Consumer Confidence - You're not buying the "recovery" spin and who is buying the houses?

With all of the main stream media economic recovery is here cheerleading rah rah, one would have expected consumer confidence to increase. But, guess what, it didn't.

The Conference Board Consumer Confidence Index™, which had retreated in June, declined further in July. The Index now stands at 46.6 (1985=100), down from 49.3 in June. The Present Situation Index decreased to 23.4 from 25.0 last month. The Expectations Index declined to 62.0 from 65.5 in June.

consumer confidence July 2009

Which leads to this second headline, New Home Sales Jump 11%. The Washington Post claims most of these sales are to investors.

The median price of a new home dropped 12 percent from June of last year to June of this year. New homes that are being sold are not being bought by you and me; they are being bought by investors because prices are rock-bottom and interest rates are still low (5.55 percent).

Now, every housing market has and needs investors or, as they're pejoratively called, "speculators." But they alone will not make a housing market healthy. To make it healthy, it needs qualified buyers who are confident enough in their continued employment status and the overall quality of the economy to make the biggest investment of their lives.

Update: Calculated Risk has a very interesting post showing when seasonal adjustments are made housing prices declined.

Case-Shiller reported that prices fell at a 2.5% annual rate in May (SA).

and also predicts a steep price decline in the fall.

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I am starting to do something that I have learned

from coming to EP. Read more deeply. I look at the press release and Census Bureau numbers on residential sales. I found this glaring item:

This is 11.0 percent (±13.2%)* above the revised May rate of 346,000, but is 21.3 percent (±11.4%) below the June 2008 estimate of
488,000.

Two things: the margin of error is greater than the increase and what does that asterick refer to:

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

I should have known better to than just rely on what was in the corporate media. Thanks EP.

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What is the driver behind the drop in confidence?

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Oh and real estate prices released today.

Despite the positive headlines in traditional media outlets, the seasonally adjusted number went down. I just read an interesting post on CR about what happened today - very interesting reading.

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thanks for the CR link

Yeah, thank god for the blogs and looking at the nitty gritty, plus willing to be mistaken. You'd never guess that housing might be bouncing along a bottom or that prices can continue to decline from reading the MSM. But it's just another point to check our P's and Q's when writing, it's really easy to make mistakes.

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We're Buying Houses

To answer your question.

People like myself are buying houses, as a matter of fact in my close group of friends at least 6 have bought a house/closing on a house in the last 4 months.

In our area, houses are selling at about a 40% discount off the top. Your area, I don't know and can't speak for.

We: are mid-20s, have useful college degrees and have well paying jobs. We've been saving up for this for the last 1-2 years, we have the down payment and excellent credit.

What we're buying: newer built, mid to low range priced houses and condos.

But OMG the world is ending?: no, things will be fine.

You're just speculators: We're not trying to make it rich by selling these houses in a year or two. No, we plan to live here. Interest rates are great, hell I got 4.75% in Feb., and I'm fairly happy with that. My mortgage+taxes is about what rent on my place would cost .

But you'll lose your job, DOOOOM?: no, things seem to be just fine. I've known 3 people lose their jobs as software developers in the last 4 months, all found new jobs within a month and at better pay. Besides, we got houses that are easy to afford, and we have emergency funds to last for months.

PS: There are many like us, try and shop around, you'll hear this all over the place.

I hope this answers some of your questions.

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yes it confirms what we just wrote

A. You're oblivious to the plight of many Americans
B. Cannot read the unemployment statistics or the foreclosure rates
C. Houses are being bought by speculators, very similar to the flippers in 2000-2008, some of whom went bust like the last to pull the Russian Roulette gun.
D. Trying to claim you will live in multiple houses is most interesting. Sure thing.

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