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I never thought I would contemplate the end of the housing market decline -- it's been with us for a very long time.  But now there are preliminary signs of stabilization.  Let's look at the charts.

The existing home sales chart has two important areas.  The first lasted from roughly October 2007 - October 2008.  Notice that during this time sales were relatively steady.  Then came the downturn caused by last falls financial crisis when sales dipped.  But now we're again seeing signs of stabilization.

New home sales have been dropping for three years.  But notice that sales levels have been consistent since the beginning of this year.  In addition, sales ticked up 11% last month.  

Like new home sales, housing starts experienced a long decline.  But, they have been steady since the beginning of the year (albeit at a low level).

Finally, we have the Case Shiller price index:

Prices are still declining year over year.  However, notice the rate of year over year decline has turned upward -- meaning the rate of year over year decline slowed last month.  And the reason is the month to month prices rose last month:

U.S. home prices rose in May on a month-to-month basis for the first time since July 2006, according to the national Case-Shiller home price index released Tuesday.

On a month-to-month basis, prices in 20 selected cities rose 0.5% in May, with increases in 13 cities, compared with a decline of 0.6% in April.

The blog Calculated Risk has proposed the theory that we'll see two bottoms in housing -- one in sales and one in prices.  The above charts bear this theory out.

Now, there are still some big issues out there that will prevent the market from going gangbusters for some time.  The US consumer is de-leveraging, there is a ton of housing inventory we have to go through (including the shadow inventory on banks' balance sheets) and the banking system is still recovering from a near fatal set of conditions.  In other words, stabilization at current levels or slightly higher is the most likely course of events.

This is the first month to month increase we've seen in a long time, so its too early to call it a trend.  But when that increase is combined with the steady sales pace we've seen along with the bottoming exhibited in the above charts its looking like a bottom might actually be in.  

Originally posted to bonddad on Wed Jul 29, 2009 at 05:52 AM PDT.

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Comment Preferences

    •  Tipped and Rec'd... (20+ / 0-)

      for doing reality based diaries that will incur the wrath of the D&G DKos Team...

      Obama - Change I still believe in

      by dvogel001 on Wed Jul 29, 2009 at 06:17:19 AM PDT

      [ Parent ]

    •  While I appreciate (24+ / 0-)

      your and Bill at CR's analysis neither of you seems to take into account the huge amounts of foreclosures coming down the pipeline in the very near future.  The loan modification program is a complete joke, I know I'm trying to do one now.  It is little more than a scam being used by unscrupulous servicers to put more people into default.  They sign you up, tell you not to make a payment until the trial period payment then they lose our paperwork over and over and over again.  By that time your credit rating is shit because the trial payments are not applied to the mortgage until it is "approved", which it will never be because they conveniently lose the paperwork over and over and over.  SCAM ARTISTS

      ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

      by Kristina40 on Wed Jul 29, 2009 at 06:24:17 AM PDT

      [ Parent ]

      •  You need to find an attorney (4+ / 0-)
        Recommended by:
        Phoenix Woman, Yoshimi, dditt, Kristina40

        there are a ton of scam artists out there, but the program itself is sound, if you find someone who is willing to administer it the way it's intended. Sorry you got taken for a ride, but don't blame the program, blame the people who scammed you. My parents were getting into the same situation, and hopefully we've fixed the damage, we'll see.

        Dance like no one is watching with one fist in the air... We are stronger than everything they have taught us that we should fear.

        by Surly Cracker on Wed Jul 29, 2009 at 06:27:21 AM PDT

        [ Parent ]

        •  I am in the Federal Program (23+ / 0-)

          and it is my own mortgage company doing the scamming (Saxon aka Morgan Stanley).  If you google Saxon and scam loan modification you can find horror story after horror story.  I am working with a reporter for Mother Jones now to expose these creeps for what they are.

          ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

          by Kristina40 on Wed Jul 29, 2009 at 06:30:12 AM PDT

          [ Parent ]

          •  That doesn't suprise me (2+ / 0-)
            Recommended by:
            Phoenix Woman, Kristina40

            when my folks called their mortgage company to ask about the loan modification, they were told "we're not participating in that program," as if it were something the company had discretion over.

            You can understand why your mortgage holder wouldn't be thrilled with the prospect of helping you pay them less money, right? Not that it's ethically or morally OK, but that still makes sense to you, no?

            If you're still in trouble, I'd recommend getting on the HUD website and finding an approved third-party administrator in your area:

            http://www.hud.gov/...

            Anyway, good luck and I hope MJ nails the bastards, but it will be cold comfort if you're reading it in an apartment or something after losing your home. I wish you the best, just keep fighting.

            Dance like no one is watching with one fist in the air... We are stronger than everything they have taught us that we should fear.

            by Surly Cracker on Wed Jul 29, 2009 at 06:39:58 AM PDT

            [ Parent ]

            •  The less money part is (9+ / 0-)

              being subsidized by the government so in reality they really are not getting less money.  My servicer had the balls to call me the day the Federal program was passed to offer me a loan mod of their own, they offered to freeze my rate for five years at the current rate of 10.22%.  I laughed at them while I hung up the phone.  They did this to more than just me, they were trying to get people to lock their rates before news of the fed program got out.  If your rate is locked you don't qualify for the Fed program...I asked them about the Fed program when they called and they said "We don't know anything about that"...Sure they didn't LOL...

              ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

              by Kristina40 on Wed Jul 29, 2009 at 06:45:02 AM PDT

              [ Parent ]

            •  I've already filed a complaint (8+ / 0-)

              with SigTarp for abuse.  They just called me again last night to tell me they hadn't received my paperwork.  I informed the caller that they are supposed to be "investigating" how they lost the paperwork as their employee signed for the paperwork and I have the tracking number and name of that employee.  I'm thinking of going after the employee personally to shake things up.  That package they "lost" has all my financial data, tax docs, pay stubs etc in it...

              ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

              by Kristina40 on Wed Jul 29, 2009 at 06:54:19 AM PDT

              [ Parent ]

              •  damn. (2+ / 0-)
                Recommended by:
                Phoenix Woman, Kristina40

                What a mess. Well, like I said, just keep fighting.

                It just goes to show, whenever there's money to be had, the greedy financial leeches will go to any length to get it, including trampling us in the process. It's in their short-term "best interest" to get you out so some investor can snap up your home and pay them in cash for 1/2 what it's worth. The great liquidation has begun.

                Don't let the bastards get you down.

                Dance like no one is watching with one fist in the air... We are stronger than everything they have taught us that we should fear.

                by Surly Cracker on Wed Jul 29, 2009 at 07:00:07 AM PDT

                [ Parent ]

                •  I'm in a particularly precarious (6+ / 0-)

                  position because I am NOT underwater in my mortgage. It is still worth more than I owe.  Foreclosing on me would be profitable for them...

                  ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

                  by Kristina40 on Wed Jul 29, 2009 at 07:02:26 AM PDT

                  [ Parent ]

                  •  yup (1+ / 0-)
                    Recommended by:
                    Kristina40

                    My folks are the exact same position. They are just financially sound enough that they don't qualify for any help, and just bad enough that they're facing foreclosure and bankruptcy, after which they'll ironically qualify for all the things that could help them now.

                    All the people that refi'd and got upside down, all the people that speculated and bought too much house, all the irresponsible folks (and all the ones that got cheated and lied to and bullied by the crooked mortgage sellers, let's not forget them) walked away from this mess in 06-07, and left it in the lap of people like you and me who pay our bills and want to keep our homes, which are now worth next to nothing. Or, they're being targeted for federal dollars to save their ass, while folks that DIDN'T make irresponsible decisions are left to mop up.

                    And when the President tries to come to our rescue, pass a bill that will allow people to do just that, you can count on the banks to find a way to turn our relief into their profit.

                    Hey, if that reporter wants to talk to a family in Naples, FL, (the bleeding center of RE speculation) who have lived there 5 generations and are being forced to leave town because of the market, my email is in my sig. It sounds like they're going through roughly the same thing you are, and I'm not confident after hearing your story it's going to turn out well for them.

                    Good luck, K40, sorry I don't have any better advice.

                    Dance like no one is watching with one fist in the air... We are stronger than everything they have taught us that we should fear.

                    by Surly Cracker on Wed Jul 29, 2009 at 07:44:21 AM PDT

                    [ Parent ]

                    •  I'm sure he would love to hear fromyou (2+ / 0-)
                      Recommended by:
                      tmo, Surly Cracker

                      He is trying to find as many people as possible that are being given the run around on the loan mod program.

                      akroll@motherjones.com

                      hit him up, he's a great guy and he is working really hard on this story.  

                      ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

                      by Kristina40 on Wed Jul 29, 2009 at 07:55:09 AM PDT

                      [ Parent ]

                      •  Have you posted a diary about this? (3+ / 0-)
                        Recommended by:
                        NYFM, Kristina40, Surly Cracker

                        I bet lots of other Kossacks would be interested in reading your story. And it might flush other people out who could help the Mother Jones reporter.

                        Californians: The Courage Campaign is working for a better budget and changing the 2/3 budget rule. Go!

                        by tmo on Wed Jul 29, 2009 at 08:21:52 AM PDT

                        [ Parent ]

                      •  Is he also talking to immigrants (and non-English (3+ / 0-)
                        Recommended by:
                        Odysseus, Kristina40, Surly Cracker

                        speakers) who bought homes at the height of the market? Or, maybe you don't know that?

                        The woman who used to work for me and who speaks very little English is going through what sounds eerily similar to your nightmare. But she and her husband don't speak much English and so can't even engage the system, if it can be called that, effectively. Unfortunately, the small town they live in has one agency that works on behalf of Spanish-speaking immigrants, but only on behalf of day-laborers, which she and her husband are not. So they are in the middle of all of this confusion that's difficult enough for native speakers to deal with, without the language skills, and close to people they know can help but who that won't help them because they don't work in the fields.

                        Aargh. Had I not had to leave town, I would have tried to help them. They are wonderful folks trying to, as most of us are, get along, feed and educate their sweet kids, etc...

                    •  If you really want to get pissed (3+ / 0-)
                      Recommended by:
                      Cassiodorus, BYw, Surly Cracker

                      Here is a post made by an ex Saxon loss mitigator...He explains all the shady shit they pull and why he quit.  I've contacted him as well to put him in touch with Andy.

                      http://www.complaintsboard.com/...

                      ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

                      by Kristina40 on Wed Jul 29, 2009 at 08:21:16 AM PDT

                      [ Parent ]

                      •  Here is the money quote (1+ / 0-)
                        Recommended by:
                        Surly Cracker

                        "When i say clear up...i mean to get rid of "off of the report" by any means possible. They will deny your file due to financials. Even though they are going off of old financials. They will also deny your file for no contact when they aren't calling every number on the account and will call you at home when they know you are at work. Than you will be lucky to be able to talk to your "negotiator" when you call them back and if you leave a message...don't think that the negotiator heard the message because the mojority of them just erase the messages without listening to them. Once you have been told that your mod has been approved, there is a good chance that the file gets lost somewhere in the process and (more than likely) all of the docs that you have sent in have not been scanned and you will have to resubmit them. I can remember when they were hiding boxes apon boxes of files when investors would come through or when Freddie Mac visited them. I couldn't handle it anymore and did not want to be a part of it so I left. Don't get me wrong, there are some negotiators and managers that care but, they are few and far between. When a negotiator approaches a manager to discuss the problems the mangers are either no where around..or it goes in one ear and out the other. Saxon is more about looking good to the investors (hiding files or just denying files to get off of the report) and not even considering the effects of thier actions to the homeowner."

