CR - You say "This tells us nothing about the number of distressed homes for sale (REOs, short sales). "
Do you have a number for that currently? Isn't this also a historically high number at this point? Meaning there should be well over a year of inventory on the market?
Important to remember that April sales were actually contracted in March - there is a lag.
The contract numbers for April will be horrible, so inventory will definitely go up in May. But I'm also seeing people pulling houses off the market, deciding not to sell. This will be balanced against the influx of REOs soon to hit, though maybe not until later this summer.
One phenomenon I haven't heard much discussion about is this: what is the long term impact on demand where a big chunk of the houses being bought are REOs/distressed? After a normal sale, that seller uses the equity to buy another house, but no new buyer is created after the bank sells an reo or after a short sale.
tyaresun, I don't know if my view is changing, I've been pessimistic on housing in general for so long!
BTW, I've been predicting 12 months of existing home supply this summer for some time - so this is nothing new.
12th Percentile, yes, REOs are probably in the 20% to 25% of the total inventory (I'll see if I can find a better number). Most REOs are included in the NAR stats (if they are listed, they are included).
Good comments on inventory CR. I would also note to those who aren't aware that the single-family only data goes back much farther than the the SFH+condo+coop figures. I have SFH only inventory data going back to 1982, and the number of homes for sale in that part of the market (3.9 million) is an all-time high. On a months supply basis (10.7), we're at the highest level since 1985. Forgive me if you already noted this elsewhere.
CR,
Excellent graphs as we've come to expect. Thank you. A minor point about the second concerning normalizing the individual datums. To see a 2005 22% increase it was necessary to add 500k listings Jan-Apr. In 2008 our more modest 14% increased required 650k more listings. Not a criticism just a caution against readers not examining exactly what the graph says.
I also recommend we take a look at "phantom inventory" (hat tip ocrenter) and as mentioned in the text; "buffered inventory," those units that should be on the market but are trying to time their entry (waiting for the market to improve).
Raise your hand if Bernanke ruined your holiday weekend:
The average price for a gallon of gasoline rose 3 cents in the last day to $3.83, a new record ahead of the Memorial Day Weekend, according to the Daily Fuel Gauge Report from AAA. A week ago, the price was $3.51 a gallon and a year ago it was $3.22 a gallon.
$.61 x 500 miles is only $15.25 more if your car gets 20 miles per gallon. I bet the price of lodging is down as well because of lower demand, so the cost of the vacation isprobably a wash or lower.
Don't drive, AC, but I do track the price of gas closely. Around here, it's gone up 9 cents in 48 hours including a 1 cent hike some time between 7 this morning when I checked the price and 15 minutes ago when I happened to glance at it again.
Excellent charts. I had noticed that listings usually jump this time of year, so a 10% increase is not out of the norm. Also, it looks to me that the gap down YOY in April was less than in March. Perhaps this is an indication that housing is turning at least in some parts of the country.
I am in complete agreement that we have not seen the worst yet and that the economy in the whole is going to be down. (MEW, HELOC, Home Equity Values, Oil, Food & Material Costs)
I just want to suggest that the headlines this AM may be a bit overly pessimistic.
Bernake has forced me and my familiy to conserve. My parents and i live in the same area and are driving to visit my brother and his family a couple hundred miles away this weekend. Usually we take two cars because our schedules never match up right and it is a tight fit with four people and the dog in the car. So much for that kind of thinking. We'll all be piling into the car together tomorrow. We can afford to take two cars but this is getting a bit ridiculous. And we really should've been doing this all along. Especially since my parents were some of the original alternative energy types.
As for higher gas prices ruining your holiday weekend: pack food for the road instead of stopping in restaurants, if that's what you do, and you'll make up the difference. That's what we did when I was a kid and money was tight. And... money is tight.
Of course the restaurant owners won't like it much.
Me, I've got a hybrid and we live in a resort town. "The beach" is a mile away.
"Raise your hand if Bernanke ruined your holiday weekend"
You also have to thank our US government political leaders who are intent on looking the other way and cheering Big Ben on as he devalues the currency to bailout insolvent banks and individuals. To them I raise my hand with only one finger visible.
