Update: Signs of a bottom? National home sales show signs of life

Update: Home sales showed unexpected signs of life nationally in February, prompting talk that the housing market may be nearing a turnaround.

The AP: "After falling for six straight months, sales of existing homes posted an unexpected increase in February which may have reflected more aggressive price cutting by sellers in some parts of the country, a real estate trade group reported."

More, from the AP: "Analysts cautioned against reading too much into the one-month rise in sales. Many economists are predicting that the steep slump in housing will not bottom-out until later this year after prices fall further and allow huge levels of unsold inventories to be reduced."

An important local reminder: We've already seen the results for February sales in Los Angles, and there was no hint of a rebound in the February statistics from DataQuick: February sales in Los Angeles County were 45% below year-ago levels, and median sales prices were down 12.9%. So if you see some glimmer of hope in today's national numbers, remember, the L.A. numbers for February were awful.

More on today's numbers, from Reuters: "The pace of existing home sales in the United States rose in February to a 5.03 million-unit annual rate. ... February broke a six-month streak of decreasing home sales."

On prices: "Prices took a record fall ... an 8.2% decline in median home prices from a year ago. That drop to $195,900 was the sharpest since the trade group began keeping records in 1968."

The pace of annual sales rose from 4.89 million in January to 5.03 million in February, which is 24% below last February's pace of 6.60 million sales.

The National Association of Realtors' news release is here, including analysis from association economist Lawrence Yun: "We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said.  “Buyers taking advantage of higher loan limits for both [Federal Housing Administration] and conventional mortgages will unleash some pent-up demand.  As inventories are drawn down, prices in many markets should go positive later this year.”

Your thoughts? Comments? E-mail story tips to peter.viles.@latimes.com

Comments

[Inland Empire]

How about fixing your "email" link for this story so that it is not dependent on an existing email account tied to the operating system? I think most people use Yahoo, MSN, Gmail or something else.

[brettdl]

There are a LOT of bargain hunters out there and a lot seem to be buying into the idea that this is the bottom. But slumps come in waves and the Spring buying season is starting up, so it's not surprising to see a little buying activity.

[peteviles]

Inland Empire wrote, "How about fixing your "email" link for this story so that it is not dependent on an existing email account tied to the operating system?"

Thanks, IE. You're giving me way too much credit. I'm gathering you think I actually provided an email link rather than just an address, and the link I provided doesn't work very well. Not so, my friend.

Until your comment I was too clueless to even create the link. So thanks to you, for dragging me into new technology, there is now a real live link there now, I hope it works for all email systems.

Pete

[brettdl]

By the way, these numbers may not matter since foreclosures aren't included. From Bloomberg:

"Home foreclosure filings jumped 60 percent and bank seizures more than doubled in February from the same month last year as rates on adjustable mortgages rose and property owners were unable to sell or refinance, according to RealtyTrac Inc., a seller of foreclosure data."

Seems to me a lot of the housing picture is simply not included in those numbers.

[150 multiple choice questions]

Don't worry, despite all the real facts, realtors are still as scummy and full of lies, er, "spin" as ever.

"The pace of existing home sales in the United States rose in February to a 5.03 million-unit annual rate ... February broke a six-month streak of decreasing home sales..."

I know it takes NOTHING to get your real estate license, but are you really telling me they believe their lies and are still using the seasonal advantages in sales to put out a positive spin? Sales are down 30% year over year, anyone think that's a more accurate measure? Am I supposed to give them credit for mentioning the 8.6% price drop? Or can you hear "prices are dropping, it's the perfect time to buy! It's the bottom! (for the 12th time in the last 12 months) Thank GOD the internet is eliminating these people. Only the handful of smart honest realtors will be left.

[NationalBubble.com]

Actually, according to the NAR report, home sales in the West are down.
"Existing-home sales in the West slipped 1.1 percent to an annual rate of 920,000 in February, and are 29.2 percent below a year ago. The median price in the West was $290,400, down 13.4 percent from February 2007.
"

http://tinyurl.com/35vgow

[Laker]

NAR: "...Buyers taking advantage of higher loan limits for both FHA and conventional mortgages..."

Bull S***, I spoke with couple of loan guys, and the answer was the same. The increased limit to $729,000 is not working (yet). They all still make loans up to $417,000. Some simply add a second mortgage as line of credit if the loan balance is higher than $417,000.
Also, even after repricing, according to them to take another 3 months, rates will be higher on these since there is greater risk...

