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More on Pending Home Sales: "Limited inventory is constraining market activity," says the NAR,...

More on Pending Home Sales: "Limited inventory is constraining market activity," says the NAR, with chief spinmeister Lawrence Yun blaming sales weakness in the West on "an acute inventory shortage." More from Yun: "Expected gains in housing starts of 25-30% this year, and nearly 50% in 2013 are insufficient to meet the growing housing demand."
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Comments (41)
  • bbro
    , contributor
    Comments (9853) | Send Message
     
    Look at the housing starts to total nonfarm payroll ratio..way way way
    below its 50 year average...
    29 Aug 2012, 10:17 AM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    Builders now use built to order business model instead of spec model. Starts are now more reflective of actual sales than in prior years. If the contract is signed the home is built, which you will see in permit and starts data. Comparing to 50 yr average won't tell you much.
    29 Aug 2012, 10:52 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    I don't see why you would want to compare anything to a 50 average anyway... sure its a good talking point but does it actually have a true affect on anything present? I seriously doubt it...

     

    By the way J457 I completely agree with your comment but would add there is the danger of contracts failing. We have a house up the street that they literally stopped mid construction because the buyer fell through. They just re-started construction with a for sale sign out front (which adds to the 20+ homes already for sale in our neck of the woods, 100-120 homes).
    29 Aug 2012, 10:57 AM Reply Like
  • bbro
    , contributor
    Comments (9853) | Send Message
     
    Using the average for the 1990s yields the same observation...
    29 Aug 2012, 11:17 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    ridiculous, millions are underwater, even more millions credit doesn't cut it to get a mortgage, and further millions are unemployed.

     

    Housing supply will be fine.
    29 Aug 2012, 10:18 AM Reply Like
  • bbro
    , contributor
    Comments (9853) | Send Message
     
    Think outside the box...
    29 Aug 2012, 10:33 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    Not sure where you are going with this over used very generic statement. Am I supposed to think that because housing starts vs nonfarm payroll ratios is below the 50 year average that the Headline is accurate? And is that thinking outside of the box?
    29 Aug 2012, 10:40 AM Reply Like
  • bbro
    , contributor
    Comments (9853) | Send Message
     
    Yes I am being flippant ( and lazy)...but
    even a subnormalized return would yield about 1 million housing
    starts...a normalized return would equal 1.5 million ( which is going to
    be a long time from now)
    29 Aug 2012, 11:15 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    So you believe that the last 50 years average is indicative of what today's market should be like(aka that is today's normal)? After the housing bust, financial crash, and middle america disappearing?

     

    I think the new normal is lower housing starts are here to stay. At least for a while. Construction companies were irreparably damaged by over building and the sudden lack of demand after the crash. They will be cautious for at least another 5-10 years.
    29 Aug 2012, 11:20 AM Reply Like
  • bbro
    , contributor
    Comments (9853) | Send Message
     
    Actually I believe the new normal is 1.1 million housing starts and 1.5 million is the high...but remember we are 750,000 today...

     

    Yes are paying for the craziness of 2005 and 2006 (2.2 million pace!!) but that
    effect is diminishing...
    29 Aug 2012, 11:38 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    Thanks bbro, interesting view point and I somewhat agree although I think it'll be lower and slower. We'll see
    29 Aug 2012, 12:12 PM Reply Like
  • FWS
    , contributor
    Comments (136) | Send Message
     
    We are not at 750,000 today. That number is more like 500,000. Your stats are way off. Listen, I worked for Pulte, Centex, Hovnanian, they are not selling crap in my area in NJ. Only inexpensive towns and AA's. With approximately 16% unemployment in the USA, it will be a long time before we see 1 million units again. There are still close to 2 million foreclosures to hit the market also putting pressure on builders and their margins.
    29 Aug 2012, 01:51 PM Reply Like
  • bbro
    , contributor
    Comments (9853) | Send Message
     
    " That number is more like 500,000"....Source?? (please don't say
    Shadowstats or Zerohedge)
    29 Aug 2012, 02:13 PM Reply Like
  • GaltMachine
    , contributor
    Comments (1146) | Send Message
     
    bbro,

     

    I think it depends upon definition - housing starts includes multi-family - and on this metric you are correct:

     

    "Housing Starts:
    Privately-owned housing starts in July were at a seasonally adjusted annual rate of 746,000. This is 1.1 percent below the revised June estimate of 754,000, but is 21.5 percent above the July 2011 rate of 614,000.

     

    Read more at http://bit.ly/QzEIGt"

     

    Single family starts:

     

    "Single-family housing starts in July were at a rate of 502,000; this is 6.5 percent below the revised June figure of 537,000. The July rate for units in buildings with five units or more was 229,000."
    Read more at http://bit.ly/QzEIGt

     

    So as usual it pays to read the fineprint and find out the definition being used :)
    29 Aug 2012, 05:32 PM Reply Like
  • GaltMachine
    , contributor
    Comments (1146) | Send Message
     
    Funny that was the quote that made me chuckle as well. Inventory would be fine if the prices were attractive to sellers - that's called supply and demand.

