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Post by jeffolie on May 31, 2013 16:20:52 GMT -6
US Real Estate bust started May 2013, 2016 bottom
BEWARE A REAL ESTATE BUST .... STARTING NOW
Radar Logic Incorporated
" ... has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest." ... institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets. ... If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future. ... The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend.
my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA.
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New York, NY - May 31, 2013 - Radar Logic Incorporated today released the RPX Monthly Housing Market Report for March 2013. An excerpt from the report is provided below. Gains in Home Prices Driven by Unsustainable Forces Despite the Increase in Prices Over the Last Year, Weakness Persists in the Housing Market The press is buzzing with news of year-on-year gains in housing prices, but a look under the hood raises doubts about whether the gains are sustainable. On the surface, the state of housing markets looks good: the 25-MSA RPX Composite price increased 13.1 percent year over year as of March 21, with all but one of the constituent metropolitan statistical areas posting gains. However, when one digs a little deeper one finds that the conditions that have given rise to these gains differ from those that underpinned past housing recoveries, and are not adequate to drive a lasting appreciation in housing values. Limited Supply Tight inventory is perhaps the most significant driver of year-on-year gains in the 25-MSA composite. At the height of the housing boom, in July 2007, 3.4 million single family homes were for sale, according to the National Association of Realtors (NAR). In April 2013, just 1.9 million single-family homes were on the market. According to the NAR, the inventory of existing single-family homes for sale was down 11.9 percent year over year in April. More recent figures are available from Housing Tracker at Department of Numbers, which reports a 15.5 percent year-on-year decline in the inventory of single family and condo homes listed for sale as of May 27. Inventory estimates by the NAR are nationwide, while estimates by Housing Tracker cover 54 major metropolitan areas.
Looking forward, however, inventories are likely to increase. Current constraints on supply - negative and low equity, seller psychology, and low builder activity - will have less of an effect as home prices rise. As inventories rise, price trends will likely weaken.
Negative and low equity The primary constraint on supply may be negative equity on the part of homeowners. According to the NAR, 10.2 million out of a total of about 50 million U.S. homeowners are still "underwater", meaning they owe more on their mortgage than their home is worth and are therefore unable or unwilling to sell their homes.
As home prices rise, many hundreds of thousands of formerly underwater homeowners will once again be able to sell as their properties are once again valued above the balance outstanding on their mortgages. To the extent that these sellers purchase new homes in different markets and different price points, or decide to rent rather than buy, the homes they sell will add to the net supply available in their current market and price range. Seller psychology Another serious constraint on supply is reluctance to sell near the bottom of the market, particularly when prices appear to be rising. Such reluctance likely affects many homeowners who, while possessing positive equity in their homes, still feel their mobility constrained by the decline in the value of their homes relative to the purchase price. This constraint on supply may be the most difficult to quantify and could be the biggest contributor to future volatility. As prices rise, this "shadow inventory" will appear on the market. Such new supply could dampen any sustained growth in prices.
Exhibit 1: New Privately Owned Housing Units Authorized, Unadjusted Data for the United States Source: Census Bureau
Exhibit 2: New Single-Family Houses for Sale, Unadjusted Data for the United States Source: Census Bureau
Builder (in)activity A third factor limiting supply is the slow rate of building activity since 2008. Exhibit 1 shows the number of building permits issued per month in the United States since January 2000, as reported by the U.S. Census Bureau. Permits dropped dramatically from 2006 through 2008, and since then have remained well below the monthly rate in January 2010. The low rate of building activity has resulted in record low new-home inventories. As shown in Exhibit 2, the number of new homes for sale for every month in 2012 was less than half the long-term average. While four years of limited building activity helped to constrain supply in 2012, and thereby contributed to the rapid rise in home prices, there are signs that builders have started to respond to price signals. Exhibit 1 shows building activity is currently on the rise. As of April 2013, permits had increased 41 percent from April 2012 and 150 percent from the post-bust low in January 2011. These gains were off a very low base, and permits still have a long way to go to get back to the rates of a decade ago, but building activity appears to have turned a corner.
