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Market Reports

[Shadow Inventory] S&P: New York Metro Highest at 103 Months

June 15, 2010 | 9:21 am |

S&P just released their “Variations In U.S. Shadow Inventories Could Spell Home Price Declines In Some Areas, Stabilization In Others” report which looked at shadow inventory and its impact on the regional pricing.

source: S&P

source: S&P

The volume of troubled residential properties has been growing in nearly every U.S. state since 2005, and borrowers nationwide are now defaulting on their mortgages faster than existing defaults are being resolved through liquidation, according to Standard & Poor’s Ratings Services. These trends have given rise to a large “shadow inventory” of distressed properties—which we define as outstanding properties that are (or were recently) 90 days or more delinquent on mortgage payments, in foreclosure, or real estate owned (REO)—that haven’t yet hit the market.

source: S&P

The New York City metro area had the highest level of shadow inventory at 103.1 months, followed by Miami with 61.8 months and Boston with 58 months. The report suggests Miami is improving, but relative to what? Miami still shows more than 5 years of shadow.

source: S&P

The fallout from the recent mortgage crisis has reduced financing for borrowers as lenders began to enforce stricter underwriting standards. Lenders have generally become more selective about their borrowers, providing fewer would-be homebuyers with loans.

view press release [S&P]

download report [my link – S&P report link being fixed at time of this post]

[Harvard Study] Jobs Needed For Housing To Recover

June 14, 2010 | 2:00 pm | |

At first glance, the headline on coverage of the annual State of the Nation’s Housing report issued today by Harvard’s Joint Center for Housing Studies:

U.S. Housing Recovery Dependent on Jobs, Harvard Report Says:

…and an Ivy League degree will get you a ham sandwich:

Ok thats way too harsh, but in reality, job creation is THE important point – since we lost sight of that during the credit/housing boom (when consumers didn’t need to have a job to get a mortgage). In other words, job creation will be needed to carry the torch from the federal tax credit stimulus. Job creation as an offset to the rising foreclosure problem is the key.

Even as the worst housing market correction in more than 60 years appeared to turn a corner in 2009, the fallout from sharply lower home prices and highunemployment continued. Byyear’s end, about one in sevenhomeowners owed more ontheir mortgages than their homeswere worth, seriously delinquentloans were at record highs, and foreclosures exceeded twomillion. Meanwhile, the share ofhouseholds spending more thanhalf their incomes on housing waspoised to reach new heights asincomes slid. The strength of job growth is now key to how quickly loan distress subsides and how fully housing markets recover.

Right now, feedback I’m being in various housing markets across the US suggests home sales are falling sharply in the post-stimulus housing world.

We’d better get back to work.

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[NAR] Pending Home Sales Index

June 2, 2010 | 2:16 pm | |

[click to expand]

NAR released its PHSI today and there were no surprises. The expiration of the federal tax credit for first time buyers and existing home owners (signed contract by April 30, close by June 30) showed its impact on sales trends.

By the way, my above chart shows how ridiculous seasonal adjustments are – the non-seasonal adjusted line better reflects whats going on.

The pending sales data set is about 20% the size of existing homes and is comprised of existing single family and condo sales. Its dubbed a forward looking index but it really is a current looking index. The “meeting of the minds” between buyer and seller occurs just before contract signing. Its forward looking in the context of closing data but it is not forward looking on the condition of housing.

Consecutive M-O-M Gains

  • Sales were up 6% from March to April and up 22% from April 09 to April 10. Last month
  • Sales were up 7.9% from February to March and up 8.3% from March 09 to March 10.

Analysts have expressed fear the housing market will suffer with the end of the government subsidy. But the job market has been improving. The Labor Department is scheduled this week to release employment data for May, and economists surveyed by Dow Jones Newswires are expecting a gain of 515,000 non-farm payroll jobs.

The same thing happened last fall as the initial tax credit within the federal stimulus plan was set to expire on November 30 only to be renewed and expanded a few weeks later. No renewal this time.

