Home builders are reporting the best conditions in 5 years

http://mam.econoday.com/byshoweventfull.asp?fid=451333&cust=mam&year=2012&lid=0&prev=/byweek.asp#top

Home builders are reporting the best conditions in more than five years, based on the housing market index which keeps on improving with a two point gain in December to 47. This index is up now for eight months in a row and is quickly approaching the breakeven 50 level. A reading over 50 would indicate that more builders describe conditions as good than bad.

Two components are now actually over 50 with present sales and six-month sales both at 51. The lagging component is traffic which is still on the sub-50 side at 36. But the report notes a positive about traffic, saying "more serious buyers" are coming forward. The report stresses that fewer vacant and foreclosed properties are on the market which is a big plus for sales. The report once again cites tight lending standards as a negative for the new home market.

Regional data show a sharp pickup in the Northeast which was held down in November, likely the result of Hurricane Sandy. The region showing the greatest strength, and the only region over 50, is the Midwest with a reading at 53.

The fact that the main index is still under 50 is a reminder of how deep the housing bust was and how lasting its effects have been. But recovery is now picking steam and points to continued improvement for next year -- and increasing economic leadership from residential construction. The Dow isn't showing any reaction to this report which however is definitely a positive factor for the session. Housing starts will be posted tomorrow morning.

Sadly I see a decade of marginal housing growth, and continuing depressed values and slow starts.

With cheap money available this is a good time to build new if qualified. Now if home values in this area would jump up life would be good.....

2seaoat wrote:Sadly I see a decade of marginal housing growth, and continuing depressed values and slow starts.

We will have new housing start data tomorrow.

Why would we want new houses being built when there are already millions of houses sitting empty? Many of the empty houses are bank owned and do not even have for sale signs up in front of them.

Anybody who thinks there is not more foreclosures and short sales filling the market is not aware. First, what rational person would build a house where the materials alone will cost more than existing houses all across every community in America. I have first hand knowledge of lenders who used to wait three months to begin foreclosure who are waiting a year. Lenders who will not start foreclosures with condos because they do not want to deal with the condo assessments, or pay the taxes.

No, any temporary small bump will not be a trend in this market. I had a home which was appraised at 580K.....I dropped the price to 380K and after 16 months have had two people look at the house. If a person wanted to build that same home they would spend more than 380k for the land, material, and labor......and the kicker....some houses of similar quality and size are selling in short sales at 300k....so a person could buy an existing home and save 100k over building.

I built some new brick ranch homes in Milton which my construction appraisal was 240k per home.....they now are 140k, and the labor, material, and land would be a minimum of 200k today to build the same....so what challenged person using economic criteria is going to build in this market. Now, there are always folks who want to design and build their dream house.....and there will always be housing starts with that small percentage, but the truth is it is still a smart move to buy existing, and that the inflation threat of delay in building is non existent.

I think the trend will stay within 25% of the current trend over the next 10 years or basically a flat line with only structural growth represented by that segment of the market which wants to build their custom or dream home. The existing inventory of homes has been shown to be falling.....I personally think this is a false statistic based on real world delays in mortgage foreclosures.

Ghandi wrote:Why would we want new houses being built when there are already millions of houses sitting empty? Many of the empty houses are bank owned and do not even have for sale signs up in front of them.

Many banks and other lenders who have properties they own don't want to put them all on the market at the same time.

I have 16 townhouses listed which I have been working with the owner and the bank for a short sale for over 2 years. They a 1,100 sq. ft. 2/2 1/2 built in the 80's with mortgages of over $100,000 on each unit. We have contracts on all 16 for $30,000 BUT they have not yet closed.

Some areas of the country are not in nearly the condition as is Florida, Nevada, California and a few other states. We still have years before we get back to "normal" whatever "normal" will be at that time.

With the median income continuing do drop, the median home price will have to continue to drop as well.

