As the ministry of truth, otherwise known as the NAR, spins faster than the Harlem Globe Trotters we have the worst drop in sales in 18 years. So what does the head chief of spin say the cause was? The weather. Yes folks, we are officially in LaLa land and smoking housing credit peyote...
"NEW YORK (CNNMoney.com) -- Home sales posted their sharpest drop in 18 years in March, a real estate group said Tuesday, as problems in the subprime mortgage sector pushed sales well below what economists had forecast.
Sales of existing homes fell 8.4 percent to an annual rate of 6.12 million in March from February's 6.68 million rate, the National Association of Realtors said. It was the biggest one-month drop since January 1989. Economists surveyed by Briefing.com had forecast sales would fall to an annual rate of 6.45 million in March.
Well he did acknowledge that tighter credit may make it more difficult for buyers to get a home. Bwahahahahahhaha!!! I'm not sure how much more of this crap I can take...
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8 Comments:
Well, at least he's admitting the that all the mortgage meltdown stuff that everyone's talking about MAY play a teensie-weensie role here, too! I mean, the weather out in California WAS sucky: I had to wear a sweater out here ONE DAY, I think, and carried an unbrella, too.
Getting a delusional person to at least ADMIT the possibility that they might be deluded is a sign of progress, right? I'd say getting him to face reality once every 18 years is a good thing. :)
We'll see how well he can spin the NEXT report....
ben franklin,
You want to know how crazy this is going to become. Read up on the subprime bail out and some innovative ideas:
"The loans have interest rates of 6.25 percent for a 40-year fixed and 6.5 percent for a 30-year. There are also interest-only loans available that carry a rate of 6.5 percent. Borrowers pay 2 points at closing for any of these products, which may be folded into the loan."
So now homeownership is becoming like renting for life. These subprime folks are going to get saved by increasing their mortgages to 40 years. If anything this is prolonging the much needed purging of the market. We need to let the bad money and shady business get it in the shorts. These businesses wanted government to stay out in times of feast and now that things are going south, they want Uncle Sam to step in. Golden.
In regards to Lereah, he is delusional and in denial. And I would be too if I had a powerful lobbying group like the NAR behind me. He almost feels that housing will never ever have a really bad year. With all this bail out talk so far the NAR is getting some support. Can't blame the guy. Its like asking a bartender if he supports a permanent ban on alcohol.
And actually, the thing to remember here is existing home sales are reported at the close of escrow, so this report represents contracts that were signed in January/February 2007.
So in fact these numbers are mostly prior to the subprime implosion which hit MSM in late Feb/ early Mar! Wait until we see the Jul/Aug numbers, as it'll only get uglier....
Yes, I've seen the reports of bailouts; sure seems like throwing good money after bad! Look at how they're willing to subvert the process to funnel money to the "bail-out"!
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/24/BUGC8PE0FA1.DTL&feed=rss.business
For sure there's going to be hell to pay, and God help us if corrupt legislatures don't investigate the mess to make sure the bastards (excuse my language, but no other word fits here) behind this don't get off the hook, much less profit from it, walking off with taxpayer dollars, too!
That would just be adding insult to injury, at this point!
Sorry, here's the tiny URL for that link I posted:
http://tinyurl.com/239bor
Lereah is a cheerleader.
We all know how smart cheerleaders are.
save the bubble, save the world...
Here's MEDIAN prices for Y-2-Y for California:
http://www.dqnews.com/ZIPCAR.shtm
For newbies who aren't used to looking at the data, please remember these are MEDIAN prices, i.e. the price represented by the middle value reported in the list. It is NOT an average, or a weighted average.
In some cities, you'll see few sales reported: these figures are highly unreliable, and largely invalid. For example, look at Somis, in Ventura Co: it shows a 255% increase in median! On the other hand, Landers shows a 55% drop.
However, notice these figures are derived from the sale of two homes, so remember to look at trends in large cities with more sales (e.g. Oxnard, Ventura, Port Hueneme, etc; all are down, some dropping significantly).
IMO, there's still LOTS of fat to chew off these prices, and just wait until the sub-prime/Alt-A meltdown starts to hit.
HOWEVER, the thing to remember is credit tightening will prevent buyers from buying what they cannot afford (which is a GOOD thing); this restriction effects 1st-time entry-level buyers, as well as inept specuvestors and would-be flippers (ALA Casey Serin), but NOT the move-up buyer who's already in their home with a good FICO (e.g. someone who has to relocate for work, etc).
Therefore, don't be surprised if/when the median figure actually INCREASES in the next few months (with total sales VOLUME continuing to decrease), as the market will pull back from 1st-time buyers, leaving only traces of existing owners who are buying.
When this happens, don't be fooled: no doubt, the REIC will use this to announce, "see, we told you. You losers who sat on the sidelines should've bought earlier, as prices are STILL going up with or without you!" This is nonsense, as numbers WILL fall in the long-run, especially if most people will forget to look at sales VOLUME and figure this out. Frankly, I think many intelligent buyers WILL overlook this factor...
Already, some of these areas are showing $100k off the median Y-2-Y, so that's a great start to the bust (and CA is in for a BIG-TIME correction)....
DHB said, "These subprime folks are going to get saved by increasing their mortgages to 40 years. If anything this is prolonging the much needed purging of the market."
This is the most frustrating part! The collapse of the market WILL take the economy down with it as a whole. It doesn't take an Econ expert (which I certainly am not one) to see that a majority of our economy has been supported by RE and its related industries for the span of this bubble. The government sees this - hence this bail out. All this other talk is PC BS.
The problem is it is absolutely delaying the inevitable. The market NEEDS to correct itself. How long is it feasible for the median house price in LA to be 10 times the median income? And have you actually looked at a median house? When you consider most of the RHoG are below, factor in the celebrity estates and even the upper middle-class McMansions, a median priced home in a decent neighborhood is a 2 bd, 1 bth "sprawling" 900 plus square foot beautifully maintained thing of joy. And as all of you know, beautifully maintained is RE code for never been updated, still has floor heaters, window air conditioners, original electrical and plumbing, and the roof is probably older than you are.
YAY for median - not.
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