I don't put money on short term bets, but i'm interested in the 2PM direction today. I say down. 3 day weekend should bring some bad news around 6:00 PM.
To conserve money, I siphon gas from neighborhood cars, invite myself to friends for dinner, and hook myself into their cable box. I find this saves money and increases my knowledge of local gossip. (I cannot believe that Lisa down the street gave up two babies to adoption when she was a teenager. That little tramp.)
What's up with the bank stocks. They are getting taken out back and beaten senseless. Did someone read their 10-Q's?! Any new news? When is Ben going to swoop down and raise the TAF?
IN the the month of April, ~67% of all rez. sales in Brevard County (FL) were purchased with FHA loans. Way to go! An idiotic organisation, sooner or latter will do idiotic things that you and I will have to pay for. And believe me, it is not going to be cheap!
P.S. Meanwhile our fearless realtors are having a field day! Long live FHA and the next wave of homedebtors!
To add to the inventory numbers, I've noticed many more people trying to sell "by owner". I doubt NAR counts these homes and I don't really know if it statistically significant. Also, MLS so cal takes a home off the inventory when it goes to auction. The auctions on the websites I follow are increasing in frequency and number of units. Throw in a little federal reserve created monetary inflation and the bottom is no where in sight.
"REOs are probably in the 20% to 25% of the total inventory"
That's 1+ million. That's a huge amount of support costs. What is going on? The banks/servicers/investors have to know if they don't sell by August, it's only going to be worse. Eyeballing, it seems Sept will be well under 400K.
Is there a story here? Is there a concerted effort to avoid liquidation?
Good news. The new trend is for the kids to move back in with the parents (or never leave). Maybe you and Dryfly can move in together and have your kids live in the other house.
From what I hear the story is that the large servicers are just overrun. They are attempting to sell more REO at large auctions because it is more expedient. And I also would observe that they all have subsidiaries that handle this stuff and I would think that the REO stays off the banks books. In my area the inventory is much larger than measured because of the practice above and sellers just have not returned to the market from last fall.
The scary part to me is this has largely been caused until now by poor underwriting. Just think when a poor economy kicks in on top of this...
Elvis writes:
To conserve money, I siphon gas from neighborhood cars, invite myself to friends for dinner, and hook myself into their cable box. I find this saves money and increases my knowledge of local gossip.
Well, Elvis, conserving certainly is a step in the right direction, but to get ahead in this world, you've got to make money.
What I've done is kidnap 6 newly homeless wretches and strapped them into my Rube Goldberg electric generator bicycles in the basement to pump watts back into the grid. The higher the rate goes, the more I make. (I know if they're putting out by looking at the little meter I installed next to this monitor.) And if they don't hit my target for the day, no (dollar store) dog chow for supper.
Uh oh. Are you anywhere near a bubble city and acting as a bedroom community?
We haven't seen that sort of craziness in rural upstate NY. Actually CNN routinely touts our upstate areas as "hot" real estate markets because they went up 3% last year. Buffalo, Rochester and Syracuse. Of course the median price is still around $110K. And when you get out to the rural areas, it is pretty reasonable.
Leh has had a frightening drop this week . Also looking at GM and Ford. They got slammed this week.
Wonder where Chrysler would be if they were traded publicly? Can't wait for that IPO! Cerberus are you listening? What, you can't hear? You are too far under water? OK sorry.
I'd be curious to know whether the numbers capture all of the alternative outlets for home sales that have cropped up in recent years, like craigslist and forsalebyowner.com. If not the figures could be significantly worse.
OT
I highly recommend the Video of the Day today. It's down the right hand side of the page. Meredith Whitney is so spot on in that analysis. It's refreshing to hear someone who actually knows what's really going on and what should be going on. One of a kind (CR and Tanta aside).
A little confused here. Don't the NAR numbers come from MLS? If so, MLS contains a number of REO and short sale properties. Certainly not all but they don't totally miss counting this inventory. Am I in error?
