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Home Sales Hit Record Low

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The Prof

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Home Sales Hit Record Low - CBS News

Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rise about 5 percent over December's pace.

The January decline will heighten fears about the fledgling recovery in housing. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.

A $1.25 trillion program from the Federal Reserve which has held down mortgage rates is set to end March 31 and tax credits to bolster home buying are scheduled to expire at the end of April.

Though the overall economy started growing again this past summer, economists are worried because unemployment remains high. This weakness is causing consumers to shy away from spending, especially on big-ticket items such as homes.

The Conference Board reported Tuesday that its Consumer Confidence Index fell almost 11 points to 46 in February, pushing the index down to its lowest reading since last April. At 46, the index is a long way from the 90 reading that economists generally view as depicting healthy consumer attitudes.
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Some comments:

1. There are THREE leading indicators concerning the real estate market---home SALES, home VALUES and home FORECLOSURES.

2. The latter is the most serious and also the most ominous.

3. Home FORECLOSURES have exceeded 300,000 for 11 straight months.

4. And virtually everyone in real estate concedes there's no bottom in sight for home FORECLOSURES.

5. Now this: home SALES in January at an ALL TIME LOW.

6. DOWN 11.2% from December.

7. And selling at a rate that extrapolates to a miserable 309,000 new home sales over a 12 month period.

8. These monthly economic reports---jobs losses, consumer spending, consumer confidence---time after time AP and the NY Times are forced to report new statistics (A) unexpected by "experts," (B) disappointing, (C) reversing a previous trajectory of recent improvement, and, therefore, (D) most foreboding forecasting forward.

9. As for home VALUES---they're DOWN, too, minus 5.6% from Twelfth Month.

10. And all this DESPITE $1.25 TRILLION dollars advanced by the Federal Reserve to hold down interest rates.

11. DESPITE the $8000 tax credit for first time buyers, $6500 for existing homeowners.

12. The credit ENDS in APRIL.

13. The governmental PROPS will be removed NEXT MONTH.

14. What's gonna happen then?

15. They don't seem to have done MUCH GOOD, anyway.

16. So much government---and NOTHING IS WORKING.

The Prof
 
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Glen Beck just proposed a theory of world economies that I hadn't heard before that may explain some of this.
 
The government props will not stop next month. Two things, the chairman of the Fed said today that they will monitor what happens to the market so they may or may not stop. What will probably happen though is that Fannie and Freddie will step into the breech. The government will let them take on this debt which they will right off later and add to the national debt.

On another note, the actions of the Fed largely had what the expected result. They slowed the slide of housing prices. Already 25% of mortgage holders are under water. This is one of the bigger reasons for foreclosures. If prices had been allowed to find their real market price, who knows how much lower they would have gone. It might have been better to take the hit at once, but the politicians did not want to deal with that.
 
American said:
Glen Beck just proposed a theory of world economies that I hadn't heard before that may explain some of this.
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Do not under any circumstances listen to Glenn Beck for economic theory.
 
listen to anyone you want to

think for yourself
 
Deuce said:
Do not under any circumstances listen to Glenn Beck for economic theory.
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Ever hear the saying "A stopped clock is right twice a day"?
 
I would imagine that the very cold weather much of the nation experienced in January put a drag on home sales for the month more than anything else. After all, in the middle of a blizzard you are probably not thinking "hey lets go look at houses".
 
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SouthernDemocrat said:
I would imagine that the very cold weather much of the nation experienced in January put a drag on home sales for the month more than anything else. After all, in the middle of a blizzard you are probably not thinking "hey lets go look at houses".
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Probably accounts for much of Jan's drop

But lets be realistic. With the large level of unemployement the US has, continued foreclousures going on, a large supply of unsold preexisting homes that have not come onto the open market for sale and of course the large supply of unsold preowned homes to begin with, I doubt new home sales will be increasing in the near future.

The economic problems the US faces right now have not been fixed, just papered over with a massive amount of paper
 
Deuce said:
Do not under any circumstances listen to Glenn Beck for economic theory.
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Since you and SD warned me against it, I'm with you. NOT
 
The Prof said:
Home Sales Hit Record Low - CBS News



Some comments:

1. There are THREE leading indicators concerning the real estate market---home SALES, home VALUES and home FORECLOSURES.

2. The latter is the most serious and also the most ominous.

3. Home FORECLOSURES have exceeded 300,000 for 11 straight months.

4. And virtually everyone in real estate concedes there's no bottom in sight for home FORECLOSURES.

5. Now this: home SALES in January at an ALL TIME LOW.

6. DOWN 11.2% from December.

7. And selling at a rate that extrapolates to a miserable 309,000 new home sales over a 12 month period.

8. These monthly economic reports---jobs losses, consumer spending, consumer confidence---time after time AP and the NY Times are forced to report new statistics (A) unexpected by "experts," (B) disappointing, (C) reversing a previous trajectory of recent improvement, and, therefore, (D) most foreboding forecasting forward.