Building activity is likely to continue as builder expectations of future home sales have improved. The NAHB/Wells Fargo Housing Market Index gauges builder confidence by tracking homebuilder sentiment regarding three variables: current single-family home sales, sales in the next six months, and traffic of prospective buyers. The index ranges from 1 to 100, with 50 being neutral. While the most recently published combined index, for April 2013, was still below neutral at 44, the component index that gauges expectations of future sales was 53, which puts it in positive territory and up one point from March. The component indexes for current sales and buyer traffic were 48 and 33, respectively. This suggests that while homebuilders on the whole are not happy with their current sales and traffic, they believe conditions will improve in the future. One might therefore expect building activity to continue to increase, which will help to increase the supply of homes for sale in coming months. 'Unorthodox' Demand While the supply of homes for sale has been severely limited over the past year, demand for homes has increased. Unfortunately, this increase in demand has been driven by unorthodox market forces - artificially low mortgage rates and institutional investor activity - which are liable to disappear in the near future. When they do, slackening demand will slow and perhaps reverse current trends in home prices. Artificially Low Mortgage Rates Housing demand is currently being fueled, in part, by low mortgage rates. Unfortunately, the current rates are largely the result of intervention by the Federal Government in the service of loose monetary policy. While the Federal Reserve has indicated that it will continue its current approach for an extended period, it will eventually change course. At such time mortgage rates will likely rise and cease to be a driver housing demand. Institutional Investor Activity During the twelve months ending March 2013, purchases of residential real estate by corporations, partnerships and investment trusts in the 25 metropolitan areas included in the RPX Composite increased 41 percent. To put this figure in context, purchases by all other buyers increased only two percent during the same time period. Across the 25 metropolitan areas, institutional investor purchases accounted for 12.2 percent of all property transactions in March 2013, up from 8.8 percent in March 2012. Institutional investors are outcompeting normal buyers for homes. They have access to less expensive capital than households and frequently pay for homes entirely in cash rather than using a mortgage, which helps expedite purchases. Moreover, institutional investors typically purchase homes through channels that are not available to other buyers, such as via foreclosure auctions and bulk sales. As such, they acquire homes before realtors and normal buyers get a chance to see them. The rapid increase in institutional investor purchases has contributed to the shortage of homes available for sale to normal buyers. Rising prices will reduce the purchasing activity of investors. When prices rise to the point where the economics of the buy-to-rent strategy no longer makes sense, investors will slow their buying and start to sell. The result could be a significant decline in demand accompanied by an increase in supply, which could cause prices to reverse their current upward trend. It should be noted that institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets.
In fact, there is recent evidence that the winds have already started to shift in the single-family rental business. It is becoming difficult for institutional investors to purchase homes cheaply. The composite price per square foot paid by institutional investors in 25 of the largest metropolitan area housing markets increased 14.4 percent year over year in March. Over the same period, asking prices for rents have increased just 2.4 percent, according to Trulia, Inc. As a result, yields on single-family rentals are declining.
According to Bloomberg Businessweek, companies formed to buy properties that have not gone public have not yet been profitable, and public companies that released financial results for single-family rental investments have reported losses as they have acquired homes faster than they can renovate and find tenants. According to filings with the U.S. Securities and Exchange Commission, Colony American Homes Inc, a division of Colony Capital LLC, has found tenants for only 51 percent of the 9,931 homes it has purchased. American Residential Properties Inc. and Silver Bay Real Estate Trust Inc., REITs specializing in single-family rentals, both reported losses in the first quarter of 2013.
Moreover, Carrington Holding Co. LLC, one of the first large institutional investors to enter the single-family home rental business after the housing crash, has ceased acquiring and in some cases has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest."
If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future.
The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend.
Exhibit 3: 25-MSA RPX Composite Price (28-Day), 2000-2013 Exhibit 4: 25-MSA RPX Transaction Count (28-Day), 2000-2013
Forward this email ... This email was sent by info@radarlogic.com
Radar Logic | 180 Varick Street, Suite 502 | New York | NY | 10014
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Post by jeffolie on Jun 17, 2013 17:36:37 GMT -6
record low marriage, culture change, less house buying coming The culture change feature just living together, cohabitating which remains less stable than marriage and produces a record decline in the birthrate. Housing DemandDemand for single family houses will continue to decline as fewer 2 good income partners marry with the goal of having children and seeking out good neighborhoods with good schools. Just living together results in motivating the goal of living, locating closer to work and renting rather than buying for good schools. my jeffolie view: the cultural change continues and now that investor demand has declined for converting houses into rentals, the demand to buy single family houses will result in the house boom rolling over into a bust over the next 3 years. ================================ Marriage rate may be low, but more weddings predicted June 17, 2013 U.S. marriage rates are at historic lows Story Highlights Numbers are rising among women ages 25-34, the college-educated and the affluent Declines likely to set in again at end of