NO SPIN – Existing Home Sales DOWN 9.6% From Aug…Not Good

Posted on October 24th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

HOME SALES TUMBLED IN SEPT posting one of their largest one month drops in a year, down 9.6%. Today’s NAR Existing Home Sales numbers released showing sales up 5.1% were ANNUALIZED, which is not how you have to look at this dynamic market.

Month over month reflects the truth about this market. Sept 07 was before the ‘new normal’, before a price crash of up to 70% in some areas and before it was apparent that we now live in a 20% down, 30-yr and 15-yr fixed mortgage world.  The past two months are highly troubling and a leading indicator of more downward pressure this Winter. Indicators in the past week of housing reports scream that the housing market is locked up at present and so are all of those home owners who want or have to sell their home.

Look below at NAR’s chart. In reality, home sales FELL considerably from August, down 9.6%. Prices fell as well, putting millions of home owners into a negative equity or deeper negative equity position, exponentially increasing their likelihood of loan default.

As prices fall sales should increase not fall 10%.  As sales fall, inventories should increase not decrease. The reason inventories decreased is because as values fell, people pulled their listings realizing they will not sell for what they owe.

You can’t even compare last Sept with this Sept. Remember, last Sept home sales fell the most in one month in history as lenders pulled out of the market at the same time making it a very easy benchmark to beat. See my recent report on the CA spinA ‘new normal’ began after Sept 2007, which is where meaningful analysis must begin.

So many things are different now, such as last year foreclosure related sales made up 5% of the market and now they make up 60% is some states. In addition, last summer home prices were at their peak. Peak home prices with very little financing choices does not move homes. Last year’s data can’t be used for meaningful analysis.

You have to look at multi-month trends and it is obvious by the chart below, home sales are falling as prices are falling. So are organic sales. When you back out foreclosure related sales, organic home sales are at multi-decade lows proving 10s of millions of Americans are underwater, stuck in their homes and unable to move.

Organic sales are critical to the health of the Real Estate market. Quickly, the entire market has become ‘distressed’ with over 50% of all sales in CA being from the foreclosure stock and everyone wanting a ‘deal’ on a foreclosure. Remember, when one person gets a ‘deal’, 100 in the neighborhood see their values fall. Taking it out a bit further for example, 30 get pushed into a negative equity position, 50 get pushed into an even deeper negative equity position and 25 default on their mortgage as a result. This negative feedback loop is what is mostly responsible for the rapid surge in loan defaults among higher paper grades. -Best Mr Mortgage

Data below from NAR site: http://www.realtor.org/research/research/ehsdata

Note: See NOT SEASONALLY ADJUSTED in the right box. ALL areas lower and nationally lower by nearly 10%!

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49 Responses to “NO SPIN – Existing Home Sales DOWN 9.6% From Aug…Not Good”

  1. I think we are confusing what constitutes “facts” and “spin”.

    Here is an example of a fact:

    There were 5.18 million homes sold Sept 08
    There were 5.11 million homes sold Sept 07.

    Heres an example of mild spin:

    NAR said:
    “The 5.18 million-unit annual rate is the first year-over-year increase in sales in nearly three years, the National Association of Realtors said in a report on Friday”

    Its using facts to support a positive conclusion. Here is another example of mild spin:

    Mr. Mortgage said
    “home sales FELL considerably from August, down 9.6%”

    Again, its using facts to support a negative conclusion.

    NOW, heres an example of major spin:

    Mr. Mortgage said
    “The spin is insane. HOME SALES CRASHED IN SEPT.”

    Really. Your opinion is home sales have CRASHED??? I think this is the first time I can think of where sales were UP YOY and yet someone called it a “crash”!!! May I ask you then, what number would have been sufficent for it to not be a CRASH?

    Heres another example of major, but compelling spin:

    “Economists polled by Reuters were expecting home resales to rise to a 4.93 million-unit pace, from the 4.91 million rate set in August.”

    So here we have an objective third party, who said this is better than what we expected. I dont know about you people, but I think I would call this good news.

    Bottom line is this – somtimes, things do not constantly get worse, sometimes things stay the same or perhaps, just perhaps, get a little bit better. Rising annual sales is rising annual sales, period. This does not mean that this crisis is over – this does not mean that its going to get better. Things certianly could get worse with the way the stock market is behaving.

