OlsSusanna- While you might be right in regards to "custom build" that is not the case with the Wall Street Builders who put little in terms of casework and other expensive amenities. Typically this means for them- Wall Street Builders- a little more base-shoe, drywall and cheap-ass floor covering. In that context: your opinion is undermined.
The problem with your comments Old Susanna is not hat you don't have pertinent anecdotal information is that you provide little insight into what the core problem is nor what the solutions are.
My info doesn't pertain to "localized info" though I can expound on just about every market in the country from Bozeman, MT to Livermore, CA. That's not the point, the point is what are the potential pitfalls of the next leg down and what is seen on a MACRO level that can affect the MICRO.
All I was doing was articulating the facts of the MACRO view... Thanks for voting down my comments ( I could care less) but what is really regretable too bad you didn't read them to understand them.
BTW I would not recommend buying "wall street homebuilders". Here is why- in the last run they had they were building McMansions. Well those days are gone. They will be forced to build smaller houses. This will mean to things 1) they will lose economies of scale- it costs a homebuilder relatively the same amount of money to build a 5,000 sq ft home as it does a 3,000 2)margin erosion as they are selling into a cheaper market to try and hit the $415K FHA ceiling. Expect higher costs of building (although input/raw material costs will be lower but not for long as many suppliers have been ripped out because of the length of the recession) and lower selling prices. Together these equal lower net incomes.
The WSB (wall street builders) sold themselves on t he fact that they wouldn't "overbuild" because they had in-house economists and market research that would for go the pit falls of smaller "mom and pop" builders. Well we know how that turned out. Now they are selling themselves as logistic and cost experts- well that ain't gonna work.
Building in the future will be "build to design" more custom and more particular for direct needs not wants.
The author touches on one great point but does not expound on it- typically homebuilding recover leads the country out of a recession. If you chart back all of the previous recessions, unemployment and housing you will see something very interesting: housing begins to rebound and fast. Then unemployment starts to decrease AFTER then the recession halts and we return to health.
What is different about this time around is that the lending situation, for the 1,000 post, is still messed up because banks only want to write that which is FHA backed. Thus the top end of the market is lagging, there is no "move-up" market. Without the upper-end of the market showing improvement it will be hard to call an end to the current situation. Actually, if the upper-end does not start to move you will see bigger problems because the price declines will be greater (in %) than they were in the first leg down which was lower priced sub-prime stuff. This will continue a negative atmosphere around RE and housing.
Galt- not sure about your "over build" assessment the country in good times adds 1.5 million households a year and in bad times 1.2 million. Builds have been sub 1 million for the longest time in American history. New housing inventory is below 2,000 per Million (vs the 82 housing recession where it was 12,000 per million). We lose 500K houses a year to tear downs. The demographics are there for a recovery but the lending mechanisms are not.
There will be massive pent up demand on the back side but that wont be realized unless lending get's back to normal and people have jobs. The jobs and housing recovery are some what correlated.
In the end, we are not there yet...and this is due to a-hole bankers strangling small business, not lending to qualified buyers (because under the current provisions they are forced to raise more capital to make new loans and who wants to 1)raise more capital from traditional sources e.g. deposits are calling in more loans 2)outside sources where capital is very expensive).
Anyway, the assessment that the housing market is at current levels "overbuilt" just doesn't hold up when we are talking about sub 300K in new housing inventory. Get us back to normal sales levels and the inventory of new and existing homes is marginal from a historical perspective.
New Housing Initiative Insures Freddie and Fannie's Survival [View article]
Well right now the gov has it set up so no banks want to lend anything other than FHA (fannie/freddie). they don't want to put money at risk becasue they don't have to witht he gov backstop....
But here is what is worse:
Well the housing 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 because 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 forced to bring in more capital to offset it. Well it's harder to raise capital than it is to say no- so we just say no. The only exception to this is if they are a good customer and we have a commercial relationship 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....
Housing and Banking Set to Lead Another Economic Wave Lower [View article]
Well the housing 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 because 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 forced to bring in more capital to offset it. Well it's harder to raise capital than it is to say no- so we just say no. The only exception to this is if they are a good customer and we have a commercial relationship 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....
Stock Momentum Trumps Housing and Banking Issues [View article]
Well the housing 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 because 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 forced to bring in more capital to offset it. Well it's harder to raise capital than it is to say no- so we just say no. The only exception to this is if they are a good customer and we have a commercial relationship 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....
