obama: Consumer Confidence: The Tail Is Wagging The Dog - 07/10/09 05:04 AM
On May 26th, as a result of consumer confidence surging despite a deteriorating job market and eroding home values, I arrived at the conclusion that the stock market rally was the reason for the increase in consumer sentiment, there was no other explanation. 
The flaw in this "confidence" was of course that the stock market rally had no economic basis, it was built on sand.  The source of the rally was hope rather than an actual healing of the economy.  The tail was wagging the dog.
Well, here we are on July 10th and the market looks to be returning to low tide.  Not surprisingly the … (5 comments)

obama: Study: Distressed Commercial Real Estate Doubles - 07/09/09 09:35 AM
According to a bloomberg article written by David M. Levitt based on a study by Real Capital Analytics Inc., $108 billion worth of commercial real estate is now in default, bankruptcy, or foreclosure.
The report cites that at the end of June there were over 5,300 properties in distress.  This is more than twice the number identified at the end of 2008.  According to a report put out by the AP, banks held approximately $1.8 trillion in commercial real estate loans.  Jon D. Greenlee, the Federal Reserve's associate director for banking supervision and regulation, said that 7 percent of those loans … (3 comments)

obama: Jim Cramer: "Obama Hurting The Economy" - 07/09/09 04:11 AM
OK, Jim, we agree on this, "Obama Hurting The Economy".
That was the title of one of Cramer's most recent blog posts on CNBC.com
Cramer writes, "Businesses won't start hiring until we get two of three economic imperatives, Cramer said: people need to feel their jobs are stable, their home prices are stable and that stocks are going higher".
I agree with all of this which I why I have suggested that the Obama administration is dropping the ball by not doing three things.
1.)  Cutting taxes for all income brackets, including small businesses.  Businesses are suffering from a loss of … (9 comments)

obama: Housing Affordability, Mortgage Rates, And Home Sales - 07/03/09 01:21 AM
The NAR recently published their May Housing Affordability Index which showed that while affordability did drop from a record high 178.8 in April to 171.6 in May, it remains well above historic norms.
Prior to this year, the highest housing affordability index reading was 147.9 in 1973.  The first five months of 2009 the index has averaged 174.72.
To get some perspective on the current index for 2009 and the relationship to existing home sales, here is what the housing affordability index has looked like over the past couple of years according to the NAR:
Affordability Index / Mortgage Rates / Existing … (0 comments)

obama: The "Real" Unemployment Rate Rises To 16.5% - 07/02/09 01:46 AM
The Bureau of Labor Statistics announced today that the U-6 unemployment rate rose to 16.5% as a result of 467,000 jobs being lost in June.  The number of June job losses breaks a trend of four consecutive months of job loss declines.  The advertised unemployment rate rose to 9.5%.
The U-6 unemployment rate includes three types of workers that are not part of the more publicized U-3 unemployment 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 … (6 comments)

obama: Warren Buffett: The Economy Is In "Shambles" - 06/25/09 12:05 PM
Apparently Warren Buffett didn't get the memo from Ben Bernanke, Jim Cramer, or Larry Kudlow about the "green shoots" in the economy.
"I wasn't seeing anything.  I had a cataract operation on my left eye about a month ago and I thought maybe now I'll be able to see green shoots.  We're not seeing them."
During a recent interview with CNBC's Becky Quick, Buffett said, "Well, it's been pretty flat.  I get figures on 70-odd businesses, a lot of them daily.  Everything that I see about the economy is that we've had no bounce."
His near term prediction for the economy is not … (14 comments)

obama: The White House As An Economic News Source? - 06/22/09 08:43 AM
According to Reuters, Robert Gibbs, the White House press secretary said today, "I think the president has said this, and I would certainly say this, I think you're likely to see unemployment at 10 percent within the next couple of months."
Yeah, like NEXT month.
Thank you Captain Obvious.
That would have been great information to consider several months ago when you projected a peak unemployment rate of 8%, a number that you have based a lot of your economic and housing "stimulus" projections off of.
Currently the advertised unemployment rate sits at 9.4% in May, in April it was 8.9%.  There is a … (9 comments)

obama: Washington's New Housing Plan: Inflation - 03/20/09 04:03 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)

obama: Investors Eligible For Refinancing Through Obama's Housing Plan - 03/16/09 10:20 AM
A couple of days ago I wrote a post about how Obama had drawn a line in the sand between investors and homeowners when it comes to housing and personal responsibility.  Apparently that line has become blurred, and that's a good thing.  Just because a person chose to make an investment in real estate, does not make them any less responsible than a person that bought a home they could not afford. 
Now clearly there can be a debate as to whether or not the government should be offering these types of refinances for anybody, and I  can think of a couple of … (1 comments)

obama: A record 11.18% of mortgages at least 30 days late - 03/05/09 12:49 PM
According to the Mortgage Bankers Association and an article put out by Reuters, a record 11.18% of one to four unit residences were at least 30 days late on their mortgage payment.
And while some people, and I'm not one of them, may find some solace with Obama's $275 billion sweeping housing and mortgage plan, it is worth noting that despite previous loan modification efforts, nearly 60% of loans have re-defaulted within 8 months after having been modified, and that was before unemployment hit critical mass.  Why would this plan be any more successful?
What we are going to see is that … (45 comments)

