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Today's release from the NAR itself and its brilliantly unbiased chief economist Lawrence Yun:
Pending Home Sales Slip but Modest Recovery Expected in 2011 (http://www.realtor.org/press_room/news_releases/2010/11/phs_slips - broken link)
Original expectations for this were +4.3% which they revised down to +3.0%, which ultimately printed (actually) at -1.8%.
Quote:
The Pending Home Sales Index,* a forward-looking indicator, slipped 1.8 percent to 80.9 based on contracts signed in September from an upwardly revised 82.4 in August. However, the index remains 24.9 percent below a surge to 107.8 in September 2009 when first-time buyers were jumping into the market to take advantage of the initial deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
His thoughts on interest rates (relevant to this thread). Even he doesn't seem to think there's a rush to buy due to low interest rates...:
Quote:
“Mortgage interest rates currently are bouncing along the bottom, but are expected to gradually rise and average 4.9 percent next year, then rise to 5.8 percent in 2012,” Yun said.
In his infinite wisdom, he sees "pent up demand". Maybe someone should remind him of that 40+-month supply of shadow inventory out there? I wonder where the demand comes from...:
Quote:
Existing-home sales are forecast to gradually rise, with some occasional dips along the way. “For 2011 we should see more than 5.1 million existing-home sales, up from about 4.8 million this year. Housing starts are expected to rise to 716,000 in 2011 from 598,000 this year,” Yun said. “We’ve added 30 million people to the U.S. population over the past 10 years, but sales are where they were in 2000, so there appears to be a sizable pent-up demand that could come to the market once the economy gathers momentum.”
Today's release from the NAR itself and its brilliantly unbiased chief economist Lawrence Yun:
Pending Home Sales Slip but Modest Recovery Expected in 2011 (http://www.realtor.org/press_room/news_releases/2010/11/phs_slips - broken link)
Original expectations for this were +4.3% which they revised down to +3.0%, which ultimately printed (actually) at -1.8%.
His thoughts on interest rates (relevant to this thread). Even he doesn't seem to think there's a rush to buy due to low interest rates...:
In his infinite wisdom, he sees "pent up demand". Maybe someone should remind him of that 40+-month supply of shadow inventory out there? I wonder where the demand comes from...:
Where exactly did he said he doesnt seem to think there's a rush to buy, or are you putting words into his mouth. He clearly only states he expects rates to rise next year to 4.9%. Currently they are 4% or so. If i was buying, i would rather buy now at 4% vs next year at 4.9%, that is assuming i am buying in a good area not likely to drop much in value.
He clearly only states he expects rates to rise next year to 4.9%.
I guess he isn't on speaking terms with the Fed chairman.
Worrying about rates rising by 1% or so only makes sense if one is trying to refinance. Anyone
looking to buy who moves faster to get locked into a multi-year commitment on a constantly
deteriorating asset because of such rate differences is clearly not playing with a full deck.
I guess he isn't on speaking terms with the Fed chairman.
Worrying about rates rising by 1% or so only makes sense if one is trying to refinance. Anyone
looking to buy who moves faster to get locked into a multi-year commitment on a constantly
deteriorating asset because of such rate differences is clearly not playing with a full deck.
You are assuming it is a constantly deteriorating asset. There is a possiblility that some homes in our country have hit bottom and are now appreciating assets. We can argue the quantity of those homes, but there are some that wont fall any further in value.
You are assuming it is a constantly deteriorating asset.
All homes are a constantly deteriorating asset.
They are not necessarily depreciating assets in all cases, of course.
My comment was because a house, unlike a market security requires
a commitment that does not justify making rushed decisions based
on relatively trivial things like 1-2% differences in interest rates.
Speculating on whether the asset is appreciating or depreciating is
just that - a speculation. There is nothing wrong with that. Making
a faster move because you think interest rates will tick up is stupid.
It's penny-wise and pound-foolish.
They are not necessarily depreciating assets in all cases, of course.
My comment was because a house, unlike a market security requires
a commitment that does not justify making rushed decisions based
on relatively trivial things like 1-2% differences in interest rates.
This is a main part of the point I continually try to make... Most datapoints point to an overall depreciation (read deflation) in housing. Exceptions to this (even if one argues appreciation over flat lining) in the face of downward wages, un(der)employment, upward taxes, and devaluation of the USD couldn't possibly outweigh a <1% interest rate increase in a year.
With the NAR's chief economist taking away the "buy now while interest rates are low" card, I see one less driver to buying now vs. into 2011 (or after). Simply based on upside vs. downside risk.
My thoughts are that any thing that cost you money to own is a liability. I don't care how much money you make on the sale of the home, that place still cost you to own it. Even if you pay it off outright you will still have a cost of ownership that you can not get away from. Rising home values are a misnomer for the person that is not planning on selling. maybe they will make you feel good but they won't do a thing for you or help you pay off your home any quicker. In my industry those are called unrealized gains. If you buy a stock or a bond your out of pocket cost is over. The value of a stock can rise or fall. Still what are your monthly cost to own the stock or bond? The truth is that everything is a paper gain or loss untill a sale is made. Income producing real estate is another thing all together. A true income producing property does not cost you to own it. I know of plenty of people that bought a rental and they are wishing that they had not done that. I know others that put 20 or 25% down on a place and now have a home that is worth less than they paid but are still making money on the investment. The rent covers the expenses on the home that they bought. Those rentals don't cost a dime to own, that is unless the tenents move out. It seems that their are others to take their place though for now.
My thoughts are that any thing that cost you money to own is a liability.
Stuff that costs you money to own is still an asset.
It is just an asset that has associated expenses.
A liability is something that you owe. A mortgage is a liability.
The associated interest is an expense.
Quote:
Originally Posted by SOON2BNSURPRISE
I know others that put 20 or 25% down on a place and now have a
home that is worth less than they paid but are still making money
on the investment.
If the home is worth less then it is not making money.
The cash flow might be greater than the carrying cost, but ...
Quote:
Originally Posted by SOON2BNSURPRISE
The rent covers the expenses on the home that they bought.
In a pig's eye.
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