     

    Potentially this could result in upward price pressure assuming buyers were willing to pay more. Sellers at these prices don't want to lock in losses and/or negative equity unless they have no choice.

     

    This looks like the signs of life in the housing market actually has some legs assuming we don't get that fiscal cliff economic weakness that is screwing with people's expectations.

     

    P.S. -- Larry Yun deserves a promotion or at least the "Perpetual Employee of The Month Award" - reminds me a lot of SpongeBob.
    29 Aug 2012, 10:22 AM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    Yes, people are just dying to buy houses if only there were enough houses for them to buy! Yes, exactly. Good lord. This spin is pathetic even for an industry shill like Yun.
    29 Aug 2012, 10:43 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    Demand will drive supply, if there truly was the type of demand this guy is calling for prices would be increasing at a much faster pace.

     

    The rental market is through the roof (currently I make more money from renting my properties then I would selling them). People are paying more for renting then it would cost in a mortgage.
    29 Aug 2012, 10:49 AM Reply Like
  • Mobywhite
    , contributor
    Comments (413) | Send Message
     
    I just placed an offer that was 4% above asking price and lost. In five days this house had over a dozen offers.

     

    I haven't made an offer in months where there have not been at least 3-4 other offers.

     

    You are right, "people are dying to buy houses" and there are not enough inventory to meet the demand.
    30 Aug 2012, 11:25 AM Reply Like
  • The_Hammer
    , contributor
    Comments (4065) | Send Message
     
    where's that? az vegas? where ever good luck with that.

     

    My area it is dead and sellers are crying the blues still have an attitude that they are entitled to big bucks and they ain't going to give their house away. it is fun listening to some of the neighbors who were critical a few years back whenever anyone mentioned bubble. they are slowly coming to acceptance that it ain;t coming back anytime soon. You can hear the realtors whining about making 2/3 less than bubble days. what a bunch of sewer rats.

     

    This country has become one big pick pocket.
    30 Aug 2012, 12:42 PM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    My neighborhood in TN is also full of houses for sale... 400-1mil range. I think one has sold in the last 3 months that I could see.
    30 Aug 2012, 12:44 PM Reply Like
  • Hitesh Patel
    , contributor
    Comments (314) | Send Message
     
    We need to get out their and build. I love the reverse psychology. Buy now before all the suppy is gone and your shit out of luck. What is this 2005. Here in NJ most home owners are delusional on the value of their home, I see list prices 50-60% higher then thier purchases prices from 2002-2003. If they can find the sucker who doesn't know any better more power to them, but in reality any uptick in home prices and their will be a lot more supply
    29 Aug 2012, 10:45 AM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    As home prices stabilize less people will engage in the strategic foreclosure nonsense. Bear in mind close to 4mm homes are still in distress (NAR never seems to discuss this?) and over 10mm are negative equity (also a mute point for the realtors) with the banks withholding REO's from the market to decrease inventory. I'd like to think we're at a good starting point for a recovery, but employment is the lead indicator, and last time I checked we still are at 16% unemployment rate. This muddle through will take several more years...
    29 Aug 2012, 10:50 AM Reply Like
  • Remyngton
    , contributor
    Comments (354) | Send Message
     
    Lawrence Yun . . . needs to get to rehab ASAP
    29 Aug 2012, 10:54 AM Reply Like
  • Tack
    , contributor
    Comments (13579) | Send Message
     
    I just revel in the negative views. This reminds me of the oft-mentioned story of the bumble bee, whom, physicists pronounced, scientifically unable to fly. But, guess what, they do.

     

    So do housing-related stocks. I'll leave all the academic discussions of why that's impossible to others.
    29 Aug 2012, 11:21 AM Reply Like
  • GaltMachine
    , contributor
    Comments (1146) | Send Message
     
    Tack,

     

    Would you play this with one of the etf's like XHB or ITB?

     

    PE's seem rather high at 19,18 respectively. I am kind of surprised they are that high.

     

    Thanks.
    29 Aug 2012, 12:09 PM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    You should try to revel in reality. How could one compare a magnificent creature with Wall St drudge. You boomers continue to skip and dance across this thin sheet of ice ignoring the cold water beneath. Fundamentals will eventually return, and when they do the negative news that is glossed over today will become all to real. Take a drive to a city near you and look closely at housing. The prognosis is clear.

     

    By the way, off topic, but Obama broke $16 trillion in debt yesterday, but you don't see that on Yahoo. USA govt incurs $3.5 billion every day to function at less than 2% growth, and yet the market is 10% from all time highs. Ignoring reality has become the new normal. A few may profit for now, but their legacy will haunt many future generations. Now, go buy some more stocks.
    29 Aug 2012, 12:18 PM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    J 457,

     

    It appears that your grasp of reality is lacking. Your statement ".. Obama broke $16 trillion in debt yesterday.." is patently misleading.

