We’ve been hearing about how the real estate market has hit bottom from a variety of sources, this today from the White House:
WASHINGTON (Reuters) – The U.S. housing market appears to be bottoming out, White House spokesman Robert Gibbs said on Friday after an industry survey showed sales of previously owned U.S. homes jumped 7.2 percent in July.
The White House, meaning your president, is telling you that the market “appears to be bottoming out”. All cheerleaders and media outlets are pushing the positive spin – could it work? Will it work?
Most potential homebuyers who are actively looking at houses aren’t going to read any further – because they are already willing to buy if they can just find the right house.
But will improving headlines cause them pay more for it?
I don’t think so.
The positive spin might get buyers (and definitely sellers) more excited, and bring in from the sidelines some new potential buyers, but I think the spin is a turnoff.
People don’t trust the spin-masters, and they tell themselves that they aren’t going to get fooled. Expect that the majority of potential buyers are going to stand pat, and be more willing to wait, rather than pay too much.
Keep your eye on the better statistics, and ignore anything you read in the mainstream media.
Compare the number of detached listings, and vs. those in some stage of foreclosure:
| Town or Area | Zip Code | ACT | PEND | SOLD July 08/09 | F/C List |
| Cardiff | 92007 | 44 | 7 | 39 | |
| Carlsbad NW | 92008 | 66 | 36 | 71 | |
| Carlsbad SE | 92009 | 122 | 106 | 196 | |
| Carlsbad NE | 92010 | 26 | 41 | 80 | |
| Del Mar | 92014 | 145 | 22 | 27 | |
| Encinitas | 92024 | 185 | 68 | 156 | |
| La Jolla | 92037 | 296 | 48 | 89 | |
| RSF | both | 350 | 31 | 35 | |
| West RB | 92127 | 153 | 100 | 182 | |
| Carmel Vly | 92130 | 216 | 75 | 89 |
We do need to make up some new measuring sticks though.
Acceptable limits?
More foreclosures than actives = trouble?
Foreclosures more than 5x last month’s sales?
Foreclosures in triple digits?
Let’s use 92010 as a guide, because it’s probably been the healthiest of the bunch.
If you have more pendings than actives, Y-O-Y sales are higher, and your foreclosures are about 3x actives, your favorite zip is doing OK.
My baseball coach used to say, don’t believe anything you hear, and only half of what you see!
I DO NOT believe anyhing out of the mouth (or other end-interchangable save for the glasses in this case…) of Funny Larry Yunny or the Gangsters at the NAR. Never believe Washington DC and the Scaramento Gang that-couldn’t-shoot-straight are just plain out-of-the-loop.
As for Realtors as a group, they cannot be trusted At All. Jim, here, on the other hand, at least present the facts backed up be with his opinions which he has arrived at OVER TIME and experience as a successful agent. And he actually works for a living which most ‘realtors’ do not in my experience – operative word being ‘work’.
Jeezus, as for the ‘typical’ agent posing as a ‘Professional’, they need a wooden stake driven through their heart and have the corpse run through an indistrial grade chipper at full throttle with the debris going into an incinerator to rid the earth of the DNA….
Typical 6% ers are doomed. Thank God.
The numbers for RSF seem to be getting worse as the months roll by. While understanding the fundamentals impacting the high-end, (tight jumbo requirements,portfolio shrinkage,trade-up fright, etc.), it appears that most RSF sellers refuse to “mark at market”. Deep pockets, big equity and all,
puzzled as to why continue listing for sale when virtually nothing is moving.
Q4 is when most companies do layoffs, the housing market cools, etc, etc.
It’ll be curious to see what happens and how well the momentum holds up.
Well, since you asked.
I think we are headed for something the likes of which we have never seen.
R/E is nothing but a small footnote in the history books of what is now taking place.
Take yourself back to Sept 08 or March 09. What was the MAIN cause of “it”. One word: debt.
Sooooo now since 08, debt (esp govt debt) has exploded and we have even LESS people (read millions) without a job….somehow that = a “recovery”
Hummmmmm “recovery”
You keep using that word. I do not think it means what you think it means- Inigo Montoya
US gov. is transfering corporate debt to its balance sheet at the cost to US citizens.
As William Grider says corporation are runing the government. It is disgusting.
http://www.pbs.org/moyers/journal/03272009/watch2.html
I suppose this could make sense if you define “bottoming out” as hitting a low in sales *volume.* If you couldn’t sell hamburgers at a dollar each, lowering the price to 25 cents each would almost certainly increase the number of sales. “Bottoming out” the *price* is another matter. You might not reach the point where you can think about raising next week’s price until the burgers are flying out the door at 5 cents each. And if it costs you 50 cents to make every burger…
In Real Estate, we will never know what point the bottom was until several months after it has passed. The only true way to determine a bottom is to have prices increase steadily for some period of time (3 mos?) and by that time, it has already hit. I don’t like to watch the County Median Price figures–we need to be looking at specific zip codes–even better, specific neighborhoods and specific properties–narrow it down and then decide.
No. 1 Anonymous – you are vile. Jim the Realtor is a pro and provides this forum for the good of all – the public and those of us in the real estate industry. You comments are not only in poor taste but have all the elements of a serial axe murderer. Hope Jim bans you into oblivion.
Local Boy,
Having lived through the last SoCal bubble I’d say we won’t know for at least 12 months that things have bottomed, and even then we didn’t have the exogenous factors facing us that we do now.
Let me see…
Unemployment is in double digits nationwide and rising; the cost of just about everything we buy is rising; our government has taken on an additional $1.5 trillion in debt (http://www.brillig.com/debt_clock/); personal savings is among its lowest levels, while personal debt is among its highest; we don’t produce and export nearly as much as we did 60 years ago (with the exception of paper dollars); our military is still in Iraq, Afghanistan, and over 130 other countries; Cash for Clunkers is being canceled a month after our elected representatives wrongly voted to spend another $2 billion dollars on it that we can’t afford; and Medicare and Medicaid are broke – yet our government thinks it can adequately manage our entire health care system.
