May 15, 2014

Sellers Are Afraid They Won’t Get The Peak Price

CNBC reports on Virginia. “Home prices are moving so far, so fast, that potential home sellers are giddy with value. ‘I even hear them say that prices are skyrocketing,’ said Jeremy Cunningham, a northern Virginia real estate agent with Redfin, a real estate brokerage. ‘When you ask them what their data source is or where they’re getting their information, it’s more of a vibe.’”

“The Soricelli family in northern Virginia thought about selling their home a year ago, but held off, hoping that prices would improve. They decided to put their home up for sale this spring. Their asking price, however, was higher than their real estate agent, Cunningham, thought was realistic. The Soricellis did take Cunningham’s advice and brought their asking price down. The house sold in one day, but they say they have no regrets. ‘Not having to go through waiting and some of the aggravation of having your house on the market for a period of time is worth a certain amount of money,’ said Brad Soricelli.”

“Especially when they look across the street. Their neighbor’s house, which has already undergone a price drop, is still sitting on the market.”

The Washington Post. “Usually the busiest time of the year for home buying and selling, spring has been a disappointment for the D.C. region’s housing market. Only 3,883 homes were sold in the D.C. area in April, the fourth consecutive month of year-over-year declines. Pending sales also declined year-over-year in April, the fifth consecutive month of year-over-year declines and an indication that the pace of sales isn’t picking up anytime soon.”

“The 8,871 homes listed for sale last month was a 16.7 percent increase from March and a 24.5 percent increase from April 2013. Alexandria saw the biggest jump in supply. Active listings increased 53.1 percent last month compared to April 2013. ‘There are some weak spots as you go out farther from downtown D.C., but the hot areas are still doing fine,’ said Donna Evers, owner of Evers & Co., a local real estate agency. ‘And really they would be doing monumentally well if we had more product. … The reason we don’t have sellers is people are still afraid they won’t get the price they got at the peak of the market.’”

The News & Observer in North Carolina. “Triangle home sales dipped slightly in April compared with the same period a year ago, but the inventory of homes on the market ticked up for the first time in more than three years. ‘The only way the market is going to move forward in more than 1 or 2 percent increments is if we get job growth at more than 1 or 2 percent,’ said Stacey Anfindsen, a Cary appraiser who analyzes Triangle MLS data. ‘That’s not happening.’”

“Anfindsen said last year was somewhat of an anomaly because the region’s job growth didn’t support the rise in sales that the market experienced. ‘I think that’s what we’re seeing this year,’ he said.”

The Pocono Record in Pennsylvania. “While real estate investors in Reading, Bethlehem and Easton are earning a windfall by flipping houses, the market still hasn’t rebounded enough for those in the Poconos to take full advantage, according to Realtors and experts. ‘Flipping homes in the Poconos remains a gamble. What had been a lucrative endeavor for many investors has lost its appeal over the last seven years,’ said Michael D. Gilliar, president of Great Pocono Real Estate.”

“‘As compared to many markets across the nation, the Poconos tends to lag in terms of the recovery,’ Gilliar said. ‘One of the primary reasons for this is that the Poconos is a popular secondary home market. Vacation homes are often the first sacrifice made by struggling homeowners, which contributed significantly to the high foreclosure rate and increased supply of housing.’”

“Leon Rybner of the home building company Pocono Dreams, said flipping houses in the area still works for him. ‘There’s a lot to learn in any market. Buying and fixing a home is the easy part,’ he said. ‘It’s selling the property that’s the hard part, but I’ve been doing it for many years.’”

The Baltimore Sun in Maryland. “Home sales in the Baltimore region dipped slightly last month amid concern about a relatively weak housing market nationwide. Price gains appeared only in Baltimore and Howard counties, while Baltimore City and Anne Arundel, Carroll and Harford counties posted declines. It is still too early to identify a downturn in the Baltimore region, which by some metrics fared better than other parts of the country, such as Washington, D.C., where sales slumped 8.3 percent, said RBI senior product manager Corey Hart. ‘Last year was a year with big year-over-year gains in sales each month, and now we’re flat,’ he said.”

“Underlying conditions in the state’s labor market are also a cause for pause, said R. Andrew Bauer, a Baltimore-based senior regional economist with the Federal Reserve in Richmond, Va. While unemployment in Baltimore-Towson dropped to 6 percent in March, down 1 percent from last year, the rate of job creation in Maryland has slowed ‘considerably,’ Bauer said. ‘There’s a number of cross currents when trying to figure out what the underlying demand in housing is right now,’ Bauer said. ‘When you net it all out for our region, I think things are going to be a little slower moving forward.’”

“Sellers placed 5,596 new listings on the market last month, the most added in any month since April 2010, according to the RBI report. The total number of active listings was 11,965, up 12.3 percent compared to March and 14.6 percent compared to last year.”

“Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University, said as more homes are listed, prices might decline or properties might take longer to sell. He, too, sounded a note of caution about the weakness of the labor market’s recovery. ‘This year might be a fairly flat year for real estate,’ he said. ‘Many people still don’t feel quite fully recovered.’”

From Marketplace. “Federal Reserve Chair Janet Yellen feels alright about most of the economy. But keep an eye, she advised, on one sector: ‘One cautionary note though is that readings on housing activity, a sector that has been recovering since 2011 have remained disappointing so far this year and will bear watching.’”

