The National Association of Realtors Pending Home Sales Index (“a forward-looking indicator”) fell 30 percent from April (110.9) to May (77.6). All seasonality and now stimulus aside, the index fell 15.9 percent on a year-over-year basis (92.3 in May 2009).
And while the National Association of Realtors did employ “as expected” in the headline of their press release, the markets would disagree, at least with respect to the magnitude of the drop. And that’s why it matters in San Francisco.
∙ Pending Home Sales Drop as Expected [realtor.org]
∙ Senate Approves First-Time (And Move-Up) Homebuyer Tax Credits [SocketSite]
∙ The Dow Drops Back Below 10,000. Yes, Skittish. [SocketSite]
NothIng to see here people. Move along.
We’re talking about SF here, though. Buyers here don’t have to work for a living so tax credits mean nothing!
you think all real estate agents like to spew a message hope and prosperity…well here’s one thats not.
here comes the second wave of the proverbial shit storm.
as always, this info was a “surprise” to the experts, but not to anybody analyzing the data. It has been obvious for some time that purchases would take a nose dive this summer, just by looking at
1) yearly seasonal factors
2) MBA purchase application data
3) new/existing home sale data
4) common sense
housing is and has been on life support for some time now, and will continue this way for some time (years) as well. My original forecast back in 2007 was that the housing pressure would be fierce until December 2011. I am probably too early now that I see our world’s response, it’s probably going to be a few years beyond that.
====
As for the markets, they might be tanking partly due to housing data, but I think they are tanking more due to the thrashing of the “Green Shoots V-Shaped Recovery” meme that is dying before even being born.
The data overall just isn’t good recently.
today’s unemployment data “surprised” to the downside, manufacturing data “surprised” to the downside, Greek sovereign debt continues to “surprise” people, housing data “surprises” to the downside as well. Eurozone troubles continue to “surprise”
add it all up, and people are realizing that indeed there will in fact be no V shaped recovery.
Equities markets rose 70% or so last year, and the chief stated reason was that the market looked forward to a V shaped recovery and priced that in.
well now it needs to price in the idea of a long and protracted jobless or maybe even jobLOSS recovery, or worse yet a double dip.
and of course, the idiot experts will be “surprised” by the double dip or the “L” shaped recovery because they don’t look at the data… they say what their Wall Street masters want them to say.
we have serious structural problems with our globalized economy that led us to this point. Thus far few to none of those problems have been addressed. we continue to simply paper over the problems and transfer the private debt to the public. but that hasn’t removed the debt as a problem, nor has papering over this issue improved our zombie banking system. In fact, our zombie Too-Big-To-Fail institutions are even worse than they were 2 years ago.
but the people making the rules right now are completely hijacked by the big banks. The big banks like the current system. Thus, they push for more of the same. And so our government leaders get up and push for more of the same. (of course they talk as though they are “reforming” something, but they are really hiding more of the same as “reform”)
this has been the biggest heist of all time, and still most people don’t know or don’t care about it. thus they continue to get fleeced for ever larger amounts of money.
Where do you get “surprise” from “as expected” ? LOL.
I’m betting ex SF-er meant the markets were “surprised” by such dismal numbers.
The “as expected” from NAR is so lame, its laughable. I’m starting to feel tinges of sadness for realtors.
I agree with anon,
Even the NAR knew this would be a dismal number. What is new is they are admitting it openly. Either this is a cultural shift or they are just tired of being considered brainless cheerleaders. I hope this is the former.
off thread – where did the Case-Shiller SF MSA vs SP500 chart post go to??
[Editor’s Note: We screwed the proverbial pooch on that post and are working on an update.]
^ That graph was bad all around. I suspect they were comparing the performance of the two, and not actually measuring correlation. Bring it back with axis labels, and mention if the figures are real or nominal…
[Editor’s Note: Yep (only worse).]
Where do you get “surprise” from “as expected” ? LOL.
From here:
while the National Association of Realtors did employ “as expected” in the headline of their press release, the markets would disagree
as for the NAR, I’m not sure if they expected the magnitude of the drop or not, I don’t tend to follow their press releases.
NAR data has been questioned of late as it is not tracking well with other observable inputs. Tom Lawler has been on top of this for a few months now and his thoughts have been discussed at CalculatedRisk among other places.
(his most recent thoughts were posted yesterday I think… but one of his best posts was from back on June 21).
his forecasts have been near on-the-money for some time, beating those of the NAR.
part of the reason is that NARs data is based on surveys of only 20% of the market or so.
C’mon already! The real estate market is not a national market. Used cars aren’t a national market either; used Civics command higher prices in Berkeley than in Tulsa.
