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A Declining Inventory of Unsold Homes September 28, 2009

Posted by John Watch in AccuriZ Reports, News Feed.
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As the news of declining sales for existing homes has captured headlines as of late, the underlying highlight of a declining inventory of unsold homes is encouraging news for the housing market.  At the end of August, total housing inventory dropped 10.8% to 3.82 million existing homes for sale, representing a proposed 8.5-month supply and the lowest level seen in a year (not seasonally adjusted).  Real estate is cyclical, seasonal and emotional, so declining sales for existing homes is expected, as the seasonal cycle wraps up and the $8,000 tax credit comes to a close.  What’s more significant is the decline in housing inventory.

The Housing in Crisis report discussed the extreme oversupply of housing as a primary factor in the housing boom.  Using this report, which utilizes a 3.5 million growth rate in population at a 2.7 average unit size, 1.3 million new housing units can be absorbed annually.  This means that it will take three years for a complete housing absorption in the market.  Until this happens, property values will remain flat.

What would be interesting to know is the details of the 3.82 million existing homes on the market. Does this number include new construction?  What exactly qualifies as an existing home? Based on various reports I’ve searched, the 3.82 million represents homes available for sale which would not include new construction if true.  Regardless, this news of declining inventory is a great sign of steps in that necessary direction.  As the market corrects itself with property values, inventory and prices, a housing recovery is in place.

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Housing Market News: 9/28/09 September 28, 2009

Posted by John Watch in AccuriZ Reports.
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For statistical reports on property data from public records and property valuation click here.

Where real estate seems to be hitting a bottom

Real Estate is Cyclical, Seasonal and Emotional

Fed’s weekly MBS purchase hold steady at $25.6bn

The Bears and the Bulls of Real Estate

New Home Sales Lose Momentum in August

Square Footage and Median Price Differentials

American Migration Trends

Negative Bond Returns Coverage with Mortgage Miracle

The Economic Recovery Continues

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Housing Market News: 9/24/09 September 24, 2009

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For statistical analysis on property data from public records and valuation click here.

The Housing in Crisis Report

Senate Version of Cap and Trade will Pummel Real Estate Market

Mortgage Assistance Program directed to Homeowners

The Crisis of Public Management

Where is the Real Estate Market Today?

What Does the Fed’s Statement Mean for Mortgage Rates?

Sales of Existing U.S. Home Probably Climbed As Prices Fell

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Housing Market News: September 21, 2009

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For statistical analysis, and property data from public records click here

Credit Policies Still Threaten Recovery

Stability for the Manhattan Market in Fruition

FHA New Lending Standards for Mortgages and Home Refinances

The Cyclical, Seasonal and Emotional Aspects of Real Estate

Low Expectations for Mortgage Help Program

Mortgage Assistance Program for Homewoners

Debate Ranges About Real Estate’s Future

Housing in Crisis: What Happened?

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Should the $8,000 Tax-Credit be Extended? September 17, 2009

Posted by John Watch in Uncategorized.
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On track to cost the government $15 Billion, the $8,000 Tax-Credit implemented last winter has undeniably stimulated the housing industry. Now, with the November 30th deadline looming, questions on whether the housing market can survive without it are surfacing.

With Real Estate being Cyclical, Seasonal and Emotional, the cyclical Tax-Credit boosted seasonal sales, causing an emotional stir in the market. The plea, led by the NAR, is looking to extend the credit through next summer, expanding it to $15,000 and making it available for all buyers. If extended, the damage would amount to between $50 billion and $100 billion.

As mentioned in our Manhattan Condo article, we see signs of recovery in the market. An extension on the tax-credit would only ensure this fact. Due to the exclusivity, many homeowners looking to trade-up were unable to benefit. An allowance of the credit to all buyers would leverage the declining larger homes market, as the current credit has first-time buyers looking more towards mid-level and starter homes. While declines are epxceted during the winter seasons, an extension of the credit could curtail this fact. Also, more construction creates employment and consumer spending is helped with furniture and home fixture needs.

