Housing Market Will Extend Recession

[auditor0007]

With all of the problems we are seeing with the economy, no one wants to mention the obvious. While the glut of houses continues to increase in the housing market, everyone is blaming the credit crunch. While the credit crunch is creating a problem for some people, the simple fact is that we have too many houses.

We built more houses/apartments/condos than we need. Even with home prices having dropped significantly, there are no new buyers, and there aren't likely to be that many anytime soon. Even foreclosed homes that can be purchased at bargain basement prices are not moving. On the flipside, rental properties are also seeing an increase in their vacancy rate. People need somewhere to live, and apparently most people do have a place to live currently, yet the overall vacancy rate is increasing. This spells a much longer term problem than anyone is telling us.

With such a glut of homes available, it will be a long time before there is a need for new housing, which means homebuilders won't be hiring anytime soon. Homebuilding is one of the foundations of our economy. When new homes aren't being built, it's bad news for the economy.

What we need are more people and more immigration, although it needs to be people who can actually afford to buy homes. Oh yea, that brings to mind another issue. If we want to deport 12 million illegal aliens, we're going to create an even bigger glut in the housing market, driving prices even lower. Something tells me it might be a good idea to put the illegal immigration issue on the backburner. Actually, I never really expected to see too many deportations.

Anyway, that's how I see things, and I believe this housing glut is going to keep our economy from taking off anytime soon.

 

[wimpy77]

that's why jim cramer suggested giving people a $15,000 to $20,000 dollar tax credit for buying existing foreclosed homes only. what ended up being put in the senate bill was giving a $15,000 credit new and existing homes. but over the last two months, existing house sales have increased with the prices of homes going down.

 

[RodISHI]

The housing market has been way over inflated in many places. People cannot afford to pay half their income or even more in many cases for a house, apartment or condo.

 

[auditor0007]

that's why jim cramer suggested giving people a $15,000 to $20,000 dollar tax credit for buying existing foreclosed homes only. what ended up being put in the senate bill was giving a $15,000 credit new and existing homes. but over the last two months, existing house sales have increased with the prices of homes going down.

You're missing my point. Now, I could be wrong, but based on the numbers, we aren't going to have enough buyers regardless of what type of incentives the government might give, because there are more homes available than are needed.

 

[indago]

With all of the problems we are seeing with the economy, no one wants to mention the obvious. While the glut of houses continues to increase in the housing market, everyone is blaming the credit crunch. While the credit crunch is creating a problem for some people, the simple fact is that we have too many houses.

Try to follow along with this:

The consumer doesn't have a job: it has been shipped to a foreign country where standards are much lower, or an illegal alien is doing his job with a stolen identity. The consumer not having a job, he has no money to spend. Having no money to spend, he can't pay his mortgage or support his family. No amount of government intervention into the banking systems, car companies, insurance companies, will help the economy if the consumer has no job with which to make money to spend. He is just not buying anything.

 

[editec]

With all of the problems we are seeing with the economy, no one wants to mention the obvious. While the glut of houses continues to increase in the housing market, everyone is blaming the credit crunch. While the credit crunch is creating a problem for some people, the simple fact is that we have too many houses.

We built more houses/apartments/condos than we need. Even with home prices having dropped significantly, there are no new buyers, and there aren't likely to be that many anytime soon. Even foreclosed homes that can be purchased at bargain basement prices are not moving. On the flipside, rental properties are also seeing an increase in their vacancy rate. People need somewhere to live, and apparently most people do have a place to live currently, yet the overall vacancy rate is increasing. This spells a much longer term problem than anyone is telling us.

With such a glut of homes available, it will be a long time before there is a need for new housing, which means homebuilders won't be hiring anytime soon. Homebuilding is one of the foundations of our economy. When new homes aren't being built, it's bad news for the economy.

What we need are more people and more immigration, although it needs to be people who can actually afford to buy homes. Oh yea, that brings to mind another issue. If we want to deport 12 million illegal aliens, we're going to create an even bigger glut in the housing market, driving prices even lower. Something tells me it might be a good idea to put the illegal immigration issue on the backburner. Actually, I never really expected to see too many deportations.

Anyway, that's how I see things, and I believe this housing glut is going to keep our economy from taking off anytime soon.

You don't suppose that the demand might be down because people cannot borrow money from the banks, do you?

 

[auditor0007]

With all of the problems we are seeing with the economy, no one wants to mention the obvious. While the glut of houses continues to increase in the housing market, everyone is blaming the credit crunch. While the credit crunch is creating a problem for some people, the simple fact is that we have too many houses.

