Something Wicked, This Way Comes: Housing Market Signals

Ah, Spring… a time when a young man’s fancy lightly turns to thoughts of love… and respected real estate market analysts voice cautious optimism…

For example, here’s Lawrence Yun of NAR voicing cautious optimism:

Yun expects a slightly stronger demand for housing and a fairly even level of foreclosures entering the inventory pipeline before easing in 2011. “We expect distressed home sales to account for 30 to 40 percent of transactions for the remainder of this year,” he said.

And here’s Mark Zandi, Chief Economist of Moody’s, doing the same:

Zandi also forecasts improving demand for housing, but with foreclosures rising later in 2010 before easing in 2011. He said home prices may weaken this year. “The housing crash is over—nearly. We are now near the bottom,” he said. “There will be no real price growth in 2010 or 2011. Whether home prices weaken is unclear, but it will take two more years to work off excess housing inventory at the current sales pace. Of course, if demand picks up, it would take less time for prices to rise,” he said.

Then there is David Crowe, Chief Economist for NAHB:

“Home buyer tax credits clearly did their job and got people back into the marketplace,” said NAHB Chief Economist David Crowe, who also served as moderator of the two-hour webinar.

With the expiration of the tax credits in April, Crowe said the housing momentum is being carried forward by low interest rates, pent up household formations, stabilizing prices and budding employment growth.

Freddie Mac is almost bubbly (PDF):

The reason to expect this relatively benign outcome is that, despite short-term swings in sales activity, the underlying fundamentals for housing markets are steadily improving. The job market report for April showed a rise in nonfarm payrolls of 290,000, the largest new hiring in four years. While temporary Census workers accounted for 66,000 jobs, private payrolls posted a respectable gain of 231,000. The other “headline” figure in the report—the unemployment rate—gave a head fake by rising two tenths, to 9.9 percent. Somewhat paradoxically, this was due to improved labor market conditions, which attracted over 800,000 job seekers back into the labor force. A broader measure of employment that is not affected by changes in labor force participation, the employment-to-population ratio, rose two tenths of a percent. Overall, labor market trends are looking much better than a few months ago. More robust job growth and the incomes this will bring should directly contribute to the housing market recovery, and will likely also have further indirect effects by boosting household confidence.

And we have very encouraging data from the Commerce Department, Fannie Mae, and others.

So why do I feel an unnamed dread going up my spine?  Is it just some sort of Eeyore-itis?  Perhaps, vampire-like, when the sun is shining and the birds are singing, I have to retreat to the chill of the grave.  Yeah, I probably need more Vitamin D….

Nonetheless, I have a bad feeling about the housing market, because of data that economists rarely look at.  That probably makes them right and me wrong (and boy, I’d love to be wrong on this), but hey, this is a blog, so… what the hell.

“We’re All Subprime Now”

First sign of gloom comes from actual economic data, so maybe there’s something to be worried about here.

Image: Calculated Risk

According to Calculated Risk’s reporting on the MBA (Mortgage Bankers Association) conference call, there are some startling things to consider:

  • FHA foreclosures are up sharply. (!)
  • Prime fixed rate is now the key problem. (!!)
  • The Q1/2010 delinquency and foreclosure for prime loans is a new record. (!!!)

According to the graph, more than 1 out of 10 prime fixed loans are now in serious delinquency (90+ days) or in foreclosure.  We’re not talking subprime no-doc loans here, or wacky interest-only ARM’s.  We’re talking prime fixed loans, the bedrock conservative 30-year fixed mortgages.

A number of the more positive analysts on the real estate market have cited the tax credits (that have expired now) as one reason for boosting demand.  I’ve always wondered whether people who wouldn’t have taken on $300K mortgages over three hundred and sixty months, were it not for a $8,000 one-time tax credit, was really the best idea in the world.

Well, seems to me, we may get to find out soon enough.

Web Search Terms

The second “uh oh” comes from Hitwise, the web traffic analysis company.  In this blogpost of May 12th, Hitwise pointed out some rather interesting trends.  Read the whole thing; it’s interesting.