    That said, I take a fact for what it is. Sales are up year over year – end of story. Anyone who interprets that to be a “CRASH”, I you really have to question their judgment.

  2. Mr. Mortgage,

    Indeed, it is insane. And many more ‘insane’ things are shaping up to appear. We’re in a different time now. Some get it. Some are starting to get it. It’s not 1995 anymore – nor is it 2004.

    The ‘good’ times are long past. The unwise will see a near-future bottom and believe that we are past the storm – in both the real estate markets and the equities markets.

    The wise will see the tectonic paradigm shift of 12 months ago for what it is: A tectonic paradigm shift from what we came to know as normal (a debt & borrowing-based economy) to what more resembles what our parents and grand-parents knew (a savings & production-based economy.) The Huge delta between the two is the period of pain & uncertainty we’re now entering.

    I won’t argue with the technical wonks – I’m not in either the real estate market nor equities markets. I’m in the market of human nature, which dictates the rules of engagement for all markets.

    We are witnessing some of the more unsavory traits of that human nature unwind right before our very eyes. Actually, it’s happening so fast that many of us are numb to the consequences forthcoming. Hopefully though, many of us aren’t so numb and are doing what we need to prepare.

    Kook?

    Let’s check back in a year from now. Not a long time. Look at how fast last fall (2007) turned into this Fall…

    Save every penny you can. Don’t take on any debt that is not critical for survival. Then, take your kids to the park, a hiking trail or many other great opportunities for fun that don’t cost a dime to enjoy!

    Peace –

    C.C.

  3. Anti-spin…I used THEIR DATA. Quit spewing unless you read the full post.

    The numbers are in the chart. Home sales fell 9.6% from Aug to Sept, values fell and inventories fell. How in the world can inventories fall when sales fall 9.6%. Exactly…values are down 15% in the past 90-days nationally, so many became underwater they can’t sell and pay the mortgage. They pull their listing. What you are witnessing is the real estate market locking up.

    You can’t use 2007 data. First, values were at their highs and financing was all pulled at the same time in Sept/Oct making for the largest fall in history from Aug to Sept in home values. Back then, foreclosures were 5% of the market now they are 50%. Back then we had 100% helocs. It makes for meaningless analysis. Its like comparing loan apps from 2007 vs 2008. It makes no difference what happened last year.

    You really don’t understand how this all works? Keep reading, you will learn.

  4. Im not arguing that people are retrenching and could be pulling out of the market. I have no doubt too that home prices will continue to fall. That entire first paragraph of your response is superflous to the argument. Stay on point please.

    You said HOME SALES CRASHED IN SEPT. Really? How do you figure? Or better yet what would indicate they are NOT CRASHING – what number were you looking for?

    I dont doubt that last Sept was a bit unique, but thats not the point. The point is, they are still up YOY, and yet you refer to that as a CRASH!!! See how odd that is dont you?

    If you want to avoid the hyperbole and hype (which you rightfully browbeat others for) consider the way you report the facts. For example, had you said:

    “Well the fact is that home sales are up YOY. In a normal world, this would be considered a good thing, but I dont see it that way, and heres why….”

    Sounds like reasonable thought provoking analysis. Instead you start your entry with HOME SALES CRASHED IN SEPT – in what world is that factually correct?

    Maybe I am not your target audience, but I think the best analysis is one that can avoid the hype associated emphatic words like CRASH to describe a situation where sales are UP. If you see it differently, so be it…

  5. year over year when using 2007 as one of those years means nothing. Look at the past 3 months. Home sales have imploded as values have fallen. It is not suppose to work that way and is a major forward looking indicator.

  6. Mr. Mortgage –

    You open with: “HOME SALES TUMBLED IN SEPT posting their largest one month fall in a year.” Yet on a month-to-month non-seasonally adjusted basis, your own table shows a much more dramatic falloff between December 2007 and January 2008, both in terms of percentage and absolute numbers, which means your opening assertion is by definition incorrect.

    Also, comparing monthly on a non-seasonally adjusted basis is a poor basis for comparison — but even by that measure, sales were up year-over-year, which would be pretty much the only comparison one can make that is meaningful. That said, beating Sept. 07 isn’t anything to really crow about. I’d expect you’ll see further weakness emerge in coming months.

    You aren’t showing in your table as well the monthly drop between August and Sept. 2007, which likely also shows a monthly drop due to seasonality and the emerging effects of the first round of the credit crisis.

