{"id":96079,"date":"2009-12-23T09:37:00","date_gmt":"2009-12-23T14:37:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/henry-blodget-well-thats-the-end-of-the-good-news-on-housing-2009-12"},"modified":"2009-12-23T09:37:00","modified_gmt":"2009-12-23T14:37:00","slug":"well-thats-the-end-of-the-good-news-on-housing","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/96079","title":{"rendered":"Well, That&#8217;s The End Of The Good News On Housing"},"content":{"rendered":"<p>After a remarkable recovery in housing, <a href=\"http:\/\/www.businessinsider.com\/henry-blodget-existing-home-sales-up-strong-in-november-on-tax-credit-2009-12\">even the perma-bulls are throwing cold water on the outlook for the next six months<\/a>.&nbsp;<\/p>\n<p>Why?<\/p>\n<p>Because much of the recovery has been driven by two factors, both of which are likely coming to an end:<\/p>\n<ul>\n<li><strong>The expiration of the tax credit,<\/strong> which was extended to April and probably won&#8217;t be extended beyond that (though anything&#8217;s possible in an election year)<\/li>\n<\/ul>\n<ul>\n<li><strong>Rising mortgage rates<\/strong>, as long interest rates rise and the Fed eventually stops subsidizing mortgage rates and actually starts selling mortgage-backed securities back into the market (driving mortgage rates higher).<\/li>\n<\/ul>\n<p>It&#8217;s possible, of course, that neither of these things will come to pass.&nbsp; The desperate Congress could extend the <span style=\"text-decoration: line-through;\">voter bribe<\/span> tax credit until November 5th, and deflation might yet take hold and drive mortgage rates to new lows, a la Japan.&nbsp; But for now, it looks as though we&#8217;re coming to the end of the gravy train.<\/p>\n<p>Before we starting whimpering, though, it&#8217;s worth reviewing how remarkable the recovery in sales velocity has been.&nbsp; Check out <a href=\"http:\/\/www.northerntrust.com\/pws\/jsp\/display2.jsp?XML=pages\/nt\/0601\/1138283678319_6.xml&amp;TYPE=interior&amp;er=dgcDetail&amp;c=primary\/resource\/0912\/1261518438553_360.xml\">the charts below from Northern Trust<\/a>:<\/p>\n<p>First, the <strong>velocity of existing homes sales.<\/strong>&nbsp; We&#8217;re back at normal levels (perhaps even above normal):<\/p>\n<p style=\"padding-left: 30px;\"><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b322a080000000000f09e68\" border=\"0\" alt=\"Existing Home Sales 122309 Northern Trust\" \/><\/p>\n<p><strong>Next, inventory, as measured by months of supply: We&#8217;re <em>below<\/em> normal.<\/strong><\/p>\n<p style=\"padding-left: 30px;\"><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b322a210000000000e69ba7\" border=\"0\" alt=\"Existing Home Sales Inventory 122309 Northern Trust\" \/><\/p>\n<p>Lastly, prices: <strong>The rate of year-over-year price declines<\/strong> has slowed mightily over the past six months.<\/p>\n<p style=\"padding-left: 30px;\"><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b322a4900000000002f173b\" border=\"0\" alt=\"Existing Home Sales Prices 122309 Northern Trust\" \/><\/p>\n<p>And now for the bad news.<\/p>\n<p>Calculated Risk <a href=\"http:\/\/www.calculatedriskblog.com\/2009\/12\/more-on-existing-home-sales.html\">lays out the case for a slowdown in sales velocity, a spike in inventory months, and further price declines<\/a>.&nbsp; He also notes that, above a modest level, existing home sales don&#8217;t really help the economy.<\/p>\n<p style=\"padding-left: 30px;\">The recent spike in existing home sales was due primarily to the first time homebuyer tax credit&#8230;<\/p>\n<div class=\"post-body entry-content\" style=\"padding-left: 60px;\">\n<li> Months-of-supply will now increase sharply as sales plunge. Do not be fooled because months-of-supply is close to &#8220;normal&#8221; levels. This is primarily because sales were distorted by the tax credit.\n<\/li>\n<li> Excess inventory includes existing home inventory, rental units (vacancy at record high), and various shadow inventory. This is still near record levels.\n<\/li>\n<li> House prices are now falling again &#8211; and this will show up in the Case-Shiller index soon.\n<\/li>\n<li> This is probably the end of the &#8220;good&#8221; housing news for a while. <\/li>\n<\/div>\n<p><a href=\"http:\/\/www.calculatedriskblog.com\/2009\/12\/more-on-existing-home-sales.html\">Read more here &gt;<\/a><\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/henry-blodget-well-thats-the-end-of-the-good-news-on-housing-2009-12#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/surging-shadow-inventory-means-actual-housing-inventory-has-barely-budged-at-all-2009-12\">Surging Shadow Inventory Means Actual Housing Inventory Has Barely Budged At All<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/henry-blodget-ken-rogoff-housing-unemployment-will-get-worse-before-they-get-better-2009-12\">Ken Rogoff: Housing, Unemployment Will Get Worse Before They Get Better<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/henry-blodget-latest-facts-about-the-state-of-the-housing-market-2009-11\">Latest Facts About The State Of The Housing Market<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/7WRZorN1Llc\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>After a remarkable recovery in housing, even the perma-bulls are throwing cold water on the outlook for the next six months.&nbsp; Why? Because much of the recovery has been driven by two factors, both of which are likely coming to an end: The expiration of the tax credit, which was extended to April and probably [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-96079","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/96079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=96079"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/96079\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=96079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=96079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=96079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}