|
本帖最后由 CoolMax 于 2010-3-24 18:52 编辑
This report contains material from my most recent monthly CA and National House Sales client reports. I hope you find them especially interesting. Mark Hanson
- Feb CA House Sales – SECOND Straight LOWER YoY Comp
- New Loan Defaults Continue to Outpace Sales
- Beginning in March, YoY Comps Get Really Thought to Beat
- National Existing Home Sales Preview
- The ‘Lack of Inventory’ Myth, ‘Effective’ Negative Equity, Price Tranche Bifurcation, Significantly Increased Distress Supply Coming to Market
Our mission is to provide our clients a significant edge. This is done by turning the daily, market-moving real estate and mortgage news flow and events into old news by the time it makes headlines. – Mark Hanson
CA housing is double-dipping right now. After surprisingly strong September through December sales due to the original Nov end date of the stimulus coupled with a sharp drop in mortgage rates in Sept, January and February CA sales have dropped sharply, both coming in below year-ago levels.
February’s 28,111 sales was slightly higher than Jan’s 27,585 but still made for the SECOND straight YoY lower sales comparable. And last Jan & Feb — coming off of a rotten 2008 — the global financial markets were imploding, QE was new, prices were still falling and sentiment was terrible. This year with sentiment measurably better across everything, lower house sales is remarkable.
Yes, sales usually fall in Jan & Feb, but with rates and tax stimulus at historic levels and most thinking both will end soon, seasonality should be somewhat muted like from Sept to Dec.
Bottom Line – Despite rates being at record lows and stimulus ending soon, sales are not picking up like they did last year three months before the Nov end of the original stimulus. Even if they do going into April, I think it will remain obvious that the stimulus driven market hand-off to a normal market has not occurred.
Organic sales — me selling a house to you and the true gauge of the health of the housing market — have stabilized at very low levels due to epidemic effective negative equity while distress-sales — what’s most in demand — languish due to the artificial lack of supply. In addition, median prices are again trending lower, as organic sales remain depressed and over the past couple of months distress sales have picked up slightly as a percentage of total sales.
In Feb, new Notices-of-Default outpaced sales by 10%, meaning the supply pool is filling quicker than it’s draining, and the mid-to-high end market continues to fall. Even if half do not make it to liquidation, which is a long shot, net inventory that left the supply pool was less than half of what sales suggest. Lastly, comps were easy in Jan and Feb and the tough comps begin in March through year-end — the first two months of 2010 were only a taster.
We are running out of sellers and buyers quickly, as HAMP has kept distress inventory at extremely low levels relative to last year and epidemic effective negative equity — not enough equity to sell (pay a Realtor and put a down payment on a new house) and re-buy — has trapped 10s of millions in their houses across the nation.
Additionally, flip-resales that have provided a noticeable boost in sales counts due to double-counting will diminish in 2010 due to the heavy handed foreclosure prevention in 2009, providing a further drag that few are looking for.
What now? With foreclosures artificially depressed for the past year due to HAMP and other aggressive initiatives, houses that are most in demand are becoming scarce.
The only way for the 2010 sales pace to keep up with the 2009 stimulus and distress driven market is for foreclosures and short sales to flood the market. This is what the two primary buyer groups — investors and first-timers — want. If foreclosures do not begin to crank up right now — or for some reason HAFA is not rolled out as it should be – house sales will disappoint for most of 2010 just like you are seeing now but worse as comps get tougher.
In fact, sales could outright collapse without abundant distressed inventory as investors and first timers do not make up a strong foundation and can literally turn it off overnight.
Yes, if distress inventory floods the market prices will be negatively effected but not like during 2007-2008 because sales will pick up sharply. And prices should not be the primary concern now anyway because they are once again under pressure even though they have been significantly restricting distressed supply.
Over the next year — with mortgage rate and tax stimulus likely waning — the health of housing will depend upon how they manage sentiment and headline risk. The most obvious headline risk, which I go over in detail in the charts below, is a string of lower monthly YoY 2010 sales comps, which infers a “double-dip”.
Turn on the Foreclosure Machine & HAFA
This can be avoided turning up the foreclosure machine and allowing servicers to run with HAFA unimpeded, but it has to start right now.
