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Michael Terry
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Michael Terry, CFA has nearly 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, Mr. Terry has analyzed and invested in both public and private companies around the world... More
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  • Existing Home Sales - Good on the Surface 3 comments
    Dec 22, 2009 10:13 AM
    On the wire this morning (Bloomberg, emphasis mine):
    Sales of existing U.S. homes rose more than forecast in November, to the highest level in more than two years, a sign housing is gaining strength along with the broader economy entering 2010.
     Purchases increased 7.4 percent to a 6.54 million annual rate, the highest since February 2007, from a revised 6.09 million pace the prior month, the National Association of Realtors said today in Washington. The median sales price declined 4.3 percent from the same month a year earlier, the smallest decrease since November 2007.
    “Housing is in recovery mode,” Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The combination of the homebuyers’ tax credit, good affordability and looser credit conditions going forward will continue moderate gains in housing.”
    The share of homes sold as foreclosures or otherwise distressed properties was 33 percent, NAR chief economist Lawrence Yun said in a press conference today in Washington.
    Okay, lets review:  existing home sales are stronger, driven by loose credit, government subsidies and distressed properties.  Isn't that what got us into this mess?  Again I ask, is there real fundamental strength?  In my humble opinion, no.


    Disclosure: Own a home, pay for it too.
    Themes: Housing
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    Great color, Mike!. What do you know about Fannie and Freddie's "grey market" of foreclosures? I have heard from a reliable analyst that there are over 2 million homes they are renting because they do not want to put additional supply on the market. Any thoughts?
    30 Dec 2009, 10:27 PM Reply Like
  •  
    The shadow supply of homes that the government - oops, I mean agencies - and the banks are sitting on would change the data significantly. Add to this the home buyer credit must eventually sunset and housing is not getting stronger (or less weak) as is reported.
    4 Jan 2010, 11:37 PM Reply Like
  •  
    Markets are mixed to start the week as stocks are positive and bonds/mortgage backs are not so positive. Leading Economic Indicators surprised to the upside as well, rising .3% in December. Economists expected the print to fall .3%. In December, 5 of the 10 components has increases, the most since April 2008. Although the number looks good on the surface, once we strip out the effects of the money supply, the number would have been a minus .7%.Nice information and really outstanding post.
    www.adkpp.com/
    24 Jan 2011, 04:23 AM Reply Like
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