Beware the False Idol

‘The housing market is improving…the housing market is improving’

Sadly, this is the banshee wail of the undereducated. Sadly, we have heard this non-fact based mantra going back to early 2009. Though accurately, on a broad-based view of the housing market, it remains mostly false. (this is not to say that there are some, but few pockets and areas of localized markets that are active with legitimate owner-occupied buying)

In what appears to be signs of improvement are in reality, just propped up indexes and figures. The Fed has financed nearly 3 trillion in bad loans and they continue to absorb the cost of defaults in nearly all of the FHA approved mortgages made today. (Read: Tax Payer money) Also, residential delinquencies are on the rise again, up 10.2% in Q4.

Approximately 80% of current delinquent residential loans were originated before 2008. In fact,
pre 2008 loans account for about 53% of all mortgage loans.

Then, there is the GSE’s one of the greatest scams are federal government had enacted- (guaranteeing private loans with public money) continues to dig a deeper and massive hole of debt- read: tax payer money to the tune of 190 Billion and counting.

A bit of historical data reveals that starts of multifamily housing stands at 15% below mean trends. Construction of single family residences is approximately 45%  below the long-term trend and demand for new homes is at 46% below the norm.

Additionally, there are approximately 14 million mortgages underwater. Mortgage net-equity has decreased in 4 1/2 years by a staggering 3.7 Trillion dollars.

There is a  massive amount of non-performing inventory sitting on the balance sheets of banks (in which the government and the Fed have ‘requested’ the banks not to release…) AKA, Mortgage-Stuffing, which has been ramping up in the past two years. There may be upwards of 5 to 7 million distressed assets not being disclosed by the banks. (part of the fraud-closure debacle)

Not too mention, the one trillion dollars of student debt, 16.7 trillion in national debt, 22% total under/unemployment, while the mean duration of unemployment is at 35.3 Weeks. (down slightly from a peak of 40.2, but up from last years average of 33 weeks)

The U.S. now has 48 million households on SNAP (UP by 17 million since 2008) all while housing subsidies have increased by a whopping 48%. Then there are salary and wages- (when adjusted for Real Inflation, are actually negative compared to the core rate) PCE, is flat and personal income is down -3.4%, the most in 20 years.

BUT! The big but…somehow, the average tax paying American has suddenly come up with new found disposal income to buy houses across the nation…amazing! Sadly, it is simply untrue. While there has been some activity in buying, it is mostly in the form of the governments ‘Central-Planning’ Reo-to-Rent programs, a flood of foreign buyers and phantom new start contracts.

And those “SA” Seasonally Adjusted prices you see? Fabricated. When all is said and done and you parse out the ‘noise’ prices are not truly appreciating and in fact in many states are declining once again.

“But the nar said so” Sadly, the nar (one of the largest lobbying groups in Washington) are nothing more than enablers of burden and debt to the tax payers. The nar are simply a fraud.

Question:
What is the primary job of a real estate person? If you think, buy and sell houses, sadly, you would be mistaken. The main function of any real estate firm and agent, is to act as a buffer between a buyer/seller and factual, relevant information. The industry itself is nothing more than a marketing-ministry of propaganda.

The agent acts completely in his or her own self-interest, despite the rhetoric they continually churn out. Upton Sinclair had a great quote- which explains the conflict that a real estate person inherently creates.  “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Housing Snapshot

By DataAnalytics

Admits the arm-waving and ramped up rhetoric being shouted by the msm/real estate/banking and finance industry, we would like to remind the stuffed-suits that housing is not improving, not recovering and will remain depressed for a long time to come.