                        HIDING boxes of paperwork from F and F inspectors...I guess I know where my paperwork is...

                        ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

                        by Kristina40 on Wed Jul 29, 2009 at 08:23:58 AM PDT

                        [ Parent ]

                        •  What a sad state of affairs. (0+ / 0-)

                          I'm going to look at that whole thing as soon as my schedule allows. I'm glad you're going forward with your story, and I hope that not only everything works out for you, but that your story will keep others from being robbed. If nothing else, you've helped me and my folks keep a watchful eye over the details as they move forward, so thank you.

                          Dance like no one is watching with one fist in the air... We are stronger than everything they have taught us that we should fear.

                          by Surly Cracker on Wed Jul 29, 2009 at 09:29:40 AM PDT

                          [ Parent ]

                          •  Another thing (1+ / 0-)
                            Recommended by:
                            Surly Cracker

                            make sure they document every contact they have with their mortgage company.  Keep track of papers that are sent and make copies of EVERYTHING.  Should it end up in court this will be their only defense.  Document phone calls and make sure they get the name of the employee and id number of that employee every time they speak with a representative.  In other words, make sure your parents are covering their asses should it come to courtroom.

                            ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

                            by Kristina40 on Wed Jul 29, 2009 at 09:32:06 AM PDT

                            [ Parent ]

          •  That's Terrible (2+ / 0-)
            Recommended by:
            NYFM, Kristina40

            My own counterstory:

            We have an FHA mortgage and got a streamline refinance that didn't require an appraisal.  We got a 30-year fixed rate of 5%, and our monthly interest savings will cover the closing costs in two yers.  It couldn't have been easier.  

            Wells Fargo was our original lender.  They weren't doing streamline refis, so they referred us to George Mason Mortgage, a local Northern Virginia shop.  It couldn't have been easier.

            We were at the time being solicited by many other banks as far away as Michigan, but for safety's sake I stuck with mortgage officers I knew.

            •  Was that via the home affordable plan? (0+ / 0-)

              The problem with the refinance end of the program is many of the predatory loans didn't go through F and F so we don't qualify for the refi only the loan mod program if our lenders participate.

              ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

              by Kristina40 on Wed Jul 29, 2009 at 07:13:37 AM PDT

              [ Parent ]

              •  I don't know (2+ / 0-)
                Recommended by:
                Phoenix Woman, Kristina40

                It was FHA-specific.  Here in Northern Virginia, middle-class homes can easily run $600K or more (I'm talking split levels built in the Seventies on small lots.  I saw our exact home model pictured in a Chapel Hill, NC article on real estate assessments that asked "Is this house really worth $156,000?"), so we had to wait to see whether or not the $729K limit on modified jumbo loans would be continued in 2009.  

            •  Wells Fargo stonewalled (3+ / 0-)
              Recommended by:
              NYFM, BYw, Kristina40

              When I tried to refi when the rate for 30 yr fixed was at 4.75.
              When it got up to 5.7 they suddenly decided they could and asked for proof of income, proof they already had.
              At that time it was too late as I had started bankruptcy proceedings.

              •  Sadly that story (1+ / 0-)
                Recommended by:
                BYw

                is being played out over and over again right now. I did a diary last week when the nightmare scenario started to play out for me.  I was shocked to find how many others are being treated the same way considering how the program was touted as the greatest thing ever to save homeowners from foreclosure.  Instead, it is helping to put people into delinquency...

                ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

                by Kristina40 on Wed Jul 29, 2009 at 07:17:43 AM PDT

                [ Parent ]

        •  There IS something wrong with the program (4+ / 0-)
          Recommended by:
          NYFM, Brooke In Seattle, BYw, Kristina40

          if it is so easy for scam artists to weasel their way into it and yet again rip people off.  Way wrong.

      •  Also, this so called 'housing recovery' (2+ / 0-)
        Recommended by:
        BYw, Kristina40

        is built on 0% Fed bank rates, which makes it all the more disturbing.

    •  The intermediate to long term future almost ... (8+ / 0-)

      certainly includes less available mortgage credit not more. Mortgage rates are most likely going to be higher not lower in the future.

      And finally, incomes in terms of purchasing power across the board will be lower 5 or 10 years from now than they are today probably signifigantly so in real terms.

      So how does less available mortgage credit, higher interest rates and less overall income to use to pay for housing translate into higher overall real estate prices (or even stable prices for that matter)?

      Once the temporary and unsustainable support for housing is cut back and the market continues to takes care of increasing rates and reducing American incomes housing will continue to bleed for a long time. Housing in general will see no meaningful appreciation in real terms for a generation at least IMO.

      But a dead cat bounce is to be expected here and there for sure.

      "I am on nobody's side because nobody is on my side" -Treebeard

      by waf8868 on Wed Jul 29, 2009 at 06:26:38 AM PDT

      [ Parent ]

    •  Vacant U.S. homes only at 18.7 million (10+ / 0-)

      plus 4.3 million units added to rental inventory.

      Yeah right the the Housing Market is Bottoming....

    •  An outlier in the second derivative -- a bottom? (10+ / 0-)

      Be real.

      This data is in the weeds.

      You can't even begin to talk about inflection points until there are a few more months of data, plus the post-mortem corrections that will follow.

      Sheesh.

      Do you play poker?  I'd love to play poker with you.

      Happy little moron, Lucky little man.
      I wish I was a moron, MY GOD, Perhaps I am!
      -Spike Milligan

      by polecat on Wed Jul 29, 2009 at 06:46:45 AM PDT

      [ Parent ]

    •  Caclulated Risk (6+ / 0-)

      which is probably the single most important blog to read right now, argues as you note that there is a second bottom coming.

      The question on home prices is the same question on weekly unemployment claims.  Both show improvement, but that improvement may be distorted by seasonal revisions, which may of may not be hiding the real truth.

      Personally, I can't get too excited about any of this until the employment market shows job growth and corporations report revenue growth instead of earnings growth.  

      If the bottom is close, though, the banks will benefit...

      The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

      by fladem on Wed Jul 29, 2009 at 06:59:46 AM PDT

      [ Parent ]

    •  Well I am not an expert but my husband is & (2+ / 0-)
      Recommended by:
      Timaeus, Brooke In Seattle

      he has said repeatedly lately, especially after the release of the recent home sales and says, this is just the calm before the storm. He says to expect another crash in real estate January and the early part of next year. Especially with other factors getting ready to take a dump, such as commercial real-estate. He says the indicators out there show that it will probably be sometime 2013 for things to finally turn around. That is his prediction and he is very knowledgeable in that. I am just a nurse.

    •  Is Ice Hot? (1+ / 0-)
      Recommended by:
      Timaeus

      I've read a few of Bondad's recent posts.  In them, he asks a leading question concerning the economy turning around.

      As support for his theory that the economy is turning around, he cherry picks some outlying statistics that he claims shows that the economy is in fact turning around.

      Later in his diary, he will present other data showing that the econonomy might not be turning around.  He then ends on an optomistic note.

      When pressed by commenters who highlight the data showing that his thesis, here that the housing market is bottoming, is wrong, he can honestly claim that he mentioned the negative data.

      However, the negative data has no effect on his conclusion.  It as if I claimed that frozen water is hot, based only upon my failing to take into consideration the data showing that water freezes at 32 degrees F.        

      •  Yep, you have his current modus operandi (0+ / 0-)

        nailed.

        And the recent chirpy little green shoot diaries are also quite short.

        Back when he was peddling doom & gloom, they used to be ponderous head-scratchers with dozens of charts.

        There must have been a conversion experience in there that we missed.

    •  Hate to break it to you (4+ / 0-)
      Recommended by:
      raboof, Sparhawk, Timaeus, Cassiodorus

      but we're nowhere near bottom.  What we're seeing is a temporary bump up due to the Obama tax rebate.  Most of activity is at low end.

      Basically as Bondad said we're gonna have 2 bottoms in prices and # of sales.  The first which we're kinda of seeing now is in number of sales and that bottom will be like a stone skimming off a lake.  A big drop followed by a slight rise and then a drop and rise and on for a few times until PLUNK! we level off.

      As I said the increase in sales now is largely due to Obama's rebate (much like the cash for clunkers is due for an uptick in auto sales).  As soon as that rebate goes away so do the sales.  I've heard rumblings that it will be extended so that might not be an issue for the time being.  

      Plus we're entering a period when sales completely bottomed out last year so we will see some gains from last year to this year probably for the next 6-9 months.  I would not take that as a positive since basically we're saying we're better off than total hell but we're still freaking on fire. In other words 1 sale is better than none but still significantly less than historic norms.  

      I'd say we are pretty close to the bottom here and we may have reached it already.  It's hard to say but if it gets any worse than it was last October to March then we're royally fucked.  

      The problems here are banks still are not lending and with consumers credit all screwed up, many people do not qualify for squat any more which means less potential buyers.  Plus many people are hurting from job and wage loss. They will not be buying any time soon.  In addition, prices still have not quite erased the artificial gains of the last 10 years from the Gramm bubble which means they're not quite where they should be as far as affordability, especially when one considers the wages in the last 10 years have not gone up and inflation has.  

      Also interest rates are being kept low right now and inflation right now is not a concern but at some point rates will have to go up and that will dampen the real estate market as well.

      In short, while # of sales are going up, they're still historically low and there are many factors contributing to them staying lower than norm for a long period of time.  

      As for prices, well we will see a drop in prices mostly because the activity is mostly at the bottom end.  Unless one HAS to buy, the upper end is not buying.  They're bottom feeding, looking for 40-60% reductions in house and if someone bites then they close the deal.  More sales at bottom coupled with less at top will drop average and median prices.  

      In addition, foreclosures are dragging prices down and will continue doing so for foreseeable future.

      For many reasons, prices will continue to go down wiping out all gains of the last 10 years before levelling off.  We're still a ways off here and the job situation will have to be stabilized before considering a levelling off in the housing market.  

      In addition, if interest rates go up you can all but forget prices going up.  The more you pay in interest, the less you can afford.

      For many reasons I think we're at least 2-3 years from seeing a real bottom here.  

      Conclusion, the number of sales closed will slowly go up only because there are and will be alot of great deals in the next few years due to people experiencing economic hardships and because the gov't is helping.  Basically one person's loss is another person's gain.  However, those increases in # of sales should not be confused with a rebound in housing.  We're nowhere near rebounding, especially when you're talking about prices.  
         

         

      This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

      by DisNoir36 on Wed Jul 29, 2009 at 08:55:06 AM PDT

      [ Parent ]

    •  Worst June new home sales since 1982 (1+ / 0-)
      Recommended by:
      Timaeus

      Consider these charts before you conclude that Residential RE is improving:

      Worst June New Home Sales Since 1982 - The Big Picture

      CONCLUSION:  The best thing you can say is the 2nd derivstive argument — Real Estate is now getting worse more slowly. Expect more price decreases. foreclosures and distressed sales. A healthy market cleared out of excess inventory with genuine price increases is likely years away . . .

  •  a general question finding the bottom (4+ / 0-)
    Recommended by:
    bonddad, Cassandra77, Dallasdoc, Fury

    does not mean that it will immediatley turn around or ?

  •  This is interesting. Is this increase at the (15+ / 0-)

    bottom of the market? I have read that investors are buying up lower cost properties to use as rental housing. I also know that some builders have shifted toward lower cost housing to take advantage of the tax credits for first-time buyers. I would like to know more about the "demographics" of the houses that are selling.

