Existing Home Sales
A: Market players call it stabilization. Lets just review and you can draw your own conclusions based on the data released today by the always trustworthy NAR.
Here are the datapoints for Existing Home Sales (Yahoo Finance):
* Existing Home Sales Hit 9-Year Low
* Sales of Existing Units Fall 0.4% From December & Down 23.4% From Year Ago; slowest sales pace on records going back to 1999
* Median Prices Drop 4.6% From Year Ago Level of $201,000
* Total Housing Inventory Rose 5.5%
* Supply Hits 10.3 Months Up From 9.7 Months in December
Rumor is stocks rallied on this news amidst signs of stabilization and a bottom forming in housing. Im a bit verklempt! Talk amongst yourselves. Ill give you a topic. The housing market is neither bottoming or stabilizing.
DISCUSS!
Posted by Joel
Mon Feb 25th, 2008 12:23 PM
You are wrong Noah! Those statistics clearly show a bottom is forming. I can see it already, it is one of those 'U' shaped bottoms except and the bottom keeps on bending downwards.
Its so clear.
Posted by Brenda
Mon Feb 25th, 2008 12:26 PM
I've quit even looking at the stock market. It seems to have little to no corresponding relevance to the current state of the economy. Half-a**ed rumors can cause a 200 point gain, with nothing but Gasparino's hot air to inflate the prices. (OK, so I peaked, but now I'm done). You'd think that after two years we'd have moved beyond denial, to despair. Wait, that's just what happened to the American consumer. Could their overlords be too far behind?
Brilliant Coffee Talk reference.
Posted by Noah
Mon Feb 25th, 2008 12:48 PM
this is a clear example of how a tightening of lending underwriting standards affects the buyer pool. It restricts it.
Posted by jeff
Mon Feb 25th, 2008 12:51 PM
So these numbers still stink, but they aren't falling off the cliff as fast as before? For that we should be grateful? I saw an interesting article in Seeking Alpha talking about the San Diego county housing market, where according to the Union Tribune "34 percent of resale homes were previously in foreclosure and 9 percent were in default. Nearlly half of all resale houses and condominiums were sold at a loss from where they were last purchased. The median loss was about 25%." According to the article, 5.2% of resales in January 2007 were in foreclosure, the December 2007 number was 31.2% Be wary of the NAR numbers, they are being propped up by bottom fishers, some percentage of whom are late night TV "short sale" investors who are likely to be drowned by the anvils they just bought. The others are bargain hunters, who sat out the boom and are trying to scoop up "bargains". In my experience asset cylces don't end until people hate the asset, not while they are tripping over each other to catch a falling knife.
Posted by brm
Mon Feb 25th, 2008 01:52 PM
We need the Dow down about 600 points - in 1 day - before these people stop talking like idiots.
Posted by Pool Shark
Mon Feb 25th, 2008 02:41 PM
If the Case/Shiller graph showing inflation-adjusted home prices since 1890 is any guide; the bottom will come in, wait for it...
2013.
Posted by Noah
Mon Feb 25th, 2008 02:44 PM
ratings agency affirms AAA on MBIA on capital infusion plans...not sure about Ambac yet.
Posted by mike
Mon Feb 25th, 2008 04:11 PM
Ambac is about to get the $3 billion in capital it needed to get it's AAA back from Fitch. They might be ok too.
Pool shark, i think its more like 2012 based on that graph. Not a big difference. However, that's real prices, not nominal. Debt gets cheaper as inflation goes up. If you're leveraged to 80%+ and hold on through all the inflation, your monthlies actually go down. Real profit or not, if you make $200k on a studio you bought for $500k in 2007 because a euro is worth $5, you still feel like you made a profit - you just might not feel like you're wealthier. It's the psychology of wealth vs. actual gaining wealth.
Posted by uwsider
Mon Feb 25th, 2008 09:09 PM
This is getting scary.. bank runs?
http://online.wsj.com/article/SB120398607404892133.html?mod=hpp_us_whats_news
FDIC Readies for a Rise in Bank Failures
By Damian Paletta
Word Count: 657
WASHINGTON -- The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
Posted by Noah
Tue Feb 26th, 2008 09:54 AM
uwsider - yes, it is still ugly out there and this process is still playing itself out. Its clear that we are still in very uncertain times, but bond insurers ratings affirmations did add a bit of clarity and did remove a big threat, at least for now