The Things That Make Buyers Jump
The NWI Times reports from Indiana. “Single-family home sales increased 14.9 percent in July in Northwest Indiana. In perhaps an even more hopeful sign, the median selling price increased to $137,000 in July, an 11.4 percent increase as compared to the year-ago month, according to association data. ‘Interest rates are still low and prices are going to go up,’ said Minakshi Ghuman, a Realtor with Century 21 Pace Realty, in Valparaiso. ‘Those two things make buyers jump.’”
The Star Tribune in Minnesota. “John Folsom and his wife invested for retirement by socking money into safe mutual funds to build a nest egg that could support their dream of one day having a house on a lake. But at 53, Folsom looks at his retirement portfolio and sees that ‘the rules’ aren’t working. The market crash and housing collapse hammered his net worth. Now the Apple Valley man’s life savings are earning about half what he had expected, dragged down by record-low interest rates. ‘All of our calculations have been thrown asunder, and everyone has to rethink the whole deal,’ said Folsom said, who is planning to push back his retirement five years, possibly until he’s 67.”
“The Federal Reserve’s near zero interest-rate policy, aimed at stimulating the economy, has created bargains for borrowers refinancing a mortgage or buying a car. But the low rates are penalizing ’savers’ such as seniors and others on fixed incomes, forcing millions of middle-class Americans to reconsider how they will live when they retire, if they can retire at all.”
“‘We’re not really seeing the positive benefit of low rates, but we’re seeing a huge negative hit,’ said Tim Gillaspy, who recently retired. ‘It’s going to have repercussions not for one or two years, but basically for the rest of our lives.’”
Chicago Mag in Illinois. “In the past month, signs of vitality in the Chicago real-estate market have proliferated. Linda Levin, senior VP at Jameson/Sotheby’s International says that the perception of stability has brought out what she calls ‘better buyers. They’re not the bottom-feeders who are looking for a [steal]. They’re educated, and they see that it’s time to buy confidently.’”
WMBD in Illinois. “The housing market in Central Illinois is starting to look like it did before the recession hit. That might sound frustrating to those who still haven’t sold a house that’s been on the market for months. Arab Kattom said she and her husband haven’t felt the benefits of the upswing; their house has been on the market for seven months. ‘We’ve had plenty of open houses, but we don’t know what the problem is,’ Kattom said. ‘We are sad, really sad. Especially in the summer, we wish we could have sold the home in the summer, but we couldn’t.’”
“‘We are right now, we’re seeing an increase in value in the greater Peoria area,’ said Laura Martin, President of the Peoria Area Association of Realtors. Martin says price alone might not be what tips the scales, that curb appeal is also important. ‘Give it a pop of color, put some baskets of flowers or pots of flowers on your front porch,’ she said.”
The Journal Express in Iowa. “Marty Shukert, principal planner for RDG Planning and Design has noticed is a shortage of market-rate rental housing across Iowa. ‘One reason is the whole industry died off prior to 2008, and now all of a sudden it’s needed again,’ Shukert said. ‘People are viewing a home as more of an anchor … as something that keeps them from being mobile.’”
“Joan Sutterlin said as new faculty members have come to Indian Hills, they have struggled to find places to live. She has also noticed that while seniors are selling their homes, and those homes are sitting empty, others are having trouble finding housing. She said one problem could be that seniors ‘don’t realize there is a global financial meltdown’ and ‘they’re not all realists when it comes to originally pricing their homes.’”
Public News Service on Ohio. “The housing bubble may have burst several years ago, but many Ohio communities continue to suffer the effects of the foreclosure crisis. An estimated one-third of all homeowners in the state are ‘underwater’ on their mortgage. It’s a story Paul Simmons, Bedford, knows all too well. He paid $130,000 for his home 10 years ago, and now houses on his street are selling for just $75,000. He has tried working with his lender to reduce his loan principal, but has been unsuccessful.
“He says he feels trapped. ‘My home is a toxic asset because it’s not worth what I’m paying for it. It’s more advantageous to me to have the house foreclosed on and to file bankruptcy than to just throw away $40,000 or $50,000 and not be able to recoup that money.”
