If you only listen to the talking heads you may find it surprising that the housing correction is still ongoing. Quite simply put, with all the efforts of the US government, the Federal Reserve, and various agencies the best they have accomplished is to delay the decline. Now that all the capital is spent, all the programs finished, the decline ensues. The only thing left in the bag is MOPE (Management of Perspective Economics).
What is MOPE? In a nutshell its a pathetic attempt to ‘talk’ people into an action. The theory goes that if you say its sunny outside, and its a torrential downpour, yet everyone leaves the house without an umbrella then the concept works.
For housing the concept is the same. Is everyone telling you that its sunny and “now is a great time to buy” and the justification they use is “look how much prices have come down” as evidence? The first thing I always ask these people is “Can you tell me when when would be a bad time to buy?”. In hindsight they will all mention a few years ago … but when the mania was at hand they were the very same touting the “housing never goes down in price” mantra.
What is left is wishful thinking and its pretty pathetic.
D.R. Horton’s Donald Horton:
“Market conditions in the homebuilding industry are still challenging, with high foreclosures, significant existing home inventory, high unemployment, tight mortgage lending standards and weak consumer confidence. However, housing affordability remains near record highs, interest rates are favorable and new home inventory is still very low,” Horton said. “We continue to focus on providing affordable homes for the first-time buyer while having product available for move-up buyers, further adjusting our cost structure relative to our current sales pace.”
Translation: We’re still in the dumps, but we’re lowering prices, so come on and buy.
Pulte’s Richard Dugas: “Over the near term, we expect the industry will continue to face low levels of demand and that overall operating conditions will remain highly competitive.” Dugas then said he expects a return to profitability in the “back half of the year.”
Translation: Still bad, but it has to get better, right?
Meritage‘s Steven Hilton:
“The market has obviously softened since the federal home buyer tax credit expired in April last year, as reflected in total U.S. home sales as well as our own sales and closings. As a result, we have offered larger incentives in some of our communities, resulting in lower margins that offset the improvements we are achieving in our new higher-margin communities…the spring selling season for the last few months is off to a tepid start, and we have not produced sales at the pace we would have hoped this far into the 2011 selling season. We believe the housing market in general is still bouncing along the bottom, with pockets of strength in certain of our markets.”
Translation: We’re lowering prices, throwing in upgrades, and it’s not really working.
News that serious delinquencies are on the decline suggesting that those left standing in their homes will remain. Kyle Lundstedt of LPS Applied Analytics aka Dr. Doom reports that mortgage delinquencies, down more than 11 percent month-over month, are at the lowest level since 2008.