First, Hitwise reports that year-over-year visits to websites in the Real Estate category are down 22% for April of 2010, and that is 11 consecutive months of traffic decline:

YoY Monthly Change Real Estate.png

That there is a pretty steep curve…

However, Hitwise also reports that visits to “Home & Apt Rental” websites are up 45% in April 2010 year-over-year, and that represents the tenth consecutive month of increases:

YoY Monthly Change Home & Apt Rentals.png

And finally, Hitwise reports: “The most popular term ranked by the overall share of search clicks is ‘apartments for rent’, which has increased 162% for the 4 weeks ending May 8, 2010 when compared to the same time period 2 years ago.”

Given that 90% of all homebuyers use the Internet during the purchase process, 22% decline Y-O-Y for traffic to real estate sites, combined with 45% increase for rentals suggests that the market demand for housing sales might be a helluva lot softer than economic data indicates.

I think this stat might be something the economists should take into account more.  The fewer people who search for homes in April will translate directly into fewer people contacting realtors a couple of months later, which then translates to fewer home sales a couple of months after that.  If April is the 11th consecutive month of decline, why do we think that September of 2010 will be anything but down? And significantly so?

I worry about this one… unless you’re a landlord.  In which case you should be thinking about rental increases, and hope that your local government hasn’t passed rent control laws yet.  Rental demand looks like it will be very, very strong.

Government Debt

Finally, on my Eeyore World Tour of the Market, there are now some serious people sounding like… well… Eeyore.

“We better get started,” the 82-year-old former central banker said in a speech yesterday in Stanford, California. “Today’s concerns may soon become tomorrow’s existential crises.”

“Little has happened to allay my concerns” raised five years ago that “dangerous and intractable” problems were rising in the U.S., said Volcker, chairman of the president’s Economic Recovery Advisory Board.

“Intractable not just because of the combination of complicated issues, but because there seemed to be so little willingness or capacity to do much about it,” he said during a dinner at the Stanford Institute for Economic Policy Research.

Now, again, this ain’t some pajama-wearin’ bloggin’ fool.  This is Paul Volcker.  As it happens, the sunnier economists like Yun, Zandi, and Crowe all agreed that their rosier forecasts depended on something being done about the massive structural deficits and anemic employment.

Not a blogger.

Thing is… as Volcker said, there seems to be little willingness or capacity to do much about the massive debts and budget deficits.  Normally, this wouldn’t be much of an issue (one would think) for the housing market; didn’t we hear bitching and whining about budget deficits and government debt for decades now, and housing has been strong?

The difference today is that there is no private mortgage market anymore, for all intents and purposes.  Fannie Mae and Freddie Mac are no longer “government sponsored entities” in anything but name; with bailout after bailout, they are really “government entities”.  The Fed is backing them up, buying their securities, and the like.  And that money has to come from somewhere.

There are, broadly speaking, three places that money can come from: taxes, lenders, and the printing press.  With unemployment at near 10% (and many think that figure is far too low), and Tea Party movements getting active, more taxes doesn’t sound likely unless Congress decides on political suicide.  Lenders (mainly foreign central banks) might keep funding the U.S. mortgage market (via Fed, which then supports Fannie/Freddie)… but might want more money to do it… which means higher interest rates.  Finally, the Fed could just decide to print more money and devalue the dollar… which means inflation… which means, again, higher interest rates.

If you really feel like freakin’ out, you might take a look at some… ah… not-quite-so-sober and serious people.  Like the National Inflation Association (which sounds like a political advocacy group with an agenda to push, but… they make interesting points).

I Ain’t Nostradamus

Keep in mind that I blog about real estate, marketing, technology, social media, business models, and the like.  I’m not an economist, nor do I play one on TV.  I didn’t stay at a Holiday Inn Express last night.  These are just pessimistic musings.

Maybe I just need a hug...