“Stephanie Rizk didn’t need to hear it from Ms Yellen though. Two years after the housing market bottomed out, she can see it from the window of her house in Laurel, Maryland. ‘On my street there are three abandoned or foreclosed properties that are empty,’ she says. ‘There’s a decaying speedboat in the back yard of one. I can’t do anything about that as a homeowner.’”

“Rizk put her house up for sale last year because she wanted to move closer to work and school. The house didn’t sell, even after six months on the market. ‘It’s really hard to sell a house when there are literally no neighbors because the houses are empty,’ she says. Luckily, Rizk found renters. She and her family were able to move…but not buy.”

“Buying a home new home was a whole other ordeal involving disputes over appraisals and stubborn sellers. ‘It was very frustrating,’ she says.”




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93 Comments »

Comment by senior manchild
2014-05-15 05:08:36

Reading about Maryland and aware that many problems in the U.S. are structural, however we are probably at the heights of the business cycle,

Are these the good times?

Comment by senior manchild
2014-05-15 05:29:15

Of course some of the structural changes are going to result in higher quality of life, but it will be a bumpy road getting there.

Comment by goon squad
2014-05-15 05:54:56

‘going to result in a higher quality of life’

higher quality of life for the 1%

and crumbs for the rest of you

Comment by senior manchild
2014-05-15 06:09:19

Sears is dying,

Won’t it make a dent with the 1%?

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Comment by senior manchild
2014-05-15 06:14:07

Won’t affect me,

I don’t remeber the last time Sears was ” more for my life”

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Comment by Housing Analyst
2014-05-15 05:18:53

“I even hear them say that prices are skyrocketing,’ said Jeremy Cunningham, a northern Virginia real estate agent with Redfin, a real estate brokerage. ‘When you ask them what their data source is or where they’re getting their information, it’s more of a vibe.’”

Exhibit A demonstrating how fools, donkeys and debt junkies are consistently blinded by their own empty wallets.

In the meantime, price reversals grow and accelerate.

Comment by Housing Analyst
2014-05-15 08:23:25

…. and after all. Doesn’t lying to yourself like that give you a warm fuzzy feeling?

The travails of happy-talks. Those travials are a trail of tears. Boo hoo hoo.

 
 
Comment by Housing Analyst
 
Comment by Whac-A-Bubble™
2014-05-15 05:48:45

“The 8,871 homes listed for sale last month was a 16.7 percent increase from March and a 24.5 percent increase from April 2013. Alexandria saw the biggest jump in supply. Active listings increased 53.1 percent last month compared to April 2013. … ‘And really they would be doing monumentally well if we had more product. … The reason we don’t have sellers is people are still afraid they won’t get the price they got at the peak of the market.’”

It sounds like desperation is taking hold, as owners are dumping inventory despite their fear over not getting the peak price.

Comment by oxide
2014-05-15 07:48:24

Two major drivers of the Northern Virginia market:

1. Lots of employees in the 62-68 range. They can stay or go at the drop of a hat. Now that the DOW is 16000+ they are choosing to go. Many will stay in the area, but some won’t.

2. Rollback of the sequester. That means more job security for the defense contractor employees and more hiring.

I can’t tell if these two drivers will reinforce each other, or compete with each other. And there is a disconnect: the retirees want to sell SFH for $550K, but the pretty young things want to buy condos for $250K. Interesting times.

 
 
Comment by Combotechie
2014-05-15 05:52:41

“Federal Reserve Chair Janet Yellen feels alright about most of the economy. But keep an eye, she advised, on one sector: ‘One cautionary note though is that readings on housing activity, a sector that has been recovering since 2011 have remained disappointing so far this year and will bear watching.’”

The term “recovering”, I suppose means, “rising in price”.

If houses “recover” then they experience a price gain, and this price gain translates into a gain of value, and this gain of value means more equity can be tapped into - aka cashed out - and this cashed out equity will be spent buying stuff and buying stuff employees people (Chinese people, mainly but lots of Americans as well) and these employees in turn spend money and thus …

The economy once again gets rolling along!

But, but, but … “cashing out equity” really boils down to “borrowing money” and borrowing money in order to prosper is a sort of false prosperity - but never mind because it’s all magic because:

When you borrow money today you are borrowing money from the future, from tomorrow, and if you spend money today that you borrowed from tomorrow then you get to enjoy prosperity it two ways:

1. You get to spend what money you get to earn today, and

2. You get to spend what money you just might possibly get to earn tomorrow.

So supporting houses prices supports borrowing and supporting borrowing supports spending and supporting spending in our consumer-based economy supports the economy.

And the most interesting thing about all of this is few people seem to question the durability of the concept, the foundation, that supports it all.

Comment by Housing Analyst
2014-05-15 05:58:15

“If houses “recover” then they experience a price gain, and this price gain translates into a gain of value,”

Without a buyer in sight.

Remember…. A ‘housing recovery’ is falling prices to dramatically lower and more affordable levels by definition.

 
Comment by DonSterlin'
2014-05-15 05:58:43

And the most interesting thing about all of this is few people seem to question the durability of the concept, the foundation, that supports it all.

I know it. The central planners are like magic Johnson.

Comment by Whac-A-Bubble™
2014-05-15 07:28:51

Without the magic…or the johnson.

 
 
Comment by Combotechie
2014-05-15 06:09:36

If you are a (gasp) renter then the way you build equity is by some sort of savings plan - a bank account, buying stocks, bonds, whatever.

But if you are a homebuyer then you build equity in your home in two ways:

Way number one: By spending money in home improvements. Spending money in home improvements puts money into the economy AND it adds value to your home.

