After new home sales rose 27% in March and yesterday’s news that new home construction was up 5.8% in April, we pointed out that the real estate market is not doing as well as depicted by the general mainstream consensus.
Today we learn that there may not be as many home buyers as many thought:
“Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates. The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season. In fact, this drop occurred even as rates on 30-year fixed-rate mortgages continued to fall, and at 4.83 percent are at their lowest level since November 2009,†said Michael Fratantoni, MBA’s Vice President of Research and Economics.
The $8,000 new home buyer tax credit expired in April, and as we rightly pointed out, in a previous opinion, this would lead to fewer new homes being sold. Without government stimulus, the real estate market will move into auto-correct mode, as it should.
We blew a huge real estate bubble over the last 10 years, and it’s time for it to deflate. This is going to happen whether or not the Federal government gets out of the way. We can have prices deflate now, or they can continue to print trillions in real estate stimulus which will eventually lead to price declines in “real” dollar terms even as the US dollar goes through inflationary depreciation in nominal terms.
Now is not the time to buy a house, but for those interested, there may be a “sweet spot” coming for the right properties at the right price in the near future. More on this later.
This coming after press secretary Gibbs’ BS about how the U.S. economy was improving over the last year.  Â
Obama’s lies are catching up with him.    Out with these traitors.
Why build a new house when they are so much foreclosed homes on the market?
Check the demographics. The party is over. Speculators will have to find a new bubble. We have 6-7 million dollar homes in excellant locations going for 2 million dollars in Arizona.
My guess is commodities, maybe ag products. The banksters have to manufacture something to churn those accounts to meet overhead and plan for next year’s mega bonus.
Sugar, cocco, coffee, wheat, and soybeans. And corn.
I really wanted to keep partying…. dangit.
Reggie — Yours’ is a great question… why keep building when there’s a bazillion homes sitting there with no one to live in?
One of the big trends going forward, in my view: Got a 3000 square foot home with 4 bedrooms? Instead of a family of 4 or 5 living there now, you’ll have grandma, grandpa and your unemployed brother, along with his wife and kids joining you soon….
Mac,
What you are saying is that we are just like the Phillipines, Mexico, or Pick-an-African country. Welcome to the “Third World”. Anybody got any Chicklets I can sell?
“ Now is not the time to buy a house, but for those interested, there may be a “sweet spot†coming for the right properties at the right price in the near future. More on this later.”
Lots of Foreclosed/Bank owned properties at rock bottom prices already.  Want to get something for cash before the dollar crashes… keep us posted! Thanks!
You mean all those Remax agent and other realTOR commercials I keep getting bombarded with are incorrect when they’re saying now is the time to buy a home?Â
Gosh darnit to heck!!Â
You mean all those Remax agent and other realTOR commercials I keep getting bombarded with are incorrect when they’re saying now is the time to buy a home?Â
Gosh darnit to heck!!Â
Anyone who thinks that RE (residential or commercial) will “recover” any time soon is living in Fantasyland. The Unemployment rate (real, not BLS BS) is continuing to climb, especially for well-paying jobs and for recent graduates – not to mention unskilled youth minorities in the inner cities. We have more than enough burger flippers, dishwashers, gardeners, (overpaid) public employees and Walmart hostesses – to the consternation of 12-20 million illegal aliens and their distressed American (legal) hosts!
Rising and long-term unemployment translates into more foreclosures and a growing, HUGE inventory of unsold properties. If you add all the REO properties on which banks are not taking any action (delinquencies) and which are not marked-to-market on their Balance Sheets, the inventory is bound to SKYROCKET and loans will be harder to get (for those dwindling few who can afford the payments).
There is NO light at the end of the RE tunnel – except from the Foreclosure train, smashing right into false hopes of rejuvenated consumer spending (70% of the economy).
Mac, “soon” is NOW! That’s why there are FOR RENT and FOR LEASE signs everywhere. Garages are being converted to living quarters, even though that’s illegal.
Who said: “TSWHTF”?
high unemployment, strategic defaults,increase in prime borrowers defaulting , very slow rate of banks liquidating foreclosed homes- supposedly at a rate which will take 9 years. 96% home sales are govt. backed. the home sales that have occurred  are mostly subprime,3% down. as banks hold these homes and the condition their in decrease likeleyhood of qualifying for fha. my near 800 credit score and debt to income 0f 45% still met too many roadblocks on a 35k reo. cash is still king for now. there are bargains out there in r.e. . as a r.e. investor im not sure what abargain is right now. i will be converting a section of commercial storefront w/ 23k traffic count to an apartment soon to generate income. so yes ,i think r.e. is in amess for a long time and just think how historically low interest rates are right now
food for thought- for those strategically defaulting on mortgage, even for those that have no choice but to default plus all other bankruptcies. ARE THESE NOT BAILOUTS???? especially when they have decreased from 4 to 2 ,the # of years you have wait to requalify  for an fha loan, so you can do it all over again. i can be compassionate to some situations people are in ; i care not here them. for you tax payers out there who have not been bailed out by defaults or bankruptcies, I WOULD BE PISSED.for all others , SHUT UP!. and while im on aroll -if  your overweight ,smoke ,drink too much, have other preventable conditions you can also shut up because AGAIN we taxpayers are paying for you ,either directly or indirectly.. soon -directly. ACCOUNTABILITY
no reply’s on ( food for thought) post? thats what  i was  afraid of : are we still looking in the mirror? freedom and liberty arent free or easy
everyone needs to view MELTDOWN by N.I.A.. Â pay attention to the fat lazy american on the couch vs. the hard working chinese
CORRECTION!!! Â its “MELTUP”