The MSM is ecstatic about May’s “tremendous” surge in existing home sales to a 5.35 million annual rate. The recovery has arrived. All is well. Those Obama waiter jobs at Ruby Tuesday are leading to a dramatic housing recovery. Please note a few things on the chart below. There was a spike in 2013 to this level and then it petered out. There was a spike to this level in 2009 when the Obamanistas were offering the first time home buyer credit to dupes, and then sales predictably crashed.
So annual sales are now where they were in 2007, after a 25% crash from the 2005 high. Annual sales are back to the 1999 through 2001 range, before Greenspan created the biggest housing bubble in history. After six years of 0% interest rates, foreclosure suppression, Wall Street hedge funds doing much of the buying, and Chinese billionaires buying everything they can get their hands on, this is all we have? I noticed the percentage of first time buyers went up to 32% from 27% last year, while the percentage of investors dropped to a four year low. You can thank the government, as Fannie (FNMA), Freddie (FMCC), and the FHA are now pushing 3.5% down payment mortgages to the poor ignorant masses. The smart money (Wall Street) is exiting and the dumb money (average schmucks) is being lured into the market by low down payments and delusions of future price increases.
With mortgage rates already rising above 4%, artificial demand from investors in reverse, a stock market crash in the not so distant future, prices out of reach for most people, and stagnant real household incomes, this does not mark the start of a housing recovery. It marks the beginning of the end for the latest bubble in real estate. Anyone who bought a low end home in the last year is already underwater, as you can see in the chart below. At least the .1% are still reaping the benefits of ZIRP and QE, as high end homes are booming. Welcome to the Bernanke/Yellen housing recovery.
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