It’s hard to say which has reached a lower low in September- Existing Home Sales or Lawrence Yun’s excuses. According to Yahoo Finance this morning:
Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years.
The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record.
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Yun’s explanation:
Temporary problems in the mortgage market are easing and are expected to free some pent-up demand, but disrupted existing-home sales and distorted prices on sales closed in September.
There is nothing to indicate that difficulties in the mortgage market are temporary. Loan defaults and falling prices continue to create difficulties for lenders. As for existing home sales being "disrupted," it’s apparent that what we are looking at is a "trend," not a "disruption."
Median Price
According to the NAR, the national median existing-home price for all housing types was $211,700 in September, down 4.2% from September 2006 when the median was $220,900; this follows three months of stability in comparing with year-ago prices. The median is a typical market price where half of the homes sold for more and half sold for less.
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INVENTORY
Inventory rose at the end of September to 4.40 million existing homes, which is a 10.5 month supply, up from 9.6 months in August.
Yun, stated, "It appears raw inventories are stabilizing, but the housing supply is a bit inflated now because the sales pace does not reflect underlying market conditions – sales were dampened by the mortgage cancellations. Once the pent-up demand begins to move, we’ll housing supplies begin to ease and then prices will edge up."
I have no earthly idea what Yun is talking about. Inventory does tend to moderate in the winter, but the long term trend isn’t good. The sales pace IS indicative of market conditions. Large vacancy rates hardly are indicative of "pend up demand."
Demand is down, supply is up, and that’s going to continue to be the story for some time to go.
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I do not know if you guys know this, but the NAR has this event, kind of like some companies have Casual Dress Fridays. NAR has one called Say the Opposite Day on days of the week that end in Y. On Say the Opposite Day you simply say the opposite of the truth.
So if Things are bad and getting worst in the housing market on say the opposite day your press release would say Things are not that bad and getting better. If Today is the worst time to buy a home you say Today is the best time to buy a home. If you expect prices to drop through 2008 you would say Prices are expected to go up soon.
It really is a fun game. Politicians, Public Relations Spokesmen, Marketers and Lawyers all love Say the Opposite day. Unfortunately the Main Stream Media is not keen to the concept yet.
Now now Roger, I don’t think lawyers can be fairly lumped in with Realtors and politicians; there are certainly some scummy lawyers, but the scum-to-clean ratio is much higher than with Realtors and mortgage men.
At least we have an actual duty to our own clients, which we generally take very seriously, rather than pretending that we do like Realtors while actually screwing our so-called clients in the rear for a commission… it’s one thing not to trust a lawyer or anyone else on the other side of a transaction, but with a Realtor, you can’t trust the people on your own side.
The 8 percent drop is wrong. Dead wrong it’s a little under 23 percent. Check the spreadsheet in the NAR report. Countrywide is reporting on Friday and rumor is they are dropping a bomb. That little water leak is turning out to be a flood.
Lawyer ethics? Please! I’ll believe in the tooth fairy first. I deal with lawyers all the time. It’s just amazing how when you catch them in a bold faced lie, they get all indignant and claim it was just an innocent mistake, and how unprofessional it was of you to insinuate anything else.
And I don’t believe they wouldn’t screw their clients just as fast as a realtor would. If there was $1000 involved, they’d do it in a heartbeat.
“a 10.5 month supply, up from 9.6 months in August”
So after a month, we gain almost a month’s worth of inventory. Basically, it’s like there were no sales in September (roughly speaking). Ouch!
“Once the pent-up demand begins to move, we’ll see housing supplies begin to ease and then prices will edge up.” I believe Yun is making the assumption that there is a large pool buyers sitting on the fence waiting to strike at a moments notice, but one key aspect is overlooked by Yun. The fence sitters will not move until prices fall to meet what the market will bear. When that happens, the median price will fall once again and not edge up.
This may be too simplistic but aren’t the laws of supply and demand the real driving forces here? With 12+ months of supply out there and no buyers in site prices will have to continue to fall until the buyers decide to step up. Right?
Few in MSM are even talking about the glut of inventory as being a problem. Don’t they get it?
Another issue that is troubling, (as if we don’t have enough!), is the fact that the secondary and tertiary jobs are affected by the burst! It is not just the sub prime mortgagees but the electrician, plumber, inspector, appraiser, pest control person, lumber salesman, etc. Now that they have recently lost their job or will shortly, they will be facing similar problems…The dominoes are falling all around. Perhaps the real reason that MSM is misreporting has more to do with the fact that the truth is too hard to swallow in one big bite.
OK, first off, as most of you know I am an affirmed housing bear. But Larry YumYun is partially correct when he says
“Temporary problems in the mortgage market are easing and are expected to free some pent-up demand, but disrupted existing-home sales and distorted prices on sales closed in September.”
