Housing recovery coming?

Freddy NAR says, rush right down to your Realtor’s office!

I spoke this morning with a friend who’s writing a piece for Wall Street 24/7 and he’s concluded, based on national data, that the recovery is underway. We both have our statistics and arguments but perhaps our main disagreement came on a non-real estate  issue: the pending collapse of Europe and thus the American economy. He discounts that possibility, I don’t.

And if the mark of a man’s intelligence is the extent to which he agrees with you, here’s a piece from a true genius, who thinks the housing recovery is a chimera and is due for (a further) collapse. 

24 Comments

Filed under Uncategorized

24 responses to “Housing recovery coming?

  1. Anonymust

    prices and rents can only diverge for so long….

  2. jeb

    Hmm, I came across this today:

    In the NYC metro area, the banks drastically cut back foreclosing on properties in the spring of 2009 and have never changed their policy. This has nothing to do with the robo-signing scandal which occurred 18 months later.

    Through sheer persistence, I obtained accurate statistics on serious delinquencies from the New York State Division of Banking. Let me explain….

    This means there are roughly 265,000 seriously delinquent homeowners in NYC who have not yet been foreclosed. Why so many? The banks do not foreclose in NYC. As of May 24, foreclosure.com reported a total of 301 foreclosed properties on the active MLS and 103 in Brooklyn. Together, these two boroughs have a total of 4.7 million residents. That is more people than live in Maricopa County where Phoenix is situated.

    Read more: http://www.businessinsider.com/another-housing-collapse-is-coming-soon-2012-5#ixzz1wMTGPRno

    Not sure if true. If so, might be a little rocky going forward until things turn around.
    .

  3. Anonymous

    Chris, when do you think this will take place locally? How long are the banks going to prop up such high end homes that are on the top of their balance sheets?? We are seeing pricing drop but relative to the high not relative to the pre bubble? Are there going to be forced short sales? Or, are banks going to negotiate with owners? Any prediction would be fascinating….

  4. anon

    Here’s another:
    Guest Post: Housing Recovery – Hope And Reality
    http://www.zerohedge.com/news/guest-post-housing-recovery-hope-and-reality

  5. anonymous

    http://www.streettalklive.com/daily-x-change/935-housing-recovery-hope-and-reality.html

    This is another article that also supports Mr. Jurow’s point of view. Buying real estate now is like playing russian roulette ……………………with 6 bullets. There is a lot more pain on the way. Be prepared.

  6. shoeless

    Pending home sales declined -5.5% on the month. All the warm weather did was pull demand forward; now it is all gone.

  7. The New Normal

    the Business Insider article sounds compelling, but in reality the crux of his argument is that prices are down a lot y/y based on his $/sqft analysis

    the best measure of what price is doing is the Case-Shiller index, which measures prices on same houses over time; the decrease y/y for the NY area is down less than 3%, seasonally adj; it is not as relevant what the $/sqft in Greenwich transacted this year vs last year vs 5 years ago, because we know that all the activity right now is at the low end of the market (Riverside, Old Greenwich, Cos Cob) with hardly any of the activity in more expensive areas (the one exception being waterfront); this is naturally going to weigh on $/sqft

    additionally, total HELOC debt as of 2010 was approximately $650bln, on 13mm lines of credit, for an average of $50k balance; a fully amortizing 15yr loan on $50k is less than $400/month, not thousands

    he is right that the trade-up market has disappeared for now; I think it is safe to say that it is not a permanent condition, but when it returns is anyone’s guess

    if you are a momentum trader, I guess selling low in the hopes of buying back lower is a reasonable strategy; but if one’s time horizon is that of a typical homeowner (at least 5 yrs?) then I would think that today is a very good time to buy, especially when taking into account the record low interest rates

  8. Demmerkrat Patriot

    http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2012/05/30/national/w070249D01.DTL&feed=rss.news_nation

    A gauge of Americans who signed contracts to buy homes fell in April from nearly a two-year high in the previous month.

    The decline was the biggest in a year. Still, sales are well ahead of last year’s level for the same month, suggesting the housing market is improving slowly.

    The National Association of Realtors said Wednesday that its index of sales agreements dropped to 95.5, down from March’s reading of 101.1.

    A reading of 100 is considered healthy. One year ago, the level was 83.5.

  9. MC

    While I agree with the authors sentiment, I disagree that colapse is coming. The banks have done a prety good job of mitigating loss.