  •  I Sense Friction -- It's A Drag, Man eom (5+ / 0-)
  •  Beats me! (1+ / 0-)
    Recommended by:
    Cassandra77

    Markets are funny things, especially when you're talking about a market where demand is a mix of discretionary and non-discretionary.  

    Al que no le guste el caldo, le dan dos tazas.

    by Rich in PA on Wed Jul 29, 2009 at 06:00:58 AM PDT

  •  Anything to do with the first time (2+ / 0-)
    Recommended by:
    Cassandra77, taonow

    house buyer tax credit?

    _ I've spoken my piece and counted to three._

    by althea in il on Wed Jul 29, 2009 at 06:01:16 AM PDT

  •  I was told by a colleague (1+ / 0-)
    Recommended by:
    jdmorg

    whose brother has been a real estate agent that based upon the holds the banks have on the supply of repossessed properties and their plans for releasing the holds, he said that the all-time lowest price "time to buy" would be between July and October, and prices would not decline any more starting in July.  So this is right on track to what he knew about the banks and their holds on properties in expensivo but housing-market-challenged CA.

    DailyKos: the "Free Ice Cream for Everybody" crowd!

    by louisev on Wed Jul 29, 2009 at 06:01:34 AM PDT

    •  convenient timing... (4+ / 0-)
      Recommended by:
      Sparhawk, taonow, Tam in CA, BYw

      he said that the all-time lowest price "time to buy" would be between July and October

      The $8,000 giveaway expires at the end of November. That sounds a little bit more like marketing than analysis. Is this somebody you trust with objective observations?

      If it is, it would be interesting to go back and ask him if he thinks the tax credit doesn't have an effect on prices, or if he's saying the supply on the market will significantly contract around the time the tax credit is taken away, or making some other observation entirely? He might have been talking about a very specific part of CA, for example, not housing in general.

      I'm not sure how prices can't drop around December-January, because a significant portion of the buying market at the low end will have $8,000 less cash to spend, and price drops at the higher end will be having a larger effect by the end of the year.

      As for my two cents, I think it's likely that increased releases of foreclosed homes combined with rising mortgage rates combined with fewer tax incentives will mean the 'lowest price time to buy' will last for some time, into next year, and quite possibly 2011. It wouldn't shock me if five years from now, (real) prices are about the same in most parts of the country. People buy homes, generally (ignore the last few years; they're the exception that prove the rule), with wages, and wages don't appear to be going up any time soon.

      •  It was the private advice (0+ / 0-)

        of a real estate agent to his own brother, so no, it was definitely not marketing.  My colleague was passing it along to me on behalf of another friend who was contemplating when to buy in the same local area.

        DailyKos: the "Free Ice Cream for Everybody" crowd!

        by louisev on Wed Jul 29, 2009 at 07:55:28 AM PDT

        [ Parent ]

        •  Here's public advice (0+ / 0-)

          Wait. Don't be a sucker. Tons and tons of ARMs and Alt-A loans are waiting to blow up over the next two years. Interest rates are low, which means it's a BAD time to buy. If interest rates have nowhere to go but up, home prices have nowhere to go but down. Additionally, unemployment is still on the increase, and what will unemployment do to home prices?

        •  if questions about why get back to him (0+ / 0-)

          I'd be interested to know.

          As far as reliability, I meant more the chain around the brother. Yes, I was assuming the brother himself was giving his honest opinion to his own brother :) Work colleagues have a way of mistranslating or leaving out information in those kinds of discussions when they're relaying what somebody else said about something...plus, it's quite possible the original agent was simply passing along something that somebody else told him...

          There are two ways prices rise; more buyers can be willing to pay more, or more sellers can restrict supply so the buyers not willing to pay more drop out of the market.

          For those of us who don't live in CA (or FL, or AZ) what we read seems to suggest there are lots of half-empty condo buildings, lots of all-but-officially foreclosed exurban houses, properties being turned into rentals, etc. It's very interesting to hear of people giving family members advice that prices are now lower than they'll be come next year.

  •  Thanks, Bonddad. Good news if true (1+ / 0-)
    Recommended by:
    jdmorg

    People need places to live. Those of us who planned for the long haul years ago, and were fortunate enough to be able to hold on, will welcome the eventual, inevitable upturn.

    Tipped and recommended for the wealth of information.

    "Lash those traitors and conservatives with the pen of gall and wormwood. Let them feel -- no temporising!" - Andrew Jackson to Francis Preston Blair, 1835

    by Ivan on Wed Jul 29, 2009 at 06:03:43 AM PDT

  •  how much of this is people (9+ / 0-)

    grabbing up foreclosures?

    (+0.12, -3.33) agree w/ me or go to redstate. i'm snarking. too many aren't.

    by terrypinder on Wed Jul 29, 2009 at 06:04:05 AM PDT

    •  That's got to be part of it (6+ / 0-)

      but either way it's a good development -- it shows that speculative money sees an opportunity.

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Wed Jul 29, 2009 at 06:06:09 AM PDT

      [ Parent ]

      •  exuse me but wasnt that part (10+ / 0-)

        of the problem in the first time

        it shows that speculative money sees an opportunity.

        never mind just my two pfenning

        •  adsf (12+ / 0-)

          To a big extent yes.  But to a small extent, speculators are part of every market and provide a necessary function.  But, you can't let them get out of control.  

          "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

          by bonddad on Wed Jul 29, 2009 at 06:16:05 AM PDT

          [ Parent ]

          •  where (1+ / 0-)
            Recommended by:
            Kristina40

            we know banks are holding back tens of thousands of homes to artificially pump up inventory levels, so once again numbers arent what they seem.

            (regarding the bank mess) They want to cure the patient but not deal with the disease.

            by dark daze on Wed Jul 29, 2009 at 06:32:15 AM PDT

            [ Parent ]

            •  Reading Comprehension 101 (7+ / 0-)

              Here's what I wrote in the diary:

              "Now, there are still some big issues out there that will prevent the market from going gangbusters for some time. The US consumer is de-leveraging, there is a ton of housing inventory we have to go through (including the shadow inventory on banks' balance sheets)"

              "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

              by bonddad on Wed Jul 29, 2009 at 06:40:20 AM PDT

              [ Parent ]

              •  right (0+ / 0-)

                so why the hard on to call a bottom?

                (regarding the bank mess) They want to cure the patient but not deal with the disease.

                by dark daze on Wed Jul 29, 2009 at 06:57:06 AM PDT

                [ Parent ]

              •  Here's some reading for ya'.... (7+ / 0-)

                From the Automatic Earth Blog and related sources linked to from the primary link, immediate below...

                The Automatic Earth Blog
                Monday, July 27, 2009
                Irrelevance and context

                Ilargi: Well, something must be going on when both the Wall Street Journal and Business Week start seriously questioning the very numbers on new home sales that earlier in the day had the entire American press (including, incidentally, the same Wall Street Journal) and investor community in a exuberant party mood. At the very least it makes one wonder what will happen to the next set of data the happy-talking heads try to cheerlead into a recovery, a recession's end and the salvation of their favorite country and/or planet.

                --SNIP--

                What has been happening in the case of the public manipulation of home sales data is no different from the way jobless numbers are dealt with, or unemployment claims, or just about any statistical data you can think of. They are all bent in such a fashion that a picture emerges that is anywhere from less bad to much sunnier than objective analysis would warrant. Realtors do it with housing numbers, the government with unemployment figures, and the press, until now, has been only too glad to play along.

                --SNIP--

                Perhaps that's what's behind the Journal's decision today. Not, mind you, that it matters all that much anymore. Plenty people by now understand that while new home sales may have gone up by an X percentage in one particular month, with an X+1 error margin to boot, what really counts in the change over the same period last year. And if that turns out to indicate a 23.1% loss, the same plenty people can figure out what the real picture is. Home sales and jobs, like so many things in life, are seasonal.

                And I know that I tip one toe over the line by accusing the media of providing "false" information in these cases. Don't worry, my toe didn't slip, it's right where I want it..

                Information can be classified as "false" when it is intentionally provided outside of, or without, its proper context, if and when that context can or must be presumed to be known by whoever provides said information. Which in turn allows me to perfectly gracefully close with a quote from Mark Hanson which Barry Ritholtz posted earlier at The Big Picture. Right there's all the context you’ll ever need. Here's hoping the Wall Street Journal, and all the rest of the media, get the message it sends before it makes them look ridiculous and be irrelevant.

                And this...

                US Home Sales Numbers Fail Inspection
                Many investors celebrated Monday after June's "surge" in U.S. new-home sales. Alas, it was largely wishful thinking. True, the Census Bureau reported sales up 11% from May. That's a big number, at first glance justifying Monday's 4.5% leap in the Dow Jones U.S. Home Construction Index. But it fails a close inspection.

                First, home sales quite often jump in June, the height of the spring selling season. When trying to gauge the strength of home sales, then, it makes more sense to compare them to the same month a year ago. That comparison is less kind -- sales were down 21.3% from June of 2008. Seasonally unadjusted data show a total of 36,000 new homes were sold last month, the lowest June total since 1982, notes Richard Moody, chief economist at Forward Capital.

                And the Census Bureau warns against assuming too much precision in these numbers, which are based on a sample survey. Accounting for a 13.2% margin of error -- at a 90% confidence level, suggesting the actual error could be higher -- new-home sales enjoyed somewhere between a 24.2% gain or a 2.2% decline from May. New-home inventories are falling, an encouraging development. But inventories are still higher than their historical norm, and there remains an avalanche of distressed sales.

                Little wonder, then, that June's "surging" sales were driven by heavy discounting. The median new-home price -- not seasonally adjusted -- fell 12% in June from a year ago to $206,200, the lowest June sales price since 2003. And it was down 5.8% month on month. To paraphrase Pyrrhus, if sales keep soaring like this, then homebuilders will be utterly undone.

                And this....

                New Home Sales Fall 21.3

                Get ready for another round of bad reporting:

                The $8,000 Fed tax credit (1st time buyers) and a $10,000 California tax credit (new homes only) likely helped out in NHS this month. Falling prices are also contributing to sales activity of the sector, which represents about 15% of the overall housing market.

                Here is the official New Home Sales:

                Sales of new one-family houses in June 2009 were at a seasonally adjusted annual rate of 384,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent (±13.2%)* above the revised May rate of 346,000, but is 21.3 percent (±11.4%) below the June 2008 estimate of 488,000.

                Thus, we in fact know that Sales fell from last year. They were down 21.3%, a number greater than the margin of error.

                The monthly data, on the other hand, is not statistically significant. Therefore we DO NOT KNOW what the change was from last month, as the margin of error is greater than the reported data point.

                The usual suspects got it wrong, as they do every month.

                If New Home Sales are so strong, then can anyone explain why prices are still plummeting? Median home prices dropped 12% year-over-year, and 5.8% from the prior month.

                "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

                by bobswern on Wed Jul 29, 2009 at 07:50:28 AM PDT

                [ Parent ]

                •  adsf (0+ / 0-)

                  1.) Regarding the margin of error issue, notice that the graphs above shown horizontal lines that occurred for at least 6 months.  Regardless of the MOE issue, the numbers (six months of data) are enough to talk about a bottom (especially when sales figures have not moved in that direction for a period of years.)

                  2.) Year over year numbers miss bottoms.  That's one of the big issues right now with people who only use YOY and don't look at month to month.  And as point number 1 notes, there have been six months of horizontal sales figures indicating stabilization.  

