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

[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.