Housing Policy

Housing Market Fails to Find Bottom Despite Every Attempt to Make Sure it Doesn't

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There appears to be some sort of surprise

There's a wonderful demonstration of missed connections in today's New York Times bidness section. The main thrust of this article is that the housing market is considerably crappier than most people expected:

The housing market remains mired in trouble, with plummeting prices and slumping sales. First-time buyers are fleeing, sellers are frustrated, builders are depressed and lenders are skittish about making new loans. […]

Nah, she hasn't fallen yet

Housing prices slid in January for the sixth consecutive month, putting them barely above the lows reached in the depths of the recession two years ago, according to the index that Mr. Case helped develop. […]

Analysts expected a rough winter, but not quite so brutal. […]

The Case-Shiller release capped a run of weak housing reports. Existing-home sales were down in February by nearly 10 percent from January, the National Association of Realtors reported last week, much worse than expected.

New-home sales in February were 14 percent below forecasts, according to the Census Bureau. At an annual rate of 250,000, sales were the lowest since the advent of comprehensive record-keeping in 1963.

Yet the same article genuinely puzzles over how the market could be so sluggish despite all the barriers to letting prices settle at the bottom:

Something to look forward to!

An element that is paradoxically working to shore up the market is the millions of foreclosed houses that are not coming back for sale and contributing to the abundance of inventory. Too much inventory pushes down prices. […]

For many[…], foreclosure is less a process than a destination, the data indicates. Three out of 10 homeowners in foreclosure have not made any payment in at least two years. […]

"You do kind of wonder where the bottom is," said Mr. Thoele.

Yeah, you kinda do.

We said it in September 2007, September 2008, January 2009, October 2009, December 2009, January 2010, April 2010, August 2010, September 2010, and basically every time Tim Cavanaugh contemplates his own poor investment choices: Artificially propping up housing prices will surely prolong and arguably deepen the pain. The most surprising thing about the housing market is that people still register surprise when the defibrillator fails to make the corpse twitch.

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  1. Deflation is baaaaad, children, mmmmmkay?

    1. You know, I learned something today. We thought we could make money in house flipping. But while house flipping is new and exciting for creative people, it hasn’t matured as a demand mechanism to the extent that one should trade long term investment opportunities for the promise of short term revenue streams. It may be that this is a bubble and in a few years this temporary distribution mechanism will burst and the housing prices will return to their true fair value in more traditional markets.

      1. Shit up you stupid Jew!

        1. Wanna get high?

          1. You’re the worst character ever, Towlie.

      2. Anybody want to get high?

        1. TIMMAAAY!!!!

  2. I think somebody was talking about evil vultures buying houses for cash the other day. Lousy SPECULATORS!

      1. Politicians invent all sorts of scapegoats and hobgoblins to shift the attention away from their own failed meddlings.

        1. LOOK OVER THERE! IT’S Libya!

          1. I thought that was Carla Bruni

            1. [grabs binoculars and lotion]

        2. “Politicians invent all sorts of scapegoats and hobgoblins to shift the attention away from their own failed meddlings.”

          Tell me about it.

  3. here in Huntsville, AL, they are not going down. But I have noticed that some builders have put a halt on further development. Some foreclosures, but I do not see housing prices falling. Actually, they are going up, and I don’t like it.

    1. Isn’t Huntsville a military town? With an Air Force Base or something? Maybe the military dynamic is at play there.

      1. Yes to the first part. No to the second. And it’s also not your typical military town… you know, the ones with pawn shops, bars, and liquor stores all over the place. It also houses NASA. A lot of PhDs in Huntsville.

        1. Was and probably still is the most educated town per capita in the United States.

        2. Lot of Star Trek conventions?

          1. I’ve been here since last July, and I don’t know of a single one to come here. Huntsville is not a big city.

            1. There’s always Atlanta.

        3. .. you know, the ones with pawn shops, bars, and liquor stores all over the place.

          Hurumphf — I love those places. Back in the nineties I would ride down to Fayetteville to check out the deals after a major deployment. Bought my last muscle car for under 5K doing that.

  4. “Give me the paddles Joe”
    I only use one paddle on a hot chick.

    Oh, and we need to go back to selling houses for much, much, much more than what people can afford, cause that makes GDP go up. Borrowing is income, debt is wealth.

    1. If we can get him to say his name backward, will Obama be sent to the bizarro world?

      (I know, Mxyzptlk went to the Fifth Dimension, but this one belongs in the Bizarro World.

      Bad-bye.

      1. Up, up and away

        http://www.dailymotion.com/vid…..away_music

      2. That’s why the security is so tight on the teleprompter. Only cultist who have made their bones are allowed near the controls and two SS guys have there sights peeled on it at all times.

