Regional data is very interesting... I'd expect the West region to do worse since it includes Vegas and California. West is holding 10% better than South, Midwest, and Mideast.. yoy.
I like some of the assumptions: The 30-year fixed-rate mortgage, which also has been vacillating, is likely to trend up to 6.5 percent by the end of 2008, and then hold at that level for most of next year.
Hahahaha! Really? No, really?! Does this mean no rate increase in 2009?
Here's what I wonder: how many of these 'contract pending' deals actually come out of escrow and close? How many have financing contingencies and the loans don't come through?
A lot of stats came out this week with some conflicting results. This one seems to be the most positive of the lot. However, with national housing prices declines set to continue for a while yet (driven by foreclosures and short sales), it looks like the real wealth of Americans will fall just as fast. According to the Center for Economic Policy & Research recent report, titled The Impact of the Housing Crash on Family Wealth ( The housing crisis and wealth decimation ), the crash of the housing bubble is likely to eliminate most, if not all, of the gains that families had made in accumulating wealth over the last two decades
A real estate agent in Colorado told me his brokerage is seeing over a third of their contracts fall through, mostly due to failure to obtain financing.
So pending numbers today aren't likely a good comparison to pending numbers during the Great Housing Insanity. Unless you're Larry Yun, in which case any comparison that hides the rigor mortis in the market, no matter how misleading, is OK.
Funny. How does elevated distressed sales help builders ? Their shares popped on the pending news. This just consumes potential buyer interest away from new construction. A long long way to the bottom.
Like Ross pointed out - If you find an uptick, short it.
A real estate agent in Colorado told me his brokerage is seeing over a third of their contracts fall through, mostly due to failure to obtain financing.
I was wondering about this point. How does NAR deal with cancellations? Or does a house which falls through and then finds another buyer show up in the statistics twice?
I can guess which way they do it, but perhaps I'm overly cynical.
As pointed out above, the real question is what % of REO sales come back as for-sale inventory. There's little doubt that many of these sales are at below-market prices that are intended to entice flippers.
safe_as_apartments, sorry I don't, but I've seen some analysis that shows existing home sales track pending home sales pretty well (although there is a lot of month to month noise).
lunatic fringe, "elevated" refers to the total activity. Existing home sales are currently in the 4.9 million range (SAAR) - IMO that is elevated by all the foreclosure activity, and will fall further in the future.
here comes the blues, new unemployment claims: "455,000 for the week ending Aug. 2. The increase left claims at their highest level since late March 2002."
David Pearson, most REO sales at the low end are to cash flow investors (with no intentional of selling any time soon). Sure there are some people trying to flip - I featured one last week - but most are buying for the long term.
I overheard a good point why flipping the houses is so popular, even when it does not bring any cash. "Walking around and pointing to something real while thinking this is mine, makes you FEEL GOOD"
Isn't it the best criteria to chose an investment? (not)
[The realtor] sent out postcards about our house to everyone in the neighborhood and buried a statue of St. Joseph in our yard, which some believe brings good luck to home sellers. "Oh my gosh," I thought to myself. "This is our marketing plan?"
All the uncertainty made us delay buying a new home near New York City, and we've been scrambling to find a place before the school year starts.
from the ws article above.
Can anyone supply a referenced (linked) definitive answer as to whether these intitial claims >400k in the last three weeks are caused because of extending benefits? TIA
In our market here in S. CA pending sales have consistently been tracking 30% higher than closed sales,meaning many are falling out. And yes, if a new or back up buyer comes along on the same property it is recorded as a new pending sale.
I may be wrong, but I believe NAR stats track MLS activity, not the shadow market that occurs on the auction block or courthouse steps.
"Back in 2006 the Pending Home Sales Index tracked closely with the real Existing Home Sales numbers, showing that contracts signed did in fact jibe with real closed sales. But come summer of last year (and the start of the credit crisis), you can see those lines diverge, and theyre still going."
