Real signs of recovery or just a mirage?

Sometimes you've got to accentuate the positive. From Friday's St. Petersburg Times:

Our housing slump has marked its two-year anniversary. Those of us invested in real estate — let's say the vast majority of us — keep our eyes peeled for that flicker of a recovery that becomes a glimmer that becomes a glare.

Let's train our telescopes on the few flickers that are brightening the housing horizon:

Flicker No. 1: Multiple offers on single houses. The Pinellas Realtor Organization issued a statement last week celebrating the return of multiple offers. I double-checked with other sales people and learned multiple offers are rearing their pretty heads again. "I have not seen them in two years but just last week I had multiple offers on three different properties," one St. Petersburg Realtor said. Realtors say these bidding wars — more like bidding skirmishes — tend to break out when home sellers concede they won't get top dollar. Lesson: A bargain still attracts finicky buyers.

Flicker No. 2: Vacant homes are moving slowly off the market. One of the sad sights of the downturn are the thousands of homes in the bay area bought as investments that never found buyers. But after peaking at more than 10,000 last summer, the number of vacant homes for sale ebbed to 8,770 in March. Not every explanation for the decline is encouraging. Some may be rented. Others were foreclosed on. On a similar trend, builders are slimming their inventory of vacant new homes. The number of such idle new homes dropped by 200 so far this year, but remains high at 3,400.

Flicker No. 3: Home sales statistics suggested a decent trend. The Greater Tampa Association of Realtors said sales in Hillsborough and central Pasco counties were down 14 percent from March 2007 to March 2008. Bad news? Not quite. A month earlier, February sales were off 33 percent from a year earlier. That trend, if real, portends a market reaching bottom. Further support comes from pending home sales. Across the Tampa Bay area in March, they were about the same as they were a year earlier. A word of warning: Since most of these yet-to-close sales depend on buyers getting mortgages, tighter lending could stymie many deals.

We can dicker over the significance of each flicker. But these words from Pinellas Realtors make as much sense as any: "It will take a while to have a healthy market, but it is good to hear about positive trends."

Comments

[Fuzzy Bear]

Since most of these yet-to-close sales depend on buyers getting mortgages, tighter lending could stymie many deals.

Funded deals will be the true answer for the Tampa Bay area housing market. In some areas in Florida, 8 out of 10 contracts have failed to secure funding.

It would be nice to speak up and say everything is getting better in the housing market, but I don't believe we are even close to that point.

The main reason is the backend of the housing hurricane is rapidly closing in on us and it is a powerful force! The power behind this storm is that the 2006 mortgages, which were the worst of the crop, are slated to reset beginning in the spring of 2008.

The second factor that will impact the local housing market is the current economic issues that are impacting the consumer from a financial standpoint.

Until these two economic factors dissipate, I do not believe there will not be much improvement in the local housing market for 2008.

[bobo]

It would be nice to speak up and say everything is getting better in the housing market, but I don't believe we are even close to that point.

Thorner didn't say that--said there might be a couple of "flickers". Pinellas realtors didn't say that either, said it would take awhile for a healthy market.

[Fuzzy Bear]

It would be nice to speak up and say everything is getting better in the housing market, but I don't believe we are even close to that point.

The comment was based on my thoughts of the housing market, not what you mentioned about Thorners comments. Again, it would be nice to say the market is correcting, but I just do not see it right now.

[k]

I do.

I am seeing more homes closed over the past few months.

I am seeing stable mortgage rates. Resetting ARMs are getting refinanced or will likely not jump *as much* as the fearmongers believe.

I am seeing the return of flexible (yet better qualified) mortgage programs in stable institutions (FLEX100). This is overcoming the knee-jerk "don't fund anybody" mentality.

I am seeing prices not falling as quickly as before. Still falling, but more owners are drawing the line on how much equity they are willing to lose.

Do I see a healthy, stable market? No.

What I see is what Thorner sees...a glimmer of optimism.

Will it last? That depends on popular attitudes like any other commodity trading. Jobs, inflation, local policies on taxes, insurance and the overall desireability of the local markets will play a role.

A new Reuters/Zogby poll says 54% of American think it's a good time to buy a home. Consumer confidence is still weary, but improved to to 95.5% from a March low of 87.7%.

The fact is, you will only be able to say "the market *is* correcting/leveling" as a hindsight comment when that statistical information is published. By then, the public will have spoken with their pocketbooks and most of the best deals will be done.