    You might want to consider such things before putting up a post full of bold claims without the full data considered to back them up.

  7. Non Sense – I meant ‘this year’. Sorry. Sales being up form last year means nothing.

    Repost: Look at the past 3 months. Home sales have imploded as values have fallen. It is not suppose to work that way and is a major forward looking indicator.

    Home sales fell 9.6% from Aug to Sept, values fell and inventories fell. How in the world can inventories fall when sales fall 9.6%. Exactly…values are down 15% in the past 90-days nationally, so many became underwater they can’t sell and pay the mortgage. They pull their listing. What you are witnessing is the real estate market locking up.

    You can’t use 2007 data. First, values were at their highs and financing was all pulled at the same time in Sept/Oct making for the largest fall in history from Aug to Sept in home values. Back then, foreclosures were 5% of the market now they are 50%. Back then we had 100% helocs. It makes for meaningless analysis. Its like comparing loan apps from 2007 vs 2008. It makes no difference what happened last year.

  8. Keep in mind guys, much of my analysis is FORWARD LOOKING, which most lack the ability to analyze. Today’s reports screams to me that the housing market is about be to turned on its head this Winter. I have given all of the reasons why.

  9. Let us not forget that Sept marked the end of the down payment assistance programs for FHA, lots of last minute buyers in Sept, Oct. looks to be bad. YOY?? You gotta be kidding me, apple and oranges my friends. Listen to Mr. M, he is dealing with the here and now.

  10. There is the seasonality contraction of real-estate transactions which will continue until the big Spring season. That’s when the YOY will truly be inportant. Because of the inertia in these types of markets it may simply take a little longer than Mr. Mortgage thinks for them to lock up. I’m in Tucson and they’re putting in infrastructure for 14 new home sites just down the road. But they’ll be selling the sites and won’t build without buyers. Still, they have to carry initial costs. Investors and buyers are getting something of a head fake here. People still think their homes are worth what they see on Zillow. But my agent next door is doing a boom business in foreclosures, some 20-30% below Zillow. One silly buyer hit the bank’s ask when she could have saved 40g.

  11. I’ve been investing in residential real estate for 15 years. Mostly SFR’s. I think the way you analyze the data is very good because you have a forward bias. In the investment world, it’s called a “trend”. That’s how money is made or in this case protected from loss. Keep it up!!! Thanks.

  12. Anybody arguing against the fact that all the data we are seeing isn’t bad for the housing market is a fool. Spin or no Spin. Even if sales are up YOY, last year’s abysmal numbers shouldn’t be hard to beat. The real problem will start when all the option-arms begin to reset while prices are still crashing. Organic sales will plunge and we will begin to see 70-80% of all sales being distressed properties. Good luck to all the strawberry pickers and car wash helpers that bought 500,00$ homes.

  13. Anti Spin i guess you must have a house in the area they are talking about. It is getting worse just deal with it.

  14. While I agree with Anti that YOY numbers are up and cannot possibly described as crashed, I also agree with Mr. M. that in fact the market has now crashed. You are both battling in semantics. We all know that YOY numbers are almost always used over MOM numbers because it removes seasonality and the yearly swings that occur due to various reasons. We also know however that the main thing that makes the YOY data so much better than MOM numbers for analysis is typically the consistency of the time periods. During recessionary times there will be a year or three affected to the extent that it will not allow for YOY comparisons to be used to accurately to truly reflect where we are heading. In Sept. 07 you could still compare YOY and could clearly define a trend of falling sales and falling prices to accurately tell us that things were turning downward, of which they have. It is now obvious that we can no longer rely on the YOY data as a forward indicator as Mr. M. points out due to the immense volatility in the markets and the added parameters that just didn’t exist one year ago today. Again, from 2006 to 2007 all things were basically even (although moving downward) right down to jobs, economy, foreclosures, etc. so it was a nice apple’s to apples comparison which is what YOY data thrives on. However 2007 to 2008 and especially August and September that is not at all the case. It is comparing apples to oranges and that won’t get you the correct data that you will need to utilize it for the future direction of housing. Look no further than the stat that shows inventory falling while sales are falling. That cannot logically take place and in fact that didn’t happen and we all know that. So what gives? As Mr. M. correctly points out, we are at a junction in time where as prices have fallen so far from peak that would be sellers cannot sell for what they owe so they are pulling their homes off of the market. That and some are now just awaiting foreclosure to take place. Still others are trying the rental move to lesson the losses they are experiencing, and wish to hang onto the property for now.

