US housing - perfect storm?

One would not think that warning to come from this guy out of all:

National Association of Home Builders CEO Jerry Howard warned consumers Friday the housing market is currently “staring into the face of a perfect storm” and argued that is a “bad sign” for the American economy.

“Our own Wells Fargo NAHB Housing Market Index (HMI) declined three points this month because builders are saying things are going to ‘dry up.’ You’ve got a combination of the costs…regulatory compliance and now at the other end of the pipeline, interest rates are going up,” Howard told “Cavuto: Coast to Coast.”

The housing expert made these comments after pending home sales declined for the fourth consecutive month in February. Howard said he’s “very worried” that the market could “really slow down.” …

https://www.foxbusiness.com/real-estate/housing-market-real-…

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The housing expert made these comments after pending home sales declined for the fourth consecutive month in February.

I would really like to see the data for existing inventory along side the comments about pending home sales declining. If there is nothing on the market to sell, there can be nothing pending.

In our market, we have less than 1 month sales in inventory. I don’t have a link but I read recently that 6 months inventory is considered a healthy market. Way more buyers than sellers here.

IP

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I would really like to see the data for existing inventory along side the comments about pending home sales declining. If there is nothing on the market to sell, there can be nothing pending.

Well there you go. The information was not in the article itself, but in one of the links it provided:

“Pending transactions diminished in February mainly due to the low number of homes for sale,” said Lawrence Yun, NAR’s chief economist. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.’”

https://www.foxbusiness.com/economy/home-sales-see-broad-nat…

But quoting Yun wouldn’t have made for quite the same doom and gloom article.

IP

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SB,

He is covering Wells’ butt. He is taking a shot at regulations that have been there all along on the way up. Why not? Just shoot for suckers who would buy that is a problem. Why waste the press opportunity?

Note he is late in his call?

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IP,

Since the OP article is quoting a Wells guy there is more to this. He is covering for liability. Making a call.

The heart of it COULD BE Wells has seen valuations reverse course and wont write some of the loans. That will cascade if it is happening.

Hi IP,

I was pondering about posting this while stumbling across the following from Doug Noland‘s latest:

U.S. Bubble Watch:

March 25 – Bloomberg (Prashant Gopal): “The U.S. housing boom is creating a new class of real estate tycoons with an easy source of financing: their own homes. Soaring prices have showered property owners with record equity windfalls, sending cash-out refinancings to levels not seen since the peak of mid-2000s housing frenzy. For some people, that means cash for a remodel or vacation. But others are putting that money to work by buying second, third or even 10th houses… Across the U.S., newbie investors are seeking to harness the power of home-price inflation to grow fast and get rich by becoming landlords. They’re contributing to soaring values, especially for starter homes that are in short supply. But even that can work in these buyers’ favor — as long as they’re willing to pay up — because Americans getting priced out of homeownership are in turn fueling demand for rentals.”

http://creditbubblebulletin.blogspot.com/2022/03/weekly-comm…

… which for some reason reminded me about that scene from ‚The big short‘:

Mark Baum : Okay, look. If home prices don’t go up, you are not going to be able to refinance. And you’ll be stuck paying whatever your monthly payment is once it jumps up after your teaser rate expires. Your monthlies could go up two-, three-hundred percent.

Florida Strip Club Dancer : James says I can always refinance.

Mark Baum : Well, he’s a liar. Actually, in this particular case, James probably is wrong.

Florida Strip Club Dancer : 200 percent? On all my loans?

Mark Baum : What do you mean “all” your loans? We’re talking about two loans on one house, right?

Florida Strip Club Dancer : I have five houses… and a condo.

Then again, I am too far away.

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The mass financialization of yet another necessary area of American life is bound to damage an entire group of people for whom homeownership is now a lost dream.Corporate America is doing dangerous damage to our least fortunate. Housing,medical,and higher education,not to mention banking, are taking so much of the average person’s income that there is very little left to save for the future. Something has to give.

JK

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The other component is that housing starts are still far below their 2006 peak:

https://fred.stlouisfed.org/series/HOUST

The reason is simple: Many lenders got burned in the housing bust and don’t want to go down that road again and therefore isn’t enough new inventory being created to meet demand. As the captain says, the cure for high prices is high prices. Eventually housing starts will rebound, but until it does we will be in a secular period of high housing prices.

FWIW, the same thing is happening with oil and gas fracking. The main hold up right now is lack of capital. Banks got burned once and don’t want to get back into it.

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The other component is that housing starts are still far below their 2006 peak:

https://fred.stlouisfed.org/series/HOUST

The reason is simple: Many lenders got burned in the housing bust and don’t want to go down that road again and therefore isn’t enough new inventory being created to meet demand.

Or it’s the supply chain for materials. Our Realtor is pulling her hair out over the things new home sellers are doing to her clients. She said there is no way she would buy a new home right now. Endless delays on their part, but high penalties if her clients can’t turn on a dime to close, even with little notice. We tried to even get a quote for a new garage door for the home we just sold, but she told us not to bother. Said that windows and garage doors were two things that were holding up delivery of new homes in a big way. We just painted it instead.

Real estate is complicated, particularly now.

IP

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