Good news?
It may be because we’ve been on the front lines of the rug being pulled out from beneath us, but I’m hesitant to note improvements in the housing market. That said, August showed an increase in new home starts nationally and traditional media sources such as CNN are pointing to this as a signal “that home builders are regaining their confidence in the housing market recovery.
The US Census Bureau reported this morning that starts were up 1.5% from July having broken ground on 598,000 new homes despite forecasters predicting only 583,000. So this is the good news everyone’s all rallying around? 6,000 housing starts across the nation? For real? There are over 307 million Americans and we’re getting excited about 6,000 homes across 3.5 million square miles of land?
Debbie Downer
I’m not trying to be a Debbie Downer here, but come on. Do I have to be the one to say this? Starts are down almost 30% from last August as are permits and we’re getting all pumped about 1%? Feels like spin to me.
Okayfine, NAHB said that homebuilder confidence is at its highest level since May 2008 but this indicator only shows me that people are tired of being kicked and tired of being scared and from what I witness on the frontlines, times are bad but sulking isn’t helping so people are choosing to chin up.
But Lani, the market has hit bottom, hooray!
Again, I’m not trying to be a Debbie Downer but I call bullcrap. When I see us recoup that 30% I’ll get a little excited, but we’re being asked to put on a cheerleader skirt because we recouped ONE PERCENT but we’re still down 29. Whatev.
Look, if the Middle East wasn’t a ticking time bomb we’re being asked to avert our eyes from and the health bill wasn’t a complete clusterflip, the economy (which was the original emergency in November 2008, remember bailouts, uncle Sam swooping in to save everyone, promises of a steady unemployment rate and new job growth?) would still be the focus and maybe I could get excited about such a tiny blip on the radar.
For those of you that know me personally, you know that I’m a very laid back, forgiving person (almost to a fault) with a positive outlook but I have to ask you all to think critically when traditional media gets you all pumped up about a stat that really is crappy if you lift its skirt up. Remember when the world crucified former NAR Chief Economist David Lereah for pumping out fluff stats and cheerleading of a virtual bullet proof housing market? It feels like traditional media is doing the same as they politically spin, all in the name of “oooh, look how well the stimulus is working!”
We asked the question yesterday on Facebook, “So Ben [Bernanke] says the recession is over or nearly finished cooking, is that true- what do you see?” one commenter said, “I’m gonna say true because I want everyone to think that, because that is the real key to getting things moving again.”
As a nation, are we to join the Lereah cult?
Any sort of good news is good, but I’m with you. Let’s not get crazy.
The bottom line is that unless and until the job market recovers, there won’t be a significant recovery. People without jobs can’t buy houses. Of course, once the job market recovers, we’ll probably have interest rate increases to contend with. In my area, there are still short sales and foreclosures to deal with, and more to come.
I don’t want the market of 2005 to return. Haven’t we learned anything?
What I want is healthy, sustainable growth. Once we have that, I’ll be happy.
Correct. We should all insert grains of salt into our mouths.
As you’ve pointed, the people who never saw it coming, reported doomsday and generally make a living spinning, they now say “Yipee, it’s a miracle, green shoots are sprouting everywhere”. I agree, thing on the whole, apparently, have improved, but jumping for joy is premature. I think good news is welcome, the reality, just look around, it’s no freaking party. It’s still a kick-ass struggle. And, lest we forget, markets are hyper-hyper-hyper local.
So, I’m pleased to hear the good news, I and most, probably think that it can skitter off track at the drop of a hat. In the mean time, make your connections, work you ass off, reinvent and deliver crazy-good stuff.
As you’ve pointed out, it’s wise to ground oneself in ‘reality” and respond appropriately. It’s not over yet. Besides, seasonality is going to naturally slow things for the next few months. The key is to prepare for 2010 now, not in 2010.
Cheers.
