Thursday, February 20, 2014

As I Suggested Would Happen - More Homes For Sale Now

Inventory rose year-over-year in 22 of the nation's 35 largest metro areas covered by Zillow, with the largest inventory gains coming in some of the areas that were hit hardest by the housing recession, including Las Vegas (up 42.8 percent), Phoenix (up 30.5 percent) and Sacramento (up 26 percent). These metros also experienced significant cooling in the pace of home value appreciation in January, as buyers had more homes to choose from and were less apt to engage in the kinds of bidding wars that helped drive prices up so quickly last year.

I have been suggesting that we would start to see a lot more homes for sale starting in January, as home buyers who are theoretically now even or "above water" on their mortgage after paying too much before the bubble popped look to sell and move on, with less debt.

I can say anecdotally that I'm seeing "for sale" signs pop up like weeds every day now, as I drive pretty much the same routes throughout central and south-central Denver regularly.  I'm also seeing more "coming soon" signs.   Back in 2007/8 when I noticed these, I assumed the was house not for sale yet.  It is, however, for sale but it is not officially listed.  The "coming soon" sign means the broker has an exclusive, albeit usually short term, selling agreement - a "hip pocket listing," as it's called.  The house is for sale but it's not listed in the MLS system and therefore does not show up in the National Association of Realtors "inventory" metric.  The latter of which actually lags the market by 2-3 months anyway.  

Let's say in any given market that maybe 5-10% of all homes sport the "coming soon" brand.  That means that at any given time the actual inventory of homes for sale is 5-10% higher than is being officially reported or being represented by your most helpful home salesman.   Just one more source of fraudulent data that has infected our entire system.

I suspect that anxious buyer demand for homes was "pulled forward" into 2013.  The anxiety stemming from the "low inventory" narrative, from the new FHA mortgage rules this year which make getting an FHA mortgage (20% of all mortgages) more restrictive/lower size limits and from fear of higher interest rates.   In other words, this rising inventory will be met by significantly reduced demand from both "organic" buyers and investment buyers.  As I pointed out in my articles over the last three months, we saw evidence of a decline in both buyer cohorts in the last quarter of 2013.

Look out below...


  1. NVR reached 52-week new high a few weeks ago. Good luck for your short position.

    1. I'm not short NVR. I made a lot of money on it when the big bubble popped, but it's a very highly manipulated stock. Wouldn't touch it here.

  2. "Legerdemain" doesn't even come close to describing the duplicitous dealings occurring not only in the housing market, but the economy as a whole. I am learning a lot from you, Dave. Thank you very much for your tireless effort in getting the message out and in connecting the dots (God knows the mainstream media would never let us know what's really happening, we're "mushrooms" as far as they're concerned).

  3. This soaking-up of Dollars by the only countries having sufficient growth to be able to use them explains, to a great extent, the lack of any Dollar devaluation or inflation in the US notwithstanding the Fed’s policy: the devaluation which should have gone hand-in-hand with such money creation has been absorbed by the rest of the planet’s economic dynamism.

    But something has made the Fed no longer able to continue. Probably the fact that to have such an impact on the US economy, the quantity of money creation would have to constantly increase, which an increasingly number of people even in Federal Reserve circles were balking at doing. Staying at the same $85 billion a month level already corresponded in fact to a slowdown. In this case, better retreating and trying to escape from the trap.

    Since the beginning of January the Fed has reduced its purchases by $10 billion a month, and by a further $10 billion a month from the beginning of February, to monthly purchases of $30 billion in mortgages and $35 billion in Treasury bonds currently. However, this decline in support means that a quarter of the indirect “aid” to emerging countries has gone… Therefore, it’s logical that there is a fall in economic activity in these countries and, consequently, their currencies.

    This is where the boomerang effect begins. First, Western investments in emerging economies are worth less since the currency is devalued; therefore, a portion of investors’ assets have well and truly disappeared, causing severe stress in financial markets. But, more importantly, to halt the decline of their currency, emerging countries’ central banks are selling their dollar reserves to buy back their own currency on the markets, resulting in a surplus of dollars and an increase in demand for the local currency, causing it to rise automatically. For example, in such a period Turkey, India, Brazil and Indonesia among others, have each offloaded in the order of tens of billions of Dollars per month.

  4. China's manufacturing activity slowed to a seven-month low in February, a private survey showed on Thursday, once again stirring concerns over the health of the world's second-largest economy.

    The flash Markit/HSBC Purchasing Managers' Index (PMI) fell to 48.3 from a final reading of 49.5 in January.

    This is the second straight month the PMI has fallen below 50, which signals contraction.

    "Economic activity has slowed in early 2014. Tighter credit in the fourth quarter of 2013 has made inventories more difficult to finance, prompting manufacturers to destock in February," said Bill Adams, senior international economist with financial services firm PNC.

  5. The "hip pocket listing" is just another example of our "smoke and mirrors" nation. Any metric that would show how corrupt and rotten to the core the USSA has become manipulated then spun by the propaganda-whore press.

    However, the biggest farce of all is the federal reserve and their money-for nothing-and-chicks-for- free printing press. I often wonder how is it that in 100 years no lawyer, judge, president, congress or wealthy individual has been able to do anything about this illegal institution.

  6. The Crony Revolving Door Spins Once Again

    Patton Boggs LLP today announced that

    Richard A. Shilts, former Director of the Commodity Futures Trading Commission Division of Market Oversight,

    has joined the firm as Senior Policy Advisor based in Washington, DC.

  7. The housing market is starting to recover in the UK as well although seems mainly fuelled by various government schemes.