NWMLS: Tax Credit Boosts November Closed Sales as Pending Sales Drop Through the Floor

November market stats have been published by the NWMLS. Here’s the NWMLS press release: Move-up buyers, extended/expanded tax credits boost home sales; Northwest MLS brokers expect momentum to continue in 2010.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

November 2009 Number MOM YOY Buyers Sellers
Active Listings 8,218 -7.3% -19.2%
Closed Sales 1,574 -10.5% +81.1%
SAAS (?) 1.48 -8.5% -47.6%
Pending Sales 1,581 -31.1% +35.9%
Months of Supply 5.2 +34.5% -40.6%
Median Price* $370,000 -2.0% -6.3%

The 2000-2007 average decline in closed sales from October to November was 12.8%, at 10.5%, the fake expiration of the tax credit did not boost November closings quite as much as I was expecting. Could it be that the strength of the tax credit was already wearing off before they even decided to extend it?

It is interesting to note that after spending the previous seven months in excess of 2,000, pending sales dropped through the floor in November, taking the largest one-month tumble on record. The average October to November drop in pending sales 2000-2008 is 13.7. Contrast that with 2009’s 31.1% drop. (Here’s a chart from the Seattle Bubble Spreadsheet for those month-to-month numbers.) Not too surprising considering that November pendings would have been too late to qualify under the old tax credit deadline, and there is no urgency anymore to rush to beat the new deadline.

As we head into winter, I’m comfortable now calling the winners in May’s poll: Guess the maximum 1-month total closed SFH sales in King Co. for 2009. 1,750-2,000 takes the prize. Only 12 of 123 voters selected the correct answer. Congratulations to deejayoh and me, as well as four other registered commenters.

I don’t have access to my full spreadsheets at the moment, so I’ll update this post later today with the charts and updated spreadsheet download link. Post updated.

Feel free to download the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format. Click below for the rest of the usual monthly graphs.

Here’s a look at pending sales, closed sales, and a forecast of the next two months of closed sales that assumes the relationship seen between the two over the previous nine months continues (which is an admittedly dangerous assumption given the phoney November closing deadline of the tax credit).

King County SFH Pending Sales

Here’s how the closed sales situation is shaping up compared to previous years:

King County SFH Closed Sales

Not much of a deviation from the usual seasonal decline this time around. Certainly a much stronger showing than a year ago, but four other years actually had smaller month-to-month percentage declines from October to November.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Still following the usual seasonal pattern, coming in as one of the highest years on record, higher than every year from 2000 through 2006 except 2002.

Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in the following two charts is now represented by closed sales, which have had a consistent definition throughout the decade.

King County Supply vs Demand % Change YOY

For the first time I actually had to (significantly) adjust the upper bound for the closed sales vertical axis. That’s probably sustainable, right? (sarcasm)

Here’s the chart of supply and demand raw numbers:

King County Supply vs Demand

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

King County SFH Prices

Dropped back below May 2005 pricing. May 2005: $370,500. November 2009: $370,000.

Here’s a few news blurbs to hold you over until tomorrow’s reporting roundup.

Seattle Times: Home sales shoot up in November from year ago thanks to federal tax credit
Seattle P-I: House sales up 81% in November, prices down in King County

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

51 comments:

  1. 1
    The Tim says:

    Also thought I’d point out that my guess yesterday of 1,565 closed sales in November was pretty dang close.

  2. 2
    AMS says:

    “Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is positive or negative news for buyers and sellers:”

    Once again, I will suggest the standard terms “favorable (F)” and “unfavorable (U).”

    Positive prices are negative (news) for buyers.

    Positive prices are unfavorable (news) for buyers.

