Tuesday, 23 March 2010 00:00

BoomBustBlog Demonstrated Today's News Last Month by Using Facts: the Housing Market is Headed Down

I've been telling readers and subscribers that the housing market has a considerable amount to fall before we reach income parity. With income currently falling along with rising underwriting standards, that point is actually being pushed even farther into the (event) horizon! We are now at a point where interested parties would be remiss in not pursuing blogs (both in addition to and instead of the mainstream media) to get the nitty gritty analysis on a wide variety of topics. With that being said, I have finally decided to bite the bullet and expand BoomBustBlog by accepting partners in a bid to grow the business. Lethargic media and financial concerns, look out, here comes the BLOGS!!! I am open to ideas and suggestions. Interested parties may contact me here.

From the WSJ.com: Home Resales Drop

The latest data on the housing market underscored its fragility and showed that a glut of homes for sale and a wave of foreclosures and fire sales are holding down housing prices...

Sales of existing homes fell 0.6% in February from a month earlier to a seasonally adjusted annual rate of 5.02 million, the National Association of Realtors said...

The median price for an existing home was $165,100 in February, down 1.8% from February 2009, the Realtors said. Distressed homes, generally sold at discount, accounted for 35% of sales last month.

A separate report Tuesday from Federal Housing Finance Agency showed that house prices fell 0.6% in January and December's numbers were softer than previously reported. The FHFA index -- which tracks the prices of the same houses over time, but only those sold to or guaranteed by Fannie Mae, Freddie Mac or the Federal Home Loan Banks -- is 13.2% below its April 2007 peak.

Inventories of existing homes increased 9.5% at the end of the month to 3.59 million available for sale, the Realtors said. That represented a 8.6-month supply at the current sales pace, compared with a 7.8-month supply in January.

Of course this isn't news at all to the Green Shoots disbelieving BoomBustBlog subscriber. Excerpts from previous posts over the last quarter that ran in direct contravention of both mainstream media and sell side analyst reports are below:

The chart below illustrates the seasonal ebbs of month to month price changes. On a month to month basis, we see hills in the spring and summer and valleys in the fall and winter. During the onset of the bursting of the (first) bubble, this cycle was compressed, but was still there. and lasted throughout the bubble. With the onset of the government stimulus (ex. housing credits and MBS market manipulation), the peaks were significantly exacerbated. Now we are entering into the winter months again, and guess what's happening, as has happened nearly every winter cycle before. The only difference is that this dip is extraordinarily steep! I would also like to add that the month to month price changes coincide exactly with the S&P 500 move downward and upward for 2008 and 2009, to the MONTH! What a coincidence, huh? If this relationship holds,,,, well you see what direction the month to month lines are going and how steep they are, don't you?

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As you can see, the residential housing uptrend is now apparently over, and we are resuming the downward decent.

Let's look at the improvement in delinquencies and losses as compared to home prices in the grand scheme of things, a birds-eye view so to speak...

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For data heaving presentations and analysis, feel free to click the links below.

Reality Check for Bank Investors, Mortgage Investors and Home Buyers (March 10th)

It's Official: The US Housing Downturn Has Resumed in Earnest (March 2nd)

It's HELOC Deja Vu,All Over Again (January 19th)

A Fundamantal Investor's Peek into the Alt-A Market (Jan 14, 2010)

Deflation, Inflation or Stagflation - You Be the Judge! (January 12th)

If Anybody Bothered to Take a Close Look at the Latest Housing Numbers...

(December 30th, 2009)

Housing sales and prices come in lower than estimated! What??? (December 24th)

Residential Lending Credit Losses Worsen as Unsustainable Government Support Proves... Unsustainable (December 21st)

The Truth! The Truth? Banker's Can't Handle the Truth!!!

On the Latest Housing Numbers (November 24th)

Last modified on Tuesday, 23 March 2010 00:00

2 comments

  • Comment Link Reggie Middleton Wednesday, 24 March 2010 03:50 posted by Reggie Middleton

    There are a variety of ways. I put significant effort in presenting market neutral strategies that allowed you to buy or sell volatility. I also shared that purchasing S&P calls and futures allowed you to participate in the general market upside. You may also ride the upside out in cash.
    Hey, if you are a good trader, you can simple go net long.

    I wouldn't call this a wall of worry, either. I believe it is called math.

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  • Comment Link NDbadger Tuesday, 23 March 2010 23:27 posted by NDbadger

    So I hope this doesn't come out the wrong way, but...

    How do you stay solvent while the market climbs the proverbial wall of worry?

    Report
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