    The dynamics are changing fast and furious with Government intervention disrupting markets everywhere. A lot of data gets skewed as a result. For example the MBA numbers vs. the MAX numbers is another example of overly hyped data YOY and even MOM due to the volatility of people getting approved for loans. What people did a year or two ago was fill out one app and await the good news. Now people fill out 4, 5 or even 6 apps to increase their chances of good news. The Max data corrects for this and so it is much more accurate. But the MBA data does not making it less accurate as an actual forward indicator of sales to take place.

    To accurately reflect what is going to happen in a volatile situation you must place more weight in the MOM data (temporarily mind you) to truly see what the direction is showing you. This data clearly reflects continuing weakness on a MOM basis which leads you to predict a continued downward spiral in the numbers. YOY numbers indicate a false upward swing that we know is not only inaccurate of what is to be, but clearly skewed because of data for example showing inventory falling while sales are as well.

  15. Count me as another reader who doesn’t argue with the basic premises about the real estate market that Mr. Mortgage has been making over a period of time. I’ve learned a lot from reading here and his analysis of the Alt-A looming disaster has influenced me greatly. Just the same, I agree with other commenters here that this current hype about the Aug-Sept numbers showing a CRASH is way overwrought. And the hype is not necessary at all to continue making the greater points about market direction.

    If someone wants to convince me that the Aug-Sept numbers are in fact as terrible as asserted, show me the 20-year average and variance of Aug-Sep numbers, and the same for the 2nd-3rd quarter numbers. Is this still a significant downward move taking normal seasonality into account, or not? Without that info, I’ll rely on the generally more useful (and accessible) YOY numbers, which in fact showed that sales are up in Sept. Probably won’t be sustained, but it is what it is.

  16. Anti-Spin Nonsense,

    Sales are down nearly 10% from the previous month, and 50% of sales are foreclosure related.

    Sept. ’07 to Sept ’08 are not an apples to apples comparison.

    I think Mr. M’s analysis is quite correct.

  17. Here are LA county stats showing why September is a crappy month to pull numbers from and likely what Mr. Mortgage is talking about. If you went by September last year, the housing market is awesome! Who knows how far back you would need to go to find a worse September than 07. Who is going to sell their home at a significant loss? Can they? Who can qualify under new lending standards, cuts the buying pool way down. As far as real estate goes, I think we are headed more into a deflationary expectation as to why buy now, it will be cheaper down the road. What happens when the foreclosure speculators find that they don’t have bank qualified buyers? Do they write their own paper?

    L.A. County September Sales
    September 2008: 6,274
    September 2007: 4,361
    September 2006: 7,917
    September 2005: 10,988
    September 2004: 10,501
    September 2003: 11,395
    September 2002: 10,808
    September 2001: 8,831

  18. Hey, Cramer actually reads the blog. He just quoted the correct stats saying ‘you can’t compare last year, you have to compare Aug 08’.

  19. Hi Dilbert – can you post Aug numbers next to Sept for each year please.

  20. This may be one of your most inane posts ever.

  21. Mr. Mortgage I don’t have those numbers for August, I stole those numbers from another housing bubble blog that pretty much said the same thing you said regarding September sales being a phooey increase, but they broke it down further, by showing where in fact the increase came from and the increase in sales YOY came from the hardest hit counties, San Bernardino and Riverside for Southern CA.

    If it makes you feel better, I have yet to see you meke a bad call. This is what another numbers digger had to say about last month in CA.

    “Let us first work through the numbers. I’ve circled the two biggest counties responsible for the sales jump. You’ll also notice one important point here. They are the cheapest and have seen the steepest price drops of all counties! Even though San Bernardino and Riverside account for 19% of the Southern California population they made up 36% of all sales last month for the region! That is why Riverside is up 106% from a year ago. Then again, the current median price is $237,500 so how will that person feel that bought a home near the peak in December of 2006 when the median price in Riverside was $432,000? That is over a 45% drop from the peak price. The price of a home in San Bernardino county in December of 2006 was $370,000. The current price of $205,000 is a 44% drop from that point. What a shocker that homes are selling after having prices cut in half.”