Market bottom??? Bull S*** number two. The latest "book" I received from REDC auction is the thickest to date...Also, I've been seeing price drops every day in good parts of the valley.
Just today the news on 1070am, they published that household median income went DOWN 2% since 2000.
Please remind me, what happened the cost of a house in our area since 2000...
I believe we are beginning to see a bull trap, watch out!

[Jack]

brettdl, I think the sales figures *do* include foreclosures. NAR typically pulls from MLS data, which will show sales of REOs (foreclosures).

That's why I think sales are up while prices are down: a lot of foreclosures are being sold. Typical resales are way down as a result; the stats are skewed by REOs. John and Mary Average, who paid their mortgage on time and now need to sell, are getting the shaft, because lenders are slashing prices to raise cash (they may have already written down the bad-loan loss) and are continuing to push down prices.

[CD]

Must you quote Lawrence Yun every month ? I know you guys in the news make money from RE adds but still
we all know the score about that lying sack of manure.
It's the computer information age. Quotes can be checked in nano time, and he is always wrong.Check out the "lawrenceyunwatch.blogspot.com" All his lies have ben collected there, you will have a laugh ! What bottom, are we still talking bottom, at the beginning of the mother of all recession ??? Bottom? that word does not exist any longer..... We are on the other side of the mirror now.

[Truth2Pwr]

Nice call brettdl. As Walt Whitman said, "There's lies. There's damn lies. And then there's statistics!"

And then there's delusional shills like Yun, and whoever produced those ridiculous TV ads about what a great investment real estate is and how there's never been a better time to buy. If that isn't false and misleading advertising, I don't know what is.

For those paid to prop up the RE industry, watching this balloon burst is probably a lot like watching "Apocalypto". About 15 minutes in, you're thinking, "Well geez, enough already, there has to be some sort of break in the brutality! But in fact, you ain't seen nothing yet, things get WAAAAAY worse, and you've still got about 2 hours more of it to go before it mercifully ends.

(BTW, if anyone could explain to me why Saw, Hostel, and their ilk are considered "torture porn" and Apocalypto gets 6 Oscar nominations, it would have to be Laurence Yun)

[kat]

"Bargain hunters"? Only in SoCal could a 1000 square foot "starter" home be a "bargain" at 500-600 grand.

Well, I see there is a bounce in the market. Look out folks because once this thing takes off, it will be the next round in "who can be the slimiest greediest speculator the quickest . . . ". As soon as the market shows the least little bit of life, it will return to status quo in no time. The people of SoCal will not have learned a thing from all this.

I also see that the scum sucking house of the seven savage money grubbers, Bear Sterns, is up to $10 a share. Wonder how much the out going CEO of Bear Sterns will get in his sweet little severance package. That would be the one responsible for the meltdown that cost a lot of tax payers a lot of money and a lot of people a lot of jobs.

I wonder if all the chicken littles on this board took their cyonide yet? I also wonder how all of the aforementioned can consider this greed postule explosion to be the end of the world when there are still enough rich idiots to fill up rentals in Malibu going for $100,000 a month.

And to all those homeowners who are "motivated sellers" I say, hold out until about July and you will be back in the catbird seat. Not only will the market rebound, it will be a frenzy.

In the meantime, the markets and the taxpayers will be figuring out a way to pay for the folly of the Gordon Geccos who gambled everything on the greedy and stupid victims of predatory lenders being able to keep up with their ARMS (most of whom are minorities who may or may not be able to speak English).

Instead of going to jail however, these sacks of greed pus who inhabit Wall Street will recieve big, fat bonuses paid for with tax payer money.

God Bless America! And God Bless California!

[tew]

The increased government assistance will lend some support going forward. It looks like the increased Fannie/Freddie/FHA limits could provide the fuel for a bear trap (head fake / dead cat bounce) that is the norm for early-mid stage bear markets.

[CD]

Truth and stats at : calculatedrisk.blogspot.com
CR and TANTA and their bloggers will tell you as it is.

[jbunniii]

Don't sales always increase from January to February? Try comparing this February with last February. This will demonstrate a huge decline in both sales and prices.

[Keith - letitsink.blogspot.com]

Yes, this is really the bottom. And every time the stock market has a positive tick, that is a sign that all the ticks from now on will be positive. I really really believe that. Hurray. Happy Days Are Here Again.

[sfvrealestate]

Laker, I think they were referring to future home sales. The FHA programs are not even widely in place yet.

Peter, is there any data for L.A. County?

[Cosmo]

How bad can the high end market be if people are willing to pay $150,000 per month for a rental in Malibu.

