Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Next Bailout CandidateAnd the winner is...The Federal Housing Administration (FHA)! Lest it be forgotten, as the article duly notes:The FHA and the government-sponsored housing agencies Fannie Mae and Freddie Mac currently provide about 90 per cent of all new mortgages in the US housing market. From The Financial Times: Defaults pose risks to US housing agency By Saskia Scholtes in New York Published: November 12 2009 21:12 | Last updated: November 12 2009 21:12 The Federal Housing Administration, the government agency that insured $360bn of US single-family mortgages last year, said on Thursday that its insurance reserves had fallen below its congressionally mandated threshold to their lowest level ever. Amid depressed house prices and mounting losses on insured mortgages, the FHA's capital reserve ratio, which measures reserves after accounting for projected losses, fell to 0.53 per cent in the 12 months to September 30--well below the 2 per cent cushion it is required by Congress to maintain. Last year its capital ratio stood at 3 per cent, and it was 6.4 per cent in 2007. Rising defaults on FHA loans have prompted fears that the agency will need a taxpayer bailout. Defaults on FHA-backed loans reached 8.24 per cent in September--up from 8.1 per cent in August and 6.1 per cent a year ago. Shaun Donovan, secretary for housing and urban development, whose office oversees the FHA, said the economy was worse than housing officials had expected. He projected that claims against the insurance fund would be higher than forecast and said action would be needed to shore up the agency's reserves. The FHA's total reserves were more than $31bn, or more than 4.5 per cent of the insurance it had written, the agency said. Mr Donovan said that in almost every economic situation examined in an actuarial study, the FHA still had enough reserves to cover projected claims on outstanding loans. Read the rest of the article Labels: Fannie Mae, Federal Housing Administration, financial crisis, financial crisis bailout, Freddie Mac, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Crisis Impact on US CitiesFrom The Financial Times. Worthy of note:Because of assessment cycles, for example, it often takes several years for city property taxes to reflect changes in property values. For this reason, cities will feel the deeper effects of the recession beyond 2009, with the worst years being 2010 and 2011, the survey predicted. Recession hits US cities' finances By Nicole Bullock in New York Financial Times Published: September 1 2009 13:44 | Last updated: September 1 2009 13:44 The finances of US cities continue to deteriorate as the ripple effects of a national recession reach local revenues, according to research. For 2009, 88 per cent of city finance officers said their cities were less able to meet fiscal needs than in 2008, amid declining house values, restrictive credit markets, slowed consumer spending and rising unemployment, a survey conducted by the National League of Cities and released on Tuesday shows. Read the rest of the article Labels: employment, financial crisis, fiscal policy, housing market, meanest cities, municipal finance Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Weekly Indicator Outlook/Monday's IndicatorsFirst, setting the tone for market performance as the week starts is a Shanghai stockmarket loss of no less than 6.7% on Monday, which has led Asian and European (but not British, as of 10.30 am EST--3.30 pm GMT) stocks lower.Japanese Industrial production rose 1.9% in July, raising the string of consecutive rises to 5. But critical export growth is lacking, and the figures, viewed from a year-to-year perspective, remain quite depressed. The fact that production continues to grow robustly, while exports and imports decline, or, at best, level off throughout the region, makes me quite concerned that the much-remarked-upon post-Lehman inventory restocking will be seen to have overshot on the upside in the next few weeks. One can only hope that the fact that the swingeing declines have led to such meager advances, viewed from a yearly perspective, will keep inventory restocking aligned to a much-reduced capacity of consumers to buy, and businesses to invest. In the US, the Chicago Purchasing Manager's Index, which provides a snapshot of the bosses' propensity to invest, rose to a post-Lehman high in August. Later in the week, all eyes will be on Friday's US employment reports. The nonfarm payroll figure is expected to be down by *only* 220,000 for August, a slight improvement on July's 240,000 loss, but the unemployment rate is expected to climb a notch, back up to June's 9.5%, as discouraged (and uncounted) workers re-enter (presumably encouraged by July's downward movement in unemployment) still horrific labor markets. But other gauges of employment are also due out: on Thursday, US weekly new and existing unemployment claims figure comes in, ehile Eurozone unemployment indicators are slated for tomorrow. Unemployment there is forecast to rise .1% to 9.5%, which would, if it--and the US projection--materialize represent another noteworthy development in the crisis, when European and American unemployment rates finally converge after decades of mainly large divergence. It's a fool's errand as to which side