Have you been hearing all the blather about the housing recovery lately? The shills and shysters on CNBC and trotted out from the NAR and Wall Street criminal banks have been proclaiming a turnaround in the housing market. Home builder stocks have been soaring because they just know things are getting better. Well the story shit the bed this morning. You see 2011 finished with lowest new home sales in the history of record keeping. There were a total of 302,000 new home sales in all of 2011. The records go back to 1963 when 500,000 new homes were sold. There were 189 million people living in the U.S. in 1963. Today there are 310 million people. So the population is 64% greater and new home sales are 40% lower than in 1963. I wonder why? Could it be that our country is drowning in debt today and in 1963 we had virtually no debt in our society? No credit cards in 1963. People worked and saved until they could afford a house or a car. They paid cash for stuff they wanted or needed.
The storyline about a housing recovery is complete bullshit. December sales of 21,000 was also the lowest December sales in recorded history. And this was in a month when the weather was warm and not snowy across the country. I’m surprised some CNBC shill isn’t blaming the poor sales on good weather.
The median price of $210,300 is down 12.8% in the last year and is down 20% from the 2006 peak. The median price is now the same as it was in 2003. We’ve had a nine year round trip and we’re not done yet. Obama pissed about $30 billion of your tax dollars down the drain with his home buyer tax credits and loan modification programs. And now he wants to try again. The whole idea of converting houses into rental units using Fannie and Freddie is nothing but a backdoor bailout of the banks and will cost the American taxpayer another $100 billion.
Existing home sales are also still in the shitter. They are down 36% from the top and are at levels seen in 1998. They should go up in 2012 because the Wall Street criminal banks have been sitting on over 2 million foreclosures that they either can’t or won’t finish. They are waiting for Obama to come to the rescue. There are approximately 10 million homes in the shadow inventory that don’t show up in the actual inventory for sale.
So you have a massive supply of homes that will flood the market at the initial signs of improvement. Prices are already down 30% nationally from the top and you have 25% of all the homeowners with a mortgage underwater on those mortgages. I still think the law of supply and demand still works in the real world. Just taking a gander at this chart below shows that we are still a long way from the average over the last 35 years. Reversion to the mean is a bitch.
There is absolutely no reason to expect housing to recover in the next year. Sales may tick up over 2011, but prices will surely fall. The cycle of lower prices leading to more foreclosures is not close to ending. There will not be a real recovery in housing until prices fall another 20%. Put that in your pipe and smoke it.
Administrator says:
A Really Bad Plan for Reviving the Housing Market
Submitted by RickAckerman on 01/26/2012 10:55 -0500
For breathtakingly stupid political ideas and catastrophic “solutions” to America’s biggest problems, it’s hard to beat the New York Times op-ed page. There, joined by such jihadists of the Left as Frank Rich and Maureen Dowd, resides the peerlessly wrong-headed economist Paul Krugman, whose Nobel Prize was as well-deserved as the one Yasser Arafat received for helping to bring Peace to the world. Until yesterday, we might have thought Krugman had cornered the market for the absolute worst ideas on how to revive the economy. Here’s a guy who actually seems to believe, in his heart of hearts, that the reason this has not yet occurred is that the central banks of Europe, the U.S. and Japan have not thrown enough money at the problem. We stopped counting stimulus dollars and guarantees ourselves when the total hit $15 trillion a couple of years ago. That was long after we’d become convinced that deficit spending in such cosmic quantities, far from reviving the economy, would ultimately bury the U.S. in debt. As it has. Such concerns pose no problem for Krugman, however, since he simply avoids using the word “debt” in his Martian-friendly economic essays.
There are so many world-class crackpots in Krugman’s chosen field that it was all but inevitable a colleague would surface to challenge the Nobelist for the top spot in the Dismal Science’s Hall of Shame. Enter one James A. Wilcox, author of a Wednesday op-ed piece that purported to offer “A Way to Make People Buy Homes Again”. Wilcox, a professor at Berkeley, of all places, says all that is needed to jump-start the residential real estate market is government mortgage insurance. Specifically, he suggests a one-time premium equal to one percent on the home’s purchase price, or $2000 for a house selling for $200,000. At the end of three years, says Wilcox, “the government would automatically mail checks to protected homeowners if average house prices in their area were lower than when they purchased their homes.” He’s right about one thing: this would stimulate demand from would-be buyers who have been sitting on the fence waiting for prices to fall even further. Sounds like a good idea, right? In fact, it is a recipe for disaster. To understand why, let’s consider the main features of Wilcox’s proposal:
He says mortgage lenders might loosen up if “the government” (aka taxpayers) were to backstop prices. Do we really need easier credit for home buyers? Have we learned nothing from the disaster this caused in the first place? In fact, the 20% downpayment lenders are now demanding is about as loose as mortgages should ever have gotten. In effect, Wilcox is suggesting that we stimulate the housing market by creating a whole new army of poorly qualified buyers.
Evidently unable to chew gum and breathe at the same time, argumentatively speaking, he talks about stimulating housing demand without even considering supply. Does anyone doubt that there are millions of sellers out there, including banks holding foreclosed loans, waiting for some bids to surface so that they can finally whack-the-mole and get out of Dodge?
It should also be clear (to anyone but a university-trained economist, that is) that the moment “the government” guarantees that buyers cannot lose no matter how much they pay for homes, neither buyer nor seller will much care about the home’s true market value.
Wilcox says that stimulating home purchases would have a ripple effect on the economy. Only an egghead could fail to see that the ripple would be financed by huge news quantities of borrowing collateralized by a wasting asset that produces nothing.
With a straight face, and apparently using Obamacare math, Wilcox informs us that if two million participants were to take advantage of his hare-brained scheme, “the expected net cost to taxpayers would be a few billion dollars annually.” We won’t even comment, since we can hear you laughing at that one already.
Unfortunately, Wilcox and the Times’ benighted readers, conditioned by the likes of Krugman to think like left-leaning politicians, would see nothing funny in Wilcox’s nutty idea. But there is no denying its populist appeal. Lord help us if mortgage insurance ever comes up for a vote on Capitol Hill.
Like or Dislike:
2 
1
26th January 2012 at 1:18 pm
Kill Bill says:
The nobel prize was named for the guy that invented dynamite.
Like or Dislike:
3 
0
26th January 2012 at 2:29 pm
Stucky says:
Housing Schmousing. Here’s a scary chart. Why? Because these are the BEST markets … and the numbers suck ass, much like NAR.
Like or Dislike:
3 
0
26th January 2012 at 5:47 pm
Mary Malone says:
Gee, I’m shocked the Princes of Propaganda didn’t find a way to give these dreadful numbers a positive spin.
They’re really losing their golden touch.
I was driving to Boston today and ABC news radio “reporter” breathlessly announced the economy was showing a huge improvement.
I also ran the car off the road.
Like or Dislike:
3 
0
26th January 2012 at 7:52 pm