But this summers’ housing numbers were certainly dependent on the credit, causing an emotional high that, all things considered, is artificial. While no one would like to see any declining numbers in the housing industry, we must not forget about the factors that created the recent housing bubble along with its subsequent burst. As stated in the Housing in Crisis Report, overbuilding in specific areas and easy lending manufactured a bubble without the proper demand and financial security of homeowners to sustain it. At the end of 2008, property data from public records indicated an excess of 5 million homes on the market, a number that needs to be corrected severely.  An increase to $15,000, with mortgage rates now under 5% could possibly lure buyers otherwise unable to afford a new home with mortgages they can’t afford. Overbuilding would likely continue, and the steps to propping up another bubble would be in place. Also, could taxpayers afford to lose another $100 billion?

What do you think should happen? Whether there is an extension or not, the government cannot provide the credit forever; it will have to end eventually. The question is, what will happen after that?

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Housing Market News: 9/15/09 September 15, 2009

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Home Sales Picking Up on Long Island

Where is the Market Today? Cyclical, Seasonal and Emotional

Rent-to-Own your home: Pro and Con

The Bears and Bulls in the Market

One Year After, What About the Impact on Average People?

A Mortgage Program to Directly Assist Homeowners

American Held Hostage by Large Financial Firms

Square Footage and Median Sale Price: Differentials?

Your House: Just A Home

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Summer Breather: Positive News leads to Increased Confidence! September 10, 2009

Posted by John Watch in AccuriZ News.
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White pants and white shoes go in the closet after Labor Day!

And so should the commentary we have become addicted to over the last six months regarding the Real Estate Market.  The rhetoric of “worse is to come” claiming the headlines should be replaced with the optimism of a full fledged recovery in 2010.

I have presented several blog posts during the past eight weeks dealing with Housing in Crisis, Mortgage Assistance Programs and most notably the Cyclical and Seasonal real estate markets.  Our efforts to attain over 40 million public records covering the top 100 MSA’s has been successful, yielding positive results that analyze actual property data and sales activity, not a tracking index.

Because real estate is complex, many analysts seek a simple solution to explain the patterns of buying and selling activity. But there is no simple solution; given that location and square footage are two critical elements that affect property values.

We have received over 100 comments to our blogs which tend to agree with this.  So my challenge to those who follow our posts is to join in and become more Active!  Your comments do not just reach us; they reach other members who can benefit from your insight and guidance.

Opinions on the real estate market will only change when more analyses of public records and the property data associated with those records are presented and accepted by the blogosphere.  This is not a small block of users that can be ignored.

Sure, there remain problems in the market. Sure, appraisers are being conservative. And yes, some agents may be crossing the line.  But the bottom line is this:

Positive News leads to increased confidence.  Increased confidence will lead to more sales and thus all Real Estate Agents benefit. We are headed towards a housing recovery and we need to announce it.  So submit a blog post or comment where you have experienced something positive in the past three months or what you see ahead.

You can make a difference!

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Real Estate News: 9/3/09 September 3, 2009

Posted by John Watch in News Feed.
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Prime Jumbo Trouble: The Foreclosures Keep Coming

Real Estate Mania: Bulls vs. Bears

Price Rise 7% Nationwide Says Clear Capitol

How to Read Bewteen the Lines of Real Estate News

In Climate of Good News, Some Argue Housing Crisis Will Continue

Square Footage and Median Price Differentials

Who Will (And Should) Get Credit for a Recovery

Pending Sales of Existing Homes in U.S. Increases 3.2% in July

Real Estate is Cyclical, Seasonal and Emotional

Mortgage Brokers Association Propose Dismantling of Freddie, Fannie

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Real Estate Mania: Bears vs. Bulls in a City Near You! August 31, 2009

Posted by John Watch in AccuriZ News, News Feed.
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 Main Event: Bears vs. Bulls- The Housing Market Bottom Match 

 Real estate is Seasonal, Cyclical and Emotional, and the emotions are running wild at the moment.  Home prices are up, sales are increasing and the reports are presenting “good news”.