will come off looking better.... US revised productivity and unit labor costs are due on Wednesday. Both figures are expected to be trimmed from their spectacular heights (inversely for ULCs), but the story of workers lucky enough to have steady jobs being squeezed implacably by the boss to make up for lack of sales and revenues is expected to stick. Finally, indications on the health of the all-important US service sector will be released Thursday. This sector has contracted since September of last year, albeit at a slowing rate. Improvement is key for the US outlook, because it has such a large service sector. Regarding housing, US July pending home sales is out tomorrow. US retailers will also report comparable stores-sales on Thursday, providing a look at the increasingly important back-to-school sales in the retaiing calendar, and of the state of the US consumer. Labels: corporate profits, economic indicators, employment, eurozone, housing market, industrial production, Japan, productivity, retail sales, service industries, stock markets, unemployment, United States Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Yves Smith: Banks Sitting on Bad MortgagesMore reason to view Case-Shiller data with caution: increased buying activity is only one side of the problem.Naked Capitalism Tuesday, August 25, 2009 Banks Sitting on Bad Mortgages, And They Aren't Getting Any Better Fitch released an analysis that shows that mortgage cure rates, meaning the proportion of borrowers who manage to get current once they fall behind, have tanked. From the Wall Street Journal: The report from Fitch Ratings Ltd., a credit-rating firm, focuses on a plunge in the "cure rate" for mortgages that were packaged into securities. The study excludes loans guaranteed by government-backed agencies as well as those that weren't bundled into securities. The cure rate is the portion of delinquent loans that return to current payment status each month. Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006. For so-called Alt-A loans -- a category between prime and subprime that typically involves borrowers who don't fully document their income or assets -- the cure rate has fallen to 4.3% from 30.2. In the subprime category, the rate has declined to 5.3% from 19.4%. "The cure rates have really collapsed," said Roelof Slump, a managing director at Fitch. Because borrowers are less willing or able to catch up on payments, foreclosures are likely to remain a big problem. Barclays Capital projects the number of foreclosed homes for sale will peak at 1.15 million in mid-2010, up from an estimated 688,000 as of July 1. Ouch. On top of that, Greg Weston looked at the underlying New York Fed data for Fitch's comment, and found another sobering factiod, namely that banks are not foreclosing. The reason most often given is that the bank doesn't want to write the mortgage down even further (we've heard it bandied about for loss severities is 60% and Weston had a chart that shows it is worse for subprime, at 70%with Alt-As not as bad at 50%), so 60% is a representative level) but another reason is that if the bank does not take possession, the taxes are still the owner's responsibility. Read the rest of the post Labels: financial crisis, foreclosures, housing market, mortgage cure rates, Naked Capitalism, Yves Smith Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Today's IndicatorsUS Consumer Confidence surges above 50 in August; considerably fewer say jobs "hard to get." Go figure.In a closely-watched non-indicator reading, the June Case-Shiller index of single-family home purchases in selected cities (chosen to be nationally-representative) rose to a level three times May's reading. The fact that prime mortgage foreclosures are displacing subprime as a percentage of homes foreclosed upon, and that continued high joblessness may mean that a rising percentage of these new sales may end up in foreclosure, must be taken into consideration when viewing this number. Labels: Case-Shiller Index, consumer confidence, economic indicators, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). One More for The Road: Global StimulusOn the plus side, German business sentiment and Eurozone purchasing managers' index readings expanded at unexpectedly rapid rates according to the FT.On the negative side, the Asahi Shimbun says Japan's stimulus program has wastefully overestimated the demand for homebuilding program it's poured 350 billion yen (about $3.5 bn) into. Japan is facing an election in a few weeks, and the powerful building lobby certainly has something to do with that. Labels: economic indicators, eurozone, Germany, housing market, Japan, purchasing manager's index Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). US Housing Starts, PPI, Retailer EarningsFrom Reuters:U.S. housing starts, producer prices fall in July Tue Aug 18, 2009 9:09am EDT WASHINGTON (Reuters) Ground breaking for new U.S. homes fell unexpectedly in July, but a rise in single-family home construction for a fifth straight month kept hopes alive the economy was poised to recover from recession. The Commerce Department on Tuesday said housing starts fell 1 percent to a seasonally adjusted annual rate of 581,000 units, well below market expectations for 600,000 units. June's housing starts were revised up to 587,000 units from the