Source: Miller Samuel Inc.


Jonathan Miller shows us the above chart (via RealtyTrak) and ask the question: How does flat to falling incomes, high unemployment, rising taxes and tight credit = housing recovery?

The short answer is a combination of record low mortgage rates and held back distressed activity. Following a weak 2011, year-over-year comparisons also look good.

The combination goosed housing sales and prices. The question for the housing bulls is, can it continue?

The answer, at least from this (personally long) housing bear is low rates in 2013 will confront rising foreclosure sales. That battle — plus the state of the consumer as outlined by Jonathan — will determine whether this year’s improvement in housing will continue next year.


Additional bullet points after the jump

• 2008-2010 – Heavy foreclosure volume as a result of the fallout from the tanking economy and housing market
• 2010 (fall) – Robo-signing scandal combined with huge backlogs in judicial states causes a sharp decline in distressed sales entering the market in 2011.
• 2012 (1Q) Major servicer agreement with state attorneys general as distressed volume drops to its lowest crisis level.
• 2012 Calculated Risk and other respected sources call the bottom (and they may be right) but doesn’t factor in the distressed sale phenomenon. “Bottom” does not equal “recovery” but rather it’s a step on the way to recovery.
• 2012 (2Q) Distressed sales begin to rise again. By adding lower priced distressed sales in the mix, housing prices stabilize or slip next year nationally (I see Manhattan rising with low distressed exposure and limited inventory).


Ignore The False Positives, Foreclosure Sales Are Rising Again Now  Posted by Jonathan Miller
Miller Samuel, December 6, 2012

Category: Credit, Foreclosures, 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.

14 Responses to “Falling Incomes, High Unemployment, Rising Taxes and Tight Credit = Housing Recovery?”

  1. BennyProfane says:

    Speaking of foreclosures:

    “As of Oct. 31, there were 377,272 pending foreclosures in Florida’s 20 circuit courts, a net reduction of just 435 cases since the money became available in July, according to the state courts administrator.
    Judges say new foreclosure filings have nearly outpaced the number of cases they’ve been able to close as banks work on clearing defaulted loans on hold since the robo-signing freezes and pending the National Mortgage settlement, which was finalized in March.
    While the $4 million has helped courts statewide close 69,513 cases in four months, 69,078 new cases were added during the same time period.”

    And, don’t think it’s any different in New Jersey, New York, and the other judicial states living with this backlog. Slow drip, for, what, another five to ten years? Praise the lord for 4% 3.5 down FHA mortgages to low credit score cases, or, there would be no housing market to speak of.

    I was listening to the radio driving around yesterday, and I heard some pundit say something about the “significant” improvement in housing prices, and the market in general. This cheerleading from fantasy land has gotten way out of hand. The election is over, so, let’s cut it with the propaganda. The housing market of 2006 will never return in your lifetime. Which, is good. Look what happened in 2008.

  2. whskyjack says:

    In the lowend market around me I’m starting to see mom and pop speculators putting a floor under housing with a bit of a rebound. Not anywhere up to normal but not falling. A lot of rent to own operators too.


  3. Expat says:

    It’s ironic, but you are missing the big picture, Barry. Goldman Sachs is doing fine. The 1% are doing fine. Berlusconi is doing fine. So why are you questioning the recovery? Do we have to report you to the Department of Information and Civic Duty?

  4. jb.mcmunn says:

    Transient sales bump as yield-chasers buy houses to use as rental properties.

    Don’t count on the Millennials as potential buyers:

    Downsizing Boomers looking to a sell.

  5. louis says:

    when the mls does not have to say “standard sale” then you have a recovery.

  6. DeDude says:


    Agree. If you simply look at the residential housing market as families purchasing houses to live in them, then I think you may be missing something important (that could change the market dynamics). The families that move out have to find somewhere else to live. In many cases that means they will rent a house. For a lot of investors the current short sale prices and rental incomes present a very nice return compared to bonds – and many feel there is much less risk in rental properties than in stocks. I think prices will slowly improve from here – with a pipeline of underwater mortgages going into short sales, picked up by investors who rent the houses out again. If they are really smart they may even end up with the original owner staying in the house as a renter instead.

  7. Futuredome says:

    1.Falling incomes mean more jobs as the global wages even out
    2.Unemployment is falling rapidly now, I have the real rate in the high 6′s once the Sandy factor is removed.
    3.Raising Taxes the piddly amount they would go up, is irrevelant.
    4.Tight credit, that is not as tight.

    Sounds like a typical housing recovery. Lowering real wages through low inflation has been the model the US has used since 1980.

  8. 1stThings1st says:

    Context is important…the larger the context, the more whole the meaning. Anyway, cheap money is circulating directly and overwhelmingly to the 1%… they having collected around 95% of all income created in the past 2-3 years and over 80% of what has been created in the last generation. With the system rigged, big corporations and hedge funds are the players fueling any “real” estate recovery by buying at distressed prices and renting at very attractive return rates. However, this will only continue as long as families-friends-neighbors-pets, etc., can pool together to afford exorbitant rent to own ratios. Afterwards, rental prices will and must drop, thereby making this bubble much less attractive. Today’s ‘Calculated Risk’ graph about the Mortgage Equity Withdrawal rate as a % of Disposable Income is telling. Therefore, like many other numbers, the “real” in real estate and real recovery is only temporary because it is being supplemented with a +$1trillion annual deficit. As the FED becomes the U.S. debt buyer of “ONLY” choice, and the majority of public mood continues to sour as any attempt to trim the giveaways is undertaken and the boomers get their savings/201k’s/Ira’s whacked once again while just now starting to draw off the social safety net, there is indeed a critical flash point arriving in the not too distant future.

  9. Willy2 says:

    This also explains in part why deleveraging of the private sector has stalled for a while. But now with the “Robosigning scandal” behind us and distressed sales rising, I would expect deleveraging to accelerate. and therefore a contraction of the US economy in the (very) near future. This could also explain why US manufacturing is “weak/weakening”. (source: ECRI).

  10. josap says:

    Hedge funds & REITs buying in bulk from lenders will keep the for sale market tight.
    Home town flippers are still buying.
    Lenders will continue to keep properties off the market and list them for sale slowly.

    This will possibly keep the bottom steady in the market.
    Some states changing foreclosure laws for abandoned properties will get those houses through the process faster.

    Just some things to watch.

  11. Dr V says:

    The Federal Reserve reported in October that for every house for sale, 2.5 houses are being kept off the market. These are not second homes. These are vacant homes with no other economic purpose, whose owners prefer them off the market in order to avoid the effect of deluging the market with these homes.

  12. [...] Mercury News Canada’s housing market: a victim of demographics – Globe & Mail Falling Incomes, High Unemployment, Tight Credit = Housing Recovery? – TBP The Fed Balance Sheet: What Is Uncle Sam’s Largest Asset? – Lew Rockwell [...]

  13. BenGraham says:

    BR: what do you mean by “this (personally long) housing bear”? Long as in you own a home or long as in you are invested in housing related stocks while being a housing bear?

  14. BuildingCom says:

    As prices slowly grind ever lower, along with housing demand at 16 year lows and falling, there won’t be any “market”.

    Get used to it because prices are still at the grossly inflated levels of year 2004 and have a very long way to fall.

    Housing is toxic.