Way number two: By voting for candidates that will get on your side of the deal, that will lend support to higher and higher prices of houses. And since there are more of you that are in favor of higher house prices (such as home owners and home buyers) than those who are against higher house prices (such as renters) then your candidates will almost always get elected.

Comment by Whac-A-Bubble™
2014-05-15 06:11:00

Way number three: Pray that a California wildfire doesn’t burn it down to the foundation.

 
Comment by MrsLolaSoros
2014-05-15 06:28:28

Way number three is my favorite. Buy a house now and watch its value drop tens of thousands of dollars in the next few months. Then try to dig yourself out of that hole and build some equity all while watching the price of your house continue to drop and drop. Seen it happen before, we’ll see it happen again.

Comment by Doom
2014-05-15 06:38:11

Don’t count on it, labor market continues to improve, stock near 17,000, homeowners underwater can’t list yet so the inventory will drop.

A more stable housing with flat prices and void of investors also threat of 5% mortage rates, will spur sales into early fall?

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Comment by Housing Analyst
2014-05-15 06:42:21

Labor force participation is lower every month since 1999. The labor market is weakening, not improving.

http://data.bls.gov/timeseries/LNS11300000

 
Comment by MrsLolaSoros
2014-05-15 07:33:12

Thanks shill for pimping the permanently high plateau lie. Homeowners can’t list yet inventory is exploding?

Buying now is a fool’s game. Price cuts abound cause there is a race for the exits. By November it will be ugly.

The economy is in shambles, a cancer patient who has been through chemo (QE) with no discernible benefit. It’s all smoke and mirrors waiting for another war or a collapse.

 
Comment by Whac-A-Bubble™
2014-05-15 07:34:22

“Don’t count on it, labor market continues to improve, stock near 17,000, homeowners underwater can’t list yet so the inventory will drop.”

That improving labor market is the reason the QE3 taper is going to keep on rolling until it’s done.

 
 
2014-05-15 10:58:49

I’ve said it before. I’m a bond bull.

Yields are going to go lower than anyone can imagine.

We all thought that they did it on the housing bubble but they really monkey-h_mped the pooch on the student loan bubble.

Where is the future demand going to come from?

 
Comment by Housing Analyst
2014-05-15 11:07:04

With tens of millions of negative net worth loan owners, mules, donkeys and debt junkies in a deflationary environment, you asked the question of the year.

http://farm8.staticflickr.com/7150/6598216937_8b6002895a.jpg

 
2014-05-15 11:42:11

Merely “question of the year”?!?

That’s it? I’m disappointed.

It’s the “question of future decades”.

Decades as in plural. Not singular.

 
 
 
Comment by Blue Skye
2014-05-15 07:53:07

“Spending money in home improvements puts money into the economy AND it adds value to your home…”

It takes a lot less effort to go throw half your money off a bridge and put the other half back in your pocket.

 
 
Comment by Whac-A-Bubble™
2014-05-15 07:27:12

The term “recovering”, I suppose means, “rising in price”.

There is also the issue of dismal levels of sales. But that is easily remidied with mo credik.

Comment by MrsLolaSoros
2014-05-15 07:35:04

Unless they go back to fog a mirror it ain’t gonna work.

Comment by Whac-A-Bubble™
2014-05-15 07:46:25

Did you notice the all out effort underway to loosen U.S. mortgage lending standards?

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Comment by Whac-A-Bubble™
2014-05-15 07:48:16

Fannie-Freddie Overseer Easing Loan Buybacks: Mortgages
By Clea Benson May 12, 2014 9:01 PM PT

Melvin L. Watt, the overseer of Fannie Mae (FNMA) and Freddie Mac, is loosening rules that have forced banks to buy back billions of dollars worth of flawed home loans in an effort to spur the housing market.

Watt, who took over in January as head of the Federal Housing Finance Agency, will announce in a speech today a series of steps intended to stimulate lending. More than six years after the housing bubble burst, lenders remain cautious about making home loans to borrowers with less-than-perfect credit because they could end up absorbing losses if the loans default.

The banks’ reticence has kept first-time homebuyers and others with weak credit out of the real-estate market and created a drag on the fragile housing recovery. Fannie Mae and Freddie Mac (FMCC) have forced banks to repurchase defaulted home loans with a balance of $81.2 billion between 2011 and 2013 alone. Lenders say that is a major reason they’re still requiring credit scores averaging about 740 on loans they sell to the government-owned mortgage companies, far above the sub-700 average before 2007.

Banks “have history in the rear-view mirror, and they don’t want to ever repeat that,” David Stevens, president of the Mortgage Bankers Association, said in an interview.

With Fannie Mae and Freddie Mac now guaranteeing two-thirds of U.S. mortgages, their actions have a broad influence on lending. Banks say the companies’ campaigns to make them repurchase $81.2 billion in home loans between 2011 and 2013 alone is a major reason they’re still requiring credit scores averaging about 740 on loans they sell to Fannie Mae and Freddie Mac, far above the sub-700 average before 2007.

First Step

The new rules that Watt will announce today in Washington are a first step in a long-term effort to clarify loan-buyback policies and ease lender concerns. Banks will be freed of liability for mortgages with three years of steady payments even if borrowers send their checks late twice during that time. They’ll also be off the hook for loans that pass underwriting spot-checks before the three years are up. Fannie Mae and Freddie Mac will begin notifying lenders in writing when they’re relieved of responsibility for each loan.

