Joe, Homie Momo, but "Interesting" NAR Revision...
http://www.schaeffersresearch.com/commentary/todaysmarket.aspx "This was not the only news made this morning; more came down the pipe thanks to the National Association of Realtors. The Association announced that sales fell 0.1 percent to hit a seasonally adjusted annual rate of 6.80 million in January. While a drop isn't always encouraging, this January's number is 13.7 percent higher than a year ago. Additionally, the real estate group announced a large revision to past data, lowering 2004's estimated sales by nearly 10 percent. Despite this revision, sales trends stayed put. 2004 was still a record year thanks to 6.78 million total sales and 5.96 million single-family sales."
( February 25, 2005) -- Existing-home sales, revised with improved methodology, were essentially flat in January but remained at historically high levels, according to the NATIONAL ASSOCIATION OF REALTORS®.
Total existing-home sales, including single-family, townhomes, condominiums and co-ops, slipped 0.1 percent in January to a seasonally adjusted annual rate* of 6.80 million units from a level of 6.81 million in December. Last month's sales activity was 13.7 percent above the 5.98 million-unit pace in January 2004.
David Lereah, NAR's chief economist, says January home sales were buoyed by the condo sector. "A slight decline in single-family home sales was offset by a record monthly level of condo sales, which just came off its ninth consecutive record year," he says.
Lereah notes this is the first monthly report in the revised existing-home sales series. "NAR took the initiative to update and improve the modeling for the existing-home sales series to more accurately reflect the growth and changes in the housing market," he says.
Monthly revisions have been made back through the benchmark year of 1999, with additional revisions made back to 1989 using improved methodology. In addition to better modeling, some of the changes result from previously overestimating the number of for-sale-by-owner transactions (FSBOs), which have shown a sustained decline.
"These changes help to make the existing-home sales series a better measure of actual marketplace activity," Lereah says. "When the existing-home sales series was created in 1968, condos weren't even on the horizon in terms of an important market share. In fact, we didn't start tracking condos until 1981 after baby boomers started to fuel demand for them in the late 1970s." When it was decided to improve the methodology for reporting home sales, following revisions by the U.S. Census Bureau and with input from the Federal Reserve Board, it was only natural to add condo sales.
As a result of the changes, the series for existing single-family sales was revised downward by 10.6 percent for the benchmark year of 1999 – these changes affect the entire series from 1989 though 2004. For example, single-family sales originally were reported at 6,675,000 for 2004; the improved methodology now shows a total of 5,964,000, still a record. Although data has been downwardly revised, the overall characterization of the resale market in terms of historic comparisons and relative changes are consistent with previously reported data. Major government indicators undergo similar periodic changes.
The national median existing-home price for all housing types was $189,000 in January, up 10.5 percent from January 2004 when the median price was $171,000. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, says strong price growth is being driven by a shortage of homes available for sale. "The demand for homes remains in record territory, but the supply of homes on the market set an all-time low in January," he says. "The growth in home equity is adding to housing wealth and helping the overall economy, yet low mortgage interest rates are keeping homes within reach of buyers in most of the country."
Total housing inventory levels declined 5.8 percent at the end of January with 2.09 million existing homes available for sale, which represents a 3.7-month supply at the current sales pace—a record low.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.71 percent in January, down from 5.75 percent in December; it was 5.71 percent in January 2004. "Aside from a handful of months over the last two years, you have to go back to the mid-1960s to see mortgage interest rates where they are today," Mansell says. January was the sixth-lowest month on record since Freddie Mac started tracking interest rates in 1971.
Condominium and cooperative housing sales accounted for 12.6 percent of transactions in January. Existing condo sales rose 2.3 percent to a record seasonally adjusted annual rate* of 858,000 units in January from a level of 839,000 in December. Last month's sales activity was 22.4 percent above the 701,000-unit pace in January 2004. The median condo price was $203,700, up 15.1 percent from the same month a year ago.
Single-family home resales declined 0.5 percent in January to a seasonally adjusted annual rate* of 5.94 million units from a level of 5.97 million in December. Last month's sales activity was 12.5 percent above the 5.28 million-unit pace in January 2004. The median single-family home price was $186,900 in January, up 9.8 percent from January 2004. (HAHAHA , Yeah.)