                  3.) Regarding the discounting issue, note what I wrote in the diary

                  The blog Calculated Risk has proposed the theory that we'll see two bottoms in housing -- one in sales and one in prices.  The above charts bear this theory out.

                  "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

                  by bonddad on Wed Jul 29, 2009 at 07:58:21 AM PDT

                  [ Parent ]

                  •  But there's more disruption ahead... (0+ / 0-)

                    ...on the high-end of the marketplace, where I'm hearing an easy $500 billion in defaulting McMansions via an anticipated (reasonable) 5% default rate in the Prime sector...and with regard to Option Arm (i.e.: "Pick-a-Pay" mtges., etc.) resets.

                    Perhaps one of the biggest upcoming issues is that these McMansions are expected to stay empty for a very long time.

                    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

                    by bobswern on Wed Jul 29, 2009 at 08:13:26 AM PDT

                    [ Parent ]

                    •  asdf (0+ / 0-)

                      "where I'm hearing an easy $500 billion in defaulting McMansions via an anticipated (reasonable) 5% default rate in the Prime sector...and with regard to Option Arm (i.e.: "Pick-a-Pay" mtges., etc.) resets."

                      When we have facts to that effect, please present them.  Right now it's speculation.  I could just as easily speculate that sales will continue to increase.

                      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

                      by bonddad on Wed Jul 29, 2009 at 08:24:54 AM PDT

                      [ Parent ]

                      •  A simple Google-ing of the following will... (0+ / 0-)

                        ...provide quite a few hundred pieces which confirm:

                        a.) the Jumbo Mtge. market is now becoming one of the biggest problems in the mortgage industry;

                        b.) lower- and mid-range homes are selling a bit...the high-end of the market is pretty much dead;

                        (The 2 realities, above, are the current CW in the real estate marketplace.)

                        c.) And, um....Case-Shiller reported valuation decreases in 12 of 20 markets based upon these same reports which were publicized on Monday, if I recall...

                        Nah, no links other than those provided...in a bit of a rush today...

                        I am in the real world financial services tech business...and the clients call...sorry...gotta' run. I'll try to get back in a few hours or later tonight.

                        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

                        by bobswern on Wed Jul 29, 2009 at 08:38:47 AM PDT

                        [ Parent ]

                      •  I'm in the finance/technology business. (0+ / 0-)

                        It's not speculation.

                        It's a professionally-stated observation of my environment. If you need more validation than this, Google it.

                        And, for someone who's not an economist, please don't lecture me about the proper behavior of one.

                        I don't pretend to be anything other than what I am.

                        BTW, here is who I am, since your incredibly rude, over-the-top rants from the other day--although not posted until after your diary fell off the Rec list--was one of the funniest (and at the same time, saddest) things I've ever witnessed here on DKos:

                        Bob Swern biography

                        early career

                        Born and raised in Trenton, NJ, the diarist majored in political science at Tufts University, where he founded that school's daily newspaper, The Tufts Daily. He sold it to another student (who ended up selling it to the student government) after arranging to have it printed on the presses of the Harvard Crimson.  The newspaper has been published, continuously, ever since.

                        (To this day, only a few dozen people--including Neal Shapiro, who went on to become President of NBC Network News after being Editor-in-Chief of the well-established Tufts' weekly newspaper at the time, the Observer, and then-Engineering Professor John Sununu, the first faculty member to purchase a subscription to the diarist's newspaper, primarily because the paper carried the school cafeterias' menus--even remember this accomplishment of Bob's; the rest, including the diarist more often than he'd like to admit, and/or remember, were way too high at the time. Hey, it was the late 70's.)

                        political experience

                        From 1978, starting out as an intern earning expense money doing political press work for a state representative candidate in Massachusetts, through 1981 (by the end of that year, having four professional political media assignments under his belt, including:
                        --a Boston Mayoral race where he handled press assistant, print, direct mail and radio advertising duties on a David Garth-produced campaign;
                        --Deputy Press Secretary duties in the Connecticut Primary for the Carter/Mondale re-election effort;  
                        --three months as Press Secretary to the eventual runner-up candidate in a last-minute, hotly-contested, four-way race to fill the seat of Father Robert Drinan, who by Papal edict was forced to suddenly retire from the House of Representatives in March of 1980, with the winner of that special election being none other than the then-Back Bay State Assemblyman and now-current House Financial Services Committee Chair Barney Frank, with whom the diarist had also briefly worked the year before on the mayoral race;
                        --and four months as the Carter/Mondale Press Secretary in Michigan in the 1980 general election where he also served as media liaison to the UAW),  the diarist worked with some of the leading Democratic political figures of the era.

                        Among other accomplishments during this early period in his career, Bob spent the better part of two years working, everday, with Boston public relations executive Larry Rasky, who later went on to become Vice President Joe Biden's media consultant for all of his national races.

                        In 1982, at the ripe old age of 25, Swern settled in Greenwich, Connecticut, where he ran a small ad/p.r. business for the next 13 years. His first client was the publisher of a startup stock market newsletter that focused upon the performance of the Standard & Poor's 500, with both the S&P 500 and the newsletter opening their doors the same week. By this time, Swern's career-focus was gravitating towards the corporate sector, but he continued to pickup occasional political projects, in-between the corporate gigs. In early 1984, interspersed among his corporate communications efforts, he handled a few small projects for the Mondale/Ferraro campaign, ending up as the volunteer Press Secretary and Media Director for Fairfield University Political Science Department Chair John Orman's congressional race against Republican incumbent Stewart McKinney in CT-04. In the late 80's, Bob produced the media for Greenwich resident Ned Lamont's successful run for Selectman in that town.

                        All-told, Bob counts 25 professional assignments for Democratic candidates and causes on his lifetime list of accomplishments, as well as a handful of volunteer efforts for folks such as John Orman, mentioned herein.

                        In 2005 and 2006, Orman, a Progressive Democrat who had announced his intention to run in the Democratic Primary against Connecticut Senator Joe Lieberman, stepped aside to clear the way for Lamont's successful run against Lieberman in that state's nationally-prominent senatorial primary. As noted in a recommended diary on this blog, Orman passed away in his sleep just a few weeks ago.

                        corporate work

                        Bob's clients in the corporate media sector, over the years, have included, among many others: American Express, Coldwell-Banker Commercial Real Estate, IBM, PepsiCo, Fujitsu Network Communications and Yamaha Corporation of America.

                        Around 1990, Swern's focus in his ad/p.r. practice shifted almost exclusively towards technology accounts and the utilization of technology (initially, multimedia technology) as a medium. This segued quite naturally with the onset of the popularity of the Internet around 1993.  Both directly, through his own ad/p.r. practice and as a result of participating in third-party engagements with multiple Madison Avenue ad agencies, Swern directed, produced and managed a variety of online projects and initiatives, culminating with two online automotive lending accounts in 2000 and 2001. While Swern was commuting back and forth between the northern suburbs of New York and his offices in Staten Island, driving past the World Trade Center everyday, 9/11 hit and a 90-minute, one-way commute morphed into a 10-hour, roundtrip journey, virtually overnight (in both senses of the word).

                        He disbanded his agency business in early 2002, and took ownership of the credit-granting intellectual property he had created for his agency clients. He's been in the b-to-b-c financial services software business ever since.

                        practical philosophy

                        "With every passing month that I witness Main Street's financial services' needs being ignored (or, even worse, undermined) by big business, I'd like to think we're doing our part to help the middle class take control of their own future via the advanced, independent initiatives that we're now providing to retailers everywhere to keep Main Street's money on Main Street. The financially-sustainable well-being of the middle and lower classes of this country deserve more than an afterthought from a status quo that maintains a regrettably myopic focus upon Wall Street/themselves."

                        Bob considers himself to be a "...devout, pragmatic-Progressive Democrat, definitely from the Joseph Stiglitz school of social consciousness."

                        In October 1980, the Boston Globe's Chris Black posted a feature story on that newspaper's front page about Swern and a handful of other diehard political operatives, including Rasky, whom she described as being "...born Democrats and christened a few days later."  

                        For the past 17 years, Bob has lived in Westchester County, New York with artist and direct marketing product development specialist Bonnie Shaver, along with their ever-present Labrador Retrievers.

                        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

                        by bobswern on Wed Jul 29, 2009 at 10:57:55 AM PDT

                        [ Parent ]

            •  How do you know that and why (1+ / 0-)
              Recommended by:
              Phoenix Woman

              would banks want to "artifically pump up inventory levels"?  I must be missing something because that makes absolutely no sense to me.

              "Not the truth in whose possession any man is, or thinks he is, but the honest effort he has made to find out the truth, is what consitutes the worth of man."

              by Lying eyes on Wed Jul 29, 2009 at 06:46:49 AM PDT

              [ Parent ]

              •  get to create the story (1+ / 0-)
                Recommended by:
                Tam in CA

                Banks hold back foreclosed home from the market, Existing inventory levels then fall, Lower inventory levels is a sign that the bottom has arrived and things are turning around.  By holding back homes and artifically manipulating the inventory levels the banks basically create the "happy talk" story they want to hear.

                Its complete bullshit but that is how our country works now.

                (regarding the bank mess) They want to cure the patient but not deal with the disease.

                by dark daze on Wed Jul 29, 2009 at 06:54:10 AM PDT

                [ Parent ]

          •  The predatory, vulture component... (2+ / 0-)
            Recommended by:
            NYFM, Brooke In Seattle

            of our economy has survived intact. Great news.

    •  Lots (2+ / 0-)
      Recommended by:
      terrypinder, Kristina40

      "Dream for just a second and then do it!" -- Kolmogorov

      by theran on Wed Jul 29, 2009 at 06:28:30 AM PDT

      [ Parent ]

  •  Thank you Bonddad. Anywhere we can see hope... (0+ / 0-)

    that is what people need to see right now.  Unemployment situation so bad and people just think in a very dark way.  We need hope and some light and something positive to look for.

    They tortured people to get false confessions to fraudulently justify our invading Iraq.

    by jdmorg on Wed Jul 29, 2009 at 06:07:03 AM PDT

  •  I've been looking for a home for over 6 months (11+ / 0-)

    Haven't had much luck though.  I've put offers on 7 homes (each had more than 2 acres and needed work), and every time an investor would swoop in and snatch the home out of my hands with a cash offer.   It's maddening.   They take the best deals and leave the crap on the market for the rest of us.  

    Sunshine on my shoulders...

    by pkbarbiedoll on Wed Jul 29, 2009 at 06:12:11 AM PDT

    •  Wait a few months (0+ / 0-)

      at some point, they're going to have to do something with that property.

      Either they're going to take the time and money to fix it up right, or they're not. If they do, chances are pretty good that they'll price themselves right out of the market, and at some point (probably not too far out, either), they'll have to take something, ANYTHING, to stem their losses.

      If they don't fix it up, they're not going to make any money on it, because nobody is going to pay more than what they did - and they might get LESS.

      Unless they actually want to live in it, which is a distinct possibility.

      •  They'll sit on it. (1+ / 0-)
        Recommended by:
        pkbarbiedoll

        These speculators aren't flippers.

        •  Again, sit on it for how long? (0+ / 0-)

          The longer they sit on it, the more money they LOSE. Most speculators today aren't in it for the long haul - they're in it to make a profit and get out. Fast.

          Today's RE market isn't going to be fast turnover, by any stretch of the imagination. Not unless they got the property really, really cheap and it doesn't need much work (not too likely).

