two words....

Shadow Inventory!

Also...

In parts of Ca. 25-30% of sales are to speculators...not a good sign...

People are missing the point on Existing Home Sales.

The question is not, "when will housing sales bottom?"

The question is, "at what price will housing bottom?" Its the price that is important for the broader economy. Its the price that drives credit losses for the GSE's and banks; that drives a negative wealth effect for consumers; and that forces broader credit tightening.

Think of it this way. Unless foreclosure bailout proponents have their way, its likely that housing prices will bottom before the rest of the economy. We know that. What we don't know is what effect house prices will have, at that time, on the severity and duration of this repression.

What if I told you that housing would bottom by year-end, and that they would fall another 30% before then? Would that be good news? Not likely.

The bottom is getting closer.
Just on an investment committee call for a large insurer that has avoided the carnage with a very conservative investment portfolio over the past few years.
They are starting to evaluate taking more risk - albeit in a slow deliberate manner. Others are supposedly doing to same.
Dont think this means much for equities, but the credit markets will thaw.

Counts from the Colorado Division of Housing indicate that foreclosures are leveling off this year and may actually decline from 2007.

What became more of an issue in the fourth quarter were the difficulties buyers faced in obtaining mortgages after the investment bank Lehman Brothers collapsed in September. "We had a lot of deals fall through because of the financing," said Bauer.

Financing difficulties help explain why the number of closings fell 3.9 percent last year despite a 1.6 percent increase in the number of homes put under contract.

Buyers were willing, but their financing was weak. Buyers closed on 47,837 homes in 2008, compared with 49,789 homes in 2007. Between 2006 and 2007, the decline in closings was less than 1 percent.

A decline in 30-year-mortgage interest rates from more than 6 percent to about 5 percent didn't come soon enough to boost markets in December, Bauer said.

If lenders aren't sitting on a large inventory of homes that they need to unload and if job losses don't force another surge in foreclosures, Cox said, Denver's housing market could start a slow, gradual recovery sometime this year, ahead of the rest of the country.

"I don't believe we have seen the bottom," Bauer said, "but I don't believe we are far from it."

Economists React: ‘Don’t Jump Out of Your Chair Yet’
Economists React: ‘Don’t Jump Out of Your Chair Yet’ - Real Time Economics - WSJ

The decline in months supply from 10.7 to 8.6 months was not only the result of higher sales, but also of absolute falling inventories. Total home inventories slid 13.2% month-over-month, a huge drop. This decline in inventories, the latest component of a trend that started in July, is encouraging for our expectations of stable housing market in the second half of 2009. Excess supply is the one overhang preventing potential vulture investors from stepping more aggressively into the sector, and with today’s indication that this overhang is easing, we’ll likely see more interest on the demand side as well.

A sharp drop in home prices appears to have brought some buyers into the market, particularly in the West (and the National Association of Realtors noted that distressed properties accounted for 45% of all sales). With mortgage rates falling toward the end of 2008 and prices likely continuing to adjust lower, it will be interesting to see if existing home sales can stabilize around these levels. Recent pending home sales data, however, have remained weak.

McMillan added that first-time buyers may want to consider an FHA loan, which offers downpayments of 3.5 percent on a safe 30-year fixed-rate mortgage.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.29 percent in December from 6.09 percent in November; the rate was 6.10 percent in December 2007. Last week, Freddie Mac reported the 30-year rate was 5.12 percent.

This is the part of the game where we all are desperately trying to sell aged Puer tea to one another...,

http://www.nytimes.com/2009/01/17/world/asia/17tea.html

Bubble bubble toilet trouble.

Good call on Denver. There is tons of Gov't cash sloshing around that town, and hey, you don't REALLY think military
spending is decelerating, do you?

But in NAR's latest housing outlook, he noted that the right economic stimulus package could help. "With a proper real-estate focused stimulus measure, home sales could rise more than expected, by more than 10 percent to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country," Yun said. "Stable home prices will, in turn, lessen foreclosure pressures and lay the foundations for a solid economic recovery as the nation's 75 million homeowners regain confidence."