[Laker]

Truth2Pwr wrote: ..."Saw, Hostel, and their ilk are considered "torture porn" and Apocalypto gets 6 Oscar nominations, it would have to be Laurence Yun..."

Truth2Pwr, You are making a sin putting the "great" economist Laurence Yun with great movies like Hostel and Saw.
On the other hand, I wish Laurence Yun would be one of those "victims" in one of these movies, i would have loved to see him there crying for his life, but trying to convince the Guy torturing him to death about how good RE is.... Anybody for SAW 5, or Hostel 3 ?

[Rich]

I've been saying for a couple of months now that there won't be a "silent Spring", nationally there will be a Spring sales season and there will be noticeable increases in sales as there are every year at this time, because prices have come down and many people will find financing and pricing they can live with. This Winter may have been the last moment when the crisis was framed clearly for all to see--from here forward the price declines which have taken place will generate sales, generating competing statistics that will keep pundits talking over each other's heads throughout the coming years of recovery. The problem for Californians is that many who buy homes this Spring which have fallen in price will still be overpaying, and will still see permanent loss of equity later for doing so. Buyers in other parts of the country may be paying prices that are favorable in comparison with median incomes for their area and will buy well this year; but Californians would have to be savvy and disciplined enough to see how wildly inflated their market still is and forbear until next Spring to buy at a fair price. How about it, do you have the discipline to wait that long while the speculative pricing is wrung out of your market?

[brettdl]

Jack, sorry I should have been more clear. While sales of foreclosed homes may be counted, I don't think the growing rank of foreclosures are counted as part of the inventory total.

Please let me know if I'm wrong on that count, though.

[Hugh]

Interesting Commentary I found on Market Watch.

Commentary: After much preaching about prices, home sellers get religion

By MarketWatch
Last update: 11:43 a.m. EDT March 24, 2008P

CHICAGO (MarketWatch) -- You might be tempted to think that there was a remarkable resurrection in the housing market in February, given the news that existing-homes sales rose for the first time in seven months. But remember, Easter wasn't until March.
If there was an epiphany a month early, it came from home sellers who seem to have gotten the message that the way to move inventory in this dismal market is to beat the competition on price. The median price of existing homes sold in February dropped a record 8.2% from a year earlier, to $195,900.
Lo and behold, you drop prices and sales go up, nearly 3% for the month. That isn't what you'd call spectacular, especially given that sales are still down almost 24% year over year. But you can't expect miracles in a month like February, a short 29 days of generally dismal weather in most parts of the country when sales are usually sluggish as everyone gears up for spring.
The sales were enough to lop 3% off of the inventory of existing homes for sale. There are now just over 4 million houses on the market, a 9.6-month supply at the current sales pace. That's down from a 10.2-month supply in January, but nowhere near the 6-month supply that housing experts consider to represent a balanced market and a far cry from the 3- and 4-month supplies routinely seen at the peak of the current cycle in 2006.
The market may be poised to ascend, but there are still some pretty big stones that have to be rolled out of the way before any revival is more than fleeting:
March traditionally kicks off the spring selling season, and a flood of inventory onto the market now could easily reverse February's gains.
Prices are falling, making homes more affordable, but in many markets they are still wildly out of relation to buyers' ability to pay.
Rates are affordable in the mortgage market, but only the most-creditworthy borrowers are getting the chance to obtain those rates; many marginal borrowers are still frozen out.
The number of delinquencies and foreclosures is continuing to grow and will likely do so for several quarters yet, threatening to pour more inventory on the market and take more buyers out of it.
Even with February's numbers, the evidence that new life is being breathed into the housing market is scant. If you want to believe, you'll just have to take it on faith.
-- Steve Kerch, assistant managing editor/personal finance

[Pat]

Arson????

A fire broke out in a large condominium project under construction in Warner Center this morning, sending large plumes of smoke across the Valley. An estimated 100 firefighters are on the scene as the blaze, which began before 9 a.m. near the 6200 block of Canoga Avenue, raced through the wood framing of the multi-storied complex, according to TV news reports.

--Jesus Sanchez

[Bots]

Gary Watts, I mean, Kat,

That's a pretty bold prediction. How 'bout some data to back it up?

[toby]

So there's a 24% drop in sales from last year and a 8.2% drop in prices (the biggest since keeping record from 1968) and WHO again is claiming that this shows that the market has bottomed out?

LOL, the market is so scary right now, you have to be a complete moron to invest in it. Or at least you can't be very attached to your money.

[Rent is cheaper]

Here we go again. Suckers borned every minutes. 50% off of 70% inflated prices. Duh!!!!