    Myself, I am curious to see what happens when foreclosure flippers start getting stuck with inventory.

  22. Someone correct me if I’m wrong, but this data doesn’t include bank (ok, government) owned homes either does it?

    Are there any other states like Georgia that allows people who file for bankruptcy to keep their homes? That has greatly affected available supply & demand here, prolonging/slowing down the housing market crash around Atlanta.

  23. From a psycological perspective I am finding this debate quite interesting. We seem to have the imovable and strict YOY folks of which 40 or so of the last 50 years of data wold include, but also the minority 10% crowd that look at the data differently when needed to produce the normal results.

    Is it just the simple fact that some are more open minded than others or even more bright, that they simply see the bigger picture in what each month, year and decade truly means, or is it a stubborn stance that has refusal for some to see the big picture and what the data truly represents because it goes against the norm?

    Maybe it is the simple fact that sometimes people just change the outlook of the data to meet their needs or argument?

    If it helps to solve this dilemma then I would suggest this. What is without dispute is the fact that things are going in a fast direction downward in nearly every single catagory you could possibly reviw at the moment. So to suggest any other direction for housing other than a seriously downward movement would be idiotic to say the least. I would like to think that at least 98% or so of us can agree with that. So any and all data that suggest otherwise in my opinion is false and mis-leading to say the least. This goes without saying and is a simple fact of the reality of the overall situation period.

    No debate here folks… things suck and are getting worse and will continue to do so for the foreseeable future. Data be damned it is what it is…

  24. this data absolutely includes all foreclosure RESALES and short sales. This does not includes foreclosed upon homes at the couthouse steps. Those totalled 22k last month. New notices of default have been averaging over 40k a month as well.

  25. Here ya go. Same headline as Mr. M. Different time different author same sales drop same headline. In this story home sales drop 9% between October and November of 2007. See how it’s written up. http://www2.chinadaily.com.cn/world/2007-12/29/content_6358597.htm

  26. Sales are down nearly 10% from the previous month, and 50% of sales are foreclosure related.

    Fifty percent foreclosure related where? Is that a national figure, or California?

    Sales in the West are either down slightly (MoM) or way up (YoY). Comparing the two it would seem that the worse scenario would involve the increase in sales YoY. Since this highly increased volume of sales would be composed of massive numbers of foreclosures – with the resulting price resets crushing nearby home valuations across the board and setting the stage for more defaults down the road.

    If that truly is the case you’ll all know it soon enough.

  27. The original post, and much of the commentary, ranges from silly to drivel. First, let’s focus on sales. “Unadjusted” (that is actual) home sales exhibit a rather sizable seasonal pattern, with sales typically hitting a seasonal peak in the summer and a seasonal trough in the winter. Closed sales in a “typical” year seasonally fall in September, and not seasonally adjusted sales from August to September have declined in every year since the NAR has kept data. So saying that “sales fell” from August to September on an unadjusted basis doesn’t say anything about the strength/weakness of the market. Focusing on that statistic is inane.

    In re “distresed” sales, various industry folks estmate that in September, around a third of sales were “distressed”, though the number was a boatload higher in California, Arizona, Nevada, and a number of other states. Comparable stats vs. a year ago would be about 10%.

    When one looks at regional sales trends (and I don’t mean NAR data, but local MLS data), almost every area where sales were way up from a year ago were areas with high %’s of “distressed” sales and areas where prices fell sharply. However, the sales gains at the “distressed” price levels was modestly encouraging. Realtors in a lot of those areas noted that sales gains were the greatest for first time home buyers and for investors.

  28. THEY KNOW NOTHING””
    Send this blog to 5 people you know that are still in denial and watch the feedback you get…THEY WILL ASK IF YOU ARE OK…SINCE YOU ARE SO PESSIMISTIC ON THE ECONOMY/COUNTRY.

    They are still in ” heavy denial” even my Friends that have lost half of their 401K or shall I say 201K.

    I feel that only one percent or less even have some sort of a clue that something is going seriously wrong in our country..Just keep watching Dancing with the Stars. Sheeple…

  29. Mr Mortgage, Please use the statistics terms correctly.

    The NAR quoted an annual rate, and not ‘annualized’ rate as you said.