  3. 3
    Groundhogday says:

    I will be watching closely over the next few months to see if the tax credit extension plays out like the “cash for clunkers” extension…

  4. 4
    AMS says:

    RE: Groundhogday @ 3 – There was no extension on the cash for clunkers program. The $2 billion in additional funding was to fund the original program sufficiently. Original expectations was that CFC program would last for months. Within a week there were concerns that the funds had been used up. Once I heard that, I immediately purchased my new car under the program. It was not worth the risk of losing out on $4,500 in Obama money. The income tax credit did not have a funding cap, but rather a specific end date. If this would have been the same with CFC, then there would have been no reason to fund the program further.

    In summary, the added funding to CFC was to cover the existing people seeking to trade up. I suspect that most of the first-time home buyers who wanted to purchase have purchased. Certainly the much of the pent-up first-time home buyer demand is gone. Of course there will be some people taking full advantage of the program.

  5. 5

    I think the tax credit peaked in October. Agents (and presumably their clients) were very wary of pushing that too far. And if you think about it from a finding a property and then negotiating standpoint, that makes a lot of sense. Otherwise you’re negotiating from a point of weakness. Waiting until October to find a property was risky.

    As to pendings, maybe it’s a sign that buyers are finally realizing that short sales are a waste of time. Only about 350 currently pending short sale properties in King County (SFR) went pending since 11/1/09. I would guess that’s a much smaller number than recent months. That’s still roughly 3x the number that actually closed in November.

    Numbers from NWMLS sources but not compiled or guaranteed by the NWMLS.

  6. 6

    RE: AMS @ 4 – They did add additional funds, but there was never a deadline. The orignal funds were used up pretty fast.

  7. 7
    AMS says:

    RE: Kary L. Krismer @ 6 – “LIMITATIONS(A)
    GENERAL PERIOD OF ELIGIBILITY- A voucher issued under the Program shall be used only in connection with the purchase or qualifying lease of new fuel efficient automobiles that occur between July 1, 2009 and November 1, 2009.”

    Source: http://www.cars.gov/files/official-information/law.pdf

    Also, “(G)
    NUMBER AND AMOUNT- The total number and value of vouchers issued under the Program may not exceed the amounts appropriated for such purpose.”

    The ‘official rules’ were released July 24.

  8. 8

    RE: AMS @ 7 – Okay, maybe there was a deadline, but it probably wasn’t extended. The first amount was used up very quickly, and even at 1/4 of that rate the additional money wouldn’t have lasted to November.

  9. 9
    AMS says:

    RE: Kary L. Krismer @ 8 – Never underestimate the power of free money…

    There were not many who thought the funds would run out in 10 days, or whatever it was.

    On a political note, I doubt that Congress could have not extended it. A program that had so much fanfare that only lasts 10 days and leaves many voters out–not good for your political career. To fund it sufficiently to get the program through a month, or so, isn’t a suicide mission.

  10. 10
    hinten says:

    “Could it be that the strength of the tax credit was already wearing off before they even decided to extend it?”

    Before you know it Tim went from “the tax credit is the worst idea since the prohibition and will kill us all” to “it is so inconsequential that it doesn’t have any impact at all”.

  11. 11
    AMS says:

    RE: hinten @ 10 – At any auction, the bid strength goes lower and lower as time goes on. At some point, there are no more takers.

  12. 12
    hinten says:

    RE: AMS @ 11 – That would acknowledge that, at least initially, the credit was effective which is what Tim has always argued against.

  13. 13
    The Tim says:

    RE: hinten @ 10 – I don’t see how either of those statements comes even close to accurately reflecting my position on the tax credit, now or in the past. What I have stated on the matter is fairly simple.

    When it was passed, I did not expect it to have much of an effect, a fact I admitted outright in yesterday’s post:

    When the $8,000 tax credit was initially passed, I doubted that the effect would be that strong, especially here in Seattle where $8,000 represented a mere 2% of the median home price. I stupidly assumed that most people would be smart enough to realize that 2% is essentially a worthless incentive when home prices are falling at a rate of over 10% a year.