          So if they don't want to actually live in it, and can't sell it for much more than what they paid (which normally means you LOSE money), and can't rent it for enough to cover their costs, how long do you expect them to hold onto it when it COSTS them money to do so?

    •  I'd use a different word (1+ / 0-)
      Recommended by:
      Brooke In Seattle

      They're not investors.  They're speculators.

      A terrible beauty is born. --W.B. Yeats

      by eightlivesleft on Wed Jul 29, 2009 at 07:01:51 AM PDT

      [ Parent ]

  •  I crunch numbers for a South FL Real Estate (17+ / 0-)

    organization; It's amazing to me how similar these graphs look on a national level to our local numbers, right down to the month.

    The biggest problem I see right now is that existing home prices are all over the map. Some people are living in 2005 in their imaginations, and it's hurting the middle of the market. (Of course, some people actually BOUGHT in 05, and are desperately trying to get out from under their properties, and that's a different story) Other people are in full fledged panic mode, and dumping properties for practically nothing when they don't really need to.

    The house next door to me used to belong to my wifes' grandparents. They sold it in July 2005 for $249k. It promptly lost $75k in value, and the people living there abandoned it in November 2006. It's now on the market for $95k, a fairly ridiculous price, since it probably appraised at roughly $130-140k.

    On the other hand, our friends bought a house down the street for $178k that's almost identical less than a year ago. There's no rhyme or reason to it.

    The volatility will continue until people have a consistent view of where the market is going, and until the banks, property appraisers, realtors, buyers and sellers all get on the same page and figure out what the hell real estate is actually worth in this country. That being said, the numbers look moderately encouraging.

    Dance like no one is watching with one fist in the air... We are stronger than everything they have taught us that we should fear.

    by Surly Cracker on Wed Jul 29, 2009 at 06:17:26 AM PDT

    •  I cannot imagine what this means (5+ / 0-)

      for property appraisers.  

      The house nearest to us sold in 06 at the very top of the market...a second home that has become a rental that rents for less than they pay monthly by about 500.

      IF we were to put our home on the market (which we are not going to do), I cannot imagine how it would be evaluated.

    •  Any offers at $95k? (1+ / 0-)
      Recommended by:
      BYw

      Did it get trashed before it was abandoned?

      If it is in reasonable condition, the new value for similar homes is something less than $95k, or am I missing something?

      What would that home sold for in 2000? That's the number that will symbolize the real bottom in my mind, because it will be too low.

  •  That graph of price decline looks like (2+ / 0-)
    Recommended by:
    Lying eyes, nathguy

    the intensive care hospital monitor of a near fatal episode.

    and the banking system is still recovering from a near fatal set of conditions.

    If cats could blog.... they wouldn't.

    by crystal eyes on Wed Jul 29, 2009 at 06:18:20 AM PDT

  •  so all the talk of a prime mortgage collapse and (2+ / 0-)
    Recommended by:
    Fury, means are the ends

    commercial real estate collapse, i think being referred to as the second and third wave, are bogus? This economic idiot would really like to know

    They tortured people to get false confessions to fraudulently justify our invading Iraq.

    by tronman5000 on Wed Jul 29, 2009 at 06:22:04 AM PDT

    •  In California, the high end real estate (1+ / 0-)
      Recommended by:
      Aeolus

      has not collapsed yet, and I expect that the downturn will be with us some time, as per the excellent Irvine Housing Blog, which I read daily and highly recommend to anyone interested in the nitty-gritty of our current real estate situation.

      I think that as with many things, how the market is doing depends on where you live. In California the high-end housing stock is growing, with lots of resistance to lowering prices. When prices finally do go down, this will put more downward pressure on the lower end as well.

      Those best informed, and who have called it correctly before, as not expecting the California housing market to bottom out until 2011-2012 at least. The Option ARM wave of disasters is on the horizon, and it's looking like it's gonna be ugly.

    •  They're right (1+ / 0-)
      Recommended by:
      Brooke In Seattle

      There are a few conditions that make me think that this is upturn will be followed by another downturn.

      Here's my take:
      Unemployment is still increasing.  We are at about 10% unemployment, according to the government stats about the percentage of people getting unemployment benefits.  (Of course, this doesn't include people who are underemployed or have "given up" on finding a job/no longer eligible for unemployment benefits).  Some of these are people in well paying jobs, who have not been able to find an equivalent job.  While these laid off workers may have some money stored up to pay for expenses, they will not be able to afford their mortgages soon, unless they find another well paying job.  They will have to sell their homes, or be foreclosed on.  Housing prices will drop when this happens.  I'm guessing the drop will happen in another 4-8 months, when unemployment benefits run out and people start to dip into their savings.

  •  Bondad, you helped us saved us our IRA's (7+ / 0-)

    Just wanted to let you know that we pulled all our money out of the stock market in late July '07 after reading some of your posts. Of course, we did other research as well but the charts and analysis you were posting back then were a great help.

    Thanks for that and for your continuing interest in informing us.

  •  my immediate area may be bottoming (3+ / 0-)

    but what a drop...probably 30% just in the last 6 months (large townhome development in the twin cities), with a total drop since the peak of about 50%. But suddenly a bunch of foreclosures sold at a particular rock bottom price point, and now a couple more have sold slightly higher than that. We'll see. They are suddenly selling very quickly, though. Good for us, as our association is now getting fees again on all these units...

  •  how much of upturn from cherry picking by wealthy (6+ / 0-)

    I'm just wondering what percent of the home sales are by opportunists and speculators picking up bargains? I guess even that can look like a sign of hope to beleagered home owners that have seen their nest eggs turn into piles of crap right before their eyes.
    I hope this trend continues and that some of the stimulus money gets to those who really need help and past the fat cats who eat at both sides of the trough.

  •  so what happens next? (2+ / 0-)
    Recommended by:
    Tam in CA, lgcap

    I do tend to agree with you it looks like volume is leveling. I'm not sure I like the word bottoming, because it sort of implies that there's a 'top' on the other side, but that's a small quibble.

    What I wonder about is what happens from here, as more people lose their jobs, as abandoned properties drag down the values of neighboring ones, as unemployment compensation runs out, as government subsidies like tax credits for first time homebuyers and artificially low mortgage rates and underwriting requirements are taken away, as local taxing entities dependent upon property taxes have to raise rates (or further exacerbate cuts in services), as somebody has to eat the losses that have been incurred from widespread misallocation of capital, and so forth.

    In and of itself, transactions in the housing market don't create any net value; in fact, moving is quite expensive.

    My hope is that we shift our focus from supporting home ownership to supporting affordable housing. The perspective of viewing housing from the vantage point of the NAR has not served us well.

    •  I don't think the problem came from (2+ / 0-)
      Recommended by:
      mochajava13, dark daze

      home ownership it came from the criminals who figured out to manipulate home ownership for immense riches for themselves.

      •  Were you a renter the past decade? (4+ / 0-)

        Since 2000, I've lived in non-owner occupied housing, first dorms, and then apartments. The harassment that us non-homeowners received during the housing bubble was unrelenting. Notions like affordability, or the possibility prices can fall, were like suggesting Bush should be impeached in 2002.

        And, it distracted public policy, focusing on an 'ownership society' instead of delivering services people need, ie, shelter. I would draw a direct parallel between problems in the housing market and the focus on ownership itself as a desired outcome, rather than one of several means to the desired outcome of affordable housing.

        But, more than that, the question is what comes next. Trillions of dollars of paper wealth has evaporated. Somebody has to pay for that. Losses don't just disappear; banks, mortgage brokers, homeowners, taxpayers, owners of dollar-denominated assets; somebody is left holding the bag. It's not a crime like a bank robbery or a car theft where you can recover the currency or property in question. And the longer other things go on, the worse the problem gets, because things like employment have a direct impact on the value of housing. Indeed, before the national 'bubble', local property values in places with high unemployment, like Cleveland and Detroit, had long been falling. At some point, you reach levels of disrepair and abandonment that has spillover effects, dragging down the value of neighboring property, making whole communities undesirable, and so forth.

        •  The losses are being monetized (0+ / 0-)

          by going on to the national debt or the Fed's balance sheet.  (The latter can be unwound later.)

          Without Bernanke's super cool moves, we'd be hosed even worse, but where the house-debt went isn't a secret.

          "Dream for just a second and then do it!" -- Kolmogorov

          by theran on Wed Jul 29, 2009 at 07:22:51 AM PDT

          [ Parent ]

        •  You hit the nail on the head... (3+ / 0-)
          Recommended by:
          NYFM, Brooke In Seattle, washunate

          after Katrina, public housing was demolished, thousands of well-built units, and the feds failed to offer aid to rebuild New Orleans's big stock of rental housing. The home ownership mantra privateers then rushed in to feed us the private property is the best way mantra. The result? New Orleans has the highest homeless rate in the nation per capita.

          Now the feds are rushing in with thousands of housing vouchers..not enough, of course, to be used in private housing...thereby putting a further strain on the private housing stock that is still standing.

        •  I know a thing or two (0+ / 0-)

          about harassment from landlords that would make your hair stand on end. From no heat for entire winters to lack of hot water anytime they want. Even carbon monoxide poisoning. All in the name of trying to clear out tenants who paid a decent amount but not the highway robbery amount the landlord knew he could get.

          BTW my slum landlord is a multi, multi, multi millionaire from collecting from his slum buildings. I always laugh when they try to plead poverty. It's about as far from the truth as you'll ever get.

          •  ha, not that kind of harassment :) (0+ / 0-)

            I meant the ribbing you get when you're in a social class where you can choose to rent or not.

            The way we treat truly poor people is really a separate issue; whether they 'rent' or 'own' isn't really even a linguistic distinction that makes sense.

            That we allow housing like that to exist in a country as rich as ours is infuriating, but that doesn't make it go away.

            However, I would suggest that the 'ownership society' concept does have some important indirect consequences for housing at the very low end.

            First, it means we do very little investment in livable, affordable, decent public housing. There is all kinds of nontraditional housing in this country, from colleges to military bases to psychiatric wards. Some are obviously more comfortable than others, but there's no inherent reason why public, collective entities can't provide satisfactory shelter. When a police officer arrests someone, they have a government facility to which they can be taken immediately, and the state houses some individuals thusly for decades. There's no reason we can't have (more comfortable) emergency housing facilities where someone can walk in off the street and get a shower, a bed, and breakfast, no questions asked. There's no reason we can't have longer term transitional housing facilities to give people a few months to secure their own place.

            Second, it means we tend to treat people like they are on their own, as if bad housing doesn't affect all of us, as if landlords aren't really responsible for their properties. If we provided meaningful supports (either direct rent vouchers, or indirectly, through more substantial safety net payments like unemployment insurance, SNAP, and TANF), people wouldn't get trapped. The very act of being able to move somewhere else incentivizes all landlords to respond more promptly and completely to problems.

            Anyway, that's my two cents. One of the market failures that really makes me sad is how we can have all the resources necessary to eliminate completely homelessness and substandard housing, but we don't have the political will to put them together. We have workers out of work, we have urban real estate that's sitting abandoned, we have capital sloshing around with nowhere to invest, etc.

  •  GEE (2+ / 0-)
    Recommended by:
    scorpiorising, pataphysician

    an upturn in sales in the spring and summer in home sales, who would of thought that.  It ONLY HAPPENS EVERY YEAR.

    Call bottom for the next 20 years Bondad, you'll get it right at some point, then you can add it to your resume talking points.