CBS News on Ohio. “In July, the number of building permits was up by more than 29 percent from a year before. But the housing rebound may be too late for those facing foreclosure. In Appalachia, 72-year-old Charlie Ward had no savings and lived on Social Security. But because of a special USDA program for low income families, he could buy his own home. Ward called it a day of pride for him.”
“A truck driver for more than 40 years, Ward and his wife Wilma expected to live out their lives in Nelsonville, Ohio. But last year, with Wilma dying of cancer, medical bills took a toll. Ward said his family finances ‘disappeared fast’ because of what happened to his wife. Ward fell behind on his payments. He says he was trying to work out a payment deferment plan when the USDA seized his $2,900 tax refund, and began taking $135 from his $900 monthly social security check. Ward said it really hurt because ‘I have to survive, and I can’t.’”
“Unlike private lenders, the USDA plays by a different set of rules. The government doesn’t need court permission to begin collecting on unpaid debts even before a home is in foreclosure. Although there are USDA programs to help borrowers when they first fall behind, it’s not always easy to get that help. ‘One of the things you have to understand is that you’re talking about borrowers who are not that financially sophisticated,’ said legal aid attorney Carlie Boos.”
“Boos is working to save Ward’s home, now in foreclosure. She says once a home is in foreclosure, federal statutes leave no options. ‘They’re not allowed to do anything after a foreclosure has started other than say, ‘give me everything that is owed,’ Boos said. ‘You are literally talking about squeezing blood from a turnip.’”
From St Louis Today. “The St. Louis market’s rebound over the past few months should continue this fall and lead, finally, to recovery. That’s the view of real estate experts, who say low prices and low mortgage rates appear to be taking effect. ‘We have been so busy,’ said Bob Bax, a broker-manager with Prudential Alliance Realtors, in Ladue, who tells of ringing phones and packed open houses.”
“The corridor’s median home price of $213,000 is flat from a year ago and ’still pretty pathetic’ but will likely begin to edge up, said Russ Nolting, a broker-manager at Keller Williams Realty in Kirkwood. Nolting added that many homeowners, ‘awakened to the reality of today’s market,’ realize their houses no longer fetch the bubble-fueled prices of a few years ago, when almost any buyer could get a mortgage.”
“‘People are staying put,’ he said. ‘Back in ‘03, if the bathroom was pink, people would just sell the house.’”
Consider yourself far ahead of everyone else my friend. There are a 130 million others who haven’t learned this very costly lesson….. yet.
It most certainly was (in his mind) when he put his name on the contract to buy…
‘Unlike private lenders, the USDA plays by a different set of rules. The government doesn’t need court permission to begin collecting on unpaid debts even before a home is in foreclosure. Although there are USDA programs to help borrowers when they first fall behind, it’s not always easy to get that help. ‘One of the things you have to understand is that you’re talking about borrowers who are not that financially sophisticated,’ said legal aid attorney Carlie Boos.’
‘Boos says once a home is in foreclosure, federal statutes leave no options. ‘They’re not allowed to do anything after a foreclosure has started other than say, ‘give me everything that is owed,’ Boos said. ‘You are literally talking about squeezing blood from a turnip.’
I’ve been following these loans for a while. They are common in small Arizona towns and have reportedly double in the past few years. They are, how do you say, designed to fail.
Everybody stand back, as the occupy crowd rushes toward government offices, pitches tents, and demands these people not be evicted!
What, no outrage? Curious.
You borrow money of your of free will, sign a contract and are expected to pay it back.
What, no outrage? Curious.
And the bank that loans you the money expects to get paid back by taxpayers, just in case the borrower doesn’t come through.
My wife’s cousins just signed on a USDA loan this year, after short-selling their “200k” townhouse for about $68k.
I’m not passing judgment, but they look “to the lord” for guidance in all of their financial matters.
Should be interesting…
‘You are literally talking about squeezing blood from a turnip.’
I love when people say “literally” when they mean exactly the opposite.
I keep hearing this argument in many articles - yet the market is within 0-10% of all time highs?