Will Housing Data Show Improvement This Week? [View article]
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....
Grim Jobs Report Hints at Double Bottom [View article]
What do they expect when small to mid-size companies can't get financing and are having credit lines either reduced or pulled. You've got the Fed's saying lend and you've go tthe FDIC regulators saying don't lend. It's a total cock-up.
U.S. Economy: Partying Like It's Still 2005 and How to Turn Things Around [View article]
John- I'm a subscriber...keep it up. We need your insights. Help us get bank lending going again to small business. That's going to create that big "W" people keep talking about unless the lending mess is cured. Oh yeah and JUMBOs to those that can afford them. Right now banks don't wan tto lend to anything that's not backed bythe government (FHA). The government backstop is a hinderence at this point not a benefit.
Crude Oil and Gasoline Prices: Like Déjà Vu All Over Again [View article]
It's the old trade from 2008- crank up equities then bid the dollar down and commodities up then short the equities and get ready for a redux. Think that's not possible? I would have to except we've seen it before.
Crude Oil and Gasoline Prices: Like Déjà Vu All Over Again [View article]
It is pretty scary this idea that we could see an equity run, based on few fundamentals then a turn to EFTs on the "materials" side (e.g. Commodities) that zaps the consumer and then where will we be? Things will undoubtedly get a lot worse. If that is possible.
Talking with a commodities trader last weekend, one who trades on fundamentals, he says the markets have run away from anything he has ever seen. The reality is that outside money can move these markets so fast and so furiously that fundamentals have nothing to do with commodity markets any more- it's all big institutional money jamming electronic trades to make the markets move.
The truth is if your not in the game your out of the game just getting jobbed. All of this is fueled by huge money players- who is paying the ultimate price well we all are..Consumers, taxpayers (bailouts jobless claims etc).
The economy is at it's core (the consumer) very weak and getting weaker as unemployment continues to climb and business continue to fold as a result of a lack of credit support.
It's very discouraging. I love the fact that equities have made a huge run, I'm happy for all those that bought gold but in reality I think this economy is far from sound.
Jobless Claims Fall to Lowest Level in 37 Weeks [View article]
You know what- I went away but this post really has me pissed:
The situation is far from good. Since Mark Perry usually writes about "green shoots" in housing I'm going to explain a little reality he seems to be negelecting:1) is that joblessness comes on the heals of a housing downturn 2) that housing recovers BEFORE the jobs which trails it just barely.
Here is the problem housing isn't going to get better anytime soon, nor is the employment picture nor is the economy. They are all related and the are all fueled by one thing lending.Just got back from California where things are not getting better they are getting worse. Joblessness is 12% and growing. Businesses are "downsizing" they are shutting down. Foreclosures are not abating they are accelerating.
This might be a foreshadowing for the rest of the country. Unless some lending gets back in the picture.Housing cannot comeback until existing inventory is cleaned up. New homes are relatively zero in inventory something like 250K. Existing homes under 200K are non-existent. But what there is a huge over hang of- one which is going is houses over $415K. That is because scum bag bankers won't write anything that is not FHA.You could be a dual income family (a doctor and a lawyer each making $150K so combined $300K) and you could not get a JUMBO or other non conforming loan. That's nuts.There is so much inventory out there in that $415K and above its silly. Plus more houses are coming on the market.
Joblessness and housing, go hand in hand. Housing leads it down and housing leads it up. Housing cannot lead it up because of scumbag bankers. So, the economy cannot improve, so sleazy bankers start demanding their lines of credit from small business which exasperates the problem but creating more joblessness. Those small businesses then are forced to reduce inventories, the inventory is gone he has already downsized hoping the recovery would be hear but you know what- it never came. Now he's running out of money. He's burning the revenues from selling his inventory to keep whatever employees he can on but he can't by product to replenish inventories because the bank zapped his line. Now he is forced to close his business liquidate what ever inventory he has (hurting the companies he competes against) and the negative cycle starts again with the business down the street.Now which BLOODY idiot in this government didn't go to econ101.
Folks we are on the eve of 2010. This mess started "officially" in December of 2007. People are getting broken- this isn't just tesing people mantle, it isn't just a little thing people are getting broken. Unless lending by s*&tbrid bankers starts again and I mean f*&ng today. We've got real problems beyond fixing.