Yes, there are factors that affect housing nationally like interest rates; but there are local factors like the economy; job mix; how much of an area’s economy depends on exports; savings level, etc. And then there are subslices of the Bay Area that add more complexity, such as average time of occupancy; the housing mix in an area (condo vs. SF vs. rental apartments); whether a local area’s star is rising because of long term trends in the economy, etc.
We recently bought. We purposely avoided buying in the most bubble years. At the time we were looking back then, many buyers were relocating from Lamorinda to escape post-children boredom. The area we bought in, if the trend toward walkable, transit serviceable areas with lots of interesting amenities in an area with lots of unique architecture and stunning gardens holds, prices will do fine. Prices of interchangeable tract housing in Mountain House and Tracy? Not so much.
There has certainly been a flight to quality in our area, which is why we bought a quality property rather than rushing into junk 2 years ago. Always buy quality. Many houses sold 3-4 years ago, which should never have sold at the prices they did relative to quality properties, are now not selling. The quality properties are down perhaps 15%. At the rate of decline the natural rate of increase of 1% over inflation will catch up before very long.
RE is a bunch of local markets heavily influenced by the national markets.
I think the last decade should make that quite obvious.
Just as the credit boom inflated most markets around the country from 2000-2007, its collapse negatively affected most markets from 2007 to present.
obviously, the national (and global) economy will continue to affect all local RE markets going forward as well.
a national economic boom will benefit SF RE, and a national economic crisis will hurt SF RE. Obviously, local factors will modify the benefit/harm and thus clearly all local markets will not be affected identically. there will always be relative winners and relative losers in RE regardless of the state of the overall economy.
I, too, bought a quality home in a quality location (just as bubble was ramping up). so it’ll likely do better than a cheap home in a poor location. but that doesn’t mean it will do well… it only means it’ll do better than the competition.
From here:
while the National Association of Realtors did employ “as expected” in the headline of their press release, the markets would disagree
The NAR “expected” thing was a press release and a subject. The “markets” thing was editorial opinion from this site and another subject. Unless your point is that the NAR and Socketsite are one and the same. Good luck with that argument.
anon:
you need reading comprehension class.
Please read the following very slowly and absorb the words. they really are important sometimes.
the place where I got “as expected” was from the editor’s comment who used the quote in relation to THE MARKETS, not the NAR.
so the experts I am talking about are the experts who drive THE MARKET and not those of the NAR.
Even if you obtusely read my first statement, I clearly stated in a later post
as for the NAR, I’m not sure if they expected the magnitude of the drop or not, I don’t tend to follow their press releases.
which should make it crystal clear that I have no idea if the NAR expected anything or not.
Why? because I first said that the experts were “surprised” and then right after that i say that I’m not sure what the NAR expected.
This doesn’t make sense unless you THINK that hey… maybe “the experts” aren’t the NAR!!!
(or I’m schizophrenic and post opposite things one right after the other).
====
so let us recap
1) the editor was making a commentary about the NAR number negatively affecting the stock market.
2) When discussing the forward looking opinions/expectations of the stock market, “the experts” does not refer to the NAR, it instead refers to the various market analysts.
in this case “the consensus” was that the NAR index would be better than it was. thus, the fall was a surprise to “the experts” who are the market analysts (not anybody at the NAR).
3) I very clearly wrote that I had no idea if the NAR expected the magnitude of the drop or not.
4) I also very clearly wrote that I don’t necessarily believe that it was the NAR’s number that drove the markets lower but instead other things that “unexpectedly surprised” the experts, who again are not the NAR.
5) all that said, NAR data has not been tracking as well as one might like most likely due to their sampling methodology.
so please calm down, I am not attacking your holy NAR institution in this thread.
the problem is that you are always so willing to be offended and attack, and so you twist words all around.
that’s why you post things like this:
Where do you get “surprise” from “as expected” ? LOL.
Uhhh… obviously because you didn’t read and understand what I wrote. next time think for 10 seconds and say “hey that doesn’t make any sense. How can he be slamming the NAR in his post when the NAR expected this????”
then you could say “ohhh… wait a minute… maybe he ISN’T slamming the NAR! hmmm… but who else could be an expert besides the NAR?”
and then it would all make sense.
Totally fine ex-SFer. Thanks. Now I get you.
You’re welcome.
Peace.
This mess will never end until prices fall. False hopes of propping up values with tax revenue or other extend and pretend attempts will not work. Prices are going to go down.
NAR chief economist Lawrence Yun was actually pretty positive on the news compared to some I read today. Here’s Washington Post Economy Watch columnist Frank Ahrens:
I still don’t think there’s going to be a crash in The City; it’s going to be more like a hard landing kind of thing, especially since banks can foreclose on properties (if they decide to actually foreclose) and hold them off the market pretty much for as long as they like and prices for Real Estate are sticky on the downside anyway.