The home resale pace in the West rose 0.6 percent to an annual rate of 1.59 million units in January and was 16.9 percent stronger than January 2004. The median existing-home price in the West was $277,000, up 16.4 percent from the same month a year earlier.
In the Northeast, existing-home sales declined 3.5 percent from December to a pace of 1.09 million units in January, but were 11.2 percent above the level in January 2004. The median existing-home price in the Northeast was $231,000, up 9.5 percent from a year ago.
Homes in the Midwest were reselling at an annual rate of 1.47 million units in January, down 5.2 percent from December, but were 10.5 percent above January 2004. The median price in the Midwest was $151,000, up 8.6 percent from a year earlier.
* The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.
Because of the benchmark revisions, data prior to 1999 is not directly comparable, but has been revised going back to 1989 using improved methodology. The separate quarterly track of existing condo/co-op sales has been discontinued.
The monthly revisions for total existing-home sales and existing condominium and cooperative sales go back to 1999. Condo sales also experienced a downward revision—20.7 percent—for the benchmark year of 1999. Condo data prior to 1999 is available only on a quarterly basis, while monthly single-family data has been revised back to 1989. Some revisions are posted in the Research area of REALTOR.org.
Existing-home sales, which are based on transaction closings, differ from the U.S. Census Bureau's series on new-home sales, which are based on contracts or the acceptance of a deposit. In the count of new-home sales, a house can be in any stage of construction ranging from not started to fully complete. The count of existing-home sales is based on completed transactions in which the home usually is ready for occupancy. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample—nearly 40 percent of multiple listing service data each month—and typically are not subject to large prior-month revisions that are fairly common in the new-home sales series.
—NAR
Editor's Note: For more housing statistics, visit NAR's Economic Research Division.
G'morning Joe, This is an uncommonly good read, imo....
Crystal Clear
Mike Hoy February 25, 2005
Let's just assume for a moment that you had a crystal ball; let's also assume that crystal ball was letting you in on its secrets and was revealing to you that certain stocks and certain industries were about to begin a journey that would give you returns of 10-15 times on your investment over the next 3-5 years. What would you do and what would your strategy be?
I have to believe that very few of you would have any doubts as to exactly what your plan of attack would be. You would step up to the plate, invest your money and wait for payday. Without a doubt, you would climb on board and have the ride of your life. Most of you would be able to make enough profit that the dreams you have today would easily be able to be realized at the end of this ride; assuming of course that the money is worth anything.
The important point to this is the fact that you would not allow short term price volatility to stand in the way of the end objective. This is the type of mindset that allows an individual to get from where we are today to where we want to be in the end. We must recognize that we are a very small minority in the huge investment pool. In the end I believe that everyone will want a piece of what we have today. You must remember that the total value of all precious metal companies is roughly one hundred billion dollars. What will this industry be worth when those entities, who possess hundreds of billions of dollars, decide to diversify into gold and silver as a foundation for their reserves, versus holding paper, whose overall quantities, seems to multiply faster than horny rabbits?
I believe that 2005 will be the year that the rest of the world will finally begin to gain an understanding of what economic debt, trade deficits, growth in third world countries, such as China and India, and a falling US dollar are all about. The list can go on and on but I think you see my point. The world is approaching the point in time where the standards that have been accepted as normal for the last three decades are about to undergo a facelift.
The point of all this is real simple; the rubber band has very little elasticity left in it. For three decades the US has had a free ride in comparison to the rest of the world when it comes to playing the game by the same rules the rest of the world has to play by. There has never been any question that the policies followed by this country and others like it, could only end with an outcome other than what our leaders have led us to believe. There is a day of reckoning when the issue of debt and the further creation of debt are called into question.
This is not rocket science, anyone willing to learn the truth, with an open mind, already understands this. Many people seem to be of the belief that the US is different and the events that go on in the rest of the world can't happen here; or those currently in power and making the rules have the ability to dictate their own end, wrong! Not only can they happen here but when the do happen here the reality of the situation is that those earlier events will pale in comparison.
