Having said that, we never really saw any real month-to-month or year-over-year "bounce" in overall home sales this summer. In fact, in the "heart" of the selling season this year sales declined. As I eyeballed the weekly mortgage applications reports this summer, it looked like there was an occasional week-to-week bounce in the applications for purchases, but the majority of the mortgage activity, since rates were falling, was in refinancing.
The reason I was thinking about the housing market is that, over the last 5 or 6 years, I've grown accustomed to making a visual note whenever I'm driving around the metro-Denver to observe the number of "for sale" signs I see, as I tend to drive through a lot of different areas over the course of any given week. Denver has always been considered a "homogenous" representation of what is going on demographically economically across the country. What I've noticed recently is that, despite the fact that the primary selling season is over, there are still a lot stale "for sale" signs and - at least in the area of Denver where I live - a lot of new signs have been put up in yards since Labor Day weekend. And now I've been noticing multiple listings per block.
In addition, I've been noticing a lot of "new price" or "price reduced" signs. To be sure, it can be argued that my sample size is limited or not "random." But I have been noticing this all over the city. One particular house was originally offered at the beginning of the summer for about 10% below the price it could have received at the peak of the housing market (yes sometimes I pull the tear sheet to observe offering prices). I noticed yesterday a "new price" sign and the new price was 10% below the original price offered and the seller had changed brokers.
Now, there's a lot of "randomness" and statistical "noise" in just one observation like that. But what the proliferation of signage as we go into the slow season for home sales tells me is that sellers are starting to get nervous/desperate again. And at some point we are going to see a meaningful percentage of the "shadow" market transform into the actual market and prices will have to be competitively reduced in order for the most desperate to move their home.
Coincidentally, a colleague sent me this article on the precarious financial condition of those still making their mortgage payments and gainfully employed:
One in three Americans would be unable to make their mortgage or rent payment beyond one month if they lost their job, according to the results of a national survey taken in mid-September...Sixty-one percent of those surveyed said if they were handed a pink slip, they would not be able to continue to make their mortgage or rent payment longer than five months.Here's the LINK
Unfortunately, it looks like the housing market is getting ready to go into another downward death spiral. Anyone who thinks that this is the bottom right now is living on another planet. Even more unfortunate, I expect that Obama will exercise his ability to use Fannie Mae and Freddie Mac to try and prevent this death spiral with a massive Taxpayer subsidized mortgage refinancing program. He's already hinted that he can do this without Congress. He also claims that it won't cost this country anything...
Don't believe that any more than you would be willing to believe that the housing market has bottomed. Obama's ploy will be nothing more than another whorish ploy to get votes as 2012 approaches. The truth is, however, that we are on the verge of heading into another big systemic black hole that will make the one we went into in 2008 look mild...got gold?