Watch....."Rising home prices and year-over-year increases in new and existing home sales have contributed to the turnaround in the housing market."
...."The latest positive numbers in the housing market have not persuaded economist Gary Shilling, a longtime housing bear, to change his downbeat forecasts. Shilling holds fast to his prediction that home prices will fall another 20% and dismisses talk that the market has bottomed. He cites the high number of shadow inventory in the market as support for his pessimistic housing thesis."
...."Excess inventory is the mortal enemy of home prices," Shilling says in an interview with The Daily Ticker."
...."Shilling says he has also become concerned with the lack of new homebuyers entering the market. The rate for a 30-year fixed mortgage was 3.39% last week, near all-time record lows. He says speculators and investors are snapping up homes and hoping to flip them as a profit but new home owners "are the foundation of the market" he notes."
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The strategy of investors is turning to shit in their hands. Too many houses are now chasing too few renters. Hedge funds are dumping their properties and buyers are not inclined or are unable to buy at inflated prices. We are at a mexican standoff with no one prepared to concede defeat.
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Laguna Beach, CA
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Strategic Renter says
I don't think it's a Mexican standoff per say, because buyers can simply sit back, rent, and wait for the fiasco to disappear. Investors have the gun pointed at themselves, or they can stop playing the game.
I know which position I'd rather be in.
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Call it Crazy says
This.
Call it Crazy says
When 84% of the mortgage applications are for refi the housing market is running into lots of trouble.
Call it Crazy says
Yeah, the millions of underwater owners who have put off moving up. Hence,the only one who are buying are speculators. Let's see who wins in long term,speculators or the first time home buyers who are chasing the shadow of specuators.
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Goran_K says
That might be the case with some people, but I believe there is a pent up demand of people who want to buy or sell. Not everyone wants to rent.
Besides what's "officially" on the MLS for sale I believe there is a ton of houses where either the current owners are squatting and stopped paying or a bunch who want to sell, but can't get out of their underwater situation.
Plus, add in all the current empty houses that are just sitting off of the market, it all adds up to a big "shadow" problem.
Like you mentioned in a previous thread, the biggest hold back is jobs, income and mortgage approvals, which keeps recovery from moving forward....
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Huntington Beach, CA
Here's the deal: we know that the banks have made a concerted and particular effort since the spring to keep houses, especially foreclosures, off the market. This has resulted in the lowest RE inventory levels in record in many areas of sustained market strength. The buyers who are left are competing for a very few properties, a small percentage of which are actually decent. What's being released now are the dregs: stuff near a freeway or bordering a major street, stuff in the seedy part of town, stuff that's got major issues, hoarder houses (seen two), and otherwise undesirable houses.
Most of the real estate hitting the market in my town comes from retiring folks and probate sales. I've only seen one house that was in the move-up category, and it was also in the move-away category. I haven't seen hardly any foreclosures this year. There have been a comparative few number of short sales, and they appear to be taking a long time to close.
And that's what this is about. The short sale tax forgiveness exemption expires January 1st. So to avoid a rush to the exits by underwater homeowners, the banks have been withholding inventory with a will. This has led to an actual increase in prices here, with the under $550000 market being especially hot.
It's all bullshit.
A more artificial RE market couldn't possibly be created. We are at the zenith of market manipulation, and I believe, the point at which the control will begin to slip.
Good luck to anyone who buys now. It's going to be a bloodbath.
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Quigley:" What's being released now are the dregs: stuff near a freeway or bordering a major street, stuff in the seedy part of town, stuff that's got major issues, hoarder houses (seen two), and otherwise undesirable houses."
I've been looking for 2 years & I agree completely.
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By the time an investment strategy is touted as being the new sound way to make money. It's already to late, the real money has already been made.
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Alexandria, VA
Quigley says
The question is when this is gonna happen. I have no problem staying low for couple years, but when it is like 10 years from now... then that's different story.
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Huntington Beach, CA
Seaside: that IS the question. Since I don't know the answer, I got comfortable. I'm renting a house that fits my family and doesn't break the bank in a decent neighborhood with ok schools. It works, we have no urgent need to move. We felt much more pressure to buy (and maybe make a bad decision) when we were apt dwellers. I'm comfortable now. If anything is wrong with the house, the landlord fixes it. I still have plenty of disposable income for saving and living well. I'm just not "a homeowner" yet.
That does bother me at times, gives me a burst of resentment and ancy dissatisfaction.
I feel like there's a quote needed here. I'll use one from Pulp Fiction: "that's just pride, fuckin' with ya. Pay no attention whatsoever to that shit."
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Quigley says
WE HAVE A WINNER!
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CaptainShuddup says
Yes, this is always the case by the time they call investment, it's not.
But it does remind me of the "How to" books or infomercials, as I have said if they knew so much about making big money they wouldn't be telling others.
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seaside says
Why? You at least by staying low aren't going to lose anything. What are you out to financially ruin yourself and your family? Haste makes waste.
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Reader says
There is a bit of a "waiting for godot" element that comes into play when looking at waiting out something that may not happen for 10+ years.
Case in point, I met an individual who was absolutely convinced that we were on the verge of crushing deflation way back in 1989, so he got liquid, cashed out his stocks, sold his house, electing to "wait it out".
Unfortunately, every 2-3 years, when nothing happened, he found another reason the massive deflation was "just around the corner" and decided to wait another couple of years. He kept doing this, pushing out the time horizon to just beyond his reach again and again and again such that he is still renting today.
Even after the massive downturn from the 2006 peak, the house he sold is still roughly worth 2X what he sold it for in 1989. Even worse, had he not listened to the sirens song of "imminent deflation" his house would be paid off by now. Instead, he is in his 23rd year of renting with no end in sight. Also, while I dont know his financial position, I cant imagine his horde of 1989 dollars is going very far these days.
Note, I am not saying that is going to happen in the instant case. However, I am pointing out that the defensive position of "waiting it out" can indeed be devastating over very very long timeperiods.