[Dave]

This is nothing but a small bounce; it is a natural phenomena of the downward cycle. Nothing goes straight down or straight up. In stock market terms this is known as a "Dead Cat Bounce". The fools are the ones who rush in and buy the first bounce, only to discover that the bottom is much lower. This was the largest bubble in the history of the world and to think that it will be all over in a couple of years is wishful thinking at its best. I'm not a Doom and Gloomer, just an objective realist who has studied history and wasn't born yesterday.

[Grant]

Amen, Dave. Brother speaks the truth!

[john]

RE: "Since most of these yet-to-close sales depend on buyers getting mortgages, tighter lending could stymie many deals.
"

I am wondering if the credit crunch is a myth. I got a 5.5% 30 year fixed mortgage / FHA for $282K with 3% down.

Not a mansion, but a good home in a good nieghborhood. Who cares if we haven't hit bottom. I'm buying to live in it and raise my family, not to play the flipping lottery.

I have good credit, reasonable debt, and a decent income...Which, back on my home planet, were what you had to have to get a mortgage. I don't see anything different now.

[Fuzzy Bear]

1. I am seeing more homes closed over the past few months.

We reached the end of the first round of mortgage resets and we are now entering the largest and second round of mortgage resets. Based on the numbers, I think it will be much worse than the first round.

2. I am seeing stable mortgage rates. Resetting ARMs are getting refinanced or will likely not jump *as much* as the fearmongers believe.

Based on todays mortgage rates from Bloomberg, it looks as if you may be incorrect on the stable mortgage rates since they have been increasing as indicated below:

MORTGAGE RATES (Rates may include points.)
CURRENT 1 MO. PRIOR
15-YEAR 5.47 5.04
30-YEAR 5.90 5.66
1-YEAR ARM 5.79 5.34

[Fuzzy Bear]

Who cares if we haven't hit bottom. I'm buying to live in it and raise my family, not to play the flipping lottery.

I have good credit, reasonable debt, and a decent income...Which, back on my home planet, were what you had to have to get a mortgage.

You made an excellent point by stating you bought it to live in, not to play the property lottery. However, the main point is that you reduced your risk by putting only 3% down, which means it will take many years just to break even. Therefore, with no skin in the game, it is easier to walk away if you are upside down.

The main problem today is most people do not have a reasonable debt level, let alone good credit and their income is declining and not keeping pace with inflation.

[k]

Bull Opposite,

#1 has absolutely nothing to do with home *sales volume* stats. You are concerned with foreclosures.

#2 30-year has been stable over past few weeks. a .1% increase in one week does not make an unstable market. The other rates even saw reductions recently (but who is taking out an ARM these days?).

Off-topic:
I have to agree with your other comment on debt level and inflation. Going to the grocery store yesterday and hearing more than one complaint about the rising prices is an in-the-trenches wake-up call. If gas keeps going out of control, I'm afraid that the trickle will continue being wholesale inflation and job reductions as a tactic for wage ascension. One could go on and talk about how less disposable income hurts the main industry here and the effects...yadda yadda.

[Fuzzy Bear]

#1 has absolutely nothing to do with home *sales volume* stats. You are concerned with foreclosures.

It has a significant impact on the real estate market and you know it. Face the facts K, Bull Opposite!

#2 30-year has been stable over past few weeks. a .1% increase in one week does not make an unstable market. The other rates even saw reductions recently (but who is taking out an ARM these days?).

How can you say that rates are stable when the rates last month were lower than today. Look at the 30 year K, 30-YEAR 5.90 5.66, those numbers are for today! These are the facts K and you need to understand the numbers and what are the driving forces are behind these numbers. Economics 101 K!

MORTGAGE RATES (Rates may include points.)
CURRENT 1 MO. PRIOR
15-YEAR 5.47 5.04
30-YEAR 5.90 5.66
1-YEAR ARM 5.79 5.34

[k]

No Fuzz. Small movments up or down does not instability make. Yoda 101.

The Fed has gone out of its way to keep rates low to disARM the current crisis. Talk to me in 3 months about a real rate shift...if any.

[k]

Here's your chart. The rates for a 30-year fixed have been dancing aound the upper 5s, lower 6s for a year.
http://www.bankrate.com/brm/graphs/graph_trend.asp?tf=360&ct=Line&prods=1&gs=275,250&st=zz&c3d=False&web=brm&cc=1&prodtype=M&bgcolor=&topgap=&bottomgap=&rightgap=&leftgap=&seriescolor=

[Fuzzy Bear]

No Fuzz. Small movments up or down does not instability make. Yoda 101.

I prefer to use macroeconomics data and look for trends instead of the game of chasing Yoda 101 when I advise a business client.