2seaoat wrote:Anybody who thinks there is not more foreclosures and short sales filling the market is not aware. First, what rational person would build a house where the materials alone will cost more than existing houses all across every community in America. I have first hand knowledge of lenders who used to wait three months to begin foreclosure who are waiting a year. Lenders who will not start foreclosures with condos because they do not want to deal with the condo assessments, or pay the taxes.

No, any temporary small bump will not be a trend in this market. I had a home which was appraised at 580K.....I dropped the price to 380K and after 16 months have had two people look at the house. If a person wanted to build that same home they would spend more than 380k for the land, material, and labor......and the kicker....some houses of similar quality and size are selling in short sales at 300k....so a person could buy an existing home and save 100k over building.

I built some new brick ranch homes in Milton which my construction appraisal was 240k per home.....they now are 140k, and the labor, material, and land would be a minimum of 200k today to build the same....so what challenged person using economic criteria is going to build in this market. Now, there are always folks who want to design and build their dream house.....and there will always be housing starts with that small percentage, but the truth is it is still a smart move to buy existing, and that the inflation threat of delay in building is non existent.

I think the trend will stay within 25% of the current trend over the next 10 years or basically a flat line with only structural growth represented by that segment of the market which wants to build their custom or dream home. The existing inventory of homes has been shown to be falling.....I personally think this is a false statistic based on real world delays in mortgage foreclosures.

The report is merely saying that the trend suggests things are improving, not that they are "good". The reading is currently at 47. Anything under 50 is "bad" and anything over 50 is "good."

I have been for five years jumping on trade magazines and even Proctor at the PNJ giving these false hope short term stats which some want to argue is a trend. If people fully understand the structural problems of the housing oversupply, they cannot come to the conclusion that we will have a path out of our malaise anytime soon. I think Mr. Markle said it best......the new normal........and right now any of us who made a great deal of money in real estate over the years is lost for the path to follow. At times I am completely hopeless that a generation may pass before we get real housing growth. I do know this for certain.......I do not think we are near the bottom of this market, because again Mr. Markle has nailed this......the median income in this nation is dropping.....the babyboom bubble and their huge houses cannot be filled by the next generation without huge drops in housing prices or significant increases in median income.....this is a formula for a decade of stagnation in housing prices.

I remember arguing with folks on PB five years ago that their houses would be worth half of what they were in 2004.....they laughed at me. I remember nailing proctor on predictions of a vibrant return of prices in 2009......but he argued housing starts......nope Mr. Markle has nailed it....median income and structural problems in this market will not correct in the short term....it will however correct as every market does....but it will be slow, and may drop yet further before the decade is over. A huge opportunity for every 30 something american, but a death knell for every 60 something babyboomer.

2seaoat wrote:Anybody who thinks there is not more foreclosures and short sales filling the market is not aware. First, what rational person would build a house where the materials alone will cost more than existing houses all across every community in America. I have first hand knowledge of lenders who used to wait three months to begin foreclosure who are waiting a year. Lenders who will not start foreclosures with condos because they do not want to deal with the condo assessments, or pay the taxes.

No, any temporary small bump will not be a trend in this market. I had a home which was appraised at 580K.....I dropped the price to 380K and after 16 months have had two people look at the house. If a person wanted to build that same home they would spend more than 380k for the land, material, and labor......and the kicker....some houses of similar quality and size are selling in short sales at 300k....so a person could buy an existing home and save 100k over building.

I built some new brick ranch homes in Milton which my construction appraisal was 240k per home.....they now are 140k, and the labor, material, and land would be a minimum of 200k today to build the same....so what challenged person using economic criteria is going to build in this market. Now, there are always folks who want to design and build their dream house.....and there will always be housing starts with that small percentage, but the truth is it is still a smart move to buy existing, and that the inflation threat of delay in building is non existent.

I think the trend will stay within 25% of the current trend over the next 10 years or basically a flat line with only structural growth represented by that segment of the market which wants to build their custom or dream home. The existing inventory of homes has been shown to be falling.....I personally think this is a false statistic based on real world delays in mortgage foreclosures.

