Here is the blaring headline in the MSM:
New home sales hit five-and-a-half year high in January
The Wall Street shysters and CNBC bimbos are ecstatic. Of course, maybe we should examine the facts within the Census Bureau report:
- There were 34,000 new homes sold in the entire country in January. There are 75 million homes in the country.
- Of these 34,000 new homes “sold” in January, 10,000 were actually built. A contract can be cancelled for a nominal penalty amount. When housing went south for Toll Brothers, the cancellation rate exceeded 30%.
- There were 32,000 new homes sold last January.
- The median price has fallen by 7% since April.
- New home sales are pacing 70% below 2005 levels, 40% below levels in the mid-1980’s when mortgage rates were 12%, and 25% below levels in the mid-1960s.
- Mortgage purchase applications fell last week to the lowest level since 1995. Do mortgage applications fall to a 19 year low if housing is going gangbusters?
The MSM is spinning a yarn to keep the ignorant masses sedated. Do these charts reflect a strong recovering housing market? Housing has begun its 2nd collapse in the last 8 years.
“Mortgage purchase applications fell last week to the lowest level since 1995.” That says it all, really.
“There were 34,000 new homes sold in the entire country in January. There are 75 million homes in the country.” ————- from the article
The 75 million home is irrelevant.
Like jobs, what matters is HOW MANY PEOPLE ARE LOOKING for a home. It just so happens that exactly 34,000 people were looking for a home.
Therefore, since 34,000 homes were sold, this means Housing is at 100% Recovery!!
Jesuskrist, why is maf so hard for you people?
The amount of shadow housing inventory is staggering.
It is not counted, like those who stop looking for jobs or run out of benefits are magically no longer unemployed!
Also, does anyone really believe the USA has 6.6% unemployment? You can walk into any neighborhood & know that more than 6.6 out of every 100 people (old enough to work legally) are not employed. All government statistics are as phony as the President’s birth certificate.
The “Institutional Investor” Housing Bubble Just Burst
Submitted by Tyler Durden on 02/27/2014 15:48 -0500
It is by now well understood that the US housing market over the past year has not benefited from broad consumer participation, exhibited best by the unprecedented, 13 year low collapse in mortgage applications. And since bond yields which recently “soared” to 3.00% only to drop right back have not resulted in a spike in applicants for home mortgages, it is clear that the problem is far more broad and systemic and has to do more with affordability than any other aspect of the market. And yet one thing that did support the elevated, or as some call them, bubble prices, of US houses, was the bid from institutional investors: those “house flippers” who buy a home with the intent of either renting it out or selling it to a greater fool.
Alas, just like the rental bubble whose bursting we chronicled here just last week, so the institutional bubble has just popped, which we know courtesy of RealtyTrac data reporting that institutional investors — defined as entities purchasing at least 10 properties in a calendar year — accounted for 5.2 percent of all U.S. residential property sales in January, down from 7.9 percent in December and down from 8.2 percent in January 2013. This was the biggest one month plunge in history. It gets worse: the January share of institutional investor purchases represented the lowest monthly level since March 2012 — a 22-month low.
Some other RealtyTrac findings:
Metro areas with big drops in institutional investor share from a year ago included Cape Coral-Fort Myers Fla. (down 70 percent), Memphis, Tenn., (down 64 percent), Tucson, Ariz., (down 59 percent), Tampa, Fla., (down 48 percent), and Jacksonville, Fla., (down 21 percent).
Yet, unwilling to give up on this latest bubble craze, institutional investors are still hoping there is some last minute cash to be made in some remaining markets.
Counter to the national trend, 23 of the 101 metros analyzed in the report posted year-over-year gains in institutional investor share, including Atlanta (up 9 percent), Austin, Texas, (up 162 percent), Denver (up 21 percent), Cincinnati (up 83 percent), Dallas (up 30 percent), and Raleigh, N.C. (up 15 percent).
The following quote summarizes the situation best, and it also refutes the entire “harsh weather” excuse that has become so popular in recent months:
“Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,” said Daren Blomquist. “It’s unlikely that this pullback in purchasing is weather-related given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago.”
So with retail buyers long out, and cash buyers and institutional investors – which as readers know amount to about 60% of all purchases – on their way out, just what will be the next myth be that will be disseminated to percent the general public from realizing that the artificial housing market “recovery”, which was entirely driven by hot money, speculation, and hope of a quick profit? Because with QE also fading, and with it the MBS bid, not to mention the surge in foreclosure exits and the flood of foreclosed properties about to hit the market as we wrote yesterday, things for the US housing market are about to get very messy.