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its the housing market stupid: Joe Biden: "We misread how bad the economy was" - 07/05/09 03:34 PM
Agree or disagree with the politics of Joe Biden, the one thing that most people, including myself, like about Biden is that he doesn't pull any punches.
And that was certainly the case when he said this week that, "We misread how bad the economy was".
Indeed, Washington has swallowed their economic compass. And it hasn't just been the Democrats. Let's not forget the "token" stimulus checks that the Bush administration mailed out in the Spring of 2008. Or the $7,500 first time home buyer tax credit/loan that was intended to stimulate the housing market out of a depression. There … (9 comments)
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its the housing market stupid: FHA Defaults on The Rise - 04/07/09 08:18 PM
According to an article on CNBC.com, "7.46 percent of FHA-insured loans were "seriously delinquent", up from 6.16 percent a year earlier."
Additionally, FHA foreclosures, "totaled 39,687 in January, up 22 percent from the same period last year."
Here is the problem, despite all of the efforts by the Fed and Congress to "stimulate" the housing market through loan modifications, foreclosure moratoriums, first time home buyer tax credits, and ridiculously low mortgage rates, the housing market is no better off than it was last year. In fact, based on these FHA delinquency numbers as well as an estimated 11.18% of all mortgages being at … (34 comments)
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its the housing market stupid: Market Price - 04/07/09 09:02 AM
A couple of days ago Spencer Rascoff with Zillow wrote a postabout why the Case-Shiller home price index along with NAR's index were both inaccurate representations of the market.
The point of Mr. Rascoff's post was, "Bottom line: methodological flaws in the median sale price and the Case-Shiller Index make them appear overly negative, which is bad for all of us".
There are two points of difference that I have with Mr. Rascoff's analysis of these indices; the first is the methodology, and the second is the philosophy.
First, in terms of methodology, the NAR and the Case-Shiller use differentdata sets to determine the percentage change in home … (1 comments)
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its the housing market stupid: The "Real" Unemployment Rate Jumps To 15.6% - 04/04/09 10:48 AM
While all of the media points to an 8.5% unemployment rate in March according to the U-3 labor report data from the Bureau of Labor Statistics, the number you won't hear anybody talking about is the U-6 unemployment number which jumped from 14.8% to 15.6%.
The U-6 unemployment number includes three types of workers that are overlooked by the U-3 number:
1.) Marginally attached workers - people that want a full time job, have looked for one in the past, but are no longer looking for work.
2.) Discouraged workers - those that have given a job market reason for not looking for … (46 comments)
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its the housing market stupid: "Bailed-Out Banks Eye Toxic Asset Buys" - 04/03/09 10:45 AM
"Bailed-Out Banks Eye Toxic Asset Buys". This is the headline from a report put out by Reuters today talking about how, "U.S. banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury's $1 trillion plan to revive the financial system".
Time out.
I want to make sure I understand what is going on here because I didn't go to a fancy Ivy League school or work on Wall St.
Back in October we were told by then Treasury Secretary Hammering Hank Pauslon that we needed … (8 comments)
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its the housing market stupid: Where Have All The Buyers Gone? - 04/02/09 02:29 PM
The NAR recently published their annual report on home buyers which are broken into three categories, primary, vacation, and investment.
The report revealed declines in all three categories when compared to 2007, no surprise there. Interestingly though it is the percentage declines in the types of home buyers that reveal why home sales were so sluggish in 2008.
Specifically, vacation home sales were down 30.8% in 2008, investment-home sales were down 17.2%, and primary residence sales declined the least at 13.2%. In other words, the biggest percentage decline in home sales in 2008 was due in large part to the second home (vacation and investment) market. Admittedly, it is worth … (5 comments)
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its the housing market stupid: Pending Home Sales Off Of Their Record Low - 04/01/09 04:02 PM
The NAR published their monthly pending home sale index which showed a 2.1% increase in February from the record low that was set in January. Amazingly, Wall St., desperately clinging to any sliver of good news, rallied today in part due to this report.