decadeAverage marriage age for U.S. men could reach 30The marriage rate is at its lowest point in more than a century, and the number of marriages across the USA fell more than 5% during the recession. But a new analysis projects that pent-up demand and the large population of marriage-eligible Millennials, ages 18-34, means more will be headed to the altar over the next two years. Cultural changes about whether and when to marry, the fact that two-thirds of first marriages are preceded by cohabitation and the recession's financial fallout — including unemployment and underemployment — fueled the wedding decline. Projections from the private company Demographic Intelligence of Charlottesville, Va., says the signs are right for a temporary boost in weddings. The company projects a 4% increase in the number of weddings since 2009, reaching 2.168 million this year; 2.189 million in 2014. Depending on the economic recovery, the report projects a continuing increase to 2.208 million in 2015. Although it finds marriage numbers are stagnant or declining among those with a high school education or less, younger Americans, and the less affluent, numbers are rising among women ages 25-34, the college-educated and the affluent, which is where "short-term increases in weddings will be concentrated," says this analysis, released exclusively to USA TODAY. It's based on a variety of measures, including unemployment and consumer confidence, which reflect the relationship between financial security and the transition to marriage. "Declines in weddings are likely to set in towards the end of the decade, even though the number of young adults is increasing, because of the nation's ongoing retreat from marriage," the report notes. Experts in the field say this projection appears on target. "Given the drop in marriage rates, it's surprising to see a group project an increase," says sociologist Andrew Cherlin, director of the Hopkins Population Center at Johns Hopkins University in Baltimore. "But it makes sense. "If you're going to get married in time to have kids, you can't wait forever, so they may be saying that the postponement of marriages is running its course, and a backlog of young adults is about to schedule their weddings," he says. From 2007 to 2009, the number of marriages each year fell from 2.197 million to 2.080 million. The report estimates that more than 175,000 weddings have been postponed or foregone since the recession began. Sociologist and demographer Wendy Manning, co-director of the National Center for Family & Marriage Research at Bowling Green State University in Bowling Green, Ohio, says the projected wedding increases "might be overly optimistic." "They seem to think the number of weddings is going to increase. That's possible," she says. But "not all those marriages are going to be among those young people entering into their first marriages. The report is focusing on the Echo Baby Boomers entering into their marrying years, which is true, but my issue is that one-third of marriages are remarriages, and the remarriages are not among the young people." A report based on 2010 data issued by her center last year found that 31% of all people who married that year were remarrying. The new forecast predicts the marriage rate to remain at the record low of 6.8 marriages per 1,000 population for 2013 (where it's been since 2009) and notes that the rate was 7.3 in 2007, just before the downturn. In addition, the report predicts that when these couples take their first vows, they'll probably be older than brides and grooms in the past. By 2015, the company predicts, the average age at first marriage will rise to 29.2 for men and 27.1 for women, up from 28.2 for men and 26.1 for women in 2010."We're anticipating that for both men and women, it (the average age) will continue to keep rising at least for the next decade," says demographer Sam Sturgeon, president of Demographic Intelligence, which launched in 2010 with birth reports and fertility forecasts for consumer products. This is the company's first foray into wedding forecasts. He and other experts say it won't be too long before the average marriage age for U.S. men reaches 30; it's already 30 in some urban areas. In several European countries, the average age at first marriage is already in the 30s for both sexes. This projected increase in weddings may mark a turnaround, but it's not going to boost the low marriage rate, experts say. "The rate is marriages per 1,000 in the population, and we've had this huge growth in older people," Sturgeon says. "All of these older people go into the calculation, but they don't add a lot of marriages to that calculation. It (the marriage rate) will be close to where it's at now in the foreseeable future." The company is also analyzing same-sex marriage, but the data analysis isn't complete, Sturgeon says. www.usatoday.com/story/news/nation/2013/06/17/marriage-trends-demographics/2424641/
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Post by jeffolie on Jun 18, 2013 5:56:27 GMT -6
Housing Demandmy jeffolie view: the cultural change continues and now that investor demand has declined for converting houses into rentals, the demand to buy single family houses will result in the house boom rolling over into a bust over the next 3 years. investor demand has declinedinvestor US Real Estate bust started, yoy decline " ... institutional investor activity, home purchases actually declined year over year... Institutional investors are driving home prices. my jeffolie view: the slow to turn real estate market now has begun to turn from boom to bust as the marginally most important institutional investors buying to convert single family houses into income rental income have shown ' purchases actually declined year over year'... the slow to change price mommentum will soon peak now in mid 2013 and roll over leading into the bust into the new Great Depression, Bottoming Area by 2016. ======================================================================== June 12, 2013 Institutional investors are driving home prices. Radar Logic can help you track how investor activity is influencing prices in individual markets. Data suggest that institutional investors are having an outsized impact on housing prices. As of March 2013, institutional investors accounted for about 12 percent of home purchases in the 25 major metropolitan areas included in the RPX Composite price, an increase from 9 percent a year earlier. While 12 percent is arguably still small relative to