AB,
Making additional money is a good game plan. However, I find that slave labor in the basement can come back to haunt you. While you are upstairs, the slaves in the basement spend the time talking about ways to get back at you. One day, you might find your head missing when you open that basement floor. I hear that, when sharpened, bicycle parts make razor like knives.
i'm a big housing bear until we see 3x income again, and i feel foolish saying this, but...
... if we're going to talk pent-up supply that's not reaching market in anticipation of the market spontaneously repairing itself, we also have to talk pent-up demand in the interest of a balanced picture.
i know the term is the refuge of fools these days, but i for one am pent-up demand -- waiting for valuations to return. there must be many others. classic asset deflations are characterized by the withdrawal of both supply and demand, and we're certainly seeing that now in the sales numbers (not to mention stock market volume).
just a word for those who want to see the balanced picture, which is plenty pessimistic in its own right. let's not go adding withdrawn supply unless we're ready to add withdrawn demand that will jump in whenever the turn of the market is perceived.
Broker writes:IN the the month of April, ~67% of all rez. sales in Brevard County (FL) were purchased with FHA loans..."
Just wait, Congress is getting ready to expand their lending by $300 billion. Sen. Dodd is openly talking about "putting a floor" in the housing market. Taxpayers are about to eat more of the downside of the bubble.
I applaud your actions and I salute you for your production of domestic sources of energy. You my patriotic friend are helping wean us off foreign oil. Keep those espresso machines going for our boys at home.
Broker writes:IN the the month of April, ~67% of all rez. sales in Brevard County (FL) were purchased with FHA loans..."
I have one more deal to get done before I can just sit back and wait for my SRS to hit $140 again and it requires an FHA loan. Come on FHA! Make it happen.
One analyst cannot motivate millions of share holders. C shareholders are selling because of losses, dilutions, Divi cuts and poor leadership. She is jut calling them as it is. No voodoo here
If you ask Gaudia Ray, he believes the value of C is $0 - he's been saying this here for some time. What if he's "more" right than the others? I actually like his posts.
NAR numbers probably provide us with about half the supply side of the equation.
CR,
You seem to be getting more pessimistic.
CR - You say "This tells us nothing about the number of distressed homes for sale (REOs, short sales). "
Do you have a number for that currently? Isn't this also a historically high number at this point? Meaning there should be well over a year of inventory on the market?
Thanks.
ok!
First! And not a nominal three hours after the post!
Important to remember that April sales were actually contracted in March - there is a lag.
The contract numbers for April will be horrible, so inventory will definitely go up in May. But I'm also seeing people pulling houses off the market, deciding not to sell. This will be balanced against the influx of REOs soon to hit, though maybe not until later this summer.
One phenomenon I haven't heard much discussion about is this: what is the long term impact on demand where a big chunk of the houses being bought are REOs/distressed? After a normal sale, that seller uses the equity to buy another house, but no new buyer is created after the bank sells an reo or after a short sale.
tyaresun, I don't know if my view is changing, I've been pessimistic on housing in general for so long!
BTW, I've been predicting 12 months of existing home supply this summer for some time - so this is nothing new.
12th Percentile, yes, REOs are probably in the 20% to 25% of the total inventory (I'll see if I can find a better number). Most REOs are included in the NAR stats (if they are listed, they are included).
Best to all.
Witnessing the days when a home is a ball and chain you can't get rid of.
CR-
Where did the tips jar go?
I've got love for the work but no way to show it!
..........................
Good comments on inventory CR. I would also note to those who aren't aware that the single-family only data goes back much farther than the the SFH+condo+coop figures. I have SFH only inventory data going back to 1982, and the number of homes for sale in that part of the market (3.9 million) is an all-time high. On a months supply basis (10.7), we're at the highest level since 1985. Forgive me if you already noted this elsewhere.
Anyone have numbers on the excess(over normal) of single family homes for rent? They really need to be added to the inventory too
CR,
Excellent graphs as we've come to expect. Thank you. A minor point about the second concerning normalizing the individual datums. To see a 2005 22% increase it was necessary to add 500k listings Jan-Apr. In 2008 our more modest 14% increased required 650k more listings. Not a criticism just a caution against readers not examining exactly what the graph says.
