Feb202014
The housing recovery falters in 2014 because… the dog ate it
The financial media blames the weather to cover up the underlying weakness in housing.
“It is better to offer no excuse than a bad one.” ― George Washington
The housing recovery sputters badly; housing starts are down, mortgage applications are down, and buyers evaporated — at the time of year when all of these factors are supposed to increase. These unexpected developments, unexpected by brilliant economists, demand explanation. Mainstream media reporters, the paragons of insightful analysis and objective reporting, explain how these events caught reporters and economists completely by surprise the only way an apologist knows how; they make up a lame excuse: the weather.
Cold weather sinks U.S. home building in January
By Lucia Mutikani, WASHINGTON Wed Feb 19, 2014 2:54pm EST
(Reuters) – U.S. housing starts recorded their biggest drop in almost three years in January as harsh weather disrupted activity, but the third month of declines in permits hinted at some weakness in the housing market.
The weather? Are you kidding me? And it takes three months of declines for them to take a hint? WTF?
“The housing sector already slowed down in the fourth quarter and it’s not picking up,” said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York. “There is more than the weather at play and the underlying dynamics are not as favorable as people thought they were.”
The only reason people believed the underlying dynamics (fundamentals) of the housing market were good is because the mainstream media ran story after story telling them so. Duh! And now, they start to leak out the truth behind a glib excuse about the weather.
Last week I posted that Home sales down, household formation down, purchase applications down: Housing recovery? Perhaps the mainstream media is ready to take a hint: HOUSING FUNDAMENTALS ARE POOR!
Until recently, hopes were high for strong growth this year, but it now appears output in the fourth quarter was not as sturdy as initially thought, with downward revisions to November and December retail sales figures. In addition, export growth was weak in December.
Is that how the financial media sees their function: raising hopes? Foolish me; I thought the point of reporting was to report facts and provide objective interpretation. What was I thinking?
But there are some holes in the weather theory.
No kidding?
The Northeast, which bore the brunt of the frigid temperatures and snow storms, saw groundbreaking hitting its highest level since August 2008. In addition, starts in the West, where temperatures have been a bit warmer, also fell.
So in other words, there isn’t a shred of evidence to support the weather-as-cause theory, and there is plenty of evidence refuting it. Hmmm… That being the case, why is the headline of this report Cold weather sinks U.S. home building in January?
Pardon my digression, but I want to point out to everyone exactly how the financial media operates:
- First, they believe people read financial news to get good news on their investments, so they spin every piece of information in a positive light, and they quote every economist willing to tell people what they want to hear.
- Second, they will repeat their spin in groupthink fashion until it becomes conventional wisdom (Do you remember how hard they worked to convince everyone the real estate recovery was real in 2012?)
- Third, they squelch any dissent from their groupthink wisdom with dismissive articles ridiculing contrary ideas or attacking the credibility of contrary messengers (Rembember John Burn’s quote about Mark Hanson, “I give him zero credibility”?
- Fourth, when reality proves them wrong — which happens quite often — they disremember the bad information they disseminated and respond incredulously to reality.
Look at how the financial media broke the bad news in this article — and I say “they” because many news articles mimic the bad-weather meme right now. They use a headline that draws in denial seekers; after all, who else wants to believe the weather is responsible for the housing market’s woes? Then, after getting their normal audience to read, they slowly break the bad news, “Sorry, our cover story is bullshit, and the housing market really is in trouble.” Somewhere in there, the financial media should apologize for leading readers astray, but most reporters probably know their readers are hearing what they want to hear anyway, so they don’t feel responsible for misleading them.
I write derisively about the mainstream media quite often, and it isn’t because I harbor some secret jealously or deep desire to be one of them. I find it offensive how they mislead people with bad information or shoddy analysis. People deserve better, particularly those considering making the largest financial purchase of their lives.
Some economists said this suggested some weakening in housing market fundamentals, noting that home sales have been trending lower as higher mortgage rates and rising house prices sideline potential buyers.
We finally get to a nugget of truth; higher prices and higher rates are turning buyers off.
Mortgage applications continue to fall, drop 4.1%
Brena Swanson, February 19, 2014 7:34AM
Mortgage applications continued to fall compared to a week prior and dropped 4.1% for the week ended Feb. 15, the Mortgage Bankers Association report found.
Overall, the refinance share of mortgage activity fell slightly to 61% of mortgage applications.
