- by New Deal democrat
Last month I wrote that It isn't just Case Shiller: almost every house price index has bottomed, specifically noting that in addition to the Case Shiller index, 9 of the 11 other indexes had also turned positive YoY.
The remaining two with negative YoY comparisons were the Census Bureau's new home sales report, and the FNC repeat sales index.
Not any more. This morning the Census Bureau report on new home sales also showed that both median and mean prices for new home sales in August 2012 were positive YoY.
Further, last week FNC reported that:
Nationwide, July home prices – based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas – were up at a seasonally unadjusted rate of 0.9% from the previous month. They were up 0.7% from a year ago in July 2011. Year to date, home prices rose more than 4.6% since January.
So that's it. EVERY house price index has now turned positive YoY. Of course, these are nominal and not real, inflation-adjusted prices (although housing itself is about 1/3 of the entire measure of inflation, so I'm not sure how instructive that is). And yes, of course foreclosures blah blah blah shadow inventory blah blah blah. I've heard all about it for two years and it hasn't stopped the trend yet during all that time. Those who continue to advocate for that position need to explain, Why hasn't it already happened?
8 comments:
http://read.bi/NNfNyd
Pacioli, as Barry Ritholtz would say, citing David Rosenberg is ... well... not wise.
But, NDD, I have to say, with Bloomberg telling us that we are facing 2% to -2% growth next year depending on whether the Congress does its job or not, I wouldn't be betting too hard on a continued housing recovery.
The main problem I see with most housing analyses is that they start from the same (wrong) assumption as this guy (http://www.northerntrust.com/pws/jsp/display2.jsp?XML=pages/nt/0601/1138283678319_6.xml&TYPE=interior&er=dgcDetail&c=primary/resource/1207/1342733522267_128.xml).
"We're all rooting for recovery in the housing sector." We should have been rooting for housing recovery during the bubble when housing was sick. But no, we rooted for the patient to stay sick (even get sicker). And now we are rooting for the patient to get sick again.
"A recent visit to Zillow revealed that the value of our home has declined so far that I’ll need to work until 85 to make up the lost equity." That was the fantasy value of the bubble. Maybe the writer wishes he had done what so many in my town did: get a big home equity loan on a fixer during a period when banks did not bother to take a look at the prospective collateral, but instead approved loans based on a paper appraisal. Then the homeowner walked away an instant half-millionaire leaving behind a daily deteriorating fixer.
"Our hopes lead us to greet any recent sign of housing progress, no matter how modest, with enthusiasm."
Rising home prices is not progress until housing completes recovery to health . Health is when the local median wage can qualify for a local median turnkey house.
Any analysis (of any topic) is flawed as long as unexamined assumptions affect conclusions.
Here is another big picture view that does not even mention foreclosures and shadow inventory (http://pragcap.com/more-on-that-housing-recovery). "...let’s not go crazy and start declaring victory in the real estate market when the evidence very clearly shows that real estate remains mired in a deep slump. It’s great that there are signs of life and it’s stopped collapsing, but let’s maintain some perspective here as well."
From http://scottgrannis.blogspot.com/2012/09/the-housing-market-deal-of-lifetime.html
"...this is a situation that can't last for very long. When market prices are distorted artificially, powerful arbitrage forces are set in motion. Large institutional investors are going to want to sell their MBS holdings at what could be record-setting high prices. Yields going forward are paltry, downside risk is enormous, and upside potential is extremely limited. The Fed's promise to buy $40 billion per month of MBS could be swamped by the decision of money managers to lighten up on their MBS holdings, which are measured in the many trillions of dollars. In other words, the big decline in MBS yields could quickly reverse, because the Fed can't permanently distort the yield on a market that is many trillions of dollars in size by buying a paltry $40 billion per month.
Meanwhile, those who can get loans are going to be putting that money to work in the housing market, and that's one reason why prices are firming in many parts of the country. The new mentality: buy now, before prices go higher. (Banks with tons of REO on their books will be thinking: no rush to sell now, maybe prices will go higher. Homeowners who are currently underwater will be thinking: maybe I can hold out a little bit longer and things will get better. It all adds up to less selling pressure and more buying pressure and the outcome can only be higher prices.)" So what we are seeing is slightly higher prices in a still fundamentally sick housing market.
Meanwhile, rents on newly advertised rentals are suddenly up 20% in some communities.
@ Charles -
What factual disagreements do you have with the Rosenberg post?
Considering I just locked in a 3.375% rate for a refi with zero closing costs (or 3.125% with $6k in closing costs), how could home prices not go up at these rates??? At these rates, home prices look very cheap in my area relative to what they have been since 2001-2002, and what apartments are currently renting for. But interestingly enough, I have not seen an increase in new home construction activity in my Toll Brothers community vs a year ago. Things appear to be down a bit... I wonder what many people are waiting for...
Charles???
Thanks for the posts. Nice blog.
Post a Comment