Pending home sales up for 5th straight month

[Stanfield]

Pending home sales up for 5th straight month
Realtors survey came in much better than expected

http://www.msnbc.msn.com/id/32283222/ns/business-real_estate/

Good or bad?

[fdjake]

It's GREAT!!!!!

This is how a BOTTOM is formed in a RECESSION.  HOUSING is almost always the catalyst for recovery.   

Housing is HUGE to our economy....As sales increase other things will follow.  People that buy new homes BUY a lot of other things once they move into that property.

Add in the month after month DECLINES in unemployment and it adds up to BETTER TIMES ahead.

Notice I didn't say GREAT TIMES ahead......Simple STABILITY would be great right now.  Once people feel SAFE they'll return to spending....Remember...We're talking about AMERICANS here.....They may have learned a lesson from this financial bust.....But they won't REMEMBER that lesson for very long...THAT you can BANK on.  Once they feel more secure....PENT UP demand will bring them back to SPENDING!!!!

[Hoosier4life2005]

House prices going up after going down down down is never a bad thing I guess.  JDjake is right, However, house prices NEED to fall much more to get where the market wants them to be.

Our government has been trying to create an artificial floor on housing prices this whole time.  Maybe it worked, maybe it didnt, i dont know.  But, if it doesnt work (to early to tell yet, I would guess no, its not going to work) and the floor is busted, house prices are going to soar to the bottom, being a neccesary economic PAIN.  House prices are going to fall fall fall fall fall much more, and get where the free market wants them priced. Just my opinion.

[fdjake]

Buddy,

The MARKET is TELLING you that prices have ALREADY fallen enough to INCREASE SALES.   The next phase will be small PRICE APPRECIATIONS, Not continued MASSIVE DROPS.....Those slightly higher prices will PUSH more buyers INTO the market as they worry about missing an opportunity.  I am NOT implying that another BOOM will occur, it won't....But the market WILL  move UP from here.

Here's an example from the Northeast where I live.  This is an ACTUAL house.

2001 .......3 bed 1 bath 50 year old Cape in liveable condition costs you $85,000 and you could pick between 25 of them on any given day.  You need a home inspection & apparaisal for the bank, good credit, and a 20% down payment.

2006........Same 3 bed Cape sells for $250,000 and has 38 bids on it 3 days after it goes on the market and there isn't 3 to pick from in the area.  Buyers take the house with NO INSPECTIONS, NO CONDITIONS, and put in an offer $30K OVER asking with NO MONEY down and a NO DOC loan.

2009........Same 3 bed Cape now LISTS for $100,000 (after the foreclosure)  and you have 50 to pick from.  Banks want multiple inspections & appraisals, your credit better be EXCELLENT, and you better have 20% cash to put down.

So.....if you REMOVE the BOOM years and add up the appreciation from $85,000 to the present $100,000 in 8 years.....You are almost PERFECTLY aligned with NORMAL real estate appreciation rates.

The bottoms IN kid.

[Hoosier4life2005]

http://www.ritholtz.com/blog/2008/12/classic-case-shiller-hosuing-price-chart-updated/

FDjake, look at the chart. House prices in American history would lead us to think, we have not hit bottom yet..

[christopher w]

Hoosier,

Based on that data I would tend to agree with Jake. We are back top pre-price boom pricing. My question is what does this mean to REI?

[Hoosier4life2005]

were not back to pre-price boom pricing, were still very high.  I dont understand why you think that..?

Obviously all REI is local, and no matter how the market turns, you can find deals if you buy at the right price.  But based on the chart, dont you think we're due to fall some more?

Hoosier,

Based on that data I would tend to agree with Jake. We are back top pre-price boom pricing. My question is what does this mean to REI?

[PositiveOutlook]

Does this mean that the Alt-A and Commercial Bubble are mute? 

From what I've read, my concern is that we are entering the W-cycle of this thing, and are currently on an up-trend, but it will regress back again...  Is it creating two different realities?  Wall-street expectations vs. Main Street Expectations?   People aren't looking at the fact we are losing less jobs, but just that the overall unemployement number is going higher and the expectation is that that number will go even higher... currently at 9.7% 

I hope you are right FDjake and that we are hitting a real estate bottom...   

I think what is working against the momentum, is all the government spending and anticipated spending that is going on or going to go on...  nationalized healthcare, Cap and Tax (trade), record government revenue shortfalls, the EVENTUAL taxation that is to come for EVERYONE... that's ALOT of uncertainty and ALL negative...  hard to combat...

What I fear is that just when people are going to start getting back into the market, is that the interest rates are going to spike, and that coupled with the stricter lending standards, will lead to the banks raising fees and points to make up for lost revenue...

It's kind of like an addict... we just went through (and some would argue we will be going through for quite some time) our version of rehab, but once the country gets a taste of it again, they'll be back on the bandwagon again...  just at MUCH higher interest rates and fees galore across the credit spectrum...

