I suppose if I were stuck on a desert island somewhere, I would want to be stuck with a bunch of housing analysts. If optimism helps you survive, these guys should guarantee it. How’s this for a strange conclusion:
“The worst has passed,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We expect prices to bottom out around the middle of next year and then look for modest price appreciation for the next several years. There is still a tremendous oversupply of homes in most major markets.”
Modest price appreciation coexisting with tremendous oversupply? I don’t think so. Not even with this conclusion about sales:
Combined sales of new and existing homes have risen for four out of the last five months, signaling the worst of the housing crisis is over.
Sales of new homes climbed in August to the highest level in almost a year, the Commerce Department reported last week. Sales of existing homes unexpectedly declined, while remaining at the second-highest level in 23 months, the National Association of Realtors reported last week.
As we reported earlier this morning, the shadow inventory is growing. As Vitner stated above, there is a tremendous oversupply. As we maintained back in the boom days, you cannot consider either supply or demand in a vacuum. It doesn’t matter what the level of sales if it is not making a dent in the supply.
But wait, there’s more: Sales aren’t the only thing that have the analysts ecstatic. They are pleased at what they are calling "signs of stability":
Home values in 20 U.S. metropolitan areas declined less than forecast in the year ended in July, a sign the housing slump that led to the worst recession in seven decades is abating.
The S&P/Case-Shiller home-price index fell 13.3 percent in July from a year earlier, the smallest drop in 17 months, the group said today in New York. Adjusted for seasonal variations, the gauge rose 1.2 percent from the prior month, the biggest gain since October 2005.
There is nothing "stable" about a 13.3% annual price drop. Remember back in the good old days, oh say 2005 when we were told price declines were simply unthinkable? Can you imagine how the talking heads would have laughed at even the suggestion that in a few years we would be looking at double-digit price drops?
The analysts can put all the spin on it they like, but "not quite as horrible as last month" is still horrible, and not indicative of "stability". That’s not even on the horizon.
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twist -
Looks like with every update that fixed smile is getting tighter.
“Home Prices in 20 U.S. Cities Rose by Most Since 2005 (Update3)”, by Bob Willis, Bloomberg, September 29, 2009.
……………………………
What are these people smoking?
“Home Data Pressure Treasurys”, by Deborah Lynn Blumberg, Wall Street Journal, September 29, 2009.
It’s all relative, right? If you expect a 10% decrease in something, and it only decreases 8%, then that’s really a ~2% increase from your expectations. Good times are here again, baby! Woo!
If global warming ever comes true, and the ice caps melt, you know they’ll be doing the same thing. “The ocean’s water level only rose 4′ this month, less than the expected 4.5′. Despite huge amounts of unmelted ice, this is obviously a great time to buy waterfront property!”
John, Linenoise-
I also see that CNBC is saying that with the worst job market in 27 years, “surprisingly” consumer confidence fell.
It would be really nice to have the MSM provide a list of these “economists” and what lunatic asylum they are in. How can numbers like this be a surprise?
Igor’s bugged, and I don’t blame him.
Oh yesss…
In this corner we have the usual suspects calling a bottom. And heck, just a week or so ago Uncle Fed told us the recession is over! I’ll bet cable news is all over that story!
Never mind that the Fed is printing money as fast as it can. Congress is bought and paid for by the bad guys. The Prez has gone walkabout, and can’t seem to remember who elected him.
Never mind that the corporate oligarchy is moving jobs out of the country at a feverish pace. The Bankster gangsters are in “hog” heaven again, back at their thieving work with hardly an interruption. And the rumor is, we have seven million more foreclosures waiting in the wings.
Oh yesss…housing should rebound any day now. Mom and Pop Sheeple are sitting in front of their HDTV’s, munching their nacho chips and sipping the coolaid; waiting patiently for the new prosperity to rise from ashes, just like it always has in the past.
At night from my patio I can see the media flicker in that window..and that one..and that one. The media says things are better. The end is in sight.
I’m not buying it. I never have bought it. Anyone with half a brain and a good internet connection knows a storm has been gathering for a long time. The middle class is in for a boatload of suffering, betrayal and disillusionment.
Give me a break Vitner. Spare me the B.S. I’m busy sorting rations and getting my emergency gear in order.
I wonder if they will let the $8,000 tax credit expire now.
Tobby-
I wonder if we should put in bets on that one? [No prize though, I doubt anyone would want what Igor would dig up out of the dungeon.]
My bet is that it will be renewed and possibly have the amount increased.
I don’t think it’s a good idea, I’m just sayin’.
http://www.reuters.com/article/gc03/idUSTRE58S2LS20090929
“The government has been relying heavily on Fannie Mae and Freddie Mac in its efforts to stimulate the U.S. housing market by buying more mortgage loans, easing refinancing and helping homeowners avoid foreclosure.”
Can’t help but expect more $ printing in order to give huge principal reductions after they buy buy buy these toxic loans. Will they begin buying the jumbos also? Would like to have a 360 degree view of the ramifications, besides “sticking it” to the prudent. Why else would they allow shadow inventory to build? Will nature win?
Hlowe
There is nothing “stable” about a 13.3% annual price drop.–twist
This is not a new development. When Congress increases spending at a lesser rate than the preceding year, they herald it as a “budget cut.”
Once newspeak becomes widely disseminated, a 13.3% price decline can be termed “stability” and few notice the discrepancy.
Don’t worry; be happy. If you take your soma faithfully and regularly tune in to news reports from the lapdog media, the incongruity will begin to lessen with time.