I also recommend we take a look at "phantom inventory" (hat tip ocrenter) and as mentioned in the text; "buffered inventory," those units that should be on the market but are trying to time their entry (waiting for the market to improve).
"The next four months - May through August - are typically the strongest selling months of the year. "
Not coincidentally, those are the four worst months for subprime resets as well.
Coming this summer to a neighborhood near you!
Raise your hand if Bernanke ruined your holiday weekend:
The average price for a gallon of gasoline rose 3 cents in the last day to $3.83, a new record ahead of the Memorial Day Weekend, according to the Daily Fuel Gauge Report from AAA. A week ago, the price was $3.51 a gallon and a year ago it was $3.22 a gallon.
$.61 x 500 miles is only $15.25 more if your car gets 20 miles per gallon. I bet the price of lodging is down as well because of lower demand, so the cost of the vacation isprobably a wash or lower.
ac,
Drove by a gas station yesterday and diesel was $5.00 a gallon....
Dios mio! ! !
(hand in air)
................
AC
That price is already a day out of date - according to the AAA fuelgauge website the US average has risen to $3.87.
Don't drive, AC, but I do track the price of gas closely. Around here, it's gone up 9 cents in 48 hours including a 1 cent hike some time between 7 this morning when I checked the price and 15 minutes ago when I happened to glance at it again.
diesel in San Diego ranges from $4.80-$5.00.......
this is taken from about 20 stations posting price.
Well there goes 1375 for the time being...could get ugly with the "help" already out in the Hamptons already...
Ciao
MS
Gasbuddy.com: 3.910/gal
They usually match the DOE numbers when they come out a week later.
We have a 2000 Honda Civic. I figure the resale value may well be going up this year, seriously.
Excellent charts. I had noticed that listings usually jump this time of year, so a 10% increase is not out of the norm. Also, it looks to me that the gap down YOY in April was less than in March. Perhaps this is an indication that housing is turning at least in some parts of the country.
I am in complete agreement that we have not seen the worst yet and that the economy in the whole is going to be down. (MEW, HELOC, Home Equity Values, Oil, Food & Material Costs)
I just want to suggest that the headlines this AM may be a bit overly pessimistic.
AC
Bernake has forced me and my familiy to conserve. My parents and i live in the same area and are driving to visit my brother and his family a couple hundred miles away this weekend. Usually we take two cars because our schedules never match up right and it is a tight fit with four people and the dog in the car. So much for that kind of thinking. We'll all be piling into the car together tomorrow. We can afford to take two cars but this is getting a bit ridiculous. And we really should've been doing this all along. Especially since my parents were some of the original alternative energy types.
CR - thanks for the response.
As for higher gas prices ruining your holiday weekend: pack food for the road instead of stopping in restaurants, if that's what you do, and you'll make up the difference. That's what we did when I was a kid and money was tight. And... money is tight.
Of course the restaurant owners won't like it much.
Me, I've got a hybrid and we live in a resort town. "The beach" is a mile away.
"Raise your hand if Bernanke ruined your holiday weekend"
You also have to thank our US government political leaders who are intent on looking the other way and cheering Big Ben on as he devalues the currency to bailout insolvent banks and individuals. To them I raise my hand with only one finger visible.
I don't put money on short term bets, but i'm interested in the 2PM direction today. I say down. 3 day weekend should bring some bad news around 6:00 PM.
Anyone for up?
In my little burg, the median house costs $267k. The median household income is $35k. You do the math, LOL. Real inventory is going to keep rising.
And a lot more people are going to be living in cars, under overpasses, and with relatives.
"I raise my hand with only one finger visible."
touche!
12th, I may be slow but I'm not dumb
no way I'd take that bet even with good odds
To conserve money, I siphon gas from neighborhood cars, invite myself to friends for dinner, and hook myself into their cable box. I find this saves money and increases my knowledge of local gossip. (I cannot believe that Lisa down the street gave up two babies to adoption when she was a teenager. That little tramp.)