The perspective that often times gets lost in all of the headlines is that the current index reading of 82.1 is still the lowest reading in over a year and it is still down -1.4% from last year. This despite the fact that housing affordability continues to set new records.
The misunderstanding that a lot of people … (3 comments)
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its the housing market stupid: Mortgage Purchase Applications Indifferent to Historic Rates - 04/01/09 12:33 PM
The Mortgage Bankers Association published their weekly mortgage application survey which showed that mortgage purchase applications increased just 0.1% despite the 30-year fixed rate mortgage hovering at 4.61%, the lowest on record.
I have written about it several times before, the housing market is no longer being negatively impacted by housing affordability. And as a result of this, the declines in mortgage rates that we are seeing which are a product of the $1.25 trillion that the Fed has invested in mortgage backed securities, are unlikely to have a meaningful impact on demand for real estate.
The problem is that Washington is still … (2 comments)
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its the housing market stupid: The Price Tag For The Credit Crisis: $10.5 Trillion and Counting - 03/31/09 05:48 PM
CNNMoney.com is reportingthat the price tag and allocations for the current financial and economic crisis has already exceeded $10.5 trillion in spending, guarantees, and loans since December of 2007; and that number does not account for the latest legacy "don't call them toxic" asset plan that will be in excess of $600 billion.
This spending fiasco has turned into a modern day Brewster's millions. Only that instead of Richard Pryor not being able to own anything with the $30 million he needs to spend within 30 days in order to inherit $300 million from his long last Uncle, the government needs to spend their money without … (4 comments)
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its the housing market stupid: Home Prices Fall 19% From Last Year - 03/31/09 12:21 PM
According to article by Reuters, Standard & Poor's/Case-Shiller is reporting that home values fell -19% in January from last year, this is the largest year over year decline on record. In other words despite all of the efforts by the government, home value losses are actually accelerating.
All 20 of the metro areas that are included in the report showed a decline in home values from last year.
Additionally, home values for the 20 metro index are down 29.1% from their peak in the second quarter of 2006.
Ordinarily I don't put too much stock in past appreciation because it represents only what happened last … (3 comments)
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its the housing market stupid: The Future of Real Estate: Zombie Homeowners - 03/29/09 02:12 PM
As home values continue to decline and government efforts continue to grow in order to keep families in their homes, the landscape of homeowners is beginning to look more and more like zombies.
According to wikipedia, the term zombie bank was originally coined by Edward Kane in 1987 and describes the phenomenon in which a, "financial institution with an economic net worth that is less than zero, but which continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support."
Translated into the housing market, the number of people that find themselves under water (owing … (5 comments)
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its the housing market stupid: Bank of America to Extend Sponsorship With Yankees - 03/28/09 03:04 PM
The AP is reporting thatBank of America is going to extend their sponsorship with the New York Yankees for another year...which I am sure when turn into a multi-year deal after the media scrutiny of banks and Wall St. firms fades away but probably before Bank of America has actually repaid all of the TARP money that have received.
I have three problems with this.
1.) Bank of America has already been the recipient of $45 billion in tax payer money (TARP) over the past couple of months. Is it really appropriate to continue to spend money on image or brand marketing in light of this?
… (3 comments)
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its the housing market stupid: New Home Sales Off of Record Lows - 03/26/09 11:49 PM
The Census Bureau is reporting that new home sales for February increased 4.7% from January to a seasonally adjusted pace of 337,000.
Additionally, the inventory of unsold new homes decreased -2.9% from last month to 330,000.
The result is that the month's supply of new homes decreased -5.4% from last month to a 12.2 month supply.
And while these recent numbers are an improvement from the previous month, it's kind of like Julio Lugo finally getting a infield base hit after an 0-24 streak when the Red Sox are getting blown out, it's important to keep a perspective on the data. Specifically, how does it compare … (3 comments)
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its the housing market stupid: Mortgage purchase applications indifferent to lower rates - 03/26/09 01:05 PM
The Mortgage Bankers Association released their weekly mortgage purchase application which showed that despite the average 30-year fixed rate mortgage plunging from 4.89% to 4.63% (the lowest on record for the survey since 1990), the seasonally adjusted purchase application index only increased 4.2% from 257.1 to 267.8.
