Housing indicators to note

Implications: When you read that the subject poll showed that 59% of those polled believed that now is a good time to buy, you realize that the American Dream is still a great big pad with a 6.000 pound SUV or two in the garage no matter what.  JUst like land developers and builders, if you will loan money, the American public will buy and/or build.  They’ll be angry with the lender if they tip over, but that will be true even if they don’t get the loan.  So once again, we are shown that the American public wants the house no matter and the lender/investor is the only discipline in the market.  A further obvious truth is that there is no discipline among a lending corp paid on a per deal or per year basis rather than from the long term growth of the Institution.

Analysis: A short while ago, the AP reported that D.R. Horton predicted a rough sale housing market for new construction through 2010.  Horton’s President pointed out that falling order cancellation rates will signal improvement in the market and that this indicator improved in the previous quarter.   The Mortgage Bankers Association reported that the number of borrowers who became delinquent for the first time in the first quarter numbered  less than those who did so during the fourth quarter of 2007.  The Association point to this statistic as an indicator of improving health in the resale market.   Meanwhile, Cable and other communication costs continue their meteoric rise.  Healthcare costs are accelerating from a high base and co-pay percentages are increasing.  Gas is now at $ 4.00 per gallon even for the cheapest grade in the least expensive market’ Some predict this commodity will continue to rise for the intermediate term.  Utility costs are rising right along with the gas prices.  Hazard insurance premiums are moving north at a rapid rate too.  Ad Valorem taxes are stressed as governments try to maintain services.  Food is now at a premium worldwide.  Since the Detroit automakers have shifted much of their parts production offshore and many of the offshore brands do not manufacture in the U.S., your car repairs are an arm and a leg with the weak dollar.  And the auto guys are guilty in spades of producing the same premium product as the housing guys which nobody can afford, so you can’t easily replace your worn-out iron either.    Meanwhile, the wage gap is even further apart.  It seems the lower 75% work only to serve the needs of the upper 25, or are the real numbers 90/10 or 95/25.  That enormous line of cars on the freeway each morning appears to just be the trade parade to provide goods and services for the elite.   A further compounding current offset here is a 5.5% nationwide unemployment level and the recent loss of jobs.   I haven’t seen a recent quote from the NAR, but at least we have two of the big three market rooters giving us food for thought about indicators that may put the throttle to housing sales and values.  In addition, interest rates are still maintaining at low levels, which leads us back to the original thought presented here.   Will the market turn?  It appears that any glimmer will turn some buyers, but will there be enough additional sales to put the doldrums behind us?  Nah, good try, I know if you got ‘em you gotta try to sell “em and all, but not yet.  The mass market for real estate needs a major price adjustment to roll, and it’s still coming.  By the time it happens, many of the elite will be in the daily trade parade and new guys will be in the drivers’ seats.  Keep your money, don’t spend yet.