The refinance index declined 3% from the previous week, as the purchase index dipped 6% from one week earlier.
If purchase applications break down completely and make a new 20-year low — and we are very close to seeing that — I wonder how the media will spin it?
Meanwhile, the 30-year, fixed-rate mortgage with a conforming loan balance increased to 4.50% from 4.45%, while the 30-year, FRM with a jumbo loan balance jumped to 4.45% from 4.40%.
With demand down, mortgage rates should decline as lenders compete for limited business opportunities; however, rates are creeping back up again, likely due to the fed taper.
2014 Housing Market: Where Is Everyone?
by Ellen Haberle |
So far this year, some homebuyers and home sellers seem to have gone missing. We can’t help but wonder: are they coming late to the party, or is it just going to be a smaller, quieter party this year? …
But growth in demand among Redfin homebuyers has been very weak, which reflects a broader decline in the market. In January, applications for new mortgages across the U.S. were about 15 percent lower than last year. Meanwhile, sales across 19 markets in January hit the lowest point in at least four years, falling 9.9 percent year over year.
Redfin agents say the downturn in demand is uneven. “The picture-perfect homes are selling just as fast as last year, often drawing a dozen or more offers,” according to Redfin Washington, D.C. agent Philip Gvinter. “But now the undesirable properties that would have sold in a few months last year aren’t selling at all. The biggest change is in between, with the sort-of-desirable homes. Last year, these homes got multiple offers and sold quickly. Now, they are getting only one offer during the first week, sometimes having to reduce their price, and the home is taking three to six weeks to sell.”
Last year, during the height of the frenzy that ended in June, anything put on the market sold quickly, generally for more than previous comparables. Demand withered over the last half of 2013, but most observers dismissed the drop as a season effect. A continuation of demand withering seen in January and February can’t be dismissed so easily. There is still enough demand to ensure well-priced properties get plenty of offers, but marginal properties priced improperly get no interest at all.
The softer demand is, in part, a product of worsening affordability. Last year’s steep price appreciation and rising mortgage rates, as well as stricter mortgage lending regulations in 2014, likely put homebuying out of reach, or made it simply less appealing, for many Americans. The National Association of Realtors says that home purchases by first-time buyers are starting to slip, falling to 27 percent of sales in December from 30 percent last year.
For someone who purchased a $350,000 home in February 2013 at a 30-year fixed rate of 3.53 percent, her monthly mortgage payment would have been $1,577. However, with prices up 14.3 percent, that very same home now costs $400,050. At the current mortgage rate of 4.28 percent, that monthly mortgage payment would now cost $1,975, a 25 percent jump from a year ago.
Given this change, some buyers are pushing back. “Phoenix has seen a wave of new, inexperienced real estate agents who are overpricing homes. But, buyers here are unwilling to pay premiums on non-premium homes. These homes are having a very hard time selling,” says Redfin agent Marcus Fleming.
No economists expected buyers to react to higher prices with reluctance. Most expected buyers to get caught up in a frenzy and continue buying no matter how high prices got for fear of being priced out forever. That dog don’t hunt; buyers simply aren’t willing to play that game any longer (See: Is the public growing weary of rising home prices?)
The dearth of inventory across many markets, however, is constraining activity on both sides. In January, the total number of homes for sale slipped 9.4 percent to the lowest point in at least four years, leaving buyers with few homes worth touring. But, low inventory isn’t just a problem for buyers. Sellers almost always need to buy another home when they sell. If sellers have nothing to buy, they may not list.
According to Redfin Denver agent Paul Stone, “I have several sellers whose homes are ready to be listed, but they won’t pull the trigger until they find something to buy. Their biggest fear is that they will be left ‘homeless’ if they sell too quickly, forcing them to move in with in-laws or find an expensive short-term sublease.”
Why is demand really down?
One of the reasons the financial media doesn’t tell people the truth about weak demand is because nothing can be done about it; there are no policy responses from government or private sector entities that can help. People prefer hopeful ignorance to despairing truths.
So why is demand really down?
- Prices and interest rates rose too high too fast making housing unaffordable.
- Unemployment and underemployment and low FICO scores keeps people out of the prospective buyer pool.
- New lending standards went into effect January 10.
Nothing can be done about any of those problems. The government and the banks wanted higher prices, so they aren’t about to bring prices down. The federal reserve has printed all the money it can to stimulate employment, so now they must let rates rise, which harms affordability. Although lenders might want them too, Congress is not going to roll back the Dodd-Frank rules that went into effect in January.
