Home sales down from lack of supply...........really?

catch22

Okay, I must have missed the data that would support the main thrust of this story.
Did I miss a simple statement or words here? This is in the report, but what does it really mean?........The number of previously owned homes on the market dropped to 1.82 million......from the report.

report

If this were auto sales, then something to the effect of 3 folks wanted to buy auto "x", but there is only 1 auto available, eh?

Gary

Catch

Where do you get the 1.82 million figure from - total home sales last year were over 4.8 ml if only 1.8 ml left - its time to look at home builder& mortgage funds,etf's. ja
gary

catch22

Reply to @Gary:

The 1.82 million number is from the linked report/story.

Old_Joe

"The inventory of existing homes for sale fell 8.5 percent from November to 1.82 million, the lowest since January 2001.

Many Americans are holding back from putting homes on the market because they owe more on their mortgages than their homes are worth. Inventories were down 21.6 percent from December 2011."

More on this, from Reuters...

rono

Howdy,

In addtion to those holding back like Old Joe mentions, the banks did a lot of buying of distressed mortgages and in addition are holding back bunches of 'foreclosed' properties. The overhang is of housing is bloody enormous and until it finally hits the market thereby being priced to market, we won't get out of this quagmire.

peace,

rono

bee

In the meantime...buy (DCA) cautiously into a good diversified REIT fund. There are bargains to be had and particpating in this sector while the government (props up) and supports Real Estate and banking with this low interest rate environment is very different than buying at the top of the bubble. Just one investors opinion. I have owned TOLSX, CRSRX, REACX, VNQ, TRRSX, TRREX and PETDX to name a few.

catch22

Thank you, OJ.
You discovered the properly written story; versus the earlier one I posted, which was not properly documented to support the title.
Take care,
Catch

catch22

Reply to @bee:
PETDX was kinda stuck for awhile, but continues to be on our list and did well today.
We currently hold FRIFX, which is a cruise along equity/bond mix and continues to reward.

Sven

Reply to @catch22: Same here. We really like FRIFX since Investor brought this to our attention several years ago. It pays a decent 4% dividend while maintains low volatility.

tgeno

Reply to @rono: I believe you are right, and we shouldn't be deceived by these numbers. The inventory of bank-owned homes has got to be enormous and they have not finished foreclosing on properties. I own a rental property in Florida and want to be out of it by summer. So far the "micromarket" where that house is located is firming, but that won't last long.

Old_Joe

Reply to @tgeno: Yes, I completely agree with both of you. One interesting factor in the mix, also, is a significant number of properties which have been and are now being bought by various financial entities and held, at least temporarily, for rental use.

I suspect that this is a medium/long term situation, maybe say ten years or so, and that many of those properties will be slowly fed back into the housing market as the retail market firms up over time.

Separately, I've noticed recent (2012) completion of a fairly large housing project in Petaluma, CA, a nice bedroom community for SF, construction of which which had been shut down since 2008. It seems to be selling nicely, judging by the number of lights in the various units and cars parked on the streets. (We travel almost every week from SF to our weekend place, and this particular development is on a hill and easily visible from Hwy 101. Been watching the situation since 2007 or so when the development was first started.)

Investor

Over the past 4 years, banks have been working the inventory of foreclosed properties. That is a reasonable period similar to earlier housing boom/bust. In the savings and loans crisis, Resolution Trust Company acquired the assets in 1989 and by 1995, the assets were sold/liquidated. This time we kept the assets in banks but a similar process is going on. I am sure in some markets there is a glut of properties still. But there are other markets that has completed the process.

In the mean time, home builders have built so little new housing. So, it is entirely plausible.

A few observations:

* Bottom line of banks have improved. They can hold their own inventory for longer time.
* Bottom line of owners have improved as unemployment dropped, people are able to serve their debt easier.
* New household formation require more houses.
* Foreign individuals have started to buy properties in states like Florida.
* Foreign and domestic investors are buying these houses and converting to rental properties etc.

Thus, I will offered a counter view for the skeptics of the board.

rono

Reply to @tgeno:

Howdy old friend,

Hope you're doing well. I agree with you and think your timing is spot on. Way back Harry Dent predicted this downturn would last until 2023 but that there would be a brief respite in the 2013-14 period. And he was using this as the target time to divest yourself of any real property that you needed/wanted to - or wait until 2023.

I know there are lots of HD detractors (where's Ed?) but at this point, he's spot on.

That said, right now is a superb time to buy a house IFF you can get a fixed rate mortgage and plan to own it for a while.

take care,

peace,

rono