Details of Watt’s speech were provided to Bloomberg News by the FHFA.

Fannie Mae and Freddie Mac also will stop automatically issuing repurchase requests when private mortgage insurers rescind coverage on loans. Such insurance is required when borrowers make a down payment of less than 20 percent.

The changes “are important steps towards balancing safe and sound lending with improving access to credit,” Watt said in an e-mailed statement. “These changes should provide the lending community with additional clarity and confidence in making their lending decisions.”

Watt’s Debut

In his speech, Watt is expected to outline a broad series of new policies governing the two mortgage-finance companies. It will be the first public appearance for Watt, a former Democratic congressman, since he took the lead at FHFA.

In addressing the issue of loan buybacks, also called putbacks, Watt is answering concerns raised by Federal Reserve Chair Janet Yellen, who told Congress on May 8 that the “flattening” housing market “will bear watching.”

New home sales dropped 14.5 percent to a 384,000 annualized pace in April, the weakest since July, according to Commerce Department data. The slump was concentrated in homes priced less than $300,000, showing that entry-level borrowers are being kept out of the market as prices and interest rates rise, and credit remains tight.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said Fannie Mae and Freddie Mac loan putbacks were partly to blame in an April 9 letter to shareholders.

‘Costly’ Loans

“These issues make mortgages more costly and unpredictable for companies and far less consumer-friendly,” Dimon wrote. “In many cases, deserving lower- and middle-income consumers may pay far more than they might have in the past for a mortgage or, worse yet, they won’t be able to get one.”

 
 
Comment by Ben Jones
2014-05-15 07:55:05

‘The term “recovering”, I suppose means, “rising in price”

And she’s all for affordable housing too. This is the dishonesty that’s at the root of why we are getting nowhere on the bubbles question. If you can’t accurately frame the debate, everything that follows is meaningless. That leaves people like Yellen to do whatever they please.

Look at this Watts character; talk about putting the fox in charge of the hen house. But I don’t think it will work the way they all plan. Look at what they have built this “solution” on; ever higher prices for houses and stocks. OK, we’re way up, now what? Young people can’t afford a house, and they know it. I read headlines today like:

‘More homes are beyond reach of middle class’

Isn’t this the plan Yellen? Where are the jobs? Why can’t we consider that your “solution” has made things worse? Enter Watts; he’ll fix it! Open the government loan machine, ever higher prices will solve everything. It’s so freaking stupid, yet no one talks about the futility of it all.

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Comment by Whac-A-Bubble™
2014-05-15 08:00:35

“It’s so freaking stupid, yet no one talks about the futility of it all.”

You’d think at least one of these wonky economists would own up to the problem of pushing home prices ever farther out of reach of buyers incomes, wouldn’t you?

 
Comment by Ben Jones
2014-05-15 08:07:36

In college I took an economic class where we did modeling and planning. One thing we learned was that if you try something, you also set up a time frame and goals to see if it works. So you say, in one, three or five years we should have accomplished X, Y or Z. It’s a very logical approach; if you propose something, tell us what it will accomplish and when. If it falls short, maybe we try something else.

We get none of that with the government or central bank. It’s just print, lend, spend, print, lend, spend.

 
Comment by Housing Analyst
2014-05-15 08:16:58

“We get none of that with the government or central bank. It’s just print, lend, spend, print, lend, spend.”

The stated goal is to spur demand…. yet demand for everything continues to crater. Housing, fuel, commodities, you name it.

Strange world we live in.

 
Comment by Whac-A-Bubble™
2014-05-15 08:24:04

“The stated goal is to spur demand…. yet demand for everything continues to crater. Housing, fuel, commodities, you name it.”

The missing ingredient seems to be U.S. household productivity. Folks who spend all their available time trying to get something for nothing tend to not produce much.

 
Comment by Ben Jones
2014-05-15 08:26:38

It’s the way it was structured; built on a fantasy. We’ll consume our way to prosperity. I remember well when this foolishness entered the economic conversation; it was Greenspan and the globalist in the 80’s. The US will be the worlds “economic engine”. We’ll print money, buy stuff from overseas, the third world will rise up and be wealthy enough to, well, that’s where we get into the underpants gnomes thinking.

‘”Phase One: Collect underpants. Phase Three: Profit.”

All this bubbles business can be traced back to this flaw. Higher house prices (throw in stocks too) means we can buy stuff, we can borrow more, and buy even more stuff. Glory be to heaven it’s a perpetual-motion prosperity machine!

 
Comment by Housing Analyst
2014-05-15 08:40:06

Phase II Reality =Tens of millions of suckers(likely a few hundred million) bottomed out in a Financial Bomb Crater.

Phase III- An illusion that never materializes

Can I get a boo hoo hoo from someone? A sad trombone?

 
Comment by Ben Jones
2014-05-15 08:42:11

‘By Amy Hoak, MarketWatch’

‘Student-loan debt could indeed be keeping more young adults from buying a home of their own, according to an analysis posted on Tuesday.’

 
Comment by Whac-A-Bubble™
2014-05-15 08:58:51

Next up: Student loan debt jubilee, in order to help savvy under-20 set get into homes of their own. But not until Madam President enters the Oval Office…

 
Comment by Ben Jones
2014-05-15 09:23:34

Bring it on! Although the words “debt jubilee” probably make a Wall Street banker choke on his steak tartare. After all, why stop there? Credit cards, municipal debt, heck, why should we pay back the Chinese who loaned the US government money? They should have never loaned us something we can’t possibly pay back!

