Thursday, October 24, 2013

Existing Home Sales For September: The Real Decline Is Worse Than The Headline Reports

The National Association of Realtors released its report on September existing home sales on Monday this week, which showed that on a seasonally adjusted, annualized basis existing home sales dropped 1.9%. However, a look behind the "adjusted" numbers shows a much bigger decline in existing home sales and a housing market that is fundamentally in trouble.

In fact, quite frankly there's quite a bit of misleading information that has been communicated to investors and observers via the headline reports and the television media sound-bytes.  Not only is the market for existing home sales now in decline - independent of seasonal factors - but prices are also starting to decline.

I review the data beneath the headlines and analyze the implications in this article published by Seeking Alpha:   LINK

What's even more interesting is that the Government is getting ready to roll out new mortgage market regulations which will tighten the clamps on underwriting standards and decrease the availability of mortgage financing to large segments of the population as well as reduce the capability and willingness of mortgage brokers/bankers to finance riskier mortgage applicants. 

I will be publishing more on this soon.


  1. .
    Half of nation's foreclosed homes still occupied
    By Les Christie | – Thu, Oct 24, 2013 4:17 AM EDT.

    Foreclosure sounds like the end of the line, but actual eviction can take months or years -- even after the bank has repossessed a home.

    RealtyTrac estimates that 47% of the nation's foreclosed homes are currently occupied. The percentage actually tops 60% in some hot housing markets, like Miami and Los Angeles.

    Those still living in repossessed homes include both former owners and renters. Either way, their time in the homes is mortgage and rent free.

    To arrive at its estimate, RealtyTrac compared its database of foreclosed homes with postal records showing whether mail was still being collected and whether change-of-address forms had been filed.

    Even when occupants leave voluntarily, old owners typically take about two months to vacate.

    With renters, it can take a year or more. "If someone has a bona fide rental agreement, we have to abide by that," said Amy Bonitatibus, a spokeswoman for JP Morgan Chase.

    One issue, according to Wells Fargo spokesman Tom Goyda, is that the eviction process can take months as it winds through the legal process. The timing varies widely based on local laws and the backlog of cases in individual courts.

    Goyda said the bank has been trying to speed up the process by offering cash to prompt occupants to leave.

    In addition, some states, like Alabama and Utah, have so-called redemption periods of up to a year during which former owners can get their home back if they can find the means to pay off their mortgages.

    And banks may be in no rush to kick people out. They will take their time in markets with a lot of homes for sale and depressed prices. Plus, letting homeowners stick around can help protect homes from abuse.

    "Although one thinks lenders take losses by not moving evictions forward, they're still faring better by keeping the properties occupied," said Pauliana Lara of the Consumer Action Law Group in Los Angeles, which works with homeowners to fight foreclosures. "Many foreclosed homes get vandalized or squatters move in."

  2. Expert: JPMorgan's $13 Billion Fine Should Have Been 22 Times Bigger

    The historic deal is a sign that the Obama administration's crackdown on Wall Street is finally gaining steam. But experts note that the $13 billion fine—which seems a gargantuan amount—is not nearly enough. First, the fine is really only $9 billion, says William Black, an associate professor of economics and law at the University of Missouri-Kansas City and a former bank regulator who led investigations of the savings and loan crisis of the 1980s. The $4 billion in relief to homeowners, he explains, represents loan modifications that the bank would have made in any event to minimize losses and avoid foreclosures. (And that $9 million, he adds, is tax-deductible.) Second, Black says, the total damages JPMorgan, Washington Mutual, and Bear Stearns inflicted directly on purchasers of the shoddy mortgage-backed securities is estimated to be $100 billion. "The normal rule in terms of remedies for frauds of this scope," he says, "is that you pay for your damages that you caused." And if those damages were caused by fraud as opposed to mere negligence, Black adds, the US legal system often makes the fraudster pay punitive damages of at least twice that amount. "A normal recovery would be in the range of $200 billion," he says.

  3. The Danger of American Fascism

    The American fascist would prefer not to use violence. His method is to poison the channels of public information. With a fascist the problem is never how best to present the truth to the public but how best to use the news to deceive the public into giving the fascist and his group more money or more power.

    And this guy never viewed todays MSM.

  4. George Soros Backs 'Ready For Hillary' PAC

    Just in case you didn't realize Hillary is bought and paid for.

    “George Soros is delighted to join more than one million Americans in supporting Ready for Hillary,” said Michael Vachon, Soros’s political director, in a statement. “His support for Ready for Hillary is an extension of his long-held belief in the power of grassroots organizing.”

    Soros will co-chair the PAC's national finance council.

  5. Posted in one of the comments on your article:

    Las Vegas Real Estate Market Update (October 2013)

    at 12:21, it gets interesting.