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Source:Bloomberg BRIEF, March 01, 2012

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Richard Yamarone, Bloomberg Economist:

Month-to-month gains in several housing statistics – new and existing home sales, starts, and homebuilder confidence – has created in financial markets a sense of optimism about a housing recovery. Comments made by key players during quarterly earnings conference calls suggests such optimism is likely premature. According to Beazer Homes CEO Allan Merrill, consumers remain fearful that home prices may fall further, are worried about about the overall direction of the economy and, “with some buyers, [concerned] about the impact of potential hanges in national housing policies.”

Category: Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

21 Responses to “Optimism Over Housing Recovery Premature”

  1. theexpertisin says:

    Beazer Homes isn’t exactly the Gold Standard for the industry, but their CEO basically saying “not yet” regarding the alledged housing sector rebound is worth thought.

    There are too many skeletons lurking within the housing sector,not the least being the true number of foreclosures hidden within the books of lenders. To pronouce this sector to be regaining health on the basis of one or a few suspect data accumulations is premature, to say the least.

    There are knowns. There are unknowns. And there are a cast of characters manipulating almost all aspects of the housing sector from every angle.

  2. louis says:

    When is someone with Political will gonna step up and take this on? I’ve never seen so many pus##y’s eating at the banker buffet.

  3. BennyProfane says:

    I’m moving to Nevada. Or, maybe, Florida. Or, hell, both.

  4. VennData says:

    Sounds like the same concerns people had about stocks in March 2009.

  5. rd says:

    Hitting bottom after falling into a well does not necessarily mean you will be climbing back out soon.

  6. Futuredome says:

    Meh, I disagree with this articles premise. You need to understand, that production increases is a housing recovery, unlike past recoveries, this one won’t surge to past heights.

    It real terms, it probably won’t be to the 2020′s before the next secular bull in housing begins.

  7. BenE says:

    “consumers remain fearful that home prices may fall further, are worried about about the overall direction of the economy”

    Are they also worried that prices of gas go too low?

    As a consumer I remain HOPEFUL that home prices fall further to make living more affordable and have money left for other things. As a business owner I also hope housing become less costly so that my customers have more money for my stuff.

    It is true that “I am worried about the overall direction of the economy”, but that’s partly because powerful interests are trying to keep housing prices over inflated.

    Only investment bankers and MBS holders are “fearful” that home prices may fall further.

  8. wally says:

    I’m curious how this chart shows that ‘optimism was premature’, since it doesn’t show us what’s coming in 2012?

  9. BennyProfane says:

    @BenE

    I’m on your side, but, au contraire, there are millions and millions of “homeowners” who are fearful that home prices will fall further, and send the water line up above their noses. So many are just stuck in their MacMansions, with no cheap way out.

  10. DSS10 says:

    Although I am sorry about the hit to the personal balance sheets of millions around the country you just can’t make so much of a persons wealth a function of leveraged real estate. If your going to try to become a paper millionaire then do it through fixed income or equity securities as opposed to a speculative, non-transparent, highly leveraged investment whose value can only be based on how much the next guy is will to pay.

    The best thing right now is for the market to stabilize and have inflation adjusted growth of ~1.5% and hopefully have some wage growth to support deleveraging.

  11. Wexler says:

    This is the data I have been waiting for. Thank you!

    It’s all about the buyer pipeline…which I thought was growing…Spring market has not sprung, yet.

    I just bought and sold. The buying experience was…once in a life time (I hope)…incredibly low rate, seller (executive reloc company) folded out of desperation to get the property off the books, neighbors are probably pissed once they checked out Zillow…

    On the selling side, starter home, on the market since May (waiting for the right deal to purchase) once we lowered to a proper market level price there was a ton of interest, sold quickly, but 5% below my lowered ask. Reasonably stable suburban community, light foreclosure levels.

    One curious note – one tire-kicker-couple said they couldn’t make an offer and leave their home until 3 years was up on the houses for clunkers deal…or whatever that govt’ credit program was.

