patrick.net

smaulgld says

The fed has designed the economy so that home prices Won't fall.-

That is the idea. And go higher too.

smaulgld says

It protects entrenched losers and give opportunities for investors and prevents millennials and low income persons from buying homes.

That has been the unintended consequence of their policy. Engineering it's reversal would give a tremendous boost to housing, quickly bringing us to normal markets.

From the link:
"The entire myth of a housing recovery has been based on one data point: higher prices."

I'm a slow learner but I think that overpaying for shacks could be a boon to everyone's else's economic situation. If I could afford to overpay,even more, everyone would end up in the 0.01%. rofl

bubblesitter says

At this moment it seems like we are at the same stage as 2013. Multiple overbidding for scant listings available. There are some buyers that simply want em. Although a bad idea, but we need a recession to see a pull back in prices and kick start the buying/selling process.

a real recession without Fed intervention and gov't stimulus would allow prices to fall and the economy to restructure naturally.

HEY YOU says

From the link:

"The entire myth of a housing recovery has been based on one data point: higher prices."

I'm a slow learner but I think that overpaying for shacks could be a boon to everyone's else's economic situation. If I could afford to overpay,even more, everyone would end up in the 0.01%. rofl

Value is in the eye of the beholder.
I look at all the paintings that sell for millions of dollars, and think it is incredibly silly. But it's the active buyers and sellers that determine the price.

Anecdotally, I'm seeing more for sale signs than in prior months, but typically in older neighborhoods where it may be retirees cashing out to move out of the area. Those are about the only homeowners that can sell, but it's a big group.

smaulgld says

a real recession without Fed intervention and gov't stimulus would allow prices to fall and the economy to restructure naturally.

Why are being so un-American and unpatriotic? why do you hate government?

And there's this place in 95123 to a million bucks. Twenty days and not pending yet. Maybe they're just mulling the highest all cash offers.

http://www.redfin.com/CA/San-Jose/5562-Cahalan-Ave-95123/home/1248760

exfatguy says

And there's this place in 95123 to a million bucks. Twenty days and not pending yet. Maybe they're just mulling the highest all cash offers.

http://www.redfin.com/CA/San-Jose/5562-Cahalan-Ave-95123/home/1248760

They may have 10 offers already, the highest being 1.3 million. They are just waiting for another 10 offers, the highest being 1.5 million.

Anecdotally, the realtor I check in with, who has his own extensive regional website, used to have very few properties on the market, and now he seems to be stacked with them.

However, I am only interested in the very low end...not much activity there, but in the high middle range and very high, just eyeballing it, seems like a lot of homes have been thrown onto the market suddenly.

JH says

because I do think increased inventory would kill the momentum (i.e., bidding wars).

of course it will if there is little demand then more inventory will overwhelm it.

bubblesitter says

smaulgld says

a real recession without Fed intervention and gov't stimulus would allow prices to fall and the economy to restructure naturally.

Why are being so un-American and unpatriotic? why do you hate government?

It's not un-American to be against poor government decisions that harm the economy and the housing market

John Bailo says

Anecdotally, the realtor I check in with, who has his own extensive regional website, used to have very few properties on the market, and now he seems to be stacked with them.

However, I am only interested in the very low end...not much activity there, but in the high middle range and very high, just eyeballing it, seems like a lot of homes have been thrown onto the market suddenly.

It's the catch 22 I wrote about last year

If home owners are lucky enough and home prices rise further, they will rush to list their homes creating more inventory.

And there’s the catch.

When there is more inventory on the market, home prices will drop.