     

    A more precise grasp of reality would apportion the $16 trillion in debt to previous presidents. The party of personal responsibility would be more creditable if they took personal repsonsibility for things that happened on their watch.
    29 Aug 2012, 12:37 PM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    You may be correct. Current Obama administration only grew from $9 trillion to $16, the rest is on GW Bush from 2000-08. Absolute failure on every front the last 12 years.
    29 Aug 2012, 12:59 PM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    Our government is mostly a joke... rich people pander the non-rich to make themselves richer in my point of view. I would guess less than 10% of politicians actually do it because they feel the need to serve their constituents.

     

    I know it's dismal and half empty outlook but I don't have any response to the utter failure of our two parties to compromise, and get stuff done.
    29 Aug 2012, 01:01 PM Reply Like
  • Tack
    , contributor
    Comments (13579) | Send Message
     
    wig:

     

    The less politicians "get done," the more hope there is for the rest of us.
    29 Aug 2012, 01:05 PM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    lol Tack you are probably very right, although that is probably an even more dismal outlook.
    29 Aug 2012, 01:13 PM Reply Like
  • Tack
    , contributor
    Comments (13579) | Send Message
     
    Galt:

     

    As an inveterate high-yield investor, those funds are not my own cup of tea. And equity REITs, like AVB abd EQR, have gotten too much play on the apartment-investment story, and I consider them rather lofty, presently. One issue I do like in the REIT sector is RWT. Overall, I'd look for individual plays, where share prices are still well below five-year highs and in related industries serving single-family homes.

     

    In the homebuilder arena, there are two issues, which I've held for quite some time, which are atypical securities --mandatory convertibles -- which offer a nice upside on price in combination with a hefty-yielding note. They are HOVU (Hovnanian) and BZU (Beazer). More information on these securities may be obtained at http://bit.ly/qWc98b.

     

    I am also somewhat attracted to SCCO at present price and yield.

     

    And, although not generally good yielders, I think the outlook for regional banks is excellent, e.g., FITB, RF, STI, HBAN, KEY, NYB. One well-under-par preferred I like is SNV-T.

     

    Although not in the residential arena, I also like several commercial REITs, e.g., NCT, RSO, NRF, ARI, etc., as well as the funds, AWP and IGR.
    29 Aug 2012, 12:34 PM Reply Like
  • GaltMachine
    , contributor
    Comments (1146) | Send Message
     
    Tack,

     

    Thanks I will bookmark and check out your suggestions.
    29 Aug 2012, 05:28 PM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    It seems counterintuitive, but the fact that some people are underwater probably restricts supply. Once housing prices increase to some level where people breakeven on their house, there could be a sudden upward increase in the number of houses on the market.
    29 Aug 2012, 12:45 PM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    yup, how many people have wanted to sell but simply couldn't due to being underwater.
    29 Aug 2012, 12:54 PM Reply Like
  • GaltMachine
    , contributor
    Comments (1146) | Send Message
     
    867,

     

    One thing often overlooked in these discussions is transaction costs. Houses are probably the single most expensive asset you can sell when it comes to the cost of the transaction - a rule of thumb is 10-15% of the selling price will go to legal, commissions, taxes, moving, etc.

     

    So it is really the net proceeds from the sale of the house that matter the most to the seller and their banker. Given where prices are today and a further deduction for transaction costs, anybody who bought in the 2000-2009 period is in for a rude awakening.

     

    Prices are going to have rise a decent amount especially if someone under water before they will be willing to put it up for sale.

     

    I live in South Florida bought in 2003 and according to the Broward property appraiser my house is worth less than what I paid for it back then.

     

    We need to get those distressed properties cleared from the system as quickly as possible.
    29 Aug 2012, 01:11 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4065) | Send Message
     
    NAR needs to educate sellers that the party is up. many homeowners waiting for things to bounce back. good luck with that.
    and the FRAUD banks need to mark assets to market forcing them to stop sitting on massive inventories.
    29 Aug 2012, 01:08 PM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    I agree there needs to be some sort of leniency from the banks, not massive though as they lost too in this whole thing... Honestly I would love to refinance the house I inherited which is currently at 5.6% and 40k underwater. But not able to put out 40k on it. So if I could get 4.5% with 10k down or something that would be great.

     

    Dreams... I have dreams lol
    29 Aug 2012, 01:15 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4065) | Send Message
     
    How about the govt get the hell out of the housing market? Housing has lost us BILLIONS and BILLIONS. House prices would fall to levels afforded by a society with Falling disposable incomes the last decade.
    The rhetoric coming from the NAR ( 0 credibility) whom has called a bottom since the peak is just nervy. They have somehow taken a backseat to criticism they deserve for their major role in this corrupt housing bubble.

     

    This non-sense of rewarding those that made poor financial decisions is nauseating already. what about those that rejected playing in this ponzi game since it made no sense? Why not allow them to benefit from their wise decisions?
    How about some free market capitalism for once?
    29 Aug 2012, 01:25 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Perhaps NAR ought to get into the housing construction business (put more money where their mouth is) if they hold this conviction so strongly.
    29 Aug 2012, 02:22 PM Reply Like
  • Remyngton
    , contributor
    Comments (354) | Send Message
     
    Like giving a machine gun to a monkey
    7 Sep 2012, 11:44 AM Reply Like
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