We are now being told that we have reached the bottom. This sage advice comes from the same aristocrats that said there were weapons in Iraq, that the subprime crisis was isolated and wouldn’t spread, that we must approve the TARP bank bailout NOW or there will be martial law, and that real estate prices never go down, among other things.
Am I missing something here?
http://www.cnbc.com/id/32508736
“…Spencer Rascoff of Zillow.com today, who claims, “this is not a real recovery.” Higher sales on one end of the market do not a full recovery make. Until foreclosures peak and prices bottom, we can’t say housing is on its way back up.”
The whole thing going forward is interest rates. Although the government has successfully brought down the cost of debt for now, I can’t help but to think that there will be a long term cost to pay. That cost, IMHO is higher interest rates down the road. If interest rates are not significantly higher in 5-10 years then I guess money really does grow on trees and the government will have pulled off one of the greatest magic acts in history.
what about SB?????????? Thx.
OFF TOPIC:
The American government — which we once called our government — has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called “economic royalists,” who choose our elected officials — indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.
…we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?”
A culture of irresponsibility took root, from Wall Street to Washington to Main Street.”
There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: “And a regulatory regime basically crafted in the wake of a 20th-century economic crisis — the Great Depression — was overwhelmed by the speed, scope and sophistication of a 21st-century global economy.”
This is nonsense.
The reason Wall Street was able to game the system the way it did — knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) — was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.
Congress gutted the Glass-Steagall Act, ……
Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:
“Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”
Read Rockefeller’s words again. He actually admits to working against the “best interests of the United States.”
And more: http://www.huffingtonpost.com/larry-flynt/common-sense-2009_b_264706.html
#10 – I think you covered it all. But I also think at one point the powers that be even said that we were not in a bubble.
Rich Toscano said that unemployment is not a leading indicator of a recovery. Yet I, as others, question this.
With the lending standards that exist today, we need a job to buy a house (among other things). Not only do we have unemployment, but we also have lowered incomes via furlough and paycuts.
We cannot really measure just incomes, but must look at salaries. For easily the past decade people had spendable income due to trading stocks and flipping houses. Factor that out and you have to rely on your reduced income from your job, if you’re lucky enough to have one.
My buying power in a year’s time is reduced by 50k due to lower income and slightly more debt (inevitable, unexpected expense).
Would we even have such a brisk shopping season this spring were it not for 8k incentive (+10k if buying from builder)
While no one questions the amount of NTSs in the pipeline, I think the biggest mystery is when and if the banks will ever release them. Will they modify all the loans? I’ve seen them take up to a year, sometimes more, before foreclosing.
Will they just let people squat indefinitely or let places sit empty until inflation takes hold and prices go back up? Will prices go back up to peak prices w/inflation? That could be a strategy. Wait it out until inflation covers the loss.
But then I also question if we have inflation, will our employment situation improve? Will our incomes also go up? Because IMO without a job or income to substantiate it, a house in Clairemont with inflation can go up to a million dollars for all I care. With no one to buy it, would it matter?
Is everyone just forgetting you actually have to qualify to buy a house and prove you can make the payments?
Someone would be a fool to trust anything the NAR says.
True, some areas are seeing increased activity, but the real bottom is years off.
So, if the White House says the market is bottoming, does that mean the 8K tax credit won’t be extended?
Hmmmm…don’t think so.
Their words won’t match their actions.
-Erica
I have no doubt that somewhere in America the market has bottomed out. Maybe Oceanside, where any further decline is reversed by investors. Maybe even the low end in general. We’re nowhere near as overpriced as we were years ago.
That said, regardless of short term fluctuations it’ll be a while before we see any modest appreciation overall.
“The positive spin might get buyers (and definitely sellers) more excited, and bring in from the sidelines some new potential buyers, but I think the spin is a turnoff.”
Jim, I agree with you and want to believe you, but it’s difficult. The masses will hear what they want. If Bozo the Clown says we’ve hit bottom, and a 2,000 sqft place in Carmel Valley is worth $800k, many people will have all the justification they need to overspend and prop up prices.
Their words won’t match their actions.
LOL, yeah, just like banking is doing so much better but they need to extend the TALF just the same.
“The American government — which we once called our government”
Only the gullible. The only thing that has changed signifcantly since FDR’s time is the demographics of the people who make up the rich and powerful elite who control things.
Cash for Clunkers? How about Dollars for Dumps?
This way the Obamanomics could give you an $ 800K immediate tax credit for any house bought, torn down and rebuilt ( Must use cheap illegal alien labor and poor quality materials from China like toxic drywall and radioactive granite countertops) for any amount which would be applicable to the down payment and sales commission guaranteed personally by Chairman MaObama and his South Side Chicago Gang of Thugs.
Of course 6% would go directly to the Real Estate Cartel with a little extra grease on the side for Lawrence and Larry, Chearleaders of the NAR with a small token for Krugman too.
No Strings attached. Just fog a mirror and the $800K is yours to spend. You must spend the entire $800K. Make sure to allocate a shopping spree at Wal-Mart and pick up some fine leaded toys for the youngsters and an extra large soda and some cheese doodles for yourslf.
DimWit America. Truly a Nation of stupid murderous fat ignorant thugs. Hurry up sheep, NASCAR on next. round and round and round you Go Go Go!
NOW IS A GREAT TIME TO BUY HURRY HURRY STEP RIGHT UP! Don’t forget your Free $800K Bonus!
Socialism can be almost as much fun as Fascism.