Anyone here read Mark Hanson's blog? Really interesting data... (feedback, mortgage, mortgage)

[Delron]

Mark Hanson posted a new blog report last week, with some very interesting details. It's incredible some of the information contained in his charts...

http://mhanson.com/blog

"It is always important to remember that the house price crash is only a symptom of losing all of the exotic loans and leverage that enabled housing to run so far so fast from 2002-2007.

Without increasingly exotic loans that allowed homeowners to easily move up, down and across or extract equity to cover the debt service, the entire country hit their debt service ceiling at once. From there, house prices quickly gravitated to what buyers could afford using new vintage, low-leverage financing. The problem is that all of the leveraged debt incurred during that time still exists but the equity is gone.

With all exotic loans gone the housing market is essentially starting over, which is what we are seeing with first timers and investors making up the majority of sales primarily at the low-end. Over a number of years, as incomes and house prices hopefully rise, first-timers will become move-up buyers and so will today’s underwater owners.

But we will never find a true bottom in the market until the 10s of millions of over-levered, underwater homeowners are adequately de-levered and are no longer a drag on the market — existing home owners have always been the driver of existing and new house sales. The only present cure for the terminally over-levered is lots of time."

[middle-aged mom]

He writes well. I wonder which mortgage banker used to employ him.

I like how he explained that there is not going to be a v-shaped recovery.

" low supply and increased demand does not mean what it did from 2002-2007 for the housing market. This is because outside of the low-end sweet spot, affordability is terrible relative to the exotic loan bubble years."

[Flat2MT]

Very good site and he's very thorough

Another one of the same ilk is Dr Housing Bubble

Dr. Housing Bubble Blog

Both are CA centric but the message is relevant across the country

[Delron]

Yes, I enjoy Dr. Housing Bubble, Patrick.net, the Housing Bubble blog...yeah I'm a bear, but there are a hell of a lot of factually based reasons for it in this environment...

[MN-Born-n-Raised]

Thanks for that link Delron (I just gave you some feedback).

Mark Hanson is one sharp guy! He consults to the lenders which adds to his credibility.

[DMenscha]

Fascinating how he only goes back to 2005 to make his point about existing home sales. Existing home sales look to be about the same as they were in 1999. Existing Home Sales History | RECESSION.ORG (http://recession.org/library/graphs/existing-home-sales-history - broken link)

[Delron]

Yes, that is one drawback that many have complained about - it obviously skews the data to look like sales are at an all time low. However, he has at various times compared them to the historical averages of the last 10-20 years as well, and they have been substantially below the average, whether adjusted seasonally or not.

[chet everett]

I have my doubts about "existing home buyers always have been the driver" -- I hate to sound really old, but "boom times" in housing go back to well before WWII and even THEN those were brand-spanking new developments!

Hello, this is "new world", not someplace where castles and hovels have been handed down by lords and serfs. The American Dream includes home ownership. It happens for MOST people within a few years of marriage /children. Sure 'move up buyers' are a HUGE factor, and have been for decades, but the stats of mobility (or more accurately LACK of same) shows there are huge swaths of America where folks buy a house and stay put. In many cases those houses are STILL newly constructed (either in brand new developments or infill or teardown).

The relative ease of borrowing is OF COURSE an enormous factor, especially when considering how quickly prices rose, but there are DOZENS of other inputs and it simply not true that all of them can be accounted for. I have some hunches that there will very likely be implications on housing trends driven by changes in health care policies. For a brief time about a decade ago there were some upticks in the direct selling of "handicap accessible" features into regular homes. This was done as the boomers parents got to the point where they might move in. With the explosion of housing starts and townhouse development and assisted living that sort of things fell off. If there are changes in where and how those with chronic conditions are cared for driven by the payments that Medicare is able to make I could see that getting picking up again.
Similarly depending on how big a deal the "pay czar" concept becomes I could see more firms tinkering with ways to turn excess real estate and /or generous - frequent relocation into a perk that might get around small minded bureaucrats. Lots of ways to either short circuit or leap frog various paths that would seem to be the obvious near-term prescription...

[MN-Born-n-Raised]

Originally Posted by DMenscha

Fascinating how he only goes back to 2005 to make his point about existing home sales. Existing home sales look to be about the same as they were in 1999. Existing Home Sales History | RECESSION.ORG (http://recession.org/library/graphs/existing-home-sales-history - broken link)

I don't think that was the main part of his message. I might disagree with a point of two but overall, it's what my gut feels. He has a pretty convincing argument. If 1999 levels were great, then what are we all complaining about? For starters the stuff that is selling now is below water. But more importantly, the pending shadow inventory will be dumped on the market (kicking the can analogy). So the way I read the 2005-2009 graphs is where is this inventory going to be absorbed and there will be downward pressure. We don't need 1999-2009 graphs to illustrate that. In fact, it would confuse his thesis.

The bottom line is if I was forced to wage a bet, I'm putting my money on his viewpoint. Saying that, I'd love to see some data that incorporates a positive message that housing is on the rise without forgetting to mention the downward pressures.