Follow the bouncing Yun!

he Royal LePage Real Estate Services poll conducted last week by Angus Reid Strategies among 1,001 consumers found 82 percent of Canadians agree the inauguration of Barack Obama will have a positive impact on consumer confidence in Canada.
A further 49 percent said the unveiling of Canada's federal budget Tuesday would further buoy the market, although it's unclear if it will be passed.
The survey said the real estate market was battered in the fourth quarter of 2008, with the average price of detached bungalows down by 4.8 percent to $319,640, followed by standard condominiums, which decreased by 5.2 percent to $233,230 on an annual basis.
"The steady flow of universally dire news that Canadian consumers faced in the fourth quarter has gradually given way to a mixed diet of positive and negative economic indicators," Royal LePage President and Chief Executive Officer Phil Soper said in a release. "This is clearly having some impact on consumer confidence as nearly half of all Canadians believe the steps the government is taking to stimulate the economy in tomorrow's budget will positively impact the country's real estate market."

false dawn

ROTFLMAO! Keep the head in the sand baby!

shadow cloud=anti-Roubini. I'll go with Roubini, thanks. He has an excellent track record.

Hmmm so if I'm in the jaws of a bear and I'm terrified, eventually greed will take over and I'll see the bear as an opportunity to get into rug sales?
Comrade Kristina | Homepage | 01.26.09 - 12:35 pm | #

Bears sense fear and react based on our reaction.

They are more afraid of us then we are of them.

Here is the Hoopajoops we are all supposed to imagine (the fellow in the middle):

http://timstvshowcase.com/lalaw3.jpg

But here is the real Hoopajoops, the actual person behind so many witty comments:

YouTube - The Phone Call

ova writes:
Grizzly bears are more scared of us???

I don't think so.....

have you ever seen or been in the presence of a grizzly bear?

It's not the top, bottom, or peaks that are significant...it's the area under the curve.

Plenty mo AUC to go.

The Roubini Bubble has one small problem, which is the fact that Roubini is riding the wave of his doom and gloom bubble, which will pop.

His only claim to fame is speaking out about the obvious housing bubble, a problem that was universally understood by almost everyone, except NAR and wall street pumpers.

FYI: Fortune magazine wrote that in 2005, Roubini said "home prices were riding a speculative wave that would soon sink the economy; in 2004 he began writing about a possible future collapse.

His pessimism is focused on the short-run rather than the medium or long-run.

At a conference in Dubai on January 20, 2009, he said, "I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers. If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion.

Nouriel Roubini - Wikipedia, the free encyclopedia

So what... Roubini preached for 3 years about gloom and doom, while the bubble expanded, so what now, what are his predictions and forecasts? As before, he is using common sense and then people look at him like he has amazing powers of reason, when in fact everyone can see that this recovery will take some time, and then what, Roubini will be out of favor, as the recovery kicks in, and then he will go back to being another talking head that has an opinion.

"It's like two bell curves that need to be added together - and the total peak is somewhere between the two peaks (but the low end peak will probably be much larger)."

Not this time, because of the lag in time it will take to clear all of the bad debt of the people at low end....thus there will be one single peak.

Alas, Benedict also warned about spending too much time on Facebook or YouTube. He said “obsessive” online networking could isolate people from real social interaction. I feel dated in conceding that I agree with him, but he may be onto something: Economic recesion and social unrest often leads to people withdrawing from public life.

The Pope’s soothsaying does have its precedents. In November, the Italian Finance Minister, Giulio Tremonti, said Benedict was the first to predict the breakdown of the global financial system - in 1985 (take that, Nouriel Roubini!) Then a cardinal, German-born Joseph Ratzinger, who became pope in April 2005, wrote a paper entitled “Market Economy and Ethics.” It argued that a decline in ethics “can actually cause the laws of the market to collapse.”
Pope Benedict XVI Has Added You As a Friend-Minyanville

"
His only claim to fame is speaking out about the obvious housing bubble, a problem that was universally understood by almost everyone, except NAR and wall street pumpers."

Actually he was also right that Europe would fail to see that inflation was not the real danger and fail to cut rates fast enough and end up in a deeper recession then the US.

He was also right when he said that China would not decouple and that most of the intra-Asia trade was simply Asia exporting to China who exported to the US.

He was also right when he warned that the real economic damage was not here yet.

