A variety of data packages get dropped in my lap from time to time, an excerpt from the latest:
First, we got the existing home sales data for February and they edged down again, by 0.6% MoM, and “no” — it was not due to the blizzards (sales actually rose in the Northeast and Midwest). Also keep in mind that these are closings — so no reason why they should have been impacted by the weather at all.
This is a new downward trend in sales turnover because it was the third decline in a row and we are now all the way back to the depressed levels of June 2009, at just over five million units annualized. Without the tax credits, which expire at the end of April (we shall see about that — Arnold is already moving to extend the goodies in the Golden State) we would have seen an even weaker figure because first-time homebuyers made up 42% of the sales tally last month. Repeat buyers are hibernating, comprising 39% of the sales pace, down from 43% in January.
What was truly disturbing were the inventory data — listings up almost 10% to their highest level since last September — taking the backlog to a six-month high of 8.6 months’ supply (from 7.8 in January), which is materially above the 5-6 months that generally characterizes a balanced market.
We are back to a classic buyers’ market, which means that we are in for another round of residential real estate price deflation. Indeed, average resale prices dropped 0.8% last month and are down in seven of the past eight months — the Case-Shiller home price index is probably not too far behind (recall that the FHFA house price index has declined in each of the past two months).
The bottom line is that the U.S. housing market is still in a mess fully three years after the collapse. If government policies worked, then it is hardly evident — perhaps at best cushioning the blow but not preventing it from happening. Consider the following:
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The slide in housing has shaved $7 trillion from national residential real estate wealth since the third quarter of 2006.
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There are an estimated 5 million Americans still in the foreclosure process.
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There are still 11.3 million homeowners who are “upside down” on their mortgage. The average “under water” mortgage borrower is in the hole to the tune of $70,700 (see front page article of the USA Today) in Q4, up from $69,700 in Q3.
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The unsold housing inventory, when accurately measured, is close to 21 months’ supply. There are over 18 million residential housing units sitting empty right now across the country, and the areas under the most severe pressure are Nevada, Arizona, Florida, Michigan and California (“only” 25% of the country).
So this is just weird, like you said, the view on the ground is very different than the articles that have been coming out on the media this last week, I wonder if this is to justify the bigger bailouts that have been announced at the same time this week,
This is just weird.
Jim,
Sorry for sending this twice:
http://www.metrotrends.org/jobsandhousing.html
They put Atlanta AND San Diego in the double dip category.
This could be a game changer:
http://finance.yahoo.com/news/Govt-to-unveil-plan-to-shrink-apf-1951043207.html?x=0&sec=topStories&pos=1&asset=&ccode=
WASHINGTON (AP) — The Obama administration will announce Friday a plan to reduce the amount some troubled borrowers owe on their home loans, after months of criticism that it hasn’t done enough to prevent foreclosures.
Maybe they know something we don’t ???
Why dont we send everyone a 50k check instead of just helping homeowners who overbought?I have neard heard so much whining in my life.When are taxpayers going to get sick of the handouts?
“Why dont we send everyone a 50k check instead of just helping homeowners who overbought?”
Why don’t we send a 50k check to everyone who has remained current on their payments (mortgage, rent, car loan) and reward those people for a change?
Second question – where is this supposed “criticism” that the administration hasn’t done enough to prevent foreclosures? Who out there is saying that it is the government’s job to bail homeowners out?
Hello hyperinflation my old friend.
Key difference between SD and ATL- ATL has employers moving in. SD has employers moving out. ATL is also affordable with a good quality of life.
Double dip they may, but weather that the same they’ll not.
Love your webpage Jim. I check it several times every day. I appreciate the tours of local areas and discussion of their home values, and the news items. You were in our neighborhood (Derby Hill in Carmel Valley) just recently and you did a great analysis of it. It is so refreshing to see a realtor that provides this kind of information. YOU ARE AWESOME! Thank you!
Thank you Kathy!
And thank you to all the generous well-wishers who comment here and privately – I love the open forum/community spirit atmosphere!
I’m going to work in a skype-type event in the next week or two, and take a few questions/discussions live. We have a new assistant, Anna, who is taking on special projects, and has been great – she even knows her share of Lakers trivia!
Art–Ask and you shall receive (comment #6)-The borrower…must not have fallen behind on their existing mortgage payments
WASHINGTON (AP) — After months of criticism that it hasn’t done enough to prevent foreclosures, the Obama administration announced on Friday a plan to reduce the amount some troubled borrowers owe on their home loans.
The multifaceted effort will allow people who owe more on their mortgages than their properties are worth to get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.
That would be funded by $14 billion from the administration’s existing $75 billion foreclosure-prevention program. It could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom.
The plan would also enable the borrowers’ existing mortgage companies to receive incentives to lower their principal balances.
To be eligible for the FHA refinancing program, borrowers who owe more than the value of their homes, known as being “under water,” must not have fallen behind on their existing mortgage payments
Real Estate Guy and Art Electric have the right idea. Obama’s new plan is to spend $14 billion for FHA refinancing and principal reductions for loans where the principal is more than the amount owed. The objective is to target 3 to 4 million homeowners that meet certain conditions. The $14 billion is part of the existing $75 billion foreclosure-prevention program.
Working the raw numbers, $14 billion and 4 million homeowners, the cost per homeowner is $3500! Even if only 1 million homeowners got the full funded benefit, it would be $14,000. This isn’t going to help anyone in any meaningful way.
On the other hand, let’s use the full $75 billion foreclosure-prevention fund, plus the Federal and various state home-buyer stimulus funds, and add another $100 billion Federal income tax credit for primary homeowners to help those homeowners who reside in Realityville.
It’s total foolishness to use Federal and State money to help banks avoid the results of poor lending practices (encouraged by foolish Federal requirements to do so) and help home-builders who way, way overextended themselves.
So far, all of the help programs, stimulus programs, and bailouts have benefited those entities that caused the problem. There is still no help, and nothing on the horizon, for those of us who pay the taxes for these programs and scrape by to make our payments on houses we can’t sell without leaving a lot of money behind.