previously reported 582,000 units. Groundbreaking for single family homes, the worst-hit part of the housing market, rose 1.7 percent to an annual rate of 490,000 units--the highest since October. "The single-family sector continued to edge higher and that was the silver lining of the report," said Michelle Meyer, an economist at Barclays Capital in New York. U.S. stock index futures pared gains, while U.S. government debt prices trimmed losses after the weak housing and prices data. While data has pointed to the likely end of the recession, analysts have warned of a weak recovery as rising unemployment crimps consumer spending. A higher-than-expected quarterly profit reported by Home Depot Inc on Tuesday helped ease investor fears as the world's largest home-improvement chain partly offset weak sales with cost cutting. No. 2 U.S. discount retailer Target Corp also reported better than expected results. Compared to July last year, housing starts dropped 37.7 percent. New building permits, which give a sense of future home construction, fell 1.8 percent to 560,000 units in July, and were down 39.4 percent from a year ago. The inventory of total houses under construction fell to record low 609,000 in July, the department said, while the total number of permits authorized but not yet started also hit a record low at 102,300. A separate report from the Labor Department showed U.S. producer prices fell 0.9 percent versus a 1.8 percent gain in June. Compared with the same period last year, producer prices were a record 6.8 percent lower in July. Core producer prices, which exclude food and energy costs, edged 0.1 percent lower in July compared with a forecast for a 0.1 percent rise, and after a 0.5 percent increase in June. The core producer price index stood 2.6 percent higher measured on a year-on-year basis, versus a forecast for a 2.8 percent advance. (Reporting by Lucia Mutikani and Alister Bull; Editing by Neil Stempleman) Labels: corporate earnings, economic indicators, Home Depot, housing market, housing starts, Inflation, producer price index, Target Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). It's a Start? Maybe?This is nothing more than a gimmick in a market that lost $2 trillion or something like that in 2008 alone. And it's ironic that the piece comes out on the day the administration seems to be caving in on the only worthwhile part (not very worthwhile at that, compared to single-payer) of the healthcare reform bill--the public option. But there it is. Noteworthy of the diminishing vision of "public servants" in this age of "change we can believe in" is Rep. Frank's remark to the effect that simply having a home is a dream these days. From The Boston Globe:President shifts focus to renting, not owning Using $4.25b to build affordable housing By Joseph Williams Globe Staff / August 16, 2009 WASHINGTON The Obama administration, in a major shift on housing policy, is abandoning George W. Bush's vision of creating an "ownership society" and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities. The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates. Analysts say the approach takes a wrecking ball to Bush's heavy emphasis on encouraging homeownership as a way to create national wealth and provide upward mobility for low- and working-class families, especially minorities. Housing and Urban Development Secretary Shaun Donovan's recalibration of federal housing policy, they said, shows that the Obama White House has acknowledged that not everyone can or should own a home. In addition to an ideological shift, the move is a practical response to skyrocketing foreclosure rates, tight credit, and the economic crisis. "I've always said the American dream should be a home--not homeownership," said Representative Barney Frank, chairman of the House Financial Services Committee and one of the earliest critics of the Bush administration's push to put mortgages in the hands of low- and moderate-income people. Read the rest of the article Labels: Barack Obama, barney frank, housing market, hud, renting Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). US Indicators: Retail Sales, ForeclosuresFrom Bloomberg:Retail Sales From Reuters: Foreclosures Labels: economic indicators, financial crisis, foreclosures, housing market, retail sales Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Drowning MortgagesFrom Reuters via the NY Times:About Half Of U.S. Mortgages Seen Underwater By 2011 Published: August 5, 2009, 3:48 p.m. ET NEW YORK (Reuters) - The percentage of U.S. homeowners that owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March as home prices continue to fall, Deutsche Bank said on Wednesday. ... Homeowners with the riskiest mortgages handed out during the housing boom have seen the greatest erosion in equity. They include subprime loans, of which 69 percent will be underwater in 2011 from half of them in March, Deutsche said. Of option adjustable-rate mortgages -- which could reduce payments by allowing principal balances to rise -- 89 percent will be underwater in 2011, up from 77 percent, the report said. Read the rest of the article. Labels: housing market, National Association of Realtors, underwater mortgages Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Case-Shiller Home Purchase Index UpFor the first time in almost three years. This