I too have first hand knowledge of the wait to foreclose. I know this guy who walked out on his wife almost 2 years ago and quit paying the mortgage payment. She was not able to make the payment so for nearly 2 years no mortgage payment has been made and she is still living in the house.

The houses where lenders have not even bothered to start foreclosure are sitting out there in growing numbers.......we are a long way from the bottom, and again.....Mr. Markle has nailed it....we need to wait for the median income to grow. America should focus on job creation and working to move that median income level up.....we all can celebrate a reversal of the median income trend. Also, I completely believe what Boards has posted. Within the context of a decade....we will have short bursts and increases in housing starts......it just will not be anything which reflects a systemic change from our structural problems.

2seaoat wrote: I do know this for certain.......I do not think we are near the bottom of this market, because again Mr. Markle has nailed this......the median income in this nation is dropping.....the babyboom bubble and their huge houses cannot be filled by the next generation without huge drops in housing prices or significant increases in median income.....

Many estimates say that we need to construct anywhere from 1.1 to 1.6 million new homes per year simply to keep up with population growth. This doesn't account for things such as fires or tear downs. New home construction has been significantly below the above estimated figures for several years now. Shouldn't this serve to provide support for housing prices?

boards of FL wrote:

2seaoat wrote: I do know this for certain.......I do not think we are near the bottom of this market, because again Mr. Markle has nailed this......the median income in this nation is dropping.....the babyboom bubble and their huge houses cannot be filled by the next generation without huge drops in housing prices or significant increases in median income.....

Many estimates say that we need to construct anywhere from 1.1 to 1.6 million new homes per year simply to keep up with population growth. This doesn't account for things such as fires or tear downs. New home construction has been significantly below the above estimated figures for several years now. Shouldn't this serve to provide support for housing prices?

There is a surfeit of older homes that many folks would like to sell in order to build new with the current interest rates. However used home prices are in the tank in many areas slowing sales for those who want to move up without giving away their current home. One program that could have helped other homeowners who are considering or followed through with foreclosure is HARP - but again home values have decreased such that many would not qualify now because of LTV restrictions. If Congress were to ease some HARP restrictions fewer homes might go into foreclosure thereby increasing the demand for new home buys. It's the dog chasing its own tail deal.

It's going to be a long haul. Renovation and maintenance will drive the recovery. Upgrading older properties will help to sustain the construction industry. And some people are making out like bandits in this market.

And some people are making out like bandits in this market.

I know a person who has bought 5 20k homes this year with cash. Some of these homes had over 100k mortgages on them when they went under. He started earlier last year, and now is up to 5 houses and has a small line of credit with the bank. He puts about 10k in the homes and averages $800 a month rents. He is getting a 33 cap rate when it used to be 10 cap was the gold standard. Those with money over the next decade will create enormous wealth, because Boards is correct.....structurally demand will surpass supply....not anytime soon, but those 20k homes will triple in value overnight once the demand starts shifting.

2seaoat wrote:And some people are making out like bandits in this market.

I know a person who has bought 5 20k homes this year with cash. Some of these homes had over 100k mortgages on them when they went under. He started earlier last year, and now is up to 5 houses and has a small line of credit with the bank. He puts about 10k in the homes and averages $800 a month rents. He is getting a 33 cap rate when it used to be 10 cap was the gold standard. Those with money over the next decade will create enormous wealth, because Boards is correct.....structurally demand will surpass supply....not anytime soon, but those 20k homes will triple in value overnight once the demand starts shifting.

I don't even know how to respond to that revelation. This is NOT THE WAY to revive the housing market. I know, I know...you said it yourself many times. Those mortgages should have been crammed down. We shouldn't have allowed the housing crisis to happen in the first place. It was the banking deregulation that led the way...so similar to the savings & loan manufactured crisis of the 80's, but even more devastating.

I was involved in the sale of my in-laws' home in 2008...lost around $50k in value over a 2-year period while everyone waited for my BIL to vacate.

I don't even know how to respond to that revelation.