Demand will come back in time. We will almost certainly see an increase in activity from the low levels we’re seeing today, but I’m feeling more solid about my prediction that sales volumes will be “unexpectedly” lower in 2014 than last year.
[dfads params=’groups=164&limit=1′]
[idx-listing mlsnumber=”OC14035325″]
875 ACAPULCO St Laguna Beach, CA 92651
$1,049,900 …….. Asking Price
$620,000 ………. Purchase Price
8/13/2002 ………. Purchase Date
$429,900 ………. Gross Gain (Loss)
($83,992) ………… Commissions and Costs at 8%
============================================
$345,908 ………. Net Gain (Loss)
============================================
69.3% ………. Gross Percent Change
55.8% ………. Net Percent Change
4.5% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$1,049,900 …….. Asking Price
$209,980 ………… 20% Down Conventional
4.77% …………. Mortgage Interest Rate
30 ……………… Number of Years
$839,920 …….. Mortgage
$213,685 ………. Income Requirement
$4,392 ………… Monthly Mortgage Payment
$910 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$219 ………… Homeowners Insurance at 0.25%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$5,520 ………. Monthly Cash Outlays
($1,241) ………. Tax Savings
($1,053) ………. Principal Amortization
$381 ………….. Opportunity Cost of Down Payment
$282 ………….. Maintenance and Replacement Reserves
============================================
$3,891 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$11,999 ………… Furnishing and Move-In Costs at 1% + $1,500
$11,999 ………… Closing Costs at 1% + $1,500
$8,399 ………… Interest Points at 1%
$209,980 ………… Down Payment
============================================
$242,377 ………. Total Cash Costs
$59,600 ………. Emergency Cash Reserves
============================================
$301,977 ………. Total Savings Needed
[raw_html_snippet id=”property”]
realtors: January Storms Push Home Sales Down
Winter storms in many parts of the country caused delays in appraisals and closings, leading January home sales to plummet 26.9 percent over the month, according to the RE/MAX National Housing Report for January. Meanwhile, tight inventory continues to drive up home prices, and homes continue to fly off the market rather quickly.
While home sales were down nearly 27 percent over the month, they were down 7.1 percent from January last year, according to the RE/MAX report, which includes data from 52 metros across the nation.
“We usually expect to see fewer home sales in the winter months, but January experienced particularly severe storms in large parts of the country, which disrupted appraisals, inspections and closings,” said Margaret Kelly, CEO of RE/MAX.
She added, however, that “the real story for home sales in 2014 will begin to unfold in the coming spring and summer months.”
The median home price declined over the month – falling 6.3 percent to $173,475. However, January’s median price continued a 24-month trend of year-over-year increases, rising 11.6 percent since January 2013. Forty-five of the 52 markets observed reported year-over-year home price gains in January.
The year-over-year rise in home prices is a reflection of the tight inventory that has persisted into this year, according to RE/MAX. As of January, the market holds 5.3 months’ supply of homes, which is lower than the inventory reported a month ago and a year ago.
A few markets are experiencing inventories far below the national average. RE/MAX found the lowest inventories in Denver, Colorado (1.1 month); San Francisco, California (1.4 months); Los Angeles, California (2.5 months); Boston, Massachusetts (2.7 months); San Diego, California (2.7 months); Houston, Texas (2.7 months); and Seattle, Washington (2.7 months).
Metros with the greatest yearly home price gains in January include: Detroit, Michigan (35.2 percent); Atlanta, Georgia (28.6 percent); Las Vegas, Nevada (23.5 percent); San Francisco, California (22.3 percent); Los Angeles, California (20.2 percent); and Miami, Florida (18.7 percent).
For homes sold in January, the average number of days on market was 75. “The low Days on Market average is associated with continued high demand and a reduced inventory of homes for sale,” according to RE/MAX.
Oh, No, Mr. Bill
Sales slumping! Mortgage applications down!
I know the answer…..what could go wrong?
http://www.latimes.com/business/la-fi-home-equity-20140219,0,1496901.story#axzz2ttMxRyLg
Thanks, that may be tomorrow’s post.
California moves to allow Ponzis to keep the free money given to them by lenders.