--
U of M survey says that 28% of homeowners say that they expect home prices to drop. We are a long ways from capitulation in prices.
Jas
"And a lot more people are going to be living in cars, under overpasses, and with relatives."
Hmmm, under an overpass or with my relatives. That's a tough one.
I'll be interested in that survey in the Fall. Should surge to 29%. People are quick at catching on these day with the internet and everything.
unirealist, what part of the country are you in?
DIA Gap 12384
SPY Gap 1337
Fill 'um up boys, or down as the case may be. Something nasty still lurking.
What's up with the bank stocks. They are getting taken out back and beaten senseless. Did someone read their 10-Q's?! Any new news? When is Ben going to swoop down and raise the TAF?
IN the the month of April, ~67% of all rez. sales in Brevard County (FL) were purchased with FHA loans. Way to go! An idiotic organisation, sooner or latter will do idiotic things that you and I will have to pay for. And believe me, it is not going to be cheap!
P.S. Meanwhile our fearless realtors are having a field day! Long live FHA and the next wave of homedebtors!
12th percentile, rural central Oregon.
Tim, TAF credit (according to the new Fed H3 report) jumped to 125 billion. Non borrowed reserves jumped to negative 112 billion.
Yikes.
Tim,
Speculate on the bad news after the market close...banks...3 day weekend...just sayi
AC
Bernake has forced me and my familiy to conserve...
Bernanke ran over our new kitten and fled the scene.
The kids are emotionally ruined.
It looks like these scars are going to last a lifetime.
Tim --
What's up with the bank stocks.
See also MBI, ABK. Not quite at their 52-week lows, but close.
And that's despite MBIA's CEO buying 100,000 shares today at $7.85.
LEH also looking sketchy today. And that's despite their debt being guaranteed by the Fed...
To add to the inventory numbers, I've noticed many more people trying to sell "by owner". I doubt NAR counts these homes and I don't really know if it statistically significant. Also, MLS so cal takes a home off the inventory when it goes to auction. The auctions on the websites I follow are increasing in frequency and number of units. Throw in a little federal reserve created monetary inflation and the bottom is no where in sight.
Your housing stat reports are great...
"REOs are probably in the 20% to 25% of the total inventory"
That's 1+ million. That's a huge amount of support costs. What is going on? The banks/servicers/investors have to know if they don't sell by August, it's only going to be worse. Eyeballing, it seems Sept will be well under 400K.
Is there a story here? Is there a concerted effort to avoid liquidation?
The kids are emotionally ruined.
Good news. The new trend is for the kids to move back in with the parents (or never leave). Maybe you and Dryfly can move in together and have your kids live in the other house.
Allen
From what I hear the story is that the large servicers are just overrun. They are attempting to sell more REO at large auctions because it is more expedient. And I also would observe that they all have subsidiaries that handle this stuff and I would think that the REO stays off the banks books. In my area the inventory is much larger than measured because of the practice above and sellers just have not returned to the market from last fall.
The scary part to me is this has largely been caused until now by poor underwriting. Just think when a poor economy kicks in on top of this...
Elvis writes:
To conserve money, I siphon gas from neighborhood cars, invite myself to friends for dinner, and hook myself into their cable box. I find this saves money and increases my knowledge of local gossip.
Well, Elvis, conserving certainly is a step in the right direction, but to get ahead in this world, you've got to make money.
What I've done is kidnap 6 newly homeless wretches and strapped them into my Rube Goldberg electric generator bicycles in the basement to pump watts back into the grid. The higher the rate goes, the more I make. (I know if they're putting out by looking at the little meter I installed next to this monitor.) And if they don't hit my target for the day, no (dollar store) dog chow for supper.
rural central Oregon.
Uh oh. Are you anywhere near a bubble city and acting as a bedroom community?
We haven't seen that sort of craziness in rural upstate NY. Actually CNN routinely touts our upstate areas as "hot" real estate markets because they went up 3% last year. Buffalo, Rochester and Syracuse. Of course the median price is still around $110K. And when you get out to the rural areas, it is pretty reasonable.