    Colapse is a lose, lose for everybody. As a result, the US is in economic limbo and wil not move forward for another 8-10 years. Put all your hopes and dreams on the back burner

  10. shoeless

    MC:

    Citibank is still sitting on $200 billion of home equity loans and seconds. If the house is underwater, those loans are worth a big fat zero. Jamie Dimon had to shed some quality assets to cover the $2 billion hole in his balance sheet because he doesn’t havwe the avilable capital. $2 billion ishould be a pittance for a company the size of JP, but it is not. House of cards, my friend.

  11. Anonymous

    S&P500 hovered over 1500 before the Lehman crisis and was below 700 in 2009. Now it hovers around 1300. Unemployment is around 8%, down from over 10%. Though not stellar, GDP is growing around 2%, a sign the economy is on the mend for sure.

  12. Anonymous

    JPM hardly has a $2BN hole in its balance sheet, it will still make money in the quarter.

  13. anony

    Gee, many say real unemployment is closer to 18% and the GDP is only growing because inflation is being counted as growth.

    Oh, and the majority of Americans believe the recession never ended and things are getting worse, not better.

  14. shoeless

    “Making money” is a product of the income statement. The balance sheet is where the bodies are.

  15. MC

    shoe:
    You maybe underwater too, but dosent mean you’ll stop paying your nut. Even if you do, jpm wont send the sherrif knocking for 3 or more years. Unless you know somthing that nobody else does?

  16. Corn in the Cob

    If inflation is a problem, better to own than rent.

  17. anony

    >>If inflation is a problem, better to own than rent.

    Not when the Great housing Bubble correction isn’t anywhere near over.

  18. AJ

    When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook
    Warren Buffett once said that derivatives are “financial weapons of mass destruction”, and that statement is more true today than it ever has been before. Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad. Well, it turns out that JP Morgan did not tell us the whole truth. As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars. But no matter how bad things get for JP Morgan, it will not be allowed to fail. JP Morgan is the largest bank in the United States, so it is essentially the “granddaddy” of the too big to fail banks. If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it. Because of this “security blanket”, banks such as JP Morgan feel free to take outrageous risks. Today, JP Morgan has more exposure to derivatives than anyone else in the world. If they win, they win big. If they lose, U.S. taxpayers will be on the hook. Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis. So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill……

    http://theeconomiccollapseblog.com/archives/when-the-derivatives-market-crashes-and-it-will-u-s-taxpayers-will-be-on-the-hook

  19. My rant

    These talking heads can cite national figures all they want, but as you frequently remind us, Chris, expensive zip codes are a long way from recovery. Demand is weak and supply continues to increase.

  20. anonymous

    Wages still do not justify home prices in most of the country. The USA will not be able to decouple from the problems in China, Japan, or Europe all of which are coming to a head very soon. We may get one more big print from the Fed but all of the advanced economies already have way too much debt and there is no way out of this mess with out a lot of pain. Things are going to go from bad to down right ugly.

  21. Anonymust

    Anony 2:10pm,

    GDP figures are “real”, meaning they are adjusted for inflation

    Investment managers are flocking to rental properties, as the timing is right for 1) financing, 2) valuation, 3) yield (rents are very high)

    Everyone seems pretty pessimistic, which in any market is one of the necessary components of putting in a real floor

  22. FakeBtAccurate

    >>GDP figures are “real”, meaning they are adjusted for inflation

    And the adjustment undercounts inflation and overstates growth.

  23. anonymous

    Investment managers are flocking to rental properties because the game is rigged. Bankers are selling bundles of properties to their buddies at PE shops and hedge funds. That said, there are plenty of clowns masquerading as investment managers. You have to look no further than the recent Facebook IPO or JPM scandal to realize this. The system is broken and the “we take the winners/you eat the losses model” will eventually rub the average American the wrong way. Then, there will be hell to pay. Speaking of hell, there is a special place there for people that prey on the weak and disadvantaged

  24. Anonymust

    anonymous 10:03am,

    I guess you think financiers ripping off the masses is a new phenomenon? it’s only been done for the last few thousand years or so

    however they are buying them, they aren’t doing it because the numbers don’t add up – clearly there is a $ to be made; and my point is it is sopping up a lot of the supply from average Joe’s who bought at the highs, which by the way is what always happens – buy at the highs, liquidate at the lows….