Expansion of California’s Anti-Deficiency Laws Means More Free Money for Ponzis
Turning a narrow consumer shield into a potentially broad sword, this summer California expanded its anti-deficiency judgment laws to prohibit not only the judicial pursuit of mortgage deficiency balances, but also to declare that post-foreclosure deficiencies can be neither “owed” nor “collected.”
In doing so, the California Legislature may have created a potentially significant compliance headache and increased litigation risks for a wide range of financial service companies – from mortgage servicers and debt collection agencies to credit reporting agencies and those relying on credit reports.
In their prior 70 years of existence, California Civil Code Sections 580b and 580d (the “anti-deficiency judgment statutes”) struck a careful balance between providing lien holders with the remedy of a non-judicial foreclosure, in exchange for giving up their right to sue borrowers in court for the unpaid balance between the amount of the mortgage and the amount of the foreclosure, i.e., to obtain a “deficiency judgment.”
Section 580d, the statute applicable to mortgage loans, stated that “no judgment shall be rendered for any deficiency” upon a secured note after it has been sold. In conformance with that carefully limited scope, for decades California courts have held that deficiencies arising from non-judicial disclosures, while not collectible through the courts, remained due and owing.
In addition, it has been held that because the anti-deficiency statute does not extinguish the debt itself, creditors were permitted under the Fair Credit Reporting Act and the California state analogue to report the existence of the deficiencies to credit reporting agencies.
The amendments were introduced in the California State Legislature in early 2013 with little fanfare or explanation. By late spring, the legislative commentary contended that the amendments were intended to prevent creditors and debt collectors from contacting borrowers seeking repayment of the deficiency balance through non-judicial means. Cal. Bill Analysis, S.B. 426 Sen. (April 23, 2013).
It was further stated that inclusion of the term “owed” was also intended to prevent a creditor from continuing to report a loan as delinquent after foreclosure by eliminating the underlying debt itself.
To date, these amendments have gone relatively unnoticed by the financial services industry and the media, other than to remark on the potentially adverse tax implications for defaulting borrowers.
But that will not last for long.
In light of these amendments, businesses should review their debt collection, credit reporting, and other policies and practices with respect to California foreclosures. Plaintiffs likely will read the amendments broadly and argue that attempts to negotiate the collection of outstanding deficiencies, or to report such balances to credit reporting agencies, violate various federal and California laws and give rise to significant statutory and common-law damages.
Given what appears to be extensive involvement by the plaintiffs’ bar in lobbying for the amendments, as well as previously unsuccessful class-action litigation targeting such practices, a wave of litigation should be expected for those creditors who do not modify their practices to conform with the new requirements.
What did the Fed say that matters to the housing market?
The big takeaway from the minutes of the Federal Open Markets Committee January meeting for the housing industry is that tapering is likely to continue apace, and that the Federal Reserve is throwing out its previous goal post of 6.5% unemployment in favor of an ill-defined mandate for continued quantitative guidance.
Although the employment situation is dire, given record numbers of people dropping out of the workforce, the official unemployment rate breeched 6.6% in January. (Read story on the real unemployment rate here.)
Members of the FOMC said it would soon be appropriate for the committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed.
A range of views was expressed – some participants favored quantitative guidance along the lines of the existing thresholds, while others preferred a qualitative approach that would provide additional information regarding the factors that would guide the committee’s policy decisions.
Several participants argued that, in the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor of continuing to reduce the pace of purchases by a total of $10 billion at each FOMC meeting.
That said, a number of participants noted that if the economy deviated substantially from its expected path, the Committee should be prepared to respond with an appropriate adjustment to the trajectory of its purchases.
Several members favored continuing a scheduled tapering of $10 billion per FOMC meeting. In contrast, two participants favored a pause in tapering due to slack in the economy and low inflation.
A number of participants noted that recent economic news had reinforced their confidence in their projection of moderate economic growth over the medium run.
There are however several signs to the contrary developing.
But, But, But … this is not ‘economic recovery” type speech. What is The Fed actually saying here?
It seems to me that The Fed cannot give any certainty in a Zombie Economy that they created.
I will believe they will completely remove QE only after it happens.
One Economists Steps Up to Tell People What They Want to Hear
U.S. home construction just cratered in January, dropping 16%, according to the U.S. Census Bureau.
This comes a day after the National Association of Home Builders housing index for January was released showing a stunning drop in builder confidence.
But not everyone is seeing this sharp drop as a trend.
Sterne Agee chief economist Lindsey Piegza, says she sees fundamentals for a continued steady climb in supply and demand.
