The Entire Housing Market Hit A Wall In August

Housing Crash FIMAGE

(By Dave Kranzler)

The housing market is collapsing. The big investors have stepped away and, now, flippers done: All-Cash Sales Fall to Six-Year Low. The demand-side of the market is in collapse.

“I spent well over an hour surveying the housing market in my area (south-metro Denver) and the market is flooded with homes for sale, with many mid-range ($500-$750) homes being lowered 5-10% in price and still sitting on the market. Zillow is estimating the average home listed in my area is now down 8% from original listing. This is an area that has been one of the hottest areas of Denver in the last year. Homes over $1 million are piling up like dogs under a cat stranded in a tree.” – A colleague of mine who has been looking at the market as a buyer for a year

He sent me a link to the typical home listing he is seeing: Lowered 4 Times In Last Year

It’s not just confined to Denver:

Home Sales July Kranzler

More evidence:

All cash sales fall to 6-yr low in June – that’s your investment buyer/flipper

NEW home mortgage purchase applications plunge 9% in August – that’s your homebuilder home sales going down the drain, per the HOV/TOL 10-Q disclosures

– Interest rates are moving higher, quickly – that’s cuts off the remaining poor credit, FHA borrowers who borrow money to put down the required 3.5% to get taxpayer subsidized mortgages

– Inventories are climbing, sales are hitting the wall, prices are dropping, foreclosures are going up again.

This is 2005/2006 all over again. You can ignore reality, but you can’t ignore the consequences of reality.

Article by Dave Kranzler at Investment Research Dynamics.

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SRSrocco:  Dave also published this article Foreclosure Activity Picking Up – Just In Time For Market Collapse, which he states the following:

“[Foreclosure activity] is reason to wake up and realize the housing recovery we’ve seen over the past two years is not as strong as it might have seemed.” Daren Blomquist, RealtyTrac

Beginning in the Fourth quarter of fiscal 2013, we have experienced a leveling in demand that continued through the second quarter of fiscal 2014 and has more recently become a weakening in demand. – Major homebuilder CEO

The homebuilder stocks represent the best short-sell opportunity I have seen in any stock market sector since the peak of the tech bubble in 2000. The homebuilders are trading at insanely overvalued levels, with p/e ratios several multiples higher than the p/e ratios these stocks had at the top of the housing bubble in 2005/2006.

When the S&P 500 starts to really sell off, it will exert particularly brutal downside force on the homebuilder stocks. At the very least, institutional/professional money managers have a fiduciary to re-examine their assumptions behind their homebuilder stock position.

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SRSrocco:  Dave believes the U.S. Housing Market will Crash again like it did in 2007-2008.  He offers some HOME-BUILDER RESEARCH REPORTS which provides information on how to profit from this upcoming crash.  It’s worth a look if you are interested in that sort of trade.

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9 Comments on "The Entire Housing Market Hit A Wall In August"

  1. Couple of interesting points to follow on –

    Rents are at record highs in dollars terms and also as a % of income. Of course wages for the bottom 60% of households have gone nowhere since ’09 (up less than 2% for the bottom 60% over those 5 years).

    Interesting also a lot of landlords are now utilizing online rent payments that allow for credit card payment. Makes sure landlords get their payment even if the renter doesn’t have the cash in hand.

  2. Yes, rents are high right now. But construction starts for apartments is near a 25-yr high: http://www.businessweek.com/articles/2014-08-22/apartment-construction-nears-25-year-high

    Note: the last time apartment construction was as high as it is now was in 2005, which was the very top of the market for housing sales.

    I know in Denver there are several monster buildings going up and recently complete buildings are offering move-in incentives. Again, just like saw as the big housing bubble started popping. I’m also seeing a lot more homes being offered out for rent. Some of them are homes that flippers have been unable to flip and some of them are investment homes intended to be rented.

    The point here is that homes for rent will be competing with a rapidly increasing apartment rental inventory. Again, just like 2005-2010.

    • Same situation here in the Portland, OR. Multifamily market has record permits and starts…only difference from ’05 is that single family starts has barely increased from the ’09 bottom of single family starts.

      BTW – market here in Portland has definitely stopped in it’s tracks the last couple of months with inventory piling up, offers drying up.

  3. The Housing 2.0 Bubble is going to crash because now that the Fed is stepping out of the MBS market there is no entity to fill the gap now. And that is why as they taper mortage apps are falling into the abyss. Simply no way to get the loans for the average Joe. And with Fannie and Freddie getting the Congress full frontal into run-off……the mortgage market bounce is officially over and the the crash will now continue.

    And also the Fed is stepping of of QE just as they propped up the market to valuation levels never seen before. You better bet JP Morgan’s and Goldman’s prop desks are starting to short everything in sight with George Soros. They did this in the mortgage melt-down in 2008 as detailed in THE BIG SHORT by Michaeil Lewis.

    The dollar is about the go gangbusters as the pavlov dogs go running for it.

    Instead of going long gold, you will make a lot more money shorting using options like George Soros.

    This fucker is going down. Oil and related stocks will crash 50%.

    • Yes that is true but while your “making money” AKA “dollars” with the shorts, the value of gold will be going up (true asset) and up as the value of the dollar starts to crash as more countries move away from our toxic central bank fascist model to one of more democracy and true capitalism. Do you really think that the US dollar will remain the reserve currency much longer. You have to look at the larger picture. In the end unlike in 2008 this time you’ll be holding lots of digital ponzi scheme currency but ultimately will not be worth much either.

  4. Look at the Census data for any given area – median household income. If average home prices are more than 3 times the median household income for the area, the prices are not sustainable.

    To put it in perspective, the average national home price in 2010 was about $270,000, the median national income in 2010 was around $50,000 – so, nobody should be surprised by this apart from a few delusonal real estate agents and the mass of increasingly horrified optimists.

  5. Here in the Atlanta area, I just took my duplex off the market for two reasons:

    1) I was able to increase the rents to the highest amounts we’ve been receiving in the 17 years we have owned it.

    2) The low-ball offers we were getting for the property were BEYOND insulting.

    We will keep making a strong positive cash-flow during this unpredictable time….laughing all the way to the bank.

  6. Gee, if 3/4 of the new jobs created are low-paying, if Europe is going down the tubes, if the Chinese are tapped out (or have bought all the empty apartments they can afford), and if only 2/3 of Americans actually have some kind of job, then the housing market is toast. And so is retail. It’s called a Depression.

  7. Yea, I see that around here in the northeast. For sale signs that are falling over they’ve been there so long. Empty stores for lease or sale.

    You can tell the state of the economy by where people shop…they are building a new Dollar General in this mostly rural county within 2 miles of the other one. I’d laugh if it wasn’t so sad.

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