Housing Doom

May 12 (Bloomberg) — Home prices in the U.S. dropped the most on record in the first quarter from a year earlier as banks sold seized homes and foreclosures in California and Florida dominated sales. [1]

Oh, well.  Sometimes things don’t work out quite as advertised.  Twist is busy with other priorites so will be out of internet range for a day or too, and the above tip from Doomer JimAtLaw couldn’t wait.

The big story is NAR’s latest survey.[2] The impact of foreclosures on the market is obvious, so this would indicate the cycle is moving to a new phase.

UPDATE: Doomer cpgone contributed this link to a NYT graphic of prices by city, and other commenters contribute information below.  Thanks!

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There isn’t much likelihood you’d get the two confused, as GoldmanSachs666, the blog, is devoted to the notion that Goldman Sachs, the bank, secretly created the current financial crisis through neglect or design. … Yet a cease-and-desist letter sent to Morgan last week from a law firm retained by Goldman Sachs wants his blog taken down … [1]

Even Fox can see what’s coming, and they don’t like it one bit.

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Just, wow. (OK, this has been in the wild for weeks, but we’ve been buried under snow up here and this is the first time I’ve watched it.  I think Tufte would approve.)

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

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My views are quite different now. I’m pretty bearish and have been for the past year and a half. Home prices will continue to drop. [1]

Posts at ForexHound [1] and DavidLereahWatch [2] are quoting from a Money Magazine interview that does not seem to be online. Seeking Alpha expands a bit.[3]

Actually, I’m a bit relieved that twist’s old nemesis has come over to The Dark Side, but don’t economists expect their colleagues to at least say what they honestly think?

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Many of us in Halifax were deeply affected by the sudden, but peaceful, passing of Allen Wayte. Some of you may have already noticed (or puzzled at) my haiku response.

Tuesday saw his memorial service,[1] and I was particularly moved by the brief message from his estate agent, of all people. I spoke with David Morton after the service and he agreed to let me transcribe his words for you, and perhaps also for some of Allen’s many friends who were unable to be here yesterday.

[starts at about 32:00 on the MP3, after David's reading of Colossians 3:12-17]

David Morton: I just want to say real quickly that it was an honour to get to know Allen in the last few years of his life and I think it’s quite amazing, now that the year is over, seeing what has transpired that …

I thought God brought Allen into my life for a reason. I knew it wasn’t for a commission because when I got the call he started looking at … trailers and … [laughter]

But his bottom line was — he always wanted to have a home of his own, and he wanted to have something in the bank when he would retire. And I sensed right from the start there was more to it than that. I said, "Allen, if you, in your position directed the choirs and led worship unto God, I believe God may want to reward you for you faithfulness, because you’ve been doing this so long.

And he looked at me kind of strange, which I thought was kind of odd at the time, that God would be interested in him in that way. And I said to him, "Al, let’s just try it and see what happens."

So he was open for anything, and as I got to know Allen he had such a kind, gentle spirit and what really intrigued me is what his friends said about him. Susanne Bailey and Naomi Mensink, they just loved him. And they talked so highly of him … and that moves me when I hear people honour other people. That doesn’t come easily in the world that we live in.

And I felt — I’ll make it very quick — I felt: God who knows that our days are numbered knew this day would come, and He wanted somebody to remind Allen how much He loved Allen.

And with Allen’s childhood, growing up the way he grew up, he didn’t have a family like many of us cherish, and I hope we do cherish this Christmas season, but he had you. He had you choir members. You did such a lovely job this morning — he would have been proud, you honoured him very well with that.

And I just wanted to say that Allen loved each and every one of you in a special way — in his own unique way.

And he will be missed.

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"Reporting involves the gathering of information through interviewing and research, the results of which are turned into a fair and balanced story for publication or for television or radio broadcast." - What is Journalism? UWO [my emphasis]

NAR is presently at Disney World making some modest suggestions [1] for the new Administration:

• An interest-rate buy down, in which the government would subsidize a portion of a home buyer’s mortgage interest rate. A recent analysis by NAR found that a reduction of interest rates by 1 percentage point could result in 840,000 additional home sales and reduce the inventory of homes for sale by 20%.
• Eliminate the provision that requires users of the first-time home buyer tax credit, enacted earlier this year, to repay the money over time and extend that incentive to all home buyers.
• Make the increased conforming mortgage limits permanent. Rates on conforming jumbo loans haven’t improved as much as was hoped, partly because mortgage investors aren’t certain whether these higher limits will remain, Yun said.