    An annualized rate would be to take the Sept over Aug change as a ratio and raise it to the power 12.
    For example, here in the UK our GDP has dropped 0.5% in the 3rd quarter. That is an annualized rate over 2% (ie 1.005 to the power 4)… which is incidentally frightening .

  30. Mr. Mortgage has been right as rain.

    I find nothing more depressing as this continued need for opptimism

  31. Shah, I equally find depression in the need for opptimism. So many have so much to learn. This is your classic dead cat bounce occuring and means absolutely nothing in the overall picture. I realize that so many, want so badly for things to turn around. It appears we are still very much in the denial stage for many.

    Housing has so much farther to fall and so many more states have huge corrections that still have yet to occur. Look at how great things were 3-4 years ago and that was just the beggining of the decline. Look how easy it was to get money from almost any source. Jobs were plentiful and people didn’t even think to ask how much something cost. Those days are long gone and will not be coming back for decades if ever again to the degree they were back then.

    Now fast forward to today and you see we have just barely entered the correction phase. Heck, subprime is just now winding down and that is the smallest wave that will hit the shore. We just started the next set of waves and the final waves touch shore in 2011. Yes, as sad as it is to hear we have much, much further to fall before this is over.

    Fundamentals for housing are still extremely out of line with reality and that has to change. Unemployment may reach 10% before this is all said and done. We have just now entered the recession both literally and psycologically. For anyone thinking that we are at or near a bottom is not paying attention to the detail and thet is where the devil resides. With so many resets yet to come and so many foreclosures still to come we are not even close. All of this is to occur when the country is at its weakest point in over 70 years.

    Denial is a great way to keep that false smile on your face and opptimism is wonderful to have when rooting for your son or daughter at their soccer game. This is real life people and the truth of the matter is we are in bad times and it is going to get much worse before it is over. Read the MSM headlines and buy into the hype and you will get steam rolled. Pay attention to what the detail is telling you and you still will get hit, but you may be able to survive it…

    Thanks again Mr. M. for your insightful view of accurate details and facts vs. the talking heads hope and opptimism that everything will be just fine.

  32. Some aren’t particularly looking for a turnaround, just signs that maybe some cash rich investors are coming back into the market trying to pick up some perceived bargains. This should be expected and celebrated once it starts, since everything else positive procedes from there.

  33. Same story here in VA. What bugs me most is that NAR and Realtors spin the numbers and the news outlets report their stories. Than appraisers complete an appraisal for these homeowners who follow the main stream media and they scream at us that we don’t know what we are doing. I have lost more clients (banks and lenders) because I do not play the game nor give the rose colored picture. I am not rude and I very much empathize because guess what…I am there too! I am underwater as much as everyone esle. And it is getting worse.

    The old game for NAR and Realtors was to only speak positive phrases and it would come to pass. That was in the days that no one dared to say the emporer had no clothes. Finally honesty is getting some value.

  34. Stu, it does not qualify as a dead cat bounce. When you have a dead cat bounce, prices go up. Prices fell. If you take it from a sales standpoint on number of units, it still was not a dead cat bounce because it is compared against a bad month for comparison when financing was pulled and shook up the market.

    Distressed sales (perceived bargains) appear to be the driving factor in sales. Yet we know that this sales event will continue on for a couple of years. In theory, the government could hold up to 10 months of foreclosure supply of housing with the 700 billion. If so, the market will take that as an inventory overhang which will just prolong the period of pain. In addition, government held property will be likely then sold at the bottom of the market creating a significant loss to taxpayers.

  35. ThomasD, these are not cash rich investors jumping in, but rather first time home buyers that have been eagerly sitting on the sidelines. They have been waiting and waiting and waiting and are fresh out of patience. So they are jumping in (way too early) partially due to the spin of the MSM and talking heads. The same thing that caused irrational exhuberance before is snagging its next batch of victims. It really is shameful but it is also life and if they don’t know better then I guess shame on them right?

    I do expect a turn around to come and I will be the first to applaud it when it is real. I have children awaiting to buy in this market myself and they are paitently awaiting the right time as well to jump in. I also agree when it is real and the time is right all good will flow from the turn around as is a normal market event when it happens. This is not that time however and one, again, needs to look no further than the devil in the current detail.