    (regarding the bank mess) They want to cure the patient but not deal with the disease.

    by dark daze on Wed Jul 29, 2009 at 06:29:48 AM PDT

  •  Honestly (12+ / 0-)

    I think you're looking at a false sense of optimism prior to the final collapse.

    The people are still financially strapped out of work and broke, Nothing has changed in that respect in fact job loses continue to pile on.

    Unless consumers start getting some real money into their hands there is not going to be any turn around.

    In fact as the States start cutting services and jobs to deal with their budget shortfalls the markets are going to degrade even further more companies will take steps to further cut costs through additional layoffs which will weaken even further the already wimpy job market.

    I'm sorry I know you are desperately looking for a ray of hope somewhere but this is just another will-o'-wisp leading you into the swamp of false hope.

  •  no bottom until we stop trying to prevent one (9+ / 0-)

    Now, there are still some big issues out there that will prevent the market from going gangbusters for some time.  The US consumer is de-leveraging, there is a ton of housing inventory we have to go through (including the shadow inventory on banks' balance sheets) and the banking system is still recovering from a near fatal set of conditions.

    Bondad is diarying courageously, but I take the opposite position.  How about these issues:  there are over eighteen million empty houses in the United States; in the bubble areas prices still do not bear a reasonable relationship to incomes and employment; and demographically the Boomers soon will be trying to finance their retirements by selling their homes to smaller age cohorts who are highly indebted or broke.  The housing market never will go gangbusters again.  That ship sailed.  And there will be no bottom until we stop trying to prevent a bottom.

    A terrible beauty is born. --W.B. Yeats

    by eightlivesleft on Wed Jul 29, 2009 at 06:50:08 AM PDT

    •  Agree (2+ / 0-)

      I am in Orlando and one thing that is very apparent to me is that prices here far outstriped wages in the area....it was crazy.  From early 2004 to probably 2006 I saw median prices on new single family homes and townhomes go from an affordable 90,000 or so to over $200,000 in the Orlando area.  They built a lot of high rise luxury condos and started asking for $300,000 to $400,000 for the smallest units.  It was and is crazy.  

      Only after much further price reductions will Orlando get to its bottom and start a slow recovery.

    •  Agree completely (0+ / 0-)

      I think the point of the stimulus isn't to prevent the bottom, but to make the slide down slower, and therefore more manageable.  (In other words: a slow degradation is better than an outright crash.  The government did slow down the crash.) The hope is that some external force will be able to stimulate the economy while the slide is happening.  

  •  There's a fair amount of pent up demand .. (2+ / 0-)
    Recommended by:
    Phoenix Woman, theran

    Americans are expendable.
    We are dying for the sins of Health Insurance Companies.

    by shpilk on Wed Jul 29, 2009 at 06:52:13 AM PDT

  •  5% Thirty Year Rates Must (1+ / 0-)
    Recommended by:
    ManhattanMan

    have something to do with this.

    I hate the banks as much as anyone, and feel that much of our capitalist system is corrupt and degenerate, but this does not blind me to accepting good economic news.
    The Obama Presidency will not be successful or prolonged beyond one term without an economic turnaround.

  •  It's sort of funny, reading Bondad's diaries. (6+ / 0-)

    I get a chuckle out of watching the responses, all the tin foil flying around is going to get someone hurt.

    Americans are expendable.
    We are dying for the sins of Health Insurance Companies.

    by shpilk on Wed Jul 29, 2009 at 07:00:22 AM PDT

  •  A housing bottom means little (7+ / 0-)

    We are at such low levels on starts/sales that a bottom here is still a negative for the economy as a whole, especially since no one is forecasting a recovery of any kind in housing.  Barring the total collapse of the economy, everything bottoms at some point, but BOTTOMS DO NOT EQUAL RECOVERIES.

    •  They might... (0+ / 0-)

      ...if people get confident that there will be no further declines, they may buy houses. This will help a recovery.

      A sector bottoming (or appearing to bottom) helps other sectors because it reduces the general panic.

      But we need to figure out who will buy, and if they have enough money to buy.

      •  Confidence will mean nothing (0+ / 0-)

        unless people actually have money to buy things.  With unemployment still rising, people have less actual money to buy things.  (As much as I want to buy a home, I simply do not have the means to do so.) Unless the  US actually starts producing goods again, we won't see this.  There's only so much credit that a person can have.  

        We will start seeing a more stark distinction between the wealthy and everyone else.  

  •  Case Shiller (4+ / 0-)

    As CR points out, the increase was also a decrease.

    Case-Shiller released the May house price index this morning, and most news reports focused on the small increase, not seasonally adjusted (NSA), from April to May. As I noted earlier, the seasonally adjusted (SA) data showed a small price decline from April to May.

    Case-Shiller reported that prices fell at a 2.5% annual rate in May (SA).

    The media with its "happy talk" continues to look for green shoots, wherever they can dig for them.

    I can live with doubt and uncertainty and not knowing. I think it is much more interesting to live not knowing than to have answers that might be wrong- Feynman

    by taonow on Wed Jul 29, 2009 at 07:04:31 AM PDT

  •  Home buyer incentives (3+ / 0-)

    The new home buyer incentives may have had something to do with the stabilization as well.

    I can live with doubt and uncertainty and not knowing. I think it is much more interesting to live not knowing than to have answers that might be wrong- Feynman

    by taonow on Wed Jul 29, 2009 at 07:06:32 AM PDT

  •  Have to wait and see, but it looks promising. (3+ / 0-)
    Recommended by:
    shpilk, mochajava13, dark daze

    We'll probably know more come November/December.

    "be a loyal plastic robot boy in a world that doesn't care" - Frank Zappa

    by Unbozo on Wed Jul 29, 2009 at 07:08:41 AM PDT

  •  Worst New Home Sales Month Ever (8+ / 0-)

    Via the Barry Ritholtz

    As Floyd Norris noted, "This was the second-worst June since they began counting new-home sales in 1963. It was not quite as bad as June 1982, when the country was mired in a deep recession and interest rates were sky high. Then 34,000 new homes were sold.  There are twice as many households in America today as there were then, so relative to population this was the worst June ever, by far.

    There is a God, but he got an MBA. How else can you explain our world?

    by Aeolus on Wed Jul 29, 2009 at 07:10:27 AM PDT

  •  bondad = unconcern(ed) troll (0+ / 0-)

    :-)

    Better Luck Next Universe.

    by the new on Wed Jul 29, 2009 at 07:11:07 AM PDT

  •  Option Arms and Jumbo Prime (5+ / 0-)
    Recommended by:
    theran, NYFM, buddabelly, bigchin, mochajava13

    are the next round of the tsunamai.

    Subprime is over,  but you look outwards
    and you see a hurricane backwall.

    George Bush is Living proof of the axiom "Never send a boy to do a man's job" E -2.25 S -4.10

    by nathguy on Wed Jul 29, 2009 at 07:11:54 AM PDT

  •  why i disagree with Bonddad (7+ / 0-)

    http://www.calculatedriskblog.com/...

    note how we are in between 2 waves?

    subprime is over and option arm/alt-a is about to come in.

    add in the shadow inventory, and, it's going to be very bad.

    George Bush is Living proof of the axiom "Never send a boy to do a man's job" E -2.25 S -4.10

    by nathguy on Wed Jul 29, 2009 at 07:14:44 AM PDT

    •  Perhaps the market is trying to find a bottom (2+ / 0-)
      Recommended by:
      mochajava13, Tam in CA

      and there's some sort of equilibrium between investors supporting prices by swooping in and buying in cash and the downward drag from everything else. Maybe the next shock will stabilize more rapidly. Wells Fargo is attenuating its problem mortgages so that they don't all reset at once, which will probably help some.

      Even if bonddad is right, I wonder at what cost? What will be the consequence if we become a nation of renters to wealthy landlords? For one thing, Bush will have achieved his Ownership Society. Or, if the investors just hang on and sell when prices recover, it will be yet another transfer of wealth from the less to the more wealthy, more or less exactly at the point when the poor have managed to scratch something together.

      [F]or too many, the cruelty of our system is part of its appeal. - eightlivesleft

      by oldjohnbrown on Wed Jul 29, 2009 at 07:41:43 AM PDT

      [ Parent ]

      •  If people didn't think that renters=scum (5+ / 0-)

        The housing bubble would never have inflated in the first place.

        Visit http://theuptake.org/ for Minnesota news as it happens.

        by Phoenix Woman on Wed Jul 29, 2009 at 07:43:35 AM PDT

        [ Parent ]

        •  landlords=slumlord (2+ / 0-)
          Recommended by:
          oldjohnbrown, mochajava13

          had a part to play as well

        •  Thats not the problem. (1+ / 0-)
          Recommended by:
          oldjohnbrown

          Everyone family should own their own home. There are too many positives to discount that. Renting is a sensible financial issue as an individual, but society wants ownership because it leads to community.

          The problem is we kept freeing up more and more credit. Developers were able to buy land at prices that they themselves drove up, and the only way to make a profit was to put the houses on the market for ludicrous prices which was ok when everyone had basically free money to throw around. The problem is everyone is in debt, and the prices are too high for the incoming workforce which is increasingly unemployed and can not get the same credit for a number macro figures.

          Renters aren't scum, but we have a vested interest in home ownership. The real problem is people started to think their homes had value beyond being a place to live in.

          •  No, that wasn't the problem (4+ / 0-)

            The 30 year fixed-rate mortgage was a deliberate progressive policy to give everyone a shot at a decent investment. Not a bubble-grade investment, but something significant and concrete. It's a completely artificial construction from the point of view of finance: No financier would willingly lock themselves into an interest rate for 3 decades, so the government created the market in recognition of the fact that what most people want most, in financial terms, is predictability and stability, to insulate them from the cyclical and crash-prone financial markets. It was also hoped that the houses would steadily appreciate in value, but they don't really have to for the system to work. They merely have to retain value.

            Most of what the bubble did was kick aside the barrier that the government had placed between ordinary people and big finance and expose people who were unaccustomed to the wheeling and dealing of Wall Street to the full madness of that world. What we are seeing now is that the barrier is still kicked to the side: Investors are taking advantage of instability to snap up lots of houses at unsustainably low prices in a way that bids the prices up over time so that they can sell at a peak and pocket the difference—meanwhile, exposing all the people who just want somewhere to live to all the booms and the busts and the hustling that they have neither the time nor the inclination nor the temperament nor the cash reserves to deal with.

            I read Atrios enough to be skeptical of the idea that we can or should all have houses. Density has its perks and its efficiencies, particularly in terms of environmental footprint, walkability and mass transit planning. But even if all you're buying is a condo (or what New Yorkers call an apartment) the long-term fixed-rate mortgage should be the norm again, and there should be a renewed effort to insulate people who depend on their Friday paycheck from the chaos and instability of high finance to the extent possible.

            Sadly, I don't see Obama doing this without a great deal of pressure. He's clearly hoping that it's possible to tweak the unregulated financial world around the edges to make it more humane. It isn't.

            [F]or too many, the cruelty of our system is part of its appeal. - eightlivesleft

            by oldjohnbrown on Wed Jul 29, 2009 at 08:56:02 AM PDT

            [ Parent ]

          •  What about people who can't afford it? (2+ / 0-)
            Recommended by:
            oldjohnbrown, mochajava13

            Even when I was married, my husband and I together never made enough money to afford a house. We probably didn't make $50K per year together, so we couldn't ever afford a mortgage anyway. My kids grew up well-adjusted and just fine without big backyards to play in. We went to city and suburban parks to play.