The “mania” of real estate predicting and forecasting is beginning to pick up as the summer selling season comes to an end, with hints of promise starting to appear in the housing market.  After a grueling Housing Bust that left the economy severely damaged, property data analysis statistics collected from public records now show signs of recovery.  

Both the Bears and Bulls have been fighting it out, relying on the training method of the S&P/Case-Shiller Home Price Index.  The Bulls are starting to swing away, indicating a sign to the return of the boom days of old.  The Bears are ducking the punches citing the lagging, inadequate property data analysis in the Case-Shiller Index as a sign of caution.

The stage for the Housing Market Bottom Showdown is set, with the American public’s perception of the market at stake.  Leaning too far to one side could mean a repeat of the 2006 Bust.   Are we to believe that we are on the verge of a turnaround, or do we still need to be patient?  We will take a look at the supporting arguments from both corners, which are based on the Case-Shiller Index and determine the best judgment for the public moving into the winter months.  Here’s the tale of the tape.

Home Prices on the Upswing from CNNMoney.com:

Packed with quotes of “positive signs” “great news” and “booming” about the Index, the optimism is rampant.  It goes on to say that an area in Los Angeles had “booming” home sales again.  Looking at the 20-city index below, L.A. had 0% change from Q1.

Is that really a boom?  The American public needs real facts, not fluff.  The following table is extracted from CNN.money.com:

CaseShiller2Source:S&P/Case-Shiller Home Price Index

Year-over-year, EVERY city is still negative, with 15 cities negative over 10%.  The talk of “shadow inventory” further depreciating the market crept in as well.

It has been noted before that Case-Shiller Index probably over weights foreclosure sales (Reported by AccuriZ and NewsnEconomics).  Foreclosure-metro areas have been more heavily weighted, dragging down the overall value of the Index.  Does it seem logical that financial institutions would dump houses on the market, knowing that such actions would further deflate property values?  There are duplicate and triplicate recordings of foreclosures out there; thus distorting the actual count of properties in foreclosure.

Asking the important question: Would you sell in a down market?  It seems to have more common sense than the confusing and contradictory analysis of the sales data presented by Case-Shiller.  Letting the market stabilize will enable mortgage servicing companies to come to terms with existing owners.  The AccuriZ Mortgage Assistance Program also provides a solution to this problem.

The article ends with this quote from Mr. Shiller, “I have found that momentum matters,” he said, “and this is a sudden break in [downward] momentum.  The [market] psychology seems to be changing.” 

Advantage: BEARS- Who do we trust

It’s Time to Call the Housing Bottom: 95% of Case-Shiller Markets Show Home Price Improvement from TheMortgageReports.com

Source: TheMortgageReports.com

Improved by how much? 10 of the 20 markets listed are bordering the 1% line.  Considering the margin for error, 1% is a meaningless number.

The article then proceeds to list 3 reasons why the Case-Shiller Index is imperfect:

  • It’s limited to 20 U.S. cities, representing just 9% of the U.S. population
  • It’s on a 2-month lag, reflective of how housing was, not how it is
  • It ignores locality, grouping city neighborhoods into one big lump

 So if it’s “time to call a housing bottom,” what other data is being used (besides the imperfect Index) to make this claim?

Admitting that the Case-Shiller Index is imperfect is one thing, but using that same imperfect data (with no other visible sources) to create a market forecast is completely another.

Many reports have economists using the skewed data of the Index to captivate headlines and bolster their own personal agendas. When not weighed against other sources of information, the Index is questionable in determining a forecast.

Real facts about property data are needed to determine the current state of the market. This article ends by pressing people to buy now with contact information for a pre-approval letter.

Advantage: BEARS- Incomplete data means caution

Why It’s Hard to Tell If Price Gains Represent a ‘Turning Point’ from Wall Street Journal (WSJ.com):  First, the article states that Mr. Shiller noted the recent index “may be turning point.”  In next sentence Mr. Shiller is quoted saying, “It really is too soon to call this as a turning point.”  Wait… what?