And what is the real story of housing for these folks? Bu age 65 - your house should be ALMOST paid off. How many home equity loans did you take out?
The market crash and housing collapse hammered his net worth.
He tried to save his wife from cancer, and it wiped him out.
That’s a different person.
2banana
Boy do I agree. If your home isn’t paid off in your 60’s, you’re looking for trouble, unless your investments are solid with a monthly net to cover your nut. My family owns a small apt bldg that cash flows well. It is small enough and owned long enough (know the history)to cash flow well. Personally, it’s not my flavor, but still someone planned ahead. Wish I did.
Funny, isn’t it? HBB demands that everyone have a house paid off by the time we’re 65; yet if we start on that path by actually buying a house, we get lambasted.
I understand that the mantra is to wait until “tomorrow” and we can snap up some pristine home within reasonable commuting distance at 60% off 2012 prices. Or maybe save up (while renting at high prices) for 10 years and buy something then, never mind that inflation alone works against that.
Sorry, guys, I’m just not seeing this happen. I bought a house 20 years in advance because that’s at least how long it takes to pay it off.
The only “mantra” we read here is “I paid a grossly inflated price for house… therefore prices *MUST* go up”.
In the meantime, prices are falling.
Funny, isn’t it? HBB demands that everyone have a house paid off by the time we’re 65; yet if we start on that path by actually buying a house, we get lambasted.
You took the words right outta my mouth Oxide.
I was financially ready to buy in my late 30’s (had young children, a stable job - which I still have, emotionally ready to settle down) but the bubble happened.
So here I am in my late 40’s, having waited for housing to make sense, and also knowing that I want a paid off house by the time I retire.
So if our deal goes through (bank ok’d the 30 year conventional loan yesterday and now waiting on approval for DP assistance from the city), it’s very possible that we could pay off this house in 23 years or less.
Putting me at 71 years old with a paid-off house.
Would I have liked to have had a paid-off house by the time I was 65? Hell yeah.
Or wait another 5 years for the elusive “bottom”, and just hope all goes well and I can work until I am 76 years old.
If prices are actually allowed to bottom you’d be able to pay cash or buy one with only a few years needed to pay it off.
Yeah, good luck paying off that 500k loan.
Carl, I don’t think that that would ever happen, at least not Where the Jobs Are. A $300K house will never drop to, say $90K. Investors have a LOT more cash than middle-class households ever will, and they will snap those homes up for slum rentals long before the middle class puts the cash together to buy them.
The whole 30-year meme is a crock. 30 years in a modern economy is an eternity.
So few careers last past year three let alone year five and year ten.
I never got the sense that those two were sh1lls but I always got the sense that like many (most?) women, they make a decision first and try and find the facts to justify them afterwards.
It’s not like men don’t do that too but I’d sh1t over them too on general purpose.
“Carl, I don’t think that that would ever happen, at least not Where the Jobs Are. A $300K house will never drop to, say $90K. Investors have a LOT more cash than middle-class households ever will, and they will snap those homes up for slum rentals long before the middle class puts the cash together to buy them.”
Up until this post, I figured you were just blinded by “home debtorship” but this post is way over the top.
How many 300k houses fell to 90k in AZ? Or FL? Or CA? Or NV? Tens of the thousands? Hundreds of thousands? Possibly millions?
Further, “investors”? Seriously? And where is this demand?
Frankly Oxy, it’s become more clear than ever that you’re truely slipping. And I mean slipping.
“Carl, I don’t think that that would ever happen, at least not Where the Jobs Are. A $300K house will never drop to, say $90K.”
Are you perhaps in denial about federal employment cuts after the government runs off the edge of the fiscal cliff?
Fiscal Cliff? Why Markets Haven’t Priced In Disaster—Yet
Published: Friday, 24 Aug 2012 | 10:01 AM ET
By: Patti Domm
CNBC Executive News Editor
…
The toughest task for Congress will be making changes in the budget to stop the automatic, or “sequestered” cuts. “ “Defense is 20 percent of total federal spending. They are 50 percent of all the sequestered cuts,” Clifton said.