I hear in Cali there is a proposal to fire 50% of all State workers (just and idea) well considering in this country- if we follow Cali into this mess- that 30% of the work force works for State, County, Federal or muni you could see unemployment hit the same kind of numbers we saw in the great depression.
Rising U.S. Unemployment Continues to Haunt Housing Market [View article]
The situation is far from good. Here is what you cannot tell from that graph. 1) is that joblessness comes on the heals of a housing downturn 2) that housing recovers BEFORE the jobs which trails it just barely.Here is the problem housing isn't going to get better anytime soon, nor is the employment picture nor is the economy. They are all related and the are all fueled by one thing lending.Just got back from California where things are not getting better they are getting worse. Joblessness is 12% and growing. Businesses are "downsizing" they are shutting down. Foreclosures are not abating they are accelerating. This might be a foreshadowing for the rest of the country. Unless some lending gets back in the picture.Housing cannot comeback until existing inventory is cleaned up. New homes are relatively zero in inventory something like 250K. Existing homes under 200K are non-existent. But what there is a huge over hang of- one which is going is houses over $415K. That is because scum bag bankers won't write anything that is not FHA.You could be a dual income family (a doctor and a lawyer each making $150K so combined $300K) and you could not get a JUMBO or other non conforming loan. That's nuts.There is so much inventory out there in that $415K and above its silly. Plus more houses are coming on the market. Joblessness and housing, as the graph shows, go hand in hand. Housing leads it down and housing leads it up. Housing cannot lead it up because of scumbag bankers. So, the economy cannot improve, so sleazy bankers start demanding their lines of credit from small business which exasperates the problem but creating more joblessness. Those small businesses then are forced to reduce inventories, the inventory is gone he has already downsized hoping the recovery would be hear but you know what- it never came. Now he's running out of money. He's burning the revenues from selling his inventory to keep whatever employees he can on but he can't by product to replenish inventories because the bank zapped his line. Now he is forced to close his business liquidate what ever inventory he has (hurting the companies he competes against) and the negative cycle starts again with the business down the street.Now which BLOODY idiot in this government didn't go to econ101.
New Home Sales Flatline [View article]
New Home Sales Flatline [View article]
New Home Sales Flatline [View article]
My info doesn't pertain to "localized info" though I can expound on just about every market in the country from Bozeman, MT to Livermore, CA. That's not the point, the point is what are the potential pitfalls of the next leg down and what is seen on a MACRO level that can affect the MICRO.
All I was doing was articulating the facts of the MACRO view... Thanks for voting down my comments ( I could care less) but what is really regretable too bad you didn't read them to understand them.
New Home Sales Flatline [View article]
The WSB (wall street builders) sold themselves on t he fact that they wouldn't "overbuild" because they had in-house economists and market research that would for go the pit falls of smaller "mom and pop" builders. Well we know how that turned out. Now they are selling themselves as logistic and cost experts- well that ain't gonna work.
Building in the future will be "build to design" more custom and more particular for direct needs not wants.
New Home Sales Flatline [View article]
What is different about this time around is that the lending situation, for the 1,000 post, is still messed up because banks only want to write that which is FHA backed. Thus the top end of the market is lagging, there is no "move-up" market. Without the upper-end of the market showing improvement it will be hard to call an end to the current situation. Actually, if the upper-end does not start to move you will see bigger problems because the price declines will be greater (in %) than they were in the first leg down which was lower priced sub-prime stuff. This will continue a negative atmosphere around RE and housing.
Galt- not sure about your "over build" assessment the country in good times adds 1.5 million households a year and in bad times 1.2 million. Builds have been sub 1 million for the longest time in American history. New housing inventory is below 2,000 per Million (vs the 82 housing recession where it was 12,000 per million). We lose 500K houses a year to tear downs. The demographics are there for a recovery but the lending mechanisms are not.
There will be massive pent up demand on the back side but that wont be realized unless lending get's back to normal and people have jobs. The jobs and housing recovery are some what correlated.
In the end, we are not there yet...and this is due to a-hole bankers strangling small business, not lending to qualified buyers (because under the current provisions they are forced to raise more capital to make new loans and who wants to 1)raise more capital from traditional sources e.g. deposits are calling in more loans 2)outside sources where capital is very expensive).
Anyway, the assessment that the housing market is at current levels "overbuilt" just doesn't hold up when we are talking about sub 300K in new housing inventory. Get us back to normal sales levels and the inventory of new and existing homes is marginal from a historical perspective.
