailynews.co...

Banks abandoning foreclosure actions. See liabilities of bank ownership not worth possible collateral salvage.

Oct 20 08:11 AM

[User 16123:]

At this stage of our financial demise - tent cities are the only industry seeing an increase within the financial and consumer discretionary sectors. GS, JPM, WFC, C and BAC all have the key rolls here. Can they keep the growth of tent housing down through the winter? We will see their humane side soon enough. Foreclosures in the winter? FASB may require foreclosure increases. We shall see.

Oct 20 08:26 AM

[Tony Petroski:]

Anecdotally I'm seeing mothballed developments starting to spring to life with new construction even though it's the fall. Certainly nothing like a new boom, but also not doom and gloom.

2010 is when the "shovel ready" projects start to kick in. The Keynesians throwing fuel on the fire as usual.

Hurricanes may have eyes, but clouds have silver linings, it's darkest before the dawn even as the 1000-mile journey begins with the first step.

"All recoveries have to start at the beginning, and at first, the baby will appear to make baby steps." Yogi Berra.

Oct 20 08:43 AM

[HardwoodFlo...:]

Well the housig numbers came out and guess what - they still suck. Know why, people cannot get financing.

Talking with a banker here is what he said:

"If s guy comes in and what's a loan and is credit worthy but not a customer of the bank we will not lend him. We will not lend him becasue we have no incentive to do so. We hare being asked to keep our cash ratios at peaks. So , if we loan out more "new"money we are foreced to bring in more capital to offset it. well it's ahrder to raise capital than it is to say no- so we jsut say no. The only excpetion to this is if they are a good customer and we have a commercial relationsip with them or something other than just doing "new" business."

So wonder why housing sucks- there it is. The reason in a nut shell.

The government with all of their intervention has this country scared of it's own shadow at this time....

Oct 20 09:55 AM

[BRUCE E. W.:]

Throwing the housing market to the wolves seems to be in vogue. I see it as the equivilent to selling it all short and creating a graveyard for many people who are trying to salvage their homes; a landfill garbage dump for scavengers in private equity; a waste treatment center for financials and a triage center for government agency. Meanwhile it is the most visable profile of existing misery which the financial sector would like to see go away (continually reminding us of the failures they conjured up with their derivitives markets...still being propagated and progressively extended to cover the same debt recovery process by way of more of the same). And to top it all, no less than the ultra conservative CATO Institute is now instituting a propaganda war (the intolerable aspect of "Socialism" must be treated like contraband by the Taliban) with a major conference on "What to do about FNM & FRE. Jeeze...I didn't know they cared!
The government has a job to do separate from the markets and one of them is to secure the foundations of socially exceptable standards of living. Everyone is aware of how the "dogs of market -wars" operate. In this case we need to concede that the market was not working properly because of total manipulations in the first place that created this default syndrome. Why should we suddenly believe the same people who will stand to gain from the scavenging that will occur by ripping these mortgage markets open and bleeding them to death.
It is interesting that all the negative focus has been perpetrated recently despite what appears to be real potential recovery and struggling positive indicators as you have carefully reported in todays blog/article. No one wants to see false news or establish false hopes and a critical assessment is required to discern not only what has been happening but what sectors require direct help. It seems that there is an entire segment of the financial community that is dogging this into a corner and seeking to collapse all hope of recovery. Apparently their own homes are not on the butcher block of arbitraged indifference.