“Fifty percent of cuts are non-defense. They will hit the Department of Agriculture, the Department of Education, all across the government. We are going to have to fire federal employees. Nobody wants the sequester to go into effect.”
If Congress waits until after the election, it will have just several weeks to get the cuts done, but each party already has a framework. Odds of a resolution of the sequester before year end are about 55 percent, says Clifton. “It’s really a reflection of what Congress looks like,” he said.
” they will snap those homes up for slum rentals long before the middle class puts the cash together to buy them”
Not if prices are declining, unless they like to watch money disappear or just like to call themselves investors to impress their friends.
Blame took the words right out of my mouth.
Carl, I don’t think that that would ever happen, at least not Where the Jobs Are. A $300K house will never drop to, say $90K. Investors have a LOT more cash than middle-class households ever will, and they will snap those homes up for slum rentals long before the middle class puts the cash together to buy them.
Those kind of drops already happened, but as you say, not Where The Jobs Are. But that shows it can happen.
Regarding investors, I think we have a different definition of “truly bottom”. By my definition we would run out of investors before we ran out of nearly-free houses.
Yes, I did find a few McMansions in Vegas which which dropped 60% from 2005. I don’t think you’d see it in DC.
I guess there are more houses than investors on a national scale, but it’s unevenly distributed. In DC area, I think we could find an investor for every property, if only for the land value, even if the investors came from a thousand miles away.
And what would be left over after the bottom feeders are done.. would it be worth buying?
And what would be left over after the bottom feeders are done.. would it be worth buying?
I think by definition you could say “no”. When you literally can’t give it away, its effective value must be zero or less.
Life is good with fools and suckers with money!
the perception of stability has brought out what she calls ‘better buyers. They’re not the bottom-feeders who are looking for a [steal].
“‘We are right now, we’re seeing an increase in value in the greater Peoria area,’ said Laura Martin, President of the Peoria Area Association of Realtors. Martin says price alone might not be what tips the scales, that curb appeal is also important. ‘Give it a pop of color, put some baskets of flowers or pots of flowers on your front porch,’ she said.”
What a soft brain and no critical thinking skills comments. Under contract and accepting the nuts and bolts (aka the inspection) is the reality of moving forward with the contract. Our deal is falling apart. We’re talking major bucks here (north of $60K) we didn’t expect, and we knew the house was neglected. We had already budgeted for some of the repairs, but not a tsunami.
Once again Divine intervention precluded financial calamity for you.
Yeah, with all the emotional pull, we pencil things out. This Trustee to the Dementia homeowner is a “greed-”er, who has never owned. She looks at comps and doesn’t do the addition and subtraction of condition. This house has 30+ years of neglect. We’re cash. She didn’t appreciate our gift of an offer. Wait until the next buyer’s lender makes her fix stuff. Her net is about to sink.
We can tell she’s a nut job, by the “estate sale” stuff pricing. Way over the top asking prices.
What are you going to do now, Awaiting? Keep looking?
Probably take a money bath with all of the cash she still has.
Do they have a real estate agent involved? If so, clearly document the problems with the house and send them in a letter to the agent and the seller, with your reduced offer, and willingness to proceed at the lower price (if you are still willing). Even if there is no agent involved, send the letter.
Since you made them aware of the deficiencies in the house, it will be their obligation to make those new disclosures to the next potential buyer–it should impact their ability to sell to the next person at a higher price if they follow the law and disclose the deficiencies.
If you end up letting the contract lapse, send in another cash offer in a month if the house is still on the market…you never know if the seller will rethink their idiocy.
Oh well. Sounds like Houses is right on this one. Sorry to hear it, Awaiting, but at least you didn’t get stucco.
Price increases on SFH across the US face strong headwinds no matter what additional steps the Fed and Gov’t take:
- Personal Income (not going anywhere)
- Supply (lot’s of empty houses everywhere - I don’t care if they are officially on the market or not)
- Demographics (boomers won’t be able to afford to ‘age in place’ - it’s just that many don’t know that yet)
- Buy to rent SFH investment funds will not generate the expected returns (see above)
So all of this cheerleading on the rapid rise in house prices by amateur ‘behavioral’ economists is just too funny!