the size of the entire market, it is important to note that institutional investor purchases accounted for the entire year-on-year gain in aggregate transaction activity across the 25 MSAs. Holding aside institutional investor activity, home purchases actually declined year over year. Thus, investors account for the incremental increase in housing demand over the last year, and it is the marginal buyer that drives prices. Of course, housing prices are primarily driven by local forces, so different markets will exhibit different trends. To help you understand how institutional investors are affecting prices in local markets, Radar Logic is currently offering data on pricing and transaction activity for all-cash purchases, non-occupant purchases and institutional investor purchases in over 280 major metropolitan areas across the country. The data file includes the following series for over 280 metropolitan statistical areas: •monthly median price per square foot (PPSF) and transaction count for all-cash purchases; •monthly median PPSF and transaction count for non-occupant purchases; •monthly median PPSF and transaction count for institutional investor purchases; •and monthly median PPSF and transaction count for motivated sales (i.e., REO sales and foreclosure auction sales). All series are aggregated at the MSA level and date back to January 2000. If you are interested in taking advantage of this offer, please contact Quinn Eddins at (212) 965-9982 or qeddins@radarlogic.com. Radar Logic | 180 Varick Street, Suite 502 | New York | NY | 10014
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Post by jeffolie on Jun 19, 2013 11:19:35 GMT -6
June 19, 2013 MBA: Mortgage Applications Decrease, Mortgage Rates Increase by Bill McBride on 6/19/2013 From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.17 percent, the highest rate since March 2012, from 4.15 percent, with points decreasing to 0.41 from 0.48 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. This is the sixth straight weekly increase for this rate. ... The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.30 percent from 3.32 percent, with points increasing to 0.39 from 0.38 (including the origination fee) for 80 percent LTV loans. 2.bp.blogspot.com/-zhyfEoGsbrE/UcGpum_8seI/AAAAAAAAavs/Z-kg7BiZ8MQ/s1600/MBARefiJune192013.jpg The first graph shows the refinance index. With 30 year mortgage rates above 4%, refinance activity has fallen sharply, decreasing in 5 of the last 6 weeks. This index is down 38% over the last six weeks. 2.bp.blogspot.com/-ptuO7Ilmgng/UbhkUi4u8kI/AAAAAAAAaqY/nNR4og9THQU/s1600/MBAJune122013.jpg The second graph shows the MBA mortgage purchase index. The 4-week average of the purchase index has generally been trending up over the last year, and the 4-week average of the purchase index is up almost 10% from a year ago. www.calculatedriskblog.com/2013/06/mba-mortgage-applications-decrease.html
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Post by unlawflcombatnt on Jun 19, 2013 22:42:03 GMT -6
It appears that the above graph shows the Mortgage Purchase Application index to be at 1998 levels, with very little actual recovery since the bubble peak in 2005-6. Is that right?
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Post by jeffolie on Jun 20, 2013 8:01:22 GMT -6
It appears that the above graph shows the Mortgage Purchase Application index to be at 1998 levels, with very little actual recovery since the bubble peak in 2005-6. Is that right? Is that right?yes
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Post by jeffolie on Jul 26, 2013 12:08:38 GMT -6
The swoon now documented in Housing Industry validates, confirms my jeffolie view of 2013's economics plus politics.
THE HOUSING SWOON, COLLAPSE OF 2013
my jeffolie view featured that normal seasonality would work in 2013 and not be overriden by bigger influences in 2013. The below piece documents the collapsing stock prices for housing industies corporation peaking exactly as predicted for the normal seasonality season.
Impact: Jobs destroyed and seasonal commodities including metals
my jeffolie view featured a serious and significant decline in lumber, copper and SILVER UNDER $20 ... all came true. Jobs in the construction and related supplies & materials industries have swooned as impacted as predicted.
OVERALL JEFFOLIE VIEW OF 2013 ... see Jan 1 Predictions thread
Overall my jeffolie view of 2013 featured a gridlock, slow GDP and lifestyle decline compared to last year of 2012. Overall my jeffolie view of 2013 featured a calm, slow decline until potential 'political event triggers' after the German Elections of Sept 22.
Overall my DANGER ZONE of a 'political trigger' remains from Sept 22 through the Spring of 2014.
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Post by jeffolie on Jul 26, 2013 12:18:09 GMT -6
The swoon now documented in Housing Industry validates, confirms my jeffolie view of 2013's economics plus politics. THE HOUSING SWOON, COLLAPSE OF 2013 my jeffolie view featured that normal seasonality would work in 2013 and not be overriden by bigger influences in 2013. The below piece documents the collapsing stock prices for housing industies corporation peaking exactly as predicted for the normal seasonality season. Impact: Jobs destroyed and seasonal commodities including metals my jeffolie view featured a serious and significant decline in lumber, copper and SILVER UNDER $20 ... all came true. Jobs in the construction and related supplies & materials industries have swooned as impacted as predicted. OVERALL JEFFOLIE VIEW OF 2013 ... see Jan 1 Predictions thread Overall my jeffolie view of 2013 featured a gridlock, slow GDP and lifestyle decline compared to last year of 2012. Overall my jeffolie view of 2013 featured a calm, slow decline until potential 'political event triggers' after the German Elections of Sept 22. Overall my DANGER ZONE of a 'political trigger' remains from Sept 22 through the Spring of 2014. " .... The Housing Bust is Back in a Big Way ..." US Real Estate bust started May 2013, 2016 bottom BEWARE A REAL ESTATE BUST .... STARTING NOWRadar Logic Incorporated " ... has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest." ... institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets. ... If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future. ... The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend. my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ==================================== The Housing Bust is Back in