How about I re-state my comment?
"The NAR's pending home sales index may no longer be a good forward-looking indicator."
"most REO sales at the low end are to cash flow investors (with no intentional of selling any time soon)."
CR, This is a strong assertion. What facts do you have to back it up? Unless you show me some strong support, I think you are operating under a bad assumption. I believe that a strong majority of people see REOs as a quick way to make cash. Unforunately for them, this is also a bad assumption.
Elvis, my view is based on discussion with several REO realtors. They all had the same impression of the buyers. Of course no one can really read buyer's minds!
Elvis, I've asked some questions (hopefully the right questions), and it is my view they are mostly cash flow investors.
We can never really be sure. Remember this is just at the low end, and in areas with strong housing demand (like San Diego) and huge price declines (many of these properties are off 60% or more from the peak), and the ROI makes sense to some investors.
This only works in some areas - but I think it is happening.
CR,
You could be right if the majority of these houses are being purchased by Long Term Hedge Fund types. But with the majority of individual investors thinking in the day trading/short-term mindset, I'd be really surprised.
The DFT rate (deal fell through) at large brokerages in SoCal is easily in the 30%+ range. Historic averages tend to be around 20%.
These numbers are further skewed when you take into account the number of transactions that are short sales that dont close. The DFT rate on those is well over 50%.
echoing the comment about 1/3 or so of transactions falling thru...had a chat with my old realtor and she had something like 4 out of 5 sales fail for financing back in april...
Interesting reading about that Dallas home sale. I'd say that pretty much sums up what I'm seeing here in Mobile (at least in my neighborhood). The houses here (again, my area) go for maybe $50k-$75k less than in Dallas but are very similar in style and description. If you really want to sell that 12% drop is a fairly typical price discount from what I've seen.
Yeah, the impression I get is that the REO sales definitely have quite a few investors who are more optimistic than I about the property cash flowing. It worried me a little, but then I realized that there's only so much money and a lot more property out there.
CR, do you have a graph of pending sales over time?
(I assume there is some seasonality...)
How is down 12.3 yoy considered "elevated"?
Only one-third? So that means two-thirds of sales are willing sellers and buyers? First round of knife catchers?
Or is the total number of sales so low that noise can effect the one-third...
Month-to-month comparisons are pretty pointless aren't they - the YoY is the meaningful number.
-K
Regional data is very interesting... I'd expect the West region to do worse since it includes Vegas and California. West is holding 10% better than South, Midwest, and Mideast.. yoy.
I like some of the assumptions:
The 30-year fixed-rate mortgage, which also has been vacillating, is likely to trend up to 6.5 percent by the end of 2008, and then hold at that level for most of next year.
Hahahaha! Really? No, really?! Does this mean no rate increase in 2009?
Here's what I wonder: how many of these 'contract pending' deals actually come out of escrow and close? How many have financing contingencies and the loans don't come through?
How many of these are REO's bought back by the banks on the court house steps?
Start of school year purchases?
Proof the NAR's pending home sales index is no longer a forward-looking indicator...
"NARs Pending Home Sales: Somethings Amiss"
NAR’s Pending Home Sales: Something’s Amiss - CNBC
Buy now, or your kids will be labeled as dirty renters for yet another year.
A lot of stats came out this week with some conflicting results. This one seems to be the most positive of the lot. However, with national housing prices declines set to continue for a while yet (driven by foreclosures and short sales), it looks like the real wealth of Americans will fall just as fast. According to the Center for Economic Policy & Research recent report, titled The Impact of the Housing Crash on Family Wealth ( The housing crisis and wealth decimation ), the crash of the housing bubble is likely to eliminate most, if not all, of the gains that families had made in accumulating wealth over the last two decades
A real estate agent in Colorado told me his brokerage is seeing over a third of their contracts fall through, mostly due to failure to obtain financing.
