Housing sales plunge in November
Posted by Mike Sylvester - 12/24/09 @ 11:27 am - Filed Under National Politics, Uncategorized
It is no surprise to me; nor should it be a surprise to the readers of this blog that November housing sales plunged.
The Government has been trying to artificially spur home sales by borrowing money (All of which we have to pay back with interest) and paying that money to first time homebuyers through a program that is rife with fraud.
As I have said for well over a year all this program has done is:
- Accelerate home sales, meaning that there will be dismal sales months ahead since the demand was pushed forward.
- Slightly prop up housing prices
- Create mortgages that will be far more likely to fail as people who have no business buying a home decide to buy a home in order to get up to $8000 paid to them from the US Government.
- Hurt the value of the dollar by causing the Federal debt to increase.
- Increase the Federal debt; thereby creating a massive burden for future taxpayers.
The First time homebuyer credit was supposed to end November 30th. On November 6th Congress stupidly extended the law and changed it so that many more Americans will qualify for the tax credit. This will cause even more people to buy homes over the next seven months; many of whom have no business buying homes.
Programs like this are destroying this country from a financial perspective and are upsetting a large number of Americans.
The Government did not pay most of us to buy our current house; the Government basically created another Government “welfare” program to prop up the housing market.
The economy crashed due to a bubble in the real estate market; the Democrats and President Obama seem determined to create another bubble in the housing market. They seem completely unable to learn from recent events.
Worse yet the plunge in housing sales has surprised Government and mainstream economists. These idiots actually expected housing sales to increase in November.
What morons…
The more I witness the idiotic policies coming from Washington DC the more concerned I am for the future of this country.
Mike Sylvester
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7 Responses to “Housing sales plunge in November”
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Ummm….
They plunged?
Justin,
New home sales have always been a leading indicator of economic improvement out of a recession. On the other hand, existing home sales have essentially no economic impact.
The ratio of existing to new home sales is now off the chart and at an all time high. This is not necessarily all bad since there are simply too many houses in this country to start with.
Here’s a good summary of posts from CalculatedRisk on this topic.
The one part your linked article didn’t mention is that mortgage rates are going to rise from here. The Fed is going to stop buying mortgage backed securities which will drive bond rates up - probably a full percent or more.
If I had to guess right now, I would say that bond rates are going to increase, fairly slowly, through 2010. Higher interest rates will lead to fewer buyers. Couple this with the fact that banks have tons of shadow inventory on their books (mortgages they are pretending aren’t in foreclosure) and I think there’s little doubt that we’ll continue to see downward pressure on prices.
Government programs to delay this “bottoming out” are a huge waste of money IMO…
Mikes post is regarding NEW home sales, (new construction inventory) the yahoo article is in r/e EXISTING homes.
While the Yahoo article cites increases, take it all with a grain of salt. A small percentage increase in one month doesn’t mean squat.
As an example, Yesterday, our local newspaper’s headline was “real estate boom” in N.E. Indiana…
Well, sort of…take Steuben County, we had 24 closings in November, a 46% increase over the previous November. While that sounds promising, keep in mind (as of 10 minutes ago)in my mls, Steuben County has 645 active homes listed.
This ain’t no boom, or boon, if you will.
Justin,
Yes sales of new homes plunged.
The figures you are referring to concern sale of existing homes.
Sales of new homes have a large economic impact; sale of existing homes has a negligible impact.
Mike
Because a house is one of the most durable of goods, population growth plays a key role. Here are three demographic reasons that result in fewer first-time home buyers:
1. The baby bust of the 1970’s means fewer 30-somethings today. This is simply something that you have to accept. There is no law that can be passed that will retroactively increase the birthrate. Here’s hoping that the Echo boomers born during the 80’s are getting ready to move out of their first apartments.
2. The immigration rate is going down. That’s a whole thread altogether, but it does play a role.
3. The divorce rate has been declining in recent years. This might be for economic reasons since divorce is so expensive. Call me an optimist, but maybe the next economic boom will produce separated bliss for many amicable couples.
Robert, A boom begets a boom and a bust begets a bust. The baby boom was due to the large immigration of fertile women just prior to WWI. These women gave birth which produced a boom that gave birt to those 25 years later. The baby bust of 1962 continued for 30 years. The boom to bust cycle has leveled off to near zero due to 2.1 births per woman (zero population growth).
Actually immigration is the only reason why the US population is rising, though very slowly.
If you truly want to see what 2.1 births per women will do long term, stretch a rubber band between two points and snap it. What happens after a period of time. The oscillation stops. That is where we are now. Echo boom? I doubt it will even be visible.
Homes may be a durable good, but after sitting vacant for a year or more with no utilities, they become a worthless asset. We have another problem yet to come. Many of these homes will never be sold and the value they have on the books will be reduced to the land value within five years. I am not sure what affect this will have on banks, but it will not be good.
William, I agree with you. I perform Broker Price Opinions for banks in the Fort Wayne area on a daily basis. As a local Realtor, I inspect homes for exterior or interior damage and give a fair market value to the bank using similar comparable sales in the area. The homes I inspect are either vacant/abandoned, delinquent, under a short sale or in foreclosure. The scope of the problem at hand has yet to be felt or accounted for. It’s not uncommon for me to inspect the same vacant property 6 months later, to find it in worse condition then previously reported. The banks are unable to keep up with the vast amount of homes that are in foreclosure or that have been abandoned by the owner. The amount of time it takes for a home to get onto the market once a foreclosure has taken place is ridiculous. This has an adverse affect upon the condition of these properties and the value at which they bring on the open market. This in turn brings down the value of surrounding homes and neighborhoods. The banks need to adopt some new measures and policies in dealing with the foreclosure process and property management on their assets. The current system in place simply does not work.