These sorts of things are problematic. If you forgive student debt, who makes the loans next semester? If there’s one thing that our banker-centric economy relies on, it’s payback. Look at the HARP/HAMP program. Was it to help Ma and Pa loan-owner? Or was it to foam the runway for the banks?

 
Comment by Rental Watch
2014-05-15 09:37:43

When it comes to student loans, a “debt jubilee” is the same as saying “just add it to Uncle Sam’s tab”.

 
Comment by Guillotine Renovator
2014-05-15 10:45:05

The problem is simply artificially low interest rates, too much debt, and poor lending standards. Until we address the root cause, we will get nowhere.

 
2014-05-15 11:36:20

Although the words “debt jubilee” probably make a Wall Street banker choke on his steak tartare.

As if.

It will never happen. NEVER.

When was the last time in history the powerful got screwed in favor of the hoi polloi?

In theory, Greece could’ve exited the Euro, defaulted and bounced back. In practice, they will extract every drop of blood of every Greek ever born.

That’s the beauty of the debt game in the modern environment. The creditors always win.

(Doesn’t apply to cross-border loans though. In that case, the military always wins.)

 
Comment by goon squad
2014-05-15 16:18:02

This article perfectly illustrates how the future belongs to Lucky Ducky.

None of these kidz will be “snapping up” the boomers’ rotting, depreciating shacks. There is no such thing as “pent-up demand” because it doesn’t exist.

2014 will be the year people realize what a big fat LIE housing is.

And the losses they will realize will be incalculable…

 
Comment by Neuromance
2014-05-15 16:25:58

Ben Jones: This is the dishonesty that’s at the root of why we are getting nowhere on the bubbles question. … It’s so freaking stupid, yet no one talks about the futility of it all.

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” — Upton Sinclair

“It’s a helluva start, it could be made into a monster
If we all pull together as a team.
And did we tell you the name of the game, boy?
We call it Riding the Gravy Train.” — Pink Floyd, “Have A Cigar”

 
Comment by Whac-A-Bubble™
2014-05-15 20:24:54

“If you forgive student debt, who makes the loans next semester?”

There must be a student loan version of Fannie Mae and Freddie Mac. What is it — Sallie Mae?

 
Comment by Whac-A-Bubble™
2014-05-15 20:26:18

IT’S TIME TO TALK ABOUT PAYING FOR COLLEGE
Make your next educated decision
Encouraging responsible borrowing

Sallie Mae has helped more than 30 million Americans pay for college since 1972. We encourage students and families to supplement their savings by exploring grants, scholarships, federal and state student loans, and to consider the anticipated monthly payments on their total student loan debt and their expected future earnings before considering a private education loan.

 
 
 
 
 
Comment by Housing Analyst
2014-05-15 06:26:35

The Great Mania

“Reinflating the collapsed housing bubble, as many desire, would likely yield the same disastrous result. What’s needed are lower, fairer prices, and more investment in more productive sectors of the economy.

http://online.barrons.com/article/SB50001424052748704372504578285931623959700.html

And here we are. The disaster just getting legs under it.

Whoodathunk?

Comment by Mr. Banker
2014-05-15 06:42:58

“The Great Mania”

Don’t knock it, it makes for a great living.

 
Comment by Blue Skye
2014-05-15 07:54:43

The longer the government/Fed enable the mania the harder the crash will be.

 
 
Comment by Housing Analyst
2014-05-15 06:29:59

Oh my word….

“There remain over 10 million vacant housing units” and that does not include the “shadow supply”.

http://www.counterpunch.org/2013/02/11/housing-hijinx/

Comment by Rental Watch
2014-05-15 09:56:14

FEBRUARY 11, 2013 posting

I love the data without context…

Bringing the data current, in Q1 2014, vacant homes for rent, for sale, or held off the market totaled 9.1MM, or 6.86% of the housing stock (per the US Census). This was down from about 9.4MM, or 7.05% the prior year.

For context, the Census keeps this data going back to 1965, and the percent of housing stock in these three categories is commonly between 4% and 6% of housing stock (generally rising over time). In the 60’s it was in the 4% range, by the end of 80’s, we were over 5%.

The average first quarter reading for 1990-1999 was 5.63%.

We are now at 6.86%.

Are we above the trendline?

Absolutely.

By about how much?

About 1.6 million housing units (6.86%-5.63%)*133 million housing units.

Link to the raw data will follow (it’s Table 8 from the Housing Vacancies and Homeownership historical tables from the Census).

Comment by Blue Skye
2014-05-15 10:25:15

“Link to the raw data…”

I don’t think that word means what you think it means.

Can you look up the three properties on the same street as my property and tell me if they are in the raw data? I know they have been empty and off the market for at least two years.

Jose hadn’t made a mortgage payment on the property I bought for six years and the property never went into foreclosure. Can you look at your “raw data” and tell me if it was ever considered “vacant” by the Department of Truth?

I don’t think so.

Comment by Rental Watch
2014-05-15 10:37:54

Understanding that we don’t have access to the sampling of homes that the Census looks at to estimate their vacancy rates, the data they post is about as raw as we are going to get.

Fine. How about change my wording to “link to the source data”.

The pattern seems to be to question the source if you don’t like the data.

Fine.

Let’s add the US Census to the long (and growing) list of data sources that people seem to want to substantially discount.