Look at the trends that impact long term rates and tell me where you think they are headed and how it may impact the housing market and overall economy from your point of view. Look at it from an macroeconomics point of view, then we will be on the same page.

I am not interested in short term one week or one month data as it does not provide much information from a trending standpoint. Historical one year trends during a downward cycle like the one year data you provided does not show a clear and consise direction as a market continues to trend downward. Looking at future indicators does provide trending as to the direction we may be headed in terms of interest rates and the housing market.

[k]

..then it's a GOOD thing we are not your clients. You blatently touted a "look at this week's rate" as some sort of trend and it couldn't ne more indicative of a chicken-litle attitude. The graph has been around the same for a YEAR. Where's your LINK?

Like Mr. Greenspan, I don't like making ridiculous economic preditictions when today's mass-media guided opinions are so obviously manipulated by those with financial agenda.

"There are some signs of optimism for a more stable makrket." Is that a prediction? No, it is simply a statement of facts.

"There are signs of doom and gloom around the corner...more foreclosures, more inflation, less jobs, etc." Is that a prediction? No, it is a statement of facts.

Alan says "chance of recession is 50%". In economic weather terms, couldn't be more right. :)

Take your pick......

[Fuzzy Bear]

U.S. mortgage applications plunged last week, largely reflecting a drop in demand for home refinancing loans as interest rates surged, an industry group said Wednesday.

Looks like you are incorrect K!

[Fuzzy Bear]

then it's a GOOD thing we are not your clients. You blatently touted a "look at this week's rate" as some sort of trend and it couldn't ne more indicative of a chicken-litle attitude.

Here is my response K:

U.S. mortgage applications plunged last week, largely reflecting a drop in demand for home refinancing loans as interest rates surged, an industry group said Wednesday.

Good luck with your incorrect assumptions!

[k]

lots of fallacy here....

"U.S. mortgage applications plunged last week, largely reflecting a drop in demand for home ****refinancing**** loans as interest rates surged, ***an industry group*** said Wednesday"

- Refinanced loans have nothing to do with home sales.
- One week snapshot (again), does not make a trend.
- What industry group?
- Link please?

(Gung Ho) You make me raff...

[Fuzzy Bear]

K, your reply, then it's a GOOD thing we are not your clients requires the following reply:

1. What industry group?

Do your research K, this information is readly available well before the public receives the information!

2. - Refinanced loans have nothing to do with home sales.

Includes new mortgages in the report, again do your research!

- One week snapshot (again), does not make a trend.

No, it's tied to other economic trends that you would find if your willing to do macroeconomics research! Do your research K, your missing the most telling signs and trends that are emerging!

- Link please?

Easy to find K, the information is readly available to economists and their firms before the public hears about it!

[Fuzzy Bear]

(Gung Ho) You make me raff...

Your profesional realtors ehtics are clearly showing K. Grow up and act like an adult!

[k]

No links again Fuzz? I am not surprised. Your realtor-hate agenda and penny stock shill-like banter are obvious.

Your statement said nothing of new mortgages...so provide a link.

Your statement said "an industry group", so give a name.

You say "other economic trends". Give examples.

Is that sooooo hard to do?

All you provide here is "do your research" after you make some sort of claim or prediction. Why should we? I don't believe ANYONE would take the financial advice or predictions from an alias on a blog, do you? YOU have the burden of proof. I give links from proven accurate sources. You give vitriolic tripe with no links. Typical.

The real fallacy here is that your 1-week mortgage info really means anything...links or not. It doesn't.

K-
Stop being so mean to Fuzzles. He's really trying hard. :)

P.S. F- I hope you're not a financial advisor.

[Fuzzy Bear]

1. then it's a GOOD thing we are not your clients.

Why should I answer your questions after you post the above statement J. K.? Is it because you lack professional ethics when confronted with an opposing view that you have to stoop to this low?

2. Why should we? I don't believe ANYONE would take the financial advice or predictions from an alias on a blog, do you?

As I have posted and replied over and over, the readers must formulate their own opinion and do their own research to determine if the information is correct. However, I am very confident that what I have posted has been correct and I remain totally independent and have no conflicting interests in the real estate industry.
Those who take the time to verify my information will certainly know find the answer and can come to their own conclusion.

Bottom line J.K., I am not in the real estate business like you or offering financial advice as you mentioned. My posts are my opinions based upon my research which is not available or will be posted on this site as it is not intended to be published or linked to the public. This blog site is for opinions, not research.

If you don't like my comments, don't read them or reply, it is that simple!