Home Sales

I meant to publish this yesterday, but was kind of busy to get it out.


Here's the article on March Existing Home Sales

Luckily we have a diverse membership and I've always gained an interesting perspective by asking the opinion of one of our members who is in the middle of the mortgage industry and basically is what I call, "Boots on the ground". Yesterday I asked for his opinion on the report, which seemed a bit shady, but hey, there's always revisions as we saw today with the BLS.

Here was his response to my question, "What's your take on the numbers?"

"These numbers are such crap, I don’t know where to start.  The NAR has been grossly overinflating their numbers for years, just like all the other BS numbers that come out.  I don’t know what or how the calculate. But I am sure they have “seasonality” adjustments that allow them to come up with a much higher annualized rate than we are actually seeing.  This is by far the worst spring home buying season I have seen in 13 years.  Foreclosed homes prices are driving down home values.  In some areas 40% of the sales are REO’s paid in cash.  Many of these are going for 30 cents on the dollar of assessed value.  Appraiser’s are having a tough time finding sales comparisons to support existing home sales for those parties that are legitimate private party transactions.  At some point the reflective value of a home may drop significantly because the sales market will be a majority of REO’s.  Several regional banks in this area have seen 85% of their loan originators with 0 loans in their pipeline.   New rules put into place by the FED on April 1^st have made loans more expensive from a rate and closing cost perspective.  This will lead to more “walk away borrowers” as their property values continue to be eroded by this spiral of death.  As you say; the system needs to cleanse itself and just take it’s medicine.  At some point real estate will be a value, I don’t see that right now and would be buyers are voting their voice by staying on the sideline.

Expect more layoffs coming in the future from the RE side of the banking industry and support industries that facilitate these transactions.  More than likely, it will be kept of the radar screen by doing it in small chunks by state rather than one company coming out and saying they are letting 20,000 people go.  I believe Wells Fargo announced they are laying off 1900 mortgage related positions in California.  Doesn’t sound so bad in small increments like this."