    I wish we were almost through, but he reality is we are just getting started. We have not even succesfully freed up credit markets yet and may not be able to for quite sometime. We have not seen prices bottom out yet or even come close. We have not had the massive wave of resets hit yet and we are just now entering the beggining of the recession. We have only had a dozen or so banks fail and we will have more than likely hundreds if not thousands fail. We have job losses approaching a million this year and the holiday season is fast approaching. We are just now entering into the seasonal worst phase of housing each year and all of this on top of a dismal 2007. We have so far to still fall and nothing the Government does is going to help us and in fact the more they do the more it will cost us and our future generations in the way of new taxes.

    One Day – One Vote!!!

  36. Bert, it most certainly does qualify but not for pricing I agree. I was talking sales. I guess it is all in ones interpretation of a bounce. This is your classic one month blip due to various factors that simply are not sustainable long term. A variation to the laws of economics that makes no sense based on the data. A spike in the numbers (whatever they are) that places a question mark in your mind as to why. It qualifies…

    I do agree with you however that the Government is certainly prolonging the pain for us all as far as the ending due to the massive amount of interference they have been displaying.

    The $700 Billion by the way cannot possibly do what you suggest because a lot of it is already gone and the rest is already spoken for. In fact based on the numbers of foreclosures already on the books of banks yet to sell the $700 Billion, if it were available, wouldn’t even take of the crust let alone be able to have any affect on the whole pie that sits uneaten…

    This problem is huge and as an example of how huge the FDIC says they will toss $40 Billion at it. Now $40 Billion is a lot of money I agree, but in regards to this problem that is like throwing a cup of water on a forrest fire. It will have zero impact and make zero difference and cause zero in change to occur. They will spin it and make some belive it is doing something and get some to jump in with both feet as a result and those that do will lose out like those before them. It is all about fundamentals and until they come back in line nothing will change and everything will keep falling until they do. Some rules of finance are based on principle and some are based on phoney accounting, while some are based on spin. Principly speaking we are not even close and the other two scenarios, while clever and manipulating, don’t mean squat in the end!!!

  37. Actually Dataquick goes into the numbers quite well. This September was the second worst since 1996, with the worst being in 2007. So we are up in unit sales against the worst numbers in 12 years. To find September 2007, you would have to go back to….

    October 16, 2007
    La Jolla,CA—-Home sales in Southern California plunged to the lowest level in more than two decades, as financing with “jumbo” mortgages dropped by half…..Last month’s sales were the slowest for any month in DataQuick’s statistics, which go back to 1988. The previous low was in February 1995 when 12,459 homes sold.

    http://www.loan-topics.com/september-southland-home-sales-lowest-in-more-than-20-years

    So there we have it folks, September 2007 was the slowest September on record since 1988, not only that, IT WAS THE SLOWEST MONTH EVER RECORDED IN 20 YEARS!!! The data does not go past that!

    Also said…

    This September’s huge annual sales increase stems from the extraordinarily weak activity in September 2007, when sales were at a record low for that month. The year-ago sales plunged after the credit crunch that struck in August 2007 made “jumbo” mortgages for higher-end homes more expensive and harder to obtain. Sales were already hurting from the subprime mortgage industry meltdown earlier in 2007, which undermined demand for entry-level homes.

    He further continued…..

    “You have to view last month’s sales in the proper context,” he cautioned. “They represent escrow closings, which reflect purchase decisions made in mid-to-late summer. That was before the dramatic worsening of the nation’s economic crisis in recent weeks. Over the next few weeks our sales data will begin to show how the meltdown in financial markets this fall has impacted housing demand.”

    What data quick is saying is that you ain’t seen nothing yet.

    http://www.dqnews.com/News/California/Southern-CA/RRSCA081020.aspx

    Mr. Mortgage proved right once again…

  38. […] Its The End of the World As We Know It on US Banks Are Not Alone – Global InsolvencyBertDilbert on NO SPIN – Existing Home Sales DOWN 9.6% From Aug…Not GoodStu on NO SPIN – Existing Home Sales DOWN 9.6% From Aug…Not GoodStu on NO SPIN – Existing Home […]

  39. Let’s all remember thàt bad news sells. I am not saying all is good but if Mr. Mortgage can’t post that the sky is falling then he doesn’t have a blog. Was he here posting when values were rising and the mortgage business was good? No because nobody cares about blogs when it’s positive news. Nobody stops to watch the traffic go by but everybody loves to gawk at an accident. No bad news would mean no blog and let’s face this blog is as much about Mr. Mortgage’s need for attention as it is about getting “the truth” out there.