But in the midst of blooms of hope about the real estate market having “hit bottom” and stabilized, I can’t help but think that the worst is yet to come.  Maybe savvy investors, afraid of the threat of massive inflation, would plow their money into assets like real estate.  The dollar might be devalued, but a house is a house is a house, and people gotta live somewhere, right?  Given the interest in renting vs. buying, that might be a smart thing to do.  That will keep the housing market percolating along for a while, especially for the distressed market where investors are bargain hunting now.

And yet… with more than 10% of prime fixed mortgages now in distress, with millions of homes in the shadow inventory as banks play extend and pretend games, employment showing no real signs of growth, can we really call the bottom of the market already?

Yes, real estate is local; all markets are different.  Consult your local realtor for your local market information, and so on.

But I tell you what… if I were a broker… I wouldn’t be expanding office space just yet… give it a couple more years before you make major investments.

What do you think?  Are you in the Eeyore Fan Club as well?  Or do I just need a hug and some coffee?


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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31 thoughts on “Something Wicked, This Way Comes: Housing Market Signals”

  1. Hey man-

    Im rather Bearish on the housing market for many of the reasons you point out…alas, the 'prime fixed loan' delinquency problem isn't a matter of some rogue infection into the 'safest', most conservative, fiscally responsible borrowers as it is a direct reflection of unemployment. Borrowers with a fixed rate are just as likely to default as someone in an ARM if they lose their job or have their wages cut.
    With rates and the indices that drive them at all time lows, as ARM's adjust today, they are likely to adjust for the better (lower rate/payment)…or at least no worse than the rate and payment prior to the adjustment.

    Take an unemployment rate chart and lay it over the 'Prime loan' delinquency chart above…outside of some lag, they pretty much mirror each other.

    I wouldn't buy a home for personal use right now…as an investment (if the #'s were right) yes, personal residence, no. Laying out a 20% min DP in a market that has enough in shadow inventory lingering to suppress values for quite some time doesn't sound very appetizing…that is if you actually have 20%+ to put down, which most people do not, hence the search to rent.

    I'm tapping my foot waiting for inflation too. Ironically as the markets and economies outside of the US deals with their issues, they are dropping their coin into US Treasuries and behind the greenback…suppressing inflation to the point where some economists fear deflation, much like the 'lost decade' of growth the Japanese experienced in the 90's.

    One could make arguments in either direction and point to a myriad of statistics and technical facts to support one side or the other…except I don't think we're making decisions based on rationale and logic any more. Behavior based economics and cognitive biases seem to steer the rudder nowadays…as such I think a hug and a cup of coffee could make a quite the difference 🙂

  2. This is a text book case of the power of internet. An everyday feet on the street real estate agent, sitting on a purple leather chair, watching CNBC pin heads blathering about the unpredictability while they predict what's next, can read the collective story detail that has zero BS corporate/Wall Street spin.

    Thanks for sharing this stuff. Thankfully I practice in one the least effected markets, Houston. But, there's no rest for the weary, this is the kind of think of sharing that sorta cracks the reality-whip, keeps my eyes open, my head on swivel, my feet on the ground and bias for optimism, consciously cautious.

    Damn, I wish the pressure would ease. I think?


  3. “Im rather Bearish on the housing market for many of the reasons you point out…alas, the 'prime fixed loan' delinquency problem isn't a matter of some rogue infection into the 'safest', most conservative, fiscally responsible borrowers as it is a direct reflection of unemployment. Borrowers with a fixed rate are just as likely to default as someone in an ARM if they lose their job or have their wages cut.
    With rates and the indices that drive them at all time lows, as ARM's adjust today, they are likely to adjust for the better (lower rate/payment)…or at least no worse than the rate and payment prior to the adjustment.

    Take an unemployment rate chart and lay it over the 'Prime loan' delinquency chart above…outside of some lag, they pretty much mirror each other.”

    I know… the theory back in 2007/2008 was that the housing market got hammered because of all those stupid people who couldn't afford the homes they were in. You know, people were blaming the evil greedy mortgage brokers, the evil greedy bankers, the evil greedy house-flippers, the stupid greedy buyers… and things like NINJA loans, option ARM's, and so on got blamed.

