NAR released their benchmark revisions today. The reductions amount to a roughly 14% decline from previous figures. The revisions apply to sales for 2007 through 2010.
Home inventory was also revised downward by a similar amount, but it should be noted that NAR's inventory figures do not include shadow inventory not currently listed. Shadow inventory still stands at roughly 1.6 million homes according to CoreLogic's latest figures.
Looking behind the headline numbers, the data coming from various government agencies is not what it seems. As Zero Hedge points out, most of the "improvement" in the housing starts figures released by the census today is in the multi-family segment. Single family starts & completions are still sluggish at best.
Any sustainable recovery in real estate will have to include growth in single family home construction. The recent growth in multi-family housing simply reflects the reality that more people are opting to rent, many because they have no choice. Housing completions are still poised to come in at a record low for 2011.
As we look to the year ahead, buyers and sellers may be wondering just what the Houston area housing market will look like in 2012. I would like to say I'm cautiously optimistic that things will be better in 2012, but I'd be telling a lie if I did. I've been saying for most of the year, that macroeconomic factors will be the biggest driver of the Katy housing market, and I think this will certainly come into play in 2012.
Today's latest BS from the BLS only confirms my skepticism of what the economy will look like in 2012. After the Fed propped up several potentially insolvent banks this week (and most of Europe for that matter) with cheaper currency swaps, we get the news that the unemployment rate dropped to 8.6%. If you really believe that, I've got small island I'd like to sell you in the West Texas Petroplex. The bullshit coming out of the Bureau of Labor and Statistics is much like the bullshit coming out our Congress, which is too busy trading on insider information to pass any meaningful legislation.
The kleptocrats in Washington will say or do virtually anything to avoid giving you the true picture of what's really going on. Today's "official" government headline is that the unemployment rate dropped to 8.6% as 120,000 jobs were created during the month of November. What the media fail to mention is that some 487,000 people dropped out of the labor force. That's right, labor force participation dropped to levels not seen since the 1980's. The duration of those out of work climbed to 40.9 weeks.
Here's a chart showing a more accurate measure of unemployment adjusted for the historic growth in the labor force.
The total of umemployed or underemployed still exceeds 15%.
The combination of global debt and massive corruption in the financial system is choking the life out of average citizens. The debt levels are simply not sustainable. As Charles Smith is fond of pointing out, debt that can't be paid won't. The problem for central bankers and every other crony capitalist who's profiting from the debt is that more and more people are awakening to the reality that the message doesn't match the facts on the ground.
The Federal Reserve and other central banks can only prop up a failed system for so long. Bond markets are catching on to this, and thus the reason for Europe's calamitous situation. This chart of Italian debt yields explains it quite well.
The banks must be restrained. Until that happens, there will no lasting recovery in real estate or any other facet of the economy. 2012 poses several challenges. One will be the overhang of the debt crisis now hitting Europe. Our problems will be compounded with 2012 being an election cycle. That doesn't bode well for any serious reform here in the U.S. barring a complete catastrophe. I expect the can to continue to be kicked down the road, while unemployment churns and the food stamp rolls move higher. Demand for oil and gasoline seems to be softening, and that could put a damper on growth in the energy corridor here in Houston.
I would agree with Bob Janjuah that the worst is still ahead of us. He's looking at a 35% drop in the S&P 500 from current levels.
Kyle Bass provides a more detailed discussion here at AmeriCatalyst of why exactly the world is about to change. We can either start preparing for the change or be victims of it.
Another good read on what's ailing global economies, The Black Swan of Cairo provides further insight into the folly that leaders across the globe have fallen into. In an effort to promise everything to everyone, leaders have tried to smooth out the volatility to create a false sense of security. Unfortunately, they've also invited disaster. As Taleb points out, there is no free lunch and all complex systems have an inherent element of volatility. That volatility is what gives them life and necessary feedback for adaptive survival. The systems we're sold as inherently stable, have been propped up and artificially so with a massive mispricing of risk. Our system of crony capitalism without failure is much like the sand pile Taleb describes. You can keep adding sand to the sand pile up until the point it collapses.
"The powers of financial capitalism had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences." Carroll Quigley - Tragedy and Hope
The Case Shiller home price index declined by 0.6% in the third quarter (3 month average of July, August and September. Of the 20 metro areas covered, only Detroit and DC showed gains. The index shows that prices are softening again in most U.S. markets, with prices down 3.6% from September 2010.
The Census Bureau reported October new home sales of 307,000, up from a downwardly revised 303,000 in September. Inventory of new homes stood at 6.3 months of supply. The combined total of completed new homes and those under construction is still tracking at depressed levels. New home sales have averaged only 299,000 units SAAR in the 18 months since the expiration of the tax credit.
Wealthy Chinese citizens are looking for better living conditions overseas, primarily in the United States and Canada. This WSJ piece shows the particularly profound effect on the Canadian markets of Vancouver and Toronto. Vancouver West and Markham/Thornhill have both been focal points for Chinese property investment leading to some rather lofty Canadian home prices.