He was also right that global political issues would play a much bigger role than given credence by the main-stream in how this ultimately turns out.

He also called for a global recession as well as a hard landing in China.

It doesn't seem like you have followed him to closely given your conclusion above.

Hard to believe housing will bottom when layoffs are starting to ramp up.

I thought it was darkest before things go completely black?

A dope gropes for a rope when sliding down a slope of hope.

Dope for hope!

This is a sign that people are hungry for hope and recovery:

J & J Snack Foods Reports First Quarter Sales and Earning

Gerald B. Shreiber, J & J’s President and Chief Executive Officer, commented, “While the overall general economy remains a present concern, we are gratified by our quarter’s overall performance. Improved results from each of our major business groups, food service, retail supermarkets and frozen beverages, contributed to the increased earnings in the period.”

Read it again and see how many "ifs" were included in the return to stability. You must also be a pro forma guy. You like assumptions especially if they are biased in your favor.
Elvis | 01.26.09 - 12:28 pm | #

More of a snark on my part. I should have said J/K.

"What certainly helped this morning is that Barclays said that they don't need government money," said Philippe Gijsels, equity strategist at Fortis. "We've had a couple of very difficult weeks and that was mainly due to the banking sector...[nationalizations] are the main fear of the market," he said.

"The market is certainly showing signs that there's opportunity," Alan Lancz, president of Alan B. Lancz & Associates, told Reuters. "Any kind of M&A is a positive and is seen as marking the beginning of the light at the end of the tunnel. You're going to see a lot of deals in healthcare. It's cheap. Even in the utilities sector there's a lot of deals waiting to happen."

Laid off = sitting on the couch stuffing your face with junk food.

Maybe, or maybe folks are stocking up, as advised so often on this venue.

Hard to believe housing will bottom when layoffs are starting to ramp up.
briwerk | Homepage | 01.26.09 - 12:58 pm | #

Exactly. This is where things are different this time...historically, the layoffs lead to the housing declines as economically stressed families could no longer meet their mortgage obligations and there were fewer potential buyers due to the job losses.

Now we see the housing bubble burst, reducing credit flows and the collapse in the financial economy begin to be fully transimitted to the real economy.

Google is your friend.
Pissed Off In California | 01.26.09 - 1:02 pm | #

I have to say, that is the classiest form of "RTFM" I have yet to see.

xxxxx | 01.26.09 - 1:14 pm | #

Take the market on that!

anecdotal - shadow inventory in some FL Condos/homes I am familiar with in Naples/Marco - many owners waiting things out with plan to put back on market when things "improve".

Separately I don't think recession impact on housing is at best just partially baked into the numbers.

xxxxx writes:

I he's gotten between a sow grizzly and here cubs, he probably wouldn't be here to tell us about it.

lol.

They experience a fight-or-flight response. Does that coun't as fear? I think it's just an adrenaline response, which is the same thing we translate as fear; as the blood runs to your extremities in preparation for flight, your stomack gets queasy, the hair stands up on your neck, sweat beads on your forehead, etc.

xxxxx | 01.26.09 - 1:13 pm |

Yeah. I am wrestling with my inner reptile as we speak.

I seriously think the federal government ought to start paying us Californians to adopt a new house and a car.

I'm willing to go up to Long Beach and pick up my car if the government would like to buy me one!

All of this economic analysis is all well and good, but when are we going to get back to talking about ammo?

The Sun | The Best for News, Sport, Showbiz, Celebrities & TV | The Sun| The Sun home...ticle603852.ece

there is a guy in alaska, retired schoolteacher, who lives with bears for 6 months of the year. has been doing it for 13 years
Canadaman | 01.26.09 - 1:52 pm | #

Wow - that's interesting!

On a related note, I'll bet HE has ammo, being up there in the wild...

Not so fast. There is a pent up inventory that is not showing up. Right now there is zero move up sales. In an area where there are typicaly half dozen homes for sale, there are none. Many homes are being taken off the market for leases, or completely off. And each year the pent up inventory increases without any measure.

I would estimate the pent up inventory to more than compensate for any visible decrease in inventory. I see no recovery for at least 5 years.

I looks like the homes once owned by illegals are just about finished foreclosing. Now for the prime-rib!