Hit the nail on the head JimO. That’s why anyone cheerleading here about a “recovery” has beans for brains.
There is still a place for home ownership even in an environment of falling prices, but the case is weak for most.
…a shortage of market rate rentals…
If that is the case, it’s no longer market rate is it?
“Market rate” is a term frequently used when referring to rental units that don’t have deed restrictions related to who can rent the units.
In California at least, many new projects are entitled with requirements that some of the units remain affordable for low or moderate income tenants–if you don’t qualify as lower or moderate income, you cannot rent the unit.
The inclusion of low/moderate income rentals can either be a policy of a municipality (all projects need to comply), or some kind of horse-trade for higher density that may be in the discretion of the city/municipality in question.
Based on the article, where the guy is talking about government programs, I’m assuming that they have something similar in Iowa.
The units that are not limited in this way are “market rate”.
Anyone remember when renting was just throwing away money?
“He says he feels trapped. ‘My home is a toxic asset because it’s not worth what I’m paying for it. It’s more advantageous to me to have the house foreclosed on and to file bankruptcy than to just throw away $40,000 or $50,000 and not be able to recoup that money.”
We’re only talking a $130,000 home purchase here. Since you have to live somewhere I don’t see why this clown feels he should get principal reduction. Because he made a bad “investment.” How much are you going to pay in rent clown? If it’s greater than or equal to your mortgage payment, suck it up an pay.
“Only”? lol.
mmmkay..
Let’s assume he bought 10 years ago for $130,000 and put 0% down. At 6.25% the P&I is $800 per month. So yes, I’m saying it’s only $130,000. At the 10 year point he’s starting to pay into that principal as well. This guy wants a free ride.
I’m not talking about the buyer.
I’m talking about your cavalier attitude toward $130k as if it is petty cash.
On a 30 year loan it is petty cash.
I’m not talking about debt slavery. I’m talking about $130k.
OK…but if he didn’t have a mortgage we wouldn’t be having this discussion. His solution to his loss would be not to sell and wait for prices to come back around.
Because he did take a mortgage, in this case not a very large one, he wants the bank to subsidize his debt.
How about we stay on point?
You assert that $130k for a house is a trivial amount.
That’s what we’re talking about.
And on a 30 year mortgage in most parts of the country it is.
We’re not talking about a mortgage. We’re talking about $130k for a used house.
And in most parts of the country, that’s an inflated amount for a used house.
On a 30 year loan it is petty cash.
Just for yuks I looked up rental housing in Peoria on craigslist. You’d probably pay about $900 month to rent a SFH.
5% down on a 130K house is a whopping $6500, so maybe 10K tops for closing costs and moving. Total PITI about $7-800 month.
Maybe I’m wealthier than I thought or just completely jaded from living in SF, but that looks like petty cash to me.
Maybe I’m wealthier than I thought or just completely jaded from living in SF
Probably both, by flyover standards.
“Total PITI about $7-800 month.”
PMI will add another $120/mo. The more expensive the house the higher the monthly PMI.
“On a 30 year loan it is petty cash.”
Principal does not matter to the howmuchamonth buyers.
Not sure what you are talking about. Anyone who can do some basic counting knows it is better for you to drop it and go rent hunting. You can´t just tight and expect your house to get back to its anterior price.
I´m just happy that the government of Canada changed mortgage rules, especially the amortization and refinancing (more at Canada’s Strong Housing Finance System). I hope this will prevent the bubble to burst and help current sellers to find better customers.
You mean let the bank eat it because you got a bad deal? Are you serious?
no you misunderstood me. I meant banks should be more flexible in terms of due payments and not force you to foreclosure, but give you more time to get back on your feet. I think foreclosure does´t help anyone, so it is more genuine solution.
And banks should be working for the citizens as well as they work for their owners, so they should avoid bad deals, because it would be tax payers, who will end up paying it.
So as a creditor/lender, I’m suppose to just give up what was rightfully my profit and not foreclose?
You’re nuts.
‘not force you to foreclosure’
No one was forced to stop making payments.
