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smaulgld
2014 Mar 25, 12:40am
Cold weather limits buying!
http://abcnews.go.com/Business/wireStory/us-home-sales-drop-33-percent-february-cold-23049207
If there was a real "inventory shortgage" buyers would be lining up in the cold to buy homes.
Strategist
2014 Mar 25, 12:56am
Doesn't the graph also show a huge potential for home builders who will eventually need to build record number of homes just to play catch up?
smaulgld
2014 Mar 25, 1:01am
Doesn't the graph also show a huge potential for home builders who will eventually need to build record number of homes just to play catch up?
Yes if there was demand for the homes. Perhaps they over built in the mid 2000's
Strategist
2014 Mar 25, 1:08am
Doesn't the graph also show a huge potential for home builders who will eventually need to build record number of homes just to play catch up?
Yes if there was demand for the home. Perhaps they over built in the mid 2000's
The population in 1980 was 226 million. Now it's 314 million.
Even if they rent, someone still has to build and purchase a home.
Strategist
2014 Mar 25, 1:12am
Damn, all that snow in the South and the West really affected sales....
Damn Russians.
Even I'm starting to get a wee bit worried about housing. Hope it's just a breather.
I can't afford to be poor.
smaulgld
2014 Mar 25, 1:15am
So, they post sales fell 3.3% from the previous REVISED number... When you go back and compare to the initial posted number of 468K from January, to February's initial 440K number, you get a drop of 6%!!!
and that is a drop from a period of time that is already at 30-40 year lows! RECOVERY!
smaulgld
2014 Mar 25, 1:17am
The population in 1980 was 226 million. Now it's 314 million.
Even if they rent, someone still has to build and purchase a home.
Right the population is higher now but new home sales are lower. That means the demand for new homes is dramatically reduced.
smaulgld
2014 Mar 25, 1:30am
It's heading to multi-generational...
You are absolutely correct. It is headed that way. First it will be economic reasons and it will turn into cultural. Last summer the pundits kept saying the "household formation" would drive the "recovery"
My response:
the last leg is the anticipation that household formation will increase when, during that glorious moment we will see millennials in their million hordes from California to the Eastern shores emerging from their parents’ basements with full time jobs, reduced student loan debt, sterling credit and an interest in and ability to buy homes.
Mr. Kolko admits that this is not happening yet but believes when it does it will represent large pent up demand for housing.
Millennials may more likely end up in one of American Homes 4 Rent rental homes which were recently 45% vacant than in their own homes or remain in their familial subterranean dwellings for many years. Or perhaps they will end up in any of the tens of thousands of Blackstone, Colony Capital, or Waypoint rental homes.
As we wrote back in April, Gen Y is in bad shape due to poor employment prospects and crushing student loan debt and is no position to provide a strong pipeline of future house sales.
smaulgld
2014 Mar 25, 1:31am
So, 5.2 months doesn't give a buyer enough to choose from??
Really???
HA! Also low inventory should be a gift for home builders as they can supply the demand not be met by the existing homes.
smaulgld
2014 Mar 25, 1:44am
Yep, Plus this:
The median price of a new home last month fell 1.2 percent from February 2013. It was the biggest drop since June 2012.
People should be lining up for "deals"..... But, apparently, they're not...
This isn't even a situation of glass half empty/half full- there is no glass! And yet we keep hearing recovery recovery recovery while they want to ban "bossy" !
Strategist
2014 Mar 25, 2:49am
The population in 1980 was 226 million. Now it's 314 million.
Even if they rent, someone still has to build and purchase a home.
It's heading to multi-generational...
Junior will be living in the basement, since he has too much college debt and no job...
Grandma will be living in her one room medical infirmary....
And Junior's mom and dad will be declaring both of them "dependents" and skimming Grandma's S.S. check while paying the mortgage and buying the food....
What use to be 3 separate houses now all live in one... Sounds nice, doesn't it???
Heading towards multi generation living is a temporary phenomenon. Lifestyles don't make sudden changes, but rather evolve over the decades. As soon as we have sustained growth in the economy this will revert back to the norm.
smaulgld
2014 Mar 25, 3:06am
What will be the catalyst to get the economy back to the norm if $ 4 trillion didn't do the trick?
Strategist
2014 Mar 25, 3:23am
What will be the catalyst to get the economy back to the norm if $ 4 trillion didn't do the trick?
Tight loan conditions. Probably more important than QE.
They have no choice but to ease off on ridiculously tight underwriting.
smaulgld
2014 Mar 25, 3:40am
What will be the catalyst to get the economy back to the norm if $ 4 trillion didn't do the trick?
Tight loan conditions. Probably more important than QE.
They have no choice but to ease off on ridiculously tight underwriting.
