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Us Property Market Dramatic Plunge

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There's a bit for everyone here, the crux of it being a spectacular, and unreported (incompetence, VI?), plunge in US pending sales that should be followed by a similar turn in house prices.

Even the BBC gets a mention and comes out ahead, but shame on the FT.

http://www.businessinsider.com/pending-home-sales-crash-to-record-lows-prices-to-follow-2010-7

Pending Home Sales Have Crashed To Record Lows, Prices To Follow

pending-homes-sales-crash-sublead-headline1.jpg?w=600&h=148&maxX=600&maxY=148The Index of pending home sales fell a record 30% in May to a record-low reading of 77.6 — two huge pessimistic indicators of future prices nationwide. Yet the combination of two record negatives went barely reported when the stats were announced last week.

So here’s the news for you now, a week late, but new to the marketplace of ideas. Pending-home sales now stand below the worst numbers we have seen since the housing crash started in 2006. The rubber bands and duct tape are breaking apart. Presume the fix of a fall is in.

Take a look at the three charts below and judge for yourself how important the facts are which the National Association of Realtors (NAR) announced last Thursday (July 1st).

10-key-charts-pending-sales-contracts-1-nar-2001-to-2010-05-by-housingstory-net.jpg?w=600&h=436

10-key-charts-pending-sales-contracts-2-nar-2001-to-2010-05-by-housingstory-net.jpg?w=600&h=447

10-key-charts-pending-sales-contracts-3-nar-2001-to-2010-05-by-housingstory-net.jpg?w=600&h=460

The oversight by major news outlets — snubbing record negatives — is egregious by virtue of its ignorance of the expiration of the free-down-payment program. The pending-home-sales stat gave us our first view of buyer demand for housing without the hugely popular prop from the federal government.

***

Speculation has run rampant as commentators have wondered about the direction of prices as government support starts to fall away.

The future direction of real estate prices is a major obsession of almost all economy watchers as the monthly bill for shelter overshadows others, as the value of homes is a predominant factor of family wealth, and because the banking sector has huge investments based upon residential property.

“If you’re looking for a silver lining in housing, you aren’t going to find it here,” Mike Larson of Weiss Research said. “Demand has fallen off a cliff in the wake of the tax credit expiration, with pending sales falling by the biggest margin ever to the lowest level ever.”

It is likely that Mr. Larson’s comment drew attention to the two new record lows. Had he remained silent, these highly relevant facts likely would have gone unreported completely. Of the 15 major outlets we reviewed, four actually did learn about the two record negatives, but they didn’t understand the meaning of it.

The statement by NAR announcing pending-home sales makes no reference to either the record fall or the record new low. If their intention was to hide bad news, they got away with murder. Let’s show you the fools who fell for it.

Among the outlets who failed to uncover either of the two record negative stats are Barrons, Dow Jones, The Financial Times, Fox Business, The Los Angeles Times, and Marketwatch.

pending-homes-sales-crash-hall-of-shame1.jpg?w=600&h=249I reviewed stories on pending-home sales by 15 leading news outlets – in addition to the flunking students mentioned immediately above, I also read Atlaticwire.com, BBC News, Bloomberg, Boston.com, CNBC, Investors’ Business Daily, New York Times, Reuters, US News — and the only difference between the outlets was the extent to which they screwed up this critical epicenter-type data set (Please see the graphic nearby depicting the various degrees of incompetence.).

The future direction of housing prices are arguably the most critical factor in the most critical nation in the most critical financial crisis since the Great Depression. The signs are not hunky-dory in this market. The May pending-sale figures may in retrospect serve as a Rosetta Stone: A perfect guide to the true fortunes of residential real estate. Just in case you have forgotten, we are in one hell of a market, and Mom did not tell us this is what would happen when we grow up.

***

HousingStory.net estimates current inventory for sale of 3.9 million is 1.2 million units higher than it should be, and not too far away from the record high 4.5 million. Inventory stands at 8.3 months of sales, but it should be at 5.8 months.

Fourteen percent of mortgages are behind on payments — about 7.7 million borrowers or, more starkly, one in seven. A record 4.63 percent of borrowers are in foreclosure. Approximately 13 million homeowners have no equity or negative equity. They would make nothing from the sale of their house if they could sell it. Or they would lose a little or a lot. Thus do we have the phenomena of strategic default — now as common as no-money-down mortgages during the boom.

***

We are in a pause of a tectonic shift of plates. Prices have been flat since August 2009, but are down 30% from their peak. The fall of 30% was almost completely discounted as impossible prior to its occurrence.

My speculation is that the fate of bubble-mortgage debt remains as our key obstacle blocking recovery (Unbelievers should rent the Godzilla movie “Eating the Lost Decades of Japan” for further enlightenment.). Total mortgage balances remain almost unchanged from the peak of the bubble –$11.68 trillion today versus $11.95 trillion at the peak (see chart below).