Regionally things were not so consistent. Month over month gains in

  • Northeast +29.5%
  • Midwest +4.1%
  • South -0.6%
  • West +7.5%

Buyers they better close by June 30th. Not an automatic assumption in today’s mortgage environment.

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[NAR] Existing Home Sales Jump Artificially

May 25, 2010 | 11:23 pm | |

[click to open]

Last month NAR told us that this month would see another period of robust sales activity as buyers sought to beat the expiration of the first time buyers and existing hoimewoners tax credit on April 30th.

NAR was right about the jump in existing home sales this month.

Still, no real trend is apparent here.

The federal government provided a stimulus to buy homes to help jump start housing and the economy. Pure market forces didn’t deliver the buyers to the closing table this month on their own. What I love about sales stats over housing price stats is sales trends tend to lead price trends. So its a bit weird to say that prices are stabilizing when a key driver of demand was the tax credit – that fueled surge in sales which helped stabilize prices. Remove the stimulus and prices fall.

Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”

When sales drop over the next few months, it would be reasonable to expect sales prices to fall too as the artificial stimulus leaves the economy.

Here are this month’s metrics:

  • existing-home sales increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March
  • existing-home sales are 22.8 percent higher than the 4.70 million-unit pace in April 2009.
  • housing inventory rose 11.5 percent to 4.04 million existing homes available for sale, an 8.4-month supply up from an 8.1-month supply in March.
  • inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million in July 2008.
  • national median existing-home price was $173,100 in April, up 4.0 percent from April 2009.
  • distressed homes accounted for 33 percent of sales last month, compared with 35 percent in March.

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[Seasonality Adjustments] are Confusing and Perhaps, Misleading

April 26, 2010 | 7:30 am |

[click to open announcement]

A few years ago, I was thinking about running another set of our market numbers for the NYC metro area as seasonally adjusted since that was prevalent in housing indexes such as NAR, Case Shiller, New Home Sales. However, when I spoke to several economists on how to set out to actually do this, I found there was no real standard and methodologies used were rarely disclosed. I opted not to pursue a conversion.


NAR takes their monthly numbers, annualize them and then adjust for seasonality. Seems like stacking Jenga wood blocks. The smaller the base piece, the more volatile the blocks are at the top of the stack.

It felt like the reliability of the data could be diluted as a result. One of the things that happened in the NYC metro market in 2009 – seasonality ran amok post-financial crisis. Contract peak moved forward 90 days for the first time in the 25 years I’ve been tracking the market, from May-June to August-September which will then screw up year over year comparisons.

Apparently that was the feeling of S&P/Case Shiller because the wild swings in housing markets of the past several years skewed seasonality and was confusing the message.

Announcement: S&P/Case-Shiller Home Price Indices and Seasonal Adjustment

I applaud them for making a change which will result in a greater clarity of their trend analysis. Remember, the CSI index wasn’t designed for its popular use as the standard for tracking the US housing market. It was designed to be an index for investors to trade housing related financial instruments. Investors (and consumers) always need greater clarity and its great that they took action.

In some recent reports the two series have given conflicting signals, with the seasonally-adjusted series rising month-over-month and the unadjusted series declining. After reviewing the data, the S&P/Case-Shiller Home Price Index Committee believes that, for the present, the unadjusted series is a more reliable indicator and, thus, reports should focus on the year-over-year changes where seasonal shifts are not a factor. Additionally, if monthly changes are considered, the unadjusted series should be used.

Raw is better. I’m sure there are great applications of seasonality, but let’s keep the black box out of the housing market analysis.

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[Special Report] 1Q 2010 Hamptons/North Fork Market Overview

April 25, 2010 | 5:05 pm | Podcasts |

Read More

[Special Report] 1Q 2010 Long Island Market Overview

April 25, 2010 | 4:54 pm | | Podcasts |

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[Back to Normal?] 1Q 2010 Hamptons/North Fork Market Overview Available For Download

April 22, 2010 | 8:05 am | | Reports |

[click to view report]

The 1Q 2010 Hamptons/North Fork Market Overview that I author for Prudential Douglas Elliman was released today.

Other reports we prepare can be found here.