Out of approximately 45 Million residential mortgage holders in the U.S. there are roughly 18 Million outstanding mortgages that are in negative equity territory. Previously, it was thought and published that there were 12 Million underwater mortgages, but as it happens, the two main firms who collect that data were incorrect. Turns out, that nearly 40% of all outstanding residential mortgages are actually  ‘underwater’

Counting all housing inventory; existing, new and both disclosed and undisclosed shadow assets (to the best of independent analysis), there is approximately 7.5-/+ Million homes available. That equates to a total absorption rate of approximately 24 months and that figure could be as high as
60 months

Housing is still unaffordable, despite the fact that overall, prices have fallen about 35%. In order for median prices to be on par with median incomes in the U.S. the median house price needs to be at approximately $144,000. Currently, the median price is about $164,000, which is +12% or +$20,000
too high. Forget affordability, forget the ‘talking-points’ that the real estate and banking industry perpetrate, they are grossly incorrect and deceptive.

The FACT is, that there is little to no borrowing and purchasing power.
One of the main causes is due to the extremely high unemployment rate of approximately 12% (U3). While the total underemployment/unemployment (U6) is about 23%. Wages are flat, credit risk remains elevated and household debt is increasing. The debt-to-income ratios for the majority of would-be buyers is above 35%- which places many potential mortgage borrowers at a high risk of defaulting.

The facts are indisputable, even though the real estate and banking muppets claim otherwise. Of course, all of their arm-chair analysis is predicated upon a paper foundation that crumbles under the weight of truth. Truth will always trump lies and deception, eventually the truth gets out. The truth triumphs.

The main take-aways here to remember: Diminished Borrowing/Purchasing Power AND Years worth of Inventory. An equation that nets very little market absorption. Plus, a myriad of ancillary factors; Including, but not limited to massive unemployment, elevated levels of household debt and
an eroding economy.

Foreclosures, Delinquencies and the Illusion of a Housing Recovery

DataAnalytics

While mortgage delinquency rates are showing signs of easing, residential foreclosures
are once again, on the rise. A  data-point worth noting, is that delinquencies did inch upward
from 7.2% in January to 7.3% in February. That key metric is certainly something to keep an eye on.

According to LPS and RealtyTrac, approximately 2.7+ million residential properties are
in some form of loan delinquency and as of February, approximately 800+ thousand
homes have been repossessed.  RealtyTrac CEO Brandon Moore said the “numbers point
to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”

So while defaults do seem to be declining, 1-4 family forfeitures are now increasing and
according to leading broker-dealer Amherst Securities, “some 9.5 million homes are
still at risk of default.” much to the chagrin of the real estate industry.

 

 

  • 2.7 Million mortgage delinquencies (30/60/90-day)
  • 1.41 Million distressed assets (approx. 34% of all inventory)
  • 1.6 Million Shadow assets (possibly 3+m in total)
  • 26% +/- of mortgage holders currently ‘underwater’ (negative equity)
  • 5.4+ Million total housing assets (includes claimed shadow assets)
  • 13 -/+ Month Supply of total Housing Inventory

Overall “printed” housing inventory stands at approximately 4+/- million units in the U.S.
(as the industry and its contingent of boosters do not account for or care to acknowledge the
millions in shadow inventory) with 2.43m existing homes, 1.41m distressed assets, approximately 151k new homes and at least 1.6 million of shadow inventory, that is publicly disclosed.

(estimates for total inventory are as high 7+ million units, due to the very real possibility
that
many banks – at the urging of the FHA and the Fed are not disclosing all of their distressed/shadow inventory)

Another data-point in decline, is sales of foreclosed homes, which has fallen approximately 24.3%
in the first two months of 2012 from December 2011 according to LPS. This drop off is more rough news for the already over-supplied inventory of the U.S. housing market.

So while there is a glimmer of positive data with regards to mortgage loan defaults, the pace of  forfeitures are accruing and sales of all homes, existing, new and distressed has been slowing. Unfortunately, this trend will place even further downward pressure on already overall weakened home prices.

Which in turn, has the affect of creating additional negative equity for a portion of existing mortgage holders who are not yet ‘underwater’ but are barley maintaining current mortgage payments.

Thus, increasing the likelihood of additional loan defaults as well as strategic-defaults.
Negating any exaggerated  and so-called “housing recovery.”

