I find it interesting that the LOWEST estimate from the surveyed economists was a drop of 2.5%. The actual drop was 3.5%!
27 economists participated in the survey.
I find this absolutely astonishing! It really just goes to show how most people are generally bullish. It makes sense really - it's easier for most people to be positive about situations than it is to be negative.
Has anyone ever done a survey of the surveys? I'd like to see a chart of how accurate these economists really are! Then I'd like the most accurate ones to have a higher weighting in future surveys. The economists that perform poorly get dropped.
Both Bloomberg & Yahoo were explaining the modest stocks rise this morning as due to an expected recovery/stabilisation in the housing market. I wonder how many got duped?
Sales in the San Fernando Valley are running at the slowest pace since the board's records begin (1984). I'd say this is a pretty significant turn of events, but the CAR and SRAR are completely silent on it. There have been some pretty tough periods for RE since 1984, but no April or May with fewer closed escrows. And, sales are sill headed down.
We're up to over 10 months inventory now. A significant leg down in prices is probably in the making around here.
Always remember that we live in Conventional Wisdom Land, and that the facts don't matter anymore. I am afraid that when the hard landing arrives latter this year it will come as a total surprise to so many people we know.
We must have the stupidest economists of any generation and as further slap in the face of Paulson and his kool aid drinking buddies, these pending home sales figures provide no evidence whatsoever of a rebound in housing. They're now down tot 9/11 levels.
Stuart/All,
Isn't it also likely that buyers, especially first-timers, are having to spend additional time securing (or attempting to secure) financing? If so, wouldn't that increase the number of pending sales?
ot sure I understand what you mean as to how spending more time trying to secure financing can increase pending sales. Usually this comes from submitted applications which can be completed concurrant with securing financing. One of the problems in the past emanating from zero % down requirements, and no downpayment was that people/speculators went from developer to developer to completing applications grossly overstating the numbers that were being reported.
That's a good question. We'll never know I suspect. Another good question is, considering a large portion of the loans issued over the past 2-3 years have been negative amortization loans and considering the rise in defaults and foreclosures, I'm just wondering how many of those banks that booked full income are now faced with reverse entries in their books. As much pressure there is on rating agencies to mark to market ABSs, one has to imagine the pressure on accounting firms to examine that mess (again for and against).
Next to nothing for sale here in Poway (San Diego) and what is for sale is just sittng. I've seen one house with a sold sign on it all year.
lots of inventory here in Sonoma but very little selling. In 1997 a 2 bedroom home in my development was selling for 110K, now the asking price is 535K. No question in my mine why sales have come to a halt but my neighbors are not in the least fazed by the slowdown. Most I have talked to tell me the market will get very hot next year ( election year) also Sonoma is unique plus many think the boomers will be coming round the mountain any day now to start their retirement.
Quite a few of the inventory is flippers. One house was sold in April 06 for 443K, they installed the following, new roof,windos,gutters, kitchen, wood floors in kitchen, new carpets, new front door and lights inside. They listed orginally for 690K and now are down to 535K. The math is bad!
Two homes that were sold late last year are both flippers that plan on living in them for two years and selling for a big profit, both are doing major remodeling.
So while sales velocity has been sharply reduced and inventory continues to built the locals continue to clutch to the belief that RE always goes up.
The troubles in Italy came amid fresh problems for US hedge funds linked to the sub-prime property crash. United Capital Markets, which has funds of $620m, said it had suspended redemptions from its Horizon Strategy hedge funds after a sudden exodus by investors.
The funds are heavily exposed to collateralised debt obligations (CDOs), typically packages of mortgages sold as securities. The lead fund lost 5pc of its value in April and May.
It is unclear whether United Capital faces the same crunch as two Bear Stearns hedge funds, which came to grief as rising default rates on sub-prime property ate into the top A-rated tranches of this form of debt.
The party train comes to an end. It's about time people stop being rewarded with fat equity gifts for doing nothing more amazing than simply paying their mtg each month.
What?!? Whaddya mean I don't make X [huge profit]. Whaddya mean I can't sell? What does "upside down" mean?
"Study suggests Irish house price could fall 40-60%
The Irish Times has an article on a study showing that Irish real estate values could fall sharply if Ireland's property market follow similar patterns as those in other countries.
The paper quotes Morgan Kelly, professor of economics at University College Dublin, that the housing market could go into freefall, with annual house prices declining nominally of 5% for a decade. In real terms, this would translate into an annual fall of 6-7% or 40-60% over the next eight to nine years. The paper said as long as there is a large stock of unsold houses and falling prices, potential buyers will have an incentive to wait for further price declines before they buy. The Irish Times says Prof Kelly studied almost 40 property booms and crashes that have occurred in Organisation for Economic Co-operation and Development (OECD) countries since 1970. "Typically, real house prices give up 70 per cent of what they gained in a boom during the bust that follows."
Written by Decraen on 2007-07-03 02:32:52"
The good news is it will take 7-9 years for the values to deline by 40-50%. Plenty of time to spread out the losses.... and if you spread it thin enough does it still smell?
There's that darn "unexpectedly" again!
Yep, that was before the June mortgage rates horror. Call it "warm-up".
I find it interesting that the LOWEST estimate from the surveyed economists was a drop of 2.5%. The actual drop was 3.5%!
27 economists participated in the survey.
I find this absolutely astonishing! It really just goes to show how most people are generally bullish. It makes sense really - it's easier for most people to be positive about situations than it is to be negative.
Has anyone ever done a survey of the surveys? I'd like to see a chart of how accurate these economists really are! Then I'd like the most accurate ones to have a higher weighting in future surveys. The economists that perform poorly get dropped.
Looks like the great bulk of econommists are using MBA purchase mortgage apps to forecast pending, existing, and new home sales.
