Homebuilders across the country say they are finally seeing signs the three-year housing downturn is ending. Last week, both Toll Brothers and Hovnanian were the latest builders to report smaller quarterly losses, rosier sales trends and more prospective buyers visiting model homes. Toll said it has seen an increase in homebuyers putting down deposits during nine of the past 11 weeks, compared to weekly figures from fiscal 2008.
None of them, however, is ready to jinx it by calling the bottom. They say the recession and fear of job losses are keeping many would-be homebuyers on the fence.
But listening to homebuilders is not where you go to find your housing bottom news. A housing bottom occurs when…
*homebuilders say their cancellations are much lower but earnings are too.
*the major homebuilders combine because they can't make any money.
*there is so little money to be made building a new home because existing homes are so cheap that there's no new building going on.
*an $8,000 tax credit for a $200,000 home all but forces renters to be first-time buyers, even if mortgages are at 6% (and we are not even there yet).
All of these things are what a bottom looks like, but people keep thinking that a maker of a $600,000 home is going to be able to call a bottom looking at his book. As much as I love Bob Toll, this whole move in housing is about increased affordability, and the houses made by Toll Brothers are simply not part of that equation.
There are also misconceptions about what a housing bottom means by way of equal house price appreciation. That is wrong. We are not going to get it. We are going to get a price in which people cannot save money by continuing to rent. That, again, is what a bottom is.
Some have given me heat for my housing bottom call for this summer. Funny thing is, in my mind, the issue isn't whether we'll have it by summer, it's whether I have missed the market bottom, especially after those pending home sales, which is probably the most important figure to follow and certainly more important than anything that Toll can say.
If you wait until housing starts go up, if you wait until Toll starts making money, if you wait until we see prices in homes go up big in value, you will miss the major point — that is, home prices are not going down anymore in the states that control about 50% of the market. Of course, it doesn't matter to those who will never want to call a bottom in anything.
But it does matter to the banks — to Bank of America to Wells Fargo and to PNC Financial nd anyone else dependent on mortgages because it means that their real estate owned (REO) peaks. In fact, REOs's are the real figure to watch going forward because that will be the next one to go down, just like it did in 1997. But that, too, is just too hard for people to understand.
Glad you're reading this. Now if you are wondering how to profit from this perfect time to invest in foreclosures at huge discounts, then you need to get your plan together. And I've laid it out for you, step by step, right here. Call Jim or Andy and they can help get you going down the right road to your next foreclosure deal… 800-310-7730 x2
|
|
|
|
|
 |
