from Mike Whitney, CounterPunch
Get a load of this chart from DataQuick’s National Home Sales Snapshot. It’ll tell you everything need to know about housing.
As you can see, prices are flatlining or drifting lower while sales are sinking like a stone. That’s the whole ball of wax, isn’t it?
Sure, sales will increase in the spring (as they always do), but judging by the sharp dropoff in last year’s hottest markets, this could be the crappiest spring selling season since the crash.
Because prices are too high, rates are too high, “organic” demand is too weak, credit is too tight, and the pool of potential buyers has shrunk to the size of a walnut, that’s why.The banks have reduced the percentage of distressed homes (foreclosures and short sales) on the market to roughly 11 percent from 59 percent in 2009. Fewer distressed homes mean higher prices, but higher prices mean fewer sales. It’s a trade-off. The banks get their money, but the market goes to hell. That’s how it works. According to most estimates, there are roughly 4.5 million homes in some stage of foreclosure. That means that –at the present pace–we should get through this Housing Depression a few weeks before Judgment Day. But don’t hold me to that.
Did you catch this gem on Bloomberg last week? It’s about the big private equity guys exiting the market. Take a look:
“Blackstone Group LP is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord. Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm…” (Blackstone’s Home Buying Binge Ends as Prices Surge, Bloomberg)
Okay, so the speculators are getting out of housing. How’s that going to effect the market?
No one really knows yet, but it can’t be good, after all, all-cash deals amounted to nearly 50 percent of all homes sales in many of the hotter markets last year. That’s why prices went up even though the economy was still in the shitter, because the fatcats were loading up on cheap real estate. Now it looks like they’re headed for the hills. That’s NOT going to be good for sales.
Did you know that existing home sales have dropped for six months straight, dipping below trend to the same level they were at in 1998?
But how can that be, you ask, when everyone’s blabbing about the recovery? How can that be when the Fed has purchased more than $1.4 trillion in mortgage-backed securities (MBS) and rates are a measly 4.5%? How can that be prices have been climbing higher for more than a year?
[read the rest, here]