may prompt more purchases in months ahead, as buyers seek to secure rock-bottom prices, and with the Federal $8,000 rebate set to expire in November. But delinquencies and foreclosures are still sky-high, as are unsold inventories, and job losses are expected by many to top 10% soon, and remain north of 8% through 2011. And the findings show important regional and price-level divergences. So, while relatively big news, the future is far from rosy, as even stockmarkets seem to have accepted (for the time being). From The Wall Street Journal:JULY 29, 2009 Wall Street Journal Home Prices Rise Across U.S. Bargain Hunting, Low Rates Drive First Gain in 3 Years; Double Dip Still Possible By NICK TIMIRAOS and KELLY EVANS Home prices in major U.S. cities registered the first monthly gain in nearly three years, according to a new report that provided fresh evidence that the severe U.S. housing downturn could be easing. Standard & Poor's Case-Shiller index, which tracks home prices in 20 metropolitan areas, rose 0.5% for the three-month period ending in May, compared with the three months ending in April. It marked the index's first increase after 34 straight months of decline, and came after a variety of housing indicators has shown glimmers of hope for the past several months. Home prices remained down about 17% from a year earlier, according to the index. According to S&P/Case-Schiller's seasonally adjusted numbers, which it began reporting only earlier this year, prices in May posted a 0.2% decline. But most Wall Street economists who discussed the survey focused on the April-to-May rise, saying it represents a significant change in direction. Home prices in 15 of the 20 areas in the survey rose or remained stable. The results were also consistent with other recent housing data, these economists said. Sales of new and existing homes rose for three consecutive months through June. Housing starts were up in June, and an index of builder sentiment rose in July, though both remained at low levels. May's uptick came in part as home prices in some areas fell enough for investors and first-time buyers to begin competing for bargains, helping to ease the backlog of unsold homes. Other likely sales spurs included mortgage rates that fell to 50-year lows, an $8,000 federal-tax credit for first-time homebuyers and the ability of buyers to secure mortgages from the Federal Housing Administration with as little as 3.5% down. The latest readings don't necessarily herald a full-blown recovery for the housing market or broader economy. Consumer confidence remains near record lows. The U.S. unemployment rate, at 9.5% in June, is expected to hit double digits before year end, making swift growth and an expanding labor force unlikely anytime soon. Read the rest of the article Labels: Case-Shiller Index, economic indicators, financial crisis, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). New Home Sales Rise Sharply in JuneFrom The Financial Times:New US home sales surge in June By Alan Rappeport in New York Financial Times Published: July 27 2009 15:57 | Last updated: July 27 2009 19:24 New house sales in the US jumped by 11 per cent in June, providing some of the strongest evidence yet that the market has bottomed out after being savaged for three years. There are increasing signs that the combined impact of falling prices and low mortgage rates, along with aggressive government incentives, is driving people back to the market and stirring sales. The monthly rise was the sharpest in nearly nine years, far exceeding economists' expectations, and followed a revised increase of 2.4 per cent in the previous month. House sales rose to an adjusted annual rate of 384,000, the department of commerce said. "[This is] more evidence that a bottom is forming in the housing market, with new home sales confirming the signal provided by other housing data," said Alan Ruskin, a strategist at RBS Greenwich Capital. Read the rest of the article Labels: economic indicators, financial crisis, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Steep Increase In Fannie/Freddie DelinquenciesThis is bad news: Fannie and Freddie mainly deal in prime, not subprime, mortgages. Job losses are the culprit. From The Wall Street Journal:By JAMES R. HAGERTY JUNE 29, 2009, 4:44 P.M. ET Wall Street Journal Fannie Sees Jump in Overdue Home Loans Fannie Mae reported a steep increase in the percentage of home mortgages with overdue payments. The government-backed mortgage investor said in a monthly summary released Monday that 3.42% of the single-family mortgages it owns or guarantees were 90 days or more delinquent in April, up from 3.15% a month before. Fannie's main rival, Freddie Mac, reported last week that its single-family delinquency rate for May was 2.62%, up from 2.44% in April. Fannie and Freddie are the main providers of funding for U.S. home mortgages. Although the two companies bought many of the riskier types of home loans in recent years, their main business is in prime mortgages. More prime borrowers have been falling behind as they lose jobs or their incomes fall. Richard DeKaser, an independent economist in Washington, D.C., blamed the continuing rise in loan delinquencies on the spike in job losses and on what her termed the "evaporation" of home equity amid falling home prices, leaving many borrowers without a cushion when they lose their jobs. Read the rest of the article Labels: economic indicators, Fannie Mae, financial crisis, Fredddie Mac, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). 