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.

[waitingitout]

My favorite phrase from the industry shills is "pent up demand." Apparently this is the new cavalry coming to save Custer's bacon.

Folks, we do not have pent-up demand. We have pent-up SUPPLY. The Real Estate syndicate of builders, agents, brokers, backers, lenders and speculators saw to that by borrowing sales from the future during the 2001-2007 run-up.

Demand is dry. For every person like me on the sidelines waiting to get in, there are 5 families jumping ship and mailing in keys. And as long as we're talking 20% down and verified income & assets, new loan limits and interest rates won't matter: no first-time homeowners qualify under the current price/standards regime. It won't change until standards relax or prices come down a lot more - or both.

Sit tight, the immutable laws of physics and economics are governing this whole debacle. It may take some time, but we'll be at nominal pre-2003 levels before you know it.

[sfvrealestate]

I want to know exactly when the FHA limits and lower interest rates will take effect. As we all know, it not only hasn't happened yet, but interest rates went HIGHER last week.

[Maggie Knowles]

NAR is a trade association, they are doing what they are paid to do. Why do you have an expectation that they would have a different opinion?

Would you expect the National Cattlemens Beef Association to warn you about Mad Cow disease?

[Cal]

sfvrealestate : "I want to know exactly when the FHA limits and lower interest rates will take effect. As we all know, it not only hasn't happened yet, but interest rates went HIGHER last week."

March 7th we should hear more. But do you really think a full doc program qualifying applicants on fully amortizing payments with mortgage insurance is what is going to save this market? People will see a half point better rate and an increase in mortgage insurance (which buyers hate), its a wash at best imho.

[arroyogrande]

"Realtors see a rebound"

I see debt people.

[Waiting in Pasadena]

Just like stock, you only know when prices hit bottom is when they start to go up. Everyone should wait on the sidelines until you see prices increase 5% year over year. Then you know the bottom has been hit and you are buying at a fair price that will not continue to lose value.

[MyLessThanPrimeBeef]

Realtors see a glimmer of hope - I clicked on that on the LATimes main page and it got me here.

My question is, Do they see it with the Hubble space telescope?

I am pretty sure that is the case.

If that's so, I am afraid I have bad news - since a glimmer of hope travels at the speed of light, that glimmer of hope occured way, way, way, way back when the universe was very, very, very, very young.

I am afraid it is dead by now - just like a lot of the stars you see at night are not there anymore. It's just an illusion.

I am sorry, but some mature, responsible adult has to stand up and say, hey, there is really no Santa Claus.

[Dave]

"NAR is a trade association, they are doing what they are paid to do. Why do you have an expectation that they would have a different opinion?"

Well then the media should publish statistics and predictions from groups without a vested interest in propping up sales. I think that the Case-Shiller Home Price index is a better measure and can show that the market should bottom out in about 2 years. Don't listen to Realtors(r), they drink their own Kool-Aid.

[AMerican]

Housing is going to plummet. Only 10% of the LA population can afford to buy a house with a $500k price tag now that Banks are going back to the old lending standards..

You know, like you a JOB and 20% down. I don't see too many households with $100k sitting in the bank.

And who wants to buy a $500k home in LA? The only thing you can get for $500k is in an area where your kids go to school with gangbangers and illegals.

"
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."

[Geek Seek]

When Lawrence gets laid off and the advertising dollars have dried up we'll know we're pretty close to the bottom.

[Raul]

To the Banks and Sellers: No more guessing game, You know what is happening, if You dont know, You are still dreaming. now if You are one of those dreamers, let me tell You: You are loosing money every day, every week, every month..... You know those RE prices are artificially inflated, the party is over, You dont have buyers that will pay that price, most of the naive guys are in trouble now, a lot of them are walking away from their overinflated properties. We are the only ones that can buy your houses, and we believe that we can get those houses almost for nothing, We want to pay for those houses as much as we pay for rent. Now You are going to say: the investors are going to jump in very soon...... Bad news the apprentices of investor are out too..... They owe more than what they have, the Real investors want positive cash flow, it means they want to pay less than us, they have to have a profit, You would think: I am not going to sell until the market pick up. We think You are too smart for that, If You sell your inflated house for half of what you are asking, lets say You are asking $500000 You sell it for $250000. If You invest that money, You will have more than $500000 in less than ten years, We and You believe, your property will not be worth that in ten years. Just relax....take a deep breath...and think logically, the dream is over.

