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Sunday, October 25, 2009
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18 comments:
For lack of other more substantive data...
So, since we will now be sitting in the cat-bird seat all winter waiting for good houses to come up for sale, having saved nearly all we intended to save for a down payment... I wanted to get a sense of how much the listings are going to slow down in the winter. So I looked on the MRIS site MRIS (the usual one Harriet posts from on the 10th of each month) for the number of new listings from November to February of 2008 for one of my target zip codes.
To my great surprise, last winter, when prices were arguably 10% lower than they are now (i.e. when fewer sellers would be interested in selling based on profit), other than December with 51 new lists, each month had 60-75 new listings! Which is identical to the rate they were coming out this summer. This tells me a number of things, (1) given that prices are higher now, I really shouldn't worry that listings will dry up, (2) that all year long in 2009 only motivated sellers have been listing, i.e. that as far as seller's are concerned, we are already in that low slow flat period of low transaction volume where no one is selling their home unless they have a motivation besides profit(other than flippers).
Obviously this is hyperbolic, and exaggerated, and foolishly extrapolated from one zip code with questionable applicability to whatever zips each of you are interested in, but I'm curious, if you guys check your home zips, how do numbers of new listings last winter, compare to new listings per month this past summer?
Okay, I looked at FFX County. And on a county-wide basis what I said is definitely not true. Winter showed 1300-1500 new listings as opposed to spring and summer with 1800-2200 new listings. But all year, new listings exceeded new contracts and pendings (if only by a small amount in spring) which should have resulted in increased inventory, but didn't, presumably because people were pulling their listings.
Some of those were going into foreclosure and will re-appear, some of those couldn't get the price they wanted and may come back on if prices stay elevated or owners become more realistic, others were attempted short sales that may have gotten loan mods, others were owners hoping not to be short sales, who will decide either to tough it out, or may give up sometime soonish.
But in any case the fact that the new listings continue to exceed the new contracts and contingencies, while inventory is falling, tells me that the extent to which the inventory has declined reflects pent-up supply. Of probably about 1k-2k units in FFX County, just of people who have tried to sell and been unsuccessful.
This is another less nefarious dimension of the "shadow" inventory. (although, yes, some of it is "short sales", in the sense of real short sale listings and listings that would be short sales if they were actually priced to sell).
Am I applying wishful thinking to my analysis? Just because it makes sense to me, doesn't mean it's true.
And the best of Patrick today.
It's national not local, but I still take it to mean, there is still no reason to be in a big hurry to buy a house.
(Though if we were to stop looking for a home to buy we really might need to find a different place to rent. The smoke detector 2 feet displaced from directly over the stove is killing me).
Cara,
The opening sentence to that Partick.net article:
Central banks and governments around the world have thrown everything they can muster at the financial crisis.
I've seen this comment a number of times written different ways. Bears mostly believe that governments have thrown "everything" they can at the market. But, it's simply not true. There is more where that came from. The only reason they stopped was to gauge the results. People really believe an $8k housing credit to home buyers that haven't owned a house in the last three years, constitutes EVERYTHING the government can do???
If anything, look at the bond market. Ten-year yields are 3.5%. That gives the USG a lot of latitude to expand any of their programs. If it were 9.5%, then yes, we may be reaching the limit, but we're not even close.
Cara-
The residential loan resets graph looks a little suspect to me. I don't remember seeing a lot of resets in '06-'08 and '10-'12, but very few in 2009 in the old graphs.
Robert,
Agreed, it is not everything the US government could do, at least in principal. The question is, is it everything the government will do, or feels is politically feasible.
Everytime that ARM reset graph comes up, (this one shows us neatly at the eye of the hurricane, but it doesn't look like the most recent analysis), the first thing I think is, if things actually do get that much worse, look out, we ain't seen nothing yet in terms of what the Fed might throw at it. And given that it's unlikely that they'll be any better at targeting the "help" towards only regions that need it, that "help" could easily create even more froth here than we already got.
(although I do have to admit, I can't follow the bond argument).
Still I do think that there are political limits to what they are willing to do. So long as Wall Street remains happy... less is likely to be done to "help" homeowners.
Cara, I think Robert will correct me if wrong, but I think his point re: bonds is that when yields are low the issuer doesn't have to pay much back to the person buying the bonds, sort of like a low interest rate on your house. People/institutions are still willing to lend him/her money at a low rate.
Ace,
Ah, okay i.e. if the 10 year rate were 9% it would indicate that the world had lost faith in the US Government and weren't willing to keep lending it any more money, and/or believed it's policies were truly expansionary in an inflationary way.
Cara,
On the budget side, I am sure there are political limits. But, on the monetary, or Fed side, I don't see any. Recall when the Fed almost instantly insured $3.5T in money market accounts. Or, how in their statement after one of their meetings, they said they would purchase $750B in MBSs and $300B in Treasuries. Obviously, they could guarantee every outstanding loan in the banking system. And maybe they will have to.
My "Open House" report for LoCo & PWC .
Saw 2 houses that were 'vacant', except people (men) were living in the back-part-of-the-basements
(you got it, the furnace rooms set up with beds, desks & tv's....!!).
Or at least there were only Men's clothes hanging in the basement bedroom's closets.
What is on the market here is getting weird to say the least..
spunky,
That is bizarre. Men saddled with the house after divorce due to money problems? Hired caretaker, free rent in turn for making sure the pipes don't freeze and the place isn't vandalized?
Yes Cara it was strange to say the least.
Both had female Agents insisting to us that both Properties were well priced (steals no less!) at 889K & 899K respectivly!
One had a DOM of 730 days & the other was 130 DOM
Wonder how much longer these Men will "hold-on" to these "granite-laden weights" hanging around there necks....?
Yep, both are going on my watch list fer sure!
Robert, regarding "everything the govt can do", please develop a sense for hyperbole. The govt can nuke the world if it wanted to, just like it *could* throw another 5 trillion dollars to prop up the housing market if it wanted to. They've done everything they can within practical means to prop up the housing market, if you want to believe that bribing people $8000 per pop is practical. I think it's insane, but I guess some people like it.
Cara - regarding that Arm reset chart. It looks like your article is using the old one that does not show the early recast of option arms (the rest of his Alt A chart looks Ok).
Thanks to the recast, it now looks like we are at the beginning of the peak of the option arms:
http://www.nowandfutures.com/d2/option_arm_reset2009(business_week).jpg
Applying the glug, glug, glug analysis of a few years back, the Option Arm Tsunami is now at peak and we renters should now be reaping the benefit of countless inventory and prices rapidly hurtling towards $0.
Thanks Mr. Mortgage - glug, glug, glug, glug...
"we renters should now be reaping the benefit of countless inventory and prices rapidly hurtling towards $0."
Uh, nope they still want 899K for them!!
Kevin-
I think Robert was just saying if housing falls dramatically the feds will do more. I don't think this is a stretch at all. For starters they are already trying to pass a $15K bill that is not just for moderate income first time buyers. I am not saying that this is a good idea, but it clearly shows that the government can do more and is already thinking about doing more. So I would hardly compare this to nuking the world or spending 5 trillion...
actually specifically Robert is pointing out that the Fed could do more, by fiat.
which is totally different politically than another round of the buyer bribe.
Why would the owners be sleeping by the furnace??? COuld the house have been foreclosed on and they are no longer the owners, so they are like former-owner-squatters? Weird.
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