Home sales weak, but Realtors see a rebound

So which is it? Is the housing market in such a terrible state that it needs an epic rescue plan from the federal government?

Or is it on the brink of turning around, as the National Association of Realtors argues today, even while issuing another crummy report on home sales?

From AP: "Sales of existing homes fell to the lowest level in nearly a decade in January while the median price for a home dropped for the fifth straight month.

More: "The National Association of Realtors said today that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units, the slowest sales pace on records going back to 1999."

The NAR reports the level of sales is down 23.4% from last January's level.

Now the positive NAR spin: The ever-optimistic Lawrence Yun, chief economist for the Realtors, continues to see light at the end of the tunnel -- he sees better days ahead later this year: "As the increased limits for FHA and conventional loans are implemented, more buyers will have access to safer FHA loans and lower interest rate loans in high-cost areas, which could lead to steadily higher home sales later in the year."

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach also predicts a bounce-back in sales later this year in high-cost areas such as California: "Once buyers have greater access to higher loan limits, it will take a few months for increased shopping activity to translate into higher sales," Gaylord said. "We should see some movement of pent-up demand by this summer, but higher loan limits need to be implemented fully and promptly to have maximum benefit."

The NAR has been wrongly making similar predictions for quite a while now. Eventually, the market will bottom and the NAR will be correct in its optimism. Eventually could be a long while from now. Or, to quote one of my favorite Wall Street aphorisms, "If you're wrong for long enough, you're wrong."

Photo credit: AP
Thoughts? Comments? Send story tips to peter.viles@latimes.com.

Comments

[Michael Snyder]

I've got it! Richard Gaylord is "lefty"!

[pugtv]

- Does anyone know what school Lawrence got his econ degree from?

- Speaking of village idiots, Lefty, say something stupid to amuse us.

[formerlahomeowner]

These realtors are clueless. Conforming loan limits could be as high as $10 million and it will not matter. The higher loan limits come with stricter/tighter lending standards. They will actually check your assets and verify your income. Let's see how many Californians can actually afford a $600K house.

[Adealia Artist]

The NRA is a propagandist group and should be ignored.

If there is going to be a bailout I hope the lenders etc suffer and only the home owner gets bailed out. It is time to go to the rich in this county and let them know they will not get their way any longer that society will strip them and their families of their ill gotten gains. The key to revenge, and like greed revenge is good, is to get the families too. Punish their children and then we will see how the rest behave. Maybe they will go to Dubai and be with their kind.

[Dana]

I think a better quote for Yun would be "Even a broken clock is right twice a day."

[Digitalian]

"Does anyone know what school Lawrence got his econ degree from?"

He has a Ph.D. in Economics from the University of Maryland and a B.S. in Mechanical Engineering from Purdue University. Odd combination of studies.

[Truth2Pwr]

I strongly suspect that Richard Gaylord, Lawrence Yun, and the other various realtor association mouthpieces are the same people responsible for the recent spate of books espousing the virtues of drinking one's own urine for its miraculous health benefits.

I am heretofore personally issuing a $1,000,000 reward to anyone who confirm this as fact.

[seattlesnoop]

Yetserday in the Pacific Northwest Magazine of the Seattle Times, Windermere Real Estate(a large regional brokerage) took out a full page ad. The ad is a letter from the CEO of Windermere explaining why it's a good time to buy real estate now. He is giving us the "real" real estate story. He says r.e. is like a stock that is held over the long term "and there are decades of data to prove it". Gives no example.
He closes by saying that we(I think he means those of us with some common sense) should not listen to those media reports about the "disastrous housing economy". I quote, "Take the long-term view and be confident..." "And know that if you buy a home today, in seven years it will be worth a lot more." A lot more than what?

On the strenghth of those words I better get out there and buy a couple more houses in Seattle and Los Angeles.

Lefty, are you related to this guy?

[ctd]

What kind of Kool-Aid is Richard Gaylord drinking?

People can't afford the houses - how does that increase shopping activity?

