One aspect of home sales that EVERY analyst is overlooking, especially the bubbleheads on financial tv, is the investor component. Realtytrac, of all sources, published an article in which it presented data showing that home sales are now being driven by mom and pop – i.e. retail – investors. It furthermore showed that the big investment funds are starting to sell their holdings into the retail investor bid. Of course, this article was never thrust into mainstream focus.
Do you see the OBVIOUS analogy here? Institutions selling to retail…at the top of the market? Ever seen this dynamic before?
Even more stunning is that Realtytrac’s data showed that the retail “investor”/flipper is increasingly using mortgages to make their purchases, rather than cash.
I have written article for Seeking Alpha in which I explain why the April existing home sales report was even more bearish than conveyed by the headline reports. Furthermore, I show a rather glaring discrepancy between data from the NAR’s website and the National Association of Realtors chief ecomists’ claim that home sales are lagging expectations because of low inventory.
You can read my full analysis here: Existing Home Sales Driven My Retail Investors Using Debt
One point of note on the table above. The chief economist of the NAR has been suggesting the that existing home sales have been lagging expectations because of unusually low inventories. This is simply not a fact-based assertion by the NAR’s own numbers.