Existing home sales fell in August because Blackrock and the rest of the Wall Street hedgies stopped buying them with your tax dollars, provided interest free by the Federal Reserve. Anyone lured into buying a house in the last two years is about to get a rude awakening. They are now underwater on their mortgage. But, the true constituents of the Federal Reserve are still partying. The .1% are still winning. FOR NOW.
Some Recovery. US Existing Home Sales Fall 1.8% In August (Down 17.7% YoY) To Pre-Housing Bubble Levels
By Anthony Sanders
Ouch! US existing home sales fell 1.8% in August to pre-housing bubble levels. And existing home sales are down 17.7% YoY.
Existing home sales increased in the Northeast and Midwest, but fell in the South and West.
We are not in the same economic climate that we were prior to 2008. Lower real median household income, wage growth and labor participation result in lower ability of borrowers to meet debt-to-income (DTI) requirements resulting in lower mortgage purchase applications and stalled existing home sales.
“Toto, I’ve got a feeling we’re not in (economic) Kansas anymore.”
Also, unlike the period 1998-2008, the home lenders actually have LENDING STANDARDS, something notably absent during the Great Rampage of the 00s.
The credit rampage of the 00s only concealed, briefly, the underlying economic malaise while introducing many more perversions and deformations than we had to begin with…. which was quite enough, when you consider the increasing financialization of our economy from 1975 forward, and worse every passing year since.
This antebellum party lasted long enough to suck two of my three sons into the damned housing market at this, probably the worst price point in a lifetime.
And the third is desperate to buy a house.
Their father has expected the sky to fall for 19 years. We had TWO head-fakes in recent times, but they were just Mr. Market setting people up for a smash so large it dwarfs any in history.
I hate the system.
My sons are the last of the old guard.
College educated.
Good jobs with Big Corporations.
Good incomes.
Full benefits.
Of course they want to live the American Dream. I have, and they want to, and have the MEANS.
Unfortunately, that means they are buying the last available tickets for Steerage on this Titanic.
Home prices show slowest growth in almost two years, according to FHFA
The small monthly rise in home prices in July pulled annual growth to the slowest pace in almost two years, according to government data released Tuesday.
In July home prices rose a seasonally adjusted 0.1%, the narrowest increase in three months, the Federal Housing Finance Agency reported. Year-over-year growth (for non-seasonally-adjusted data) slowed to 4.5% in July – the lowest return since September 2012 – from 5.2% in June, according to FHFA, which tracks deals involving mortgages backed by federally controlled mortgage-finance giants Fannie Mae FNMAand Freddie Mac FMCC.
The data is taken from transactions involving Fannie- and Freddie-backed or guaranteed mortgages.
According to the FHFA data, the peak in growth was almost 9% in July 2013. Since then acceleration has cooled down as the number of homes for sale rose. Also, some would-be buyers dropped out of the market, shocked by the double price whammy of bidding wars and rising mortgage rates.
There are positive and negative effects from slower price growth. Slower growth should encourage more buyers to jump into the market. Prices that continued to run too hot for too long would slash the pool of prospective owners. But slimmer price gains also mean that it will take longer for still-underwater borrowers to gain equity in their residence.
In the Pacific region, year-over-year growth dropped to 7% in July, compared with 20% a year earlier. Meanwhile, in the East North Central area, growth slumped to 3.8% from 6.6%.
FHFA’s findings have been echoed in other recent housing data, with the National Association of Realtors reporting earlier this week that prices for previously owned homes were up 4.8% in August from the year-earlier period, a dramatic drop from annual growth of more than 13% in August 2013.
I do not regard rampaging house prices as a sign of economic health, and am not disturbed that my place isn’t worth more than a tiny increment (if even) more than when I bought it last year…… especially since my building is appealing its property taxes. So, the lower the better.
During our “high” period of 1945-1970, there was hardly any “appreciation” i.e. asset inflation. If you wanted your house to “appreciate”, you had to actually improve the place, or, more important, improve the neighborhood it was located in (good luck with that).