New Housing Initiative Insures Freddie and Fannie's Survival [View article]
But here is what is worse:
Well the housing 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 because 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 forced to bring in more capital to offset it. Well it's harder to raise capital than it is to say no- so we just say no. The only exception to this is if they are a good customer and we have a commercial relationship 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....
Housing and Banking Set to Lead Another Economic Wave Lower [View article]
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 because 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 forced to bring in more capital to offset it. Well it's harder to raise capital than it is to say no- so we just say no. The only exception to this is if they are a good customer and we have a commercial relationship 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....
Stock Momentum Trumps Housing and Banking Issues [View article]
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 because 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 forced to bring in more capital to offset it. Well it's harder to raise capital than it is to say no- so we just say no. The only exception to this is if they are a good customer and we have a commercial relationship 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....
Will Housing Data Show Improvement This Week? [View article]
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....
Grim Jobs Report Hints at Double Bottom [View article]
U.S. Economy: Partying Like It's Still 2005 and How to Turn Things Around [View article]
Crude Oil and Gasoline Prices: Like Déjà Vu All Over Again [View article]
Crude Oil and Gasoline Prices: Like Déjà Vu All Over Again [View article]
Talking with a commodities trader last weekend, one who trades on fundamentals, he says the markets have run away from anything he has ever seen. The reality is that outside money can move these markets so fast and so furiously that fundamentals have nothing to do with commodity markets any more- it's all big institutional money jamming electronic trades to make the markets move.
The truth is if your not in the game your out of the game just getting jobbed. All of this is fueled by huge money players- who is paying the ultimate price well we all are..Consumers, taxpayers (bailouts jobless claims etc).
The economy is at it's core (the consumer) very weak and getting weaker as unemployment continues to climb and business continue to fold as a result of a lack of credit support.
It's very discouraging. I love the fact that equities have made a huge run, I'm happy for all those that bought gold but in reality I think this economy is far from sound.
Jobless Claims Fall to Lowest Level in 37 Weeks [View article]
The situation is far from good. Since Mark Perry usually writes about "green shoots" in housing I'm going to explain a little reality he seems to be negelecting:1) is that joblessness comes on the heals of a housing downturn 2) that housing recovers BEFORE the jobs which trails it just barely.
Here is the problem housing isn't going to get better anytime soon, nor is the employment picture nor is the economy. They are all related and the are all fueled by one thing lending.Just got back from California where things are not getting better they are getting worse. Joblessness is 12% and growing. Businesses are "downsizing" they are shutting down. Foreclosures are not abating they are accelerating.
This might be a foreshadowing for the rest of the country. Unless some lending gets back in the picture.Housing cannot comeback until existing inventory is cleaned up. New homes are relatively zero in inventory something like 250K. Existing homes under 200K are non-existent. But what there is a huge over hang of- one which is going is houses over $415K. That is because scum bag bankers won't write anything that is not FHA.You could be a dual income family (a doctor and a lawyer each making $150K so combined $300K) and you could not get a JUMBO or other non conforming loan. That's nuts.There is so much inventory out there in that $415K and above its silly. Plus more houses are coming on the market.
Joblessness and housing, go hand in hand. Housing leads it down and housing leads it up. Housing cannot lead it up because of scumbag bankers. So, the economy cannot improve, so sleazy bankers start demanding their lines of credit from small business which exasperates the problem but creating more joblessness. Those small businesses then are forced to reduce inventories, the inventory is gone he has already downsized hoping the recovery would be hear but you know what- it never came. Now he's running out of money. He's burning the revenues from selling his inventory to keep whatever employees he can on but he can't by product to replenish inventories because the bank zapped his line. Now he is forced to close his business liquidate what ever inventory he has (hurting the companies he competes against) and the negative cycle starts again with the business down the street.Now which BLOODY idiot in this government didn't go to econ101.
Folks we are on the eve of 2010. This mess started "officially" in December of 2007. People are getting broken- this isn't just tesing people mantle, it isn't just a little thing people are getting broken. Unless lending by s*&tbrid bankers starts again and I mean f*&ng today. We've got real problems beyond fixing.
I hear in Cali there is a proposal to fire 50% of all State workers (just and idea) well considering in this country- if we follow Cali into this mess- that 30% of the work force works for State, County, Federal or muni you could see unemployment hit the same kind of numbers we saw in the great depression.
Then what?
Rising U.S. Unemployment Continues to Haunt Housing Market [View article]