Oct 20 10:14 AM

[Mad Hedge F...:]

cva b Since I have been pelted daily with predictions that residential real estate has bottomed for the last two years, like hail in a Midwestern summer thun derstorm, I feel a public duty to tell you that is just not the case. Now that the state and federal moratoriums are off, foreclosures are accelerating. There are over a million Option ARM and Alt-A loan resets about to hit the fan. Since many owners will not see positive equity in their homes in their lifetimes, banks are seeing more walk aways and keys mailed in, often with tearful letters attached. The run up in mortgage rates from 4.5% to 5.5% has yet to hit the market. Some 18 million homeowners divert 50% of their incomes to pay for housing, double the 25% that is considered healthy, and many of them are losing jobs at a record rate. While the volume of units sold has rebounded, the action is dominated by speculators, flippers, and bottom feeders bidding for properties at 10-40 cents on the dollar, not exactly a sign of health. I like to visit the plethora of open houses in my neighborhood, but always find the dead broker hanging from the showerhead a bit of a downer for a Sunday afternoon. Call me when Ozzie & Harriet Nelson come back to the market. I listened to industry insiders call the bottom of the Japanese real estate market for 15 years, until they finally died, and the market is still a fraction of its 1990 high. I think we are closer to the bottom than the top in terms of price, but closer to the top than the bottom in terms of time. You can take that to the bank.

Oct 20 11:04 AM

[BRUCE E. W.:]

www.reuters.com/articl...
20425289200NEW YORK, Oct 20 (Reuters) - Freddie Mac (FRE.N) (FRE.P), the No. 2 U.S. home funding company, on Tuesday sold $3.5 billion in new two-year reference notes that were priced to yield 26 basis points over U.S. Treasuries.

The joint lead managers for the sale were Goldman Sachs, Citigroup and Morgan Stanley. NOW ISN'T THAT CONINCIDENTAL AND VERY INTERESTING?

Oct 20 11:23 AM

[lower98th:]

www.miamiherald.com/bu...

Could this be right? Miami Herald reports area FHA lenders have begun requiring a credit score of 740.

Oct 20 12:29 PM

[Tack:]

If the data is bad, it "proves" things are getting worse. If the data shows improvement, then, it's "wrong," "manipulated," "temporary," "misunderstood," or, most importantly, just not liked by the doomsayers.

To believe and invest as if there's no future is not to have one.

Oct 20 12:36 PM

[John Lounsbury:]

lower48th - - -

Thanks for the press clippings.

Oct 20 12:46 PM

[goldbug101:]

It appears that some lenders are in effect reverse red-lining what properties to foreclose.

Red-lining, traditionally defined as a lender refusing to lend based on the property location, not the borrower's credit worthiness, has been outlawed for some time.

Instead, what lenders are doing now is refusing to either initiate the foreclosure or finish it by taking title to the land so that they are not stuck with properties that will cost them money and possibly subject them to code violations, etc.

Obviously, the more properties in a neighborhood a lender forecloses on, the more knowledge it gains as to the marketability of properties in the area as well as the likelihood that the neighborhood is “undesirable” to potential bidders or REO sales.

Call it black-lining, and it is perfectly legal. The lenders don't have to mark the loan for a loss, nor pay the property taxes, or the code violations. Nope, they can let the local authorities sit on it for years until it goes through property tax foreclosure, then mark it as a loss years from now.

Why take the loss now, and possibly be subjected to code violations and delinquent property taxes, when you can just sit on it until the local authorities get around to the property tax foreclosure sale in a few years.

Plus, you avoid the out of pocket expenses associated with foreclosure and subsequently holding the property and marketing it for sale.

Oct 20 01:10 PM

[PD Quig:]

"If the data is bad, it "proves" things are getting worse. If the data shows improvement, then, it's "wrong," "manipulated," "temporary," "misunderstood," or, most importantly, just not liked by the doomsayers."

We've had a 60% run up in the stock market with P/E's exploding to record levels--all with arguably the worst economic data in 70 years. If there is any denial going on, it is on the side of the bulls. Let's see what becomes of the housing market when the millions of shadow-foreclosures held off the market hit. There's a difference between being a 'doomsayer' and being clear-eyed with respect to the fundamentals that ultimately CANNOT be ignored by the market.

