(snip)"The real story of the market is in the new house sales prices. That data shows what happens when the time runs out to take advantage of Uncle Sam’s $8,000 first time home buyer credit. Since the program ends on November 30 and it takes at least 4 months to build a house from date of contract, new house sales prices started to tank in August, completely wiping out the March to May bounce. That bounce, in my view, was entirely due to the government fist time home buyer prop job.
As an old real estate appraiser the first thing I do when considering a sale price is to make sure that it’s a cash equivalent sale price. In this case, the March to May average sale prices should be adjusted down by some percentage of the $8,000 that buyers got from Uncle. That percentage would depend on just what percentage of all sales were impacted by the credit. One source I’ve read says it was 43%. So the credit would appear to account for about $3500 of the price gain that appeared last Spring. This doesn’t even consider the fact that demand was also artificially inflated. That probably had a bit of an impact as well.
The CSI as of July, just now being reported, was up 3.6% from its April low. While we can’t convert that directly to dollars, it appears to correlate nicely the home buyer credit and the false demand uptick that resulted.
Now stay with me here. This is important. New house sales are reported to the Commerce Department at the TIME OF CONTRACT or when A DEPOSIT IS TAKEN, not at closing as with the NAR’s existing home sales, and especially not with the CSI. Case Shiller slows its data even more by using only data reported in the public records, then time smoothing and lagging it.
In August the incentive to first time home buyers ceased to exist for new house sales and looky, looky loo! Price plunged by a mere 9.5%, the biggest one month decline since at least 1994. That means probably forever.
The March to May supposed price gains were vaporized.
Poof.
Kaput.
Meanwhile, all the economists and pundits, having no clue whatsoever how the Case Shiller data is compiled, are in a lather proclaiming that the housing recovery is under way completely ignoring the evidence that the price gains were artificial, fake, illusory, not real, bogus, false, phony, and fictitious."(snip)
from
http://wallstreetexaminer.com/2009/0...nd-fictitious/
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