Skip to comments.Guess Who Is Propping Up The US Housing Market
Posted on 06/23/2014 8:14:51 AM PDT by PoloSec
A month ago we showed a chart that, in our humble opinion, summarized all that is wrong with the US housing market. The chart in question showed the April breakdown of existing home sales on a Y/Y basis by pricing bucket.
Needless to say, what the chart showed was the symptomatic, and schizophrenic, breakdown of US housing into two camps: the housing market for the 1%, those costing $750K and above, where the bulk of transactions are mostly between non-first time buyers, and typically take place as all cash transactions, and the market for "everyone else" which continues to deteriorate.
Moments ago the NAR released its May data, which on first blush was widely lauded as bullish: the topline print came at a 4.9% increase, rising from 4.65MM to 4.89MM, above the 4.74MM expected. Great news... if only on the surface. So what happens when one drills down into the detail? As usual, we focused on the last slide of the NAR breakdown, located at the very end of the supplementary pdf for good reason, because what it shows is hardly as bullish.
So how does this "housing recovery" in which the NAR has proclaimed the "sales decline is over" look on a granular basis.
The answer is below, and it is even worse than the April data. It also explains why first time buyers have dropped to even further cycle lows of just 27%, down from 29% both a month and year ago.
This is bad because while in April there was a modest increase sales in house buckets from $250 all the way up to $1MM +, in May the only bucket that had an increase in sales from a year ago was that exclusively reserve for the ultra-richest, i.e., those who benefit the most from the Fed's non-trickle downing wealth effect policies. In fact, on a price bucket basis, the May data was unformly worse than April!
The logical follow up question: what is the total percentage of sales by given price bucket? The answer, once again, below.
Housing recovery? Maybe for the richest, and even they are far less exuberant about purchasing $1MM+ mansions. For everyone else, enjoy "plunging" hedonically-adjusted LCD TV prices. Everything else is, well, noise.
I didn’t know The Guess Who was IN the U.S. Housing Market.
What you’re seeing here is people pulling their money out of stocks and bonds and putting it into hard assets. Question for the interested student. Does anybody know why the people who can are doing that?
Well, they did sing "American Woman."
My guess: the Fed has been pumping up the Stock Market for years now. It is due to crash. In fact, many millionaire and billionaire investors started pulling out months ago.
Retirees are living off their investments, and hoping more people who are still working will pour more and more of their ever decreasing disposable income into stocks, bonds, IRAs, and 401Ks. But at some point, the market will realize this is unsustainable.
” Question for the interested student. Does anybody know why the people who can are doing that?”
They see huge inflation on the horizon?
“They see huge inflation on the horizon?”
Inflation is defined as too much money chasing too few goods. People tend to stock up on consumables like toilet paper and maybe cars.
Hyper-inflation is people diving out of paper currency into hard assets that have tangible value; generally homes and land. Possibly gold, old coins, bullion...cartridges.
No thanks. Still mulling over this guy’s BS from yesterday or so about Bush lying about”mission accomplished” and WMD.
I am guessing it the FED!
Inflation is defined as an increase in the money supplies. True wealth, the supply of goods and services hasn’t increased, but the number dollars has increased, which drives up prices first in the industries/markets where the new money is injected. In our current bubble, money has been injected into the stock markety creating “record highs”. Everything underneath is crumbling. When it crashes no one knows.
You have some good answers already. However their is a lot of discussion about should their be another major "correction" their would be the engulfing of all qualified assets into what will be SSI on Steroids in an equity swap to that people could be made whole. Why have an annuity with Government when you can still hold your own asset would be a reason.
Also if their is an actual gain on high end homes, if they stay in it 2 years, their is 500k in Cap gains tax free.
This would be an extension of the pump and dump we saw from "DINK's" between 2000 and 2006 as the over 50 crowd was buying and living in it for two years and flipping it, in the large / high dollar McMansions market and other types of high end homes...
No sugar tonight in your coffee...