It’s Friday, and a euphoric stock market closed up 188 yesterday, in part because of the excitement of a "rebounding" housing market. Their optimism was misplaced. Lawrence Yun chief economist of the National Association of Realtors said:
The increase in existing-home sales occurred in all major regions of the country,” he said. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions.
Here’s a picture of what the "increase" in home sales looked like:
Yes, once more the NAR and the markets are focused on seasonal variability rather than the more significant yearly trend- which is down. That’s tough to do when you consider how bad sales were last year. Yun’s "gradual uptrend" is unlikely- the summer selling season should be winding down soon.
Here’s what Yun said about appreciation:
The national median existing-home price3 for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
With foreclosures accounting for nearly a third of home sales, I would disagree that they are "distorting" home prices. To a large degree, they are defining it.
Long time Doomers might have noticed that it’s been a long time since I’ve dusted off my NAR charts. I’ve been neglecting them. Is there anything else we’re neglecting? This is an open thread, so let us know what’s on your mind.
Mish's Global Economic Analysis
Bubble Meter
UK House Bubble
Northern Virginia Housing Bubble Fallout
Ohio Fraudclosure
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
I actually laughed out loud when I saw the first graph. Good ol’ Mr. Yun…waddya gonna do?
Beautiful charts.
As for distortion, I see no reason why lender-owned houses sold on the open market should ever be excluded from appraisals or market analyses. Even when they comprise a minority of sales (i.e. not 2009 Arizona, Nevada, Florida), averaging them in with other sales strikes me as more correct than pretending that they are not there.
This guy really needs to hit the comedy tour with Bagdad Bob.
The denial of reality(or realty) tour!
Lender houses on the open market absolutely need to be factored in.
Its pure crazy that people want to continue to create their own reality
Russ, Bristin-
I also believe that foreclosures are too big a part of the market to not factor them in.
We’ve all seen cases where the median price of some zip code jumped 400% in one week because of one high priced sale. Sales like that do distort the real picture and it makes sense to leave them out.
When foreclosures are 30% of sales however, you can’t just dismiss them as a distortion.
twist -
Tim’s got a good graph on your topic.
“Three months in a row means what?”, The Mess That Greenspan Made, July 24, 2009.
Yun sprinkles pixie dust on everything before he looks at it. Then you can’t read it for all, the little sparkly things are reflecting the light back. Thats when the magic happens and he has these visions about the housing market.
I have been thinking the banks don’t have the foreclosure distortion problem with pricing. You find this out when you apply for a loan and the appraisal is done. Nope no distortion there unless the bank can sell the loan off.
anyone know (or guess) how this new foreclosure law will affect things? i’m not familiar, but i beleive that starting in september many people won’t be able to walk away in AZ? i think it HAS TO BE your residence (no spec or rentals) to let it go with no recourse? otherwise, you’re still on the hook for the difference between the loan balance and what the bank sells it for?
AZ -
Have a look at my new post, where I link to Catherine Reagor’s long article in the Republic. It doesn’t look good