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Full marks to Mrs. M for digging this amazing story [1] out of page C4 of our local paper.

A Dartmouth [Nova Scotia] real estate agent says Ottawa is forcing agents to play Big Brother by requiring them to get and store personal information about their clients.

"It’s a privacy issue more than anything. It has been mandated upon us," said the Re/Max agent, who asked not to be identified.

Do any Doomers know if America’s NAR or other national Realtor organizations force their members to do this?

Some agents across the country are upset about the new rules, which have created more paperwork, said Bob Linney, spokesman for the Canadian Real Estate Association.

"There are members who believe that we are now being asked to do the work of government and not being compensated for it. Realtors did not go to spy school. They were not trained to collect all this personal information or to look out for the things that (the transactions centre) now wants them to," Mr. Linney said Thursday from Ottawa.

Twist and I have had run-ins with RE agents before but for the most part we have been impressed with their professionalism. Many of our most valuable contacts and sources work in the field. Doom has gone to bat for Realtors before, and this looks like another time to do that. There is no way that Canada’s RE agents should have to work at cross purposes to the interests of their clients like this.

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Thanks to Jared for telling us about a glitch at the Realtor.com website-

On my recent trip to the Realtor.com website I thought I’d check out their "Why use a realtor?" link.   The 4th paragraph from the bottom advertises their "Code of Ethics".  I love the fact that when you click the link it says "404 Not Found".

I had to check it out.  Here’s the "Why use a realtor?" page, paragraph four:

And here’s what you get when you click on the Code of Ethics: [Above link not live]

This confirms what we suspected.  While we know many real estate agents with their own personal code of ethics, [Including our own contributors and posters!] they do seem to be missing at the NAR!
 

According to CNBC this morning, Housing Market Is Showing Signs of a Turnaround:

Pending sales of previously owned U.S. homes unexpectedly rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower, a real estate trade group report showed.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in April and seen as a key barometer of future housing activity, increased 6.3 percent to 88.2 from an unrevised 83.0 in March.

Despite the uptick, sales were 13.1 percent lower than a year ago.

There are two problems with this report.  The first is that pendings are down year-over-year, not up.  Year-over-year is more significant than the more volatile month-to-month comparison.  More importantly though, I believe that pendings should no longer be considered as a "key barometer of future housing activity."

In 2005 when the National Association of Realtors started tracking pending sales, pendings were a good indicator of future sales.  Pending sales generally closed within 30 days, which made it easy to see what would be happening the next month.  The world has changed, however.

Homes can remain pending for months now as would be buyers scramble to sell homes or find financing.  Often buyers need to give up entirely, so more pendings are being cancelled than during the boom years.

Pending sales numbers are given as an "index" rather than number of sales [as in the Existing Sales report], so a good "apples to apples" comparison is difficult.  However, it is possible to compare the slope of both pendings and sales.  It is clear that the spread between the two is increasing and the correlation is decreasing.

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In 2005, you couldn’t throw a rock in Phoenix without hitting a Realtor, but that isn’t the case any more.  Apparently a lot fewer people are signing up for real estate school these days. [Hat tip Asset Hunter!]

Connie Ross wonders a little when people tell her they want to enroll in real-estate school.

Ross, a partner at one such school, said she’s surprised not because she believes a declining market is necessarily a bad place to start a real-estate career, but because it’s an unforgiving environment for those unwilling to pay their dues.

"A lot of people that got their license in 2005 aren’t in business anymore," Ross said. "They never learned how to work."

Connie Ross wonders a little when people tell her they want to enroll in real-estate school.

Ross, a partner at one such school, said she’s surprised not because she believes a declining market is necessarily a bad place to start a real-estate career, but because it’s an unforgiving environment for those unwilling to pay their dues.

"A lot of people that got their license in 2005 aren’t in business anymore," Ross said. "They never learned how to work."

Not only are there fewer students, but schools are going out of business and agents are moving on to other lines of work.

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