Housing posts big rebound in April WE'RE DOOMED!!

The Washington Times ^ | May 17, 2008 | Martin Crutsinger

[expat_panama]

ASSOCIATED PRESS - Construction of new homes posted the biggest increase in more than two years in April. While it was a rare bit of good news for the housing market, analysts said it's far too soon to declare an end to the extensive slump. The Commerce Department reported yesterday that housing construction rose by 8.2 percent in April to a seasonally adjusted annual rate of 1.03 million units. Building of single-family homes continued to weaken, however. The growth came from a big jump in apartment construction. Analysts predicted the surprising rebound in April would be temporary given the headwinds builders are still confronting, from slumping sales to soaring home foreclosures. "It is definitely too early to uncork the champagne on the long and winding road to more healthy housing market conditions," said Brian Bethune, an economist at Global Insight. He does not expect housing activity to stabilize until the end of this year. The prolonged slump in housing has been a major drag on the overall economy, raising worries that the country is in danger of falling into a recession. A second report yesterday showed that consumer confidence as measured by the University of Michigan/Reuters survey fell to a 28-year low ...[snip]

[CRBDeuce]

‘Unexpected’ good news will continue until Bush is no longer President.

[Chode]

[Mr. Jeeves]

Well, to a large extent the economy is what people believe it is, so I guess this recent all-out statistical propaganda campaign is worth a try.

But the simple, underlying fact is that Americans have dishonestly been trying to consume more than they produce for at least the last twenty years (see "liar loans"). Unless the equation can be righted - and our new guests, thirty million low-skilled net benefit recipients, are going to make that awfully tough - a day will come when the statistics can no longer be fudged.

[jammer]

The potential for the bottom having been March is there if you wish to see it!

No, only if one is Polyanna. April is over, and the numbers are in. The potential for the bottom having been April is there, but authorizations aren't housing starts. April was down for single-family homes. Compare apples to apples and your argument doesn't work.

[jammer]

I agree with every word you say. The piper is asking to be paid.

[RightWhale]

It’s mostly apartments not houses. Like retail sales are up—at warehouse stores. Like car sales are up—for econobuckets. We are at the mere start of 25 years of pain.

[steve86]

So many of the “glass half full” types on this thread oblivious to the fact it is apartment construction you are seeing — nothing to do with single family detached. I see it has been noted.

[SuziQ]

The surge is in apartment construction, perhaps to house the people who have lost, or can't afford, homes.

It could also be to replace old apartments, built over thirty years ago, and in bad shape. I figure any new construction, after the doom and gloom of the last year and a half, is a good sign.

Housing prices have already stabilized, and are starting to head back up in our neck of the woods. That's GREAT news for us, because we're remodeling our home to sell it, and we've been just kind of taking our time, since the market has been so lousy. Good to see it moving up, again!

[Freedom_Is_Not_Free]

Housing? Shouldn’t this read “Apartmenting rebounds in April?”

House building is still down, down, down, as well it should be. They need to clear inventories. Building more houses will just depress house prices that much further. Still it is not terribly accurate to say “housing” or “homes” are up when the fact is it is apartments are being built. All those folks losing their homes to foreclosure are going to need somewhere to rent. That is why you are seeing so many houses for rent today. The owners can’t sell them and those losing their own homes need a new place to stay.

[Freedom_Is_Not_Free]

The economy is so good, the stock market has rebounded so quickly, that I am starting to doubt the recession I’ve predicted.

Funny, this has happened twice before...

In 1998 I said the NASDAQ was filled with funny money and had to crash. By 2000 I was really starting to doubt myself, then it crashed.

By 2004 I said the housing market was a massive bubble and had to crash. I never really doubted myself but I was starting to wonder if the “greater fool” practice of paying ever-more than a house is worth would go on for years more still. By 2006 the market crashed and is still crashing as I type.

Now Americans are saddled underwater with personal debt. Corporations are taking massive losses after taking on way too much corporate debt and leveraged risk. State and local governments are buried in budget short falls. The US government has been embracing debt for years.

All of this makes me think the economy is going to stall and we are heading for recession. So far I have been wrong. Just like I was wrong in 1998 about the NASDAQ and wrong in 2004 about housing. I was early.

So I am still early. I have no doubts. The economy will suffer, but the FED is just pushing back the day of reckoning. The Polyannas here can gloat all they want. I was right in the last 2 cases and I am right again, just early again.

[jammer]

Yes, it is good. If that housing comeback can spread throughout the nation, it will be better than good. The report indicates that this isn’t so, unfortunately.

[SuziQ]

The housing crisis was not spread throughout the nation. There were many areas that didn’t experience a downturn at all. Here in Central MA, the downturn was similar to the one we experience in the early 90’s. We ‘lost’ the same proportion in value this time as we did back then. Our son bought a condo near Boston in August of 2006, and his only decreased in value about 4%. So the downturn wasn’t the same everywhere.

