Whether it’s the data for existing homes, new homes, housing starts, or builder sentiment, all have pointed to signs of stabilization over the past few months and we hear stories of bidding wars again in some markets. One of the factors the NAR in particular is citing is the lack of inventory, whether because of the slowdown in foreclosure proceedings or sellers waiting for higher prices. Whether the case or not, one indicator is standing in contrast to the bottoming housing figures and that is weekly mortgage applications to buy a home. They fell for a 5th straight week and is at the lowest level since Feb. In analyzing existing home data in the next few months we should start focusing on how many are being bought for cash by investors who then plan to rent them out, a continuously growing trend.

In Asia, while the Shanghai index fell to a 2 week low and cannot gain any upside traction, the Indian Sensex index rose to a 5 month high on hopes for central bank easing after yesterday’s less than expected inflation report. In the UK, pre olympic hiring helped July jobless claims to unexpectedly fall. The other thing of note this morning is the continued uptick in bond yields in all the perceived safe haven countries such as the US, UK, Germany, France, Sweden, Netherlands and Japan.

Category: MacroNotes

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.

4 Responses to “Housing bottoming? Then where are the buyers?”

  1. wally says:

    “…all have pointed to signs of stabilization”
    No, they’ve pointed up.
    My opinion is that you guys drove a stake in the ground with your “not a bottom” bottom call in housing a few months back and now you have personal biases to defend that poor call – the same sort of biases that BR constantly warns others to avoid. ‘Fess up and move on.

  2. logline1 says:

    Wow, wally. Brave post… and I think you’re right. I’ve seen an amazing influx of buyers in Las Vegas (believe it or not!) and not all are investors. I can’t believe I’m writing this because I too was completely pessimistic and wrote off the housing market until at least 2017.

    Then I remembered a specific chart that I believe BR even referred to once. Notice how the majority of distressed properties should have been processed through the system by now:
    http://3.bp.blogspot.com/_pMscxxELHEg/ShQKBEyAORI/AAAAAAAAFTM/03RNGrH9sEA/s1600-h/CreditSuisseResetMarch09.jpg

  3. DeDude says:

    It is all about where you see a safe parking spot for money. A lot of people have money that they do not want to gamble with in stocks, yet they want or need to get returns that are at least a little higher than inflation. If people are losing their fear of a major reduction in house prices, then “purchase to rent out residential properties” types of investment could be the only major game in town.

  4. stewa43210 says:

    “Where are the buyers?” Many are locked up in homes that are worth far less than what is owed on them. As a Realtor I’ve been pounding the drum locally saying that no meaningful recovery in housing can occur until underwater homeowners get some kind of relief, whether by government or market forces. Aren’t the best potential buyers of homes people who have bought homes before?? With roughly 20% of homeowners having negative equity plus another large percentage having effective negative equity (technically not under water but can’t pay commissions plus the mortgage and have any down payment money left) there is no way to have a sustainable housing recovery, IMHO. If there’s a bright side to underwater homes it’s probably the fact that these homes aren’t on the market which is contributing to the reduction of inventory. In my market in the Midwest I can tell you that we have seen both a 9%+ increase in sales YOY, a 12%-15% decrease in inventory YOY and about a 3% rise in median prices YOY. While they are all welcome on their face I believe the increase of both sales and prices are due to outrageously low interest rates. Take away 200 basis points worth of “Operation Twist” stimulus and I think you’d see similar numbers going the other direction. Bush and Obama’s home buyer tax credits both unnaturally lifted sales and prices of homes. Operation Twist is doing the same. Until there is NO government intervention no one will know for sure if housing has bottomed.