[Keith - letitsink.blogspot.com]

Another terrible article by the LATimes. The only "expert" quoted is the head of the NAR who is basically laughed at as the Joe Isuzu of the real estate industry. And his message? It's a good time to buy!

During the last real estate crash in CA, I think in 1990 or 1991, the California Association of Realtors predicted 8% price appreciation for the year. The real figure was an 8%drop in price. They're very trustworthy.

Also note in this article that the author only tells us: "The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago." How much did it fall from the previous month, and how much has it fallen from its peak? Don't bother giving us the full story. Then you'd have to do work instead of transcribing what Larry Yun tells you to write. You wouldn't want to make him mad, or you might have to write your own articles.

[Susan]

For NAR to be correct on its optimism, it needs to lose its optimism first.

A 3 part article for another website on the last housing bust in Southern California that perused the L.A. Times archives revealed that when the true recovery was starting, industry observers held a weary "we shall see" attitude, noting the rebound with suspicion, citing several past sales rebounds as "false dawns". By the time the real bottom was in, realtors had been through the wringer. As the slump first took hold, they were accused by potential home sellers of cheating the home sellers out of profits by talking them in to lowering their prices. They got yelled at and were the targets of temper tantrums when they tried presenting home sellers with market realities that the home sellers didn't want to hear. Then, as the downturn really took hold, realtors were blamed if they had talked home sellers into cutting their prices - and the houses still sat, unsold. As if the realtors had broken their promises that the houses would sell. (I'm not a realtor or in the business, only summarizing what those archived articles reported...)

During that last downturn, industry observers trumpeted every potential sales rebound or successful auction as a sign that the bottom was in place - only to see the rebound dry up and the price decline to continue.

Homeowners who had been trying for years to sell their homes were comparing being in a house that didn't sell - in spite of many price cuts - to living with a terminally ill cancer patient, or being terminally ill - just waiting for the end.

Around 1989, realtor Fred Sands was telling people it was a good time to sell. And around 1992 or 1993, the same visionary was telling people if they want to sell their house, price it like you mean it or be prepared to wait at least 3 years before trying to sell.

If sentiment has anything to say about the matter, we aren't anywhere close to a bottom.

[Buster]

I am shocked that anyone thinks an organization of professionals who sell real estate would make false statements promoting real estate sales simply to cause the income of those same real estate professionals to increase.

[Rob]

Whoohoo....

My dead cat bounce is here !! Hang on everybody.

[lessismore]

Instead of ridiculing Yun and his ilk, we should encourage the government to adopt these arguments at face-value. Anyone who opposes a bailout of sellers and lenders should trumpet the good news. And then let the chips fall where they fall.

[Tombstone Realty]

There's a great line by Metallica -

"Well, the soothing light at the end of your tunnel,
is just a freight train heading your way"

BS in Economics is right.....Who' lotta BS.

[javier]

remember....All real estate is local, cliche but true. And one more thing, price does not necessarily equal value. Compare North Texas residential pricing to homes in the Los Angeles area.

p.s. I received my Economics degree in the late 90's

JP
(an economist who happens to be a Real Estate Broker)

[Jeff]

Ok -- look, I've saved, didn't buy a house, got shut out of the market, have a good income and a small family and am ready to buy a reasonably priced house -- like many of us on the blog.

But I want to give one anecdotal data point about a potential upswing in sales.

yesterday a house came up for sale in my very specific little pocket of a neighborhood, 3/2, mid-century, not updated since then, with a phenomenal backyard view over the canyon and looking up at the San Gabriels. $499K.

So I go to see it with my realtor -- and there are 3 other people visiting it with their realtors. I know they have one offer already, and saw other people pulling up when I left. This was NOT an open house even.