The data released last week on pending home sales and the dismal record of reporting on that data proves that breaking news business journalism fails even in surface scratching. The cows just want to feed on the grass in front of them and go on to the next field.

The smart investor is going to look at these charts on pending-home sales and have a real advantage over the common media consumer. Readers of my work know I have found pessimistic facts easy to find. The pending-sales figures are a dramatic concurrence — a record fall and a record low.

So I will give you my opinion: All hell has broken loose all over again in real estate. Don’t buy a home. Sell one.

***

pending-homes-sales-crash-mm-headlines1.jpg?w=600&h=272

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I'm sorry if the title is a bit misleading, I should have said 'plunge in pending sales'. Only saw the mistake after I posted.

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The BBC wouldn't have reported it so honestly if it had been about British home sales!

The poor old BBC - even when they report the news they get slated on here!

Are you not glad your licence fee is going to a news organisation that is actually reporting the news?

And anyway, they DO publish UK sales figures!!

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The poor old BBC - even when they report the news they get slated on here!

Are you not glad your licence fee is going to a news organisation that is actually reporting the news?

And anyway, they DO publish UK sales figures!!

The BBC do report these things, but they tend to try and be upbeat about their presentation when there is a positive and to play down the negative. Depends what you personally wish for! I saw this news a week ago on a NY Times thread. It has not come here yet, but when the govt dept cuts kick in then the minor falls we see now (when it's summer and should rise) will increase. It takes less than 1 year of av 2% monthly declines to reach 25% retrenchment.

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The BBC do report these things, but they tend to try and be upbeat about their presentation when there is a positive and to play down the negative. Depends what you personally wish for! I saw this news a week ago on a NY Times thread. It has not come here yet, but when the govt dept cuts kick in then the minor falls we see now (when it's summer and should rise) will increase. It takes less than 1 year of av 2% monthly declines to reach 25% retrenchment.

A bit of info from the coalface.I just went to the solicitor and signed contracts on my sale and then went and paid off the agent.The former says that new instructions are non existent the latter says he was selling 5-6 a week and since budget day hasn't sold a house.He was whining about HIPS before and since it's demise he has been flooded with sellers.Hang on to your hats.

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Simply, prices are still too high in the US.

Here is JH Kunstler's take on it from Monday:

http://kunstler.com/blog/2010/07/my-tea-party.html

My tea party would get the government out of the housing business. The main effect of 70 years of federal intervention for the sake of "affordable" housing has been to drive the price of housing up far beyond the ability of normal people to afford a place to live. And the current policies devised during the bubble crackup crisis have only served to prevent the price of houses from returning to a level where people might be willing to buy them. Of course, the whole process has also encouraged local governments to jack up property taxes to a level that can only be described as intolerable (in the 1776 sense of the word).

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A bit of info from the coalface.I just went to the solicitor and signed contracts on my sale and then went and paid off the agent.The former says that new instructions are non existent the latter says he was selling 5-6 a week and since budget day hasn't sold a house.He was whining about HIPS before and since it's demise he has been flooded with sellers.Hang on to your hats.

What area are you?

I'm hanging on all right. When it has happened we will need to campaign to have this unnecessary HP spiral never happen again. That will require proper, inalienable mortgage lending controls. No more lies, lax lending, stupid multiples, rediculous mortgage 'consultants' making it all up for 'clients', 125% mortgages, etc etc. All of this means we suffer, our kids suffer, we remortgage and spend when we should not, and we damage Britains economy by having false 'wealth' which later explodes in misery.

You know it's wrong when your house is making you more in HP inflation, than you earn by going to work. Well, it's all about to change.....

Edited by plummet expert

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There's a bit for everyone here, the crux of it being a spectacular, and unreported (incompetence, VI?), plunge in US pending sales that should be followed by a similar turn in house prices.

Even the BBC gets a mention and comes out ahead, but shame on the FT.

http://www.businessinsider.com/pending-home-sales-crash-to-record-lows-prices-to-follow-2010-7

This came out last week

http://news.bbc.co.uk/1/hi/business/10478238.stm

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Plunge ????

House prices depend on the house and the area...

A relative who is a developer who does up old houses sold a house last month in Philly for 1.25m dollars

and got very near the asking price..in fact the buyer got him to do extra work on the house...so its not all plunge....

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“If you’re looking for a silver lining in housing, you aren’t going to find it here,” Mike Larson of Weiss Research said. “Demand has fallen off a cliff in the wake of the tax credit expiration, with pending sales falling by the biggest margin ever to the lowest level ever.”

So demand was being propped up by US govt incentives to those on tax credits. That's going to work out well isn't it?

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  • 258 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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