@LaniAR – I don’t blame you for calling it like you see it. I’ve grown tired of the forecasts, the guesses, the predictions, and the fools. My take? Things are “better” than they were a few months ago, but back to where we want them/they should be? Nah. Your breakdown of the numbers on housing starts is amusing and one of my favorite things to see played out in the news, in conversation, and on blogs. Stats are there for personal interpretation. Housing starts are up from July is true as a statement, but when looked at with a nose for what that means…well it seems rather insignificant. Add your facts in there and suddenly an increase in housing starts looks sad.
I think on a national level we have a long way to climb. In some areas, things are looking up, some are still looking down. Real estate is local…blah, blah, blah.
As for “homebuilder confidence”…they were pretty confident when they flooded the market with homes that are now languishing on the market, weren’t they? I don’t have much faith in these confidence indicators (on any level). My confidence in housing (or the economy or jobs or consumer spending) doesn’t determine what I buy. My needs and wants do. Yes, I realize these gauges have been around forever and they are used by economists, but to me…a lot of that is just us trying to make sense of things – we’re still playing a guessing game at any given moment.
You know what I love about you Lani? You’re never afraid to say what’s on your mind. Keep it up. One of my favorite things about you (and AgentGenius in general). More bloggers need to speak their minds and not just toe the “company” real estate line.
Way to cut the fog of BS, the new @cnn headline is the new stimulus talking point.
Daniel speaks the truth, this entire thing hinges on jobs, and confidence, but the administration has utterly failed to create a plan that secures work for the middle class- in fact, I think it’s suggested that the middle learn to build roads. We’re shoring up one end of the equation while tearing down the top 90%- you’ve got to be kidding me.
I say healthcare gets on hold until the President can actually fix the one thing on the pile he’s yet to deal with- obviously the administration can’t multi-task when it comes to what’s most pressing.
Pimpin mandatory health care (12-13% of income) is tantamount to offering a drowning man a subway sandwich.
Why is increasing home starts a good sign of housing market strength when one of the central problems you are still struggling with in most markets is a glut in inventory?
@timu_Matt it’s good for local economies, and mico-purchase levels- construction means lumber and all that comes with completing a home. Also, slow steady building growth is great and all, but it’s so tiny, that I can’t see locals hiring to fill a drip demand- it’s all spin, we’ll take anything, but spinning it up to the world just opened its wallet is a flat out reach.
Most economists will tell you that a recovery takes time and good news starts slowly. That being said, we could have a double-dip recession (or a “w” curve, if you will) and have some more rough times ahead. There are some sound reasons to suggest this is possible.
No, we shouldn’t get too excited about just a little good news. But we shouldn’t poo-poo it either. It could be the beginning of the end, which we all hoping for. To some extent, good news breeds more good news by creating confidence. Let’s not be the “Debbie Downers” that stand in the way of a positive attitude turn around.
I just wish we could find someone more credible than Lawrence Yun to stick on the TV to represent the Realtors interpritation of housing market! He’s sort of the poster child of Pollyannaism these days.
I’m just surprised Lani’s one of the 10,000 CNN viewers.
Her points of course, are well taken. I also was pleased to see the media called traditional instead of mainstream, as they haven’t been mainstream since LBJ has been in office. Lamestream would be more genuine.
As Benn says, it’s the economy stupid — with jobs as #1. If Obama gets what he wants in any substantive way, game over.
Fannie/Freddie rules keep getting more and more anti-recovery at every turn. It reminds one of the Fed’s suicidal actions in the 1930′s — shrinking money supply while simultaneously raising interest rates — in a freakin’ depression.
Good stuff, Lani.
@LaniAR I’d like to take issue with the central assumption in your argument: That activity at this time last year represented the market norm. I think those of us who survived the dot.com bust in early 2000 can call the 2003-8 housing market what it really was… a big fat bubble. Ironically, both were fueled by a false sense of liquidity that led us to think that access to capital was was almost effortless.