  12. albnyc says:

    BenE: for homeowners, the tide is going out for all, in many markets. Not just those in McMansions, or whatever type of housing you care to denigrate. I did not overpay for my house, but am still witnessing the equity and improvements made get washed away in the flood. Your comment is uninformed.

  13. overanout says:

    In escrow on a short sale that has taken 6 months with one lien holder…Endless drama,hours on the phone with Realtor and Asset Recovery company that the Bank farms out Short Sales and foreclosures related activities which is a call center tied to debt collection where Nobody has any idea how the mortgage business works and don’t care! The MBS investors on this house will lose over 350K and this is a nothing house in Calif, the losses to insurance companies,pension funds must be at record levels and will go on for years!
    My current neighbor finally got his NOD on his 600K house and is moving out ASAP been 18 months without making a payment including taxes. Those who have purchased with low down FHA loans over the past 3 years have negative equity and home prices are going lower, this group will be the future foreclosure wave!

    Endless chatter about the housing market recovery is spin and more spin, means nothing.

  14. BenE says:

    albnyc, sure there was a correction and the speculative value of your house has gone down, but all house prices have gone lower so if ever you sell your house you will be able to buy an equivalent one for that new lower price and you won’t be poorer for it. For someone who already owned a house and wasn’t using it to speculate you aren’t much worst off in buying power.

    For new home buyers, lower prices are much better.

    In the long run everyone is better off when housing costs are lower in much the same way as they are better off when gas prices are lower.

  15. Wexler says:

    BenE – the majority are “holders” (with on paper losses), not buyers. The buyers are few. That’s the point of the chart – not enough new buyers = no recovery / bottom.

    Now the bigger (biggest) problem is that the “holders” are “boomers” that thought they were going to make a killing on their house when it was time to cash out…and are now holding out hope cause they didn’t save properly.

    Boomers = Most selfish generation, leaving it to X & Y’ers to clean up your mess, again.

  16. rob777 says:

    If you agree:

    -With ECRI that a new recession is imminent;

    -That the next wave of foreclosures is coming now that the robo-signing fiasco is ending particularly in judicial foreclosure states such as FL;

    -That demographics in the form of aging population, particularly the boomer generation, is a strong headwind for family formation and housing;

    -That ~33% of homes with loans are at water level or under water;

    -That it is much harder to get a home mortgage than in the boom years;

    -That there is a reversion to the mean (and probably over-shooting to below the mean) for long-term home ownership (62% vs still at ~65%);

    -That there is a trend toward renting vs owning; …

    Then optimisim about a near-term housing recovery does seem “just a bit” premature.

  17. Bob A says:

    one of these days these foreclosure homes are gonna be cleared and prices will jump.

  18. Neildsmith says:

    Optimism about housing? Can you say… “talking your book”?

  19. victor says:

    Eventually demand will catch up with supply, we have strong demographics due mainly to immigration. Meantime, value destruction will continue, unfortunately this is not a zero sum game, friction losses are enormous, all market participants are taking losses except those who were mainly responsible for the debacle, bailout nation?

  20. sailorman says:

    Florida has always been a leader in the housing crisis. I can’t speak for all of Florida, but Sarasota has definitely turned around. Houses priced at the new normal (slightly above 2009 prices) sell in a couple of weeks with multiple offers. The inventory of houses for sale in my community is the lowest in 10 years. Every broker I talk to says things are definitely picking up.

  21. DeDude says:

    Recovery to the previous levels of sales and prices are far far away. But neither volumes nor prices are going to fall more than 10% from their current levels, and are more likely to stabilize and move up by 10% in the next two years. A lot of houses will become rental houses and you have to calculate the return on investment on a rental house to the return on investment on similarly “safe” investments. For many “small saver” retired people, putting money into companies or co-ops that rent out houses, would be an attractive alternative to eating dog food.