a Big Way ==================================================== In this issue • The "recovery" is collapsing. • Homes are once again unaffordable. • Housing bust 2.0 is here. • More! July 26, 2013 The Housing Bust is Back in a Big Way Anyone who believes that housing is back in a big way needs to take a look at homebuilder stocks. Here’s DR Horton (DHI) which is down over 30% from its recent highs. gainspainscapital.com/wp-content/uploads/2013/07/sc7.pngThe same can be said for Pulte Homes (PHM) gainspainscapital.com/wp-content/uploads/2013/07/sc-13.pngThe problem with the housing industry was and remains the Fed. By keeping interest rates at zero and giving institutions access to various lending windows, the Fed gave large financial firms like Blackrock to opportunity to snatch up tens of thousands of homes. This has put a false floor beneath housing prices. Historically, housing busts in the OECD countries last 6-7 years peak to trough. But by giving certain players in the market (institutions) the opportunity to buy up vast swaths of homes, the Fed didn’t allow this natural process to take place. The end result is that housing is once again unaffordable for most folks. Prices are surging across the board at the precise time that mortgage applications are collapsing (in part based on the rise in rates and based on housing becoming too pricey). It’s just like 2007 all over again. Only this time around, we know for a fact that the Fed hasn’t fixed things and has bankrupted itself and the financial system pretending that it can. This is not doom and gloom. This is a fact. The Fed has created an even bigger bubble than the 2007 one. The time to prepare for this is not once the collapse begins, but NOW, while stocks are still rallying. Stocks take their time moving up, but when they crash it happens VERY quickly. With that in mind, I've already urged ... to start prepping. We've opened six targeted trades to profit from the stock bubble bursting. We've also taken care to prepare our finances and our loved ones for what's coming, .... gainspainscapital.com/2013/07/26/the-housing-bust-is-back-in-a-big-way/
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Post by jeffolie on Jul 26, 2013 13:26:36 GMT -6
The swoon now documented in Housing Industry validates, confirms my jeffolie view of 2013's economics plus politics. THE HOUSING SWOON, COLLAPSE OF 2013 my jeffolie view featured that normal seasonality would work in 2013 and not be overriden by bigger influences in 2013. The below piece documents the collapsing stock prices for housing industies corporation peaking exactly as predicted for the normal seasonality season. Impact: Jobs destroyed and seasonal commodities including metals my jeffolie view featured a serious and significant decline in lumber, copper and SILVER UNDER $20 ... all came true. Jobs in the construction and related supplies & materials industries have swooned as impacted as predicted. OVERALL JEFFOLIE VIEW OF 2013 ... see Jan 1 Predictions thread Overall my jeffolie view of 2013 featured a gridlock, slow GDP and lifestyle decline compared to last year of 2012. Overall my jeffolie view of 2013 featured a calm, slow decline until potential 'political event triggers' after the German Elections of Sept 22. Overall my DANGER ZONE of a 'political trigger' remains from Sept 22 through the Spring of 2014. " .... The Housing Bust is Back in a Big Way ..." US Real Estate bust started May 2013, 2016 bottom BEWARE A REAL ESTATE BUST .... STARTING NOWRadar Logic Incorporated " ... has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest." ... institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets. ... If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future. ... The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend. my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ==================================== The Housing Bust is Back in a Big Way ==================================================== In this issue • The "recovery" is collapsing. • Homes are once again unaffordable. • Housing bust 2.0 is here. • More! July 26, 2013 The Housing Bust is Back in a Big Way Anyone who believes that housing is back in a big way needs to take a look at homebuilder stocks. Here’s DR Horton (DHI) which is down over 30% from its recent highs. gainspainscapital.com/wp-content/uploads/2013/07/sc7.pngThe same can be said for Pulte Homes (PHM) gainspainscapital.com/wp-content/uploads/2013/07/sc-13.pngThe problem with the housing industry was and remains the Fed. By keeping interest rates at zero and giving institutions access to various lending windows, the Fed gave large financial firms like Blackrock to opportunity to snatch up tens of thousands of homes. This has put a false floor beneath housing prices. Historically, housing busts in the OECD countries last 6-7 years peak to trough. But by giving certain players in the market (institutions) the opportunity to buy up vast swaths of homes, the Fed didn’t allow this natural process to take place. The end result is that housing is once again unaffordable for most folks. Prices are surging across the board at the precise time that mortgage applications are collapsing (in part based on the rise in rates and based on housing becoming too pricey). It’s just like 2007 all over again. Only this time around, we know for a fact that the Fed hasn’t fixed things and has bankrupted itself and the financial system pretending that it can. This is not doom and gloom. This is a fact. The Fed has created an even bigger bubble than the 2007 one. The time to prepare for this is not once the collapse begins, but NOW, while stocks are still rallying. Stocks take their time moving up, but when they crash it happens VERY quickly. With that in mind, I've already urged ... to start prepping. We've opened six targeted trades to profit from the stock bubble bursting. We've also taken care to prepare our finances and our loved ones for what's coming, .... gainspainscapital.com/2013/07/26/the-housing-bust-is-back-in-a-big-way/ Joe Friday, Home Construction Index down 19% in nine weeks! Posted by Chris Kimble on 07/26/2013 blog.kimblechartingsolutions.com/wp-content/uploads/2013/07/joefridayhomeconstructiondown19percentjuly25.jpg After creating a bearish rising wedge, the DJ Home Construction index broke support and then rallied to......... kiss underside of the old support as resistance on 5/17. Results since the kiss of resistance....A 19% decline in 9 weeks! Joe Friday... This index is now breaking another support line. Keep a close eye on this sector because it was the first key sector to slow down in 2005, before the broad economy slowed down! blog.kimblechartingsolutions.com/2013/07/joe-friday-home-construction-index-down-19-in-nine-weeks/