‘And banks should be working for the citizens as well as they work for their owners’
Where do you work John? Should your company work for me as much as the owners? Can I have some of your paycheck?
BTW, banks don’t hold much of the notes.
The banks made a ton of loans that they shouldn’t have because they didn’t have to hold the note. Something tells me this $130K home doesn’t fit into that category.
Where I have ire for the banks is when they resort to sinister tactics to extract the buyer for every last cent when things go bad. Remember they wanted me to make 3 “trial payments” (money I didn’t have) to consider me for modification. Once I got the documentation they wanted me to pay them over $10K in a balloon payment in month 4. Honestly if they would have put the interest rate down to today’s rates for even 5 years, forgave the fees, and tacked the missed payments to the end of the loan I would have gotten back on my feet and taken the $100,000 hit in value.
Never once did I ask for any write downs. I had a payment that was too high and some bad circumstances that they could have helped me with without touching their principal investment. Instead they ate the $100,000.
because it would be tax payers, who will end up paying it.
They didn’t/don’t make bad loans IN SPITE of this, they made/make bad loans BECAUSE of this.
“How much are you going to pay in rent clown?”
My thoughts exactly. I did a quick check on rentals in Bedford (a suburb of Cleveland) and a 2 bedroom place is in the range of $750 - $800/month (not bad by Cincy standards).
So the guy has a choice… pay $750/month to rent a 2-bedroom appartment, or pay $800/month (based on your numbers below, which might be reasonable) for the house he currently ‘owns’.
0% down in 2002 wasn’t the norm. Interest rates ranged from 6% to 7% during that time. $800 may be on the high end but it doesn’t include taxes or insurance. Even so it’s got to be on par with rentals so unless this clown wants to be a squatter he should just keep paying the mortgage.
There probably isn’t a person breathing in this country that had a 6 to 7 percent rate in 2002 that has not “refinanced” and taken cash out on the side. His rate is probably around
4%. We live in credit do-over Country. It’s the only way we can show increasing GDP.
Eighteen months ago if you had $ X in GICs you got $71m interest for a year. Today you get $45m.
The biggest second housing issue is not price but expected longevity of the buyer.
Then security of the area, cleanliness, neighbours, services. Cash price is next and at current level are not an issue to me.
I expect to live another eleven years, the last two with possibly restricted health.
I am willing to buy in Florida now because I can only enjoy nine more winters there.
I will enjoy eating oranges from my own back yard; using my boat/golfing an extra four months - twice what I get in Canada. Therefore, if prices fall less than 50% from today I am still ahead.
Counterfeiting the world’s fiat currency is benefiting only one class. How long do you think this can last?
Once interest rates go up again I won’t have to grow oranges. I will be able to buy them.
If you only have 9 years to “enjoy” and you only have 4 months each to spend there, how much can rent possibly cost?
Almost nothing.
And you could go to a different place each time.
Sounds like another equity cash-out FB from the north trying to justify a doomed decision.
Enjoy poverty!
Faster -
No thank you.
1. I want to see that orange tree grow.
2. It will be mine, all mine.
3. Renting and carrying the habits of life don’t mix.
4. Four months in one place requires a lot of “things”.
5. Besides, that $100m house will make me rich.
Tongueincheek.
When you are doddering about searching for Alpo, we’ll be right here laughing at you, gramps!
Enjoy poverty!
Incidentally, how many oranges can you eat?
If you can’t afford oranges, are you sure you can afford a house?
The fruit monthly budget must be a rounding error for a man of your staggering wealth, right?
LOL
This is like shooting fish in a barrel.
fawkin dying laughing here
“‘We’re not really seeing the positive benefit of low rates, but we’re seeing a huge negative hit,’ said Tim Gillaspy, who recently retired. ‘It’s going to have repercussions not for one or two years, but basically for the rest of our lives.’”
Bend over and take it like a man Tim, it’s but a small sacrificial to make sure we do not harm the egos of people who’s entire identity rides on the value of their homes.
I guess Timmy is gonna have to un-retire and get a job.
Get to work Timmy.
