Posted on 04/07/2012 1:18:54 PM PDT by whitedog57
There was an interesting post by Warren Hatch (chief investment strategist at Catalpa Capital Advisor) entitled “Why The Housing Recovery Could Happen Faster Than Anyone Expects.” He argues that the U.S. housing market is “shovel ready.”
Where have I heard that before? Oh, now I remember. President Obama touted “shovel ready” projects in his pleading for the $800 million stimulus package.
The basis of his argument is that the NAHB/Wells Fargo homebuilder confidence index is rising. And he argues that this index has a strong correlation with housing starts of 0.7. Here is his chart:
Is this a compelling argument? As a fan of Darrell Huff’s “How to Lie with Statistics." I am skeptical about bold statements based on a simple statistical factoid.
Are you convinced that this latest rise in homebuilder sentiment will be followed by a big, shovel-ready increase in housing starts? There simply isn’t enough information in that chart to be meaningful and it has false turnaround signals in it.
Here is a closer look at homebuilder confidence in white (still beneath 50, but improving) and 1 unit housing starts in blue. There appears to be a dramatic disconnect rather than a bold prediction.
From the US Department of Agriculture (the same agency that distributes food stamps) has the following words of wisdom:
“Bears that are accustomed to people can become too bold and lose their fear of humans. To avoid this behavior, do not let bears become habituated to human sources of food.”
That was about bears. What about humans?
“Humans that are accustomed to other people’s money can become too bold and lose their fear of taxpayers. To avoid this behavior, do not let humans become habituated to taxpayer sources of mortgage financing.”
(Excerpt) Read more at confoundedinterest.wordpress.com ...
I like his analogy to the US Dept of Agriculture's Bear warning.
Folks, if you’re blessed enough to have income, and you’re using FR but not donating to keep it on line, you’re riding in the cart while others are pulling it.
Take one minute out of your busy FReeping and set up a monthly donation. Even $5 helps, you probably won’t even notice it and if you do, you’ll feel good about it.
$5 a month for FR? A bargain at twice the price!!!
Yeah, and the Fed Res will stop printing money and begins tightening the money supply and FedGov™ quits deficit spending the day before that.
WILL NOT HAPPEN.
We have WAY too much inventory because of all the juicing that took place from 2000 to 2008, and even the crap since (i.e., bailouts, artificially low interest rates, etc.).
We have, probably, double the number of square feet of floor space per person that we had 30 years ago (when houses were smaller and families were bigger). We have energy costs that make it difficult to live in humongous housing...and those costs will likely go up. Interest rates, certainly, will go up. We have millions of young adults with worthless college degrees that simply go back home, rather than getting their own housing. And we have millions and millions of empty houses and houses where the ‘owners’ are no longer paying their mortgage. Once the price of housing shows any recovery, those houses get dumped on the market, and the recovery stalls.
Some combination of the following must happen before the housing market gets healthy: Either our population increases to around 400,000,000 (about 60,000,000) more than it is now, at which point it will start to push people into new homes and balance out the market. Or some type of huge reduction inventory, such as bulldozing millions of houses. Or, of course, some combination of those.
Until then, look for 2020, maybe, for some improvement, but probably closer to 2025.
Unless you’re in Texas. Minimal, if any, inventory here.
Bull.. Housing market isn’t going anywhere with 58% employment.
“Unless you’re in Texas. Minimal, if any, inventory here.”
But we never crashed, just went down a bit. We actually do have a rather healthy market. So you are right.
He must be drinking the Flavor-Aid again!
And pigs’ll fly out of my butt, Warren! Put the bong down, pal; you’re just wet-dreaming, as long as 0bummer&HisRegimeFromHell POS is still in The White Crib.
I’m actually starting to see more “sold” signs than new “for sale” signs here in the northern Piedmont region of North Carolina.
Unemployment has declined but is still high by historical standards, around 9%. Houses appear to be a bargain compared to even a year ago, mortgage rates continue to hover near historic lows.
I honestly don’t know if this has legs or not. The economy here tanked immediately in 2008, actually collapse would not be hyperbole. Maybe first in, first out? The local economy is manufacturing dominated.
The cynic in me says that this is just an indication that lending and underwriting standards have quietly been relaxed to absurdly low levels again, that liar’s loans have risen from the dead.
But, who knows? It’s all so screwed up, I certainly wouldn’t buy right now, but I can see why those with a more optimistic take might see this as an opportunity.
Facts. In Orange County and San Diego County, the inventory of unsold homes in the real estate MLS has dropped big time.
Also the average marketing time had dropped big time.
Homes listed in affordable price ranges typically have multiple offers.
These measures signal a stronger real estate market.
Warren Buffet invested big in Bank of Ameriuca, and the price has gone up.
Buffet said he’d like to be able to buy thousands of homes, because they are a good buy at today’s prices and interest rate.
Real estate is local, so don’t tell me things are crappy in my area, because they are crappy in your area, or vice versa.
Prices are going up in some markets. I expect new home starts will be up soon, too.
Elsewhere I read the big banks may make home loans easier to qualify for, again helping the RE market.
Too bad all of this will help Obama’s campaign.
That sure as heck isn't right now nor in the next 4-5 years that I can see.
Agreed. Now that the robo-signing lawsuit is settled, the rate of foreclosures will rise while prices start to drop again. The government selling its FHA foreclosures to inside investment groups do not help, since they’ll get it for pennies on the dollar as part of sweetheart deals.
Unless you’re in Texas. Minimal, if any, inventory here.”
That is true in some areas if we base our premise on the number of residences that have signs in the yard or are listed with a realtor. But if the banks and lending institutions disclosed their total list of foreclosures, all markets would be flooded. At some point this has to happen. Even though it would be a bitter pill to swallow, that shoe has to drop sometime, better now than later IMO. There are also a lot of people who would like to and/or need to put their house on the market but are staying put for now.
I understand this isn’t the case in other parts of the country but the housing market hasn’t slowed down here one iota. They’re building new homes as fast as they can. Homes are selling like hot cakes. I wouldn’t be opposed to some market problems as the multi-million $$$$$ mcmansions going up within eyesight of this chair which are zooming my property taxes through the roof. Unfreakin’ believable.
Who knows what will happen if Bammy - God forbid - gets re-elected, tho. All bets are off.
In certain regions, inventory is dropping. First to go, homes in decent shape that are way down in price.
In certain other regions, housing is still flat.
Likely in each region, there is a correlation between the health of the housing market and the overall political leanings of the region.
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