[am452]

Housing? Shouldn’t this read “Apartmenting rebounds in April?”

Yes. It's still continuing to drop in other areas-see the Bloomberg article today. . Going to get way worse before it get's better. Gas prices and housing price declines is leading to a "Perfect Storm"- a reverse of the Perfect Storm that led us to this mess.

May 23 (Bloomberg) -- Sales of previously owned homes in the U.S. fell in April and the supply of unsold properties reached a record, signaling no let-up in the 27-month housing slump. Purchases declined 1 percent to an annual rate of 4.89 million, higher than forecast, the National Association of Realtors said today in Washington. The median price fell 8 percent from April last year, the second-biggest drop. ``There is no indication that things are improving,'' said Christopher Low, chief economist at FTN Financial in New York, who forecast sales would drop to a 4.9 million pace. ``Inventories will stay out of balance at least until the end of 2009 and prices will keep falling.''

[am452]

The housing crisis was not spread throughout the nation

In an odd way it has (is). People in other parts of the country may have less money to spend so the Acme widget company in your neighborhood may have less sales which leads to layoff's in your area-which may lead to people not buying homes.

Your prices may not have have decreased like a home in CA but that does not mean other areas problems are not affecting your own area.

Looks like housing prices and sales are continuing to decrease. Let's see what your son's house is worth in a year or two.

[Wyatt's Torch]

Construction of single-family homes--which is what most people think of when the phrase "home-building" is used, "continues to weaken."

Exactly correct. Single family starts are at their lowest point since January 1991, declined 42.1% from April 2007 and have declined 62.3% since the peak in January 2006.

[Wyatt's Torch]

The potential for the bottom having been March is there if you wish to see it!

One data point does not a trend make...Permits increased 3% sequentially in November 2006 and 1.5% in March 2007 and then resumed their slide. Fact is, months supply of new home inventory and existing home inventory are at highs not seen since the 1981 recession. Those inventories need to be worked through in order for the housing market to begin to rebound in any meaningful way.

BTW, it's my job to track and analyze the housing market as my company is heavily dependent on new residential construction. In my opinion, the housing market will not recover and grow until second half 2009.

[Freedom_Is_Not_Free]

You make the claim that the housing crisis was not spread throughout the nation. Are you not aware that prices have dropped in 43 out of the 50 states?

http://money.cnn.com/2008/05/22/real_estate/ofheo_report/index.htm?postversion=2008052211

“OFHEO reported that prices fell in 43 states, with eight states seeing quarterly price declines of more than 3%. California and Nevada were the biggest losers, with home prices falling more than 8% in both states.”

Your claim is false. The housing crisis was most definitely spread throughout the nation.

[Freedom_Is_Not_Free]

Thanks for the update.

People can pretend the housing crisis/liquidity crisis are over if they want to. We haven’t even begun the reset in Alt-A mortgage rates yet. Of course, BurnYankee’s slamming rates to 2% helped subprime borrowers keep their payments low and maybe it will do the same for the Alt-A slaves.

At the same time, defaults seem to depend more on house price than the ability to repay loans. Plenty of people with the ability to keep up their increasing mortgage payments simply decline to do so when they get too far underwater on their loan.

I have no clue when housing will bottom. I am thinking about 12 months or so to stabilize sales volumes, with price declines stabilizing about 12 months after that. But who knows???

[SuziQ]

My claim isn't false. I said that there has not been a widespread housing CRISIS. There HAS been a real estate price correction, which is part of a natural business cycle, in much of the country. The few areas that were TRULY in crisis were the ones that had been overbuilt by speculative builders, or those in which larger numbers of homeowners had taken advantage of subprime, or no money down loans. There were areas of the country that actually have continued to see home prices rise.

We've experienced three of these corrections since we bought our house 20 years ago. In the first one, in 1990, our home dropped about 20% in value from the price we'd paid in 1988, but by 1992, the price had gone back up to our purchase price, and continued to rise. In the mid 90's, there was a small correction, and our home dropped about 10% in value from what it had been. By 2005, our home had doubled in value from our original purchase price, based on an appraisal we obtained. By early 2007, the value was down almost 20%.

Now our area isn't having an employment problem, nor is there a subprime mortage problem, in fact mortgage rates are terrific, but because of the continual drumbeat of negative media about homes and mortgages, this correction has gone on longer than the previous two. Only now are the prices beginning to rise again, as sellers refuse to lower their prices anymore, and buyers are realizing that if they want to grab a bargain, now is as good as it's gonna get.

Not even all areas of every state had the same amount of correction. Here in MA, our son bought a condo near Boston in Aug. of 2006, and by the late 2007, the value of his place had only dropped 4%.

[am452]

Here in MA, our son bought a condo near Boston in Aug. of 2006, and by the late 2007, the value of his place had only dropped 4%.

Apraised values and asking prices and selling prices are an entirely different matter. Have your son put his house up for sale and see what the offers he gets.