    My point is that if the infection has spread to 30-yr fixed prime loans… then we've got something else going on here. You're likely right that it's about employment, but that means bad times ahead for the housing market….

    Again, I hope I'm wrong about this, and that somehow, the GDP growth we've heard about translates to real job growth.


  4. Well, if the Alt-A's and the Option ARM's end up with another wave of defaults… I suspect that the “too-big-to-fail” banks will be bailed out the taxpayer once again. Question is, will the Fed actually be able to do that this time around. Will buyers of US Treasuries really accept the current low interest rate on them if we need to raise another couple of trillion dollars to bail out the various big banks, insurance companies, and the like that have these toxic assets on their books?

    If the answer is no, then I figure we'll have higher interest rates, quite possibly high inflation, and then we'll see if we all can demand higher wages to go with the higher inflation.

    The scary thing is that the 60 Minutes report focused on Alt-A and Option ARMs; what MBA is saying is that more than 10% of prime fixed are in delinquency. Oy vey…


  5. I am definitely in your Fan/Believer Club. I heard the Prof of Economics at U of Chicago speak the other day on Fox Business News and, while suggesting that home prices will go down even more, he also mentioned, in so many words, that the cost of buying and selling homes will also go down (referencing the 6% commissions) due to the internet and the vast amount of information now available 'out there' that wasn't available prior to its dissemination on the internet.

  6. JeffX has it nailed — for the most part. Where I branch off is buying a home now, as I suspect sub-5% rates, when they go up, won't be makin' a return any time soon. When combined with the lowest prices in quite awhile, I fail to see the problem. The kink in my position, which Jeff pointed out, is losing one's job. Duh — but a point I can't refute.

    Speaking for San Diego housing, (and I'm not a house agent) a buy qualified to buy a home using OldSchool underwriting standards will do well, assuming they're simply buying a home and not an 'investment'. The home they buy today for roughly $370K, sold for about $575K four short years ago.

    As usual I'm painfully aware that this opinion, along with $3 will get me coffee and a cookie at Starbucks.

  7. “the theory back in 2007/2008 was that the housing market got hammered because of all those stupid people who couldn't afford the homes they were in…”

    Thats no longer theory- thats fact, and the blame can be spread pretty evenly…unless you just want to point the finger at the enablers on Wall Street who created the liquidity. Sheeple will always demand and blindly take credit (cash), paying little attention to the terms that come attached, and pimps will sell whatever they can. There was a total loss of self control on most every level…

    Besides the number of people losing their homes because they couldn't afford them (they really never could, but property always appreciates :)), which caused a bunch of dead weight on the banks balance sheets and bailouts and all that jazz…What has had as much of an impact is that not only were mortgages fueling Wall Street proper, they were fueling Main Street too as borrowers- paint em 'Prime' 'Alt-A' or 'Sub-Prime' (Option Arm's are a loan type, acquired by all classes of borrowers)- were using their homes as ATM's and subsequently went shopping.

    There was a 'drill baby drill' mentality…consumers were sucking all the inflated equity out of their properties and spending it on anything and everything. Or they paid off their credit cards, only to rack up huge balances again. It was like giving out 2nd jobs with a nice bonus structures to people. Here, take a house with no money down…come see me in 3 months and ill give you a $10,000 check, come see me in another 6 mos and ill give you $15k more…

    Consumers aren't spending like they used to because that spicket has been turned off, evidenced by a flat CPI, and higher savings rates which will likely keep inflation in check and rates Relatively low for quite sometime…

    Ken's right about his market in Houston…all of Texas actually…since they've had a practical lending law in place that doesn't allow any borrower to 'take cash out of their home' above 80% of the value. This prevented a cash-out refi orgy and kept housing volatility in relative check.

    To your point this will not, can not last forever…trillions of new $ must rear inflation, possibly hyper-inflation at some point with the accompanying spike in interest rates. Tell me when today and be right within a 6 month period, and I'll buy you a drink and forever refer to you as NostroRobus 😉

    Unemployment is the root cause of the fixed and otherwise 'Prime loan' default rate…Coupled with continued rolling defaults in the Alt-A and Sub-Prime class of loans that will last well into 2012 (assuming non-prime ARMs have 5 year max-mean fixed periods) further fueling shadow inventories beyond then, one should expect the the housing market to remain flat/sideways at best for many years.