Oct 20 01:37 PM

[sako shooter:]

Building permits fell 1.2% to a 573,000 annual rate in September. There was not a likely rise to 590K as forecasted by economists in the article. Put your faith in facts, not forecasts by economists. I probably and very likely could have found an economist who forecasted a decline in building permits. Lots of likely's and probably's in this article. My forecast is that the housing market has not bottomed out, and won't for years. Fannie and Freddie are worthless. FHA is the new purveyor of tomorrow’s toxic loans. Wait until the Fed has to raise interest rates next year to protect the dollar from $1.75 to the Euro (how low will they let it go?) The banks have slowed foreclosures in order to save money and protect their bottom line. Goldbuy 101 is spot on. There are way too many toxic loans and toxic properties for the housing market to clear yet. Wait until the tidal wave of commercial foreclosures hits the banks. With 40 year refi's becoming a technique to keep delinquent owners in their house, maybe the banks will offer 100 year refi’s on commercial loans. Full disclosure: I am not an economist, but I can tell you that every winter the housing market slows due to bad weather, and what few are still working will get laid off. There are no green shoots or any good news. Sorry. We are paying for years of bad policy created by CRA.

Oct 20 02:21 PM

[bobbobwhite:]

One thing not debated enough is how/why the gov't is pushing the extremely harsh realities of this economic mess out further and further on its improbably infinite time line, as if that would soften what has to eventually happen. That soft landing everyone wants will not happen, and the roof will fall in(sorry, housing industry) at some future point, probably after the present crop of failed politicans leaves office. It will be worse than it was in 2008. Prepare.

Oct 20 02:50 PM

[Jeff Nielson:]

John, I still see you looking at this market "through rose-coloured glasses".

You acknowledge the CURRENT discrepancy between the total number of foreclosures and the MUCH smaller number of foreclosure SALES. However I still see no mention of the MILLIONS of units held off the market by banks over the PREVIOUS 18 months or so.

Full marks for noting that the "official" number of foreclosures for the last quarter doesn't come close to matching the total number of foreclosures - when each month is added separately. This is much like how the actual increase in the U.S. national debt is about DOUBLE the "official deficit", and how the state-by-state numbers on employment are WORSE than the aggregate "national" numbers.

At what point do all these LARGE discrepancies in simple ARITHMETIC (living in an age of computers) go from being "honest mistakes" to deliberate deceit?

And given that we can trust neither the "official" totals of foreclosures, NOR the "official" inventory numbers, are we supposed to ignore this clear pattern and assume we are being told the truth regarding recently "rising" U.S.home prices?

Here's one more anecdote. I have read NUMEROUS propaganda pieces about how the "growing number" of potential buyers are supposedly having difficulty FINDING "REO homes" for sale - because they are being snapped-up so "quickly".

However, as a Canadian, I have gone in recent weeks from getting ONE piece of spam each day ("alerting" me to all the wonderful investment opportunities for CANADIANS to buy U.S. distressed real estate) to getting SEVERAL pieces of such spam daily.

Is THIS the sign of a market which has "bottomed"?

How long before you are willing to "call a spade a spade", John?

Oct 20 04:33 PM

[robert.b.fe...:]

Housing data is actually hosing data and we are the ones being hosed.

Oct 20 06:47 PM

[PompanoFrog:]

this is ridiculous..the FRB is well aware of the weak housing market..they will continue to create liquidity until the housing market stabilizes..meanwhile the spread between the rise of the stock market and the real estate market gets larger..at some point households will shift their asset allocation towards housing..

If you dont understand that asset prices rise rapidly when central banks fight recessions i guess you havent made any money in the last 6 months..the turn in real estate prices will cause banks to have to take profits under the new estimation models..this will create an earnings explosion in financials..

