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Thread: The Increase in Real Estate Sales MIGHT be Illusory

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    Banned Eric Stoner's Avatar
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    Default The Increase in Real Estate Sales MIGHT be Illusory

    We'll know better after January's sales numbers come in but it seems clear that December's real estate sales figures were primarily a response to the looming tax increases related to the Fiscal Cliff. Manhattan produced real estate sales numbers not seen for 25 years. A traditionally slow month for sales witnessed a mini-boom. Most of it was sellers scrambling to close BEFORE the Capital Gains Rate went up from 15% to as much as 23.8%.

    We will see.
    Last edited by Eric Stoner; 01-04-2013 at 12:40 PM.

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    Default Re: The Increase in Real Estate Sales MIGHT be Illusory

    I would also point out that other real estate sales ... specifically 'short' sales and other negative equity situations ... were also accelerated into 2012 for fear that the Fiscal Cliff would again begin to tax 'forgiven' debt as taxable income. As it turned out, this tax exemption was extended by the Fiscal Cliff 'deal' for another year at least.

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    Banned Eric Stoner's Avatar
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    Default Re: The Increase in Real Estate Sales MIGHT be Illusory

    More actions creating reactions, right Mel ?

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    Default Re: The Increase in Real Estate Sales MIGHT be Illusory

    ^^^ nope, if that were true it would mean that the Austrian school of economics was 'right' about the economy !!! Undoubtedly, the Keynesians will argue that the increase in real estate sales is not a one time 'reaction' event, but instead the result of economic stimulus ( gov't subsidized low mortgage interest rates ) as well as an economy that is actually growing. The answer to this debate will probably not become apparent for at least 3 more months, at which point everyone's attention will be diverted to a different 'crisis'.

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    Default Re: The Increase in Real Estate Sales MIGHT be Illusory

    It seems that the 'surface' news is hiding a major new development ... a huge piece of the 'improving' housing market is in fact attributable to the building of new multi-unit rental properties ! From


    (snip)"Housing starts were off the charts in December," wrote Patrick Newport of HIS Global Insight. Newport blamed much of the gains on warm weather, but added, "the housing recovery is ongoing and has steam."

    "Given how far below normal levels starts remain even now, we expect further strong gains during 2013," wrote Paul Diggle of Capital Economics.

    What they failed to mention is that 30 percent of all housing starts in 2012 were of multi-family apartments. That is the highest share in over 20 years. In December alone, multi-family starts jumped 23 percent month to month, seasonally adjusted, and are up nearly 166 percent from December of 2011. Compare that to single family gains of 8 percent month-to-month and 18.5 percent from a year ago.

    Single family construction may in fact be slowing. Housing starts usually calm down in the fourth quarter. When you take out that seasonal adjustment, they fell 24 percent from October to December of 2012 compared to just a 10 percent pause in the fourth quarter of 2011, according to housing analyst Mark Hanson.(snip)


    the obvious take-away is that rich investors are concluding that a large number of Americans are being 'permanently' disqualified from home ownership ... via credit rating problems, via previous delinquency problems, via insufficient verifiable income, or whatever. As such, rental price levels are rising ( due to rising demand for rental units versus limited supply ) while single family home prices are stagnant. Thus some investors are now 'gambling' that investment in newly constructed multi-unit rental properties will offer them a better return on investment ( net of taxes ) than stocks or bonds.

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    Default Re: The Increase in Real Estate Sales MIGHT be Illusory

    Yes it is illusory.

    Anyone who has been in the markets can see that family's are not buying the majority of homes.

    Investors (including foreign money, hedge funds, and banks) are buying up the bulk of real estate sales right now....

    "The biggest competition for Canadians, Tuccillo says, are investor groups that are now making unprecedented “bulk investments” — buying dozens of condos or houses at a time in markets, like Florida, which has seen steady price growth and the inventory of homes for sale sink to five months’ worth from the glut of 20 months back in 2008."
    http://www.thestar.com/business/arti...estate-markets


    "Now some of the same elite investors are tacking backward and betting on a recovery of the housing market. It's a strange recovery though, propelled not so much by families seeking their own piece of the American dream, but instead by the US Fed's monetary policies. Low-interest rates fostered by the Fed are causing big-money investors to purchase foreclosed single-family homes in blocks of hundreds, even thousands. Expected gains in home prices are also leading hedge funds and investment bank traders to gamble on housing derivatives.

    Like the so-called jobless recovery, characterized by rising business earnings in the midst of high unemployment, the nascent housing recovery is not propelled by a rise in homeownership rates, employment and incomes. Instead, foreclosure rates remain high, as does do unemployment figures, and there's a big backlog of bank-owned properties that has yet to hit the market. Meanwhile, many former home owners have been relegated to the status of renters. If home prices are truly embarked on a sustained rise, the big gains in any new equity created will likely accrue to a smaller number of owners, many of them corporate investor-landlords, and to a few elite financial speculators positioned to make complex derivatives bets on housing bonds. That's how it's playing out so far."
    http://truth-out.org/news/item/13883...is-inequitable
    Nature knows no indecencies; man invents them. ~ Mark Twain


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