  8. JeffX usually does have this stuff nailed. 🙂

    A part of me thinks that the thing to do now is to liquidate all of my stock/bond positions, and buy housing as an investment. Even if paying above-market rates for a 30-yr fixed, if inflation does arrive (or God forbid, hyperinflation), until the govt intervenes with rent control laws, real estate might be a highly desirable asset class, if you're paying back a 5% mortgage in a 8% inflation environment….

    The problem, I suppose, is that the money spigot will dry up, and that right soon.

    Question for you re: San Diego. Is the assumption that the house going for $370K today should be worth $575K? Not that there is such a thing as a “natural price”, especially if you think harsh economic conditions are coming, but if one believes in 'reversion to the mean' type of scenario, what should San Diego home prices be, “naturally” speaking?


  9. So, I wonder if real estate remains the solid hedge against inflation that is has historically been, at least from an appreciation standpoint?

    When rates rise…and I agree w/Jeff in that when they do rise, they're not coming back to the 4.5%-5% range…buying power decreases, pressuring prices down when you consider stricter qualification payment and income ratios on mortgages.

    Also Consider:
    Copious amounts of existing supply for many years.
    A qualified buyer pool that is the square root of what it was.
    Future rent control, which is a certainty in many areas

    Its hard to see where real estate appreciates more than 3%-5% y-o-y, where inflation may double that.

    Anyway, I 100% believe that investing is prime right now, especially if you're credit worthy and liquid enough to throw 30%-50% down and look things from a long term cash on cash perspective. There are great deals to be had out there and if you can get the return you desire on todays rental rates, I cant see cutting them as much as slapping a ceiling well above what currently exists. Man, its a great buy and hold market if you qualify…and you do your research.

    It will look to be just as insightful to invest in the next 12-24 months as it was naive to buy at mid 2007 prices…

    From a personal residence standpoint, unless you just have cash laying around and want to own a house, I would take that 20%+ DP invest it in gold and rent a nice home/condo/whatever with some lease-option terms…Thats sure not to be a popular opinion 🙂

  10. Guys — I've been tellin' real estate investors with equity in San Diego income property to 'Get Outa Dodge' for several years now — much to the chagrin of my local buddies. Will SD regain their former status? Maybe, but it'll be my kids talkin' about it, not me — that's how long it'll take. Anyone assuming they'll reach a median of $575K any time soon, is, IMHO, smokin' some strange stuff, and not sharin' it. 🙂 Frankly, I think we'll have a man on Mars before SD homes reach a median that high again.

    As far as Texas goes, I've been yellin' from the SD rooftops for a few years now for them to do whatever it takes to get their equity/capital headed that way. Texas is a bright light among black holes — while being significantly safer for the long haul — again, IMHO.

  11. Is real estate a solid hedge against inflation?

    I'd have to say yes, but not from a capital appreciation standpoint. Rather, from a cashflow standpoint, it strikes me as solid.

    Say inflation (real inflation, as opposed to the phantom figures put out by the government) heads towards 10%. Rates will follow suit, of course, as no bank, no lender, no investor in his right mind would loan money out at less than inflation.

    Your points re: huge shadow inventory + fewer buyers actually play into housing as a hedge. Fewer buyers = more renters. People do have to live somewhere, after all.

    Absent rent control which is a big assumption, I admit, free market rents should track inflation — even hyperinflation — in ways that longterm fixed rates cannot. You could always write your leases as “$X + inflation” and see if the market bites.

    So… depending on your risk tolerance, and depending on your beliefs about where inflation is headed, right now might be a great time to throw down not 30-50% down as you suggest, Jeff, but more like 0% – 5% down to buy as much investment property as possible, leverage to the hilt with fixed rate mortgages, and only in markets where rent control laws are less likely (e.g., Texas).