We built more houses/apartments/condos than we need. Even with home prices having dropped significantly, there are no new buyers, and there aren't likely to be that many anytime soon. Even foreclosed homes that can be purchased at bargain basement prices are not moving. On the flipside, rental properties are also seeing an increase in their vacancy rate. People need somewhere to live, and apparently most people do have a place to live currently, yet the overall vacancy rate is increasing. This spells a much longer term problem than anyone is telling us.

With such a glut of homes available, it will be a long time before there is a need for new housing, which means homebuilders won't be hiring anytime soon. Homebuilding is one of the foundations of our economy. When new homes aren't being built, it's bad news for the economy.

What we need are more people and more immigration, although it needs to be people who can actually afford to buy homes. Oh yea, that brings to mind another issue. If we want to deport 12 million illegal aliens, we're going to create an even bigger glut in the housing market, driving prices even lower. Something tells me it might be a good idea to put the illegal immigration issue on the backburner. Actually, I never really expected to see too many deportations.

Anyway, that's how I see things, and I believe this housing glut is going to keep our economy from taking off anytime soon.

You don't suppose that the demand might be down because people cannot borrow money from the banks, do you?

That is only a small fraction of the overall problem. The fact is that for most of this decade, until the beginning of the housing market meltdown, speculators were responsible for the purchase of nearly 25% of all home sales. This created a massive excess of homes which has now been added to by all of the foreclosures. The point is that there are not enough people to buy all of these homes even if everyone was working.

The following article was written in 2005 and discusses this problem even at that time.

"If housing speculators stop buying, who's left to buy? The average American with a job has already bought. America has been creating new homes faster than new jobs, and it has been the home speculator, and second home investor, holding up the market for at least the past year. (The latest reports show that the time it takes to sell a home has increased, and price rises have been trailing off.)"

Safe Haven | Slaughter of the Housing Speculators

 

[Truthmatters]

Barel Karsan: Housing Inventories Tell The Tale

The Glut is effectively over dude.

 

[auditor0007]

Barel Karsan: Housing Inventories Tell The Tale

The Glut is effectively over dude.

Yea, like a wow dude. Those are new housing inventory levels dude, and they don't take into account the glut that has been added from foreclosures dude. I would imagine new housing inventory levels would have reduced in the last couple of years dude, because we haven't been building any new homes dude. You're a damn genius dude.

 

[Truthmatters]

They are inventory levels DUDE!

They are the same numbers used in every year.

When people have an economy that is not falling off a cliff they will move out of their Sisters, Mothers , brothers, friends, Dads, Uncles , Aunts, Sons ,Daughters, Inlaws house and be able to rent or buy one of these houses.

It is a standard measure and you are wrong, please dont cry.....Dude.

 

[Truthmatters]

More families move in together during housing crisis - USATODAY.com

 

[auditor0007]

By JAMES R. HAGERTY
Lower home prices are luring some buyers back into the U.S. housing market, but foreclosures and a weakening economy are likely to keep downward pressure on prices for at least another year, economists say.

A quarterly Wall Street Journal survey of housing data in 28 major metro areas shows that the glut of unsold homes listed for sale is shrinking in most of them. In many cases, sales have been stimulated by investors who are grabbing what they see as bargains on homes that can be turned into rentals. Metro areas with the biggest drops in for-sale signs include Sacramento and Orange County in California and the Virginia suburbs of Washington, D.C.

Bargain Hunters Help Shrink Housing Glut - WSJ.com

So, apparently we have nothing to worry about as the glut of homes is dwindling, right? Wrong!!!! Let's look at the actual numbers. The homeowner vacancy rate and the rental vacancy rate are both increasing and are at all time highs. So even if some speculators are taking advantage of low prices, they're not going to be able to rent these homes out, and those homes will evenutally find their way back into the market, further exacerbating the glut.

More On Homeowner and Renter Vacancy Rates

Posted by Tyler Durden at 12:46 PM

This is the summarized data on the troubling vacancy rates:



Homeowner Vacancy Rate 2.9% (in Q4)
Rental Vacancy Rate 10.1% (in Q4)
Pending Home Sales +6.3% (in Dec) vs. consensus flat


Some analysis from Goldman on this data. None of it is good:


1. Homeowner vacancy rates remain very elevated, which is quite bad news for the housing market. These increased to 2.9% in the fourth quarter, an increase of 0.1 percentage points from the 2.8% rate in the third quarter. The increase puts the homeowner vacancy rate at the top end of the range they have been in since the end of 2006. At over a percentage point above the average vacancy rate before the housing bubble, this corresponds to an excess supply of over a million homes. Moreover, the slight increase from the third to the fourth quarter means that there is no sign that reduced homebuilding has started to work off that excess supply, a prerequisite for stabilization in the housing market. We expect the excess supply to continue to put downward pressure on house prices over 2009.