As much as it pains me to defend him there was a disruption of the jumbo market which has since eased. September jumbo rates were 8%+. They are now back down to 6 1/2%. We are seeing those closings in October.
The reason I comment on this is that Ocotober sales are likely to be 5-10% HIGHER than September and median prices are likely to jump a bit due to all those delayed jumbos. I have access to about 12 major MLS markets and all are confirming this.
My predicition: NAR and Larry the Yun will declare a housing bottom and/or recovery in November when Ocotber sales data comes out. Of course they will be dead wrong and sales will continue to slide over the holidays and into next year…
Which brings up another topic for later. Decreased holiday sales due to a negative wealth effect will be like 50 pound weight dropped on a drowning rat. Can’t wait for Spring!
How did i know there’s this “pent up demand” phrase in there?
I had a sixth sense that there’s gona be “pent up demand” mentioned, and there! How did that happen?
” Now now Roger, I dont think lawyers can be fairly lumped in with Realtors and politicians; there are certainly some scummy lawyers, but the scum-to-clean ratio is much higher than with Realtors and mortgage men.
At least we have an actual duty to our own clients, which we generally take very seriously, rather than pretending that we do like Realtors while actually screwing our so-called clients in the rear for a commission its one thing not to trust a lawyer or anyone else on the other side of a transaction, but with a Realtor, you cant trust the people on your own side.”
A lawyer questioning the ethics and integrity of others? That’s classic!!
First of all let me say that your view of my profession is NOT the view of most attorneys I deal with and I’ve dealt with many in my 17 years as a Real Estate Broker! While most of them are highly intelligent people who deserve respect for the time they’ve devoted to their profession, every once in awhile I run across one who says something so uttely ridiculous that it just can’t go unanswered. This is one of those times. Allow me to give you a little free education on the Real Estate industry.
First of all, let me dispell a few common misconceptions.
First, The people in my industry are not a bunch of unethical people who will do anything for a buck. I can assure you that the number of people who feel this way about attorneys GREATLY outweighs the number who would say this about people in my profession. ( remind me to tell you some good lawyer jokes sometime ) I’m guessing maybe you haven’t been practicing all that long if you truly believe what you say in your post.
Second, I ,along with most others in my profession, take our obligation to represent our clients very seriously. For you to make a blanket statement as you did of my profession, in my opinion, is highly unprofessional.
Third, we don’t just list a home and show up to collect 6% – (which really doesn’t seem all that excessive compared to the 33 1/3 percent some lawyers make with a personal injury case!)
The fact is, we as Realtors are independent contractors who all set our own fees. We don’t have any set fee as most people believe. We negotiate our fees with those who hire us based on our abilities and what the market for our services will bear. It’s nothing more than the free market economy. In fact, I can’t remember the last listing I took at 6%. My fee these days is typically 5%. From that, I pay out half (2.5% ) to the cooperating broker working with the buyer and then that agent and I end up splitting our 2.5% with the brokerage we work for. Those splits vary from office to office. So, the reality is that an agent with a 200,000 listing that sells, if they charge what I do, would end up pocketing around $3,000 before expenses.(or about the cost of some attorney’s suit.) All of this for a process that can and sometimes does take months or even a year or better. Now factor in the deals that fall through, which we make absolutely NOTHING on. That’s right, in my profession, it’s very possible to spend countless hours working on something and never see a dime. Not something very common in YOUR profession. With you, the meter starts as soon as you pick up the phone.
Fourth, it’s not all about the money. Far from it. I would never do something to compromise one of my clients to make a buck. I have on several occasions advised clients not to buy a home if it wasn’t in their best interest. When representing a client, I treat the transaction the same way I would if I were the one buying or selling and, in the all the years I have been in business, not one client has EVER lost money as a result of something I’ve sold them. Ever! Unfortunately, as with any profession, there are some bad apples. I attribute a lot of this to the low number of hours required in many states to obtain a license. Keeping one’s license can be a whole different story. People who operate in my business as you suggest, usually do not last long.
Lastly, we are NOT a bunch of overpayed, useless people who care about nothing but the almighty dollar. The fact is that the national average income for a Realtor is less than $50,000 per year and that number has actually dropped in the last two years. Of course there are some who make much more than this but even more who make far less. Most people who obtain Real Estate licenses sell little to nothing and are out of the business within 2 years or less. This has been the case for as long as I’ve been in it.
I realize that markets can vary greatly from state to state, especially a state such as yours which, in some areas, has entry level homes starting in the $750,000 range. To someone in the midwest this doesn’t even seem conceivable! Ca has had a history of being a very volatile market at times when it comes to Real Estate but fortunately, this is not the case in most other markets.
I hope maybe this will shed some light on the subject for some who might otherwise just assume what you said is accurate.