They will loosen guidelines when rates are higher
But people will still need good full time jobs to homes
They have no choice but to ease off on ridiculously tight underwriting.
If they are not making loans then they are not making money...........they will find a way to make the loans, this is only a temporary front.
The main reason for your "tight" loan conditions is that 1/3 of the
population has a sub-prime credit score in the 500's or lower, no money for a
down payment, super high credit card and college debt and are working at Walmart
for $10/hr...
Should the standards be lowered so they can qualify for a loan???
If you are a lender, you make money lending at interest.
There are less credit worthy borrowers now for the reasons you mentioned - but what do you think is going to happen in the futre - lenders are just going to give up?
When there are only 2 types of customers left, 1. extremely wealthy, don't need a loan, and 2. $10/hr Walmarters - what will happen to lenders?
Lenders are either going to fold up shop, or figure out ways to make money lending to the those who want to borrow.
This means more risk shifting. Collateralization, government backed loans, loan insurance, etc.
Should the standards be lowered so they can qualify for a loan???
This question is irrelevant..............they will find ways to make loans come hell or high water.
Should cable news just report the facts without any bias?
smaulgld
2014 Mar 25, 5:47am
This question is irrelevant..............they will find ways to make loans come hell or high water.
Should cable news just report the facts without any bias?
which means lowering standards and government guarantees!
Facts without bias? not a chance.
which means lowering standards and government guarantees!
Right, the debt trap continues.
smaulgld
2014 Mar 25, 6:00am
the only way they know how to fix their mistakes is to compound them
Strategist
2014 Mar 25, 6:25am
What will be the catalyst to get the economy back to the norm if $ 4 trillion didn't do the trick?
Tight loan conditions. Probably more important than QE.
They have no choice but to ease off on ridiculously tight underwriting.
They will loosen guidelines when rates are higher
But people will still need good full time jobs to homes
The people who have the good jobs are least likely to need loose loan conditions.
It's the ones on the fence that would benefit the most. This is where the biggest demand surge will come from.
smaulgld
2014 Mar 25, 6:26am
This question is irrelevant..............they will find ways to make loans come hell or high water.
So, why haven't they these last few years????
Because they don't make any money lending at these rates- and there isn't much demand for mortgages anyway
smaulgld
2014 Mar 25, 6:27am
If there is nobody to off-load the toxic loans to, do you think the banks will just write marginal loans if they will get stuck holding them, just because making loans is what they do????
without guantees banks won't do it unless forced.
Banks' motto- we'll take the risk if you'll take the loss
Strategist
2014 Mar 25, 6:29am
Tight loan conditions. Probably more important than QE.
They have no choice but to ease off on ridiculously tight underwriting.
There aren't "tight" loan conditions now.... You don't know what your talking about..
What there isn't are NINJA loans, Option Arms, no doc loans where people could get a $500K mortgage just by signing a piece of paper, while making $10/hr working at Walmart....
The main reason for your "tight" loan conditions is that 1/3 of the population has a sub-prime credit score in the 500's or lower, no money for a down payment, super high credit card and college debt and are working at Walmart for $10/hr...
Should the standards be lowered so they can qualify for a loan???
What's wrong with giving sub prime loans to those who have 25% down and enough income to afford the loan? Sub prime existed for decades, and we're not responsible for the crash. The NINJA loans were the culprits, no one wants to bring those back.
smaulgld
2014 Mar 25, 6:30am
The people who have the good jobs are least likely to need loose loan conditions.
It's the ones on the fence that would benefit the most. This is where the biggest demand surge will come from.
Correct but there seem to be less of them
Strategist
2014 Mar 25, 6:32am
This question is irrelevant..............they will find ways to make loans come hell or high water.
So, why haven't they these last few years????
Because they don't make any money lending at these rates- and there isn't much demand for mortgages anyway
Yeah, they are not willing to make loans at low rates because everyone knows rates will go up sooner or later, and when they do, those loans will lose value.
They could start by loosening up on ARMS as they are not likely to lose value when rates increase.
Strategist
2014 Mar 25, 6:34am
The people who have the good jobs are least likely to need loose loan conditions.
It's the ones on the fence that would benefit the most. This is where the biggest demand surge will come from.
Correct but there seem to be less of them
Not really. This group has been unable to get any loans for the last 7 years. Imagine the pent up demand.
smaulgld
2014 Mar 25, 6:40am
What's wrong with giving sub prime loans to those who have 25% down and enough income to afford the loan?
Nothing as long as the bank takes the risk and loss if they don't get repaid
smaulgld
2014 Mar 25, 6:41am
Not really. This group has been unable to get any loans for the last 7 years. Imagine the pent up demand.