    In the months since it has become apparent that there was indeed some effect, certainly more than I expected, but at a far greater cost than we were originally sold on, and in a horribly inefficient manner. In this post I am simply questioning whether what effect it did have is beginning to wear off already.

  14. 14
    Ray Pepper says:

    I’m very depressed. My offer of 30k was crushed by two other offers. I received the inevitable email “Would I like to increase my offer? Is this the highest and best?

    I don’t engage in bidding wars and I suggest all Bubble Heads do as I do. WALK!!!!!!!!!!!!!!!!!!!!!!!!!!!

    I like holding the Deck of cards……..Never the Bank!

  15. 15
    hinten says:

    I will admit that the quotation marks I used were not to indicate that these are accurate quotes but only to indicate that paraphrasing of your position in a mildly humorous fashion begins and ends.

    The issue is that you are continuing to compare the effectiveness of the program to an individual buyer with the efficacy and impact at a macro-economic level. Presumably a portion of the ~7000 WA buyers proceeded with the purchase because of the credit.

  16. 16
    AMS says:

    RE: hinten @ 12 – Let me surrender too: I had no idea that CFC would run out of money in 10 days, or whatever it was. I thought I had lots of time. Who drives a ‘clunker’ that’s willing to run out an buy a new vehicle? I was way off on my estimate of the number of people who qualified for the CFC program and who were both willing and able to purchase a new vehicle. I underestimated the power of free money, mainly because of all the terms and conditions.

    I also underestimated the power of the $8k credit. Read my message here:

    RE: AMS regarding affordability..

    The tax credit would buy someone less than two months worth of market declines in Vegas and LA. In most markets the $8k is far less than a year’s worth of market declines.

    I certainly underestimated how cash today gets attention, no matter what the future costs are, and without respect to how little $8k is relative to the purchase price, which is heavily financed.

    That said, the market will run out of fools sooner or later. I suggest this based on the relatively small size of the housing tax credit. The CFC credit was a significant portion of the purchase price, so much so that the NPV is probably positive on an economic measure. Of course if housing prices suddenly rebound, all these first-time home buyers will have made great purchases!

  17. 17
    AMS says:

    RE: Ray Pepper @ 14 – I love the shills that attempt to execute this game. Essentially keep bumping the buyer up until the buyer waivers, and then try to lock the buyer in at his maximum price. Might work on some buyers.

  18. 18

    Ray Pepper said “I don’t engage in bidding wars and I suggest all Bubble Heads do as I do.”

    Me neither. As the clown on ” In Living Color” said…” Homey don’t play that.”

  19. 19
    Scotsman says:

    My favorite part of CFC was having half of the first $2B allocation used up in administrative costs before any money even got to the consumers/manufacturers. A classic example of government efficiency. I can hardly wait for them to take on health care…

  20. 20
    AMS says:

    RE: Scotsman @ 19 – “(j)
    Appropriation- There is hereby appropriated to the Secretary of Transportation $1,000,000,000, of which up to $50,000,000 is available for administration, to remain available until expended to carry out this section.”

    The initial allocation was $1B of which $50M went to administration.

    Source: http://www.cars.gov/files/official-information/law.pdf

  21. 21
    hinten says:

    RE: Scotsman @ 19 – Worn out talking point is worn out. Let’s make sure we take Medicaid, Medicare, Vet care, etc. out of the hands of the government as well since it is so inefficient. You know that the highest priority of a CEO of an insurance company is the life and health of their customers not making profits.
    It is one of the few examples of an industry where it is actual to the benefit of the company when the customer dies.

    We can argue about eliminating inefficiencies all day long but don’t argue that a potential inefficiency is reason enough to retain horrible status quo.

  22. 22
    Groundhogday says:

    RE: AMS @ 4

    You are arguing semantics. They put extra money in cash for clunkers, but it turned out that demand was already fading. By extending the homebuying tax credit they are also putting more money in the program. The questions is, have additional sales to be gained from the credit already largely been realized?