Oct 20 07:37 PM

[John Lounsbury:]

Jeff - - -

Thanks for the insightful comment, but you are being a little harsh. Here is what I have written in the past 30 days:

1. "Housing Bottom is not In", September 29 www.thestreet.com/stor...
Conclusion statement: Housing-sales volumes have risen dramatically since the beginning of the year in many markets. We may not see a repeat of the extreme low volumes. Prices remain within 3.6% of the lows and, heading into seasonal weakness, the national average price lows of April have a good chance of being taken out. Supply and demand challenges add to the probability that the price lows are not yet established.

2. "Many Home Buys Delusional About Market" October 14
www.thestreet.com/stor...
Restated evidence that housing prices have not bottomed, and added that employment and consumer spending also have not bottomed, so expectations of a significant recovery are misplaced.

3. "New Home Sales are not Constructive" September 25
seekingalpha.com/artic...
Introductory statement: The new home sales data today is much clearer. It is quite negative and the press is ignoring that.

4. "Season Effects Cloud Housing Market Status" September 25
seekingalpha.com/artic...
Final statement: One possible outcome, which no one (except a home buyer) wants to see, is that we have higher sales volumes this winter as a result of home prices pushed lower by a continuing high number of foreclosures.

5. "Housing Prices: Further to Fall?" September 29
seekingalpha.com/artic...
Final statement: I am staying with my opinion that housing prices are headed lower.

6. "Pending Home Sales Up; Failed Contracts Also Up" October 2
seekingalpha.com/artic...
Concluding paragraph: When I see some unconnected dots in existing home sales and mortgage data, I can only assume they are not connected by the NAR because it does not service their purpose. The purpose of the NAR is to promote an enthusiastic consumer base for home sales. My assumption is that there is nothing here that would support their agenda.

7. "Housing is Moving Toward Disaster" October 16
seekingalpha.com/artic...
Conclusion: This discussion hasn't even addressed the possibility that the foreclosure rate may increase as we go forward. It is possible that foreclosure rates could keep climbing for another year, as some have predicted, or even longer. What happens if the foreclosure rate approaches the sales rate? What happens if foreclosures outnumber sales? I'm glad I don't plan to move soon.

I think I have made my analysis of the U.S. housing market pretty clear. However, you may be correct about the rose colored glasses. As negative as my outlook is, It could be even worse that I have projected.

Oct 20 07:55 PM

[GreatWhite:]

You need to take off your GOLD colored glasses and get in touch with reality. The only thing you EVER preach is BUY GOLD & SILVER, The end of the world is coming because of the US Banksters.... Bankersteroos! Governments are ALL Liars in everything they say, the inventory numbers for homes, the inventory of GOLD they say they have, the unemployment numbers are all LIEs, Buy GOLD to protect yourself, come to my website bullion bulls canada and my pay per click advertisers will tell you how to buy GOLD> Then when you have as much GOLD as you can cary. find a cave and hide there with your GOLD till you DIE! This is the ultimate end for us all. Give up your FIAT currency blah blah blah blah blah blah........

You tell John to call a spade a spade, I say to call you a Joke because you are a JOKE Nielen! A gloom and doomer JOKE!

GreatWhite


On Oct 20 04:33 PM Jeff Nielson wrote:

> John, I still see you looking at this market "through rose-coloured
> glasses".
>
> You acknowledge the CURRENT discrepancy between the total number
> of foreclosures and the MUCH smaller number of foreclosure SALES.
> However I still see no mention of the MILLIONS of units held off
> the market by banks over the PREVIOUS 18 months or so.
>
> Full marks for noting that the "official" number of foreclosures
> for the last quarter doesn't come close to matching the total number
> of foreclosures - when each month is added separately. This is much
> like how the actual increase in the U.S. national debt is about DOUBLE
> the "official deficit", and how the state-by-state numbers on employment
> are WORSE than the aggregate "national" numbers.
>
> At what point do all these LARGE discrepancies in simple ARITHMETIC
> (living in an age of computers) go from being "honest mistakes" to
> deliberate deceit?
>
> And given that we can trust neither the "official" totals of foreclosures,
> NOR the "official" inventory numbers, are we supposed to ignore this
> clear pattern and assume we are being told the truth regarding recently
> "rising" U.S.home prices?
>
> Here's one more anecdote. I have read NUMEROUS propaganda pieces
> about how the "growing number" of potential buyers are supposedly
> having difficulty FINDING "REO homes" for sale - because they are
> being snapped-up so "quickly".
>
> However, as a Canadian, I have gone in recent weeks from getting
> ONE piece of spam each day ("alerting" me to all the wonderful investment
> opportunities for CANADIANS to buy U.S. distressed real estate) to
> getting SEVERAL pieces of such spam daily.
>
> Is THIS the sign of a market which has "bottomed"?
>
> How long before you are willing to "call a spade a spade", John?