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Comment by Blue Skye
2014-05-15 12:28:02

I don’t like or dislike the truth. My problem is that the fruit you can taste off this tree is rotten or hollow window dressing, at every instance one can measure against reality.

Can you even tell me how the Census supposedly comes up with these numbers in general? For sure they do not march down the road to see if there are any houses without occupants. Any idea?

 
Comment by Rental Watch
2014-05-15 13:20:27

http://www.census.gov/housing/hvs/files/qtr114/source_14q1.pdf

“Beginning with the first quarter 2002 Housing Vacancy Report, the size of the CPS/HVS sample increased to approximately 72,000 housing units. This expansion was one of the Census Bureau’s plans to meet the requirements of the State Children’s Health Insurance Program (SCHIP) legislation. Of the 72,000 housing units contained in the CPS/HVS sample, approximately 61,200 are eligible for interview each month; of this number, 3,900 occupied units, on the average, are visited but interviews are not obtained because occupants are not found at home after repeated calls or are unavailable for some other reason. In addition to the 61,200,
there are also about 10,800 sample units in an average month which are visited but are found to be vacant or otherwise not to be interviewed. About half of the 10,800 are vacant and
interviewed for the HVS.”

This is how they currently sample.

The best potential data that I’ve ever seen comes from a HUD/USPS partnership:

http://www.huduser.org/portal/datasets/usps.html

They track the numbers of homes by zip code that haven’t collected their mail for more than 90 days. VERY granular, VERY objective, hard to manipulate data.

I’ve tried to get this data.

Unfortunately, they don’t allow access to the data unless you are a non-profit or government agency. How’s that for BS? Taxpayers pay for HUD and provide a backstop the USPS, but unless you ARE the government, or an entity that doesn’t pay taxes (and thus don’t even help pay for activity in question), you can’t see the data?

Total BS. Until they make this data publicly available, the Census is the best I’ve been able to find (certainly with the longest historical record).

 
Comment by Rental Watch
2014-05-15 13:24:14

Link is coming, but the Census spells our their process. They sample about 72,000 homes on a regular basis, including interviews and some visiting of the homes–they extrapolate from there.

The data from the 2010 Census is much more complete.

As you’ll see from my response (coming), there is a much better source in existence (USPS knows who doesn’t collect the junk mail)–but it’s not available to the average, tax paying citizen.

 
Comment by Blue Skye
2014-05-15 14:12:16

That is quite an extrapolation, from 10,000 to 7 million. This is the government that screens every phone call and email in the country? So, once they find an empty house, do you think they keep going back to it for their census survey? BTW, the post office has no idea if I have empty houses or even where I live.

 
Comment by Rental Watch
2014-05-15 15:20:39

You’re making up reasons to ignore the data, rather than looking at the data for what it is–an imperfect estimate.

Like any kind of survey, it’s all in the sampling.

From my read, the 72k is a monthly sampling, and they provide their estimates each quarter, so there are about 216k data points. They use a 90% confidence interval. Last quarter, that meant their 8.3% rental vacancy was +/- 0.3%.

If you look at a significant number of such samplings you can see if trends emerge. Below is the data from Q3 2010 onward (quarterly)–Vacant for-rent PLUS for-sale PLUS Held off Market, Other as proportion to all housing units:

7.5%
7.4%
7.6%
7.4%
7.5%
7.1%
7.2%
7.0%
6.8%
6.9%
7.1%
6.7%
6.6%
6.7%
6.9%

Why did I start at Q3 2010? Because we just had a Census, where they sampled far more than 72,000 homes.

From that data, they had:

Total Housing Units: 131,704,730
Total for-rent vacant, for sale vacant, and “Other” vacant: 10,314,979

Vacancy Rate of 7.8%.

7.8% is the most accurate number on the page.

So, you have 7.8% in the middle of 2010, and then with sampling (and even acknowledging errors inherent in sampling), you see a general downward trend.

And from all the data before (again, with sampling error inherent), 0% vacancy is certainly never attained. And you would be hard pressed to convince anyone that 5% isn’t common.

So, can we use this data in any way to surmise the answer to 2 important questions? I say yes, with caveats (sampling errors), others seem to say “no”, preferring to believe headlines from bloggers, etc. (who generally get their data from the same friggin’ place, but spin it their own way).

Those two important questions:

1. How much excess is there in terms of vacant housing units (the measure of how much shelter compared to the people who want to occupy that shelter)? Let’s say the sampling error is the same as the overall number at 0.3% (applied to 133MM, this is 400k homes. And let’s pick a LOWER number than the 1990’s average to be conservative–5% as “normal”. So, with approximately a 90% certainty (and I would argue higher certainty since you can see a number of data points, each with 90% certainty), there are between 2.1MM and 2.9MM “excess vacant” housing units out there–out of 133MM.

2. Where is the excess located (in other words, where will there be difficulties if the portion of the vacant housing that is in the shadows comes out to play)? The Census looks at state-by-state data as well (with similar sampling):

http://www.census.gov/housing/hvs/data/rates.html

Let’s just say that there are lots of places where the Census estimate is for double-digit rental vacancy rates–and about 10 states where the rental vacancy rate is approximately half that number.

It is NOT stretch to conclude that states with vacancy rates CONSISTENTLY (quarter after quarter) estimated well below the national average are going to have less than their fair share of this 2.1-2.9MM excess than states with vacancy rates CONSISTENTLY (quarter after quarter) estimated to be well above the national average.