  23. 23
    AMS says:

    RE: Groundhogday @ 22 – The marked difference is that CFC was expected to last about 4 months, not a few days. Also the transactions had two peaks: One when news reports announced the funding was used up, and another when the official end was announced.

  24. 24
    Groundhogday says:

    RE: The Tim @ 13

    Let me add a more fundamental critique of the homebuying tax credit.

    1) Buying and selling existing homes has virtually zero effect on the economy. Only a small fraction of tax credits went to new homes, and new home construction is needed to actually stimulate the economy.
    2) Household formation is pathetic. So people moving into purchased homes are leaving rentals vacant, causing rents to drop, vacancies to rise and CRE borrowers to default. Accidental landlords will also be pressured to put their homes back on the market as tenants become scarce. The credit is effectively robbing from Peter to pay Paul.
    3) the only real solution to the housing problem is to increase household formation, which requires higher employment. The administration needs to address employment instead of blowing their wad on an economically useless and horribly expensive tax credit.

  25. 25
    Groundhogday says:

    RE: AMS @ 23

    I’m not saying they are identical, but the fact remains that when more funding was added to CFC there was substantially less demand than anticipated.

    Let me just add (hopefully not a chump edit) that economic theory would anticipate that we would need to continuously increase a stimulative payout to maintain a constant effect. Sort of like an addict needing a bigger and bigger dose to get the same effect.

  26. 26
    anonymous says:

    RE: hinten @ 15 – I think the issue is that you are not really looking at the efficiency from a macroeconomic level. The NAR’s numbers (which are probably overly optimistic) say the program costs $43,000 per additional house sold. Do you think we get an average of $43,000 stimulus for each house sold?

    Would we not get much more stimulus paying to build power plants and bridges, directly employing people who can then re-spend the money causing even more stimulus, and making our power generation and travel more efficient resulting in even more stimulus?

    Macroeconomically speaking, the homebuyer tax credit is a horribly inefficient use of resources.
    http://www.calculatedriskblog.com/2009/09/first-time-home-buyer-nar-numbers.html

  27. 27
    AMS says:

    RE: Groundhogday @ 25 – Oh, I agree that it would take progressively more and more to entice new buyers into the market. It’s essentially a reverse auction. That said, there was limited inventory. I purchased the last car that I sought where I purchased my CFC. The selection went from “What do you want?” to “Here is what is left.” My choice was ONE! And I didn’t have time to go shopping, as the one just arrived from a test drive, and the people were interested.

    So, yes, it would take progressively more cash to entice more and more buyers, but the program was not initially funded sufficiently to cover those who were happy with the $3,500/$4,500. Even with the extra $2B ($3B total), the money went much faster than expected.

  28. 28
    AMS says:

    The Tim-

    Why is an 81% increase in sales unfavorable for buyers? It seems that buyers were able to negotiate many more deals, and since many in that increase have $8k coming from Uncle Sam, IRS, (in other words your taxes), it seems that this is favorable for buyers. Similar for pending sales. In fact, I’d suggest an increase in sales and pending sales is favorable for both buyers and sellers, as it indicates deals are/were able to be made, which took both a buyer and seller, and hopefully that trend will continue for both.

    Clearly higher prices are favorable for sellers and are unfavorable to buyers. Similarly lower prices are favorable for buyers and are unfavorable for sellers.

  29. 29
    DrShort says:

    What’s going on with the MLS breakouts for King County? There’s nothing available when I click them. Same last months too if I recall correctly.