    2. And spending is investment! Well, only if the government does it!

      1. By George, I think he’s got it!

  5. ThreadJack!!!
    Sometimes you don’t even need grass on the field to play ball.
    What court in the world would have granted custody to the dad? I’m a divorced father and I got shit on by hte courts, but shit like this is why father’s rights suffer so much.

    1. and here I thought it was only American kids getting knocked up

      1. “Article 244 of the Penal Code, sex with a minor under 12, is punishable.”

        Damn dutchman.

        1. Damn. He only had a few more months to wait…

    2. What court in the world would have granted custody to the dad?

      A sharia court?

      1. The mother was a Senegalese immigrant. Who wants to make a bet on whether or not xenophobia played a role in the custody hearing?

    3. And from that link, one finds this oddly hilarious story of a guy furiously attempting to win himself a Darwin Award:

      Florida Man Accidentally Shoots Himself in Face in Front of Friends.

      Unfortunately, he was unsuccessful in his endeavor.

      The key sentence:

      Joshua Krakat, 21, was tooling around with a group of friends in Hobe Sound, Fla., on Wednesday night when he pulled out a handgun, removed the magazine, put the gun up to his face and pulled the trigger, forgetting that a bullet remained in the chamber.

      Maybe guns really are too complicated to allow average people to own them.

      1. I wonder if there’s some sort of suicide switch that a body can activate when it knows its genes shouldn’t be passed on.

        1. That mutation happens all the time, unfortunately, it’s so effective that it is never passed on to offspring… It’s the well known “dead folks can’t reproduce” problem…

      2. Officials are investigating the gun’s registration.

        Registration? Florida doesn’t have gun registration. It’s a felony to create a gun registry in Florida.

        Fucking reporter shouldn’t believe everything he sees on CSI Miami.

  6. Tim Cavanaugh contemplates his own poor investment choices: Artificially propping up housing prices will surely prolong and arguably deepen the pain.

    The artificial propping-up of prices is old economics crackpottery; it was tried during the start of the Great Depression (wage and food price controls), and it fails always.

    Propping up prices, bailouts and economic “stimulus” are akin to continuously digging a hole under the guy who is falling off a cliff: it may give the falling person a temporary respite, but it only delays the inevitable and makes the touchdown the more painful.

    1. Propping up prices, bailouts and economic “stimulus” are akin to continuously digging a hole under the guy who is falling off a cliff: it may give the falling person a temporary respite, but it only delays the inevitable and makes the touchdown the more painful.

      That’d make a good political cartoon, if done well. Probably explain the situation much better to people who don’t get get but are capable of getting it than a bunch of us yammering about Austrians.

  7. How can this happen when the HOAs are preserving property values?

  8. Gee, I wonder what the response from the Left will be? Teh Market Failure?

    1. Well duh!
      Consequences of market intervention are always the fault of the market.
      Isn’t that obvious?

      1. Clearly, we didn’t hit the market hard enough. GET A BIGGER HAMMER!

    2. Of course it’s the market’s fault, with it being so resistant to government intervention and all.

  9. http://www.lincolninst.edu/sub…..prices.asp

    1. Open spreadsheet above (I didnt bother to make it a link, deal with it, you know how to use the internet)

    2. Look at cities in middle America (Indy is a good one)

    3. Notice land prices have literally bottomed out as they cant really go negative.

    4. Look at city on coast, like DC or SF.

    5. Notice that land prices havent entirely tanked.

    6. Extrapolate.

    1. No one wants to live in the midwest?

      1. The structural prices have grown solidly though. No one wants to own the land under the houses in the midwest.

    2. I didnt bother to make it a link,

      Somebody did.

      The squirrels taketh away, but they also giveth.

      1. I noticed that. Crapshoot from what I can tell.

        1. Is Crapshoot one of the squirrels?

          I didn’t know they had names, but that would be an awesome name for one of the server squirrels.

          1. CrapShoot
            Rolla d’Dice
            Ja Winsome JaLus Some
            Ree Pete
            Block von Linxs

            and others…

    3. It means no one really believes global warming is a threat yet.

  10. New-home sales in February were 14 percent below forecasts, according to the Census Bureau.

    Sheesh, just have Census Bureau lower its forecasts.

    1. Yeah. Does that really tell us anything besides the Census Bureau made a bad forecast?

      1. Wait. Wait. Wait.

        Why the fuck is the census bureau doing forecasting? Shouldn’t they be disbanded until, oh I don’t know, 2020?

        1. That’s very good question.

  11. You know who else didn’t want to let things hit bottom….

    1. Tim Cavanaugh’s lover?

    2. Definitely not Elton John or George Michael.

  12. How can you do a post about Rock Bottom and not include a Felix the Cat reference?

  13. It’s so bad, even the crack houses aren’t selling.

  14. This is doom and gloom stuff for my parents’ generation, I get that, but frankly, as someone just hitting his thirties, this is good news for me. House prices are ridiculous and need to continue to fall. That may mean a lot of baby-boomers lose out on their investments, but frankly, it’s partly their fault for allowing things to get so bad to begin with and handing my generation all this debt.