1 in 5 Homeowners Under Water and Sinking FastOver 20% of homeowners (more than 1 in 5) owe more than their homes are worth, according to a new study by Zillow.com. In all, about 20 million homeowners have mortgages worth more than their houses.Median home prices have fallen 18% in the first quarter of 2009 compared to the same period a year earlier, with no bottom in sight. Mortgages made at the peak of the bubble are in the most trouble. Nearly 60% of mortgages written in 2006 are underwater. Even with lower prices and tighter lending standards, about a third of 2008 mortgages are higher than the values of the homes. Certain areas are worse off than the average. In Las Vegas, 67.2% of homeowners would have to pay someone to take their houses off their hands. In Stockton and Modesto California, more than half of all homeowners owe more than they could sell their houses for. --d.f. Labels: housing bubble, housing market, mortgage meltdown, underwater mortgages Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). 14 million homes are vacantFrom USA Today:Census numbers show: Banks are on a tear to evict people rather than renegotiate loans to market rates. As we wrote earlier, this has hit renters as well as homeowners. The Obama plan barely addresses this problem by providing just $2 billion for buying up and renovating abandoned properties -- hardly enough to make the slightest dent in the growing glut of vacant properties. The bank policy of forcing eviction instead of renegotiating the loans to market rates is insane. The glut of foreclosed properties is driving down the value of homes everywhere. Vacant properties quickly attract vandals and criminals, often leaving disaster zones in their wake. The banks are left with a property worth a fraction of what they could have gotten by renegotiating the loans. This is why some Democrats have been pushing to give bankruptcy judges the authority to "cram down" mortgages. The impact has been devastating for communities. Owners who keep up on their mortgages have seen their home values fall even further, vacant properties are a blight on neighborhoods, and homelessness is rising. The banks seem determined to drive themselves into the ground and take the rest of the country with them. --d.f. Labels: Daniel Fireside, eviction, housing bubble, housing market, mortgage meltdown, Mortgage plan Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). California Housing Defaults SkyrocketAfter a brief lull, California's housing market has resumed its downward spiral. According to the Silicon Valley Mercury News, the number of default notices sent by lenders to property owners jumped 80% in the first three months of 2009 versus the last three months of 2008. Default is the first step in the foreclosure process.There were nearly 80,000 foreclosures in the third quarter of 2008 before dropping to 46,183 and 43,620 for the following two quarters, respectively, due to temporary changes in foreclosure policies that have now come to an end. Foreclosed properties now account for 58.1% of all resales in California this year. --d.f. Labels: California, Daniel Fireside, foreclosures, housing bubble, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Housing Meltdown Leads To More BankruptciesFrom EPI. Hardly surprising, but the numbers are still very striking:Economic Snapshot for April 8, 2009 Housing collapse drives up consumer bankruptcies by Nooshin Mahalia The bursting of the housing bubble, which led to a foreclosure crisis and economic downturn, is also likely triggering a surge in bankruptcies. Consumer bankruptcy filings hit more than 1 million in 2008, up from just under 600,000 in 2006. Since falling home prices reduce an owner's ability to use home equity to manage financial distress and debt-related difficulties, we would expect bankruptcies to be more common in states with declining home values. The latest data show how strong that connection is. Between 2006 and 2008, personal bankruptcies rose 58% in states without declines in the Home Price Index (HPI)1 but rose 118%-more than twice as fast-in the 16 states with HPI declines (see Chart).  Other factors contributing to bankruptcies include job losses, high credit card balances, and costly medical expenses. This finding supports the notion that people were using home equity as part of their personal safety net in times of crisis. With this option quickly disappearing, more people will be forced into bankruptcy court. Note 1. The Office of Federal Housing Enterprise Oversight publishes the Home Price Index by tracking housing values for individual single-family residential properties. States with declines in home price were California, District of Columbia, Florida, Michigan, Massachusetts, Arizona, New York, Nevada, New Jersey, Ohio, Maryland, Minnesota, Rhode Island, Connecticut, New Hampshire, and Hawaii. Labels: bankruptcy, Economic Policy Institute, EPI, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). New Home Sales Fell In February, Not RoseFrom Barry Ritholtz in the RGE Monitor:WSJ: Sales of new homes rose in February for the first time in seven months, the