By the way, I am a big HAFA fan, am working closely with a couple of the large servicers and several outsourced loss mitigation specialty firms, and am confident that it — along with Obama’s new ‘60-day late/HAMP for all loans proposal’ and June 1st HAMP rule change & portal debut — will define and streamline the foreclosure process from the mess it is today.
A defined and streamlined foreclosure process where everybody is on the same page, borrowers are being sought out many times in person at the 60-day late stage, and HAFA is in place to change the outcome of half of the foreclosures to short sales or DIL’s will result in a constant supply of the very distress supply that the primary buyer groups – investors and first timers — are demanding for at least the next few years.
1) CA Total Home Sales Down in Jan & Feb — TWO YoY lower comps in a row
The chart below is what a “double-dip” looks like – there is no arguing that. This year has not started off well with two months in a row of lower YoY comps (red & blue). And in March the real YoY comp sales trouble begins as that is when the stimulus-driven market began to take off in 2009.
2) CA Sales (Total vs Distressed vs Organic vs Flip-Adjusted) and Loan Defaults – Loan Defaults Lead Pack
A) Total CA home sales (blue) plunged in Jan & Feb putting them below year-ago levels when the global markets were imploding, QE was new, prices were still tumbling, and sentiment was terrible.
B) Organic sales (green) holding steady YoY at low levels emphasizing the epidemic effective negative equity that prevents the majority from selling and re-buying
C) Distress resales (yellow) are languishing due to continued meddling. The lack of distress supply, which is most in demand, is the primary threat to house sales in 2010 and beyond.
D) Flip-Adjusted Sales: When adjusting for flip-resales (light-blue), which make for double-counting in the monthly house sales results, CA house sales are bouncing off lows not seen in decades. It is important to note that flip-resales, which provided much of the 2009 boost in sales counts due to double-counting, will diminish sharply into 2010 due to the lack of foreclosures in 2009 caused by all of the foreclosure prevention initiatives. This is something nobody is looking for.
E) NODs: Despite being artificially lower, new loan defaults (red) are leading the pack meaning the supply pool is filling quicker than it’s draining.
3) Foreclosure-Resales Languishing – an unintended consequence of foreclosure prevention initiatives
4) Organic Sales picking up slightly, but it’s not the hand-off most expected if Foreclosures were artificially suppressed. This is due to Epidemic Effective Negative Equity that prevents 10s of millions from selling and re-buying (paying off the loan, paying the Realtor, moving expenses, and putting a down payment on the new house)
5) CA New Notice-of-Defaults Lead Sales once again in February
Even if only 33% of the 31k Feb NODs make it to foreclosure and become housing supply, which is a very aggressive estimate of foreclosure prevention, then Feb’s 28k CA sales rally did not remove 28k units from inventory. This is because another 20k units will end up as inventory 5-10 months from Feb based upon the NODs. The market can’t clear when new distressed supply is hitting faster than the distressed supply is leaving – remember less than half of CA sales in Feb were from the distressed stock.
6) As Foreclosures as a Percentage of total sales began to drop sharply at the beginning of 2009, median house prices got a boost due to the mix shift. Prices also dipped again in Jan & Feb as foreclosure resales ticked higher (blue) due to the total lack of organic demand.
If distressed properties are about to come to market fast again the 2009 peak median prices are the best we will see for a long time. I am not expecting the same cliff-dive as we saw from 2007-2008 but can easily see 5-10% per year for a number of years coming off prices as distressed sales rise as a percentage of total sales. At the mid-to-high end the downturn will be more severe, as the upper price bands have lagged on the way down, but are picking up steam.
7) Flip-Adjusted CA Sales are at the lowest point on record
When adjusting for flip-resales, which are hot and make for double-counting in the monthly house sales results, CA house sales are bouncing off lows not seen in decades. It is important to note that flip-resales, which provided much of the 2009 boost in sales counts due to double-counting, will diminish sharply into 2010 due to the lack of foreclosures in 2009 caused by all of the foreclosure prevention initiatives. This is something nobody is looking for.
