Housing Doom

It has been awhile since we've dug into the Las Vegas home sale numbers.  Of note this month is that the most interesting number is not a sale statistic at all- it's the number of single family homes that have rented.

The Greater Las Vegas Association of Realtors (GLVAR) has only been tracking the number of homes leased since 2006.  In January 2006, 1113 homes were rented. [This number only includes homes leased through the MLS.] That number has steadily increased.  In February 2010, a record 2102 homes were leased:

Note the difference in trend between the number of homes rented and the number of homes sold.  2390 homes sold in February, up slightly YOY from last year's 2288, but dropping from January's 2608, an unusual trend for this time of year:

Could it be that the thrill of homeownership is cooling off, or are fewer potential buyers qualifying?  It might be a combination of both.  With more homeowners walking away, people might be thinking twice about walking toward homeownership.

While sales have been headed down, listings are moving up.  Only 19,707 homes were listed for sale in December, a level not seen since February 2007.  However, listings have risen for the past two months.  There were 22,142 homes listed at the end of February.  Consequently the 5.8 months supply that we saw in December has increased markedly to a 9.3 months supply in February.

So where are home prices?  February's $135,694 is down 12.8% YOY, and 56.9% off of the June 2006 peak of $315,000.

So where are home prices headed?  Long time Doom nemesis Larry Murphy said last month: Read the rest of this entry »

So you didn't buy too much house and decided to just fix the old place up? Once more it is shown that no good deed goes unpunished:

If you have not lost your home to foreclosure, get ready to pay up. Hernando County, Florida has announced plans to raise fees on homeowners who make repairs to their property or do home improvements. Everything from roof repairs to replacing an old hot water heater will be hit with higher fees.

In his plea to the BOCC for more money, the county's business development director, Michael McHugh said, "We've been operating in fiscal distress,'' according to the St.Petersburg Times.

The reason for the budget shortfall is the foreclosure epidemic that has reduced the county’s tax rolls by some $5 million dollars.

Homeowners who have so far survived the crisis, have made home maintenance and improvement a priority. So while new construction permits have slowed to less than a dozen during some months, repair and improvement permits have risen to about 800 a month.

The Hernando County Builders Association is in favor of the higher fees, which will benefit the county's building department budget.

The impact on property owners will be widespread. In addition to the new fees, the full cost of repairs and improvements will be added to tax assessments, which increase a homes property taxes for years to come.

Read the rest of this entry »

Consider this from Clusterstock:

Today the St. Louis Fed released its latest monthly look at commercial and industrial loans at major banks — a measure that some would say represents the essence of the US banking system.

As you can see, this measure is still falling like a knife — a bad sign for the ongoing health of the economy.  (And also not what we were promised when we bailed out the banks.)

In some respects, this is a good thing for the residential and commercial markets.  L has often told me that the homebuilders back in the '80s kept on building until the banks took away their nails- even when the recession meant there was a glut of properties on the market. Given the glut of both residential and commercial properties out there, a slowdown would be a good thing. That said, there are still worthwhile business projects out there that won't be happening due to a lack of cash.

So why are banks not lending? [Besides the fact that in a deleveraging world, there are a lot of projects out there not worth funding.]  According to Mike Larson of Weiss Research: Read the rest of this entry »

There were some interesting articles that said a lot about the state of the new home market in the Phoenix area recently- if you could get past the headlines. The first was an article in the East Valley Tribune entitled Blandford Homes buying up East Valley developed lots: [Thanks L!]

Gilbert-based Blandford Homes continues to amass hundreds of fully developed vacant lots across the East Valley, Pinal County and Maricopa that were slated for development by other builders before the market went bust.

Since mid-December, Blandford has purchased 775 developed lots from Wachovia Bank for more than $15.36 million. The builder was represented by Scottsdale-based Westland Properties Group in the acquisitions. Wachovia foreclosed on all of the properties.

With terms like buying up and amassing, it sounds like Blandford was acquiring a good percentage of these lots.  Not so.  Further down the article states:

There are about 70,000 vacant, developed lots in the Phoenix metro area right now, but we only started (construction on) less than 8,000 homes in 2009. It will take a few years to use all of those lots at the current pace, so there’s not a lot of interest in buying the raw land right now.

A few years? At 2009's rate, it would take nearly NINE years to use up all of the lots.  But maybe that's being too pessimistic. Maybe things have been looking up recently.  In a word, nope: Read the rest of this entry »

This "dire" news from Forbes is the funniest thing I've read in awhile:

If new houses aren't built soon in the U.S., there won't be enough next year.

The focus of the U.S. real estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don’t start focusing on building new houses, the market will have a much bigger problem on its hands.

"We need one and a half million houses per year just to keep up with population growth," Wesbury said in an interview with Steve Forbes. "And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we’re down to about six and a half, seven months’ inventory whether you look at new homes or existing homes."

Privately owned housing starts in December 2009 were at a seasonally adjusted annual rate of 557,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4% less than where it was in November, which had 580,000 housing starts.

