joof

Single Family Homes Remain Oversupplied by Over 900,000 Units

The thought quantity (massive) and quality ( sloppy analysis, dated data, poor writing, and obvious emotional baggage) of the bear case is certainly a contrarian indicator - implies support for a long case.

Increasingly hard to rationalize the doom position as an end market continues running away from you (both volume and price) - continued obsessively talking your book is no longer enough .

The market is clearing at current levels. Debt is taken out each time a transaction occcurs, and replaced with lower and more supportable financing at lower asset price. Quality homes are being bid up. The overhang is real, but at this point has a fighting chance to be absorbed in an orderly way over the next few quarters.

A little known fact- all the national homebuilders are back in the market aggressively bidding up land. Someone is stupid - professional builders or the amateurs on these boards . You pick

How Bloomberg Fabricates U.S. Housing Numbers

Amazing but true

NO One on this thread actually read the article and understands the numbers. That actual number of excess units- housing vacant above trend- is a fraction of this large number

Three items make up the 19 MM - vacant for sale, vacant for rent ( including apartments) and seasonal (second homes). About 1/3 of the total comes from each.

Seasonal homes by definition aren't excess - they don't compete for primary occupancy in most markets. In this kind of world many will try to dump the beach house or Vail condo, and prices for second homes are very soft- just like in any recession. But that really doesn't directly affect most primary housing markets.

On for rent (apartments) nation vacancy is about 7.3% , or about 2% over what owners would like. Say that means 1 MM excess housing units.

On for sale most analysts would say that that the current vacancy rate is about 2x the norm - say another 1 MM excess units

19 MM really means 2 MM excess - about 1/2 year of gross demand. A problem - true - but not a cataclysm

Property Values Set to Fall 43% from Current Depressed Levels

except that prices are actually rising now


Dohhh!

U.S. Housing: Round Trip to Pre-Bubble Prices Underway

or in some markets 2003 nominal ( not real) values. In other words we are there in much of the US

rent/value, income/value, supply/demand (measured as listed months supply ) also say the same thing. Almost no newly contructed supply is entering the market, esp as a ratio of long term demographic demand .

However, more income compression due to labor market conditions and the dribble out of the gradual resolution of defaults may push values down further, or at least limit appreciation from these levels

Housing: Objects in the Mirror May Appear Closer than They Are

National single family starts are actually well below 400k

In S California there is less than 3 months listed supply at lower price levels in better markets. Multiple offers and aggressive bid ups over list have become the norm for better properties. Sales rate have been sufficient to counter balance new foreclosure inventory. It costs less to own than to rent in many cases. Since those are the facts, why hasn't the so called shadow inventory flooded the market ?

The upper end end is a very different story

Sacramento, California: Reaching Prices Where There is Demand

I don't think anyone would say the market is truely recovering. However clearing the inventory with good sales rates is a necessary event along the path towards a stabilized market.

Much of the foreclosure stuff is in lousy shape or in bad locations . Stories abound where well priced well located houses in good shape ( ie the next level up in quality from the foreclosure market ) get multiple offers, and sell for well in excess of list

Over the mid term the echo boom demographics would create potential demand- if those kids can get and keep jobs

Homeowner Equity at Post WWII Low

If you dig into the numbers ( at least the prior issuances of this data) you find that the % of owners with fully paid off mortgage or good LTV ratios hasn't changed that much. However the portion of people with high LTV (little to no equity; the new buyers of the past several years ) are much more levered. Hence, combined with value reducitons the average equity decline

we end up with two classes- the housed and comfortable, and the broke

Without a Widespread Economic Crash, a Housing Crash Is Unlikely

Comps in a number of major metros are already down 15-25% on psf basis. Combined with volume and inventory stats it is clear to anyone in the businsss ( not blogging at a desk) that not only is a crash likely - it started several quarters ago and is getting worse

Don't forget the effects of two factors that make housing markets different than tech stocks - 1. leverage and 2. the glacial pace at which price discovery occurs


It is no coincidence that major market paticipants ( hombuilders, banks , developers) have privately and some case publicly stated that this in many ways is the worst cycle in their insitutional memories