The Golden Truth: Existing Home Sales Number Even More Bearish Than Headline Suggests...

Tuesday, March 23, 2010

Existing Home Sales Number Even More Bearish Than Headline Suggests...

The Nat'l Assoc. of Realtors reported it's existing home sales number for Feb. today and the numbers are much worse than the headline that most analysts and investors will look at. Sales fell for the 3rd straight month down to a "seasonally adjusted" 5.02 million annual sales rate. You can bet your gold that the number is statistically skewed to the high side. Inventoies of existing homes for sale jumped by 10% 3.59 million, leading the normally uber-bullish NAR chief cheerleader to state: "Yun said the January-to-February increase in inventory was much larger than usual in February. Inventories represented an 8.2-month supply at the current sales pace, the most since August." (LINK). Keep in mind that March/April is typically the peak listing period, so expect to see a lot more "for sale" signs in your area as homeowners either engage in "strategic default" (i.e. send their keys to the bank) and vacate or the ones who still have equity to preserve decide to sell.

Please bear in mind, that the inventory of existing homes would be substantially higher if banks were to release their foreclosed home inventory (REO - real estate owned) onto the market. Furthermore, as per the self-imposed foreclosure moratorium by big banks during December and January, expect that the foreclosure rates will begin to spike - we're already seeing this to some extent in the numbers. As banks let foreclosed homes pile up, expect the market will "feel" this "shadow" inventory and buyers will likely wait. Also expect that most "frothing-at-the-mouth" buyers who jumped to take advantage of the massive taxpayer tax credit subsidy, which theoretically expires April 30, have already likely made their purchase. Too bad for them because I expect prices to drop another 5-10% this year alone from where we are now.

2 comments:

HalTuesday, 23 March, 2010
KB home CEO said this AM that home sales are stabilizing. That might very well be true but just look at the level of where it is stabilizing and then look at the components of sales. Not exactly encouraging, but you cannot blame home builders and realtors for showing optimism.
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Dave in DenverTuesday, 23 March, 2010
Yes I can blast them. And I intend to go over KB's numbers and look for accounting bullshit. Sales "stabilized" slightly because of the tax credit. KB is mostly a middle market/low-end homebuilder with a 200k or lower price point. That has fed right into the first time homebuyers using the $8500 tax credit as part of their down payment.

These numbers are abysmal.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.