Existing home sales numbers were announced today

[Neubarth]

Existing home sales numbers were announced today


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As always now that Obama is president, they claimed that "Existing Home Sales Sharply Rise Over Two Percent"

Existing home sales are not that important. People will always be dying or moving and the houses will have to be sold. As is presently the case about 300,000 houses are foreclosed on each month. That counts as a change of ownership from the owner to the bank. You can not judge economic improvement by house turnovers, but you can with an accompanying statistic and that is the value of the house. If the Value of the house is going down, THEN we have an economic issue. As is presently the case, house values in this great country of ours are going down at a rate in excess of 5% a month. That is frightening, but you do not see the Obama spin masters yelling about that.

Here are some numbers on Existing House Sales.

MAY Reported as 4.77 M (Houses, Condos, mobile homes on sites.&#8230

APR Initially reported as 4.66 M and then corrected to 4.68 M

MAR Initially reported as 4.55 M and then corrected to 4.57 M

FEB Initially reported as 4.71 M and then corrected to 4.72 M

The numbers are corrected one to two percent each month, so it can be said that they have a margin of error between one and two percent, which is fairly tight.


If in February the existing housing sales were 4.72 and now they are reported at 4.77, that is effectively NO CHANGE while bouncing around on the bottom. How far down is the bottom?


In June of 2005, existing home sales were 7.33 M

In May of 2005, existing housing sales were 7.13 M

Sales in May 2009 are now down 33.1%

In Apr of 2005, existing housing sales were 7.18 M

Sales in Apr 2009 were down by 34.8%

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House values keep on going down, and with that plunge, the economy continues to collapse. More and more homes are defaluted on and banks take the losses. We have hundreds of banks on the edge of bankruptcy. The FDIC is going to have to hire more people as there are a hell of a lot of bankruptcies in the offing.

 

[foggedinn]

Are banks actually taking the loses?

From what I've been reading, when a bank forecloses on a house that has a $250,000 loan and now has a true market value of $150,000, they don't write down the loan to it's current market value. Instead, they keep it on their books as a $250,000 asset. They don't have to recognize the loss until they actually sell it.

Since to recognize the loss would put them into technical bankruptcy, they won't sell it. Hence the tremendous drop off in existing home sales.

The banks seem to be hoping for an economic recovery that isn't manifesting. It's a kind of a catch-22 situation for the banks. To get the unit sales up to pre-crash levels, the forclosed properties have to be marked down and sold at what the market will pay. As soon as they do it, they go broke. Their hoping to hold out until there is a price recovery. I don't personnally see that happening for at least 10 years.