    I’m living in an area with 20%+ unemployment. There’s no way I’ll ever be able to afford a $150k house (and that’s if I want something fairly old way the hell out in the suburbs). Keep these devaluations coming.

    1. In my late 20’s and I completely agree. I view the whole propping up of housing prices as yet another wealth transfer to the Boomers. Fuck em

    2. In my early 20s, and all I have to say to falling house prices is “SHIT YEAH!”

      1. Ditto since I’m in college. When I hit the actual job market in 4-5 years it’ll be like Henry Beemis walking out of the bunker after the nuclear holocaust.

    3. shit I already own a house. But I bought it to keep the rain off my head, not as an “investment”. If it would bring down my property taxes, I’d love for its open market value to go down.

      1. ” If it would bring down my property taxes, I’d love for its open market value to go down.”

        But it won’t. My value went down and my taxes went up.

      2. Exactly, i’m more worried about being taxed out of my house than anything else.

      3. And of course, we all know that raising housing taxes won’t dissuade people from buying, and prices won’t drop as a result, so the local government can rely on raising property taxes to raise their revenues to cover their debts. right? RIGHT?!

    4. Fair enough point, but only in a world where only baby boomers own houses. I’m 34, and have a house I cannot sell.

    5. Housing prices aren’t falling in my area. I’ll probably be looking to buy in 2 years. But a 3 bedroom house for me will be around $150k or more.

    6. +1

      Housing prices have been ridiculous for a long time. Regardless of whatever else the govt. does or does not do it cannot repeal the laws of supply and demand (though it can delay them and prolong the pain). Prices will keep falling until the average person can afford the average home without a bizarre mortgage (no ARM, 80/20, balloon, etc).

  15. Teh Market Failure?

    Evul banksterz!

    1. You mean the ones we gave all those hundreds of billions to?

    2. I remember the eighties when evil Japanese corporations were buying up land. Scare stories about water front properties, golf courses and office buildings being snapped up.

      Yet here we are in 2011 and …what exactly?

      1. We’re toiling under Japanese hegemony. We just don’t know it.

        1. The Japanese sold the franchise to the Chinese.

          I know. Inscrutable. But what are you gonna do?

          1. Close. The Japanese hired the Chinese. Mostly a marketing move.

      2. My boss just bought some land in Maui.
        Paid a lot more than he had hoped. Realtor told him prices are being bid up by the half of his clients who are
        newly rich Chinese (supposedly looking for a place to run if China goes Libyan.)

        1. They’re trying to find something to do with their dollars. ultimately there’s only one place to spend $$.

  16. In addition to all of the other reasons why trying to prop up housing prices is stupid (and boy is it stupid), the government is working against other stated goals. On the one hand, they want to keep prices up so people don’t lose their investment, and on the other, they want to increase home ownership. Of course, the government should have no interest in either of these things, but honestly.

  17. “every time Tim Cavanaugh contemplates his own poor investment choices:”

    But the OC is the greatest place in the world to live…except San Diego where I live – 0.1% housing price growth baby – w00t! Of course its because of all the illegal immigrants taking foreclosed houses from red blooded Americans in Salton Sea…

    1. But the OC

      Don’t call it that.

  18. Shouldn’t that be “because of”, rather than “despite” ?

  19. Perhaps if we give the banks more money…

    1. Remember when banks were rich?

  20. So I am trying to help this problem, closing on a house soon. Restrictions are so tough though that it looks like my loan might fall through. I make about $180K a year and am buying a $300K house. Turns out my last 2 years E-File failed to go through, the IRS took the money but never processed returns and I was an idiot and didn’t realize it. Now lenders can’t lend to me because I have no IRS records.

    1. My efile failed too. I just found out.

  21. Turns out my last 2 years E-File failed to go through, the IRS took the money but never processed returns and I was an idiot and didn’t realize it.

    Which raises the question: If you e-file and the money moves, how are you supposed to know whether the IRS processed the returns?

    1. Not sure how it would be any different with snail filing either.

      1. That’s the government–keeps you guessing. If they need to toss you in the clink for something, they can just conveniently claim to have lost your filing.

  22. Except for comic books and Magic: The Gathering cards everything loses value once purchased. But try telling home buyers that.

    Banning the use of real estate to secure loans would go a long way towards changing how we view housing.

  23. Why is it bad when gas prices go up, but bad when housing prices go down ?

  24. trouble, with plummeting prices and slumping sales. First-time buyers are fleeing, sell

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