So, the point I'm making is that at 500K people still seem willing to buy. It's not going to bottom out at 300K (which is what my friend bought his similar canyon view house up the street at in 2003). At some point 499 looks cheap again, compared to 699 inflated prices. Even if it's still "high" relative to the rest of the country or our hoped price collapse.

will I make an offer on that house? I had set my personal limit for our family at 500K. it's got all the elements I wanted -- except a group home for released criminals across the street. So, probably not, unless they can shut down the group home (which they are trying to do).

Point is still that -- 499 can look cheap, even when it's still 5-6X a good salary.

[pugtv]

Digitalian

Thanks for the info on Lawrence Yuns background.

I initially thought Lawrence must be an embarassment for the University of Maryland - College Park. Then I dug up information on the school from the Princeton Review...

"Rankings & Lists
- Their Students (Almost) Never Study"

Hahaha ... why am I not surprised. What a dimwit. lol.

http://www.princetonreview.com/college/
research/profiles/schoolsays.asp?category=1&
listing=1022953

[ajax]

Ever heard of the tail wagging the dog ?

We the sheeple are doing it right now in massive numbers and the farmers have been caught off guard

[ajax]

If we were to allow the bailouts then the prices would stay at 400k for a house, which is a 4k a month payment which no one can afford, all we would be doing is delaying the crash by a few years and at that time our nation may actually go bankrupt from it.

If we have the crash now, we still may survive the backlash, at least median prices will come down to 100k a 1200 a month payment

which is one all of us can start on.

which is one we can all rebuild again on.

[Laker]

Keith - letitsink.blogspot.com: "During the last real estate crash in CA, I think in 1990 or 1991, the California Association of Realtors predicted 8% price appreciation for the year. The real figure was an 8%drop in price. They're very trustworthy."

Keith, i think you are actually not correct, and CAR were correct with very very small tiny change. Instead of appreciation by CAR there was depreciation...You know dep vs app. +8% vs -8%...
I see 8 % as correct. The change (or direction) is a minor error.....
What a joke, and what a bunch of losers these CAR and NAR are...

[bottom line]

Oh brother, this stuff would be a laff riot it it wasn't so sad, with criminality mixed in.

The DJIA up sharply initially this a.m., NOT on the report stating "9 year lows in housing sales", but THAT THE LOWS WEREN'T AS GREAT AS PREDICTED! loloolol.

Maybe the NAR & Yun should revisit that "Tip of the Iceberg" column L.A. Land linked to. You remember, the one on CNN Marketwatch, wasn't it? Back on December 6th, '07, or thereabouts. On L.A. Land around Dec. 11th? Then the Credit Suisse ARM reset graph through 2012 or so?

What the r.e. cheerleaders don't get, or refuse to acknowledge, is that they aren't the center of the universe. If they would ponder on the basics of the economy, the disappearance of the middle class, outsourcing of jobs, the $10 BILLION dollar monthly drain for a misbegotten war in Iraq, they might help become a potential solution to part of the larger problem.

I'm not going to hold my breath, though. Seems 1 in 5 Americans believe the sun revolves around the earth. I wonder if Yun and lefty are part of that group?

[alan]

"“As the increased limits for FHA and conventional loans are implemented, more buyers will have access to safer FHA loans and lower interest rate loans in high-cost areas, which could lead to steadily higher home sales later in the year.”

FNM and FRE just got downgraded on friday, citing concerns for additional writedowns. Do you really think they have the ability to purchase more of these loans?

[arroyogrande]

"All real estate is local, cliche but true"

And credit trends are global, both expansions (remember the exotic mortgage/housing boom?), and contractions (remember, ummm, *now*)?

To say "real estate is local" presupposes people buying houses with all cash, and not having to worry about silly little things like "financing".

- arroyogrande

[Ace]

Jeff said 'So, the point I'm making is that at 500K people still seem willing to buy. It's not going to bottom out at 300K'

I guess I can agree with that, people will start to by at around $500k. If you can put 20 percent down, your mortgage on a 30 year fixed is about $2500 per month plus $500 for taxes.

However, you would have to have $100k to put down and an income of $110k if you have no other debts. I'm not sure how many LA residents are in that boat.