Tuesday, July 31, 2007

FLASH: American Home Mortgage melts down - stock falls 90%. Lawrence Yun still thinks housing will be fine and dandy.

Lawrence - if people can't get mortgages anymore, who's going to buy some of that record inventory? Come on, you're an "economist" - you gotta understand supply and demand, right?


American Home plunges on bankruptcy concern - Mortgage lender hires advisers for 'orderly liquidation of assets

SAN FRANCISCO (MarketWatch) -- American Home Mortgage Investment Corp. said Tuesday it has missed margin calls from its lenders and hired advisers to consider strategic options including the liquidation of its assets.

Shares of the company plunged 90% to $1.04 on concern the company may file for bankruptcy protection.

Meanwhile, in LawrenceYunLand:

"We are encouraged that home prices, at least for now, have stopped declining," said Lawrence Yun, senior economist at NAR. "If they were to drop much larger than that, it could tip the economy into recession." The association has predicted that existing home sales will fall by 1 to 2 percent in 2007.


Anonymous said...

This guy is an idiot. Price declines are accelerating and we are already in a recession. That should be completely obvious to anybody with an IQ above 75.

Where did they find this guy - sleeping in a cardboard box in the alley behing their offices?

Anonymous said...

Latest from the man:

June Pending Home Sales Index Shows Market Improvement
WASHINGTON, August 01, 2007 - A forward-looking indicator based on pending home sales shows the market is likely to stabilize in the months ahead, according to the National Association of Realtors®.

The Pending Home Sales Index*, based on contracts signed in June, was 5.0 percent higher from the downwardly revised May index of 97.5, but is 8.6 percent below June 2006 when it stood at 112.0. This 5.0 percent monthly gain is the largest in more than three years, since a 6.1 percent increase in March 2004.

Lawrence Yun, NAR senior economist, said it is encouraging that the increase occurred in all four major regions. “However, it is too early to say if home sales have already passed bottom,” he said. “Still, major declines in home sales are likely to have occurred already and further declines, if any, are likely to be modest given the accumulating pent-up demand.”

Scott said...

Demand is the largest problem right now. In 2006, 40% of all mortgages originated were either subprime or Alt-A. That means that demand will be at least 3 million units weaker than last year.

Supply will be balloning as well. As of June, according to the census new residential sales and the realtor existing home sales, there were 4.733 million homes available for sale. While the rate, in June of purchase was at 6.584 million homes. That's 8.6 months of supply. However, the best estimates are that there will be 2 to 2.5 million foreclosures in years 2007, 2008 and 2009. That will add 5 to 6.5 million (minus those that foreclosed in 1st half 2007) homes into the inventory over the next 2 and one half years.

I would not be surprised to see the months supply soar to 14 to 15 months. And with homeowners avoiding putting them on the market, and investors temporarily renting out, this housing market sluggishness will persist well into 2011-2012, even with no broader recession.

Home prices reflect local conditions, and it's hard to imagine that many areas will avoid declines of 5 to 10% or more, with some areas seeing more. Additionally, because asking home prices tend to lag the reality, most markets, on an inflation adjusted basis, will not rebound for at least 5 to 8 years.

DaveO said...

Is it just me, or do these NAR senior economists (Lereah and Yun) simply state the obvious after the fact and never offer any insight? Think about it. Where was Lereah 5-10 years ago telling us to invest in real estate because it will be going up tremendously soon? He wasn't. He only told us to invest later on, at the top of the market, after the prices had already run up greatly.

Yun is just as useless. He tells us now, only recently, that real estate will slide, but has only begun saying this only AFTER it has already begun sliding. That's not insight. That's just stating the obvious.

We HPers already know that these two clowns are worthless as far as their predicting abilites. My question to the NAR is this: Have either of these guys ever made any accurate, insightful predictions as far as the housing market is concerned? No? Then why keep them around?

area 51 said...

Lawrence Yun calls bottom!

I hope someone is keeping his quotes so he can be mocked later.

"Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006," he said.

It's funny that for two quarters beyond Q4 2006, home prices are still falling. Am I missing something here?


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