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Post by jeffolie on Aug 1, 2013 8:20:15 GMT -6
SELL NOW... the SELL HIGH ADVICE APPLIES now IN REAL ESTATE AND STOCKSUS Real Estate bust started May 2013, 2016 bottom " ... Construction spending fell 0.6% in June to an annualized rate of $883.9 billion. This was well below analysts' expectations of a 0.5% gain ... " my jeffolie view: jobs ended because investors could no longer profit as a result from Ben redefining the economy as "moderate" as an act of revenge for Obama's humiliating firing of Ben ... Ben increased interest rates making investors seek stocks instead of real estate investments. ... next STOCKS ARE PEAKING within days ... the SELL HIGH ADVICE APPLIES now IN REAL ESTATE AND STOCKS============================================= Aug. 1, 2013 June construction spending drops unexpectedly WASHINGTON (MarketWatch) - Outlays for U.S. construction projects unexpectedly declined in June, the Commerce Department reported Thursday. Construction spending fell 0.6% in June to an annualized rate of $883.9 billion. This was well below analysts' expectations of a 0.5% gain and the biggest drop in five months. But May construction spending was upwardly revised to 1.3% growth from the initial read of a gain of 0.5%. Both private and public spending fell in June. www.marketwatch.com/story/june-construction-spending-drops-unexpectedly-2013-08-01?link=MW_home_latest_news
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Post by jeffolie on Aug 3, 2013 17:22:10 GMT -6
Real Estate Mini- Bubble Deflating May Be Economy’s Next ProblemBy Sy Harding 08/02/2013 The housing and automobile industries are the main driving forces of the economy - in both directions. That makes sense since consumer spending accounts for 70% of the economy, and homes and cars are the biggest ticket items consumers spend money on. More importantly, unlike most purchases, it’s not just spending the money they made last week, but through loans and mortgages it’s spending in advance money they will earn for the next five to thirty years. That housing and autos therefore continue to be the economy’s main driving forces was dramatically demonstrated when both home and auto sales were so instrumental in driving the economy and markets higher after the 2000-2002 meltdown. And then when the resulting real estate bubble burst in 2006, housing and autos led the way down into the sub-prime mortgage catastrophe and then the meltdown into the 2008-2009 Great Recession. Their powerful influence continued when in 2008 and early 2009 $trillions were spent, mostly on the bailout of banks and the rest of the financial sector, but the economy didn’t begin recuperating to any noticeable degree until the housing industry and automakers began their substantial recovery. And they have indeed experienced a substantial recovery. While the auto industry in Europe continues in recession (auto sales down 8.2% last year to the lowest level in 18 years), by 2012 U.S. automakers had jumped from reverse gear all the way into 4th gear, posting their highest annual sales since 2007, with the pace of sales continuing so far this year (although automakers missed the forecasts for their sales growth in July). Meanwhile, for close to two years the real estate sector has been blasting through the most optimistic forecasts for its recovery. At the end of May new housing starts were up a huge 28.1% year-to-date. Existing home sales had increased 15.2% over the previous 12 months. Home prices have shot up 12.2% nationally over the last 12 months, the biggest year-over-year jump since March, 2006 (near the peak of the housing bubble). Prices were up more than 20% in some of the trouble spots of the last housing bubble like Florida, California, and Las Vegas. It’s been hot. The National Association of Realtors reported two weeks ago that 47% of all homes sold in June were on the market for less than a month. As in the big bubble of 5005-2006, multiple bids and selling prices higher than asking prices have been fairly common. However, there have been some troubling signs in the recovery, easily ignored because the basic numbers of sales and prices have been so impressive. For instance, it’s no secret that the recovery has been mostly driven by institutional investors building inventories of rental properties. For them it’s all about profit. So far they’ve been able to take advantage of low interest rates and depressed home prices. But as prices rise and that opportunity fades away there are already indications they are dialing back on adding more homes to their inventory. Speculators looking for quick profits by buying at the distressed prices and flipping for a quick profit have also been significant factors in the sales numbers. RealtyTrac reports that single family home flips, where a home is purchased and sold again within six months, were up 19% in the first half of this year, and up 74% from the first half of 2011. But RealtyTrac expects that interest to also fade as bargain prices disappear, and is already seeing ‘buying to flip’ tapering off in many markets.
A sustainable housing recovery has always needed real home buyers who intend to live in the homes, and particularly a healthy percentage of first-time home buyers. We haven’t been seeing that, and we’re not liable to any time soon with the higher home prices and higher mortgage rates raising monthly mortgage payments significantly. Meanwhile, even much of the reported increases in new home construction have been for multi-family housing for renters. As of June 30, single-unit housing starts were 67.6% below their January, 2006 pre-recession level. And now we’re seeing the first indications of the mini-bubble potentially beginning to deflate. New housing starts plunged 9.9% in June, to their lowest level in 10 months. Permits for future starts fell 7.5%. Existing home sales declined 1.2% versus the consensus forecast for a 1.5% increase. Pending Home Sales fell 0.4% in June. Construction Spending unexpectedly fell 0.6% in June, well below the consensus forecast for an increase of 0.5% (and the largest monthly decline in five months). And these reports are mostly from housing activity in the period prior to the spike in mortgage rates of the last six weeks.
