a Look at the Financial Marketing Industry

Gang,

It’s been a little while since we have had any reports that are worth chewing on. We have one today that is worth a look. As always in these little letters I send the link to the source so you can go and look yourself to see if you have any other conclusions.

New Housing Sales:
Source: http://www.census.gov/const/newressales.pdf
The graphs that I have attached are courtesy of CalculatedRisk.com

This report is very useful and probably fairly accurate as new inventory is not swept under the rug like much of the REO inventory that our good friend Johnny Lender does not want to report and show further bleeding.

You can have a look at the report and see that new home sales levels are roughly at the same level they were in 1963. This is frightening as the overall size of the pie today is much larger than it was in 1963, so to be at the same level is to say the least catastrophic.

Since housing starts have fallen off a cliff over the last 12 months the percentages will appear to be a bit better over the following months but we can’t fooled by it. There is no good news anywhere in this report. New home sales are not the leading indicator of health as most people think, they are a lagging indicator, especially now since builders can’t build new homes and compete with the prices of existing homes.

This report confirms what I have been saying for the last 2 years. The real estate market is the REO/Foreclosure market. I don’t see the new home sale aggregate numbers improving for the next 24-36 months. This is good for our business as we will continue to focus on the late data. The world of builders survives on credit and there is next to nothing available for builders right now. In this next year the bulk of the inventory will be further absorbed in the REO monster as banks continue to call loans on builders and take the collateral back and builders continue to default.

lenders taking over the liquidation?

Headline predictions: At some point soon we start to hear about lenders taking over the liquidation of new homes since the builders will no longer have a hand in that inventory. I don’t know if this will be through the normal REO channels. I suspect that it won’t. There will be further erosion in the new home pricing. At some point there will be capitulation and the assets will attempt to be liquidated like everything else in the cycle. There is more to the story but

I need to do a little more research before I can make a hard predictions and I simply don’t have the time at the moment. I will keep you posted.

This will not have a significant impact on our financial marketing business; it will just accrete to already massive snowball that is rolling.

Always full of good news J

Brad Dawson
Senior Consultant
Vanzan Incorporated
Desk (949) 309 2853
Fax 800 609 3608
Toll Free 800 884 8312 X236

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