[Lee]

Not to be a contrarian, as I see what everyone is talking about in the larger scope of things, but in the Pasadena area there continue to be multiple offer situations all over, including at least 3 Arcadia townhomes in the last 2 weeks, and at least 3 properties in varying price ranges from 650 to 2M. And these are just what I have seen myself, not including those that I have NOT seen and happen. I don't search these out, I come across them in my day to day. Some of the properties have had over 10 offers. There is money out there! Not all is going to_______in a handbasket! Someone makes money in every kind of market, so maybe we all just stop complaining and go out and find the opportunities!

[Laker]

Posted by: Jeff: "499 can look cheap, even when it's still 5-6X a good salary....at 500K people still seem willing to buy..."
Hey Jeff, You are probably one of those guys that bought Nasdaq in 2001-2 when it was at "rock bottom" 4000 points....while saying "hey it was 5000 before, so 4000 looks like a great deal....
Jeff, i got some news for you, 6 years after Nasdaq is at 2300...

If your friend bought similar house in 2003 for $300,000, rest assured the property price will be lower than that in a year or two!.

There are knife catchers as there were people that bought Nasdaq at 4000...there will always be some...

[Ann]

""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."

Only reason I read Yun's commens is sheer macabre fascination with the fact that someone who suffers from such severe delusions is still walking around loose and not in a nice locked ward receivieng some serious psychotropic drugs while the attending phsyicians debate whether he should be given shock therapy.

Oh well, if one ignores such pesky details of things like the fact that the FHA and Freddie/Fannie require

(1) documented income and assets

(2) downpayments (3% FHA) and (10% for Freddie/Fannie in CA) from an identifiable source that does not include inflated appraisals and kickbacks at closing

(3) debt:: income ratio caps of 28-31% of gross for mortgage, taxes and insurance and 36-41% for all debts (mtg, credit cards, car loans etc)

(4) credit scores above that 690ish or more

then he can maintain his delusion.

Problem is reality does intrude on hashish induced dreams and reality is a bitch.

[Tbone]

Another anecdotal tidbit to add to the previous posts...

My neighbor who has been trying to sell for months(since May), has just recently been witness to a big swing in activity. He was getting 2-3 parties a week visiting the open houses all through the fall, but since the stimulus package announcement has had mob scenes at every subsequent open house, multiple showings daily, and now is in escrow with two backup offers. He is priced slightly less than recent comps in the neighborhood.

What I take from it, is that there IS in fact pent up demand. His agent said all three offers came from people who had been watching the listing for months getting their ducks in a row. False bottom? Maybe...but he is selling for a almost 200K down from his original list price last year. I think the price point that stimulates buying activity is upon us.

[MyLessThanPrimeBeef]

I remember this particularly irritating guy telling me back in 1990 or about what a great bargain he got getting an office buidling for 10% off, or something like, the 1988-1989 peak.

I never heard from him again.

[Mike]

For you people that are waiting, keep on waiting. In 1991 we sold a home in Altadena for 189,000 that same home just sold January 08' $489,000, what do you think the buyer was thinking about in 1961....... see you in 2016.

[mattress man]

Jeff, you sound like a nice family man and a financial idiot.
Got 100G to lose? Step-up buddy and bet it, right now.

Your biggest problem is that you've got a family and you can't
bring yourself to rent any longer. I think I'm hearing your wife talking here ???
Tell her to shut-up! A lot of guys going into foreclosure wish they had kept
the pants on. Wake-up, pal! She ain't worth it and neither is that house.