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David Rosenberg via Zero Hedge: Not a Single New Home Over 750k Has Been Sold for 2 Months

Hubbs

By Hubbs
in The Tailgate

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Hubbs

Hubbs

Posted
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Wow. Seriously? Just... wow.

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The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes priced above $750k managed to sell in July. Answer — zero, nada, rien; and for the second month in a row. Only 1,000 units priced above 500,000 moved last month. That’s it! Over 80% of the homes that the builders managed to sell were priced for under $300,000. Just another sign of how this remains a full-fledged buyers’ market — at least for the ones that can either afford to put down a downpayment or are creditworthy enough to secure a mortgage loan (keeping in mind that 25% of the household sector does have a sub-600 FICO score).

Remember that this is a July data point and we know that the NAHB housing market index, which has an historic 83% correlation with new home sales, dipped for the third month in a row in August, to 13 from 14 in July. So it’s not even safe to say that we have hit rock bottom. Moreover, when you look at the trendline in total home sales, it is plain to see what has happened from the impact of the now-expired housing tax credits — the subsidy did little more than distort the pattern of housing demand and actually pulled forward well in excess of a million units of consumption, at the expense of future growth. What does this mean? That demand will remain anemic and likely hit even new lower lows in coming months and quarters as we enter into the “payback time” phase.

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Kilmer17

Kilmer17

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I dont know. How many NEW home subdivisions with houses like that are being built these days?

What we are starting to see is complete stagnation. No new homes being built, no new listings for existing homes and no new buyers.

On top of that, this is occuring with the lowest interest rates in forever, and still nobody is taking the risks. Both the banks and the consumers.

Do you know what it takes to get a jumbo loan these days?

shudder.......

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McD5

McD5

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It's nasty time, no doubt about it.

And everything is so screwed up right now--that we need major change.

Why should a bank even loan money to people, when they can just buy treasuries from the government?

We have incredible fundamental flaws all through the banking and financial system, and no one is running the store.

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zoony

zoony

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Yah, pretty bad. There is also a cultural/trend element here that is worht noting

http://finance.yahoo.com/news/Death-of-the-McMansion-Era-of-cnbc-1051033821.html?x=0

Death of the 'McMansion': Era of Huge Homes Is Over

They've been called McMansions, Starter Castles, Garage Mahals and Faux Chateaus but here's the latest thing you can call them - History.

In the past few years, there have been an increasing number of references made to the "McMansion glut" and the "McMansion backlash," as more towns pass ordinances against garishly large homes, which are generally over 3,000 square feet and built very close together.

What sets a McMansion apart from a regular mansion, according to Wikipedia, are a few characteristics: They're tacky, they lack a definitive style and they have a "displeasingly jumbled appearance."

Well, count 2010 as the year the last nail was hammered into the McCoffin: In its latest report on home-buying trends, real-estate site Trulia declares: "The McMansion Era Is Over."

Just 9 percent of the people surveyed by Trulia said their ideal home size was over 3,200 square feet. Meanwhile, more than one-third said their ideal size was under 2,000 feet.

"That's something that would've been unbelievable just a few years back," said Pete Flint, CEO and co-founder of Trulia. "Americans are moving away from McMansions."

The comments echoed those made in June by Kermit Baker, the chief economist at the American Institute of Architects.

"We continue to move away from the McMansion chapter of residential design, with more demand for practicality throughout the home," Baker said. "There has been a drop off in the popularity of upscale property enhancements such as formal landscaping, decorative water features, tennis courts, and gazebos."

"McMansions just look and feel out of place today, given the more cautious environment everyone's living in," said Paul Bishop, vice president of research for the National Association of Realtors.

And homebuilders are heeding the call: In a survey of builders last year, nine out of 10 said they planned to build smaller or lower-priced homes.

Even in Texas, the land of go big or go home, they're downsizing.

Diane Cheatham, owner of Urban Edge Developers in Dallas, said today, the average size of home they're building is 2,200 square feet, down from 2,500 in 2005 - which was considered small for Dallas back then.

She said the trend there is more toward building green homes instead of big homes. Right now, they're building a 1,200-square-foot uber-green home for a couple that's downsizing from 3,000-square feet, Cheatham explained.

1,200? Some of the hair in Texas is bigger than that!

"We've never built one that small," Cheatham confessed, but added: "I think that's just a good example of the trend right now."

For a little historical context, 1,200 square feet was the average home size in America in the 1960s. That grew to 1,710 square feet in the 1980s and 2,330 square feet in the 2000s.

What's more, many in the real-estate business say they think this trend of downsizing, or "right-sizing," as Flint likes to call it, is here to stay.

"This is absolutely a long-term effect," he said. "Think of families with small children who've been foreclosed upon ... When these teenagers are in a position to buy a home, they won't want to go through these experiences they saw their parents go through."

Of course, the question becomes, what do we do with all these McMansions that have already been built?

It's tempting to make jokes about what you might do with a former McMansion but with crime on the rise in neighborhoods littered with abandoned McMansions, Christopher Leinberger, in an article for the Atlantic, asked a sobering question: Is this the next slum?

Luckily, people are starting to get creative: A film collective in Seattle has taken over a 10,000-square foot McMansion there, using it for both living and work space. They turned a wine closet into an editing room and tossed a green screen in the garage. And in a suburb of San Diego, one couple turned a former McMansion into a home for autistic adults.

