The real estate market is crashing all around us. This latest report continues the housing market woes. Smart money always finds a home, but with stock, crypto, real estate, bond, junk bond, and debt bubbles everywhere, there is really only one stealth opportunity left. Lucky for us, it comes in pairs…
The trend is very clear in the commercial real estate market and the residential housing market. Data indicating a weak economy is constant. It seems that for every two data releases with terrible data, the next data point is magically awesome again, only to go back to weak data immediately after.
Case in point:
Yesterday everything was awesome after the first revision to second quarter GDP. It seems growth was not that sweet 2.6% we thought, but it was actually 3.o%!
Today we get back to the bad data cycle as pending home sales are slumping.
from Zero Hedge:
Following a plunge in existing home sales and a plunge in new home sales, pending home sales slumped in July, dropping 0.8% MoM (missing expectations of a 0.3% rise). This completes the triple whammy of misses and drops for July’s housing data…
Bloomberg notes that the decline in contract signings, the fourth in the last five months, highlights that a limited number of properties for sale remains the biggest hurdle for the housing market. That’s particularly true for those wanting to buy for the first time as rising home prices are outpacing gains in wages.
The Realtors group reduced its projection of sales this year to 5.49 million from last month’s estimate of 5.56 million. Supply is failing to keep up with demand, and the outlook for sales is also less favorable because purchases in the Houston area will likely slow in the aftermath of Hurricane Harvey, the NAR projects.“The housing market remains stuck in a holding pattern with little signs of breaking through,” Lawrence Yun, NAR’s chief economist, said in a statement.
“The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace.”
“Buyer traffic continues to be higher than a year ago, the typical listing has gone under contract within a month since April, and inventory at the end of July was 9 percent lower than last July,” Yun said.
“The reality, therefore, is that sales in coming months will not break out unless supply miraculously improves. This seems unlikely given the inadequate pace of housing starts in recent months and the lack of interest from real estate investors looking to sell.”
Looking ahead, not only have home sales most likely slumped again in August, but thousands upon thousands of houses were literally destroyed by Hurricane Harvey.
If there is somehow “good news” in a month or two that home sales are picking up again, we must stop and ask ourselves – If our house and the belongings we worked so hard to achieve, sometimes lifetimes to achieve, was obliterated by mother nature, simply replacing something you already had is not called “economic growth”, it’s called “keeping up”.
Furthermore, just like the Obama Recovery included a loss of full-time, good paying jobs and a rise in part-time, low paying jobs, are we really better off if we move from a 2000 sq ft 1980s one-story brick ranch house in Texas to a FEMA trailer?
Replacing something that is a “utility shelter” as Danielle DiMartino Booth recently stated, with something that could literally be just a “glorified shed” is not an investment and it is not growth.
As people learn the hard way how home owner’s insurance, automobile insurance, and flood insurance really work, as in the insurers take in as much money as they can from every person they can as they likewise try to never pay out a dime, there is this other type of insurance, that is financial in nature, and has been shunned for years, yet still, the payouts to so few will be massive…