by Calculated Risk on 6/21/2011 09:32:00 PM

From the O.C. Register: Luxury Irvine condo towers go rental (ht SGIP)

The luxe new high-rise condos at Astoria in Irvine’s Central Park West are no longer for sale — they’re for rent.
...
The apartments at Astoria, once priced to sell from $415,000 to $779,000 – along with homeowner association (HOA) dues ranging from $915 to $965 a month — now rent beginning at $2,590.

This is part of the Central Park West project in Irvine. This project was built by Lennar and mothballed in 2007. Part of the project was brought back on the market in 2010, but they only sold six condos since then in this high rise building - so it is time to convert them to rentals!

This is shadow inventory that I expect will be converted back to condos eventually.

Earlier:
• FOMC Meeting Preview
• May Existing Home Sales: 4.81 million SAAR, 9.3 months of supply
• Existing Home Sales: Comments and NSA Graph
• Existing Home Sales graphs

by Calculated Risk on 6/21/2011 03:35:00 PM

UPDATE: No surprise, from CNBC: Greek PM Wins Crucial Vote, But Outlook Remains Dire

• From Tara Siegel Bernard: Borrowers Wade Back Into Adjustable-Rate Mortgages. CR Note: We have to remember that not all ARMs are bad - just like not all "subprime" is bad. During the bubble, many borrowers didn't understand the product and were frequently qualified at an absurdly low teaser rate - if they were qualified at all, with little or no proof of income. As long as people understand the terms, and the underwriting is solid - this probably isn't too bad (although I'm sure there are people who will get burned).

• The Greek confidence vote is scheduled to start at 5 PM ET. Here is the online Greek TV (it is all Greek to me). It is pretty clear that Prime Minister Papandreou will receive a vote of confidence (just more theater - like the debt ceiling charade in the U.S.). So they will receive a few billion more ...

• Here is the Conference of Mayor's report with some local data: U.S. Metro Economies Report: 2011 Release

• And from the LA Times: Controller says he won’t pay legislators

California lawmakers must forfeit their pay as of mid-June because the budget they passed last week -- which Gov. Jerry Brown vetoed less than 24 hours later -– was not balanced, the state controller said Tuesday.
...
Voters approved a law last fall that empowered legislators to pass a budget with a simple majority vote but also threatened to strip them of pay for every day the blueprint is late. The measure makes no mention of approving a balanced budget, but other laws on the books dictate that state budgets be balanced.

Earlier:
• FOMC Meeting Preview
• May Existing Home Sales: 4.81 million SAAR, 9.3 months of supply
• Existing Home Sales: Comments and NSA Graph
• Existing Home Sales graphs

by Calculated Risk on 6/21/2011 12:15:00 PM

A few comments and a graph (of course):

• There was no mention of the "benchmark revision" that was supposed to be announced this summer (Summer starts now!). I was hoping for at least a mention on the timing of the release. This revision is expected to show significant fewer homes sold over the last few years (perhaps 10% to 15% fewer homes in 2010), and also fewer homes for sale.

Hopefully the NAR will provide an update soon - and hopefully the NAR will provide 1) the revised data for the last decade and 2) a description of the new methodology (as part of this revision, the NAR is expected to change their method for estimating sales and inventory).

• The NAR continues to complain about lending standards. NAR economist Lawrence Yun said: “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”

Actually standards are fairly reasonable for qualified buyers. Of course many qualified buyers bought last year - using the ill-considered homebuyer tax credit - and that pulled demand forward. The housing market is still paying the price for that policy mistake.

Of course the NAR never complained about the "very loose standards" during the housing bubble!

• The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Click on graph for larger image in graph gallery.

The red columns are for 2011.

Sales NSA are well below the tax credit boosted level of sales in May 2010, but slightly above the level of May sales in 2009. The level of sales is still elevated due to investor buying. The NAR noted:

All-cash transactions stood at 30 percent in May, down from 31 percent in April; they were 25 percent in May 2010; investors account for the bulk of cash purchases.

First-time buyers purchased 35 percent of homes in May, down from 36 percent in April; they were 46 percent in May 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in May compared with 20 percent in April; they were 14 percent in May 2010.

• As Tom Lawler noted yesterday, the Pending Home Sales Index will probably show a significant increase in May - so reported sales in June and July will probably be higher. The Pending Home Sales Index will be released on Wednesday June 29th.

Earlier:
• FOMC Meeting Preview
• May Existing Home Sales: 4.81 million SAAR, 9.3 months of supply
• Existing Home Sales graphs

by Calculated Risk on 6/21/2011 10:00:00 AM

The NAR reports: Existing-Home Sales Decline in May

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April, and are 15.3 percent below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit.
...
Total housing inventory at the end of May fell 1.0 percent to 3.72 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, up from a 9.0-month supply in April

Click on graph for larger image in graph gallery.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in May 2011 (4.81 million SAAR) were 3.8% lower than last month, and were 15.3% lower than in May 2010.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 3.72 million in May from 3.76 million in April.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, so it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 4.4% year-over-year in May from May 2010. This is the fourth consecutive month with a YoY decrease in inventory.

Inventory should increase over the next couple of months months (the normal seasonal pattern), and the YoY change is something to watch closely this year.

Months of supply increased to 9.3 months in May, up from 9.0 months in April. This is much higher than normal. These sales numbers were slightly above the consensus of 4.75 million SAAR (Lawler's forecast was 4.8 million using the NAR method).

There was no mention of the coming revisions. I'll have more later.

by Calculated Risk on 6/21/2011 09:05:00 AM

Existing home sales will be released soon.

Here is an article from Bloomberg: Brazilians Buy Miami Condos at Bargain Prices(ht Nanoo-Nanoo)

Surging real estate prices in Brazil and the currency’s 45 percent gain against the U.S. dollar since 2008 are sending Brazilians to South Florida in search of bargain vacation homes and property investments. That’s helping bolster Miami’s condo market ... As many as half of the downtown Miami condos that have been sold to foreigners for more than $500,000 since January were purchased by Brazilians.

This doesn't help in most overbuilt areas. But it does help a little in some areas - like Miami - and they are paying all cash.