Don't have to....just look around. I was in a Macs on Sunday and all these men were carrying bags over their shoulders with their personal things, and I saw this young hispanic man dressed for going to church approaching the counter to pick up his order.....next to him was this older man with his possessions over his shoulder.....the order came....it was a big breakfast and a cup of coffee....the young man gave the man the big breakfast and took his coffee.....the old man said god bless you sir.....the young man said .....sir it is my pleasure.....and can I have your name........Fred.....you take care of yourself.............I was floored. This young kid showed incredible wisdom. Buying the breakfast was a good christian deed, but before he left.....asking the man's name.....acknowledging his humanity......I wanted to follow that young man out to his car and find out where I could find his parents.....I see too many folks suffering and that sound of suffering is not by accident.....it was the theft of trillions of dollars of American wealth by greed and evil intent.....and to date not one of those bastards have found a jail cell.....yet later that day......if the old man fell asleep on a park bench.....he may have found a jail cell.

I was moved by this simple act of generosity, but I was equally angered that what was done to America by Wallstreet and the Banksters was a crime.....and to date......it is only the citizens who have suffered.

Why are builders building when there is a dearth of housing still for sale? I guess it has been two years since many folks walked away from their homes and are now eligible to buy a new piece of property after having their homes foreclosed on.

Until I can sell mine for what it was paid for, there is no recovery.

Floridatexan wrote:

2seaoat wrote:And some people are making out like bandits in this market.

I know a person who has bought 5 20k homes this year with cash. Some of these homes had over 100k mortgages on them when they went under. He started earlier last year, and now is up to 5 houses and has a small line of credit with the bank. He puts about 10k in the homes and averages $800 a month rents. He is getting a 33 cap rate when it used to be 10 cap was the gold standard. Those with money over the next decade will create enormous wealth, because Boards is correct.....structurally demand will surpass supply....not anytime soon, but those 20k homes will triple in value overnight once the demand starts shifting.

I don't even know how to respond to that revelation. This is NOT THE WAY to revive the housing market. I know, I know...you said it yourself many times. Those mortgages should have been crammed down. We shouldn't have allowed the housing crisis to happen in the first place. It was the banking deregulation that led the way...so similar to the savings & loan manufactured crisis of the 80's, but even more devastating.

I was involved in the sale of my in-laws' home in 2008...lost around $50k in value over a 2-year period while everyone waited for my BIL to vacate.

It was Clinton, Frank and Dodd who created the mess of giving houses to anyone who wanted to buy one despite their lack of income. All, with the help of Congress, wrote laws that made housing available at the expense of banks who did not give these loans under those conditions. They were called NINJA loans (No Income NO Job Available) All three believed EVERY American had the right to own a home and that is just not true.

[quote="PACEDOG#1"]

Floridatexan wrote:

2seaoat wrote:And some people are making out like bandits in this market.

I know a person who has bought 5 20k homes this year with cash. Some of these homes had over 100k mortgages on them when they went under. He started earlier last year, and now is up to 5 houses and has a small line of credit with the bank. He puts about 10k in the homes and averages $800 a month rents. He is getting a 33 cap rate when it used to be 10 cap was the gold standard. Those with money over the next decade will create enormous wealth, because Boards is correct.....structurally demand will surpass supply....not anytime soon, but those 20k homes will triple in value overnight once the demand starts shifting.

I don't even know how to respond to that revelation. This is NOT THE WAY to revive the housing market. I know, I know...you said it yourself many times. Those mortgages should have been crammed down. We shouldn't have allowed the housing crisis to happen in the first place. It was the banking deregulation that led the way...so similar to the savings & loan manufactured crisis of the 80's, but even more devastating.

I was involved in the sale of my in-laws' home in 2008...lost around $50k in value over a 2-year period while everyone waited for my BIL to vacate.