Could one of the resident macroeconomics experts on the HBB kindly enlighten us about how worsening consumer confidence helps lock in a housing market bottom? I’d think it would have exactly the opposite effect, of “foaming the runway” for further price declines.
Home Values Rise in U.S. for First Time Since 2010: Economy
By Shobhana Chandra and Prashant Gopal - Aug 28, 2012 1:32 PM PT
…
More Gains
“This ain’t tax credit driven,” said Thomas Lawler, a former Fannie Mae economist who is now a Virginia-based housing consultant. “There are fundamental reasons to expect home prices have bottomed and will continue to show gains.”
Consumer confidence fell in August as households grew more pessimistic about their employment prospects and the economic outlook, another report today showed. The Conference Board’s index decreased to 60.6, the lowest level since November, from a revised 65.4 in July, according to data from the New York-based private research group. The 4.8-point decrease was the biggest since October. The reading was less than the most-pessimistic forecast in a Bloomberg survey in which the median projection was 66.
Susan Wachter, professor of real estate and finance at the University of Pennsylvania’s Wharton School, said the increase in prices will help aid consumer confidence, in turn benefiting other parts of the economy.
‘Real’ Rebound
“This is real,” Wachter said. “The market has turned and barring any new shocks, this should continue.”
…
“The Conference Board’s index decreased to 60.6, the lowest level since November, from a revised 65.4 in July, according to data from the New York-based private research group. The 4.8-point decrease was the biggest since October. The reading was less than the most-pessimistic forecast in a Bloomberg survey in which the median projection was 66.”
Since none of the resident macroeconomics specialists seem interested in sharing their insights, let me guess:
This is some kind of reverse-psychology contrarian indication that housing demand is back for good, because the Fed will work extra hard to bring back consumer sentiment and housing demand.
Does that about capture it?
This is only partially related, but I saw a graph the other day (published by DDR, a retail REIT) that tracked changes in retail sales compared to changes in the consumer confidence index. Over a decade, less than 25% of the change in retail sales was explained by changing consumer sentiment. In other words, consumer sentiment wasn’t very predictive of retail sales.
The other interesting quote from the presentation: “Consumer confidence and retail sales moved in opposite directions in ten out of twelve months in 2011.”
This was for retail sales though, not big ticket purchases.
I can see why a more nervous consumer wouldn’t change their habits when it comes to buying a new DVD.
Completely different story when it comes to bigger ticket items. I don’t see any logic that would say worsening consumer confidence should improve home sales to those consumers.
I do understand some logic in saying that improving home values will improve consumer confidence. However, I can’t see how someone would think such confidence will be gained overnight. If the price increases continue for a period of many, many months (9 months to a year), all else equal, I would assume higher consumer confidence would follow.
That said, it’s a stretch to assume such change would happen after a month.
“‘We’re not really seeing the positive benefit of low rates, but we’re seeing a huge negative hit,’ said Tim Gillaspy, who recently retired. ‘It’s going to have repercussions not for one or two years, but basically for the rest of our lives.’”
The housing market stimulus had to come out of somebody’s pocket.
I PITI the foo!
(Someone had to say it. It’s been a while.)
Awesome! I’d forgotten that one.
BWHAHAHHAHAHHAHAHHAHHAHAHAHHAHAHHAHAHAHHHHHHHHH!!!!!!!!!!!!!!!!
I’d like a discussion on the following:
As the old joke goes about two guys and a bear, the first says, “Neither of us can run fast.” and the second retorts, “I don’t need to run fast. Just run faster than you.”
I nominate this as the metaphor for the moment.
I strongly believe the denizens of the HBB are the second person (the “strong hands”.)
Comments?
It does seem like a race with a bear. Try not to end up like this guy.
Grizzly bear kills San Diego man
By Jen Lebron Kuhney and Ed Zieralski
9:07 a.m., Aug. 26, 2012
Updated 6:11 p.m.
Richard White had a zest for life and a penchant for hiking alone in remote places.
Both those attributes factored into his death this weekend when the San Diegan was attacked and killed by a grizzly bear in Alaska’s Denali National Park.
White, 49, was photographing the bear as it grazed peacefully.