Housing completion numbers also contribute to this dire picture, with December 2009 privately owned housing completions reaching a 768,000 seasonally adjusted annualized rate. That’s down 11.2% from the 865,000 completions in November and down 25.3% from the 1,028,000 completions in December 2008. Read the rest of this entry »

You’d think from the headlines that homebuilder Lennar is actually making money.  Yahoo Finance reported in bold letters:

Lennar posts 4th-quarter profit, jump in home orders and sees housing market stabilizing

Way down in the article though is this comment:

Lennar said it earned $35.6 million, or 19 cents per share, in the quarter ended Nov. 30. It had a loss of $811 million, or $5.12 a share, a year earlier.

The tax gain reported in the fourth quarter came from a change in federal accounting rules that allowed the company to reverse previous writedowns of deferred tax assets.

Without the tax benefit, Lennar would have lost $284.9 million, or $1.15 a share. The tax benefit was offset by charges totaling 89 cents a share related to adjustments in the value of land and other write-offs.

Revenue fell 29 percent to $913.7 million, because of a 22 percent drop in the number of completed home sales. The average sales price of a home dropped 9 percent annually to $238,000

You have to wonder where the CEO gets the nerve to say this: Read the rest of this entry »

So how is this for a special- straight from Paradise Valley, AZ- – you can "temporarily" get $1 million off of asking price, and get a 3% cobroke for your agent: [Hat tip M!]

Now is the time for your client to become a part of this unique community with prices momentarily adjusted for savings up to $1 million and a $100,000 credit exclusive to buyers who act now.

Read the rest of this entry »

The turnout was staggering: close to 45,000 desperate homeowners showed up during NACA’s five-day stand at the Cow Palace for the chance to renegotiate their disastrous subprime mortgages or sky-high interest rates or interest-only payments. For them, this event beat any chance at a star-studded concert — and best of all, it was free. – Andy Kroll¹

It wasn’t long after we’d posted to the sidebar that quote from the CBS.com version of the story that the author himself dropped by the Castle to invite Doomers to take a closer look.  Well, tomorrow’s class prep will just have to wait.  This is an amazing text.

As a Doomer of a certain baldness, I remember a 50s TV program, one of the original "reality" shows, called Queen for a Day. Well thinking back to those "competitions" gave me quite a hollow feeling in the gut when I read this …

The process would save many of them thousands of dollars, defuse an explosive mortgage, even avert foreclosure. To boost morale, NACA officials occasionally ushered chosen homeowners to a makeshift lectern where each offered a glowing testimonial over a PA system to the work taking place. They spoke fervently of new fixed-interest loans and fought back tears, while thanking their counselors, friends, NACA, and — regularly — God.

The post is long and detailed, ranging as it does along a number of the eastern suburbs of the great CA cities.  After an exhausting tour through green-painted lawns and damaged community, Andy takes on some of the insiders and finance types who’ve profited handsomely from the backwash of all this misery.  Oddly enough, that brought to mind the theme of Marcy’s newly released satirical song.

So I heartily recommend that our readers think long and hard on these issues, because our politicians have got some pretty heavy policy choices to make to keep this stuff from flying apart into something nobody wants to see.

Read the rest of this entry »

Wall Street may not like it, but lower housing starts is good news for the housing market:

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 529,000. This is 10.6 percent (±8.7%) below
the revised September estimate of 592,000 and is 30.7 percent (±8.3%) below the October 2008 rate of 763,000.

Single-family housing starts in October were at a rate of 476,000; this is 6.8 percent (±7.5%)* below the revised September figure of
511,000. The October rate for units in buildings with five units or more was 48,000.

Here’s how one analyst sees the situation: [Thanks L!] Read the rest of this entry »

Chris Low, chief economist of FTN financial recently said:

[A] stable housing market is essential to a stable banking system, and he believes “everything that can go wrong in the housing market already has.”

I would disagree. One of the things that housing can still suffer from is attrition.  Some problems get worse over time.

One of the factors that can wear over time for housing is employment.  There is no such thing as a "jobless recovery"

With the unemployment rate at 10.2%, the stock market might take some comfort in the thought that we are closer to the peak in the unemployment than the trough.  Unfortunately, we are likely a lot closer to the beginning of a long, jobless recovery than the end.

If 200,000 jobs could be added monthly to nonfarm payrolls starting in November (and that will not happen in November), we would recover all of the jobs lost so far in the Great Recession sometime around April 2013.

Unemployed people don’t buy houses.  Underemployed people don’t buy houses.  People who are worried about their jobs don’t buy houses. [Unless they are downsizing.]

I don’t agree with the politics of John Buell, a political economist, but I have to give him his point here: 

One need only look at a number of widely accepted measures of economic health. While nearly one of six American workers is unemployed or underemployed, almost a third of our productive facilities stand idle. While homelessness continues to grow, nearly one in seven rental properties stands vacant and foreclosure rates rise.

Put aside Economics 101 and ask a simple question. Isn’t there something wrong with an economy that fails to steer unemployed workers into the unused plants? And if some policy achieved this purpose, wouldn’t more workers earn enough to rent those vacant homes and apartments?

Americans often pride themselves on looking at facts on the ground. I find it hard to deny that as an economy we have already produced enough homes and factories that everyone could live comfortably. Read the rest of this entry »