It was Clinton, Frank and Dodd who created the mess of giving houses to anyone who wanted to buy one despite their lack of income. All, with the help of Congress, wrote laws that made housing available at the expense of banks who did not give these loans under those conditions. They were called NINJA loans (No Income NO Job Available) All three believed EVERY American had the right to own a home and that is just not true.[/quot

You do know Dodd got that sweet house in Ireland on the beach. It's public records, a near freebie. The Clinton's have screwed taxpayers since they were born. No wonder they had to return TAXPAYER PROPERTY when they moved to NY.

Meanwhile, the far-left wishes they could buy ammo. Sorry they don't understand current laws......

[quote="NaNook"]

PACEDOG#1 wrote:

Floridatexan wrote:

2seaoat wrote:And some people are making out like bandits in this market.

I know a person who has bought 5 20k homes this year with cash. Some of these homes had over 100k mortgages on them when they went under. He started earlier last year, and now is up to 5 houses and has a small line of credit with the bank. He puts about 10k in the homes and averages $800 a month rents. He is getting a 33 cap rate when it used to be 10 cap was the gold standard. Those with money over the next decade will create enormous wealth, because Boards is correct.....structurally demand will surpass supply....not anytime soon, but those 20k homes will triple in value overnight once the demand starts shifting.

I don't even know how to respond to that revelation. This is NOT THE WAY to revive the housing market. I know, I know...you said it yourself many times. Those mortgages should have been crammed down. We shouldn't have allowed the housing crisis to happen in the first place. It was the banking deregulation that led the way...so similar to the savings & loan manufactured crisis of the 80's, but even more devastating.

I was involved in the sale of my in-laws' home in 2008...lost around $50k in value over a 2-year period while everyone waited for my BIL to vacate.

It was Clinton, Frank and Dodd who created the mess of giving houses to anyone who wanted to buy one despite their lack of income. All, with the help of Congress, wrote laws that made housing available at the expense of banks who did not give these loans under those conditions. They were called NINJA loans (No Income NO Job Available) All three believed EVERY American had the right to own a home and that is just not true.[/quot

You do know Dodd got that sweet house in Ireland on the beach. It's public records, a near freebie. The Clinton's have screwed taxpayers since they were born. No wonder they had to return TAXPAYER PROPERTY when they moved to NY.

Meanwhile, the far-left wishes they could buy ammo. Sorry they don't understand current laws......

I don't know how else to even respond to this other than to simply say that you are wrong.

[quote="boards of FL"]

NaNook wrote:

PACEDOG#1 wrote:

Floridatexan wrote:

2seaoat wrote:And some people are making out like bandits in this market.

I know a person who has bought 5 20k homes this year with cash. Some of these homes had over 100k mortgages on them when they went under. He started earlier last year, and now is up to 5 houses and has a small line of credit with the bank. He puts about 10k in the homes and averages $800 a month rents. He is getting a 33 cap rate when it used to be 10 cap was the gold standard. Those with money over the next decade will create enormous wealth, because Boards is correct.....structurally demand will surpass supply....not anytime soon, but those 20k homes will triple in value overnight once the demand starts shifting.

I don't even know how to respond to that revelation. This is NOT THE WAY to revive the housing market. I know, I know...you said it yourself many times. Those mortgages should have been crammed down. We shouldn't have allowed the housing crisis to happen in the first place. It was the banking deregulation that led the way...so similar to the savings & loan manufactured crisis of the 80's, but even more devastating.

I was involved in the sale of my in-laws' home in 2008...lost around $50k in value over a 2-year period while everyone waited for my BIL to vacate.

It was Clinton, Frank and Dodd who created the mess of giving houses to anyone who wanted to buy one despite their lack of income. All, with the help of Congress, wrote laws that made housing available at the expense of banks who did not give these loans under those conditions. They were called NINJA loans (No Income NO Job Available) All three believed EVERY American had the right to own a home and that is just not true.[/quot

You do know Dodd got that sweet house in Ireland on the beach. It's public records, a near freebie. The Clinton's have screwed taxpayers since they were born. No wonder they had to return TAXPAYER PROPERTY when they moved to NY.

Meanwhile, the far-left wishes they could buy ammo. Sorry they don't understand current laws......

