NAR Optimists Drubbed by their Own Dismal Data
In the hierarchy of half-truths, hoodwinks and practical jokes, there are lies, damn lies and then there are statistics. Somewhere within this hierarchy must also be NAR press releases.
According to the NAR, which just released its new home sales statistics for February, the supply of new homes in the U.S. dropped 3 percent at the end of last month to just over 4 million homes. This translates into an approximately 9.6-month inventory of new homes, compared to about 10.2 months at the end of January. In addition, the NAR says the national median existing-home price for all housing types was $195,900 in February, down almost 10 percent from 12 months ago.
Some, including the NAR, are suggesting that this decline in inventories, a rise in existing home sales, and the almost 10% drop in the median house price may be signaling an end to our national housing malaise. In reality, prices still need to correct – and substantially - before we see an end to this housing implosion.
Unfortunately, median home prices remain far too high relative to incomes, and no amount of optimistic NAR press releases can obscure that fact. In this case, a picture truly is worth a thousand words, because the NAR’s own data convincingly tells the story:
In almost twenty years, the NAR “Affordability Index” has never shown such a disconnect from the NAR’s own calculation of U.S. median home prices. As sub prime lending took off, this disconnect grew even more pronounced. Clearly, bathing under the comforting salve of easy money, the ebullient housing market was able to easily shake off stagnant wage growth.
Now that the credit spigot has been all but shut off, and wages are coming under pressure from an almost certain recession, housing prices – even at current levels - cannot be sustained. In fact, it looks like they have much further to drop. NAR economists are undoubtedly already working over-time to unearth a fresh silver lining for next month’s press release, and judging by their own data, they will need their most creative minds.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In662
- 2.
-
3.Smarty_Pants423
-
4.axelrod608331
-
5.The hand278
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
This article has 12 comments:
-
rdial54
-
74 Comments
My Website
Mar 27 07:26 AM-
die
-
3 Comments
Mar 27 08:43 AM-
Investor Eric
-
5 Comments
Mar 27 01:10 PMAnalysts all want to declare a bottom, NAR obviously too, even "value-based"... wall st. investors want to believe. But disconnected from all their hopes and wishes is the fact that home prices depend on region. Arkansas and Iowa might have $200,000 houses, but NY and San Fran metro areas certainly do not. The talk of foreclosures being contained to "subprime" is just a talking point. Eventually even the metro markets are going to have to correct downward, and it will be in areas of mortgages other than subprime, and that is when the ral pain could be felt. Fixed rate loans will be solid and eventually will be the gold-standard for mortgages and loans.
But the big if in all this is the home equity loans that have pervaded our society and made homes into ATMs rather than just homes. If you live in a home it is not an investment. Period.
This perception that equity in home is meant to be built only to cash out on it a few years down the road is a silly and dangerous way to live and surprise, surprise America is knee-deep in this. Originally it was a creative way to pay for a child's college, but now it is mostly for keeping up with the Joneses.
Meanwhile we have a zero-savings rate(highest amount of debt in our history) while companies like China which hold bundles of our currency have a 40% savings rate.
This is a confluence of events that could cause real damage to the housing market, to buyer/seller perception, etc. Rental prices will skyrocket for awhile as less and less units are available until home prices come down some more and many of these exotic mortgages are refinanced into fixed rate mortgages. Then we might see a true bottom, but with banks tightening lending standards(actually a good thing longterm) and foreclosures rising, the market is not going to recover anytime soon.
-
Jane
-
27 Comments
Mar 27 04:26 PMHouse prices ARE still too high. People couldn't get into these houses without creative, i.e. toxic, loans, but that was a farce...it didn't really increase homeownership it just let people have a taste of a "dream" that was quickly ripped away from them. Better for them if they had just accepted reality and bought or rented within their means. In some areas even that is near impossible.
Artificially inflating prices during the past few years contributed to even more unaffordability and more toxic loans. Warnings of the consequences were many, on blogs and alternative news and consumer sites, but not so much in mainstream media, which at that time did appear to just be regurgitating industry press releases!
That these bad loans were sold as quality investments is mind boggling. Weren't any of the banks, investors, or ratings agencies doing due diligence? Were they that stupid or were they just crooks? The most naive first-time homebuyer is expected to do better than that.
Also, though some "affordable" areas of the country do indeed have houses for $200K, incomes in those areas are also significantly lower. Many families living there would have to really stretch to afford a house of that price if they could buy it at all. Of course during the crazy years, they COULD get a loan to buy a house they couldn't afford.
-
dickjanine
-
11 Comments
Mar 27 04:39 PM-
eh
-
10 Comments
Mar 28 07:04 AM-
tuma
-
1 Comment
Mar 28 01:29 PM1- the house is more than 4 times your income? walk.
2- Do you need a piggy-back loan to qualify? walk.
3- Can't afford the mortgage at fully indexed rate? (ie after the rate re-set? walk.
4- The broker fudging numbers to make you qualify? walk.
5- The broker pushing an ARM on you? walk.
6- Only qualifying through ARM? that house is not for you, walk
7- The broker pushing an Interest Only Loan? walk.
8- The broker pushing a Negative-Amortisation loan on you? walk.
9- Mortgage taking 50% of your paycheck? Walk.
10- Just used a credit card to pay your mortgage? Let them foreclose.
11-Buying thinking of equity first, rather than shelter? maybe you shouldn't
-
Giacomo
-
1 Comment
Mar 28 04:14 PM-
Mr Pasadena
-
9 Comments
Mar 28 06:51 PM-
User 170017
-
1 Comment
Mar 29 06:04 PMWhy is it so hard to tell the difference between a Realtor and a spoof caricature of a Realtor these days?
-
33Nick
-
43 Comments
My Website
Mar 30 02:47 PM-
AvlGuy
-
36 Comments
Apr 07 09:05 AMThat’s why there are so many players involved in our housing crisis, financial wizards, debt rating enablers, and the front men (realtors, mortgage brokers) who attended numerous seminars to learn the most effective way to get consumers in big numbers to fall for all 11 traps in tuma’s 3/28 comment.
Now look for renters to jack up rents as more homeowners are forced into renting. Then look for the housing cabal to do more FGs and uncover new ways to get big numbers of consumers to make “new” bad choices whenever the market recovers.