Let us take the recent events in Argentina; there is an Argentine bond due in 2008 with a coupon of 15%. The government is attempting to redeem these bonds for $.25 on the $1.00. Do you understand what this means? To put it bluntly, there are a whole lot of poor investors that are going to get only a quarter of their principal back. Can this be writing on the wall?
Now let's look at the greatest debtor nation in the world; but things are different here. What happened in Argentina can't happen here, can it? Why doesn't Argentina just do what the US does? Why don't they just print more paper? The answer is pretty simple. They can't print more paper because no one wants to own it. Do you see a change in the appetite for foreigners when it comes to the willingness to buy more US paper and hold on to it as a reserve currency? Seems to me that Japan and Italy just issued the US a "very polite Margin Call" dealing with the dollar; in essence they are putting the US on notice. China has made it crystal clear that their tastes have changed. Think about what these dollars are going to be spent on and also the impact their liquidation will have on interest rates. Things are changing and it is crystal clear to those who open their eyes and their minds.
What really blows me away is when I see those in office, who are running the greatest deficits in the history mankind, stand up in front of the cameras and tell the listening public how "fiscally responsible they are." They just don't get it! They have put the citizens of the US between the proverbially "rock and the hard place."
I could carry on for hours about the reasons why we have our problems; but I won't and that is not what this piece is about.
This article is about the fact that those who have our debt are changing their habits and they are going to cash those dollars in and put them to work where the outcomes will benefit their own best interests rather than the interests of the US. We see this in the fact that China is already spending dollars to buy the natural resources to fund their growing and insatiable needs. They are entering the 21st Century and acquiring the assets and the way of life that the "Smith's and Jones's" have accepted as normal. This new way of life is going to consume a whole lot of natural resources, which simply do not exist in the necessary quantities to satisfy this growing demand. As a result, these countries that have amassed trillions of dollars are beginning to spend them for their own well being. They are beginning to take the steps necessary to guarantee their own needs; who do you think is paying for it and who do you think they are trying to secure the future consumption of those assets from? This is the first step.
The next step will be to exchange those investment dollars, that just seem to increase in numbers and decrease in value, into an asset that will hold its value under times such as these. Historically, gold has not been an investment to make money but to preserve the value of ones assets. The fact that gold has a limited supply, versus the unlimited expansion of fiat paper, is the reason why gold and silver has their best days in front of them. Until I can see a point in time where are leaders are able to show me that they are willing to take the steps to balance our checkbook and encourage the citizen to save I will have nothing but contempt for our current policies and a steadfast desire to own investments in the precious metals.
A monumental event has recently occurred with the Governors of the Mexican Provinces unanimously stepping up together and backing the re-monetization of silver. This is very important and the consequences of this act cannot be seen as anything other than the beginning of a new era. You might think of this as the first "domino." This is a huge step and again it is a crystal clear signal that the mistaken ways of the last three decades are about to revert back to the true norms of fiscal responsibility.
What does all this mean? Again this is a very simple question to answer. What it means is that we are in the infant stages of this bull market in precious metals and natural resources. We must realize that our numbers are miniscule in relation to the where they will be in the years to come. I always like to compare it to a room full of people where all the people are on one side of the room and I am alone on the other side. I have no doubt that the exodus from their side of the room to mine is on the way. It is like the first lifeboat on the Titanic being filled with lucky survivors. Very few of them realized, at the time, the urgency of having a seat in that boat. Very few of the passengers believed that the "unsinkable Titanic" could sink! Kind of like the NASDAQ in 2000.
The fundamentals behind natural resource ownership become clearer each and every day. What we must realize is the fact, in the end, that we are all individually responsible for the decisions and investments that we make and with proper due diligence and work we can make intelligent and informed choices; or suffer the consequences.
When I reflect on the circumstances and events surrounding my investments I know that the fundamentals have never been better or more obvious. I believe the value presented in many companies today, as a result of successful programs, possess value far in excess of what the current market price reflects. I follow the bulletin boards of a couple of companies and I am amazed at the whining and complaining that goes on. To be honest I have to confess that I love it because I know from past experience that this is pure opportunity.