But if you want to discount the data entirely and instead believe the rantings of our very own “Housing Analyst”, fine.

That just seems kind of crazy to me.

 
Comment by Housing Analyst
2014-05-15 15:38:03

25 million excess empty houses R._Fraud. And we already established that doesn’t align with your wallet.

 
Comment by Blue Skye
2014-05-15 15:55:11

Don’t dismiss me because you dislike someone else, that won’t wash. Dismiss me because you dislike me.

You cannot defend Census data with their own stated confidence levels. That is too circular.

 
 
 
 
Comment by Rental Watch
2014-05-15 09:59:23

http://www.census.gov/housing/hvs/data/histtabs.html

See Table 8 for historical data for context.

Comment by Housing Analyst
2014-05-15 10:29:03

With 25 million excess, empty and defaulted houses out there, a few million either way are just raindrops in the desert.

 
Comment by localandlord
2014-05-15 19:36:58

For the 2010 census is that I noted my house as vacant in April, someone did a follow up visit in August and lo and behold it was occupied by me. But the choices on the questionaire were 1) vacant held for rental and 2) vacant held for resale. Neither of which were accurate. Sometimes we don’t fit in a neat little box.

 
 
 
Comment by MrsLolaSoros
2014-05-15 06:32:25

I’m quite disappointed with the local teenagers all across the country. Back in my day, these obviously abandoned houses would have been rife with drug and sex parties.

Comment by Guillotine Renovator
2014-05-15 10:51:15

I was driving down a country road yesterday, and slowed down because there was a young lady on a bike traveling the same direction but on the wrong side of the road who was kind of meandering back and forth, and I was worried she would veer into my lane. When I got about 15 yards from her there was a big puff of smoke from her exhaling what I thought was cigarette smoke. As I passed by, the smell of marijuana was overpowering. This little gal was in her own little world. Kind of scary given the way she was riding. This was a 45mph road.

Comment by Arizona Slim
2014-05-15 11:46:42

I tried bicycling while high. Once. That was enough to convince me that I ride better with a clear head.

 
 
 
Comment by taxpayers
2014-05-15 06:57:11

OT harley ad for 6 dollah a day-does that include a pre refi clause?

Comment by Bluto
2014-05-15 11:41:21

Not entirely OT, Harley DID get in trouble giving loans to anyone with a pulse much like mortgage lenders a few years back…

http://www.businessweek.com/stories/2008-10-15/harley-davidson-slips-on-subprime-consumers

 
 
Comment by Ben Jones
2014-05-15 07:06:03

‘The state fire marshal’s office says a Sharpsburg woman set fire to her house on the day she and her family were to be evicted in foreclosure proceedings.’

‘Deputy State Fire Marshal Bruce Bouch said Wednesday that the 47-year-old woman will be charged with first-degree arson and other offenses after her release from a Baltimore hospital where she is being treated for first- and second-degree burns.’

Comment by Housing Analyst
2014-05-15 07:14:16

Jeeez… This woman must really like jails. She barbecues one cell and now she’s going to get another cell.

Answer: Sell.

Comment by MrsLolaSoros
2014-05-15 07:38:46

Sell NOW if you can get out without a loss or with some type of profit. A friend of mine just did this, lopped 20k off in the third week on the market to get out with a lucky timing profit.

But I’m sure that comp will be ignored.

Comment by Whac-A-Bubble™
2014-05-15 07:58:00

If any of the three households among my closest blood relatives (siblings and first cousins) have succeeded with their attempts to sell houses this spring, it is a closely-guarded secret thus far. I need to do some inquiries soon to figure out the real stories.

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Comment by oxide
2014-05-15 11:28:16

Might be easier to look up the addresses on Trulia.

 
 
Comment by Bluto
2014-05-15 11:59:00

Good move doing a discount, succumbing to greed right now could be a VERY bad idea. When I sold my place in spring 2007 “discounting” the initial listing price $10K (from $325K to $315K) got me a buyer under contract within a week and the buyers loan was quickly approved as the appraisal came in OK…had I listed too high in hopes of making a few extra bucks it might have cost me big in the long run as the Bubble 1.0 popped soon afterwards and I could have been forced to chase the market down…thanks to this blog and a few others ( like Of Two Minds) I was (correctly) convinced that the pop was imminent. Hope the blogs are correct this time too, would love to see lotsa flippers and specuvestors get spanked and want to buy again after Bubble 2.0 pops.

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Comment by Ben Jones
2014-05-15 07:17:51

‘Wawaset Park, which is considered a model of stability in Wilmington for nearly 100 years, saw the second largest decline in median price. From 2010 to 2013, the median price fell 27 percent to $379,000 from $522,000 and trended toward an annual drop of more than $50,000.’

‘The biggest decline in median price was at The Pointe, a high-rise condominium building in the Brandywine Park development along Brandywine Creek. Between 2011 and 2013, the median price dropped more than 20 percent to $775,000 from $995,000 and trended toward a $110,000-per-year drop.’

“We haven’t dropped our prices and if it appears we have, it’s because the units on floors with mid-range prices have been selling,” said David Crowley, manager of The Pointe.’

‘Another indicator of demand is how close the sale price is to the original asking price. Across New Castle and Kent counties, some neighborhoods saw sellers receiving a median price of 5 percent more than their original listing price while sellers in other neighborhoods received as low as half of what they initially sought.’

‘Consider the situation with the Duriceks, who are selling their 3,750 square foot house in the Corner Ketch area to Kelly Hurtt. Their two children, both in their 20s, have been living with them.’