Someone please sell them a subscription to Calculated Risk. Wait, its free!
Both Bloomberg & Yahoo were explaining the modest stocks rise this morning as due to an expected recovery/stabilisation in the housing market. I wonder how many got duped?
Sales in the San Fernando Valley are running at the slowest pace since the board's records begin (1984). I'd say this is a pretty significant turn of events, but the CAR and SRAR are completely silent on it. There have been some pretty tough periods for RE since 1984, but no April or May with fewer closed escrows. And, sales are sill headed down.
We're up to over 10 months inventory now. A significant leg down in prices is probably in the making around here.
100% of economists consulted by Bloomberg unexpectedly missed the estimate by at least 1%. NOT.
I'm having some halscan problems lately.. "cannot find page" and invisible link on main blog page.
Always remember that we live in Conventional Wisdom Land, and that the facts don't matter anymore. I am afraid that when the hard landing arrives latter this year it will come as a total surprise to so many people we know.
We must have the stupidest economists of any generation and as further slap in the face of Paulson and his kool aid drinking buddies, these pending home sales figures provide no evidence whatsoever of a rebound in housing. They're now down tot 9/11 levels.
Does "Pending Sales" include buyers that may not have secured financing yet?
"Does "Pending Sales" include buyers that may not have secured financing yet?"
yes.
Next to nothing for sale here in Poway (San Diego) and what is for sale is just sittng. I've seen one house with a sold sign on it all year.
Stuart/All,
Isn't it also likely that buyers, especially first-timers, are having to spend additional time securing (or attempting to secure) financing? If so, wouldn't that increase the number of pending sales?
ot sure I understand what you mean as to how spending more time trying to secure financing can increase pending sales. Usually this comes from submitted applications which can be completed concurrant with securing financing. One of the problems in the past emanating from zero % down requirements, and no downpayment was that people/speculators went from developer to developer to completing applications grossly overstating the numbers that were being reported.
In simpler terms, what is the likely magnitude of people who are included in the "Pending" numbers who have not yet secured financing?
lama, I would say it is an absolute certainty that is the in fact the case.
But I wonder how much of the pending sales, low as they are, fall in the category of Looking for Financing (and likely won't get it).
That's a good question. We'll never know I suspect. Another good question is, considering a large portion of the loans issued over the past 2-3 years have been negative amortization loans and considering the rise in defaults and foreclosures, I'm just wondering how many of those banks that booked full income are now faced with reverse entries in their books. As much pressure there is on rating agencies to mark to market ABSs, one has to imagine the pressure on accounting firms to examine that mess (again for and against).
I'll go out on a limb and say that any bank that issued neg-ARMS and is still on the hook will have restatements.
This is a great stat.
I follow this one carefully as NAR often pointed to it as signs of a recovering market.
The fact that their favorite shill stat is now showing a decline as well is interesting.
Next to nothing for sale here in Poway (San Diego) and what is for sale is just sittng. I've seen one house with a sold sign on it all year.
lots of inventory here in Sonoma but very little selling. In 1997 a 2 bedroom home in my development was selling for 110K, now the asking price is 535K. No question in my mine why sales have come to a halt but my neighbors are not in the least fazed by the slowdown. Most I have talked to tell me the market will get very hot next year ( election year) also Sonoma is unique plus many think the boomers will be coming round the mountain any day now to start their retirement.
Quite a few of the inventory is flippers. One house was sold in April 06 for 443K, they installed the following, new roof,windos,gutters, kitchen, wood floors in kitchen, new carpets, new front door and lights inside. They listed orginally for 690K and now are down to 535K. The math is bad!
Two homes that were sold late last year are both flippers that plan on living in them for two years and selling for a big profit, both are doing major remodeling.
So while sales velocity has been sharply reduced and inventory continues to built the locals continue to clutch to the belief that RE always goes up.
Blow-up costs Milan bank 610m
In the UK Daily Telegraph this morning.
The troubles in Italy came amid fresh problems for US hedge funds linked to the sub-prime property crash. United Capital Markets, which has funds of $620m, said it had suspended redemptions from its Horizon Strategy hedge funds after a sudden exodus by investors.
The funds are heavily exposed to collateralised debt obligations (CDOs), typically packages of mortgages sold as securities. The lead fund lost 5pc of its value in April and May.
It is unclear whether United Capital faces the same crunch as two Bear Stearns hedge funds, which came to grief as rising default rates on sub-prime property ate into the top A-rated tranches of this form of debt.
Blow-up costs Milan bank €610m - Telegraph
The party train comes to an end. It's about time people stop being rewarded with fat equity gifts for doing nothing more amazing than simply paying their mtg each month.
What?!? Whaddya mean I don't make X [huge profit]. Whaddya mean I can't sell? What does "upside down" mean?
Real esate always goes up you know... pfffft!
"Study suggests Irish house price could fall 40-60%
The Irish Times has an article on a study showing that Irish real estate values could fall sharply if Ireland's property market follow similar patterns as those in other countries.
The paper quotes Morgan Kelly, professor of economics at University College Dublin, that the housing market could go into freefall, with annual house prices declining nominally of 5% for a decade. In real terms, this would translate into an annual fall of 6-7% or 40-60% over the next eight to nine years. The paper said as long as there is a large stock of unsold houses and falling prices, potential buyers will have an incentive to wait for further price declines before they buy. The Irish Times says Prof Kelly studied almost 40 property booms and crashes that have occurred in Organisation for Economic Co-operation and Development (OECD) countries since 1970. "Typically, real house prices give up 70 per cent of what they gained in a boom during the bust that follows."
Written by Decraen on 2007-07-03 02:32:52"
The good news is it will take 7-9 years for the values to deline by 40-50%. Plenty of time to spread out the losses.... and if you spread it thin enough does it still smell?