The mainstream media has really been loading up and blasting the negativity this week, since the housing stats came out. The people they interview get caught up in the hoopla too, and the more negative you are, the more you’ll see yourself on TV!
I went to a seminar yesterday, and it was happening there too. Local realtors were spewing negative statistics that were blatantly false when checked later on the MLS – and not even close to accurate. Question authority!
Readers TJ and the Bear and John both asked about the claim on zerohedge that no new homes sold in July over $750,000, for the second month in a row – and I think he’s referring to the USA.
There were 14 new homes closed in June, and 2 in July in San Diego County. But the new-home stats are based on when escrow is opened, so the claim may be that no buyers signed a contract last month. But how many new homes are being built that are priced over $750,000? I’ll check with Bridle Ridge today, and maybe Davidson in Carlsbad, but there aren’t many around here.
The claim was also that the high-end market is becoming “non-existant”.
There were 469 detached listings on the MLS that were priced over $750,000 that opened escrow in June and July (251 and 218), and 334 of them have closed. So apparently buyers exist. Can the new-home builders compete with existing homes, and will they?
Right now the cost to build a home at that price point (i.e. to give the buyer’s the size/finishes that they are requiring)is not profitable.
These homes cost more to build/design/approve/profit than the comparable market value today. Thus it is highly logical that very few new homes at the higher price points should be built.
Hopefully this will help existing inventory work through the market, decrease supply over time, and ultimately builders will be able to build high quality homes again.
They wear aluminum foil hats over at Zero Hedge.
Compared to total new home sales, higher end new homes have actually held up well.
http://bespokeinvest.squarespace.com/storage/New%20Home%20Sales%20082610a.png
To be fair, ZH was only reporting the statement by Rosenberg. He, presumably, was relying on data underlying yesterday’s July new home sales figures, which I assume are reported by the new homebuilders themselves.
ZH just posted there own explanation of the source of the statement. They said:
The earlier post citing Rosenberg’s claim that there were no new homes sales in July in the $750,000+ bucket has generated quite a controversy. It appears some are stuck up on the Census Bureau definition’s of footnote Z (Table 2 of the linked excel sheet) which is the designator for home sales for June and July, defined loosely as “Less than 500 units or less than 0.5 percent.” Since this is an open ended range, and could indicate 0 just as easily as 500, we leave it up to our readers’ imagination to draw their conclusion which end of the range is correct. However, what is without question, is that as of July, the combined proportion of new homes sold in the over $400,000 range, is the lowest it has been in a year. For the first time since July 2009, the houses costing $399,999 or under as a percentage of total has crossed 90%. And like the claim that the quality of the New York Times journalists is the best in the world, there is just no debating that (unless of course one wishes to brand all the data emanating from within the bowels of the government’s data machine as questionable at best).
This is too funny not to share…check out photo 16 of this listing
http://www.redfin.com/CA/Vista/711-Osborne-St-92084/home/3463761
So, what “zero” really means in this report is “less than 500 units or less than 0.5% of the total number of newly built houses sold if the number of newly built houses sold was more than 100,000”. Still not a lot, but definitely more than “zero”.
Answer — zero, nada, rien; and for the second month in a row.”
More than zero, yes, and more than nada and rein. It’s the extra pop that makes it sound worse than it is that bugs me.
Thanks Sean for adding their explanation, which is all I want – anyone who makes an outrageous claim should back it up so it has credence.
Thanks for clearing up.
Zero Hedge is an overwhelming source of information, but you have to take it with a grain of salt. On my sites I like to call them the CNBC of the bears.
I have a question about the new home stats… Is that only new homes built by large developers? Or does it include onesy twosy spec homes and / or single custom homes? (And how would you get data on the latter?)
There’s dumb, and then dumber. They’re not bearish, they’re simply dumb and dishonest at the same time.
ZH is really way over the top on a lot of stuff, you really have to take everything you read there with a massive grain of salt. That said, David Rosenberg is ex-Merrill Lynch and a fairly notable bear on the market and the economy. So he’s at least a reputable source, though I think he went too far on this (maybe) and at least Jim is (perhaps) in a position to call bunk, or not, on this one.
I am the bunco squad!
UCGal-You have a good point too. If it excludes customs or very small tracts, then the numbers would be easy to explain. Only in a very few areas nationwide are there whole housing tracts that have houses selling for more than $750k.
# 5 that is funny
A photoshop FAIL!
It looks like Satan is in the firepit.
sdbri, you may not agree with the viewpoint of Zero Hedge but calling them dumb is just not correct. The site contains a wealth of information, just decide for yourself after reading the data whether you are bullish or bearish.
That Vista listing (of LM’s #5) is hilarious, not only because of the photoshopped fire, but because these flippers paid $485K for it in October 2009, then put “tens of thousands of dollars” worth of flipper “upgrades” in it and had the nerve to list it at $849K in May (now down to $749K). It wouldn’t be so bad if they hadn’t said this is their text:
Sold in 2006 for $1,055,000!
It’s like they think we should focus on the “discount” from insane bubble prices in 2006 rather than focus on the ridiculous markup from the sale just a few months ago. The delusion is thick out there.