  30. 30

    I’ve heard various theories about how you can see indicators that we’ve hit bottom or reached the top in home prices.
    By the beginning of ’06 it seemed obvious to me that the price increases we’d been seeing couldn’t be sustained for much longer. Closed sales were dropping, inventory was rising, and prices were getting to be way out of whack compared to people’s incomes.
    I think we’re getting closer to the bottom, but I’m not prepared to call it. Inventory is lower, closed sales are up, but from the time I told people that prices were going to drop to the time that prices actually did drop was about a year and a half. It would not shock me to see the median home price next November to be lower than it is today.
    But I think the rate of price drops is leveling off, so the Year over Year median next November might be 4% less than what it is now.
    What happens after that? That’s the big question. Scotsman would probably suggest that if prices decline another 4% to next November, we’ll continue to see another decade of annual 4%+ declines.
    Some of my colleagues in the real estate industry believe that if we decline another4% to next November, it will then be followed by robust, double digit price increases.
    I think it’ll probably fall somewhere in between the two. There’s nothing out there that suggests to me that we’ll see robust home price increases in the next few years, unless hyperinflation happens.
    Artificial stimuli like the 8000 dollar credit can make things look good temporarily, but face it: The economy still sucks.

  31. 31
    Jonness says:

    Tim:

    I feel cheated that you didn’t point out the amazing accuracy of my prediction in this poll, so I am going to go ahead and do that now:

    I’m never wrong on predictions about the future and will be back to tout my awesomeness next near when the results prove my abilities. And now for my amazing prediction (quick, call the newspapers)…Anywhere from 0 to 5000.

    See, I’m never wrong!

    Just kidding of course. :) :) :)

  32. 32
    Jonness says:

    RE: Ira Sacharoff @ 30

    But I think the rate of price drops is leveling off, so the Year over Year median next November might be 4% less than what it is now.

    I think that’s how Japan turned out. Large drops at first, and then gradual drops as the years progressed. All the way, experts were calling the bottom on a monthly basis.

    The problem with a deflationary cycle is buyers begin to realize that prices will be somewhat lower in the future, so they hold off and keep saving their down payment.

    The Fed’s best bet to stop the slide is to spur inflation. But despite the massive increase in the monetary base, inflation will remain subdued until the banks put a portion of their reserves into the economy via lending.

  33. 33
    rent for now says:

    I love this guy…sorry if this is a redo.

    “This winter will not be ‘business as usual’ for the housing market. Thanks to historically low interest rates, adjusted home prices, and the passage of the extended/expanded tax credit, we are getting a running start on the New Year,” said Lennox Scott, chairman and CEO of John L. Scott Real Estate, in a statement.

  34. 34
    Scotsman says:

    RE: rent for now @ 33

    Scott’s my favorite too. He should have been captain of the Titanic.

    With GS predicting rising unemployment through the end of 2011 I don’t think we’re going to see any big jump in prices, or even a leveling off. Given the current depressed level or retail sales (as measured by tax receipts) my guess is we’ll see a big slide down after the first of the year when the new reality sinks in.

  35. 35

    “Scott’s my favorite too. He should have been captain of the Titanic.”

    ” Iceberg? Only doom and gloomers see icebergs. There’s never been a better time to be on a luxury ocean liner.”

  36. 36
    Groundhogday says:

    By Ira Sacharoff @ 35:

    “Scottâ��s my favorite too. He should have been captain of the Titanic.”

    ” Iceberg? Only doom and gloomers see icebergs. There’s never been a better time to be on a luxury ocean liner.”

    LOL

  37. 37
    Scotsman says:

    RE: AMS @ 20

    You’re right, I’m wrong. I went back to a bookmarked article to find that they had corrected a math error. Actual administrative costs (so far) were only about 20% over budget, but likely within the $3B allocation.

  38. 38
    Jonness says:

    RE: rent for now @ 33 – He’s right about mortgage rates.

    “Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.71 percent for the week ending December 3”

    http://www.chicagotribune.com/business/chi-tc-biz-rates-1203-1204-dec04,0,7133013.story

    That’s the lowest in 38 years. The Fed is on target to purchase $1.25 trillion in mortgage backed securities, and this keeps rates low. The problems might come next April, because that’s when the Fed supposedly completes its obligation. At that time, mortgage rates could spike, and the bottom could fall out of the housing market. All those who thought they were saving money using low rates could see their house price depreciate to adjust to a new era of lower affordability caused by higher rates. Fun stuff.