Analysis from all of these key metrics and data points, reveal a sobering picture for the residential real estate market. Housing, may in fact not recover for another 5 to possibly 10 years.

Crony Capitalism or Corporatism by any other name…

Via Bill Moyers


Moyers & Company
explores the tight connection between Wall Street
and the White House with David Stockman, former budget director
for President Reagan.

Stockman speaks candidly with Moyers about how money dominates
politics, distorting free markets and endangering democracy.
“As a result,” Stockman says, “we have neither capitalism nor democracy.
We have crony capitalism.” Or Corporatism.

 

The Shadow Knows…(Housing 2012)

By DataAnalytics

2012 Housing Market observations:

»Update to original post

Confirmed Data-

•Twelve Million Mortgage Holders are now Underwater (Avg of -59K neg equity)
•Mortgage Delinquencies are rising (+60-day/FHA and Conventional)

•Foreclosures are accumulating (REO and pending)
•Shadow Inventory remains elevated (disclosed & undisclosed)
•Underemployment/Unemployment is stuck at 11+% (U3)
•Wages and salaries are stagnant (which lowers purchasing power)
•Food & Fuel Inflation remains elevated over 2010 levels

Probable Data-

•Mortgage delinquencies will likely increase
•Overall housing inventory will likely increase
•Unemployment will remain in double-digit territory
•Real GDP will remain below 3% through Q3 of 2012
•Public and Private Debt is increasing
•Food & Fuel Inflation will remain high and may increase

As 2012 rang in, there were the so-called experts weighing in on the
Housing Market and their predictions for the new year. Most are choosing
to stand on the side of a declared price-bottom.

»The Fed’s January report stated that 12 million mortgages are
now underwater to the tune of an average –$59,000 negative per loan.
Adding to the already existing $700 Billion in negative home equity.

»So as distressed inventories keep increasing, prices will continue to fall.
Which means, these already negative equity mortgage holders will be
losing even more value in their homes. You can be certain that a portion of
these mortgage holders will be walking-away from their sinking ships…

DataAnalytcis, contrary to main stream prediction, is standing
across the proverbial street, and stating that most of 2012 will
not be the year of a price bottom. Perhaps their might be a start
to a trending uptick beginning in Q4, but only perhaps.

But with at least 1.6 Million units of shadow housing inventory
lurking- (mind you this is ONLY what is being disclosed and reported,
as it is widely believed that there could be upwards of double that figure)
on top of the 2.6 Million of existing units, (nar data is always suspect)
plus 160k of new homes and the approximately 1.5 Million units of
already foreclosed properties and clearly inventory levels are not subsiding.

total housing inventory 07-11

The glut of approximately 5 Million to 6 Million total housing units with
a very likely probability of more distressed properties hitting the market
will keep pushing prices downward. Couple the massive inventory problem
with what is basically flat to little demand AND then add in the major issue of
unemployment to the housing depression mix for a real witches brew…

Fact: 39% of loans in foreclosure have not made a payment in two years,
and 72% have not made a payment in over one year.

• 2.36 million loans over 60 days delinquent.
• 1.84 million loans 90+ days delinquent.
• 2.17 million loans in foreclosure process.

For a grand total of 6.37 million loans delinquent or in foreclosure 
as of September of 2011.

One aspect that is tethered to the unprecedented 22%-23%
underemployment/unemployment rate in the U.S.- is, the
pending 2012 presidential elections.

What do we know about all financial and economic markets? Easy.
Markets like stability, (for the most part) markets thrive in predictable
and certain parameters.

This includes the labor market and the housing market.
DataAnalytics thinks that one of the issues preventing the labor
markets from recovering, is the unpredictability and uncertainty
of the political landscape.

When a market and its manipulators know or have a very good idea of
who is calling the shots, it tends to be more or less predictable.
Fact: Companies are not adding enough jobs to lower the unemployment rate.

underemployment/unemployment rates

While there are various reasons for this; such as the increased costs of
employer-provided health benefits, along with the uncertainty of tax policy,
results in a reluctance to increase hiring or begin to hire. Which can be pinned
down to the current and often unpredictable administration currently in the White House.

