Posted on 01/27/2014 4:27:29 PM PST by Kaslin
The National Association of Realtors Chief Economist Dr. Lawrence Yun reported 5.09 million home sales in 2013. December was widely reported as up by the media, but only 1% over a November that was revised down. Year over Year December was down 0.6%. The second consecutive monthly decline.
To say the year in housing ended with a whimper would be an understatement.
But wait a minute, isn't the job market improving with only a 6.7% unemployment rate? If more people are working doesn't that translate into more people buying homes? The unemployment rate is as bogus as the inflation rate or we would be selling more homes and ground beef.
As a member of the National Association of Realtors I understand the desire to put a positive face on housing numbers to benefit members, however, to say the reason for the slowdown is due to a lack of inventory and bad weather is a stretch.
The weather argument falls flat because closings typically occur thirty to forty five days following a purchase contract. Bad weather in October and November didn't impact the number of closings in December.
I take the opposite view of the association, sales are down and slowing not due to a lack of inventory but due to a lack of demand.
We are heading towards an inventory shortage eventually because new construction has never recovered. New home construction remains at half the rate of pre-recession levels, and the recession ended four and a half years ago.
It is noteworthy that the number of mortgage applications were down by 66% in 2013. The reasons are twofold, rising interest rates killed the refinance market, and cash sales were at historic levels. Primarily from major investors entering the own to rent market gobbling up foreclosures. That too is slowing to a crawl.
If interest rates continue to rise into the five percent range the inventory of homes for sale will be hurt because anyone who doesn't have to sell won't trade a mortgage at or below 3% for a 5% mortgage.
Regardless the shortage of inventory you must still have demand, and demand comes from family formation and job growth. With 18 to 34 year olds accounting for 46% of all unemployed Americans most of the family formations are those based on love not money. Does love count toward a loan approval?
Obamacare casualties continue to mount, but the toll from employers cutting hours to part time, and laying off employees to avoid the mandates has harmed demand. When tens of millions with employer paid policies start getting cancelled and have their premiums increased, look out housing.
The president and his chief adviser Dan Pfeiffer can claim they have created 8 million jobs all they want, which you will hear in the State of the Union, but they won't tell you most of those jobs were part time and that eight million barely surpasses population growth during that time.
That means a net zero improvement in the labor market or adding demand for housing. Why no mention of the record 92 million working age Americans out of the workforce and the workforce participation rate the lowest since 1978?
The best thing to happen to the real estate market has been the hard winter. There is pent up demand building because people can't or don't want to get out and look at homes. When the weather breaks we will have a huge rush of home sales, but it won't last long without job creation.
The good news is that the president in his State of the Union message will chide the dangers of inequality, call for an increase in the minimum wage, more infrastructure spending, and more pre-school programs.
Yes siree Bob, that should cause an explosion in job growth not seen since the Stimulus and the Summer of Recovery!
Back to Dr. Yun and another statement he made.
"More people working means additional housing demand," said Lawrence Yun, chief economist at the National Association of Realtors. "In last 12 months the private sector has added 2.2 million jobs. That's 2.2 million potential homebuyers."
Really? If 1.54 million of those were part time jobs, please refer me to the lender who will approve a mortgage for these part time employees. Maybe they will loan on love too?
Here, even the remodelers are without work. New home sales are non-existent for all intents and purposes. Older home sales a little better if the seller is willing to give it away. My original “Happy days are here again” comment was sarcastic. Foreclosures are down but still too high. That suppresses the crap out of the entire market. Foreclosures and short sells being scooped up by investors who are not willing to sell at today’s values. I believe in the future because with God’s Grace the American people will overcome this. Too bad we don’t have some help from the RINOs that keep rubber stamping 0bama’s agenda. But God and the American People are bigger than the opposition.
The good news here is the people I work for cancelled my health insurance on January 1. And it was decent insurance with dental and vision with my share at about $100/month.
We are having a huge housing boom, if by boom you mean vacant houses that the unemployed former owners had to leave.
really??? lol
My son (24) has been pretty much unemployed for the last three years. He gets a job and they tell him this could work into something good--full time--but that isn't the case from what I see. Companies hiring temps but advertising full time positions just to get them through a big job with promises and shineons.
There’s a boom in rentals and vacant houses scooped up by professional landlords. The houses that aren’t used will rot, before they’re sold for low prices. Property taxes will continue to be propped up by many in the political regulator regime.
You are correct. As an investor I have no intention to sell. Rents are up, potential owner occupants lack cash, investors get the good deals with cash, demand is slack, inventories are down. Until the labor market improves, people fix their balance sheets, the analysis in the article rules. It will be at least three more years of this.
!
It has become ridiculous. But we will win. I’m 60 and I know we will.
>> They only count people looking for work. Pretty stupid, huh??
And dishonest.
Smoke and Mirrors, that is all this dictatorship has leading the low brows over the cliff. It will never end until these commies are run out of town.
There was an article? I just read the headlines. I scooped up several properties as a partner with my 5 siblings. We live in 6 different states and own properies in each. We are making a dollar or two on each until we sell them in 4 or 5 years.
NJ is dead in terms of housing; whatever lies the government spreads about the unemployment figure, the fact is that jobs don’t move into homes - people and families do. We’re bleeding people profusely, only making up some of it with illegals; they are the government’s answer to the housing crisis (and by extension, the public education crisis - there are much fewer American students to fill the seats).
“He gets a job and they tell him this could work into something good—full time—but that isn’t the case from what I see. Companies hiring temps but advertising full time positions just to get them through a big job with promises and shineons.”
I can’t believe how many part-time jobs now aren’t second jobs; they require a flexibility that would make them your only job possible. The 29-hour workweek is here...
Fixed it.
Illegals don’ buy homes. They end up pooling resources and government freebies and renting single family homes and occupying them with 2 or 3 families or 15 or 20 individuals. The houses and neighborhoods fall into a state of abuse with garbage and junk everywhere. They overburden schools, hospital emergency rooms, increase the crime rate. The property values tank even worse than similar non-illegal areas.
I certainly don;t think they are the answer; importing them has closed some hospitals here. They don’t buy homes; they rent apartments (and pay with cash) - often in neighborhoods that are falling already. They make it even more undesirable for Americans to settle in an area...
Well actually from 500,000 annual to 1 million annual. Still far below the 50 year run rate of 1.5 million average annual.
Not exactly as vacancies are down significantly and are the lowest they have been since 2007:
Example, I have an escrow with a home on commercial zoned property. The buyer is solid, 20% down on a conventional loan. The underwriters for the bank are putting a hold on the loan for the manager of the underwriters to review. It has been a week as we scramble to find comparisons and they are strict on what they want. I fear they will turn down the loan due to the "house", not the buyer.
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