“Buyers are Back”

September 23, 2008

A recent story in the RJ quoted a new research report from Credit Suisse that shows positive signs in the Las Vegas housing market:

“Buyers are back and looking for deals. Traffic levels improved during the summer…Real estate agents noted a growing sense of urgency among buyers to ‘buy while the price is low’ as inventory levels have been steady for several months and sales are starting to improve.”

Robin Camacho, a Las Vegas Realtor was quoted,

“I’m working with so many buyers, it’s unbelievable,” Camacho said. “It’s been tough getting offers accepted lately, even offers for well over list price. Right now, I’m working with at least seven or eight serious, well-qualified buyers — some strictly cash — at the same time, which is incredible, even in a good market.”

Read the full story here


Great Cramer Summary on Housing

September 15, 2008

Jim Cramer has been converting from bear to bull on housing overall, and he wrote his best analysis yet in New York Magazine. Here are some highlights of his 10 reasons that he thinks housing will bottom in about 9 months:

The converted bears, as well as the panicked sellers desperate to bail out and nervous buyers afraid to jump in, will be dead wrong nine months from now, when housing prices bottom. In fact, I’ll call the precise date of the housing-market turnaround. It will begin on June 30, 2009.

Let me give you ten reasons why everyone who now thinks there’s no end in sight to weakening home prices will look like a fool in nine months and will miss the best opportunity to buy since the 1989–1991 real-estate crash.

1. Two years ago, we were building twice as many homes as in 2008, and the decline in new-home building is now accelerating. At this pace, we could see new-home construction fall an additional 25 percent, back to levels last seen when we had 60 million fewer people living in this country. By next June we won’t be building enough homes to accommodate demand, and the gap between supply and demand won’t be made up by unsold inventory..

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6. Come June, the bulk of the reckless 2-and-28 loans—the ones with the low teaser rates for the first two years that sucked people in and then reset at much higher rates, dragging people under—will have moved through the system. These loans have been the biggest source of foreclosed property, so the rate of foreclosures should decline sharply once those loans are off the books, tightening supply and soothing anxious buyers’ nerves.

This one, on household formation, is one of my favorites:

7. We may not think of ourselves this way, but we are still a growing nation: Four million babies are born each year in this country, vastly exceeding the nation’s death rate. Household formation, meanwhile, has held steady at about 800,000 a year. Families have been camped in their apartments or crowding in with their in-laws for some time now. That pent-up demand is bound to find expression and put upward pressure on prices, as credit again becomes easier to get.


Cramer: Housing Recovery in Next 12 Months

August 27, 2008

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A bullish prediction by Jim Cramer this morning focused on the following strengths:

We’re building fewer homes, so inventories have the chance to come down.

The recent housing-rescue bill authorized the Federal Housing Authority to put $300 billion toward getting homeowners out of difficult floating rate loans to the low fixed-rate kind.

Prices have come down enough to lure out the bargain shoppers, about an average of 7% year-over-year. Today’s S&P housing numbers showed declines of over 25% in some areas. That trend could continue.

At last the holdout markets have rolled over – think New York. When that happens, a recovery can happen.

If – and Cramer thinks this is a when – Fannie Mae [FNM 6.27 0.65 (+11.57%) ] and Freddie Mac [FRE 4.55 0.58 (+14.61%) ] are taken over by the government, mortgage rates will come down. They’ve been going up month to month recently.

The bulk of those teaser-rate loans – those that offer low rates for the first two years and then reset to much higher rates – will reset in the third quarter of this year because they peaked in the third quarter of 2006. That means there will be fewer foreclosures as a result because there will be few loans changing to those higher rates.

There’s a tremendous amount of household formation, 800,000 every year, Cramer said. Four million babies born each year, divorces, 2.5 million new citizen – they call create demand.

Immigration had been bringing in 1 million people a year, but that’s been cut back a bit. But both McCain and Obama are pro-naturalization, so that number could return to previous levels after November.

The horror shows that are the California, Florida and Arizona real estate markets are no longer bleeding into other areas. These heavy losses are being cordoned off, Cramer said, and different markets are evening out.

Lastly, even these horrible areas – Bradenton in Florida and the Central Valley in California – are bottoming. The first to fall is usually the first to return, Cramer said. He’s predicting that Miami and the Inland Empire are next.

Once that happens it will be the third quarter of 2009, and Cramer thinks he thesis will be apparent to everyone by then. So here’s the countdown: 309 days until June 30, 2009 – the deadline for a much-needed housing bottom.


LVRJ: Local Home Sales on Comeback Trail

August 20, 2008

Hubble Smith fleshes out the statistics from yesterday:

Home sales are making a comeback in Las Vegas and inventory has been reduced to about an eight-month supply, but prices continue their free fall from a year ago, a strong signal that the housing market has yet to enter recovery.

Actually, if you divide 3,173 into Monday’s inventory level of 22,091, you get 6.96 months, but we’re getting the benefit of the April/May spring buying boom right now, so it will probably widen a bit in the next two months.

Hubble also points out that foreclosure sales are pretty closely matched to new foreclosures, suggesting we’re near equilibrium:

Perhaps overlooked in all of the reports is that foreclosure sales in Las Vegas were about 85 percent of the number of new foreclosures, indicating that the market is nearing equilibrium between foreclosure absorption and foreclosure creation.

That’s one benchmark for recovery, Murphy said.

“When we get to the point where the banks are selling more than they acquire, then and only then will we be in a recovery mode,” he said.


Median Sales Prices Rising

July 24, 2008

Look at the difference between the Year-over-Year comparisons and the recent trends.

The New York Times reports:

Values are dropping as well, which is cutting into many homeowners’ equity lines. The median price of a previously owned home in June was $215,100, down 6.1 percent from a year previous.

But look at the graph they printed on the same article:

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Does it look like values are dropping to you? Funny, to me, it looks like values bottomed in February, and that they’ve risen in April, May, and even more (3.5%) in June.

It boggles the mind that the Times can print such misleading assessments in the face of such clear data.


Home Sales Up Again in the West

July 24, 2008

Just like last month, pending sales fell in the rest of the country, prompting headlines like “Home Sales Fell More Than Expected”. However, once again, sales were up in the West:

Sales slowed to an annual rate of 4.86 million, adjusted for seasonal variables. That follows a 2 percent increase in May. Total sales are 15.5 percent below their level in June 2007.

Only the West had higher sales, reporting a 1 percent increase. Sales declined 6.6 percent in the Northeast, 3.4 percent in the Midwest and 3.1 percent in the South


The Best Bad News: Lower Housing Starts

July 18, 2008

Newspapers tend to report lower housing starts as a bad thing, indicative of further doldrums, sick large homebuilders, etc. But lower housing starts are an important part of balancing an overhang of inventory with market demand. If all the single-family homebuilders just took a one-year break from homebuilding, the major reduction in supply would really eat into supply. So when we see reductions in starts, we froth happily. AP writes:

Construction of single-family homes nationwide fell to the slowest pace in 17 years.Builders started work on single-family homes at an annual rate of 647,000 units last month, a drop of 5.3 percent from the previous month, the Commerce Department reported Thursday. It marked the slowest pace for singe-family activity since January 1991, another period when housing was going through a severe downturn.

And because of a New York anomaly, these figures mask an even bigger correction in the West:

Housing construction soared by 102.6 percent in the Northeast, reflecting the New York City surge, but fell by 12.8 percent in the Midwest, 9.4 percent in the West and 1.4 percent in the South.