To give this 267.8 seasonally adjusted purchase index some context, during the week of November 26th of 2008 when the average 30-year fixed rate mortgage was 5.99%, the purchase index was 261.6. In other words, despite the 30-year rate being nearly 1.4 points lower today than it was the last week of November of 2008, there is virtually … (2 comments)
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its the housing market stupid: Existing Home Sales Report: The More Things Change, The More They Stay The Same - 03/23/09 12:38 PM
The NAR published their February existing home sales report today. It showed that home sales were up 5.1% from last month to a seasonally adjusted rate of 4.72 million. Listing inventory was also up 5.2% from last month to 3.798 million units. The result is that the month's supply of housing currently stands at a 9.7 month supply, which is exactly what it was in February of 2008. The only difference being that the median home value today is worth -15.5 less than it was last year. Do you see the problem?
Despite loan modifications efforts, lower mortgage rates, increases in housing affordability, first … (6 comments)
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its the housing market stupid: Geithner's book report is finally done - 03/23/09 08:54 AM
After weeks of anticipation and amid plenty of skepticism, Tim Geithner's and The Treasury's seven page public-private investment program has finally been published.
I have three observations.
1.) Is this program that could entail using up to $1 trillion worth of tax payer money in the form of government guarantees and incentives even necessary? After all, Citi along with several other major banks have announced that they have been profitable this first quarter. If they are so profitable, why do we need to do this?
2.) The government will answer that by removing these assets from the banks balance sheets, the banks will increase their … (17 comments)
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its the housing market stupid: Housing Affordability vs. Housing Values - 03/21/09 05:24 PM
With so much focus on making housing affordable, has everybody forgotten about considering the impact that falling home values have on the homeowner and the broader economy?
For those of you keeping score at home, housing affordability is currently the highest on record when you account for mortgage rates, median home values, and median incomes. In 1973, when the NAR first began tracking housing affordability, the composite index was 147.9. Never since 1973, in over 3.5 decades, has housing been as affordable as it was then...until now when the composite index hit 166.8. And yet despite this record for housing affordability, the Fed … (3 comments)
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its the housing market stupid: Bernanke Sending Mixed Messages - 03/21/09 04:46 PM
It was only less than one month ago when Federal Reserve Chairman Ben Bernanke was quoted as saying, "Affordability is not the issueit was a few years ago" in reference to the housing market. The comment was said in the context that the Fed had recently purchased $500 billion worth of mortgage backed securities, housing affordability was at a record high, and yet despite this, demand for real estate was deteriorating.
Now, here we are, not even 30 days later, and the Fed has agreed to purchase an additional $750 billion worth of mortgage backed securities in an effort to plunge mortgage rates further. Am I missing … (2 comments)
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its the housing market stupid: Washington's New Housing Plan: Inflation - 03/20/09 11:03 AM
If lower mortgage rates and first time home buyer tax credit's don't work, and they are showing they have not, it appears that Washington's backup plan for the housing market is inflation.
Between Obama's housing plan of $275 billion and now the Fed's recent move to purchase an additional $750 billion worth of mortgage backed securities on top of the $250 billion they agreed to purchase a couple of months ago, Washington has spent over $1 trillion on "housing" in just the past month. And that doesn't include $700 billion for TARP or Obama's $787 billion "stimulus" plan.
The end result of all of this is … (14 comments)
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its the housing market stupid: Is The Fed Taking After Washington? - 03/18/09 05:42 PM
With due respect to Federal Reserve Chairman Ben Bernanke, he has been a very effective steward by navigating our country through this banking and economic crisis. Without certain actions by the Federal Reserve over the past six months, the financial and corporate landscape would have likely been swept away when this storm made land-fall in September of 2008.
Now, with that being said, I need to question the Fed's decision to purchase $750 billion more worth of mortgage backed securities after already agreeing to purchase $250 billion earlier this year. In all, this is a commitment of $1.25 trillion. The reason this is a … (8 comments)
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Mark MacKenzie
Phoenix,
AZ
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Mark MacKenzie Real Estate Planning
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