    You're looking at things from a buy-hold-appreciation viewpoint; I'm looking at things from a “cash-is-about-to-become-worthless” standpoint.

    Gold is a good hedge, but all signs are that Gold prices are already so high that absent true hyperinflation, it's difficult to see how gold goes any higher. Plus, gold generates no cashflow; real property does.


  12. Rob — In order to produce even more income down the road 5-10 years, I've had clients buy some free and clear props along with 30-50% down props. They then take the aggregate cash flow to free and clear the leveraged properties. This allows minor leverage along with significantly increased cash flow in a short period of years, depending upon the investor's ability to apply cash flow and/or any other available capital to the elimination of debt.

    One client will retire in just under eight years with an initial investment of just over $500K. HIs retirement income will be roughly $7-9K monthly, with almost half of that tax sheltered.

  13. That's smart investing right there 🙂

    But if you think inflation is heading to say 15% annually, wouldn't you advise your clients to leverage now as much as possible on a bunch of 5% fixed rate loans? 🙂 Cashflow can keep up with the inflation; paying back with depreciated dollars is surely an interesting proposition.

    All depends on one's tolerance for risk and outlook on macroeconomic environment….

    Oh, and government action. The big X factor.


  14. That would seem, on the surface at least, the play to make. My experience, and my elbow tendons, tell me that play is far to 'Vegas' for my OldSchool soul. 🙂 Remember — first protect the capital. However, what most investors fail to realize is that the next priority IS NOT to protect your so-called appreciation-based return, but to protect the cash flow itself.

    Appreciation is nothing if not a luxury. If inflation happens, it happens. If the individual investor has the 'Vegas' capital to make that bet, which is what it truly would be, then I'm with you — make it. But do it with the understanding you're not gonna shed any tears if it's wiped out. Sometimes you get your cards, sometimes you don't. 🙂 Make sense?

  15. Completely 🙂 It's a different mindset when you're investing in your 30's at the height of earning power than when you're investing in your 60's thinking about imminent retirement.

    I doubt my wife would let me make any Vegas-style bets anyhow.

    The troubling thing about inflation is that it really hurts the conservative investor who is all about capital protection, since the loss of buying power eats away at the capital thus protected. Especially if the capital is locked up in equity in non-liquid assets, like housing. Hence, the focus on cashflow, as you said.

    Question is, what does this mean for the real estate industry? Is it time for realtors to be thinking about expanding their leasing practice, as well as getting extremely well-trained in investment concepts? CCIM designations might come in real handy even in residential real estate a couple of years out.


  16. You don't need to explain marriage to me. 🙂

    Agree with your points, but what we might consider is the relative nature of the market. Sometimes 'losing less' in real estate is much mo betta than losing half or more of your capital, with NO cash flow, on Wall Street.

    I don't think it means all that much for the real estate industry, frankly. I was licensed during Nixon's first year in office, and have seen the ups/downs since. Every time the siren is sounded about huge changes, but, in the end, nothing changes.

    An example of this is discount brokerages. They're a waste of time in two of the three markets. ONLY when even an flunking 8th grader can sell houses is discount brokerage universally viable. We saw this in real time during the bubble build up, and the subsequent correction. IMHO, real estate may adjust to the recent online opportunities, but not much else will be altered.

    CCIMs for house agents? Sorry, but most of 'em, and I was one for seven years, have demonstrated they can spell their name write almost every time. 🙂 Know what the fail rate is for just the first CCIM week long class is? Between 40-50% — and that's with an open book final test! I completed their exceptional course of classes, passing all of them, but couldn't spend any further time due to the 80's recession, and my abject fear of having to earn a living as a Von's checker. 🙂

    Nothing of real substance will change in our business. Home owners want results when listing. Buyers want expertise/integrity when buying. Those who consistently provide results will win — which is exactly how it was for Dad back in the 60's. Make sense?

  17. “first protect the capital”

    Jeff – have wiser words been written? The economy would not have collapsed over the past few years if more people remembered this principle.

