Scott Sambucci

Housing Demand Is Back in San Jose

Mad Hedge - Thanks for the note. The editors drastically altered the headline title for this article. It's purpose was to show market activity by price zone, and how the lower end of the market is indeed clearing now that prices have fallen dramatically. Previously in 2005 and 2006, the housing demand was spurred by bubble activity - buyers wanted to get into the market as it was rising and could only afford lower-priced homes because of the prices levels then. Now, the market is beginning to show signs of picking up at the lowest price segment because homes are priced far more aggressively and because of foreclosure activity.

Housing Market: The 'End of the Beginning'

Hi Jasper - Per your note - "I am curious how the author squares this with the coming waves of ARm resets, especially in light of rising long bond. According to the Credit Suisse (done in 2007), there is a larger wave coming at the end of 2011 than the subprime one we already dealt with. That is pretty much inventory."

Absolutely agree with respect to some of the ARMs resetting - I've referenced this in a couple of articles, including:
seekingalpha.com/artic...

By no means am I suggesting that we're out of the woods - the premise for labeling our situation as the "end of the beginning" (and clearly NOT the "beginning of the end"...).

Housing Market: The 'End of the Beginning'

Radardoc - "While I must acknowledge that I am probably as pessimistic as you are optimistic, " ...

I guess I'm optimistic in the sense that I think that the bad data and information is behind us, though I don't think that we're anywhere close to the end of the housing market problems. It's important to look at how the housing market holds up (or not) through the rest of 2009 to see if this is indeed a bounce or early signs of recovery. The data on inventory levels and foreclosures indicates this is a bounce, which puts the start of the recovery (the "beginning of the end") in 2010 or 2011.

Las Vegas Homeowners Lose Their Bets as Home Prices Fall

Mark - Really appreciate the research and numbers your put into your article. Your article prompted me to take a quick look at more recent numbers in Las Vegas as of May 1 to augment what you've written here:

seekingalpha.com/insta...

Nice work.

Housing: Spring Cleaning in Phoenix

Steven, Mr. Ed & WY Broker - Thank you for your comments. Much appreicated.

You all make excellent points about the "real" inventory that's out there. Certainly the short-term conversions to rentals and the shadow inventory of post-foreclosure units are out there. Though in some regards, by pushing the rentals a few years and the post-foreclosures getting sold in asset bundles, that's the market acting accordingly to the existing conditions. If the local market begins to show some levity in the short-term, perhaps that will provide more consistent inventory inflows over the next couple of years, rather than the floodgates that we've been seeing.

Cheap Credit Means Crummy Companies - Fed Researcher

Hi Paul - Thanks for posting. There's an economic concept known as "the Tragedy of the Commons" that can be related to the current credit market and government "stimulus" programs in place. This definitely qualifies.... I did some research on this after reading about how California, Ohio, and Illinois were going after infrastructure funding:

freemarketvoice.org/20.../

Ingrid Beckles: Freddie Mac's Plan for the Housing Market

houstonian22 - I think you missed my commentary in brackets throughout the article...

On Apr 09 11:21 PM houstonian22 wrote:

> Dude - Are you Ingrid's publicist..?

Housing Activity: Isolated to the Bottom Price Segment

Thanks for your comment. It's not that what's being written is all that unique - the housing market is down - not a surprise. I'll never fool myself into thinking that I'm laying the groundwork for a Nobel Prize. My goal in postings like these is to give some unique visibility to local data and real numbers at the individual market level, and to assemble information for those that might be unaware of the acute problems of the housing market. Hope you'll keep reading!


On Mar 31 01:06 PM User 386374 wrote:

> I need a new line... I have wrote this exact same statement in at
> least 150+ different blogs. I don't like reading the truth 150+ times
> because I bought a house for more then I could afford because I believed
> everything I was told..that houses never drop in value. Please stop
> writing the truth...or I'll keep complaining...even if I have to
> lie.

Live Discussion: Treasury's Bank Recovery Plan

Brad Delong has been taking an active role in communicating his perspective on the "recovery" plan. Caught him at UC-Davis a couple weeks back for the "Stimulus Smackdown" - a lively debate with Michele Boldrin of the CATO Institute. Here's a recap of Delong's comments then:

seekingalpha.com/artic...

