Tag Archives: homebuilder sentiment

As The U.S. Economic Collapse Proceeds, Gold Continues To Be Heavily Manipulated

The predictability of the Asia rise/European/NY selloff pattern has become almost comic…Gold surged $4 in the last couple of hours of Shanghai trading peaking at $1,163.30 in April about 2-30 AM. Since about 1AM a sliding $US should have been helping but as MKS Sydney reports

“The $1160 level throughout the morning seemed well capped however with what seemed to be some decent iceberg orders lingering on the offer… There was decent selling from retail, macro and even physical names above $1160 so it does still seem pretty heavy going towards the top end of the range and will likely continue this way into the FOMC.”

There are plenty of well-trained (and well-fed) Bears around.

The quote above is from John Brimelow’s “Gold Jottings” daily gold market update (subscription-based).   Almost every night gold rallies during Asian trading hours, only to be pushed back down once the fraudulent paper gold markets in London (LBMA) and NY (Comex) open.  India and China continue to aggressively accumulate physical gold.

Meanwhile, today’s economic reports continue to confirm the fact that the U.S. economy is beginning to contract.  The Empire State Manufacturing  index dropped to 6.9 from last month’s 7.8 reading, missing the consensus estimate of 8.  The new orders component plunged to negative 2.4.  

Industrial production came in at .1%, well below the consensus estimate of .3%.  The January report was revised to negative .3 from the original report of +.2%.   Had the prior report not been revised lower, the report for today would have been significantly negative – as in, reflecting a large monthly contraction in manufacturing output during February.

Finally, the Homebuilder Sentiment index – which I consider to be one of the more absurdly Orwellian metrics – dropped again to 53 from February’s 55.  It missed the Wall Street brain trust estimate of 56.   Here’s Bloomberg’s mascara-covered take, which is in and of itself uncharacteristically and tersely blunt:

The lack of first-time buyers is an increasing negative for the new home market, evident in the housing market index for March where growth slowed 2 points to an 8-month low of 53. The traffic component of the index again shows particular weakness, down 2 points to 37 which is a 9-month low and directly reflects the lack of first-time buyers.

Notwithstanding Bloomberg’s uncharacteristic candor in its interpretation of the falling builder sentiment index, it’s not just the first-time buyer traffic that is falling off.   The median real household income continues to decline, as new jobs are primarily are of the part-time variety and more people leave the workforce than are finding jobs.  This dynamic does not generate the level of income that can support home ownership.  This is why the rate of homeownership continues drop every month.

Let’s not forget that mortgage rates are near all-time lows and the Obama Government has significantly reduced the credit requirements to qualify for the taxpayer-subsidized mortgage programs  (FHA, Fannie Mae, Freddie Mac, VHA, USDA).  Even Government intervention is not stimulating housing sales.

If you want to exploit the fact that the homebuilders are now more overvalued than they were at the peak of the housing bubble in 2005/2006, my Homebuilder Research Reports will show you why and how.

When I say “overvalued,” that means relative to the companies’ underlying financials.  The stock prices are lower now that at the peak, but the various financial metrics like debt, inventory and p/e ratios are higher now that at the peak. Meanwhile, we found out last week that foreclosures, especially repeat foreclosures, are at a 12-month high – LINK

foreclosure-sign

Housing Market Update – Exclusive Information

I find it interesting that we’re now seeing some other analysts/bloggers discuss the housing market in a bearish “light.” So far everything I’ve read is nothing more than a regurgitation of the information and analysis I’ve been presenting for over a year. The facts and the trends in the data have not all of a sudden become “bearish.” Perhaps it’s now becoming more obvious.

Here’s some facts: 1) The trend in unit sales volume for both new and existing home sales has been negative on a year over year monthly comparison basis (i.e. July 2014 vs. July 2013, etc) since July 2013. Yes, there been some blips in the data, some of it “dead-cat” bounce noise and most of it fictitious “seasonal adjustments” based on data samples that are then converted into annualized rates. Just that concept alone, converting an estimate into an annualized rate for a given month is nothing more than unmitigated brain damage.

2) Mortgage purchase applications have been in cliff-dive formation for well over a year. This is the foundation of the traditional first-time buyer/move-up buyer market. It’s at least 70% of sales volume over a long period of time.

3) Mortgage applications AND unit sales volume has been declining DESPITE the fact that mortgage rates have been falling for over a year now to near-record lows.

4) The investment buyer game is over

5) Inventory is starting to pile up everywhere AND flippers are now finding themselves “stuck” with homes.

But don’t take it from me. A long-time reader who works for a title attorney in the DC area sent me this email last week:

I am in the DC Metro area. We have been in business for 29 years and to give you an idea of our drop off: On the average we would have 700 title orders a month. During the boom it doubled,almost tripled. We are lucky if we see 120 cases a month now and very lucky if they make it to settlement and get paid. This is just for title searches.

For all you housing market bulls, the MOST representative data-point for a home sale is the title work. No home closes without transfer of title. Note: “lucky if they make it to settlement.”

I have also noticed that the high end inventory in the metro-Denver area is starting to pile up like litter in a junk-yard. I just got an email this weekend from REColorado which was a big list of homes in the central Denver area over $600k that had dropped their asking price. For some of them, there’s been multiple price drops. I’m also driving by developments that are not even finished (townhome/single family) and homes are being offered for rent by investors in these developments. Oh, just ignore all of the huge apartment complexes being developed which surround the townhome/single family developments – those surely won’t affect supply or price…

Just wait until the wealth effect of the crash in the price of oil begins to reverberate through any part of the economy attached to the oil patch, including and especially housing. Texas, California, Pennsylvania and Colorado have been among the biggest beneficiaries of the shale/fracking boom. Texas and California are two of the biggest housing markets in the country. Those who are interested in finding the housing market overseas might be interested in checking out this website for more information.

It’s going to start getting ugly in the housing market. Do not fall prey to the marketing hype and obfuscation being promoted by the National Association of Realtors, National Association of Homebuilders, Wall Street and the Government. The housing market is starting to collapse again and the 2015 forecasts just given by KB Home and Lennar confirm my view.