            I am in my 50s and I've never owned a house. I never felt the need to sink so much of my income into a place to put my stuff. It doesn't mean I didn't feel a sense of community for the places in which I lived. I didn't always see that community returned -- by the home owners who lived there -- because there is a curious prejudice against renters, seemingly encouraged by society. That is, I guess we look like irresponsible louts because we don't pony up and buy a house whether we want or can afford one or not. That's why all that easy credit got pushed on people. And look where it got us.

            I lived in the same house for 17 years when I was growing up, and I have never had the desire to to that again. Good thing, since I never could afford it anyway.

            You are right that people began to see their home as a valuable asset, and that added to the way they look down their noses at renters.

            "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

            by Brooke In Seattle on Wed Jul 29, 2009 at 09:00:50 AM PDT

            [ Parent ]

            •  People that rent do not count, (3+ / 0-)
              Recommended by:
              oldjohnbrown, nathguy, mochajava13

              especially politically.

              Look at all the massive giveaways to homeowners at the expense to those that rent going on today.

              •  Amen to that (3+ / 0-)
                Recommended by:
                oldjohnbrown, nathguy, penguinsong

                I've been responsible, and not bought a home in the days of easy credit.  Even with 0% down, I knew that I would eventually be unable to afford the mortgage payments and would be foreclosed on, even if I could afford the payments for a couple of years.  So I've rented, instead of buying something I knew I couldn't afford in spite of a desire to own a place.  

                And now the government is helping home owners, and not helping out renters.  Thanks.  

            •  Rent is another form of the insulation (1+ / 0-)
              Recommended by:
              nathguy

              I was talking about: Rent doesn't fluctuate with the markets, at least not in real time. It's usually fixed for at least a year, and it usually only goes up incrementally.

              There are glaring exceptions, but they're counterbalanced by the fact that, lacking a long-term investment in the property, a renter can move much more easily than a homeowner can, on average.

              I didn't mention them simply because there haven't been a flood of pick-a-pay or balloon rate rental agreements trapping people in their apartment complexes. Rental is a fine and necessary, even preferable option for many people. But property ownership comes with rights, and my concern with the concentration of property ownership in the hands of the wealthy is that the effects can be toxic to the country in the long term. I have no beef with landlords generally; I've had some very nice ones.

              [F]or too many, the cruelty of our system is part of its appeal. - eightlivesleft

              by oldjohnbrown on Wed Jul 29, 2009 at 11:24:17 AM PDT

              [ Parent ]

          •  Your idea that every family should (1+ / 0-)
            Recommended by:
            mochajava13

            own a home has given us suburban sprawl and an unsustainable living model.

            The benefit to society of having a nation of homeowners is way overrated.  

          •  That may be true in the suburbs (0+ / 0-)

            but not in cities.

            I have a community with others in my building, including my landlord/owner.  We also know some of our neighbors in other buildings.  With the exception of the owners who live in the building, we all rent.  

            In my neighborhood, we cannot afford buy a home, or even a condo.  It's simply too expensive.  My husband and I can't afford the down payment, especially not in our area.  

            Just because we can't afford to buy a home doesn't mean that we're not invested in our community.

      •  rent is very rational in pricing (1+ / 0-)
        Recommended by:
        oldjohnbrown

        people won't pay big dollars for rentals,  so the rent income
        helps calculate owners price, so you can do
        Rent vs Own calculations

        George Bush is Living proof of the axiom "Never send a boy to do a man's job" E -2.25 S -4.10

        by nathguy on Wed Jul 29, 2009 at 02:19:35 PM PDT

        [ Parent ]

  •  Significance? (3+ / 0-)
    Recommended by:
    Yoshimi, scorpiorising, mochajava13

    Disclaimer: I am completely ignorant of economics. I am a climate scientist, so accustomed to analyzing plots with a large amount of random fluctuations.

    Just eyeballing those curves it is hard for me to see what makes the current upturns more significant and likely to represent a trend than the numerous other brief pauses in the overall decline. If the downward trend resumes in another month or so, the current upward movement will not look remarkable, just a little more noise in the system.

    Is there a more fundamental reason to believe things are turning around?

    "Don't believe it when they tell me there ain't no cure - the rich stay healthy, the sick stay poor." - God Pt. 2

    by Purplepeople on Wed Jul 29, 2009 at 07:17:41 AM PDT

    •  Go read the diary (esp. the '2 bottoms' part) (1+ / 0-)
      Recommended by:
      theran

      Housing, while still down from this point last year, bottomed out in terms of sales a few months ago; sales have been growing every month since about February.  Prices, however, haven't started to rise again until the last month or so.  

      Visit http://theuptake.org/ for Minnesota news as it happens.

      by Phoenix Woman on Wed Jul 29, 2009 at 07:47:19 AM PDT

      [ Parent ]

      •  One should reserve some judgment (3+ / 0-)
        Recommended by:
        mochajava13, Tam in CA, penguinsong

        Because of all the tampering in the market via mods and moratoria.  When does such a manipulated market clear (which is the implication of this diary)?

        "Dream for just a second and then do it!" -- Kolmogorov

        by theran on Wed Jul 29, 2009 at 07:57:20 AM PDT

        [ Parent ]

      •  Right, but... (2+ / 0-)
        Recommended by:
        mochajava13, makettle

        ... when I look at these various graphs, I can pick out other places where it appeared that things had bottomed out and started moving upward, only to resume falling again a few months later. I can also find points where it seemed like a steady upward trend had ended, only to pick up again a little while later. This is clearly a noisy system.

        So my question is, is there is some outside reason to believe that we have in fact reached a bottom, ie something based on more than wiggles in a noisy curve?  

        "Don't believe it when they tell me there ain't no cure - the rich stay healthy, the sick stay poor." - God Pt. 2

        by Purplepeople on Wed Jul 29, 2009 at 08:08:03 AM PDT

        [ Parent ]

        •  There isn't any (0+ / 0-)

          economics isn't an exact science.  This is all about predicting future trends based on past patterns.  The hope is that because there's been a rise in prices, there will continue to be a rise in prices.  There is no guarantee that this is true, and now way of knowing if this prediction is true until after the fact.

  •  the housing market has dropped.... (4+ / 0-)

    enough so you have speculative buying going on at this point.  Housing is highly market based.  Some neighborhoods never saw a huge decline and even some cities really never saw a drop.  

    I think the housing market will continue to flux.  If gas soars, climate change starts becoming even more noticeable and/or we have some sort of disaster it could drop a lot lower.

    Graphs and trends worked when the world was a more stable environment.  Now we are a schizo human race facing some serious problems.  The housing market is not nearing a bottom.  My guess is that the suburbs will be nearly completely empty or kind of like rogue states in about 20 years since nobody will be able to afford the commute.

    •  Actually, some cities are greening their 'burbs (1+ / 0-)
      Recommended by:
      theran

      Youngstown, Pittsburgh and other cities are tearing down old empty neighborhoods and bioremediating the soil.  Soil that's been cleaned up is used for community gardens; soil that has a ways to go is used for bioremediation crops, including plants that can be used as raw material for biofuels.  Since the soil used for biofuel feedstocks isn't arable land anyway, no actual healthy farmland is being diverted from food production to fuel production.

      Visit http://theuptake.org/ for Minnesota news as it happens.

      by Phoenix Woman on Wed Jul 29, 2009 at 07:52:07 AM PDT

      [ Parent ]

    •  I wonder (0+ / 0-)

      how many large population areas will even exist when sea levels begin to rise.

  •  On this trend I think we need couple more months (2+ / 0-)
    Recommended by:
    mochajava13, dark daze

    before making bold predictions.  I have agreed with many of your assertions to date, but of the charts you present, only the first on existing home sales shows a meaningful upward change. If the trends on new sales and new starts holds another couple of months, then I think we can make stronger a prediction.

    The only thing we have to fear is fear itself - FDR. Obama Nation. -6.13 -6.15

    by ecostar on Wed Jul 29, 2009 at 07:22:56 AM PDT

  •  S&P Worst Earnings Ever Projected for 3rd Quarter (3+ / 0-)
    Recommended by:
    bigchin, mochajava13, TomP

    Via the Big Picture Economics Blog

    With 38% of S&P 500 companies reporting Q2 2009 numbers, on a real basis, earnings have declined over 98%.This is the largest decline on record going back to 1936.

    The folks at Chart of the Day note that if current estimates hold — and that’s a big "if," as  they are most likely too low — then Q3 2009 will see the first 12-month period during which S&P 500 earnings are negative.

    Green Shoots!

    There is a God, but he got an MBA. How else can you explain our world?

    by Aeolus on Wed Jul 29, 2009 at 07:23:41 AM PDT

    •  Ouch (0+ / 0-)

      By the way, the link doesn't work.

      This is what I've been suspecting for a while.  My company has  had a large revenue decline.  I see way too many sales in consumer goods, but no one seems to be buying.  (Sale sections are larger than normal.)

      This is one reason why we desperately need a public health care option.  More  people are going to be losing their jobs, and their health care.  

  •  Yes! n/t (0+ / 0-)

    Love = Awareness of mutually beneficial exchange across semi-permeable boundaries. Political and economic systems either amplify or inhibit Love.

    by Bob Guyer on Wed Jul 29, 2009 at 07:30:51 AM PDT

  •  A few thoughts... (9+ / 0-)

    ...First I know nothing about the economy...

    ...but looking at all your graphs, I see similar upticks in the past during the long downward slide.

    Did I miss the part where you explained why this uptick is different from the previous upticks?

    Or shouldn't it be wiser to wait for a more pronounced upward trend?

    Then: both Atrios and CR have warned us about lots of ARMs resetting this summer, meaning another wave of defaults in the fall. How is this reflected in your model?

    Finally, I gather this entire theory is relying on mortgage availability remaining the same as in the past (in terms of rates, credit scores & downpayments). Do you think that is a realistic scenario?

    Sincerely, I want to believe you but I;d like to know you integrate the above with your prediction.

    OVER HERE: AN AMERICAN EXPAT IN THE SOUTH OF FRANCE, is now available on Amazon US

    by Lupin on Wed Jul 29, 2009 at 07:39:04 AM PDT

    •  Amen. (3+ / 0-)
      Recommended by:
      Lupin, Brooke In Seattle, mochajava13

      Seeing an uptick isn't enough.  

      It is not enough that today is better than yesterday.  We need a rational theory as to why we think tomorrow will be better than today.

    •  Short version of the argument: (4+ / 0-)

      rising number of sales means buyers find the new prices acceptable, and the market is starting to "clear", which will in turn get prices going up again.

      On the other hand, all the stuff you are saying is correct too.  Plus, there is a time-shifting effect of these "anti-foreclosure" programs that mostly put off the inevitable.

      Nobody is totally convincing either way.  

      "Dream for just a second and then do it!" -- Kolmogorov

      by theran on Wed Jul 29, 2009 at 08:09:41 AM PDT

      [ Parent ]

      •  Thank you muchly for the... (2+ / 0-)
        Recommended by:
        theran, mochajava13

        ...explanation... It does make sense that a number of potential buyers are waiting for prices to drop to jump in... If they fell prices have stabilized, then they'll move in...

        But then, of prices drop, they'll decide to wait again... It all sounds very unstable to me...

        OVER HERE: AN AMERICAN EXPAT IN THE SOUTH OF FRANCE, is now available on Amazon US

        by Lupin on Wed Jul 29, 2009 at 08:16:43 AM PDT

        [ Parent ]

        •  You have good intuition (2+ / 0-)
          Recommended by:
          Lupin, mochajava13

          Most real estate discussions ignore the main fact of real estate, which is:

          It is not a very good "buy and hold" investment.