    Personally, I don’t think the govt. can ever stop propping it up, because as soon as it does, we face the real economy. In short, the economy has all kinds of green shoot economic signs as long as we continue to pump trillions of phony dollars into it. But the economy cannot become robust until the banks start to lend. When the govt. stops buying MBS, who on earth is going to take its place?

    It’s like a guy about to go bankrupt who convinces his uncle to bail him out. The uncle gives him a loan and tells him to pay him back next year. The guy lives like a king, right up until the loan comes due. All the while, he’s telling all his friends about how many financial green shoots he sees in his life, and how next year, his bank account will be back where it was prior to losing his fortune.

  39. 39
    Scotsman says:

    RE: Ira Sacharoff @ 35

    We just rented “Titanic” last week so my daughter could see it. She was in first grade when it originally came out and we judged it a bit to intense for her then. Amazing how many years have gone by so quickly. But I remember that line- from last week. You’re good, Ira.

  40. 40
    Groundhogday says:

    By Jonness @ 38:

    RE: rent for now @ 33 – He’s right about mortgage rates.

    “Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.71 percent for the week ending December 3”

    http://www.chicagotribune.com/business/chi-tc-biz-rates-1203-1204-dec04,0,7133013.story

    That’s the lowest in 38 years. The Fed is on target to purchase $1.25 trillion in mortgage backed securities, and this keeps rates low. The problems might come next April, because that’s when the Fed supposedly completes its obligation. At that time, mortgage rates could spike, and the bottom could fall out of the housing market. All those who thought they were saving money using low rates could see their house price depreciate to adjust to a new era of lower affordability caused by higher rates. Fun stuff.

    Personally, I don’t think the govt. can ever stop propping it up, because as soon as it does, we face the real economy. In short, the economy has all kinds of green shoot economic signs as long as we continue to pump trillions of phony dollars into it. But the economy cannot become robust until the banks start to lend. When the govt. stops buying MBS, who on earth is going to take its place?

    Theoretically, MBS purchases end next spring as does the homebuying tax credit. Want to bet they both get extended (even if the Fed actions might be technically illegal)?

    Sen. Johnny Isakson, the Georgia Republican who has been a staunch advocate of the credit, promised that this would be the “last extension” of the credit, according to Dow Jones Newswires’ Corey Boles. “Tax credits like this only work by creating the sense of urgency to take advantage of it,” Sen. Isakson said.

    http://blogs.wsj.com/developments/2009/10/29/qa-the-home-buyer-tax-credit-extension/

    Yeh, right.

  41. 41
    Herman says:

    RE: AMS @ 4 – Thank you for sharing your experience with the CFC program for the four billionth time.

  42. 42
    Herman says:

    RE: anonymous @ 26 – Once again, evaluating the free money program based on number of homes sold is incorrect. The .gov’s objective was to stabilize or increase selling prices across the board, not add a marginal number of new sales.

    In other words, the .gov used the program to increase America’s home equity, which is at the root of the crisis.

    For example. If every home in America is valued/comped at $8,000 more than it would have without the program, then the program added (70M x 8,000 =) 560B in home equity across the country, vs. 15B spent on the program.

    I don’t have the real numbers, but the example illustrates the point. The nation’s home equity is vitally important to homeowners, especially retirees, real estate agents, construction companies, and of course the nation’s mortgage holders: banks and the government itself. Propping the values up with inflated comps is what the program was all about.

  43. 43
    Groundhogday says:

    RE: Herman @ 42

    The tax credit was part of the stimulus act and was promoted as a means to increase sales and therefore stimulate the economy. Increasing home equity by itself is really only stimulative if it increases MEW, not likely given the reluctance of lenders to finance such equity withdrawals.

    http://money.cnn.com/2009/02/13/real_estate/homebuyer_tax_credit_finalized/index.htm

  44. 44
    Cheap South says:

    It’s like telling people one hour before closing that black Friday prices will be honor on Saturday. Most that were going to buy already did.