Now let's go back to that crystal ball; after briefly discussing the timely fundamentals that currently exist in the world today and understanding that the numbers of investors, who are even remotely in touch with these fundamentals, are miniscule, at best; do you really have any doubt about the prospects for large capital gains in the future? If the future of the precious metals and natural resources is as bright, as I believe it is, then, I am also forced to believe that the future prices of these natural resources will be an extension of the highs that were reached in the late 1970's and early 1980's. If this is correct then I believe the initial assumption of 10-15 times on your money may be conservative in this unfolding bull market.
Many of you may think I am nuts to think this way but common sense and logic leave me no choice. The games that have been played for years with hedge funds, derivatives, and companies like Fannie and Freddie are about to end. I believe hyper-inflation will be our leader's answers to these problems and in the end that will only make matters worse. I will be correct in my assumptions simply because there shall be no viable alternatives for investors to flock to for safety.
As the urgency to liquidate dollars and real estate becomes crystal clear, down the road, the only question that one needs to answer is where is the money going to go? The precious metals and natural resources will win by default. There will be no other alternatives! The question of alternatives exist today, but as time moves forward each of these alternatives will be eliminated as viable, do to the unfavorable circumstances that will surround them; such as rising interest rates.
I find it very difficult to comprehend that the total value of all gold and silver companies is less than $100,000,000,000. This total is 1/3rd of Microsoft's Market Cap. and 1/4th of GE's Market Cap.; think of the funds that will become available to enter the precious metals markets and the natural resource markets! Think of all that money being spread around the few companies in the metals and resource sectors. Still think I'm nuts?
Do you begin to see what that crystal ball is showing you? Do you really think that these people who are trying to trade the precious metals and precious metals stocks really have a clue of the opportunities they will forfeit as a result of being caught on the sidelines or sold out too early when these stocks take off? If you could understand this, do you really think that you would be concerned with the current prices of these stocks? Do you think you would be concerned with anything other than what it takes to increase the size of your position? This is how I view weakness and I love it. I have been able to take advantage of special situations, and I am thankful for the opportunity. The only question that I continually ask myself is the question; "am I in the right stocks?" This is the toughest of all questions and only time will give me the correct answer to that question.
If you all remember, my number one position and savings account is Novagold Resources ng. I feel pretty good in knowing that we have just begun the next leg of this great bull market in the metals and natural resources and my number one position is performing as though it was steroid enhanced.
Remember, do your homework; read, learn absorb as much knowledge as you can about the companies that you own. There is no substitute for knowledge.
For those of you who believe that bonds will be a place to hide; then I want you to answer one question I have about interest rates. When individuals are financially moving backwards; do the creditors lower their interest rates or do they raise them? I want you to show me a credit card company that lowers your rates if you miss a few payments because your financial position has changed for the worse; good luck!
As far as nations go, do not forget Argentina; that 15% coupon at $.25 on the dollar is a current rate of return of 60%. If you think that interest rates will fall in the next big recession then I have news for you. Of course the powers that be will hyper-inflate until there is no tomorrow and I believe this will be our future for several years.
Yeah, I believe the long term future is "Crystal Clear" and the short term price fluctuations in stock prices should be viewed as long term opportunities.
For those of you on my e-mail list you should have received an e-mail article from me in the last few days; if you did not receive the e-mail then you need to reply to the e-mail address below as there is a problem with your current e-mail address on my list. Include your proper e-mail address; if you would like to include your name, phone number and the state of residency I would appreciate it. I plan on getting to know as many of you as I can as I believe 2005 offers a wealth of opportunity for those who want to take advantage of the opportunities at hand. I am very excited about what my "Crystal Ball" is telling me.
Some central bank(s) really poured 30 billion in that last two weeks to rescue the US dollar and bond. No wonder Korea was screaming "Enough" earlier this week.
The narrowing of the risk spread between ten year treasuries and corporate low grade bonds continued to shrink. This is indicative of a serious warped indicator, or we have reached economic nirvana. I think the broken indicator is correct.
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