But come November 2012, the markets will have a clearer path to its destination;
Whoever secures the White House in 2012, be it the DNC or GOP, the markets
will know what to fairly expect. Although, if this current and ineffective administration
retains the Presidency, the labor market will probably be very slow to improve if at all.
With other major and investment markets following suit.

Market surety is one of the keys to growth in our mixed-market free economy.
Replace abnormal market volatility with some sort of actual cohesion and
the indicators will begin to show signs of Real improvement.

The main issue facing our economy will be the implementation of said
cohesive force- that will enable hiring within the job market. Sounds
easy, right? Well as with almost everything, the delta between theory
and practicality remains vast. Philosophically, Socially and Politically,
those differences are just a few of the stumbling blocks on the road to recovery.

Sinking

Collecting credible data is always challenge in this 24-7, online world.
With the enormous amount of data available, scattered widely
across the many spectrum’s of information, an independent researchers
job to mine reliable data is more difficult than ever.

Information and data collected and then disseminated by the government and
in-house organizations (such as the nar, BLS, nhba, Commerce Dept., etc.,)
usually results in biased and inaccurate reports.

DataAnalytics, an independent resource, always attempts to collect and verify
data then report all discovered information without bias.

Partial data in this report was collected from LPS, CoreLogic and RPX data.

FANNIE & FREDDIE SOUGHT $95 BILLION DOLLARS FROM U.S. TAX PAYERS IN 2009

Guest Post:
By Die ex-onomic Machina

The U.S. housing market continues to slide in one of the darkest abysses in the nations history. New home sales have plummeted, existing home sales posted a record low in January as well. Home prices are dropping like a rock from the sky and foreclosures are running wild. While shadow inventory is set to flood the market this year, producing a bigger glut of unsold homes, which will drive sale price and volume even lower.

Now Fannie Mae, the largest mortgage provider in the U.S. has reported enormous losses topping $74 Billion Dollars for 2009.  Earlier in the week, Freddie Mac posted a $21.6 billion loss for 2009. Combined, that is a MASSIVE $95 BILLION DOLLARS lost from both government sponsored institutions. $95 Billion in tax payer  monies WASTED and SQUANDERED by corrupt, thieving politicians and suits running these two fraudulent entities.

Fannie Mae spokesperson said they will seek an ADDITIONAL $15.3 Billion in additional funds from the U.S. government this year. The firm has already received $59.9 billion in aid from the so-called stimulus. When you total the amount of tax payer money GIVEN to both publicly funded institutions, it is a STAGGERING $170 BILLION DOLLARS. That’s $170 Billion STOLEN from the American tax payers by Fannie and Freddie alone. How about the Billions more given to all the BANKS who have also stolen tax payer money- via TARP and stimulus? The auto makers? And other many various companies and entities as well.

How many BILLIONS upon BILLIONS are we, the American Tax Payers in debited for? How much more are we going stand for? How much longer before the public stops voting for these same CRIMINALS in BOTH parties- who KEEP stealing OUR money and LYING to us. Where is the conservative movement, at a time when America truly needs it?

The corruption and financial problems with Freddie and Fannie are just the tip of the iceberg. Isn’t it interesting that NO ONE in the socialist mainstream media has done any type of investigative reporting on the suicide of Freddie chief financial officer David B. Kellermann, in April of 2009. Why is that? The cover up behind the real story must be mind blowing. The layers and layers of corruption that are waiting to be uncovered must be staggering. But, has anyone in the Obama run media bothered to vet out the real story? No. Instead, the State-run media falls inline and follows orders, the new order from comrade change and his socialist minions.

Barney Frank, Chris Dodd and host of other criminal executives and politicians are so deeply embedded in corruption with these two institutions and yet no one seems to care. When will be the time to care? Will it be after the left-leaning U.S. government installs State-Run Health Care? Will it be when the jobless rate reaches 20%? Again, where is the conservative movement at a time when America truly needs it.