“The decline was pretty evenly divided with single family starts down 15.9% from 681k to 573k, while multifamily starts fell 16.3% from 367k to 307k in January. On an annual basis, starts are off 7% for single family but remain in the black for multifamily units up 8.1%,” Piegza said. “Housing permits fell 5.4% in January from 991k to a 937k unit pace, up 2.4% on an annual basis. On a three-month average, permits slipped from 1016k to 982k.”
The bottom line for Piegza is she believes the momentum in the housing market continues to slow but the upward trajectory in both supply and demand remains positive.
“In other words, the recent pullback in demand has not undermined the housing recovery but slowed the pace of activity, a sentiment echoed by yesterday’s 10 point decline in the NAHB which suggested a cooling-off of conditions for home purchases and a slowdown in foot traffic,” she said. “Remember, even though housing was the killer of the economy it will not be the savior, contributing less than half of what it once did during the boom years.”
Mortgage Apps Experience Steeper Decline
After seeing their first notable drop of the year in February’s first week, mortgage applications continued to slide down a slipperier slope approaching the middle of the month, the Mortgage Bankers Association (MBA) reported.
According to MBA’s Weekly Mortgage Applications Survey, loan application volume dropped 4.1 percent on a seasonally adjusted basis for the week ending February 14. Unadjusted, the index was down a smaller 2 percent.
Refinance apps fell 3 percent, MBA reported, with the refinance share of mortgage activity declining a percentage point to 61 percent, its lowest level since September 2013.
Purchase numbers were no better: MBA’s seasonally adjusted Purchase Index decreased 6 percent week-over-week, ending up at its lowest level since September 2011. The unadjusted Purchase Index was down 2 percent compared to the prior week and 17 percent compared to the same week a year ago.
The drop in application volume accompanied a mild increase in 30-year fixed mortgage rates, which were up to 4.50 percent for the week. Meanwhile, points fell to 0.26 from 0.34 (including the origination fee) for 80 percent loan-to-value loans.
“…The financial media blames the weather…”
“What you can observe depends on the theory that you use.” – Einstein(?)
“There is still enough demand to ensure well-priced properties get plenty of offers, but marginal properties priced improperly get no interest at all.”
Seems like good news. Isn’t this how the market is supposed to work?
Yes, that is the proper balance, but we are supposed to achieve that with 50% more inventory and 50% more demand interest to balance it. This is supposed to be an expansion and recovery, but what we are seeing is a contraction. Finding an equilibrium during a contraction is not good news.
Uh… price is being administered, so you’re using the word ”market” rather loosely.
For some positive housing spin, Calculated Risk doesn’t disappoint.
Housing Starts: Weakness, Weather, Fundamentals
Is the housing recovery over? Housing starts were down in January (and down slightly year-over-year). The MBA mortgage purchase index is at the lowest level since September 2011. Existing home sales were weak in January (to be released tomorrow). Oh no. Oh no. Is the sky falling?
Short answer: no.
There are several reasons for the recent weakness: weather (probably a small factor), higher mortgage rates, and higher prices (homebuilders raised prices sharply in 2013). But the fundamentals of household formation and housing supply suggest a significant increase in housing starts over the next few years.
So I’m not too concerned about short term weakness. As always, fundamentals will eventually rule, and I think that means housing starts will continue to increase for the next few years.
” But the fundamentals of household formation and housing supply suggest a significant increase in housing starts over the next few years.”
Really? Household formation declined significantly from 2012 to 2013. According to real data rather than wishful thinking, the fundamentals of household formation don’t look good right now.
I don’t think the demand story really matters. With supply hitting the lowest level in 4 years, there is still more than enough demand to support prices at these levels. The interesting thing to watch in 2014 will be the trajectory of home price increases. Most people expect it to cool off somewhat from the current 20% YoY levels, but where will price increases end up?
The lack of new supply is a surprising event. I suppose sellers don’t see much point in listing homes with demand being off, and some may be reluctant knowing they can’t buy a home to replace the one they sell.
I expected to see a large amount of new inventory come to market with WTF listing prices like last year. We would have had a lot of inventory but still low sales volumes because none of it is affordable. As it stands we have neither supply or demand.
With sales volumes and inventory so low, prices could go anywhere. With the inventory largely being cloud inventory, house prices probably won’t go down, so it becomes a matter of how much higher prices get pushed in a contracted supply-demand environment. It will depend mostly on all-cash buyers. If they want to dump their money in real estate, prices could go up significantly again, then we would have serious affordability problems here.