Oct 20 10:45 PM

[Joe Shareho...:]

Echoed by my Citibank neighbor. They only service existing customers right now.


On Oct 20 09:55 AM HardwoodFlooring wrote:

> Well the housig numbers came out and guess what - they still suck.
> Know why, people cannot get financing.
>
> Talking with a banker here is what he said:
>
> "If s guy comes in and what's a loan and is credit worthy but not
> a customer of the bank we will not lend him. We will not lend him
> becasue we have no incentive to do so. We hare being asked to keep
> our cash ratios at peaks. So , if we loan out more "new"money we
> are foreced to bring in more capital to offset it. well it's ahrder
> to raise capital than it is to say no- so we jsut say no. The only
> excpetion to this is if they are a good customer and we have a commercial
> relationsip with them or something other than just doing "new" business."
>
>
> So wonder why housing sucks- there it is. The reason in a nut shell.
>
>
> The government with all of their intervention has this country scared
> of it's own shadow at this time....

Oct 21 12:50 AM

[Hmm?!:]

There are approximately 7 million homes in bank shadow inventories today.

By 2007 48% of mortgages were low/no doc loans. A sample of 100 low / no doc loans showed 60% of low / no doc borrowers overstated their income by MORE than 50%. (Data Source: Mortgage Liquidity Du Jour by Credit Suisse)

That means about 30% of all homes sold in 2007 are destined for foreclosure. The other Liars loans could still have up to a 50% overstatement on their income. Do you know how buyers who never qualified the first time come back into the market? They don't!! They never existed as qualified buyers in the first place.

A lot more will go wrong from the side effects of excess before it is all absorbed. With a downward spiraling economy and slowing population growth, the excess could last...........a decade? How does this get absorbed when builders are still building?

On Oct 20 07:37 PM PompanoFrog wrote:

> this is ridiculous..the FRB is well aware of the weak housing market..they
> will continue to create liquidity until the housing market stabilizes..meanwhile
> the spread between the rise of the stock market and the real estate
> market gets larger..at some point households will shift their asset
> allocation towards housing..
>
> If you dont understand that asset prices rise rapidly when central
> banks fight recessions i guess you havent made any money in the last
> 6 months..the turn in real estate prices will cause banks to have
> to take profits under the new estimation models..this will create
> an earnings explosion in financials..

Oct 21 01:39 AM

[Ponchovilla:]

More Good News:
1. Builders margins stink. Buyers are resizing to consider energy costs after $150/barrel oil shock on the wallet. Granite counters and other fluff? where best profit was made.
2. Realtors play the game of relisting to show houses on the market less than 60-90 days. In reality some are on the market for 2 yrs at original listing price. Seller denial.
3. Banks are ignoring loans well past due. Ya'll should know this. Many more foreclosures to come.
4. CRE only to make matters worse.
5. FHA/Fannie/Freddie still accumulating too many toilet paper loans.
6. Investors pools are buying bulk properties on the assumption that they will make great returns relative to Treasuries. No so sure when it applies to condo's and the reality of maintenance and tax expense when Tax appraisal districts need every buck they can get due to State/County/City crap finances.
7. RE Agents list homes at a price where the Bank refuses a short sale. Loan value plus taxes due are greater than selling price.
8. Realty Trac does not have all of the foreclose listings (good but partial data). FHA has a bunch not shown on Realty Trac

Economists are as clueless as that bunch of idiots inside the beltway.