So pending numbers today aren't likely a good comparison to pending numbers during the Great Housing Insanity. Unless you're Larry Yun, in which case any comparison that hides the rigor mortis in the market, no matter how misleading, is OK.
cd
Funny. How does elevated distressed sales help builders ? Their shares popped on the pending news. This just consumes potential buyer interest away from new construction. A long long way to the bottom.
Like Ross pointed out - If you find an uptick, short it.
A real estate agent in Colorado told me his brokerage is seeing over a third of their contracts fall through, mostly due to failure to obtain financing.
I was wondering about this point. How does NAR deal with cancellations? Or does a house which falls through and then finds another buyer show up in the statistics twice?
I can guess which way they do it, but perhaps I'm overly cynical.
I know it's O/T, but I've been wonderin' why it shouldn't be a topic today:
U.S. stocks end steeply down as financials shake up market - MarketWatch
Dismal AIG and Walmart results. Jobless claims highest in 6 years.
Housing Doom had graphs regarding pending sales (Are they a good indicator) a while back!
NAR’s Pending Home Sales: Something’s Amiss - CNBC
figures don't lie but liars figure...now wher'did I hear dat
As pointed out above, the real question is what % of REO sales come back as for-sale inventory. There's little doubt that many of these sales are at below-market prices that are intended to entice flippers.
CR, this would be a good question for Ramsey Su.
safe_as_apartments, sorry I don't, but I've seen some analysis that shows existing home sales track pending home sales pretty well (although there is a lot of month to month noise).
lunatic fringe, "elevated" refers to the total activity. Existing home sales are currently in the 4.9 million range (SAAR) - IMO that is elevated by all the foreclosure activity, and will fall further in the future.
Best to all.
- NY Times
here comes the blues, new unemployment claims: "455,000 for the week ending Aug. 2. The increase left claims at their highest level since late March 2002."
Markets should rally, rally, rally !!!
Boom2Bust.com, Oh no, please don't make me dig up the data! I've seen comparisons going further back, and I think that chart is misleading.
It looks like I'll have to dig up the data - to either verify that chart or debunk it.
Best to all.
WSJ
We Managed to Sell Our [Dallas,TX]Home And Keep Our Marriage Intact
Selling a Dallas Home in a Down Market - WSJ.com
David Pearson, most REO sales at the low end are to cash flow investors (with no intentional of selling any time soon). Sure there are some people trying to flip - I featured one last week - but most are buying for the long term.
Ramsey and I both agree on this.
Best Wishes.
I overheard a good point why flipping the houses is so popular, even when it does not bring any cash. "Walking around and pointing to something real while thinking this is mine, makes you FEEL GOOD"
Isn't it the best criteria to chose an investment? (not)
CR,
Thanks for the answer.
OT: The wsj article above is pretty funny:
[The realtor] sent out postcards about our house to everyone in the neighborhood and buried a statue of St. Joseph in our yard, which some believe brings good luck to home sellers. "Oh my gosh," I thought to myself. "This is our marketing plan?"
All the uncertainty made us delay buying a new home near New York City, and we've been scrambling to find a place before the school year starts.
from the ws article above.
Can anyone supply a referenced (linked) definitive answer as to whether these intitial claims >400k in the last three weeks are caused because of extending benefits? TIA
Hey y'all how bout them Giants?
Great article in the local news rag...
"Homeowners delusional on value of property"
Homeowners delusional on value of property
And the Faux WSJ
Housing values propped up by wishful thinking MarketWatch First Take - MarketWatch
OT: Where is Citi going to find that $7billion for the ARS they'll be buying back?
The woman on the sinlges.net ad is HOTTTTT!
"short sales and foreclosures [account] for approximately one-third of transactions".
Where is this quote from? I don't see it in either link you posted.
In our market here in S. CA pending sales have consistently been tracking 30% higher than closed sales,meaning many are falling out. And yes, if a new or back up buyer comes along on the same property it is recorded as a new pending sale.