” Most people expect it to cool off somewhat from the current 20% YoY levels, but where will price increases end up?”
Most people are usually wrong, so if it is accurate, that most people expect it to cool off somewhat from the current 20% YoY levels, then prices will do one of two things. Either they will go up at a 20% ARR or they will decrease.
The consensus that I’ve seen is that price gains will moderate to 4-5% annually. I agree that consensus will likely be wrong just as it was the year prior. Anybody that ignores California cyclicality in their model is bound to be wrong.
I should be a move up buyer and generate a listing and a purchase. The obvious central planning in the market makes me extremely reluctant to go any further into mortgage debt. So instead of buying a more expensive property, I just refinanced into a lower rate with a shorter term and bought a larger equity stake.
Looks like gold’s ”acceleration phase” of its undecline™ that began on June 28 2013 continues; ie.,
Jun 28 2013: $1190oz.
Feb 20 2014: $1317oz.
Cheers!
You’re right… I concede…
Congratulations on your monster $5 gain over the past 6 months…LOL!
—————————————————-
el O says:
August 2, 2013 at 10:02 am
June 28, 2013 10:00am– $1190
Aug 02, 2013 10:00am– $1312
Go back to school.
FYI, $1190 to $1312 = $122per oz gain, not $5. Oh… and June 28–Aug2 in the same year = 5 weeks, NOT 6 months.
Mellow Ruse is comparing Aug 02, 2013 to Feb 20, 2014, not June 28, 2013.
Yah, but MR is merely playing his silly ‘lil game of ‘arrange the dates to fit the narrative’. I merely played the same hand, but with different dates. Savvy?
btw, keep in mind the individual you’re defending is posting anonymously under the nom de plume of..
Mellow
an easygoing pace
Ruse
an action intended to mislead, deceive, or trick;
nuff said
Nonsense. My post quoted you directly, so I was using the dates previously chosen by you as price benchmarks.
Deflection fail.
Bad theory leads to flawed models….
Feb. 19 (Bloomberg) -By Jody Shenn- Rents collected on the collateral for the first U.S. rental-home securities declined by 7.6 percent from October to January, according to Morningstar Inc.
Payments declined as expiring leases and early tenant departures left residences backing the bonds of Blackstone Group LP’s Invitation Homes vacant, Becky Cao and Brian Alan, analysts at Morningstar’s credit-ratings unit, said in a report.
———————————————————–
whocouldanodeLOL
Last night, American Homes 4 Rent (AMH) announced that Peter J. Nelson, its Chief Financial Officer, will resign his position, following a transition period, to “pursue other career interests”.
http://www.zerohedge.com/news/2014-02-20/rental-bubble-also-bursting
tick tock
So at the start of the spring selling season we’re looking at no inventory and no demand? Yikes! The situation gets stranger every minute. As Neil used to say: got popcorn?
Inventory is up, while sales are down, as the chart above displays (up 25%, down 19% YOY for Jan).
The same chart for L.A. County has inventory up 10% with sales down 13%.
One of the zips I follow (90808) has inventory up 70% with sales down 26%.
Granted, these numbers are for January, which isn’t exactly buying/selling season but if this trend continues, something (prices) has to give.
Chomping at the bit, patiently watching while renting in Irvine…
hey I follow that zip (90808) as well… well actually only the cliff may tract, love those homes but the prices are kinda wtf
On a related subject, it seems to me that the industry estimates of the number of habitable dwellings may be rapidly diverging from reality.
While housing starts are near a record low, many dwellings seem to be in decline in terms of their practical future value. Let’s see … homes located in areas with little hope of economic growth (and therefore zero future demand), those “owned” by the prop 13 house-poor and the underwater who are deferring maintenance, those deteriorating in foreclosure-squatting limbo as well as unoccupied REOs being stripped of anything of value. As time goes on we have fewer habitable dwellings in practice than we do on paper.
Meanwhile – despite a lack of household formation – population growth trudges on. If we ever have a meaningful middle-class economic recovery (I’ll wait for you to laugh that one out…), aren’t we looking at a serious housing shortage in many markets – particularly those which are “built out”?
Maybe the smart play here isn’t a house, but rather a bet on home-builders – when they are sufficiently beaten down. Any takers?