obama: Obama's Housing Plan Unveiled - 03/04/09 10:59 AM
The free markets are an interesting thing, they actually work.  Sometimes they need a little poking or prodding from the government, other times common sense prevails.  But more often than not, the free market will usually find a solution to a problem and it is going to be a solution that rewards hard work, sweat, innovation, and investment; principles that America was built on.  Unfortunately, it doesn't appear that the free markets are going to be allowed to work anytime soon.
The Obama administration unveiled today their new $275 billion housing "rescue" plan which represents yet another massive government intervention into our economy and markets. 
(7 comments)

obama: Underwater mortgages on the rise - 03/04/09 04:09 AM
A couple of months ago I had written a post about the number of homes that are under water or have "negative equity", essentially the home is worth less than what is owed on it.  Well, today, Reuters is reporting that according to First American CoreLogic, nearly 1 in 5 or approximately 8.31 million properties were a part of this epidemic at the end of 2008.  This number is up 9% or about 700,000 homes from the end of September.
The report goes on to say than an additional 2.16 million properties could go underwater if home values fall by another 5%.  Based on the current supply … (3 comments)

obama: Mortgage Interest Deduction Under Fire - 02/28/09 06:14 AM
Luke Mullins with U.S. News & World Report is reporting on his blogthat the Obama administration is proposing to limit the mortgage interest deduction for households in the 33% and 35% tax brackets.
The Wall Street Journaldetails the plan as, "Households paying income taxes at the 33% and 35% rates can currently claim deductions at those rates. Under the Obama proposal, they could deduct only 28% of the value of those payments".
Not surprisingly, the NAR and President Charles McMillan are up in arms.  In a recent email McMillan wrote, "NAR is launching a multiphase plan of action to eliminate this provision … (11 comments)

obama: Obama's Housing Plan = Massive Government Intervention - 02/27/09 10:36 AM
If the events over the past couple of weeks have left any shadow of doubt that the era of big government intervention is upon us, Obama's housing plan will put that to rest.
According to an article put out by Reuters, Obama's housing plan includes two massive and sweeping initiatives that will change the landscape of the housing and mortgage market.
The first part of the proposal is to allow bankruptcy judges to write down loan principal and modify loan terms for homeowners that claim bankruptcy protection.  Considering how far home values have fallen in some markets, this could be a staggering provision.
The second part of Obama's … (4 comments)

obama: Consumer confidence at record low, literally - 02/24/09 05:56 AM
According to Reuters, the Conference Board announced that consumer confidence cratered from 37.4 in January to 25 this month; this is the lowest reading on record since they began tracking the data in 1967.  The expectation was for a reading of 35.5.
The amazing part about this report was that only 8.7% of consumers think that business conditions will improve within the next six months, that is saying something.  The near future looks very bleak according to most Americans, I would tend to agree with them.
The reason is pretty simple, the speed of the deterioration in the broader economy and asset classes, namely stocks and real estate, has … (3 comments)

obama: Round 3 for AIG and Citi? - 02/23/09 10:48 AM
If the size and scope of the current financial crisis was at all uncertain or ever in doubt, the past couple of days of news headlines should have made things very clear, we are going to need a bigger boat.
There are two major breath-taking headlines that should have caught your attention.
First, AIG, which according to CNBC's David Faber, has already received $150 billion in loans from the government which already owns 80% of the now defunct insurance company, is looking for a third loan from the government in order to "keep operating after next Monday, when it will report the … (5 comments)

obama: Part II: What does a bond market strategist know about real estate? - 02/20/09 08:40 AM
A couple of months ago Tony Crescenzi, a bond market strategist with Miller Tabak + Co., wrote a guest blog on CNBC.com about how the decline in new home inventory was a "bankable top-down theme for 2009".  His suggestion was that if you can eliminate the construction of new homes, natural population growth will occur and as a result home inventories will come down and the market will be well on a road to recovery.
What Tony didn't acknolwedge in his blog post was the foreclosure epidemic that we will continue to experience over the four years which is going to add to the … (2 comments)

obama: Where is the bottom? - 02/20/09 02:52 AM
I think the question on every American's mind is, where is the bottom, when are property values going to stop falling?
Of course, there is no easy answer because all real estate is local, but the truth is, all local markets are exposed to a lot of the same headwinds like tight credit, job losses, weak consumer confidence, and foreclosures.  Every market is up against these forces to some degree and as we are seeing, each of these forces is intertwined. 
As Americans lose their homes to foreclosures, property values fall.  As property values fall consumer confidence and consumption declines and credit contracts.  … (1 comments)

obama: CNBC's Diana Olick on Real Estate Investors - 02/19/09 04:40 AM
I have written before about the difference between real estate investors and speculators.  But every now and then it is nice to have your opinion vindicated by somebody else.  In this case it is CNBC's Diana Olick when she made a recent blog post about real estate investors.  The title was, "Not all real estate investors are irresponsible".  It was written in response to President Obama's speech yesterday when he said about his housing program, "It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell."
First of all, to set … (4 comments)

obama: Obama's Housing Plan? - 02/18/09 07:42 AM
According to a Reuters report, the details of Obama's housing plan are to help 9 million homeowners at a cost of approximately $275 billion.  Here is a link to the four page document.  It is estimated that $75 billion will be spent in "subsidizing" mortgage payments while another $200 billion will be allocated to the Treasury to purchase preferred stock in both Fannie and Freddie, doubling their stake in each, which will presumably allow the government to modify a greater number of loans.
The big question however, is how is what Obama is proposing actually any different than from what has already been attempted on … (6 comments)

 
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Mark MacKenzie

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