The real estate sector led the way down into the financial meltdown and 2007-2009 bear market. It turned back up in early 2009 precisely at the bear market low even though housing sales and prices were still tumbling. With the housing recovery potentially stumbling again investors would do well to keep an eye on the SPDR Home-Builder etf, symbol XHB, and home builder stocks like Toll Brothers (TOL), DR Horton (DHI), Pulte Corp (PHM), and Lennar Corp (LEN). The Home Builder etf XHB was down more than 12% in May and June, but has been recovering some but lagging well behind the overall stock market’s spike to new highs. www.financialsense.com/contributors/sy-harding/real-estate-mini-bubble-deflating-may-be-economy-s-next-problem
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Post by jeffolie on Aug 13, 2013 16:54:08 GMT -6
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Post by jeffolie on Aug 14, 2013 8:30:20 GMT -6
US Real Estate bust started May 2013, 2016 bottom BEWARE A REAL ESTATE BUST .... STARTING NOWReal Estate jobs will end ... construction, remodeling, converting foreclosures into rentals, banking " ... For the 12th week of the last 14, mortgage applications in the US fell this week. ... which doesn't bode well for sales... my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ==================================== Mortgage Activity Plunges 50% To April 2011 Levels 08/14/2013 For the 12th week of the last 14, mortgage applications in the US fell this week. Despite the ongoing (though quietening) exclamation that the housing 'recovery' will continue, it is hard for even the most ardent 'believer' to still think that a rise in interest rates will have no effect on housing when mortgage actvity has collapsed by ove 50% in the last 3 months. At the lowest level since April 2011, back well below the lowest levels of the 2000s boom with home purchase and refis plunging, we suspect a few 'investors' will be rethining their theses (or finding another pillar to base their 'buys' on).
... relationship between rates and applications.... www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08/20130814_MBA2.jpg Mortgage Apps are down 50% in 3 months... www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08/20130814_MBA.jpg which doesn't bode well for sales... www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08/20130814_MBA1.jpgCharts: Bloomberg www.zerohedge.com/news/2013-08-14/mortgage-activity-plunges-50-april-2011-levels
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Post by jeffolie on Aug 31, 2013 12:29:33 GMT -6
US Real Estate bust started May 2013, 2016 bottom BEWARE A REAL ESTATE BUST .... STARTING NOWRadar Logic Incorporated " ... has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest." ... institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets. ... If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future. ... The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend. my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ==================================== New York, NY - May 31, 2013 - Radar Logic Incorporated today released the RPX Monthly Housing Market Report for March 2013. An excerpt from the report is provided below. " ... On the most recent chart the only changes are for the worse. The rising trend line break has become decisive (not likely to be reversed). my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ================================================================= Housing Is the New Stock Market? By Carl Swenlin 08/30/2013 The following is an excerpt from the August 30, 2013 blog for Decision Point subscribers. In 1960 I was a young Airman in aircraft mechanic school in Amarillo AFB, Texas. We had an instructor who, when we were being especially dense, would say, "I buy you books and buy you books, and all you do is eat the covers!" Every once in a while I see something that makes me remember that saying, like this week when I saw the CNBC.com headline: "As investors shift, housing is the new stock market." I thought, "What, again!? Even us old folks with short-term memory issues can remember how, after the stock market crash in 2000, housing became 'the new stock market'" until the real estate crash began in 2005. In an article I wrote in June I pointed out that housing was giving the first signal that it was probably topping. We should revisit that chart and see how things are progressing, but first let's see what it looked like in June. We can see the long-term double bottom, and an advance of about +175% from the 2011 bottom. The two long-term negatives were that the rising trend line had been broken, and the PMO (Price Momentum Oscillator) had topped. www.financialsense.com/sites/default/files/users/u169/images/2013/djushb-27-jun-2013.jpgOn the most recent chart the only changes are for the worse. The rising trend line break has become decisive (not likely to be reversed). Also, the 6-EMA is close to crossing the 10-EMA, and the PMO is about to cross below its EMA, long-term sell signals both. www.financialsense.com/sites/default/files/users/u169/images/2013/djushb-monthly-30-aug-2013.jpgMoving in for a closer look on the daily bar chart we can see that a descending wedge has formed, which could precipitate a bounce. This formation is bullish in that it most often resolves upward, but, even if it does, that doesn't mean there will be a trend reversal. www.financialsense.com/sites/default/files/users/u169/images/2013/djushb-ema-30-aug-2013.jpgConclusion: There may still be money to be made in real estate, but I think it will be a lot harder to come by, and it is certainly not an area for those who lack the experience and knowledge to find the opportunities. The trend has turned downward. To those who want to fight the trend, my old instructor would say, "I buy you books and buy you books . . . ." Technical analysis is a windsock, not a crystal ball. www.financialsense.com/contributors/carl-swenlin/housing-new-stock-market
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Post by jeffolie on Sept 11, 2013 8:10:30 GMT -6