    I am not sure the real estate credit extension will be that big of a factor from now on.

  45. 45
    AMS says:

    RE: Herman @ 42 – This is the exact mentality that gets people into problems. When stocks trade, there might be millions of shares outstanding, with thousands of shareholders. When one share trades for a high price, all shareholders seem to think that the millions of shares are worth that high price, and that there are buyers for all the extra shares at the higher price. Unfortunately, this is generally not true. As supply comes to market, the prices quickly fall.

  46. 46
    David Losh says:

    RE: Herman @ 42

    Your point about equity has been on my mind for about a month. The program of the tax credit, for good, bad, or stupid, did the job of halting the declines and stabilizing the Real Estate market, for now.

    The equity is important to the market place that has these Mortgage Banked Securities. This breather has given banks, lenders, and investors a chance to dump portions of their portfolios that may have been more negatively impacted by continued property value declines.

    It is all about the financial markets. The home owners are paying for the extravagant life styles of the rich and want to be rich.

  47. 47
    Herman says:

    RE: Groundhogday @ 43 – The government promotes something to sell it the public, but that sales job is rarely tied to the real objective.

    The Iraq war was sold as stopping WMD and terrorism but was for control of oil resources and as a way to launder public money to Haliburton. The health care bill is promoted to save poor children when it’s really about shifting a 100 billion dollar power structure and also achieving a goal of rationing. Appropriations bills have been “for the troops” when they’re really for pork. (“Are you going to vote against the troops?“)

    I don’t expect homeowners to resume pulling money out of their homes over this, which I agree would be stimulative. But I do expect some of them to reconsider walking away, and leaving the banks with a loss, which is depressive. If the .gov could buy a headline that says, “Home Prices Begin to Rise Again in 2009” you bet they would. Or even if they stop falling. Flat is the new up.

    RE: AMS @ 45 – Like it or not, that’s how it works. Home values are established using a small number of sales comps relative to the actual number of homes.

  48. 48
    Groundhogday says:

    RE: Herman @ 47

    I think it is more complicated than that. From what I read at the time, many of these issues were conflated by both the real estate industry and congress. Many congresspersons really believed that since the collapsing housing market was the source of the economic collapse, “helping” the housing market would “help” the economy. More sales = more economic activity. Most folks in congress are economically illiterate and can’t really think things like this though.

  49. 49
    waitingforseattletocool says:

    RE: The Tim @ 1

    So I guess pendings mean something now, no longer useless. Hmmm?

    I guess another headline could have been “Gap between pendings and closed sales reaches nearly 100%”

    In any case, if you have 1200 to 1300 home sales in January, it will be about 6 months supply of homes based on closed sales to start the year.

  50. 50
    David Losh says:

    RE: Herman @ 47

    Health care reform is a subsidy to the Health Insurance Industry. The system of Health Insurance has been running on fumes for years.

    Mortgage Insurance is probably another thing that is taking a huge hit right now. More importantly there are insurances for the financial markets that are as dead as FHA.

    On NPR yesterday there was a segment with a guy saying that the equity in a person’s home is like the cushion that sees them through financially hard times. They don’t need to touch the equity, it’s just a thing to feel good about.

    Consumer Confidence would be at zero if the housing market were to be allowed it’s decline in pricing.

  51. 51

    By David Losh @ 50:

    RE: Herman @ 47 -Mortgage Insurance is probably another thing that is taking a huge hit right now.

    Not necessarily. Although I’ve heard some 20s of 80/20s were insured, most of the loans done during the runup were done without PMI. That was the whole point of doing an 80/20; avoiding PMI.

    This is just my opinion, but I think the fact that they didn’t have a large base of insured mortgages at the peak made the PMI companies less willing to take on a lot of risk on new loans.

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