Yesterday’s revelations about the 10% increase in existing home sales, which crushed analyst’s expectations, went largely poo-poo’d by the talking heads like Diana Olick from CNBC. Their rational for this, is that we are still seeing the tail end of the tax credit since the numbers included the last closings before the September 30 extension expiration. If you recall, Congress granted the extension for closing escrow from the June 30 deadline to September 30, so that those who purchased short sales, would have an opportunity to close within the tax credit time frame. The home purchase contract however, still had to have been completed by April 30. Since most escrows are 45-60 days, those purchases likely closed ahead of the original June 30 deadline not 3 months after. Moreover, to presume a 10% increase in sales can be attributed in any way to short sale closings alone is just ridiculous. If the analysts had ever tried to push a short sale along to meet any kind of deadline, they would know just how ludicrous that idea sounds. The so called expert opinions like Diana’s also spoke about the 35% distressed sales component (Short sales and foreclosures) as well as the voluntary foreclosure freeze implemented earlier this month by the banks, as further problems and prolonged pain in the housing market. This is just garbage. First of all, the fact that 35% of all sales were distressed, is not a bad thing – granted it’s not a good thing either, but it reflects absorption of inventory off the bank’s books. Consider also that a percentage of gross sales cuts across all markets. In Las Vegas I would imagine that distressed sales percentage is well above 50% maybe even 75%, where as in our local Conejo Valley market, it represents just a mere 9.8% (18 short sales and 1 REO out of 195 total closings in September). Secondly, the impact of the bank foreclosure freezes has absolutely nothing to do with September housing sales, nothing. Once again, we find that even when the news is fantastic, the media prefers selling fear rather than hope and optimism.
Published on 2010-10-26 08:56:23