So we basically GAVE them the hose they are going to beat us with...

[Stanfield]

Well, you can look at charts all you want.

But, the question in my mind is the what happens when the $8,000 runs out of time.

I think we will see the answer to that with the cash for clunkers deal.

Watch that deal and apply it to housing.

I got in on some cheapies no doubt.  And just got off phone with fellow investor... if we move to an appreciation market prepare to get back to flippin.

[christopher w]

I don't think the 8K has had all that much of an affect on the market. Because you could not use the 8K as the down payment it really has not been the spark that they intended it to be. People still have to come up with at least 3.5% for an FHA down payment. as we get closer to Nov 30th (the last day that the 8K will be available)  people may jump off the fence, but lately everyone I have spoken with has said "I heard it will be $13,500 or $15,000 next year so I think i am going to wait it out". Idiots.

[Stanfield]

Actually, that changed  few weeks ago.

You can use the 8 k for downpayment.

[sellnbama]

Move fast if you wanna make money on rei.The mort. rates are bound to go up with the rate of spending that has happened.This is also the only way china will be guaranteed we'll pay our debt to them.So get what you can, but don't be so small minded as to think the storm has passed.We can all agree that when intrest rates increase/sales decrease.   

[fdjake]

All that Goverment spending averted a financial collapse that would have made the Depression look like a bump in the road.  Remember....OUR 21st century economy RUNS on credit....In 1930 credit was NO WHERE NEAR the levels it is now.  Even the Republicans admit that a complete economic melt down was stopped by these measures.  And I'm not giving that credit to Obama.....That was done while BUSH was in the White House.   Paulson, in my opinion, will go down in history as the man that saved America from a second great depression.   He held a GUN to the Wall St. bankers heads and told them their signitures were going on that paper or their BRAINS were.
That single event STOPPED a cascading collapse.

As far as housing goes......How much LOWER do you think this CAN go?????   When you can buy houses in OHIO, MICHIGAN, ILLINOIS, and countless other states for under $5,000 that's the BOTTOM....It ain't going lower.

And CHINA........Freakin CHINA is a HUGE BUBBLE right now....Jimmy Rogers has been bullish on China for over a decade.......NOT NOW....He thinks their entire economy could collapse.  THAT would greatly strengthen the DOLLAR and would be the PERFECT contrarian play....The COUNTRY everyone see's as the strongest (China) is actually built on a huge BUBBLE.   These aren't MY WORDS, this is what Rogers is saying right now.    This guy is a GENIUS at identifying market moves long before anyone else.

Don't be so SMALL MINDED as to think the USA STILL isn't capable of a KNOCK OUT economic punch.  Too many people have sold this Country short too many times.....Only to have their @sses handed to them.

And HOOSIER......You better update your CHARTS because even SHILLER (the guy whose chart you linked) is seeing signs of a bottom. Your chart is from 12/08

Here's some more RECENT Shiller toughts on the subject.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aIbMtWW6cVO4

[sellnbama]

I don't doubt the US at all.But to think that there won't be a punishment for the most money spent since washington is just plain dreaming.I'm taking advantage as well of all I can while I can too.But record spending has consequences.So nobody has still not answered my question- If we are out of recession can the remainder of "stimulous"go to tax cuts??Since they have an in your face demo that(cash 4 clunkers)tax cuts generate income=economy recovery.   

[fdjake]

Of coarse that spending will have consequences.......And I agree with you...We NEED to pull back this spending as things loosen up.  Let's get a REAL plan togehter that PAYS down this debt....Let's see CONGRESS take a PAY CUT....It won't amount to sh*t numbers wise, but it sure would make PEOPLE feel better about their Goverment. 

I honestly think the worst is behind us....I'm SEEING IT first hand.  Things are NO WHERE NEAR as bad as some people thought they'd be....
I just don't think POLICE OFFICERS will turn to ROBBING CITIZENS to provide for THEIR families......AS WAS SUGGESTED HERE DURING THE PEAK OF THE PANIC.

As far as cash for clunkers, tarp, talp, bail outs, work outs......It is FAR BETTER to have done EVERYTHING POSSIBLE to avert a total economic collapse than it would have to SIT and watch it occur....There are people here who THINK a collapse would have been preferable.....They THINK that until THEY find themselves BANKRUPT or HOMELESS......TOTAL COLLAPSE means WE ALL GO.

I'll take the Goverment INTERVENTIONS any day of the week over the alternative.....YEP....MY taxes are going UP......BUT....I'd rather pay more and HAVE a functioning economy than pay NOTHING and live in a tent!!!

Be very careful what you wish for...

As far as Alt A and commercial loans are concerned.....These issues are DIRECTLY related to JOBS......Slow the job losses (and that IS happening) and those Alt A and Comm loans will take care of themselves.