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TMFDeej (99.47)

Positive news from the housing sector

Recs

12

October 28, 2009 – Comments (9)

Existing home sales were reported this morning.  Out of all of the statistics that are contained in the release, the one that jumped out at me the most was the following:

The supply of homes on the market fell to 251,000 in September, which is the lowest level since November 1982.

and 

There were 7.5 months of supply in September - significantly below the all time record of 12.4 months of supply set in January.

Kudos to Big Picture and Calculated risk for mentioning this statistic as well.

I don't expect home values to come roaring back any time soon, but we could be nearing the end of the decline plus or at least be within a single digit percentage of it...assuming that the shadow inventory of homes that will eventually be foreclosed upon isn't too large and the expiration of the first-time home buyers' credit could does not have too significant an impact upon sales (though I personally wonder how long the juice from that program would last anyhow).

See charts below.

Deej

9 Comments – Post Your Own

#1) On October 28, 2009 at 2:55 PM, TMFDeej (99.47) wrote:

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#2) On October 28, 2009 at 3:25 PM, EnigmaDude (97.23) wrote:

cool charts!  Looks like we are regressing towards the mean, so probably still have a little ways to go...

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#3) On October 28, 2009 at 3:27 PM, JaysRage (94.10) wrote:

Nice post.   Love the charts. 

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#4) On October 28, 2009 at 3:43 PM, vrpirata (< 20) wrote:

Sorry dude, but you are drawing conclusions too soon. We are in the eye of the storm. This isn’t a guessing game like the government and banks what us to believe. They know how many loans they have, they know when they are going to reset, and they know what is the risk of such loans going to future foreclosures. Supply is down until the next wave hit. The first wave was subprime, the upcoming wave is Option and Alt-A (remember the interest only loans?). Check the following chart:

http://bp3.blogger.com/_pMscxxELHEg/RxzD0s_7EYI/AAAAAAAABB4/ljDSXZhMG3o/s1600-h/IMFresets.jpg

This, in combination with the commercial loans also due to reset end of this year and next year, should trigger major losses for banks. In addition, the tax credit has created dependence, no momentum. That tax credit will create a ripple effect when finally gone, hurting not only sales and house prices, but also propagating through the economy. That is why we should oppose its expansion and extension.

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#5) On October 28, 2009 at 3:46 PM, ParrotRedWorm (62.33) wrote:

Sell Mortemer .... Sell.... 

Thanks for the charts, but "the shadow market" on this recession should definately not be underestimated by comparison to the past.

A chart of the shadow markets would be super cool!

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#6) On October 28, 2009 at 3:59 PM, goldminingXpert (30.95) wrote:

Too bad banks have quit foreclosing and are holding supply back artificially.

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#7) On October 28, 2009 at 4:06 PM, outoffocus (24.51) wrote:

The only good housing news I need to hear is that home prices are back in line with incomes, which is not the case in many areas.

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#8) On October 28, 2009 at 4:24 PM, vrpirata (< 20) wrote:

outoffocus. I agree. However, affordability can be achieved in many ways. For example, if interest could drop another 1 or 2%, housing monthly-payment would be affordable, but price would still be high. Many would afford the monthly payment, but almost nobody would be able to pay their house sooner than the loan term.What I would like to see is a high interest rate (close to 10%), that would force down house prices. That way, the payment would be the same, but a higher percentage of buyer would be able to pay off  their loans sooner.The only fix thing is how much the average American can pay every month. If for example, that is ~$1,5k per month that means we can either buy a $275k house at 5% or a $185 house at 10% interest. That is the reason interest rates drive house prices. I would rather have the 10% because with few extra payment I could drive down the principal faster.

But of course the NAR (Realtors) don’t want that. They want low interests so we acquire higher debt and they get higher commission.

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#9) On October 28, 2009 at 5:20 PM, davejh23 (< 20) wrote:

These figures are for "new homes".  251K is nowhere near 7.5 months supply of "existing" homes.  If annual sales pace of existing homes is ~400K, then we're in trouble.  The "new home" figures will not be affected by the "shadow inventory" either...although this could easily add 6 months of "existing" inventory to the market.  I know "existing" inventory has been coming down in many areas as well, but it looks like you're looking at the wrong numbers.

Sorry for all the "quotation" marks.

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