Later, Mr. Shiller expresses “great reluctance” in forecasting market prices. But this is exactly what transpires as economists make predictions solely based on the Case-Shiller report.

For example, later in the article housing economist Thomas Lawler notes that “the price index should keep gaining in the coming months” in the next paragraph.  Based on what?  What are we supposed to believe?  The reason why it’s ‘hard to tell’ is because everyone has a different interpretation without providing the facts.

It ends with this quote from Lawler, “Indeed, the [index] is almost certain to continue increase over the next few months.  After that, who knows?” said Mr. Lawler.

Advantage: BEARS: Too confusing to pinpoint.

Housing Market: Looking Better, But Still Troubled from Time.com:  Using more than just the Case-Shiller Index, this article notes looking “behind the headline” to see that the “sector is still fragile.”  It looks deeper into the property data to see that the low- and mid-tier homes are doing better than more-expensive homes. Once again we see that Square Footage Matters! (Reported by AccuriZ). In a recent Manhattan Condo report we predicted stabilization by Q4, based on square footage;

 Source: AccurZ.com

Also, noting that data on new-home sales like the Index are “notoriously imprecise and volatile,” the article states that “new home-sales are best looked at over five or six months.” So what is the real benefit of these Indexes? 

The Time.com report even stated that the margin of error on one particular Index was plus or minus 13.4%.  With that said who really benefits from this information?

The article ends with, “We’re now moving forward, and even though it looks like we’re doing that in a positive way, there could still be more plot twists ahead.” 

Advantage: BEARS

So how do they match up for the American public?  When the match is based on one specific source of data that has been historically ineffective, no one wins. The Bulls emotions are high right now, but as the emotional sector dies down – and foreclosures, unemployment and a housing oversupply (in the AccuriZ Housing In Crisis report) start to do damage in the later rounds – the Bears’ perspective might take control.

Again, Real Estate is Cyclical, Seasonal and Emotional.

Time and Patience are the elements that work to everyone’s benefit.  While things are looking better, we still have some time to heal.  Incomplete data analyses that rely on public records and outdated property data from certain regions of the country have little impact other than stirring up the emotional sector of the market.  A level of confidence needs to be balanced with a level of cautiousness, as quarterly reports and month-to-month gains are not enough to be deciding factors in a market forecast. 

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Single Family Housing Starts: Dog Days of August August 18, 2009

Posted by John Watch in AccuriZ News, News Feed.
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As we all sit inside our air conditioned offices wondering what will be the next “big” news regarding real estate, the Commerce Department released its estimate of New Single Family Home Construction today.

Stop!  We can be happy with this news or we can take it in stride.  Every article that I have read, the author comes from a point of strength in that there is some unique data set that only they have access to.  There never appears to be any common sense applied and invariably there are always quotes from interested “economic advisors”.  The latest news is a classic example. 

581,000 new single family homes were built in 2009, according to public records.  Now that is a dismal number compared to the hay day of 2005/2006 when over 2 million homes were being built (See Housing In Crisis Report). But is this really a bad number?  Based on property data records, every year in the United States each market replaces existing inventory with new inventory because older homes need to be rebuilt and because of natural disasters.  There also is the market for individual, non development homes that are built to meet unique demands of property owners.  So 581,000 is a good number.

But let’s not forget that over 3.5 million vacant housing units that were newly built remain in the market.  Let’s not forget that Supply and Demand need to be in balance for a healthy real estate economy to exist.  And let’s not forget that supply is reduced by people buying homes and presently this is occurring through natural population growth.  So with the national population growing at about 4 million people annually, we will only see about 1 million of the excess inventory absorbed annually.  This means three more years before true market levels begin to appear.

Of course in areas where overdevelopment was held in check, the housing markets are already in full recovery.  But for areas in Florida, Nevada and Arizona, recovery may be five years away.

Let us know what you think, what you are experiencing in your communities and what you think about the housing recovery!

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