Leh has had a frightening drop this week . Also looking at GM and Ford. They got slammed this week.
Wonder where Chrysler would be if they were traded publicly? Can't wait for that IPO! Cerberus are you listening? What, you can't hear? You are too far under water? OK sorry.
I'd be curious to know whether the numbers capture all of the alternative outlets for home sales that have cropped up in recent years, like craigslist and forsalebyowner.com. If not the figures could be significantly worse.
It would be a good weekend to announce some change in the BofA / countrywide deal wouldn't it? No insights here just pure speculation....
OT
I highly recommend the Video of the Day today. It's down the right hand side of the page. Meredith Whitney is so spot on in that analysis. It's refreshing to hear someone who actually knows what's really going on and what should be going on. One of a kind (CR and Tanta aside).
Witnessing the days when a home is a ball and chain you can't get rid of.
Gosh, you might actually have to (gasp!) speak to the neighbors and get interested in local governance.
A little confused here. Don't the NAR numbers come from MLS? If so, MLS contains a number of REO and short sale properties. Certainly not all but they don't totally miss counting this inventory. Am I in error?
Lama,
How likely is it we see C at $10 this year as Whitney said? I mean that would be a 20 year low and 50% cut from here.
AB,
Making additional money is a good game plan. However, I find that slave labor in the basement can come back to haunt you. While you are upstairs, the slaves in the basement spend the time talking about ways to get back at you. One day, you might find your head missing when you open that basement floor. I hear that, when sharpened, bicycle parts make razor like knives.
i'm a big housing bear until we see 3x income again, and i feel foolish saying this, but...
... if we're going to talk pent-up supply that's not reaching market in anticipation of the market spontaneously repairing itself, we also have to talk pent-up demand in the interest of a balanced picture.
i know the term is the refuge of fools these days, but i for one am pent-up demand -- waiting for valuations to return. there must be many others. classic asset deflations are characterized by the withdrawal of both supply and demand, and we're certainly seeing that now in the sales numbers (not to mention stock market volume).
just a word for those who want to see the balanced picture, which is plenty pessimistic in its own right. let's not go adding withdrawn supply unless we're ready to add withdrawn demand that will jump in whenever the turn of the market is perceived.
Pent-up demand for housing is like pent-up demand for pent-up demand. If you pent it up enough, it can explode and cause quite a spectacle.
Broker writes:IN the the month of April, ~67% of all rez. sales in Brevard County (FL) were purchased with FHA loans..."
Just wait, Congress is getting ready to expand their lending by $300 billion. Sen. Dodd is openly talking about "putting a floor" in the housing market. Taxpayers are about to eat more of the downside of the bubble.
Ab
I applaud your actions and I salute you for your production of domestic sources of energy. You my patriotic friend are helping wean us off foreign oil. Keep those espresso machines going for our boys at home.
lama / Tim --
The Wife of Death Mask has had a tremendous year, but I think she might be overplaying her hand.
Heck, I would buy Citigroup at $10/share...
Broker writes:IN the the month of April, ~67% of all rez. sales in Brevard County (FL) were purchased with FHA loans..."
I have one more deal to get done before I can just sit back and wait for my SRS to hit $140 again and it requires an FHA loan. Come on FHA! Make it happen.
Thanks FinanceGuy
They have to be thinking ahead. I would have expected to hear/read about bulk unloads. Perhaps they don't like the prices?
Nemo,
One analyst cannot motivate millions of share holders. C shareholders are selling because of losses, dilutions, Divi cuts and poor leadership. She is jut calling them as it is. No voodoo here
If you ask Gaudia Ray, he believes the value of C is $0 - he's been saying this here for some time. What if he's "more" right than the others? I actually like his posts.
Lionel, that's under an overpass and with relatives.
A. Bosch - the Triplets of Belleville are coming after you
Excellent Triplets of Belleville reference.
I recall long-time posters here ripping Gaudia Ray a new one over his C=BK call. Now not so much.
dr digits,
And who could forget mp relating Conjure Bag's "Die, Citi, die!" quote?