What happened to the American values of hard work and self-sustainability? What happened to the America from the 1940′s through the 1950′s? A time when our country was at its BEST, with a strong, proud work ethic, solid family values and the staunch will to further democracy? It seems to be gone for now, taken away by the dangerous progressive liberal socialists, the minority groups of the very, very wealthy, the very poor, the corrupt unions, and all of the special interest groups who DO NOT represent the majority of America. -Taken by the brain-washed who believe that a platform of European styled Socialism is the right path for our Nation. Tragically, they are hugely and deadly mistaken.

Retail in Ruin

Guest Post:
By Die ex-onomic Machina

National Retail Market

U.S. Retail sales for October is said to have risen 1.4%, a slight increase from September’s 2.3% decline. Month over month the reality is only a modest if not negligible 0.9%. Let’s not overlook the fact that these numbers always get revised and more than likely, the 1.4% increase will be revised downward next month.

0.9% is virtually nothing, in fact it is flat for all intents and purposes. But the government and the banks, who’s puppet economists- all in the play, would have the public believing different. Theater of the absurd, now on tour across the nation with special performances in Washington, only this week seemed to ‘get’ that at the crux of the massive economic recession, is JOBS.

The labor market, is not, as pontificated by some, a lagging indicator. When unemployment reaches double digits and more importantly, there are no new jobs being created, unemployment becomes a coincident and in the nations current situation, even a leading indicator of the economy. Unemployment will most likely reach 12% or more in 2010 as the recession is predicted to continue for at least another year.

Retail businesses are continuing to falter and close at an alarming rate. Third Quarter overall retail space vacancy was 7.6%, up almost 2% from Q2. Strip malls alone have a running vacancy rate of nearly 12%. The colossal ramping up of pre-holiday sales from major retailers Walmart, Target and Kmart/Sears is a clear indicator of just how troubled the economy and these companies truly are.

Regional News

Here in the Garden State, by the Third Quarter retail vacancies rose to 8.2% and now stands at over 10%. As of October 31, as reported by NJ Biz, another 14 single store businesses had closed their doors for good.  Add to that, Ohio based InkStop, who had 9 stores operating in New Jersey, until October 1st. Initially, the company announced a “temporary” closing, to shore up financial debts and reorganize the chain. But on November 10th it was an entirely different story.

“As of November 10th, InkStop has filed for Chapter 7 Bankruptcy.” This according to the board of directors. The company owes $48 million to more than a 1,000 creditors. A company spokesman stated that the debt is too large to recover from and there would be no way to reopen and will instead liquidate its assets and close for good.

On top of the vacancy problems nationally and in New Jersey, are the mounting loan defaults for commercial real estate. Currently $3.6 BILLION dollars worth of commercial mortgages are distressed in NJ and that number is predicted to reach $7.4 BILLION by 2011- according to Foresight Analytics.

InkStop’s closings are just another dreadful sign that retail and the economy continues to spiral downward and significantly suffer, despite the propaganda still coming from the government. There are many questions to be answered, but the single most important is not health care or climate change issues, It is employment issues. The restoration and creation of jobs.

Nothing except jobs will lead an economic recovery, NOT housing, stock/bond markets, not retail. Why? Because in order for consumers to SPEND money, they first have to EARN money. A concept that even a first grader can grasp- except for this leftist administration, a concept they have yet to understand.

One has to wonder what this mock administration has been doing for the last 10 months, except placating to dictators around the world. One also has to wonder if their goal is not to cripple the U.S. economy in an effort to take complete control through government intervention. If there were a complete collapse of the financial sector, they could move to seize all and every business in the nation.

Make no mistake, there is another bubble being created, a monetary bubble that has been growing by TARP, Stimulus and other borrowed tax payer dollars. The banks are borrowing money they can’t repay, the government is borrowing against future generations that is set to collapse the U.S.- unless something is done to stop and reverse the apparent move towards a centrally planned economy.