    Ensure security of capital, Get return of capital, THEN enjoy return on capital

  18. 'I'd have to say yes, but not from a capital appreciation standpoint. Rather, from a cashflow standpoint, it strikes me as solid.'

    That was my point, so agreed…

    “right now might be a great time to throw down not 30-50% down as you suggest, Jeff, but more like 0% – 5% down to buy as much investment property as possible, leverage to the hilt with fixed rate mortgages, and only in markets where rent control laws are less likely (e.g., Texas).”

    Damn, who is lending at rates in the 5% range, 30-yr fixed at 95%-100% LTV's for investment properties again? That would be sweet!

    I'm looking at things from a buy and hold- cash-flow standpoint…not depending on appreciation at all…hence the reason I would be putting 30-50% down and looking at things from a cash on cash return perspective, while having enough equity in place to fire sale if necessary.

    “gold generates no cashflow; real property does.”- Agreed, thats why I suggested it in the personal property scenario, not in place of investment real estate.

    Its a Great Time To Rent…

  19. Hitwise only serves to prove the move from big-box sites to hyperlocal. The little man has learned SEO and it's kicking the big-boys in the goolies. You want a house in East Wherever? Then you search for “home in East Wherever.” There's a ten-spot on this that there's five local agents in your top ten results. Ok, that's my take on Hitwise and the trending down of traffic (Hitwise doesn't index my site, yet I've been between #2-#5 on Google for the last year for the top Keywords for our area).

    The rest of your post does have my haunches all a-flutter – especially when – in the last week – two perfectly employed and thriving homeowners have called my wife about short-selling just to be rid of their home.

  20. That's a very interesting point, Joe, on the hyperlocal vs. big RE websites… Have you seen an increase on your own site Y-O-Y since July of 2009? How much? And is it a consistent increase month over month?

    That could explain quite a lot actually…


  21. Wow – I am ever late to your blues party Rob!

    Great stuff and I concur with much of what you lay out here. I'd have to say I am less bearish than I was in early 2009 but still bearish. As in we are not standing on a cliff.

    I keep looking at unemployment hovering at 10%, credit remaining very tight and the expiration of the housing stimulus ie tax credits that will cut out sales activity and press prices lower at the end of the year and next. Foreclosures won't peak until next year. Lenders are looking at CRE losses, credit card losses, auto loan losses, etc. They are looking for reasons NOT to lend right now. They will eventually revert to the underwriting mean but not for several years.

    With all that floating around it seems like the best case scenario would be for the housing market to move sideways for the next few years – however the reality is, I'm afraid, that housing will erode further over the next 2-3 years another 10-15% nationally. How can prices trend higher as we keep reading in press release generated news releases? I can't seem to do that math.

    However, depending on the market, it might not preclude me from buying (I'm not looking to) if I view the market as a long term investment. We all got so screwed up during the credit boom by viewing housing as speculative and a short term hold. It's looking like we have 5 years of general weakness followed by 5 years of stability ahead of us and of course, several Yankee World Series Championships to experience to help us bide the time.

  22. The Hitwise report totally reflected the real estate market in “Home & Apt Rental”. Homeowners may search for option to rent their property out completely or partially while “awaiting” loan MOD or selling. On the other hand, there are homeowners who walk away intentionally! They buy better, bigger property at lower price, or go for leasing in the process of loan MOD or before foreclosure. There is no legislation to restrict homeowners of doing so. The market would not be stable until the problem inventory is cleared and lenders start to lend, again.

  23. Great blog!

    I totally agree with your post. I am new to your blog, but dont know if you have heard anything from Chris Thornburg from UCLA/Beacon Economics? He was bearish in his analyzes of this RE stuff way back in '05ish and I agreed with him back then when the Kool Aid dam broke a couple of years later.

    Still more FAIL to come!

  24. Great blog!

    I totally agree with your post. I am new to your blog, but dont know if you have heard anything from Chris Thornburg from UCLA/Beacon Economics? He was bearish in his analyzes of this RE stuff way back in '05ish and I agreed with him back then when the Kool Aid dam broke a couple of years later.

    Still more FAIL to come!

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