  40. Mayo, the way I see it, Mr. Mortgage has been constantly posting that he is waiting for the trends to reverse and the bottom to be hit. The fact that most posts he makes are negative is a good indication he doesn’t believe we have reached bottom.

    And when we hit bottom, it is not going to be a sharp V. The data is starting to indicate that first time home buyers are the few who even qualify. Existing home owners can’t upgrade because they don’t have positive equity, and a foreclosure locks them out of affordable mortgages for 3+ years.

    When a forclosure sells, it doesn’t create a new homebuyer, the money simply goes to the bank, who sold at a loss. Like Mr. Morgage says, organic sales are the most important, and they are at their lowest level in recorded history.

  41. Well, if you see a great disaster coming and want to warn people, you’ll have a “need for attention” too. But I’m glad to hear your 401k isn’t down 40% in one year and you’re not 300k negative equity in your California home purchased in 2006.

  42. Mayo

    That is not true at all. Mr. Mortgage cuts past the spin and as I proved out, the September they were comparing against was the lowest monthly sales since 1988. September 2007 then was an anomaly, and should not be compared against.

    All things considered this blog is slow, mainly because people are more interested in making money than reading bad news. Good news at this time is just not in the cards. Worse, the bad news is going to come out a week or two before Christmas when we start measuring closings after the crap hit the fan on wall street.

    We might not get good news for 6 month, a year or longer. California is going into the crapper fast. In addition to loss of jobs in the home building market, let’s see what else we have….

    “In terms of jobs, the five largest sectors in California are trade, transportation, and utilities; government; professional and business services; education and health services; and leisure and hospitality.

    In terms of output, the five largest sectors are financial services, followed by trade, transportation, and utilities; education and health services; government; and manufacturing.”

    Ok so in terms of jobs, trade is number one. Container stats for September.

    Port of Long Beach, down 15.2%
    http://www.polb.com/economics/stats/latest_teus.asp
    Port of Los Angeles down 6.69%
    http://www.portoflosangeles.org/maritime/stats.asp

    So in a global recession, we are likely to get hit hard on the trade front. These numbers were before the crap hit the fan. One longshorman was telling me if it is like this now, he is not going to want to see what January is going to be like. So that is our number one employer, trade.

    Number one for output, financial services. I think we all know where that is headed except for payday loans.

    Anyone want to guess what sales tax revenue is like right now? The government is going to have to cut spending, state, county, local. Everybody is going to be cutting and slashing. Things are not going to get better anytime soon. We are going through serious withdrawals and this is going to take time to work through. This is not going to help real estate sales.

  43. I agree with Tom Lawler’s comments.

    Also, Mr. Mortgage, you pose the silly question, “How in the world can inventories fall when sales fall 9.6%?” Declining sales figures, even if no listings are pulled are entirely mathematically possible. Why don’t you build yourself a simple spreadsheet to prove it to yourself since the math is so hard for you to grasp?

  44. How interesting, Mr. Mortgage’s lead in to this story now says:

    “HOME SALES TUMBLED IN SEPT posting one of their largest one month drops in a year”

    Yet last friday, Mr. Mortgage’s lead in to this story said:

    “The spin is insane. HOME SALES CRASHED IN SEPT”

    Could it be that despite my “spewing” as he called it, when sales go up year over year that is not “CRASHING”? Hmmmmm….

  45. Anti-Spin – yes, I changed the sentence thanks to your constructive criticism. While total sales have crashed and were in stark contrast to what was reported, most people are home owners and I should not rub it in. I am going to try to chose better words to get my point across. Nonetheless, that was an ugly report.

  46. My own personal take is that it is a one month anomaly, and that the market has yet to respond to the recession which just got much worse. I think its highly likely that sales will be down month over month AND year over year in November.

    Still, either way I am glad to see you listen to your critics.

  47. I am writing up new home sales now…not what it was reported as.

  48. […] Comments admin on NO SPIN – Existing Home Sales DOWN 9.6% From Aug…Not GoodAnti Spin on NO SPIN – Existing Home Sales DOWN 9.6% From Aug…Not GoodAnti Spin on Remember […]

  49. New Home Sales Report up – also worse.

    http://mrmortgage.ml-implode.com/2008/10/27/no-spin-sept-new-home-sales-report/

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