 2010 YoY CA Sales (red) are above 2008 when the wheels were coming off all global markets, rates were high, prices were still falling sharply and sentiment was terrible, but remain lower than any year in recent history.
National Existing Home Sales Preview
Based upon CA sales and other national sampling we perform, National Existing Home Sales released this Tuesday, should be down slightly MoM and flattish YoY on a Not-Seasonally Adjusted Basis. My estimate is for 282k sales vs 288,250 in Jan and 280k in Feb 2009.
Seeing national house sales flat when in Q1 2009 there was no tax stimulus, prices were still falling and the global financial markets were imploding is remarkable. This underscores how fundamentally weak this housing market really is…unprecedented stimulus and the market can only keep pace with the worst time in history for the financial markets.
Seasonally adjusted, it is too close to call especially with the foul weather in Feb that any sales miss will be blamed on. But consensus has dropped to 5mm units, which is below January’s levels even though Feb has a history of being up slightly, so it should be a close call. If I were forced to bet the result, I would pick the under.
Despite the voodoo seasonal adjustments, the same trend in national sales is obvious — the lack of distressed inventory is beginning to take its toll on sales and despite historical stimulus, the stimulus-driven market has not handed the baton to a more normalized market. Investors and first-timers continue to dominate due epidemic effective negative equity among organic sellers and buyers and these two groups can literally turn off the demand overnight.
Bottom line – the national housing market ‘recovery’ sits in a precarious position and ironically enough, the deciding factor will be how quickly foreclosures and HAFA liquidations can hit the market and be absorbed because that is all the buyers want.
Lastly, flip-sales double counting within the Existing Home Sales reports provided a sizeable boost to house sales counts in 2009 as shown in the chart below. When backing out flip sales double-counting the resulting ‘Flip-Adjusted’ total sales (red) in 2009 were weaker than 2008 and they continue to languish. Since July 2009, both the headline and Flip-Adjusted MoM trend in existing home sales has been lower. It is important to note that Flip-resales will diminish sharply into 2010 due to the lack of foreclosures in 2009 caused by all of the foreclosure prevention initiatives. This is something few are looking for.
The ‘Lack of Inventory’ Myth, ‘Effective’ Negative Equity, Value Tranche Bifurcation, Significantly Increased Distress Supply
Yes, “listed” inventory is way down. Pundits use this metric as leading evidence that the housing market has nowhere to go but higher. Obviously, they will not mention the millions of houses barreling down the foreclosure pipe — and the approx 125k that enter the pipe every month — of which the vast majority will end up as inventory through foreclosure, deeds-in-lieu or short sales
But aside from the shadow inventory, the lack of organic inventory (natural sellers) is not a positive. Homeowners are trapped. In strong real estate markets homeowners selling and moving drive the market but in this market, epidemic effective negative equity prevents most from selling and re-buying.
**Remember, effective negative equity does not begin at the point in which somebody owes more on their house than what it’s worth. It begins at the point at which they can’t pay the Realtor and put a down payment on the new prop.
In the Jumbo market this could be 75% LTV (sales proceeds less 6% Realtor fee and 20% down payment). When calculating neg-equity like this, the figures are much greater than the popular reports suggest.
Also, this speaks to how strong foreclosure prevention has been, keeping in demand foreclosures off the market. For the latter reason, this is why creating more distress supply via significantly increased foreclosures and the new HAFA program (short sales and DILs) is beneficial to the housing market and will happen. At this point, holding back distress inventory is detrimental to the housing market.
Along the lines of lack of “listed” inventory in the state of CA is the bifurcation within the value tranches…those houses priced right vs. those priced according to what the owner owes. In any given city, half of the listings will be priced in the stratosphere relative to other current listing comps. Because everybody wants a good deal on a distress sale, the real marketable inventory is much less than the “listed” inventory would suggest. Again, this suggests that the market is ready for significantly increased foreclosures and HAFA liquidations to come post-haste.
Best Regards,
Mark Hanson | 
狗仔卡
发表于 2010-3-24 07:48 PM
提升卡
置顶卡
沉默卡
喧嚣卡
变色卡
发表于 2010-3-24 08:24 PM