RMBS Opportunities in 2009: Recap from IMN's Distressed Investment Summit

Hi J.D. - Thanks for the comment. Your comment:

> As said, apparently no one else will buy them at the 50-60, so the
current holders are going to have to hold on to them. If the current holder's pre-write-down cost is 95, those current holders will be earning a return that is maybe 6 or 7%...but since they are enjoying almost zero cost of funds thanks to the Fed, that's not a bad spread - right? And, if they can hang on long enough they could earn a fair return, while they wait to sell the RMBS off later - right?

This is exactly a point that Michael Clark from Meridian Development Partners made on one of the panels - if the banks get bailed out at 90/100, why bother selling at 40? But, there are some forced sale opportunities that have brought the prices down to the 50-60 on selected portfolios. Most of the speakers/panelists are banking on these prices becoming available more broadly as 2009 progresses.

Chart of the Week: Jump in February Housing Starts Signaling a Bottom?

Regardless of whether or not this particular moment is the proverbial bottom, it's a positive sign to see the tremendous drop in starts. I agreed with the other comments - there are mitigating factors to this stat - prevalence of multi-family homes for example.

The resales housing market will inevitably a bounce this Spring, and could be headed farther down (15-25% seems reasonable give the research), but every day that passes is one step closer to the end...

Good post, good info here to dissect.

Milton Ezrati: Market Pricing Assets to Fear, Not Value

Hi Fred - Thanks for the reviewing the post and your comments. Absolutely agreed on many of your points.

"Unfortunately, because of pollyannish people like yourself..."

Remember - don't shoot the messenger... This is a synopsis of Milton Ezrati's presentation and not my personal opinions...


On Mar 20 01:25 AM Fred Voetsch wrote:

> There were negative earnings in the DJIA during the depression and
> there are negative earnings in the S&P 500 now.
>
> The S&P 500 currently has a P/E ratio of 50.
> www2.standardandpoors....;br/>
>
> Earnings are falling.
>
> Housing has yet to bottom.
>
> Consumers are deeply in debt with little savings.
>
> Unemployment is rising rapidly.
>
> Leading Economic Indicators are falling.
>
> Industrial Production is falling.
>
> Trade has dropped off a cliff.
>
> Protectionism is starting to appear.
>
> Demographics for the next two decades suggest a slow but stead drain
> (at best) for the stock market.
>
> Taxpayers (including business) are on the hook for trillions of dollars
> of debt and will almost certainly see taxes raised dramatically in
> the coming decade.
>
> All of it is fundamental. None of the above has anything to do with
> emotions except that when you combine it all with a stock market
> that was double its fair value (at 14,000) fear was a wise thing
> to feel in 2007. Unfortunately, because of pollyannish people like
> yourself millions of people have lost trillions of dollars as they
> were advised to hold on to investments that were tremendously overpriced,
> and still are, given that we are in the middle of a great unwind.

Housing: Spring Selling Season Will Be Critical

The challenge of a spring time bounce is that it might just be a "bounce" and not a recovery. Metro areas have been acting differently each Spring over the past couple of years. Some anecdotes of this were documented a couple weeks ago in another article posted here in Seeking Alpha:

seekingalpha.com/artic...

Vegas Home Prices Continue to Fall; No Turnaround Yet

Hi Tim - Love the point about the pressure on the traditional resale market placed by the short sales and foreclosures. We're seeing a relative equilibrium in the number of new listings and listings absorbed each wekk - totial inventory is leveling off on a week to week basis, but the ask prices are continuing to fall as the same rate as they have been over the past two years:

tinyurl.com/cwyhdy

Now keep in mind the "listing absorbed" is "the total properties leaving the market" - could be solds, foreclosures, or frustrated sellers. Our conjecture is that many of these absorbed properties were listed as short sales that never entered contract and were eventually foreclosed upon so that bank takes possession.

These properties leave the traditional resale market, but still exist as part of the total inventory since the banks now need to off-load them in large asset portfolios or pools, which exerts pricing pressure on the remaining on-market properties.

Same situation in Sacramento:
tinyurl.com/c5394b

And Stockton:
tinyurl.com/dcz5sw

Can We Expect a Springtime Bounce in Housing Prices?

Hi Tom - The scales are chosen automatically by our charting tools here at Altos Research. These graphs are not intended to be used as a strict supply and demand curve - simply to show relationships between these two key housing market stats. That is, you can ignore the point of intersection between the two curves.


On Feb 10 10:06 AM Tom Armistead wrote:

> Interesting article.
>
> I would be interested in knowing how you selected the intervals to
> scale price on the left vs.inventory on the right.