Here is what NAR economist Lawrence Yun had to say about the increase in February existing home sales:
The latest reading on home sales further confirms stabilizing trends. Existing home sales increased 2.9 percent in February to a 5.03 million unit pace from a 4.89 million unit pace in January. ...Sounds like a possible housing bottom, doesn't it? There's only one problem: the quote is a year old. That's right, exactly one year ago this week NAR reported that month-over-month home sales had increased in February, and an economic recovery was expected in the second half of the year. It's déjà vu all over again.
The economy is also anticipated to pick up momentum in the second half of the year, which will help lift consumer confidence.
In summary, today's rising sales data is encouraging in at least hinting that we are very close to the low point for home sales.
Posts
Unless the ALT-A and ARM garbage is properly addressed and cleaned up (yet another bailout?), all this pumping of taxpayer money into the system is only an attempt to re-inflate the bubble.
ReplyDeleteI don't see it bottoming until the prices fall below their inflation-adjusted values. And I say below because of current unemployment numbers, a diluted currency due to all this money printing, and of course very unfavorable demographics.
You may indeed see a recovery for most of this year because of the recent flood of government money (ie. yours and mine). What happens when we have to start paying for all of this? Does anyone think people will have more money in the pockets to buy RE then? We're throwing more wood in the fire and expecting it to go out. Not gonna happen.
ReplyDeleteThere is no way to change the direction of this correction without changing the fundamentals of the market.
ReplyDeleteAll the government attempts to re-inflate the bubble may result in a temporary plateau, but that won't matter a bit in the long run. Prices are still completely out of whack when compared to their long term trend lines, incomes, and any other reasonable measure you want to focus on.
Does anyone ever remember that a new wave of defaults and foreclosures are now ramping up due to Option ARM resets? That is a fact that Mr. Lun (or anyone in the real-estate or mortgage industry) fails to acknowledge.
ReplyDeleteBottom Schmottom.
"aksteve said...
ReplyDeleteDoes anyone ever remember that a new wave of defaults and foreclosures are now ramping up due to Option ARM resets? That is a fact that Mr. Lun (or anyone in the real-estate or mortgage industry) fails to acknowledge.
Bottom Schmottom."
Option ARM TSUNAMI is BS
"Of conventional, prime borrowers originally under a one-year ARM that refinanced in the third quarter of 2008, 94 percent refinanced into a conforming fixed-rate loan. About 82 percent of borrowers originally under hybrid ARMs refinanced into fixed-rate mortgages, according to Freddie’s survey."
http://www.housingwire.com/2009/01/30/with-fixed-rates-this-low-who-needs-arms/
Last I can tell 40 billion a month in ALT A is being refinanced into 30 year fixed. I dont know how they are doing it (I thought they were all underwater) but they are slipping through our fingers.
Given the velocity of these refinancings, that TSUNAMI will be a pond ripple by the time it gets here.
The first Anonymous comment raised the same flag.
ReplyDeleteThanks for enlightening me though. That wave was supposed to hit around Jan., and here we are looking at April and I hear nothing about it any more. In the back of my head I had always thought that just because the reset period is coming, does not necessarily mean that those folks would default. But with the rest of the economy in shambles it was likely.
I still say Bottom Schmottom.
There are too many liabilities out there and nothing left to prop up the economy.
But hey, maybe hyperinflation will bring those home prices back up ;-P
"Thanks for enlightening me though. That wave was supposed to hit around Jan., and here we are looking at April and I hear nothing about it any more."
ReplyDeleteI still think there will be alot of resets and alot of defaults, but the TSUNAMI part is completely overblown. They will be a drag on housing prices for sure - but I dont think they have the "critical mass" to kill housing the way the first wave did.
It's definitely a good thing if that Alt-A + Option ARM mess is indeed already being addressed, but do you mean this STACKED avalanche of resets (http://www.istockanalyst.com/article/viewarticle/articleid/3109125) is for the most part a non-issue by now? Somehow I find that hard to believe.
ReplyDeleteLast I read, the banks themselves don't even know how much of their portfolio is really in these loans.
Anon 12:09, your article link was cut off but I assume you are talking about the article titled
ReplyDeleteWill More Problems With Alt-A Loans Get Swept Under The Rug?
Is so it has that infamous credit suisse chart from 2007 with all the resets in 2009-2001 right?
Heres the thing, that chart has not been updated once since 2007, meaning it has not accounted for any of that avalanche (a) being sold, (b) defaulting early, or (c) refinancing. The story from housing wire shows how much we are losing to refinance. 40 billion a month. How much are we losing to early default/foreclosure?
This chart was done for Credit Suisse by a woman named Ivy Zelman. She doesnt work for Credit Suisee any more, but I shot her an email asking, how much of that scary looking 2009-2011 AVALANCHE has been lost to sale/refinance/foreclosure?
Her response, "I dont know buy my guess is it would be pretty substantial". She wouldnt get more spefic than than that, but frankly that tells me alot. That Avalance from the old chart that every stock analyst, Mr. Mortgage, etc. rely on has been knocked down substantially.
Thus, I have no more faith in this thing to be a big deal.
Sorry - should have said.
ReplyDeleteIf so, it has that infamous credit suisse chart from 2007 with all the resets in 2009-2011 right?
Yes, that was the chart. Thanks for looking into it and sharing that information. Is anyone aware of a more recent chart for Alt-A + Option ARMs?
ReplyDeleteI don't think we can start talking about a steady recovery until someone knows where these really stand in the banks' portfolios.
- Anon 12:09
"Anon said...
ReplyDeleteThanks for looking into it and sharing that information. Is anyone aware of a more recent chart for Alt-A + Option ARMs?"
Unfortnately no, and its KILLING me!!!
"I don't think we can start talking about a steady recovery until someone knows where these really stand in the banks' portfolios."
This is what worries me. We are in uncharted territory and no one is looking into it. No one, wants to do the legwork to figure out what "substantial" means - even Ms. Zelman.
To be honest my biggest fear is, say we assume its still on - the avalance is still coming, and so we wait. Worse, prices may rise a bit, but we figure, if that avalance is as big as advertisied, that gain is going away and then some, so we wait and wait and wait.
Now, what if its like Spring 2010 and then suddenly a report comes out "no ALT A avalanche - everything is fine - OOPS". Thats great and all but where does that leave me?
So I hate to say it, but I think we are on our own here. Unless someone comes out with another report saying its still coming and updates that chart, I am outta here. Yeah its gonna suck if prices drop again, but I can afford it now, so I think Im gonna go for it.
In any event, good luck to us all and happy hunting!
"So I hate to say it, but I think we are on our own here. Unless someone comes out with another report saying its still coming and updates that chart, I am outta here. Yeah its gonna suck if prices drop again, but I can afford it now, so I think Im gonna go for it."
ReplyDeleteAnon @ 7:42 - I appreciate your perspective. I too have been waiting on this Alt A thing to hit, but as time goes on and it seems like nothing happens, im getting increasingly nervous about it.
Ive got a weird feeling about this whole thing. It almost feels like 2005 again out in my zip - lots of stuff moving.
So I think im like you. Would I like it if it keeps dropping? Sure. Can I afford it even if ALT A never comes? Yes. I have a few more months on my lease, but as soon as thats over, I think im gone.