“I don’t know how these kids are going to do it today,” said Kristine Duricek. “They make it so hard to buy houses. Unless they’ve been saving since they were in middle school or they have parents who can give them money for down payments, they can’t do it.”

‘The Duriceks are buying a house in Millsboro where they plan to retire when the time comes. In the meantime, they’ll rent a two-bedroom, 1,690-square-foot house in Elkton, Md., where they’ll live until they hit retirement age. Their daughter is planning to move with them to the Elkton house.’

“As long as she has a bed and place to put her head, that’s what matters,” Kristine Duricek said.’

‘Some young people with high-paying jobs are kept from becoming homeowners by high credit standards required by lenders, said Kevin Kelly, chairman of the National Association of Home Builders and president of Leon N. Weiner & Associates in Wilmington. Many first-time buyers are burdened by student loan debt, making it hard for them to qualify for a mortgage, he said.’

“In a normal marketplace, 40 percent of new homes are sold to first-time buyers. That number right now and over the last couple of years has hovered at 26 percent to 27 percent,” Kelly said.’

 
Comment by MrsLolaSoros
2014-05-15 07:42:11

“While real estate investors in Reading, Bethlehem and Easton are earning a windfall by flipping houses, the market still hasn’t rebounded enough for those in the Poconos to take full advantage, according to Realtors and experts.”

According to thieves and liars. A real estate investor in Bethlem or Larry Holmestown is like one of those capuchin monkeys at the Allentown fair that tips his hat for a quarter and up, but won’t accept pennies.

 
Comment by Housing Analyst
Comment by Carl Morris
2014-05-15 08:56:17

I know I do.

 
 
Comment by taxpayers
2014-05-15 08:44:01

10 yr=2.48% ==== WOW never thought I’d see that again

Comment by Housing Analyst
2014-05-15 08:49:47

Yet mortgage purchase apps are still cratering.

Why do you think it might be that housing demand is at 19 year lows?

 
Comment by Whac-A-Bubble™
2014-05-15 09:00:00

It’s still falling. Just watch what happens when the stock market fever breaks!

 
 
Comment by dwkunkel
2014-05-15 09:09:32

From the San Jose Mercury News:

April home prices in Bay Area hit 7-year high
http://www.mercurynews.com/News/ci_25766743/April-home-prices-in-Bay-Area

In a milestone for the Bay Area housing market, April’s home prices reached the highest levels since just before the recession began, with Santa Clara County hitting a new peak in records going back 26 years, according to a report Wednesday.

The money quote:

Uri Safrai, an engineer who moved to Sunnyvale from Israel two years ago, said he had trouble getting a loan at first, and by the time his credit was established, prices had risen 20 percent.

“I dropped out,” he said. “Right now, I don’t think it’s wise to buy something in Silicon Valley. I think we’re at the peak. It’s just like the stock market and everything else, if you enter at the peak, there’s a high chance you are going to lose some money or are not going to earn any money. It’s not a good time to go in.”

Comment by In Colorado
2014-05-15 09:26:40

To the moon, Alice!

 
Comment by In Colorado
2014-05-15 09:29:31

Uri Safrai, an engineer who moved to Sunnyvale from Israel two years ago

Where are prices higher? In the Valley or in Tel Aviv?

 
Comment by Housing Analyst
2014-05-15 10:11:17

Remember…. I can ask $50k for my 10 year old Chevy truck but where are the buyers at that price?

Santa Clara County, CA Housing Demand Plunges 8% YoY; Falls to 4 Year Lows

http://www.zillow.com/local-info/CA-Santa-Clara-County-home-value/r_3136/#metric=mt%3D30%26dt%3D1%26tp%3D6%26rt%3D6%26r%3D3136%26el%3D0

 
 
Comment by Ben Jones
2014-05-15 09:30:51

‘Maryland has experienced 22 months of year-over-year increases in foreclosure activity as measured by foreclosure filings, contributing to a foreclosure rate that was the second highest in the nation last month for the third month in a row, according to RealtyTrac.’

‘About 911 foreclosures were completed, up 45 percent since last year and almost 30 percent from last month, the report found.’

‘The number of foreclosures remains elevated. CoreLogic reported that 48,000 foreclosures were completed in the U.S. in March, compared to a monthly average of 21,000 between 2000 and 2006.’

 
 
Comment by Rental Watch
2014-05-15 10:27:35

http://www.mba.org/NewsandMedia/PressCenter/88228.htm

I want to call out a specific quote from this press release:

“Judicial states continue to account for the majority of loans in foreclosure, making up almost 70 percent of loans in foreclosure, while only representing about 40 percent of loans serviced. Of the 17 states that had a higher foreclosure inventory rate than the national average, 15 of those were judicial states. While the percentages of loans in foreclosure dropped in both judicial and non-judicial states, the average rate for judicial states was 4.6 percent compared to the average rate of 1.4 percent for non-judicial states.”

Comment by Housing Analyst
2014-05-15 10:32:35

Thats forward looking…

Now about those 25 million excess empty and defaulted houses out there.

Comment by Rental Watch
2014-05-15 12:22:56

You’re right. Forward looking requires looking at data, trends, and making some judgement as to where we are heading…like this, perhaps:

http://www.thehousingbubbleblog.com/?p=7237#comment-2058203

Comment by Housing Analyst
2014-05-15 14:04:48

And there is a 4.4 million house anchor attached.

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