Posted on 07/24/2014 8:09:04 AM PDT by wbill
WASHINGTON (AP) — Sales of new U.S. homes plunged in June, a sign that real estate continues to be a weak spot in the economy.
New home sales fell 8.1 percent last month to a seasonally adjusted annual rate of 406,000, the Commerce Department said Thursday. The report also revised down the May sales rate to 442,000 from 504,000.
(snip)
(Excerpt) Read more at finance.yahoo.com ...
So I did a little homework here. May home sales (at the time) were characterized as "Surging" and "A Six Year High" ... and that number was revised down in this report (no surprise) by 62,000. So the report was a complete fabrication ... a miss that big isn't in the margin of error.
April's new home sales were also revised down to 425000. What does this mean? New home sales - a large engine in our economy - went from 425K to 442K to (unrevised) 408K. Flat, and trending downward. If this months number follows the usual pattern and gets revised down, new home starts are about dropping off a cliff.
Lookout below. I'm thinking that the 2nd half of 2014 is going to be a long slog.
Well, I hope the developers who bought the horse farm next to our exurban neighborhood to build smaller houses on much smaller lots lose their effin’ shirts. After all, they spent a lot of $$ greasing the palms of the City Council. Bad investments all around. :snort:
We are looking at a condo(not new) in Vegas for winter getaway. Can’t figure out if the market has bottomed out yet.
Polar vortex. Sequester. Republicans.
In my neck of the woods, homes can’t be built fast enough. Not once during the burst bubble era did they slow down.
“April’s new home sales were also revised down to 425000. What does this mean? New home sales - a large engine in our economy - went from 425K to 442K to (unrevised) 408K. Flat, and trending downward. If this months number follows the usual pattern and gets revised down, new home starts are about dropping off a cliff. “
As housing drops off the cliff it takes with it the manufacturers of appliances, carpet, concrete, doors and windows, electrical and plumbing suppliers, all manufacturers of anything to do with houses. Further depresses the construction sector jobs, used home values and land values. Buying a house now is financial suicide, unless you can buy now so cheaply that you can absorb a 50% drop in value.
This should drive the market up another 100 points.
I know nothing about economics. So, if you can buy an inherited mortgage within a month (wishful thinking for sibling), at 2/3 the actual value of the house last month (I figure the whole market will drop?) would it be a good thing to do? Say the house was assessed at $120k at the time of death, mtg would be $80k. House is in great disrepair. Safe to live in with $2k improvements. LOL
It hasn't. Check out Scottsdale, AZ instead. Nicer winter weather and much better long-term resale potential.
Well its going to be tough to get a housing recovery with 92 million out of work and half of the rest working 29 hours per week. Not a good outlook.
Impressive letter on your home page! I just looked because I wanted to see where they were building houses without stopping but ended up reading the letter instead.
Location, location, location. That means everything.
The first time I bought a house (right in the middle of all the "irrational exuberance") I was pre-approved for a loan where the payments would have exceeded my monthly income.
Let that sink in for a minute. It's no wonder that the nation got into some trouble.
Now, the last time I purchased a house (right in the middle of the banks' 'Oh CRAP, how are we going to pay for all this?!!' moment), Mrs WBill and I had near-perfect credit and were looking for something well within our budget. We were still pre-approved but we only were able to get the exact amount of money required and not a nickel more. The paperwork needed takes up several folders in my desk, as well. Lots and lots of hoops to jump through.
So .... fewer unqualified people buying houses is probably a good thing, especially in the long haul. However, to your point, the pool of qualified buyers is shrinking as well, which will weigh heavy on the market in the short AND long term. It's a vicious circle that can only reinforce itself.
Here is what I think is happening, some areas are booming, not the overall market. I think loose lending practices are creating another bubble in housing, mainly to make Obama look good, supposedly the Fed is stopping in Oct. this year of their stimulus, when this happens I look for a nose dive in the stock market. This will affect, just as before, how wealthy Americans feel and how much they can borrow to support lifestyles they can no longer afford.
I would rent for the near future and see what happens. Another thing you must consider is that more and more state, county, and city governments have been receiving stimulus money from the Feds, a lot of this has gone to hire otherwise unemployable relatives. If the stimulus does stop in Oct. these same levels of government will be desperate for money and will tax an easy target, that being your home.
Another thing I am seeing is people buying new cars and trucks at such prices that two of them could purchase a house. This is nuts and will not end well.
Think about this, Muslims are said to be big on symbolism and if you remember Oct. of ‘29 was the date of the big crash in the stock market. The murder of our ambassador and 3 others occurred on 9/11. Maybe it is just a coincidence that the Fed is pulling the plug in Oct. Just happens that I don’t believe in coincidences.
Only thing I am considering buying in the way of housing is a houseboat, I can move it to wherever sane people might still reside. Bear in mind this is just my opinion, probably not worth anymore than the opinion of anyone else.
Thanks. I’ll check into it.
Yes things are not going to be better for awhile. As a 30 year veteran of the mortgage industry underwriting, managing and being a mortgage broker for 17 years I can tell you though that the mortgage business runs in a cycle and as soon as the business falls off they come around and tell the underwriters to start loosening up on the underwriting. Then the no income verification loans come back and yes they will. If interest rates rise the ARM’s will come strong and then down the road another refi back into fixed. It is age old.
The difference IMO this time around is the high unemployment and that combined with the huge shadow inventory the banks are still holding is providing a different dynamic. The banks use those REO’s in their asset column and they show the value based on the time the loan was made so it bumps up their asset column. If they sell the property then take the write down it erodes their assets on paper and they can end up showing that they are undercollateralized. Which IMO a lot of the banks are undercollateralized. The only thing making them look solvent is this bogus REO inventory showing inflated value.
As long as Obama is in office its not going to change. We have a long slog ahead of us.
Manufacturing and jobs provide real revenues instead of debts. Real estate is good for the time being in parts of boom states with big energy commodity production.
“So .... fewer unqualified people buying houses is probably a good thing, especially in the long haul. However, to your point, the pool of qualified buyers is shrinking as well, which will weigh heavy on the market in the short AND long term. It’s a vicious circle that can only reinforce itself.”
The worst symptom or our national suicide/0 birthrate is the lack of interested buyers (qualified or not). When the young people that are working are foregoing families in order to preserve some semblance of a middle-class standard of living, then they certainly aren’t going to be tied to thirty years of school tax payments for somebody else’s children.
NJ, with taxes among the highest in the nation, will probably be the last to see any housing recovery for this very reason. Young workers will keep their mobility to follow jobs/dreams, and will accept the relatively light burden of income taxes in exchange for freedom from property taxes. They will have nice cars and electronic gadgets, though.
I’ve worked in the mortgage industry as well; see # 18. There is such an oversupply of housing that today they have to traffic children from Central America to fill it. The demographic trend would indicate that only massive infusions of foreigners will even keep the current housing stock occupied.
The mental scars from this economy will last for decades; few people will sink ten years of payments into a property just to lose it when their job leaves.
I agree. As long as Obama is in office things will only get worse. So for 2.5 more years chaos will reign. The Federal Reserve is killing the dollar, there is no gold in Ft Knox the economic collapse is coming whether we elect a GOP Senate and President or not.
IMO a resolution conflict is inevitiable and the only way to salvage the constitutional republic. So hang on its going to get bumpy.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.