Wednesday, January 6, 2010

Mark Hanson Explains "Why Pending Home Sales Are a Bigger Disaster Than You Realize"

The mortgage guru / housing analyst quickly and clearly dissects the 16% drop in national pending home sales...a portent of closings in the near future, despite massive government intervention in the housing market. He looks at 2009 sales, which were comprised of nearly 40% foreclosures, compares '08 to '09 and shows why that's moot, compares Oct. to Nov. 09 and gets here. 

2.4 Million Houses Will Be Added to Housing Inventory in 2010 via Foreclosure (h_t RealCentralVA)
Fed Govt Acknowledges Housing Crisis is Deepening
2009 Housing Market at Years End


Anonymous said...

Because of this pending disaster in home sales, what are your thoughts on the movement (up, down, remain the same) of interest rates during the first and second quarter of 2010?

Real C'ville - The Bubble Blog said...

FOMC minutes...on interest rates etc = Slow Economic Recovery

Prevailing thought is that mortgages will go up to 6-6.5% when Gov't stops buying MBS at end of March....That's still a low rate but seems high compared with the recent under 5% rates....With all the shouting about the failure of Obama Mods, 2.4 Million foreclosures expected this year alone, Paul Krugman noting there's up to 40% chance of recession in 2010, and the fact that if housing prices drop another 15% (on nat'l basis) mortgages written in 08 and 09 will be's hard to believe the Gov't won't continue socializing housing...and yet, if this happens, it's just "Extend and Pretend"..."Mark to Make Believe" instead of to "market"....and then the US turns into Japan, w/declining housing prices for nearly 20 years....

At the moment, mortgage applications for new purchases are at a 12 year low, fwiw...meaning few's the off season, yes, but prospective buyers have the tax cred and the threat of rising rates to motivate them....

Anonymous said...

Pending home sales are an even bigger disaster here than nationwide: Albemarle County single family homes dropped 60+% October to December....

Real C'ville - The Bubble Blog said...

More on rising interest rates at CalculatedRisk

Anonymous said...

This just in:

MLS# 472357

Asking price $335K. Bought by RE "investor" in late 2008 for $265K. Bought by previous owner in 2005 for $189K. Assessed by county at $250K.

We looked at this house when it was on the market in spring 2008 & found it the worst case of misleading RE advertising of our home search. The "renovated kitchen" features an exposed, ancient water heater sitting out in the middle of everything. The "detached studio with wide-plank floors" is a converted 50-year-old garage building with vinyl wood-patterned flooring that smells like, well, a 50-year-old garage. There was a pond standing in the crawl space, but I guess they couldn't think of a way to make that a positive in the ad? Cave-dwelling goldfish, perhaps?

Anyway, it's the same ad, but the asking is now about $50K higher than in 2008. I remember checking the comps and saying, "if anyone buys this it will be the first sale in this neighborhood over $200K EVER. And this is POST-bubble."

WTF? W. T. F.?

This is why sales are down--it's these sellers I want to THROTTLE.

Anonymous said...

Typical of what is presently listing on MLS . . . over-priced and over-hyped. There doesn't seem to be any logic to C'ville continuing to be an island of high priced homes. The reductions across the board are really nominal given the outrageous starting points. Mysterious C'ville cachet.

Name/URL said...

Careful manipulation of the market is what's going on here....It's about 50 real estate agents and Realtors at this point who are keeping the prices here inflated. Anybody who has dealt with a "professional" here in the past year or so knows this is true.

This is why these realtors are so concerned about outside appraisers. Anybody from outside this market who sees the prices would be convinced there are hallucinogens in the water.

The inventory numbers are completely skewed; there are many more than "just" the 16 months listed over at the Duncan website.

Even those realtors who are supposedly "respectable" are desperate to keep prices inflated.

The tipping point is here, though.

Anonymous47 said...

Name/URL says: "Careful manipulation of the market is what's going on here....It's about 50 real estate agents and Realtors at this point who are keeping the prices here inflated."

You are kidding, I hope. The market can be manipulated only if there are willing buyers who are ignorant of the so-called manipulation. But if you don't like the price, don't buy. And obviously not many people are buying.

Real C'ville - The Bubble Blog said...

Overleveraging + Housing Bubble Burst = seller pain in 2010.

Going forward, there's a shrinking pool of buyers:

And...Deja vu. It seems like both of the previous two comments, by Name/url and anonymous47, have been left on this blog before. Both are familiar comments on the market.

Re: pricing - Looking over the listings that have come on the CAAR MLS since January 1, as of the 8th, nearly half had been built since 2000.

If you review previous selling prices in general, especially in Albemarle County ( sellers either have Askings that are below what they paid in '07 or '05 or '03, or about $20K higher than those prices, often hoping to just unload the property by recouping agent fees, closing costs, etc.

Of course, then there's the kooky listing that infuriates buyers, but it's not going to sell. It's an enormous waste of everybody's time, though, isn't it?

This market is going to favor buyers for quite some time, even if pricing adjustments take longer than some buyers would like.

It's been said here before that $700k is the new $1M, $500k the new $700k, $300k the new $500, $200K the new $300K, and this seems to be true in many areas.

Anonymous47 said...

Real C'ville says: "This market is going to favor buyers for quite some time, even if pricing adjustments take longer than some buyers would like."

As a recent, satisifed buyer who expects prices to remain under pressure, I think this sums up the situation very well.

Bleeding it said...

Today's sellers taking a loss:

MLS 472661 475 Foxdale Lane Asking $1,195,000
Paid : $1,350,000 April 2009

MLS 472667 3262 Sandown Park Rd Asking $869
Purchased 2006 $855K

Real C'ville - The Bubble Blog said...

Mortgage rates down after a month of rising: read

BI, you could do that on a weekly basis.

Anon47, on the other hand, once sellers at a certain price point start capitulating, others follow suit. Or sellers in a particular neighborhood. Fifeville and 10th & Page have come down precipitously. And the further away one travels from the Nirvana that is Charlottesville, prices have dropped.

The upper prices, $1M northward, will be stalling for years, however.

The Mortgage Bankers Assoc expects 40% fewer mortgages nationwide this year.

RealtyTrac's latest on foreclosures (report due Thursday/14th) is "No end in sight."

Bleeding It said...

Today's Cville sellers taking a loss:

MLS 472488 830 Village Road $469,900k
$469K in 2007
losing commission, closing, and the 20% less that new buyer (unlikely) will offer

MLS 472560 117 Morgan Ct $400k

MLS 472748 174 Baylor Ln $389k
Paid $389k in 2008
losing commission, closing, and the 20% less that new buyer (unlikely) will offer