Do you get the feeling that this guy had a desired outcome, and just lined up his ideas? From Time:
While experts continue to warn that housing has not yet hit bottom, a slew of indicators suggest otherwise.
The latest is a stellar quarterly earnings report from Home Depot, which is benefitting from hopeful owners sprucing up for the spring selling season.
Home Depot said Tuesday that net income jumped 32% for the quarter ending Jan. 29, blowing past Wall Street estimates. Top-performing store categories included electrical supplies, building materials, paint, lumber, lighting and flooring. Also strong: gutters, roofing and vinyl siding.
The company saw more shoppers: Number of transactions rose 3.6%. Shoppers spent more: The average customer ticket rose 2.4%. Meanwhile, the number of customers who spent more than $900 rose 3% as those who spent under $50 rose just 1.3%.
Good weather and pent-up demand for improvements from recession-weary homeowners may help explain the results. But an unmistakable sense of optimism underlies this activity. Yes, there are always high hopes for housing at this time of year. Yet people generally do not make a big investment in their home unless they feel they have equity and it is secure. Among other hopeful signs:
- The job market is improving. Last month, unemployment hit its lowest level in three years. The unemployment rate has improved five months in a row.
- Homebuilder sentiment in February climbed to its highest level in nearly five years.
- Housing stocks are soaring. The stock market isn’t always right. But it often predicts developments six to nine months down the road—and companies that build houses have seen share prices increase 60% since October. Home Depot stock has rallied in similar fashion, in part because people who buy homes tend to spend money fixing them up.
- New housing starts in January nearly matched November’s three-year high.
- Sensing a turn, big investors are buying mortgage securities as eagerly as they once sold them. “There is light at the end of the tunnel,” Kenneth J. Taubes, the head of United States investment for Pioneer Investments, told The New York Times. “The mortgage crisis is getting behind us, and things are getting back to some semblance of normality.”
- State and federal authorities have reached a $26 billion settlement with big banks that is expected to provide some mortgage relief and possibly ease the foreclosure nightmare.
Yes, we’ve seen false bottoms before. The foreclosure mess, especially, still hangs over the market. But housing downturns like this one end at some point—and most people are surprised when it happens. Keep an eye on mortgage rates. If they start to move up it may push buyers to act before they miss the lowest rates on record—and then higher prices would follow.
The latest is a stellar quarterly earnings report from Home Depot, which is benefitting from hopeful owners sprucing up for the spring selling season.
As long as he was making up stuff, he could have used these too:
1. More dumps are selling, foreclosures or otherwise.
2. More homeowners are staying put, and modifying their home, rather than sell below their fantasyland price.
3. Construction labor is much cheaper these days, so people are taking on bigger projects.
This is TIME Magazine, for pete’s sake! The media today is lazier than ever.
The story on Home Depot is the fact that for many years now they have been raising retails throughout the store and buying everything from China. Other than Lowes they really don’t have any serious competition in most market places or in the minds of the consumer. That’s is how they have managed to consistently show gains. Big retailers keep their stock up with retail metrics that govern their stock performance. They are constant masters at spinning information to suck in investors. The truth for many in this trade is business stinks.
It all depends on what you want the statistics to say:
1) Was HD up because they took market share from Lowes and the home improvement market as a whole was flat?
2) Did people finally fix things they could no longer put off and won`t have to in the future ?
3) Did HD have more sales or reduce prices on a wide variety of items to increase volume ?
4) Are these same-store sales or did HD open a number of stores juicing the numbers ?
On the other hand, kudos for reading Time magazine, it puts you in an exclusive club these days.
Just another thought. When I worked for Sears in the 70’s the government was after Sears for bait and switch. We would change the prices on the appliances every week, some up and some down. Then when a particular unit was usually going inconstantly up in price we had a big sale the next week on that unit. The customers couldn’t figure that out. What a racket.
Should have just gone with the hemline indicator or maybe animal spirits.
Never forget “animal spirits” is the NAR model, and thieves hate competition 😉
I had a roof and dry rot repair done in the Sacramento area a few months ago.
A few reasons:
1. I’ve seen a few subdivisions come out of mothballs and sell, so it does look like construction is picking up.
2. I was getting within a few years of needing to do it, rather than choosing to do it.
3. I’m getting shit for interest on my savings.
Time to just get it over with. The contractor I went with initially said it would be about six weeks before they could start but it ended up being about 8 1/2 weeks instead. I had no leaks and we had some rain in there so people who’ve already waited to long took precedence.
Some of the workers though said they were glad for the work so I’m not sure why the GC/roofing contractor took so long to get started.
P.S. I’m not planning on going anywhere, I’ve got 5 years or less before I’m done with this mortgage so the only way I’m leaving is if California actually does go down the drain.
“The latest is a stellar quarterly earnings report from Home Depot, which is benefitting from hopeful owners sprucing up for the spring selling season”
-One VERY large reason for Home Depot’s recent increase in earnings is that FNMA made them a preferred vendor last year. FNMA paid over $985 BILLION to vendors to maintain and repair their foreclosures. Think Home Depot got a piece of that? Also, many contractors are stating that Home Depot is now taking all of there FNMA business due to the preferred vendor treatment.
I can just see it now, exec’s at FNMA and Home Depot on the golf course hashing that deal out.
tightest inventory in a long time is the best signal I see of a slow recovery mounting
Jakob, both from the numbers on RealtyTrac and conversations I have with people I encounter daily I feel that the inventory is likely to grow rapidly this year in my area. I expect banks to be pushing short sales much more aggressively in California due to the publicity about title problems with REO. We will see in the next few months…
Well, I firmly believe all real estate is local. In January, I mentioned to JtR that a local builder closed on one house in my neighborhood, and he sold four homes in that month–which is more than he sold all last year.When I walked today, I noticed another home the same builder built had a “sold” sign on it. It must have gone into escrow in just the last 2-3 days.
Yes, it sat on the market for 14 months, and he got some low-ball offers and wouldn’t sell until he got the price he wanted. I was shocked that it sold because I think it’s the worst paint color on the exterior I’ve seen in decades. He did have a fence installed in the backyard just last week.
A neighbor told me tonight that the builder said he was in no hurry to sell it because he owned it free and clear.
Still, with just this one builder, he sold five houses in seven weeks, and the traffic of wanna-be buyers in my neighborhood–especially on the weekends–is significant.
So there are now three houses for sale in my neighborhood and two in different stages of completion–all new construction. I think they will be all be in escrow no later than May 1st…
If you have a job and still have equity in your house (there are a few of us stll out there who do), things still wear out. And even if you are underwater, as long as you can still pay your bills who wants to live in a dump?
What would be interesting to know is how much of HD’s uptick is sales to contractors and how much to DIY homeowners.