Lots more but that's enough to show downside risk is substantial.

Oct 21 02:15 AM

[nevket240:]

Just as the AGW scammers started calling wisps of wind "Hurricanes" to diddle the data, what size tent can be called residential construction??? Does it require a metal frame to qualify???
regards


On Oct 20 08:26 AM User 16123 wrote:

> At this stage of our financial demise - tent cities are the only
> industry seeing an increase within the financial and consumer discretionary
> sectors. GS, JPM, WFC, C and BAC all have the key rolls here. Can
> they keep the growth of tent housing down through the winter? We
> will see their humane side soon enough. Foreclosures in the winter?
> FASB may require foreclosure increases. We shall see.

Oct 21 03:14 AM

[Steven Hansen:]

John,
with internet at $0.75 per minute, i will be brief....

after my first lecture yesterday, i asked the audience how many believed the recession was over. not a person raised their hand.

housing, i believe, has little chance of recovery with people believing we are in a recession. no one believes the government.

on the other hand, housing volumes have to be increasing - i doubt if they can go any lower. improvement is from a low level, and i do not believe there is any chance of volumes returning to 2006 levels any time soon.

Oct 21 04:08 AM

[MikeD71:]

Well said. Seeing reality, as opposed to media slant has become similar to being a conspiracy theorist. If you don't accept popular view, that is, a view aligned with the mainstream, you are a doom-and-gloomer or a fringe nut. To me the nut is the one who believes what they hear because it's the majority opinion, or it was on TV. How...how can one conclude that we are recovering??? Because the descent has slowed? I'm really worried about this false hope, and the destruction it will cause. The guy that lost 60% and is now sitting there with the shakes just itching to jump back in. All in. We have a day of reckoning coming. Be it in a month, 6 months or a year. It's coming. Like a smack in the face, REALITY. We have fixed nothing, and have diluted the dollar to near extinction in the process. We're on life support. The sooner that is understood the better.


On Oct 20 01:37 PM PD Quig wrote:

> "If the data is bad, it "proves" things are getting worse. If the
> data shows improvement, then, it's "wrong," "manipulated," "temporary,"
> "misunderstood," or, most importantly, just not liked by the doomsayers."
>
>
> We've had a 60% run up in the stock market with P/E's exploding to
> record levels--all with arguably the worst economic data in 70 years.
> If there is any denial going on, it is on the side of the bulls.
> Let's see what becomes of the housing market when the millions of
> shadow-foreclosures held off the market hit. There's a difference
> between being a 'doomsayer' and being clear-eyed with respect to
> the fundamentals that ultimately CANNOT be ignored by the market.

Oct 21 04:12 AM

[lower98th:]

I suppose from my real estate-centric vantage point, things would look bad. But just like no addiction can be cured before rock bottom, I can't reconcile a robust recovery with an unresolved and opaque housing market. How much of our greater economy extends from housing? It is not just the houses, it is the $20,000 refrigerators and $2,000 washers that went into aspirational housing, the $55 sq ft granite, the $10,000 security systems. When and to what extent will that business return?

In Central Florida, residential builders have a construction pricepoint under $50 sq. ft. In my opinion they cannot achieve it except by seriously cutting quality and further deflating wage and component price inputs.

I suppose we can inflate the housing asset, just like stocks, but a smoke and mirrors market is very uncomfortable. This is not change I can believe in.

Oct 21 06:51 AM

[robert.b.fe...:]

That's assuming that the liars who took the loans are even still employed the numbers could get much larger much faster.