2. There is also excess supply in the rental market, where the vacancy rate also increased. Rental vacancies increased to 10.1% from 9.9%. The high rental vacancy rate shows that the excess supply in the owned housing market is part of an overall problem of too much housing, not just a change in the mix of housing demand. That is, the transition of homeowners to renters is not putting significant pressure on the rental market because there is excess supply there too. Part of that probably stems from the fact that the size of the rental market has increased, as some housing units have transitioned from the owner occupied to rentals. Consistent with the other data, the homeownership rate decreased by 0.2 percentage points to 67.5% -- nearly 2 percentage points below its peak.

Zero Hedge: More On Homeowner and Renter Vacancy Rates

 

[auditor0007]

They are inventory levels DUDE!

They are the same numbers used in every year.

When people have an economy that is not falling off a cliff they will move out of their Sisters, Mothers , brothers, friends, Dads, Uncles , Aunts, Sons ,Daughters, Inlaws house and be able to rent or buy one of these houses.

It is a standard measure and you are wrong, please dont cry.....Dude.

You really are an idiot, aren't you? It's a standard measure of new home inventory levels, not overall levels. Of course inventory levels of new homes have fallen. We haven't been building any new homes. Try using the overall figures of the entire housing market next time, instead of cherry picking the data that suits your argument.

When the economy turns around and all these people move out from their relatives homes, they will only be able to reduce inventory levels slightly. It still won't be enough for new home construction to take off again, because there are too many damn homes. It's going to take more than a slight reduction in inventory levels before new construction is necessary.

 

[Truthmatters]

This is largely in part do to the families who have compiled resources to save their house or to merely survive.

When the kids move back in with Mom and Dad because their hours were cut, to pitch in to save the house or both. There is also the aspect of renting your house and living with family to try and save the house.

If you could rent a house at the same amount your appartment cost you would you live in an appartment?

 

[Truthmatters]

http://www.dwight.com/images/econ/0808/7a.jpg

housing starts have fallen off a cliff.

 

[auditor0007]

http://www.dwight.com/images/econ/0808/7a.jpg

housing starts have fallen off a cliff.

This is why new home inventory levels have fallen. But overall home inventory levels are at a peak and likely to increase as even more foreclosures are projected as ARM's come due over the next two years.

 

[Anguille]

I'm waiting to see some of the McMansions divided up into rooming houses. I bet that if they hadn't mostly been built as part of urban sprawl, that would be happening a lot.

The silver lining to the down turn in home sales is that urban sprawl has been checked. It's time to put some effort into seriously stabilizing our population if we want to hold onto any undeveloped land for future generations.

 

[Truthmatters]

http://www.americanbanker.com/usb_article.html?id=20090126ZPMC0W20


You are right that was just new housing my mistake and I accept the baffoon award for that one.


Inventory however is coming down and largely due to the new housing starts falling off a cliff.


the unanticipated 6.5 percent month-over-month jump in existing homes sales in December was music to the ears last week. Even better, total housing inventory at the end of last month declined 11.7 percent to 3.68 million homes, a 9.3-month supply compared to an 11.2-month stock at the end of November. But sales were up because prices were so down. “The higher monthly sales gain and falling inventory are steps in the right direction,” according to Lawrence Yun, chief economist at the National Association of Realtors, “but the market is still far from normal balanced conditions.”

 

[auditor0007]

http://www.americanbanker.com/usb_article.html?id=20090126ZPMC0W20


You are right that was just new housing my mistake and I accept the baffoon award for that one.


Inventory however is coming down and largely due to the new housing starts falling off a cliff.


the unanticipated 6.5 percent month-over-month jump in existing homes sales in December was music to the ears last week. Even better, total housing inventory at the end of last month declined 11.7 percent to 3.68 million homes, a 9.3-month supply compared to an 11.2-month stock at the end of November. But sales were up because prices were so down. “The higher monthly sales gain and falling inventory are steps in the right direction,” according to Lawrence Yun, chief economist at the National Association of Realtors, “but the market is still far from normal balanced conditions.”

Those are better numbers on the surface. The problem though has to do with vacancy rates. Many of these homes are being purchased by speculators who will now try to rent these properties. Unfortunatley, the rental vacancy rate has also been climbing higher, meaning that many of these homes will continue to sit vacant.

I can't say how things are throughout the country, but in my neck of the woods, more and more houses are sitting empty with "For Rent" signs on them. The owners can't sell them, so they are trying to rent them. This has increased the vacancy rate on rental properties. Any way you look at it, we have a lot of empty homes sitting around.

 

[Truthmatters]

The reason is the Banks are not lending.

The lenders pocketed the money we gave them and are not using it for lending.

Bush and team refused to put the needed caveots in the program.