          Basically, it tends to perform just like inflation over very long periods.  This means that personal choices for housing need to be based on a comparison to renting and saving in other instruments, which bounds the "reasonable" price somewhat narrowly.

          Everything else is trying to make money trading on the other main fact of real estate:

          It is very volatile, transaction costs are high, and it's illiquid.

          In other words, if you want to take on all that risk, you can make very good returns if you spotted a mispricing.  But you can also blow up (millions did very recently).

          I'm hardly an expert and make no recommendations, but these are things to keep in mind when evaluating any of these arguments based on charts of what the market is doing: the essential character of this market is big moves that are unexpected by many participants.  Which was exactly the thing you are worried about.

          "Dream for just a second and then do it!" -- Kolmogorov

          by theran on Wed Jul 29, 2009 at 08:28:06 AM PDT

          [ Parent ]

          •  It seems to me that if you can buy a house (0+ / 0-)

            with 3.5% down using an FHA loan there is not so much risk.

            If the market goes down you just walk.

            My view is that the government cannot keep throwing trillions at the housing industry without really screwing up the dollar.

            So once the government is forced to back off, then we will see the last leg down.

          •  Well, that's what happens (0+ / 0-)

            Real estate is one of the last goods that we actually produce in this nation.  Of course it's going to be treated as an investment and not as a form of shelter.

  •  Case Schiller Index shown is misleading, (2+ / 0-)
    Recommended by:
    theran, NYFM

    but is still better than I expected. The 1998 value was 80, now approx 140, about 5-6% annual increase. (National composite) That's what I'd expect a reasonably desirable housing market to produce over that period of time. In other words, properly deflated.

  •  I don't see a bottom yet in Florida...houses not (5+ / 0-)

    selling and rentals not being rented.

    Unemployment in the state going up at the same time as more snowbirds  are permanently leaving for North Carolina.

    "We are a Plutocracy, we ought to face it. We need, desperately, to find new ways to hear independent voices & points of view" Ramsey Clark, US AG

    by Mr SeeMore on Wed Jul 29, 2009 at 07:47:20 AM PDT

  •  Price data is key, sales not so much (1+ / 0-)
    Recommended by:
    tmo

    Sales volume flucuates based on servicers' willingness to liquidate foreclosures.

    The price data is much more reliable because it is a huge nationwide survey.  Its regional weighting does miss markets outside of the top 20, but the data shows a nice smooth curve. I'd expect this index to show prices flat to +3% over the rest of the year.

    Sanctimony thy name is Joe Lieberman.

    by roguetrader2000 on Wed Jul 29, 2009 at 07:57:39 AM PDT

  •  Durable goods (1+ / 0-)
    Recommended by:
    DHinIA

    http://www.bloomberg.com/...

    U.S. Durable Goods Orders Rise Excluding Cars, Planes (Update2)

    July 29 (Bloomberg) -- Orders for U.S. durable goods, excluding automobiles and aircraft, unexpectedly rose in June, signaling manufacturing may expand in the second half of the year.

    Excluding transportation equipment, demand for goods meant to last several years climbed 1.1 percent, the most in four months, the Commerce Department said today in Washington. Total orders fell 2.5 percent, the first decrease in three months.

    While cars and planes will drag down durables, the balance of durables going up is a good indicator of something taking place.

    Americans are expendable.
    We are dying for the sins of Health Insurance Companies.

    by shpilk on Wed Jul 29, 2009 at 08:00:42 AM PDT

    •  More distortions (1+ / 0-)
      Recommended by:
      mochajava13

      Total orders fell 2.5%, yet the headline is Durable goods orders rise.

      More "wonderful" media coverage to "blind" anyone not paying attention. Oh yeah, and also not mentioned was the revisions to last month, which pushed last month's numbers lower.

      BS Media

      I can live with doubt and uncertainty and not knowing. I think it is much more interesting to live not knowing than to have answers that might be wrong- Feynman

      by taonow on Wed Jul 29, 2009 at 09:23:46 AM PDT

      [ Parent ]

  •  The market in Minnesota is especially good. (0+ / 0-)

    Why, I hear that houses in north Hennepin County will soon be selling for 2x, maybe even 3x what they sold for before the bust.  If I had some money, I'd be investing in houses in that area as soon as I could.

  •  Prisoners of graphs... (5+ / 0-)

    that's what we are if we leave the housing, economic, health care policies to those who control and leverage for their personal benefit.

    What is lacking from these diaries is thoughtful analysis of what went wrong and how to correct it. Instead, the diaries seem to be picking through the ruin (yet another one) of so-called free market capitalism that is devastating people, ecology, and our future, searching for glimmers of hope.

    These diaries are more about shoring up the belief system of the diarist, than true economic justice.

    What are needed is a firm desire to reject this laissez faire approach, and press our vision and our desire for a restructuring of the world economy that truly employs a just, economic vision. Anything less is a cop-out and a sell-out.

    •  Result of us "winning' (1+ / 0-)
      Recommended by:
      scorpiorising

      the Cold War.  We thought that "proved" that capitalism is the better system, and a more "pure" capitalism is even better!  And, of course, any form of socialism is bad.  Big government seems socialistic, so decrease the government.  

      We ignored the rise of corporations, monopolies, and fraudulent business practices.

  •  No. n/t (0+ / 0-)

    "History is a tragedy, not a melodrama." - I.F.Stone

    by bigchin on Wed Jul 29, 2009 at 08:20:15 AM PDT

  •  stimulus (2+ / 0-)
    Recommended by:
    NYFM, mochajava13

    does anyone know if the stimulus is playing into this?

    •  Is that rhetorical? (0+ / 0-)

      Of course it is.  The stimulus prevented some foreclosures from happening.  Less foreclosures meant that there would be fewer homes on the market, and that home prices wouldn't fall as far as without the stimulus.

      What remains to be seen is the effect of the increase in unemployment.  Once unemployment benefits run out, people will dip into their savings.  Eventually, the savings will run out.  Unemployment is officially almost 10%; it is likely higher.  Underemployment is even higher.

  •  Isn't there a federal homebuying rebate (2+ / 0-)
    Recommended by:
    Sparhawk, NYFM

    and isn't it about to expire?

    I wonder how much that might have to do with it.

  •  Unlikely (3+ / 0-)
    Recommended by:
    Sparhawk, NYFM, mochajava13

    Several reasons:

    As others have pointed out, seasonal adjustment would render the curve much flatter, or even flate or negative.

    Second, the impact of the tax credit is driving demand.

    Third, whatever gains might have been inching along will likely get swamped as foreclosures continue to increase.

    But as in all things, the local situation is highly variable.  

  •  Let me guess: You're trying to sell your house? (1+ / 0-)
    Recommended by:
    Sparhawk

    Even if the housing market doesn't actually bottom out, I hear prosperity is just around the corner...

    We must pick ourselves up, dust ourselves off, and begin again the work of remaking America.

    by Minerva on Wed Jul 29, 2009 at 08:25:39 AM PDT

  •  The uptick in housing numbes (6+ / 0-)

    Bonddad, you're getting out of your own area of expertise and into mine.  Don't be fooled by aggregate numbers into assuming something is happening that isn't.  What you're seeing in those numbers is a wave of foreclosure sales.  Banks that have been putting off and putting off doing final foreclosures, particularly extending  extra time to defaulting suburban homeowners, are finally biting the bullets and taking the real estate.  One thing that's driving up0 the "average home price" is that so many of the new foreclosures are of subprime and Alt-A loans not in distressed urban neighborhoods, but given in upscale suburbs so that middle-class buyers could delude themselves, at least temporarily, into believing they could afford houses well out of their range.  (One of the great myths is that most sub-prime mortgages were given in urban ghettos, it's just not true, subprimes have been the primary driver of exurban sprawl for the past ten years.)

    "99% of the battles and skirmishes that we fought in Afghanistan were won by our side." ~ Marshall Akhromeyev

    by ActivistGuy on Wed Jul 29, 2009 at 08:31:38 AM PDT

  •  Well one thing we do know.... (5+ / 0-)

    is that about 8 million people have been removed from the available customer base for purchasing a house and millions more of them will also be removed.

    Hmmmmmm, inventories are at all time highs and available customers are declining even after we had to go after sub-prime customers to purchase them. I wonder if in 2012 prices have declined much more and sales are in the tens of thousands a year you'll understand that bottoms can be found in a number of years and not in a period of a few months.

    For instance where was the bottom in 2001 and where is it now? Look at those two data points, they are relavant because the period in between is when sub-prime exploded and then crashed and we had to take on ever increasing amounts of risk in order to sell people houses.

    There simply is no way you can look at the characteristics of the qualified house purchaser and see that we are anywhere near seeing a bottom, housing prices will have to adjust to the employment and income levels that can support them and we are far off from that.

    Not to mention that the federal reserve is the only player purchasing mortgage backed securties at this time, talk to me about a bottom when actual investors are willing to enter than market once again VS the tax-payer backed federal reserve...

    Also, you mention Calculated Risk without mentioning that he thinks that the seasonal factors are wrong for todays market and housing prices will continue to decline in the fall...

    What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

    by laughingriver on Wed Jul 29, 2009 at 08:42:35 AM PDT

  •  THere is nothing good about housing (4+ / 0-)

    prices remaining too high for people to actually be able to afford a house without taking on an unrealistic amount of debt.

  •  FHA and VA (1+ / 0-)
    Recommended by:
    Cassiodorus

    are the only loans that first time home buyers can qualify for these days.  Very few first timers have the 20% you need for a conventional loan.  There is very little money available right now for conventional loans. I think Wells Fargo is the only bank that is making money available for other banks to loan, or so I have been told.

    Anyone who has tried to sell their home to a buyer using a FHA or VA loan will tell you that it is nothing but a nightmare for the seller.  I have my home up for sale and it is at the upper end of where first timers are looking in my area.  My home is 50+ years old and most likely will not qualify for a FHA loan because the well is less then 100 feet from the septic system. Even with all the incentives for first time buyers that are out there, we are seeing very little action.  My agent says our house is the best house in it's price range on the market in our area, but the buyers just are not there.

    Waitress bring me some garlic bread, and a baked potato 'cause its good for my head

    by Borg Warner on Wed Jul 29, 2009 at 09:11:10 AM PDT

  •  Oh those horrible Doom & Gloomers! (2+ / 0-)
    Recommended by:
    mochajava13, makettle

    with their unsightly facts!

    "Our lives begin to end the day we become silent about things that matter." -- Martin Luther King Jr.

    by Cassiodorus on Wed Jul 29, 2009 at 09:26:58 AM PDT

  •  This, of course, assumes cheap housing's bad. (0+ / 0-)

    As somebody about to re-enter the rental market, I love the re-emergence of efficiencies under $400.  Housing prices probably will not recover in the worst-hit markets, and they should not recover.

    Current housing prices are probably right where they should be.  The national Housing Affordability Index maintained by the National Association of Realtors is currently at 159.2, a degree of affordability not seen since 1972.  In June 2009, the Northeast and West had affordability indices in the 130s, which is comparable to levels seen nationally during the Clinton expansion.  Housing in the Midwest and South is more affordable, but this could be where a distaste for speculation, abundant flat land and lower construction costs meet unemployment over 10%.

    2009: Year of the Donkey. Let's not screw it up.

    by Yamaneko2 on Wed Jul 29, 2009 at 09:55:29 AM PDT

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