With that in mind, you don’t hear tech analyst bemoaning the modest growth in the web sector because it is a factor of magnitude smaller than what it was in 1999. So get used to it, the market was inflated and now it is correcting. New starts are going to grow at a slower clip- and that is a good thing.
@sameder you might be surprised that you and I don’t differ here. Where we may differ though is my believing that the traditional outlets are using meaningless stats (like how freakin home builders FEEL) as more than indicators…
The most dangerous thing we can do as a nation is behave as sheep fighting to fit into another bubble, so why would we note a 1% increase (also known as a 29% DEcrease year over year) as a “jump” or “revival” in the market when really it’s just a step back in the right direction that may or may not indicate a potential uptick? It’s hype. We’re still flat lining here and consumers having a false sense of hope is as dangerous now as it was before the LAST time this got all jacked up.
PS: thanks for commenting, it’s awesome to see you at ol’ AG!
Great comments from everyone here.
I’m going to side with Lani on a lot of this. Home sales (and as an after-effect, building activity) are picking up due in large part to two temporary economic incentives which likely won’t be here next year: ridiculously low mortgage rates and the first-time buyer tax credit.
At this time next year I would be shocked if rates were as low as they are. I actually think we’ll have to pay the piper for the Fed’s rate cutting preventative measures and deal with some rate inflation the next few years.
And the tax credit likely won’t be here next year, either. And even if it is, odds aren’t good it will be as effective as it was this year since most first-time buyers who were eligible to purchase this year did just that. We’ve sold forward at least a year into our inventory of first-time buyers, I’d argue, and the ongoing recession means far fewer of them will be created next year due to a weak job market.
All of the excitement seems premature.
And now they want to extend the first time home buyer credit. Till when? With my client base this has actually hurt me more than helped. And besides, the reason I don’t think you are seeing a lot of people rushing to complete their first home purchase before Nov 30 is because we’ve pretty much drained that lake…at least for the foreseeable near future.
I’m more than happy we may have hit bottom. Because my biggest fear was next he’ll want to nationalize my house.
Sure – I agree 100%. They have been spinning this since the beginning of summer like my daughter and her hula hoop. where they were once grasping at every nugget to exploit the bad news they are now doing the same for every nugget of good news. Shame on the media but shame on us too for listening. It amazes me how they can dramatically change the thinking of this entire country with a few weeks of news reports. Where I was once hearing doom and gloom from clients I now hear the market has turned. I wish. It hasn’t happened though. Best to you all!
I really don’t think we have hit bottom at all. What happens when the banks flood the market with the next wave of foreclosures? Values will come down more and resales will be harder to sell. I think we are in for a long bumpy ride folks.
[...] Agent Genius: Housing Market Resurgence or Political Spin? (Realtors come together to discuss the current housing market…the comments are worth reading, too.) [...]
Ok, I used to deal a lot with statistics when I was a dweeb in a laboratory. I’m still a dweeb – so Lani, I’m with you on the housing start issue. 1%??? Statistics tend to have a normal variance and oscillation and 1% is probably just that. Normal variance that may indicate that things aren’t getting worse – which in and of itself might be some form of good news.
But to my feeble mind the notion that low housing starts is bad for housing makes no sense. New housing is the last thing we need with high inventories. The fact that housing starts are low and staying that way can only help in soaking up the overhanging inventory of existing homes.
As far as the market is concerned, I think the Fed will keep the lid on interest rates until we are into a recovery. In many ways we are still in deflationary mode, so I’m not as worried about the debt that is being taken on. The biggest mistake Hoover made was NOT spending money when the Great Depression took root. The Fed is doing the right thing and as much as you hate to hear it – so is the Obama Administration. However, once recovery starts – the Fed will have to take away the punch bowl before a hint of a party starts. They will start to tighten and that will keep housing prices down for some time to come.
Heck, we don’t need the market of 2005 again – GOD FORBID!!! Please! I have a dream….Just a normal health bubble-free market when we finally do recover.