I may be wrong, but I believe NAR stats track MLS activity, not the shadow market that occurs on the auction block or courthouse steps.
Didn't mean to cause you work, CR.
From the CNBC piece...
"Back in 2006 the Pending Home Sales Index tracked closely with the real Existing Home Sales numbers, showing that contracts signed did in fact jibe with real closed sales. But come summer of last year (and the start of the credit crisis), you can see those lines diverge, and theyre still going."
How about I re-state my comment?
"The NAR's pending home sales index may no longer be a good forward-looking indicator."
The woman on the sinlges.net ad is HOTTTTT!
So support our local blog and click on her.
Good rule of thumb, btw. These things don't write themselves.
"most REO sales at the low end are to cash flow investors (with no intentional of selling any time soon)."
CR, This is a strong assertion. What facts do you have to back it up? Unless you show me some strong support, I think you are operating under a bad assumption. I believe that a strong majority of people see REOs as a quick way to make cash. Unforunately for them, this is also a bad assumption.
lol
Her name is Sarah and she is 29 and a teacher. I clicked on it (for CR's sake only)...
The 30-year fixed-rate mortgage, which also has been vacillating, is likely to trend up to 6.5 percent by the end of 2008
Um... it's already there. I checked my favorite broker's web site today and 30 yr fixed for a 200k loan was 6.5%. 7% by EOY, maybe.
-Jaso
The woman on the sinlges.net ad is HOTTTTT!
must be Tanta...
Elvis, my view is based on discussion with several REO realtors. They all had the same impression of the buyers. Of course no one can really read buyer's minds!
Best Wishes.
CR,
Right. And these buyers also read Playboy for the articles.
Elvis, I've asked some questions (hopefully the right questions), and it is my view they are mostly cash flow investors.
We can never really be sure. Remember this is just at the low end, and in areas with strong housing demand (like San Diego) and huge price declines (many of these properties are off 60% or more from the peak), and the ROI makes sense to some investors.
This only works in some areas - but I think it is happening.
Best Wishes.
Jumbo loans are about 9%. It should be interesting for anything over a million dollars in SoCal.
Elvis,
Both you and CR are correct. All investors think they can hang in- there for the long-haul. Few actually do.
CR,
You could be right if the majority of these houses are being purchased by Long Term Hedge Fund types. But with the majority of individual investors thinking in the day trading/short-term mindset, I'd be really surprised.
C&C: Her name is Sarah and she is 29 and a teacher. I clicked on it (for CR's sake only)...
Thanks. I'd rather have her in your cache than mine.
Why does that sound dirty?
The DFT rate (deal fell through) at large brokerages in SoCal is easily in the 30%+ range. Historic averages tend to be around 20%.
These numbers are further skewed when you take into account the number of transactions that are short sales that dont close. The DFT rate on those is well over 50%.
re: C's settlement
Does this set up a precedent?? Since LEH's share-price went into nosedive at the exact same time.
I bet it does.
Ciao
MS
Love the little disclaimer under "Sarah's" picture:
"photos in this ad may not be of actual singlesnet.com members."
"Actual mileage may vary."
darn, I'm not getting a singlenet.com ad, I'm getting an Intel ad. I wonder if that says more about me or about you.
echoing the comment about 1/3 or so of transactions falling thru...had a chat with my old realtor and she had something like 4 out of 5 sales fail for financing back in april...
Interesting reading about that Dallas home sale. I'd say that pretty much sums up what I'm seeing here in Mobile (at least in my neighborhood). The houses here (again, my area) go for maybe $50k-$75k less than in Dallas but are very similar in style and description. If you really want to sell that 12% drop is a fairly typical price discount from what I've seen.
Yeah, the impression I get is that the REO sales definitely have quite a few investors who are more optimistic than I about the property cash flowing. It worried me a little, but then I realized that there's only so much money and a lot more property out there.
Screw off NAR!