From an article in the WSJ, and four excerpts (with JtR’s comments underneath):
1. Sales may have been even worse if mortgage rates hadn’t been so low, said David Berson, chief economist at PMI Group Inc., a mortgage insurer in Walnut Creek, Calif. Low mortgage rates won’t hurt, he says, but “they will give you less traction in the market than we would normally get.”
2. How long the hangover from the tax credit will last depends on how long the economy takes to recover. Tuesday’s housing report was “a wake-up call to anyone who’s trying to understand why housing has not been recovering,” said Ivy Zelman, president of housing-research firm Zelman & Associates. “The artificial boost from the tax credit masked the impediments.”
3. One troubling sign for the market is that banks appear to be listing more homes for sale, just as demand has dropped. The number of bank-owned listings increased 12% in August from the previous month.The figures, tracked by Zelman & Associates, include listings for the top 10 U.S. banks in 20 states and from mortgage companies Fannie Mae and Freddie Mac.
4. “I’m in no rush,” said Steve Hamilton, who sold his Carlsbad, Calif., home two years ago and has been on the sidelines since. He said he was happy to continue renting a home that costs half of what the monthly mortgage payments were just a few years ago. “The tide is still going out,” said the 41-year-old commercial-real-estate investor. “When I see a steady increase in local jobs, that’s when we’ll step back into the market.”
My thoughts on their remarks, in order:
1. Less traction than normal? What I wished he would have said: “If your house isn’t selling when rates are 4.5%, then your price must be wrong.”
2. “The artificial boost from the tax credit masked the impediments.” I don’t think the tax credit was an artificial boost. It was free cheese for buyers who bought the listings that were priced right, and the supply of right-priced listings has been exhausted. Today’s listings are priced higher than April’s, and that’s why they aren’t selling, not some mysterious masked impediments. I still keep running into multiple offers on well-priced new listings.
3. August isn’t over, yet we’re claiming a 12% increase in REO listings this month? Shouldn’t we take the count in a couple of weeks? Here are the REO listings for San Diego County, by month:
706+715+783+805+664+715+674+440 = 5,502 REO listings in 2010, YTD.
Jan-Aug, 2009 = 6,307.
It looks like August will probably exceed July, unless bankers go on vacation. If they do increase REO listings, hooray, let’s move some product. But I’ve seen some high-priced REOs lately – remember how they used to get multiple offers the first week? Only 53% of July’s REO listings have found a buyer.
4. Steve is clearfund, and I introduced him to Nick at the WSJ – thanks for participating.
Let’s ask Mr. Hamilton:
a. If you saw a steady increase in local job next year, would you buy a house?
b. If you never saw a steady increase, would you never buy a house?
I think Steve, like vegasandre, Tony Robbins, and the rest, have specific markers and guideposts to assist them with following the market, which is good. Steve enjoys extensive knowledge and experience in his designated target market, and can comfortably afford to buy if the right deal came along. Are you saying that if you saw the right house that you could buy at the right price, that you wouldn’t buy it?
We made a silly bet that I don’t want to muddy the waters. I’ll just say that I think there will be enough good deals drop in his lap over the next 1-2 years, that one will be irresistible. And one is all it takes.