from Bart's blog: 9/8/2013 Weakness in Dataquick weekly median home price (blue line), probably at least a temporary price top is in place. Third week in a row showing price drops. Both the XHB homebuilder and the PHLX (HGX) housing indexes have also not been strong for a while. H ousing recovery perspective, still lower lows and lower highs when the Case Shiller 20 city average is just CPI adjusted, and definitely no new highs when CPPI adjustment is made. www.nowandfutures.com/blog/
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Post by jeffolie on Sept 26, 2013 4:39:56 GMT -6
US Real Estate bust started May 2013, 2016 bottom BEWARE A REAL ESTATE BUST .... STARTING NOWRadar Logic Incorporated " ... has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest." ... institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets. ... If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future. ... The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend. my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ==================================== New York, NY - May 31, 2013 - Radar Logic Incorporated today Median New Home Price Drops To Lowest Since January 2013 don't get too excited about today's print - as the following chart illustrates all too clearly - the data has an awkward tendency to be revised notably lower over time... my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. =================================================== Median New Home Price Drops To Lowest Since January 2013 09/25/2013 New home sales meet expectations at 421k after downward revisions in the last month - which was already the biggest miss of expectations in over 3 years. www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/20130925_newhome_0.jpgThis looks like the last hurrah rush for purchases as we got a dip lower in rates in July before the most recent surge higher. www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/20130925_newhome1_0.jpgBear in mind that the actual unadjusted number of homes sold was a mere 35k (the 3rd lowest in 2013) and 11k have yet to be started. In the meantime, median home prices continue to slide - now at 2013's lows and supply is rising at 5.1 months (unadjusted) this is the highest in 2013. It seems that as rates rise, just as we warned, speculative capital will exit (on uneconomic yields) and home prices ae forced lower on a stagant income vs higher rates affordability basis. www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/Median%20New%20Home%20Price%20-%20Lowest%20Since%20January_0.jpg Sure enough, median home prices have slumped to their lowest level since January 2013. and don't get too excited about today's print - as the following chart illustrates all too clearly - the data has an awkward tendency to be revised notably lower over time... (h/t @not_Jim_Cramer) www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/811070267.pngCharts: Bloomberg www.zerohedge.com/news/2013-09-25/median-home-price-plunges-lowest-2013
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Post by jeffolie on Sept 26, 2013 4:40:06 GMT -6
US Real Estate bust started May 2013, 2016 bottom BEWARE A REAL ESTATE BUST .... STARTING NOWRadar Logic Incorporated " ... has started to sell properties in its rental portfolio. Bruce Rose, Carrington's founder and CEO, was quoted in Bloomberg Businessweek as saying "We just don't see the returns there that are adequate to incentivize us to continue to invest." ... institutional investor purchases over the last year have been concentrated in seven metropolitan areas: Atlanta, Los Angeles, Las Vegas, Miami, New York, Phoenix and Tampa. One would expect changes in investor behavior to have a particularly severe effect in these markets. ... If these trends continue, we could see the rapid investment of the past year give way to an equally rapid divestment in their not-too-distant future. ... The conditions in many housing markets today are not conducive to a sustainable recovery in home prices. As constrained supply and artificially high demand drive prices higher, supply will enter the market and demand will slacken. We believe that a saw-tooth trend in home prices, in which home prices rise and fall periodically, is more likely than a continuation of the current upward price trend. my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. ==================================== New York, NY - May 31, 2013 - Radar Logic Incorporated today Median New Home Price Drops To Lowest Since January 2013 don't get too excited about today's print - as the following chart illustrates all too clearly - the data has an awkward tendency to be revised notably lower over time... my jeffolie view: the 'Recovery' housing bubble now is peaking ... a bust will follow into the 2016 new Great Depression, BOTTOMING AREA. =================================================== Median New Home Price Drops To Lowest Since January 2013 09/25/2013 New home sales meet expectations at 421k after downward revisions in the last month - which was already the biggest miss of expectations in over 3 years. www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/20130925_newhome_0.jpgThis looks like the last hurrah rush for purchases as we got a dip lower in rates in July before the most recent surge higher. www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/20130925_newhome1_0.jpgBear in mind that the actual unadjusted number of homes sold was a mere 35k (the 3rd lowest in 2013) and 11k have yet to be started. In the meantime, median home prices continue to slide - now at 2013's lows and supply is rising at 5.1 months (unadjusted) this is the highest in 2013. It seems that as rates rise, just as we warned, speculative capital will exit (on uneconomic yields) and home prices ae forced lower on a stagant income vs higher rates affordability basis. www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/Median%20New%20Home%20Price%20-%20Lowest%20Since%20January_0.jpg Sure enough, median home prices have slumped to their lowest level since January 2013. and don't get too excited about today's print - as the following chart illustrates all too clearly - the data has an awkward tendency to be revised notably lower over time... (h/t @not_Jim_Cramer) www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/811070267.pngCharts: Bloomberg www.zerohedge.com/news/2013-09-25/median-home-price-plunges-lowest-2013
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