The 16 percent fall from October to November was much greater than expected for pending U.S. home sales, but a decline in general wasn’t (think seasonality), sales volume only dropped 2.7 percent in the West, and pending sales were up 19.3 percent on a year over year basis.
The figure shows housing may be at risk of weakening when homebuyer incentives, which were extended in November, expire later this year. Unemployment close to a 26-year high and weaker consumer finances remain hurdles to a sustained acceleration in home sales that would help fuel the economy.
“The buildup in sales and contracts was driven by the rush to beat the deadline for the tax credit,” said Bill Jordan, an economist at Ried Thunberg & Co. in Jersey City, New Jersey, whose forecast of a 12 percent drop was the closest in a Bloomberg News survey. After the extension expires, housing will have “some kind of a mild recovery,” he said.
Was it (or will it be) so in San Francisco?
∙ Pending Sales of U.S. Existing Homes Dropped 16%
This means absolutely nothing, other than the forecasters don’t appear to have a clue. The numbers are being influenced strictly by the government so the fact that it was worse than even the most pessimistic forecasts is absolutely meaningless. And no doubt the numbers were massaged
But the endless cheerleading of the so called “economists” is the real message. I think they are going to predict imminent recoveries again and again until one finally happens because it’s good for their business.
Hopefully prices have hit the trough and a slow housing recovery will ensue as the Bloomberg economist projected.
I heard Gerald Celenti on radio this morning and he is still the contrarain. Said things will get worse and that the US and other governments having thrown trillions of dollars created out of thin air into the world economy is only creating another bubble that will burst.
Celenti seems to be in the minority but its still a time for real estate investors and residential home buyers to be extremely cautious going forward.
The Fed, Treasury, and Congress have re-bubbled their efforts, and they still didn’t hit the targets. I wonder how much demand was pulled forward by the phantom expiration of the tax credit in November (and how much might be pulled forward of what’s left by the new expiration, which is probably a phantom expiration too).
Prices have dropped around 40% across the nation. Maybe there’s a *little* more to go, but the bubble has already burst.
The government is clearly dragging out the pain over a 2-3 year period. Which is fine.
If prices are going to fall another 10% — and I’m not say that they will — then it’s better to have that happen over 2-3 years, rather than all at once.
That additional 10% would put a LOT more mortgages underwater.
Another sign of recovery, further evidencing the strength and resiliency of the real estate market. Oh..wait…that was last month’s refrain.
Well, at least the tax credit is estimated to cost the government only $17 billion. Fannie Mae is losing over $20 billion PER QUARTER. See, there’s always a bright side!
So when do our taxes go up to pay for all this?
Quick quiz….if you were investing in R.E. in 1992 (the nominal bottom of the last bubble), would you have chosen the SF MSA or Madison WI?
Kind of a trick question…but percentage-wise, they would have made about the same money. Just for those who think SF real estate is a unique path to riches.
“Percentage wise” and “same money” in the same sentence?