He’d been shooting photos of the bear for eight minutes before the bear attacked him. It was the first fatal attack in the park’s history.
Investigators recovered White’s camera and examined the photos, which clearly show the bear grazing and not acting aggressively, according to Denali Park Superintendent Paul Anderson.
Anderson said White was backpacking alone along the Toklat River Friday when he got to within 50 yards of the bear. Park regulations state that hikers stay at least a quarter-mile away from bears.
“The photos show the bear grazing in the willows, not acting aggressive in any form or manner during that period (eight minutes) of time,” Anderson said.
…
Or, a discussion on:
“Can pussycats run faster than dogs.”
or
“Can houses make you poor faster than stocks?”
All leverage kills. First, you must survive. Then you can lever.
Enjoy Alpo, gramps! You’ll be needing it.
Pussy
We all need it.
Gramps
“The housing market in Central Illinois is starting to look like it did before the recession hit. That might sound frustrating to those who still haven’t sold a house that’s been on the market for months. Arab Kattom said she and her husband haven’t felt the benefits of the upswing; their house has been on the market for seven months. ‘We’ve had plenty of open houses, but we don’t know what the problem is,’ Kattom said. ‘We are sad, really sad. Especially in the summer, we wish we could have sold the home in the summer, but we couldn’t.’”
Does anyone expect the crazy NAR propaganda to go the way of the housing bubble? One certainly can hope.
Regarding this incoherent screed, if the housing market looked the way it did before the recession hit, then you wouldn’t see underwater borrowers frustrated by their inability to sell a house that’s been on the market for months, would you?
We have sad summer sellers out here in San Diego, too, like my colleague at work, whose home is now listed for $400K less than when it first went on the market in Summer 2011. A year and two massive price reductions later, still no sale…
‘People are viewing a home as more of an anchor … ’
A sufficiently heavy anchor can sink a boat.
‘They’re not the bottom-feeders who are looking for a [steal]. They’re educated, and they see that it’s time to buy confidently.’
Telling greater fools that they are educated enough to see that it’s time to buy confidently is a great way to set them up for catching a falling knife real estate purchase.
‘She said one problem could be that seniors ‘don’t realize there is a global financial meltdown’ and ‘they’re not all realists when it comes to originally pricing their homes.’
As if to suggest that seniors are somehow more in the dark than the average American… How many people in your circle do you think apprehend the never-ending ‘global financial meltdown’? My impression is that not many in my circle apprehend it.
“He says he feels trapped. ‘My home is a toxic asset because it’s not worth what I’m paying for it. It’s more advantageous to me to have the house foreclosed on and to file bankruptcy than to just throw away $40,000 or $50,000 and not be able to recoup that money.”
If he recognizes that he would be better off filing bankruptcy than just throwing away money, as he is doing, then in what sense is he trapped? It sounds to me as though he is a prisoner of his own inaction.
“Unlike private lenders, the USDA plays by a different set of rules. The government doesn’t need court permission to begin collecting on unpaid debts even before a home is in foreclosure. …‘One of the things you have to understand is that you’re talking about borrowers who are not that financially sophisticated,’ said legal aid attorney Carlie Boos.”
Let me get this straight: The USDA makes the easiest-money loans in the world to financially illiterate low-income rural borrowers, then lowers the boom on them the instant they can’t make payments. Reminds me of the familiar refrain, ‘We’re the government, and we’re here to help.’
“That’s the view of real estate experts, who say low prices and low mortgage rates appear to be taking effect. ‘We have been so busy,’ said Bob Bax, a broker-manager with Prudential Alliance Realtors, in Ladue, who tells of ringing phones and packed open houses.”
For those unfamiliar with Greater St Louis, Ladue is the ‘Rancho Santa Fe‘ equivalent community — where corporate managers and independently wealth folks with last names like McDonnell (as in McDonnell-Douglas Corporation) and May (as in May Department Stores) live in large homes on estate-sized lots. My guess is that real estate vultures are currently descending on the area, in response to the latest housing market bottom call.
why is coastal california holding up ? La Jolla, Irvine and Palo Alto seem to be doing fine.