Those lower home prices will probably be unattractive to the down side sticky homeowners and not high enough for the underwater homeowners causing them not to sell which will have the effect of restraining inventory and causing home prices to rise again and encouraging homeowners to list their homes which will have the effect of increasing inventory and lowering prices which will be unattractive to the downside sticky homeowners and not high enough for the underwater homeowners causing them not to sell…….

http://smaulgld.com/real-estates-underwaterdown-side-sticky-catch-22/

Fed continues the tapering of QE

"Yet the Fed statement did not reflect substantial concerns and in fact agreed with consensus from economists who believe the slowdown will be short-lived and growth will accelerate."

http://fw.to/GZPQZIZ
They don't say why they think growth will accelerate

Strategist says

smaulgld says

The fed has designed the economy so that home prices Won't fall.-

That is the idea. And go higher too.

smaulgld says

It protects entrenched losers and give opportunities for investors and prevents millennials and low income persons from buying homes.

That has been the unintended consequence of their policy. Engineering it's reversal would give a tremendous boost to housing, quickly bringing us to normal markets.

The only way to reverse engineer would be to for the fed to stop qe start selling its portfolio and hike rates
They wont do that

exfatguy says

http://www.redfin.com/CA/San-Jose/5562-Cahalan-Ave-95123/home/1248760

Looked at the disclosures on that. Interesting things are:
1) There is a lien on the house due to one of the owners filing bankruptcy last year (lis pendens maybe because the case may still be ongoing).
2) The tax value is $767K, despite them paying $1 million in 2005. If they are now trying to sell for $995K, the county should reassess them.
3) As of the recent title report (last month) the loan on the place according to the title company was $625K. Not sure how that works with being in bankruptcy -- suggests that they have a ton of equity.
4) The property is in a liquefaction zone.

smaulgld says

Strategist says

smaulgld says

The fed has designed the economy so that home prices Won't fall.-

That is the idea. And go higher too.

smaulgld says

It protects entrenched losers and give opportunities for investors and prevents millennials and low income persons from buying homes.

That has been the unintended consequence of their policy. Engineering it's reversal would give a tremendous boost to housing, quickly bringing us to normal markets.

The only way to reverse engineer would be to for the fed to stop qe start selling its portfolio and hike rates

They wont do that

Tapering is the first step, and it is well under way. My guess, by end of next year we will achieve "escape velocity"

That is the idea taper and the economy stands on its own
I dont think it will

Strategist-"But it's the active buyers and sellers that determine the price."

It's a great country that allows sellers to overprice their houses & buyers to overpay.What a perfect compromise. The buyers know that they are making the right decision because housing only goes up in value. Everything worked out great from the ~2006 peak.
How quickly we forget.

smaulgld says

That is the idea taper and the economy stands on its own

I dont think it will

We're now approaching terminal velocity but that's a comprehension issue that keeps being refuted

Bubbabear says

We're now approaching terminal velocity but that's a comprehension issue that keeps being refuted

"escape velocity" is more like EJECT!

Unemployement claims rose last week
But dont worry its temporary they all have jobs soon and be looking to buy homes

smaulgld says

Unemployement claims rose last week

But dont worry its temporary they all have jobs soon and be looking to buy homes

That's OK. The flipping jobs are on the rise, that makes it up for any lost jobs.

bubblesitter says

That's OK. The flipping jobs are on the rise, that makes it up for any lost jobs.

Seems there are fewer of those too

Call it Crazy says

Or, they will now have a lot of FREE time to shop for overpriced houses...

Well, consumer spending was up according to the latest report so when people stop shopping for health care insurance they can start buying homes

There is a shortage of inventory of at prices that are agreeable to buyers. Or, there's a shortage of demand at current prices. Seems a bit of semantics to me.

YesYNot says

There is a shortage of inventory of at prices that are agreeable to buyers. Or, there's a shortage of demand at current prices. Seems a bit of semantics to me.

Great point. But the assumption of the real estate bull has been there are few homes for sale and that if there were more homes, they would sell at the prevailing increased price and even drive prices higher.

Instead what we see happening is increased inventory at prices that "are not agreeable to buyers" so sales have dropped off

Call it Crazy says

Absolutely true.... The inventory is there, but the buyers aren't buying at the current prices...

and there it is just like in the original post. Really there is no need for commentary as the above graphs speak for themselves.
But for the real estate bulls some times explanation is required.

smaulgld says

Call it Crazy says

Absolutely true.... The inventory is there, but the buyers aren't buying at the current prices...

and there it is just like in the original post. Really there is no need for commentary as the above graphs speak for themselves.