The demise of the McMansion has stirred a growing chorus of murmurs in the real-estate community about the possibility that it may force a dramatic redesign of the suburban McMansion tracts into mini-towns of their own, turning these icons of excess into more practical spaces like offices, banks, grocery stores and movie theaters.

Though, given some of the poor quality of materials and craftsmanship, it begs the question, would it be better to just tear them all down and start from scratch?

Have some thoughts on what to do with former McMansions? Drop a comment in the box below. Or, email ponyblog@cnbc.com.

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Spanky22

Spanky22

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Yah, pretty bad. There is also a cultural/trend element here that is worht noting

Death of the 'McMansion': Era of Huge Homes Is Over

...and good riddance! They were ugly as hell and totally unneeded.

Back to the article, Id still like to see the actual data on this. Im finding it very hard to believe that not a single new home over $750,000 was sold. Is it possible that the data jumped in 500 or 1000 increments and it didnt hit that? There had to have been at least a couple. Really rich people are still rich.

Either way, well back to earth, house prices. I think youve got a way more to go.

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Hubbs

Hubbs

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...and good riddance! They were ugly as hell and totally unneeded.

Back to the article, Id still like to see the actual data on this. Im finding it very hard to believe that not a single new home over $750,000 was sold. Is it possible that the data jumped in 500 or 1000 increments and it didnt hit that? There had to have been at least a couple. Really rich people are still rich.

Either way, well back to earth, house prices. I think youve got a way more to go.

Really rich people also tend to be good with money. If they believe high-end housing is still really overvalued, they won't buy.

I was skeptical too, but Rosenberg's pretty trustworthy.

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maxiumone

maxiumone

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...and good riddance! They were ugly as hell and totally unneeded.

Back to the article, Id still like to see the actual data on this. Im finding it very hard to believe that not a single new home over $750,000 was sold. Is it possible that the data jumped in 500 or 1000 increments and it didnt hit that? There had to have been at least a couple. Really rich people are still rich.

Either way, well back to earth, house prices. I think youve got a way more to go.

I think the key is new home..

I am sure there were existing homes sold over 750K

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Kilmer17

Kilmer17

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I really don't know, but I'll take a guess-

Verified employment and income in proper proportion to the loan amount.

A down-payment in proper proportion to the current property value.

A good credit history.

Am I close?

LOL. exactly.

The ones who get hurt a bit are small business owners who file as a sub s. Hard to say where my income begins and the businesses ends. Same thing with debt ratios.

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Hubbs

Hubbs

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I really don't know, but I'll take a guess-

Verified employment and income in proper proportion to the loan amount.

A down-payment in proper proportion to the current property value.

A good credit history.

Am I close?

Quit spouting off nonsense. Everyone deserves an endless amount of credit, no matter their circumstances.

Next you'll be telling me that banks should double-check someone's income before giving him a loan of eleventy billion dollars.

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maxiumone

maxiumone

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Quit spouting off nonsense. Everyone deserves hundreds of thousands of dollars in credit, no matter their circumstances.

Next you'll be telling me that banks should double-check someone's income before giving him a loan of eleventy billion dollars.

Good thing China does not double check income :evilg:

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Monte51Coleman

Monte51Coleman

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Quit spouting off nonsense. Everyone deserves an endless amount of credit, no matter their circumstances.

Next you'll be telling me that banks should double-check someone's income before giving him a loan of eleventy billion dollars.

What's funny (funny sad, not funny ha ha) is that so many in the old new economy couldn't have qualified for their cars under basic, reasonable and prudent lending standards, much less their houses.

How, of how, did it all go so wrong?

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zoony

zoony

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What's funny (funny sad, not funny ha ha) is that so many in the old new economy couldn't have qualified for their cars under basic, reasonable and prudent lending standards, much less their houses.

How, of how, did it all go so wrong?

here's a book I think you will find interesting. I'm about halfway through

9780061733215.jpg

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Monte51Coleman

Monte51Coleman

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here's a book I think you will find interesting.

I'll check it out, thanks.

I thought there might be a problem when an acquaintance told me about her Countrywide Mortgage job at a xmas party in 2005.

High school educated lady of average intelligence and a nice smile. Career secretary. Started selling mortgages. Did well. Became head of an office. Made 400k that year.

Here's your sign.

I don't know if she's in jail or not.

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Corcaigh

Corcaigh

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here's a book I think you will find interesting. I'm about halfway through

The amount of businesses that operate here in helping people live beyond their means and accelerate the journey of the poor (and not so poor) to financial trouble is something of an eye opener to Europeans.

You'd have to be a rough part of a city in most of Europe to see a pawn shop or a billboard for payday loans. Here they are located on mainstreet in the strip malls and advertise on TV. :ols:

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zoony

zoony

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The amount of businesses that operate here in helping people live beyond their means and accelerate the journey of the poor (and not so poor) to financial trouble is something of an eye opener to Europeans.

You'd have to be a rough part of a city in most of Europe to see a pawn shop or a billboard for payday loans. Here they are located on mainstreet in the strip malls and advertise on TV. :ols:

There aren't really any poor in Europe though, that's kind of the difference right? Generally speaking of course.

In Europe unemployment puts you squarely in the middle class. So even the 4 year unemployed guy doesn't need to pawn anything.

Which is great, unless you want to move up into another class of course... which doesn't happen. You have your old money European cultural elite, then everyone else. Which is why so many came to the US in the first place.

Not making a judgement on either, it is what it is.

(the book is an eye opener though, it's still hardback only I think but you might want to pick up a copy if you're interested in such things)

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