9. As for home VALUES---they're DOWN, too, minus 5.6% from Twelfth Month.

10. And all this DESPITE $1.25 TRILLION dollars advanced by the Federal Reserve to hold down interest rates.

11. DESPITE the $8000 tax credit for first time buyers, $6500 for existing homeowners.

12. The credit ENDS in APRIL.

13. The governmental PROPS will be removed NEXT MONTH.

14. What's gonna happen then?

15. They don't seem to have done MUCH GOOD, anyway.

16. So much government---and NOTHING IS WORKING.

The Prof
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I really don't understand why Congress hasn't just passed a law that puts a freeze on all home foreclosures. I mean it's pretty common frakking sense that right now people are just trying to hang on to what they already have instead of trying to get more of what they want.
 
There was a home foreclosed upon two houses down that frankly has me baffled. The owner filed bankruptcy but had a renter paying rent and keeping up the house and property. For some reason the renter was forced to move out and now the property is an eyesore with no income coming in for anyone. Wouldn't it have made more sense to keep renting it? Does the bank have some kind of ulterior motive or are they just plain stupid?
 
Bubbles pop. The world still goes round.
 
Dont Worry!!!!

Chairman Obama & the poliburo will come up with another brilliant plan like a "cash for clunkers" except with houses where someone could trade in there 1973 Marshfield mobile home with leaking pipes & a rotted floor for a brand new house , compliments of the taxpayer of course.
 
samsmart said:
I really don't understand why Congress hasn't just passed a law that puts a freeze on all home foreclosures. I mean it's pretty common frakking sense that right now people are just trying to hang on to what they already have instead of trying to get more of what they want.
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Great idea, just have people stop making mortgage payments because they can not be foreclosed on. Besides the fact that you would be breaking millions of legal contracts.

People need to use their frakking heads!!
 
Iron Yank said:
Dont Worry!!!!

Chairman Obama & the poliburo will come up with another brilliant plan like a "cash for clunkers" except with houses where someone could trade in there 1973 Marshfield mobile home with leaking pipes & a rotted floor for a brand new house , compliments of the taxpayer of course.
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I don't see the GOP coming up with any solutions to the issue.
 
washunut said:
Great idea, just have people stop making mortgage payments because they can not be foreclosed on. Besides the fact that you would be breaking millions of legal contracts.

People need to use their frakking heads!!
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Well, when a lot of those mortgages are predatory in nature, I don't feel so bad for the lenders who gave them out. The lenders need to use their frakking heads just as much as the borrowers.

It just doesn't make sense to me that we should be kicking people out of homes that won't be bought anyways and those people won't be able to find any cheaper housing because they don't have a job because they can't find one and so they have to move in a crowded house to pay for it.

Maybe we could do something where if the owners of the home is on unemployment their house has an automatic foreclosure freeze, and do something like child support in which a percentage of each paycheck is taken out and given to the bank, which the borrower can opt-in to do even if it's less than is mortgage payment.
 
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samsmart said:
Well, when a lot of those mortgages are predatory in nature, I don't feel so bad for the lenders who gave them out. The lenders need to use their frakking heads just as much as the borrowers.

It just doesn't make sense to me that we should be kicking people out of homes that won't be bought anyways and those people won't be able to find any cheaper housing because they don't have a job because they can't find one and so they have to move in a crowded house to pay for it.

Maybe we could do something where if the owners of the home is on unemployment their house has an automatic foreclosure freeze, and do something like child support in which a percentage of each paycheck is taken out and given to the bank, which the borrower can opt-in to do even if it's less than is mortgage payment.
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Decent proposal in the last para. On he other issues discussed above we have to admit that a lot of people are not in trouble becuase of presatory lending. I knwo fo people who bought property in Califonia who clearly could not own the property under usual standards. They bought the house and soemone lent them the money because they thought the house would go up in value and they would make a big profit. People in the bubble states were buying investments and not housing for their family. That is a hige problem.

Then when the bubble ended badly, housing prices went down and people did lose jobs.

Not sure what the rational for bailing out the housing speculators versus the investors ( including pension funds) in something like Citicorp that have lost billions of dollars.
 
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