Although the Government would like you to believe that that there is job growth real unemployment is at 16%. They want you do believe that the Feds money printing is going to fix the economy and housing but that isn't what the numbers show. What is more bizarre to me anyway is that the investment community I see on CNBC/Bloomberg (except one or two guests a month) don't really do their homework and they just spout government propaganda. I was shocked by the recent exchange between the CNBC "Fast Money Crew" and Peter Schiff, I expected more. These were the same type of folks laughing at Schiff in 2006 when he called the the financial crisis.
Right now real estate professionals and Wall Street will figure out a way to spin housing data in a positive manner, but the housing market still has a long to way to fall in order to correct from the massive bubble inflated by Greenspan and the related lending fraud enabled by the government. While Govt/industry inventory shows relatively flat growth projections, the shadow inventory of foreclosures, impending foreclosures, unreported Bank REO's and potential existing homeowners who would like to sell but want to "wait for the market to come back a bit" has created a massive glut of inventory that it is going take substantially lower prices or a much stronger economy in order to restore supply/demand stability. Of course, the Government and Wall Street would like you to believe that the shadow inventory is not really there.
Right now real estate professionals and Wall Street will figure out a way to spin housing data in a positive manner, but the housing market still has a long to way to fall in order to correct from the massive bubble inflated by Greenspan and the related lending fraud enabled by the government. While Govt/industry inventory shows relatively flat growth projections, the shadow inventory of foreclosures, impending foreclosures, unreported Bank REO's and potential existing homeowners who would like to sell but want to "wait for the market to come back a bit" has created a massive glut of inventory that it is going take substantially lower prices or a much stronger economy in order to restore supply/demand stability. Of course, the Government and Wall Street would like you to believe that the shadow inventory is not really there.
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Number Foreclosures |
As per the National Association of Realtors' report last month, existing home sales plunged 9.6% (annualized) in February and the number was substantially below the Wall Street-Einstein consensus estimate. Prices declined 5.2% to their lowest level in nearly nine years. That's a big price drop and contrary to the views of the analysts, lower prices are not stimulating sales. Here is recent report from Bloomberg news.
As most have seen by now, new home sales absolutely collapsed by 16.9% in February to a record low. I just want to point out how lame our financial media is by showing you the Bloomberg news headline BEFORE the news hit - Bloomberg was anticipating a strong number :"Sales of New Homes in U.S. Probably Climbed in February"
I wanted to post that in order to show how important it is to do your own homework in order to get closer to the truth. The financial media in general is a complete failure at this. They helped propagate the lies (unintentionally i'm sure) but aren't they supposed to do homework before they report, isn't that something they teach in Journalism, fact verification?
Here's the details to recent new home sales report: New-home sales reach record low; Feb. median new-home price down 13.9% to $202.1K; Feb. median new-home price drop biggest on record; Northeast new-home sales fall 57% on month; Every region but the West saw record lows. Link
Here's the details to recent new home sales report: New-home sales reach record low; Feb. median new-home price down 13.9% to $202.1K; Feb. median new-home price drop biggest on record; Northeast new-home sales fall 57% on month; Every region but the West saw record lows. Link
"Pending home sales" index, which is compiled and released by the National Association of Realtors. By their measure, pending home sales (i.e. contracts to purchase existing homes) increased by 2.1% in February, although they are down nearly 10% from Feb 2010.
While I will say that it is likely that, with banks looking to unload foreclosed inventory to make room for even more foreclosures, there was a marginal increase from January's depressed levels, this data is extraordinarily inconsistent with the purchase mortgage application data released on a weekly basis by the Mortgage Bankers or America Association, which ha been plummeting almost every week, but improved a bit in March.
If you are looking for a reason to question the reliability of the NAR's data, besides applications for mortgages to purchase a home, then take a look at this remark by Lawrence Yun, the chief economist for the NAR and perpetual cheerleader/data-spinner: “We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability.”
While I will say that it is likely that, with banks looking to unload foreclosed inventory to make room for even more foreclosures, there was a marginal increase from January's depressed levels, this data is extraordinarily inconsistent with the purchase mortgage application data released on a weekly basis by the Mortgage Bankers or America Association, which ha been plummeting almost every week, but improved a bit in March.
If you are looking for a reason to question the reliability of the NAR's data, besides applications for mortgages to purchase a home, then take a look at this remark by Lawrence Yun, the chief economist for the NAR and perpetual cheerleader/data-spinner: “We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability.”
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Wasn't supposed to happen Ben! |
Home Prices (Bloomberg:LINK)
And then there was this Case-Shiller monthly 20-city home price index, which showed an across-the-board decline in home values in January, except of course in Washington, DC.
This is terrible news because the Case-S index is skewed away from the price-effect of foreclosures, and thus understates the true decline in home prices (Property taxes going up) going on out there. This is horrible news not only for current home owners, but also for the banks and investors who are invested in mortgage paper, which is losing its "equity" cushion on a steady basis.
Anyone think QE2 will be it for the time being? Better think again because with collateral value shrinking in this country and the economy headed back into the tank, if the Fed were to stop printing money it would likely lead to economic catastrophe, not to mention the fact that the Government would lose its primary source of funding.
Anyone think QE2 will be it for the time being? Better think again because with collateral value shrinking in this country and the economy headed back into the tank, if the Fed were to stop printing money it would likely lead to economic catastrophe, not to mention the fact that the Government would lose its primary source of funding.
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