Sales Up, Prices Down

The foreclosure bubble has hit the local market.

Home sales actually increased from this month last year by about 2,000. But the values continue to tumble. The culprit? Foreclosures. The number of foreclosed homes sold this past month were up 73% from last year.

Bottom line is that people are looking for deals. Banks have a large collection of foreclosed homes they need to get rid of. Put the two of them together and you will see an uptick in sales but a decrease in values as banks unload homes in their inventory.

Slow Housing Recovery

Most of you know that one of the subjects that I blog about is how the housing market is or isn’t doing.  For the most part the news has been a bit gloomy, but showing some sign of recovery, although very slowly.

But according to this clip from Breitbart TV, maybe the news isn’t so good. Link to video here.

I know that many will have the reaction that we need to get rid of the man currently occupying the White House, the sooner the better, but not all of the blame can be laid at his feet. Oh, I do blame him for the sluggishness that has taken hold of the entire economy. But the housing crisis and the slow climb out from the depths had its roots before the guy took office. Has he made it worse? Most certainly! Policies and decisions from the White House that has caused the economy to continuously falter impacts the housing market as much as the housing market impacts the economy. In a way, this is a vicious circle that, until someone does something to bump it off track, will continue for the foreseeable future.

Home Sales Up, Values Down

Once again the real estate market is providing us both good and bad news. Sales continue to show slight upticks and home values continue to be depressed.

Homes sales did show an increase, but some of that might have been brought on as investors are snapping up homes.

Home sales rose 1.4 percent in October to a seasonally adjusted annual rate of 4.97 million, the National Association of Realtors said Monday. That is below the 6 million that economists say is consistent with a healthy housing market and slightly ahead of last year’s sales – the worst in 13 years. (Source: The Oregonian)

On the negative side, values continue to slide.

Most economist say home prices will keep falling, by at least 5 percent, through the rest of the year. Many forecast don’t anticipate a rebound in prices until at least 2013.

The medium sales price dropped roughly 2 percent to $162,500 in October.

The high rate of foreclosures has made re-sold homes much cheaper than new homes. The medium price of a new home is roughly 30 percent higher than the price of one that’s been occupied before – twice the normal markup. (Source: The Oregonian)

For those of us who own homes, this news can be a bit unsettling. Many have been counting on the value of our homes seeing us through retirement down the road. Now it looks like it might be years before the value is returned. But on the bright side, at least sales are moving in the right direction, which eventually will put pressure on the values, pushing them upwards.

Opposing Forces

If we are extremely lucky these two pieces of news will be able to coexist.

Jobless claims dip:

Fewer Americans filed for their first week of unemployment benefits last week, marking continued – but still slow – improvement in the job market.

About 390,000 people filed for initial unemployment benefits in the week ending Nov. 5, the Labor Department said Thursday.  The number of claims fell 10,000 from the revised 400,000 in the prior week, and is now at the lowest level since April 2.

…

“The passing of some of economic weakness is starting to show in a better labor market,” said Michael Gapen, senior U.S. economist at Barclays Capital.

The four-week moving average if initial claims, used to smooth out volatility, is teetering exactly at 400,000. While not an exact science, that number serves as a rough estimate for economists, who say claims below 400,000 could mean job growth has finally become strong enough to start bringing the unemployment rate down.

In a report last week, the government said the unemployment rate dipped to 9% in October, down from 9.1% the month before. (Source: Yahoo News)

Home foreclosures increases:

The number of foreclosures climbed in October, as mortgage lenders started to work through the paperwork that had delayed new filings for much of last year.

…
 

RealtyTrac said one in every 563 U.S. home had either a default notice, a scheduled auction or a bank repossession filing during the month.

“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, RealtyTrac’s CEO. (Source: Yahoo News)

Considering that our economy is pretty much based on a health housing market, I am concerned these two numbers (declining unemployment and increasing foreclosures) are going to struggle against one another.  As long as unemployment stays high, people just aren’t going to buy homes. As long as people don’t buy homes because of fears the housing market still hasn’t reached bottom unemployment is going to have a difficult time recovering.

The final paragraph of the linked article on foreclosures says it best:

The best hopes for stopping foreclosures is an improvement in the overall economy, especially in the battered real estate and labor markets. But with so many foreclosed homes weighing on the market, and with unemployment still at 9% and consumer confidence low, even mortgage rates near record lows aren’t enough to fix the problem caused by the bursting of the housing bubble. (Source: Yahoo News)

Whodda Thought: A Good Idea From Romney

Wow, something from Mitt Romney that I could actually support.

Campaigning last week in Nevada, the epicenter of the housing bust, Mr. Romney was asked by the Las Vegas Review-Journal editorial board what he would do about housing and foreclosures. His reply:

“One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the house up. Let it turn around and come back up. The Obama Administration has slow-walked the foreclosure process that have long existed, and as a result we still have foreclosure overhang.

