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...and all regions of the country saw increased sales.
the sales that Realtors report are just the ones that run through a multiple listing service -- therefore there's plenty more activity in distressed properties that happens outside of that official Realtor system, meaning it is likely that more than half of all home sales these days involve something other than what would be considered a market-rate transaction.
guys like xmonger are going to chime in by saying that it's an NAR number, and that we should wait until we get Schiller's number before popping the champagne. Problem is, Schiller is lagging so badly that if this number is confirmed by Schiller, the rally will already be over. You either accept this report at face value, for what it is worth, or you don't.
Another thing Schiller & his ilk fail to realize is that home sales are little different from stock sales -- when an investor feels the price has reduced to an attractive level and has more up-side potential than down-side, they begin to buy. It may not be the "bottom" (since no one knows the precise "bottom" until after the fact), but the risk/reward ratio eventually becomes compelling. Home prices got too high, and they're now returning to appropriate valuations. Signs are that more and more people sense we're near that point.
If you want to buy a house, go out and make lowball offers. That's the way it works. We're not here to "let prices collapse" and be punitive. We're here to enjoy the benefits of capitalism. If you make 10 lowball offers (and I mean LOW) in today's market, you'll probably catch that one desperate seller that was one step from bankruptcy or foreclosure, and he'll be happy to make a deal.
guys like xmonger are going to chime in by saying that it's an NAR number,
Haven't seen it yet, but the numbers here: New Jersey Real Estate Report tell a different story. What are NAR's year on year numbers ?
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Another thing Schiller & his ilk fail to realize is that home sales are little different from stock sales --
No, they are substantially different. Stock prices are always forward-looking, because there are always sellers who are willing to sell at whatever the market is prepared to buy it at.
In housing, some people might want to hold on (it doesn't make sense to sell at a loss). In the stock market, if real values drop and the holders don't want to realize their losses, someone can borrow the stock and sell it short. Because of this, stock prices instantaneously adjust to reflect expectations of future earnings.
Not so with house prices -- the case shiller futures market shows that there is an expectation of a decline, but there is no way to scoop up the difference (if the forward price of a stock were low, you could sell it short, buy it forward, and pocket the difference)
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Home prices got too high, and they're now returning to appropriate valuations.
No they aren't. I posted some compelling evidence that they are not.
There are two "realities": the pre-bubble universe, and the post-bubble universe. Valuations are still in the bubble territory (median prices at 4x median income, HOI affordability numbers well under 50%, rates under 6%). If you looked at those plots I posted, you'd see that the numbers today are closer to 2006 numbers than they are to 1996-2001 numbers.
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We're not here to "let prices collapse" and be punitive.
It's not about "punishing" anyone. Making lowball offers only makes sense if there's a reasonable chance of the offer being accepted.
And year-over-year, this February was worse than February 2008, which was worse than February 2007, which was worse than February 2006, which was worse than February 2005 ...
The housing bubble is still in full deflation mode around here. Price will continue to fall even faster as lenders start to unload more of the massive numbers of foreclosures on their books.
Economists said sales, while still extremely slow, may finally be coming back to life after declining sharply following the stock market plunge last autumn. Prices, however, are expected to keep falling well into the year. Tens of thousands of homes reman tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.
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So a jump is good versus more doom and gloom but this isn't a "WE ARE HOME FREE" type results.
Economists said sales, while still extremely slow, may finally be coming back to life after declining sharply following the stock market plunge last autumn. Prices, however, are expected to keep falling well into the year. Tens of thousands of homes reman tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.
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So a jump is good versus more doom and gloom but this isn't a "WE ARE HOME FREE" type results.
I liken this news story to a plane recovering from a nose dive- the engines have thrust to push back up (sales) but the momentum of the dive is still carrying the plane downward (home prices). Eventually the thrust will overcome the momentum and the plane will start to rise again.
That may be a crappy analogy, but thats what I likened this story to when I read it. Now we just get to see if the engines have enough juice.
Like I've said, one month doesn't mean too much in the grand scheme of things- we will need to see an honest to goodness TREND before people will even start to consider a turnaround.
Price will continue to fall even faster as lenders start to unload more of the massive numbers of foreclosures on their books.
there's no indication that lenders will unload those "massive" number of foreclosures at such a rate that would cause the supply/demand equation to collapse.
lenders will release these into the market at a slow, measured pace... to do otherwise, they'd be cutting off their nose to spite their face.
Last edited by JG183; 03-23-2009 at 01:49 PM..
Reason: goofed
there's no indication that lenders will unload those "massive" number of foreclosures at such a rate that would cause the supply/demand equation to collapse.
lenders will release these into the market at a slow, measured pace... to do otherwise, they'd be cutting off their nose to spite their face.
I agree. We're in for a slow bleed, not a fast crash.
there's no indication that lenders will unload those "massive" number of foreclosures at such a rate that would cause the supply/demand equation to collapse.
lenders will release these into the market at a slow, measured pace... to do otherwise, they'd be cutting off their nose to spite their face.
Um, OK. So we'll continue to see prices fall at a nice, steady pace like they fell 15% last year. Just means that the housing collapse will take longer to finish.
Pretty hiliarious that this is seen as "good news" for housing.
granted, but then how do you account for 2 consecutive months where sales tracked upwards ?
In the national aggregate, that is at least a sign that the rate of decline will slow. In the nation wide market, the HOI affordability index was already at (indeed, slightly above) historical norms in Q4 2008. Not so in NJ. Median price was about 15% off 2000 levels after taking account increases in incomes -- a little high, but not prohibitively so, and rates are lower now.
The NJ market is different. The numbers didn't track upwards (see njrereport.com), affordability is still in bubble territory, and price/income ratios are also still in bubble territory.
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