On Oct 21 01:39 AM Hmm?! wrote:

> There are approximately 7 million homes in bank shadow inventories
> today.
>
> By 2007 48% of mortgages were low/no doc loans. A sample of 100 low
> / no doc loans showed 60% of low / no doc borrowers overstated their
> income by MORE than 50%. (Data Source: Mortgage Liquidity Du Jour
> by Credit Suisse)
>
> That means about 30% of all homes sold in 2007 are destined for foreclosure.
> The other Liars loans could still have up to a 50% overstatement
> on their income. Do you know how buyers who never qualified the first
> time come back into the market? They don't!! They never existed as
> qualified buyers in the first place.
>
> A lot more will go wrong from the side effects of excess before it
> is all absorbed. With a downward spiraling economy and slowing population
> growth, the excess could last...........a decade? How does this get
> absorbed when builders are still building?
>
> On Oct 20 07:37 PM PompanoFrog wrote:

Oct 21 09:34 AM

[BRUCE E. W.:]

Great Overview John: I do believe it constitutes one of the best article/blogs (in itself) that I have seen. What a great summary; I copied and pasted it to a mailing to myself for future reference!
Nice Job: Bruce Woych, Research Anthropologist


On Oct 20 07:55 PM John Lounsbury wrote:
> Here is what I have written in the past 30 days:
>
> 1. "Housing Bottom is not In", September 29 www.thestreet.com/stor...
>
> Conclusion statement: Housing-sales volumes have risen dramatically
> since the beginning of the year in many markets. We may not see a
> repeat of the extreme low volumes. Prices remain within 3.6% of the
> lows and, heading into seasonal weakness, the national average price
> lows of April have a good chance of being taken out. Supply and demand
> challenges add to the probability that the price lows are not yet
> established.
>
> 2. "Many Home Buys Delusional About Market" October 14
> www.thestreet.com/stor...
>
> Restated evidence that housing prices have not bottomed, and added
> that employment and consumer spending also have not bottomed, so
> expectations of a significant recovery are misplaced.
>
> 3. "New Home Sales are not Constructive" September 25
> seekingalpha.com/artic...
>
> Introductory statement: The new home sales data today is much clearer.
> It is quite negative and the press is ignoring that.
>
> 4. "Season Effects Cloud Housing Market Status" September 25
> seekingalpha.com/artic...
>
> Final statement: One possible outcome, which no one (except a home
> buyer) wants to see, is that we have higher sales volumes this winter
> as a result of home prices pushed lower by a continuing high number
> of foreclosures.
>
> 5. "Housing Prices: Further to Fall?" September 29
> seekingalpha.com/artic...
>
> Final statement: I am staying with my opinion that housing prices
> are headed lower.
>
> 6. "Pending Home Sales Up; Failed Contracts Also Up" October 2 <br/>seekingalpha.com/artic...
>
> Concluding paragraph: When I see some unconnected dots in existing
> home sales and mortgage data, I can only assume they are not connected
> by the NAR because it does not service their purpose. The purpose
> of the NAR is to promote an enthusiastic consumer base for home sales.
> My assumption is that there is nothing here that would support their
> agenda.
>
> 7. "Housing is Moving Toward Disaster" October 16
> seekingalpha.com/artic...
>
> Conclusion: This discussion hasn't even addressed the possibility
> that the foreclosure rate may increase as we go forward. It is possible
> that foreclosure rates could keep climbing for another year, as some
> have predicted, or even longer. What happens if the foreclosure rate
> approaches the sales rate? What happens if foreclosures outnumber
> sales? I'm glad I don't plan to move soon.
>
> I think I have made my analysis of the U.S. housing market pretty
> clear. However, you may be correct about the rose colored glasses.
> As negative as my outlook is, It could be even worse that I have
> projected.

Oct 21 10:43 AM

[Living4Divi...:]

"FHA is now underwriting about 90% of all mortgages."

WOW !!

Oct 21 10:49 AM