Additional insight can be gained from charts we create to supplement the report and press coverage.

An excerpt

…There were 486 sales in the first quarter, 141.8% more than the 201 sales of the prior year quarter, but 13.8% below the 564 sales in the prior quarter, which was a two-year high. The last three quarters of sales activity has been consistent with the quarterly average of the past 5 years. Gains in the financial markets, Higher Wall Street compensation, low mortgage rates and improved affordability have stimulated demand. Despite economic turmoil of the past two years, the East End housing market, which is driven by its second home market, has continued to keep pace with the New York City housing market. Although there were sharp gains in the number of sales, up from levels not seen in at least six years, listing inventory rose. There were 2,318 listings, up 1.3% from 2,289 listings in the same period last year and up 7.4% from 2,159 listings in the prior quarter. Re-sale shadow inventory, which consists of listings that were removed from the market in the prior year due to unfavorable market conditions, is being added to the current market…

Download report 1Q 2010 Hamptons/North Fork Market Overview [Miller Samuel]
View Hamptons/North Fork charts [Miller Samuel]

[Limping Into Better Times] 1Q 2010 Long Island Market Overview Available For Download

April 22, 2010 | 7:54 am | | Reports |

[click to view report]

The 1Q 2010 Long Island Market Overview that I author for Prudential Douglas Elliman was released today.

Other reports we prepare can be found here.

For additional insight, view a series of charts we prepare outside of the report as well as general press coverage.

An excerpt

…After reaching a two-year high of 5,935 sales in the prior quarter, the number of sales fell 35.7% to 3,814 sales in the first quarter of 2010, which was 32.8% above the 2,872 sales in the same quarter last year. The rise in the number of sales over the past year resulted in a modest decline in listing inventory. There were 20,902 listings in the first quarter, down 8.9% from 22,942 listings in the prior year quarter, but 7.5% higher than 19,450 listings in the prior quarter. The uptick in listing inventory and decline in sales resulted in a rise in the monthly absorption rate— the number of months it would take to sell out existing inventory at the current pace of sales. The absorption rate was 16.4 months, down from 24 months in the prior year quarter, but higher than the 12.9 average monthly absorption rate for the past 5 years…

Download report 1Q 2010 Long Island Market Overview [Miller Samuel]
View Long Island charts [Miller Samuel]


[Special Report] 1Q 2010 Brooklyn Market Overview

April 19, 2010 | 10:59 am | Podcasts |

Read More

[Special Report] 1Q 2010 Queens Market Overview

April 19, 2010 | 10:44 am | Podcasts |

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[Starting To] 1Q 2010 Queens Market Overview Available For Download

April 15, 2010 | 8:45 am | | Reports |

[click to open report]

The 1Q 2010 Queens Market Overview that I author for Prudential Douglas Elliman was released today.

Other reports we prepare can be found here.

The 1Q 2010 data (shortly) and a series of charts (and a podcast) will be available soon.

Press coverage can be found here.

Since the neighborhood data is too thin to build a reliable trend line, we have grouped neighborhoods by logical regions based on housing stock.

An excerpt

…The average sales price was $391,444 in the first quarter, down 7.2% from $421,818 in the same period a year ago and down nominally from $394,730 in the prior quarter. Median sales price followed the same pattern falling 12.2% to $345,000 and down 1.4% from $350,000 in the prior quarter. The re-sale market, which represented 94.4% of all sales in Queens in the first quarter saw its median sales price decline 10.5% to $340,000 from $380,000 in the same period last year and down nominally from $343,000 in the prior quarter. New development sales, which represented only 5.6% of all sales in Queens in the first quarter saw more volatility in price indicators. The median sales price of new development sales fell 35.2% to $396,728 from $612,497 in the prior year quarter, but a large portion of this decline was a shift in the mix toward smaller unit sales rather than significant downward re-pricing of new development listings. The average square footage of a new development sale was 961 square feet, down 4.8% from the same period last year while re-sale property, a large portion includes 1-3 family properties was 2,039 square feet, up 6.1% over the same period…

1Q 2010 Queens Market Overview [Miller Samuel]