Number two, the credit [that] was given to first time homebuyers was insufficient and inadequate to turn around the housing market. I think it was an ineffective idea. It was a little bit like the cash-for-clunkers program, throwing government money at something which was not market-oriented, did not staunch the decline in home values anymore than it encouraged the auto industry to take off.” (Source: Wall Street Journal via TigerHawk Blog)

You have got to know that there are folks in the Obama Administration AND the leftist media (aka: Main Stream Media) that are going to be completely up in arms about what Romney said. “How dare Romney endorse throwing people out into the street without a roof over their heads. Doesn’t he know winter is around the corner?”

I know the democrats and progressive can trot out heart-rending stories about individual homeowners forced out of their homes because of the big, bad banks. And to tell you the truth, the stories can be heartbreaking.

But let’s look at this from another angle. For most of the progressive movement, it has always been about the collective, not individual freedom and responsibility. But on the matter of housing and foreclosures, for progressive and liberals it is all about the individual (certainly not about freedom and responsibility) homeowner. They want the government to save the individual homeowner so they can stay in their house. But with this stance, they have lost sight of what is good for everyone (the collective). If we continue in the direction we have headed over the past three years, home values will take years to even begin to climb, much less recover. Isn’t a faster recovery in the housing market good for everyone (the collective)? You’d think that liberals and progressive would support this.

All that is happening is the can is being kicked down the road. Romney is suggesting that we stop kicking the can down the road, man-up, take our lumps, let the market recover on its own. No amount of government intervention is going to save the housing market, it has to save itself and the sooner we allow this to happen , the better off we are going to be in the middle- and long-term. The role of government is not to control or run the economy, but to make it easier for the economy to function.

BTW: Still not a fan of Romney.

Local Real Estate Good News/Bad News

Here is a good-news, bad news story. In King County (Seattle), home sales were up in September and compared to September 2010. This is the good news, although tempered somewhat with the knowledge that last September sales were the worst in nearly a decade.

On the bad news side, values continue to decrease, down 8 percent from last September. On a positive note, it was unchanged from Aug.

PS: Sorry about the slow blogging. Came down with a touch of something. I have also been putting a lot of extra hours at a second job. My lovely bride went to visit our daughter in San Diego to attend her San Diego State University Nursing Program Induction ceremony. And my Oldest Son has decided to join the Marines, Since he is 17, his mom and dad have lots of paperwork to deal with. It has been a very hectic week around here.

(Source: Seattle Times)

Worst Housing Market in Decades

More bad news from the housing market front.

The home buying season was a bust.

March through August are typically the peak buying months. But this year, Americans bought fewer new homes in that stretch than in any six-month period since record keeping began a half-century ago.

Sales of previously occupied homes didn’t fare much better; they nearly matched 2990’s total for the peak buying months. And that was the worst since 1997.

Combined, total sales this spring and summer were the weakest on records dating back to 1963. The figures underscore how badly the housing market is faring and suggest that a recovery is years away.

Because the economy is barely growing and unemployment exceeds 9 percent, many people see a home purchase as too big a risk. Some worry about losing their jobs. Others can’t afford the 20 percent down payment most lenders now require. (Source: Seattle Times)

Long Climb Out

This is certainly not welcome news. For those of us who were hoping to have our homes as a nest egg for retirement are going to be disappointed. This will be especially true for those who will be retiring for good in the next 10 years or so.

The pessimistic outlook on home values is really not all that surprising in my book. Serious damage to the real estate market has been done. Values in homes are as low as 2000 prices, and the market has yet to experience a serious glut in foreclosed homes. Couple the aforementioned reasons with a natural pessimism that I think people are going to have towards purchasing a home, home values increases are going to be stunted. There will be some markets that will recover nicely, most likely in areas that see economic recovery sooner.

I sometimes wonder if Barney Frank and other democrats who pushed banks to loan money to people who should have never been the market ever loses sleep over what he has wrought. If I were to hazard a guess, I’d say that he feels nothing. It would not surprise me if and when the market shows life once again, that he doesn’t try the same thing all over again.

Obama and Holder Going After S&P

The first time I read the headline in this linked story, I actually laughed. Eric Holder and the Justice Department are going after Standard and Poor, looking into possible misconduct related to mortgage securities. Raise your hand if you think this is in retaliation for S&P down-grading the US for AAA to AA+.

It is laughable that this administration would go after a group that rated mortgage securities, when Obama, as a Senator, backed continuing down the path of destruction when then-President Bush wanted to reign in Fannie and Freddie. It was democrats, led by Clinton, while he was president, and continually backed by Barney Frank, who should be the ones under investigation. This group of liberal politicians wanted everyone to be able to purchase a house. These risky mortgages were backed by Fannie and Freddie under the direction of Frank’s boyfriend. When banks and mortgage companies wanted to bring back and little sanity to the lending process, they were threatened by progressives and liberals with charges of racism.