But for the real estate bulls some times explanation is required.

Somehow, I don't see much of the YoY data in the media (or the bulls' posts). I think it's also instructive to see longer historical trend. That site goes to 1999. The spike in home sales in 2010 and 2013 is still only a reversion to the pre-boom (early 2000s numbers)...which is hardly a recovery or a boom.

Are screen shots (or save as) the only way to post those stlfed graphs? I don't know how to post anything other than a website pic into patnet posts.

JH says

Are screen shots (or save as) the only way to post those stlfed graphs?

you can adjust the dates on the st Louis fed charts

smaulgld says

you can adjust the dates on the st Louis fed charts

Ya I did that, but I don't know how to post them.

JH says

Ya I did that, but I don't know how to post them.

you have to take a screen shot of the chart you create and save it to your hard drive, then upload it here using the "include image" feature

Ah, ok...I see the boxes above the textbox now...thanks!

Call it Crazy says

then factor in the growth in the population over those years, the data looks even worse...

Yeah, great point re: both of the graphs. The bulls use population growth to justify higher prices yet neglect these 'minor' details.

JH says

Ah, ok...I see the boxes above the textbox now...thanks!

this chart show that home sales are really low when you compare them to historical numbers

I call it the law of small numbers http://smaulgld.com/housing-recovery-law-small-numbers/

But check out how low new home sales are over time

Call it Crazy says

So, we have an population increase of 36 million in that time frame but existing home sales are down in that same time period....

What's that say for historical trends???

it clearly means that we don't have a housing shortage!
If we did home builders would be building like mad-they are not

smaulgld says

this chart show that home sales are really low when you compare them to historical numbers

But, but...

1. interest rates are so low compared to the 80s!
2. we are running out of usable land for building!

Call it Crazy says

So, we have an population increase of 36 million in that time frame but existing home sales are down in that same time period....

Population +10%
Sales -10%
There is 20% off historical trends...

Thank god the fed came in a saved us all. That's another 20% easily.

The low new SFH sales simply means that builders aren't making a profit at today's prices. Is part of that a shift toward building more rental units? If so, that could lead to lower rental prices, or less rent increases. More people are renting rather than buying these days, so that might be what is going on.

If builders have just not been building at all, that is bad news for renters. It means that people are going to have to continue doubling up or eventually pay more for rent as well as purchase. A drop in new house sales seems par for the course in a recession. Also, it may compensate for the overbuilding from 2000-2006 but in general, low building activity is bad for housing bears and renters.

Finally, new house sales are not proportional to population. There is some amount of new house sales to replace old housing, but a lot of it is simply to provide new housing for an expanding population. As such, new housing should be proportional to the population growth rate, which is the first derivative of population. It should not be proportional to population itself.

Call it Crazy says

Go do some research... NEW house sales make up like 10% of total sales, so they don't factor in much. The charts above were EXISTING house sales, the other 90%...

I think the reference was to smaulgld's chart, which did say new. YesYNot says

builders aren't making a profit at today's prices

Well, today's prices are the same (or higher) than the last build up to a maximum, so builders could make a profit. But, I see 2 key differences between today and 2004/5, however. First, banks are no longer giving out loans like lollipops. Second, (related?) there is not enough demand for new homes. Restricted supply could easily be loosened by building. However, builders know that banks will not lend easily, and bankers know that builders will not build if nobody can borrow. Who wins? Banks. They have gotten their way for 5 years, 5 months, and counting.

Call it Crazy says

JH says

I think the reference was to smaulgld's chart, which did say new.

Oh yeah... What's Smaulgld doing screwing up our charts of EXISTING home sales with a NEW home sales?? That Doofus!!

We'll have to spank him.... Oh wait... It's his thread...

Nevermind....

Was made clear that new home sales were the ones that were really down. Existing home sale are not that robust but new home sales are in the gutter.