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Housing Market Resurgence or Political Spin? Reality Check

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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?

Lani is the Chief Operating Officer at The American Genius and sister news outlet, The Real Daily, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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25 Comments

25 Comments

  1. Daniel, The Real Estate Zebra

    September 17, 2009 at 11:46 am

    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.

  2. Ken Brand

    September 17, 2009 at 12:03 pm

    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.

  3. Matt Stigliano

    September 17, 2009 at 12:16 pm

    @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.

  4. Benn Rosales

    September 17, 2009 at 12:27 pm

    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.

  5. Matt Heaton

    September 17, 2009 at 12:34 pm

    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?

  6. Benn Rosales

    September 17, 2009 at 12:39 pm

    @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.

  7. Jim Reppond

    September 17, 2009 at 12:54 pm

    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.

  8. BawldGuy

    September 17, 2009 at 1:11 pm

    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.

  9. Sam Eder

    September 17, 2009 at 1:28 pm

    @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.

  10. Lani Rosales

    September 17, 2009 at 1:48 pm

    @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! 🙂

  11. Jeff Allen

    September 17, 2009 at 3:22 pm

    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.

  12. Chris Lengquist

    September 17, 2009 at 6:51 pm

    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.

  13. Steven Beam

    September 17, 2009 at 8:31 pm

    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!

  14. Fred Romano

    September 18, 2009 at 9:20 am

    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.

  15. Ruthmarie Hicks

    October 27, 2009 at 12:20 am

    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.

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Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

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