That's true there are people who are more than just marginally attached to the work force, with good jobs decent credit and cant get a mortgage
This question is irrelevant..............they will find ways to make loans come hell or high water.
So, why haven't they these last few years????
A move by Wells Fargo Bank:
The San Francisco-based bank, which is the country's biggest mortgage lender, said recently that it would begin accepting scores of 600, down from 640, for FHA and VA loans, which require as little as a 3.5 percent down payment.
Ha, let the games begin again. Sure we fixed the previous crisis..................
MisdemeanorRebel
2014 Mar 25, 6:48am
It's heading to multi-generational...
Junior will be living in the basement, since he has too much college debt and no job...
Grandma will be living in her one room medical infirmary....
And Junior's mom and dad will be declaring both of them "dependents" and skimming Grandma's S.S. check while paying the mortgage and buying the food....
What use to be 3 separate houses now all live in one... Sounds nice, doesn't it???
It's how 99% of the world lives. The 50's nuclear family SFH thing didn't last very long.
The unemployed daughter can spoon-feed Grandma.
Strategist
2014 Mar 25, 6:48am
The people who have the good jobs are least likely to need loose loan conditions.
Exactly, which is why the mortgage business hasn't changed for those people...
It's the ones on the fence that would benefit the most.
Sure, everyone would like a loan to buy a house... But if they had 710 FICO's before, then went down to 625 and now are at 560, should the bank just say sure, you're a good risk, here's $400K, go buy a house???
Yes, if the purchase price is $550,000, and they have their $150,000 down. They would prove the income to afford the payments, and the rate would be 7% to cover the added risk.
That is a good risk.
smaulgld
2014 Mar 25, 6:59am
It's how 99% of the world lives. The 50's nuclear family SFH thing didn't last very long.
The unemployed daughter can spoon-feed Grandma.
right mostly in America did the multigenerational family break up post war. Immigrants to the US at the turn of the 20th century lived multigenerational style until after WWII and the creation of suburbs
It's heading to multi-generational...
Junior will be living in the basement, since he has too much college debt and no job...
Grandma will be living in her one room medical infirmary....
And Junior's mom and dad will be declaring both of them "dependents" and skimming Grandma's S.S. check while paying the mortgage and buying the food....
What use to be 3 separate houses now all live in one... Sounds nice, doesn't it???
It's how 99% of the world lives. The 50's nuclear family SFH thing didn't last very long.
The unemployed daughter can spoon-feed Grandma.
Let's not forget all the sprawl gets very expensive as gas prices rise.
Pure gas is over 4.25, up from 0.80 just 15 years ago. The watered down E10/E15 crap masks this slightly. Hard for transportation to make up for the dead weight loss with improved MPG
MisdemeanorRebel
2014 Mar 25, 7:17am
Let's not forget all the sprawl gets very expensive as gas prices rise.
Pure gas is over 4.25, up from 0.80 just 15 years ago. The watered down E10/E15 crap masks this slightly. Hard for transportation to make up for the dead weight loss with improved MPG
Yup.
Apparently here in Florida, the biggest (or loudest) opponents to the High-Speed Rail between Orlando-Miami are whackadoodles who think the UN is trying to switch everybody to mass transit to track them.
I guess they haven't figured out that most intersections have red light cameras, Speedpass tracks the time and date of your exits and entrances to the Turnpike, every cop car has a computer to run plates, etc.
That, and it's really not a commuter line, but a method of sharing tourist revenue between Miami Beaches and Orlando Attractions without having to rent a car, something many Euro/Asian tourists don't do.
Not to mention a sense of "Entitlement" to cheap gasoline.
Strategist
2014 Mar 25, 7:30am
Yes, if the purchase price is $550,000, and they have their $150,000 down. They would prove the income to afford the payments, and the rate would be 7% to cover the added risk.
That is a good risk.
Sure, but you missed this part:
the average down payment today is between 5% - 10%
Would the bank still make that deal with $27,500 (5%) down??
There aren't a whole lot of buyers today getting a mortgage putting down $150K on a $550K house....
Sub prime loans can have their own requirements for down payments
I think 25% minimum down was the norm at one time.
I think 25% minimum down was the norm at one time.
I also believe we had some level of sanity and responsibility at one time, not so long ago...............
smaulgld
2014 Mar 25, 8:06am
Nice chart in this one
http://www.mortgagenewsdaily.com/03252014_new_home_sales.asp
Comments 1 - 40 of 42 Next » Last » Search these comments
http://abcnews.go.com/Business/wireStory/us-home-sales-drop-33-percent-february-cold-23049207
http://www.reuters.com/article/2014/03/25/us-usa-economy-idUSBREA2O10I20140325
They are spinning it as a one or five year high but the reality is new home sales are bouncing along 30-40 year lows.
and of course blaming the drop on the weather