I don't know how else to even respond to this other than to simply say that you are wrong.

No, that was the short version. Here is another abridged form, just not quite as abridged.

The housing bubble is what led to the downfall and that was driven by Democrats, starting with Jimmy Carter and hugely expanded by Bill Clinton. Here are the facts, once again, for you to ignore, put your fingers in your ears and scream la la la la la as loud as you can like screaming little girls.

The responsibility for the housing/mortgage/financial meltdown lies with Jimmy Carter, Bill Clinton, Barney Frank and Chris Dodd. AND with REPUBLICANS for backing off every time Chris Dodd, Barney Frank and his cronies played…THE RACE CARD!

HUD TO FIGHT DISCRIMINATION, BOOST MINORITY HOMEOWNERSHIP AND WORK WITH URBAN LEAGUE TO FURTHER GOALS
August 5, 1997 (President Clinton)
http://archives.hud.gov/news/1997/pr97-135.cfm

New York Times - 1999 (President Clinton)
Fannie Mae Eases Credit To Aid Mortgage Lending -
http://tinyurl.com/ce7hh3

President Bush’s and the Administrations Unheeded Warnings About the Systemic Risk Posed by the GSEs – Fannie and Freddie dating back to 2001
http://tinyurl.com/yyd3uey
http://georgewbush-whitehouse.archives.gov/news/releases/2008/09/20080919-15.html

From the New York Times
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
Published: September 11, 2003 WASHINGTON,
Sept. 10— The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html?sec=&spon=&pagewanted=1

Sept 11, 2003
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'' http://tinyurl.com/75yoa89

Maxine Waters & Barney Frank - Then Vs. Now
Mid 2004
http://tinyurl.com/ykcjm4a

Democrats in their own words covering up the Fannie Mae, Freddie Mac
Late 2004
http://tinyurl.com/3nkrp7

Barney Frank in 2005: What Housing Bubble?
http://tinyurl.com/djqmnc

By Elliot Blair Smith,
USA TODAY5/25/2006
Fannie Mae to pay $400 million fine (Franklin Raines CEO and Obama adviser)
http://tinyurl.com/nmmns

Bloomberg News – September 22, 2008
How the Democrats Created the Financial Crisis -
http://tinyurl.com/4u9rnk

Timeline shows Bush, McCain warning Democrats of Financial Crisis September 24, 2008
http://tinyurl.com/4rj9nn

September 28, 2008
Wall Street Journal Barney’s Rubble
http://tinyurl.com/44pet5

Steve Kroft On Credit Default Swaps And Their Central Role In The
Unfolding Economic Crisis -
http://tinyurl.com/yk8etks

All this, in addition to the repeal of the Glass-Steagall Act signed by President William Jefferson Clinton caused the meltdown. It COULD have been stopped. Democrats fought that every step of the way and the Republicans wilted under the barrage of being called racist and worse.
###

Mr. Markle.....we have done this before.....the money flowing to closing tables had nothing to do with the government for five years in my experience....it was wall street money bundled which bastardized the process and caused the crash.....your links certainly were contributory, but it was the mass infusion of funny money being peddled as sound conservative securities backed by mortgages.....which had been sound and secure investments....none of the bastards found a jail cell and everyone made money....realtors, lawyers, title companies, mortgage brokers, consolidators, and layer of layer of brokers who all took their cut until some little old lady in Oregon, had her pension tied into secure mortgage backed securities......we done this over and over....either you really believe what you are posting, or you took a vacation during the peak of the boom and did not have much to do with the financing of your deals......it just is not what you are trying to create now....I was there.

Perspective:

I would be interested in this chart being overlayed with the babyboom bubble. I think there is a huge structural bubble where the babyboomers are leaving the housing market and consolidating with other family members which is not shown. A 65-75 year old is getting out of the housing market, and the continuing foreclosures indicate to me in the real world that there simply is not enough buyers to buy 4000 square foot homes built by those baby boomers at the peak 15 years ago as they leave the market.....the babyboomer bubble could be 15-22 years.