Commerce Department reported Wednesday, another sign that the housing market is thawing Bloomberg: Purchases of new homes in the U.S. unexpectedly rose in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers. Sales increased 4.7 percent to an annual pace of 337,000 . . . Marketwatch: The U.S. housing sector continues to see signs of improvement. The latest government data showed new home sales climbed in February for the first time in seven months, sending shares of home-building companies soaring. The parade of the mathematically innumerate business writers continue to misread data. The latest evidence? New Home Sales. After incorrectly reporting the Existing Home Sales, the mainstream media misread the Census department report of New Homes. No, New Home Sales data did not improve. In fact, they were not only not positive, they were actually horrific. The year over year number was a terrible down 41%. Sales from this same period a year ago have nearly been halved. Why did the media report this as positive? If you only read the headline number, you saw a positive datapoint: February was plus 4.7% over January. To get the the facts, you need to read below the headline. In the present case, it wasn't the seasonality factor that was confusing, it was the "90-percent confidence intervals"—or as it is more commonly known, the margin of error. From the Census Bureau: Sales of new one-family houses in February 2009 were at a seasonally adjusted annual rate of 337,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.7 percent (+/-18.3%)* above the revised January rate of 322,000, but is 41.1 percent (+/-7.9%) below the February 2008 estimate of 572,000. The median sales price of new houses sold in February 2009 was $200,900; the average sales price was $251,000. The seasonally adjusted estimate of new houses for sale at the end of February was 330,000. This represents a supply of 12.2 months at the current sales rate. Note that the month over month data at 4.7% - plus or minus 18.3% - is statistically insignificant. (i.e., meaningless). The reported data does not inform us if sales improved month-over-month or not. It is a range, from down -13.6% to plus 23%. Since "zero" is part of that range, we can draw no conclusion. As the Census Department itself notes, "the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease." The data does however, tell us that the year-over-year sales fell 41.1% plus or minus 7.9% gives us a range of -49% to -33.2%. The entire range is negative, therefore we can conclude sales fell year-over-year. These are facts. This is data. This is how you interpret it. Most of the MSM reports (WSJ, Marketwatch, Bloomberg) were simply wrong. Not nuanced, not shaded, but 2+2=5 wrong. Let me remind that many of these folks incorrectly misinformed you that Housing wasn't getting worse in 2006, 2007 and 2008 - just as Home sales and prices went into an historic freefall. Now, these same folks are misinforming you that Housing has turned around and is improving. That is simply unsupported by the data. (And don't even ask about television - they simply read the wrong news. Here is a life lesson for you: Never believe news people who read teleprompters. They have no idea what they are doing, they are reading what someone else wrote. When it comes to data interpretation, they are quite literally clueless. Rely on news readers to your personal financial detriment). The bottom line: Learn to interpret data correctly. Avoid using the people who cannot do so as primary news sources. Labels: Barry Ritholtz, home sales, housing market, RGE Monitor Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Delasantellis on Foreclosure EndgameHe has some great observations about US politics setting the upper middle class against the working and lower classes as well. From his Asia Times column:A scam at the heart of the US By Julian Delasantellis Asia Times, February 26th, 2009 Travelers visiting New York city from Americas's rural heartland in the 1980s might have been able to regale the folks back home with tales of encounters with knife-wielding drug addicts and/or disease-scourged prostitutes, but it's not like their predecessors who made the same trek back in the 1950s didn't have a tale to tell around the cracker barrel as well. They might have come back to the square dance and talked about playing and losing at the game of three-card monte. Set up on rapidly movable folding card tables, in order to remain mobile against the disproving eyes of the constabulatory, three-card monte games were operated by New York sharpies who, when spying a rural rube from Racine, Wisconsin, or maybe Red Wash, Utah, would invite the visitor to play a simple card game. Three cards from a deck would be dealt face up-one a face cardsuch as a King or Queen. Then the cards would be turned face down, the "dealer" would arrange and re-arrange them on the table, and, the contestant would be invited to chance a wager as to which card was the face card. This was a lot harder than it seemed, especially with the dealer usually employing sleight of hand to hide the face card in his sleeve. No matter how hard he tried, no matter with how much concentration he watched the dealer's hands, the contest could never be won by its very nature; the player was destined to lose the card and his wager - rather like the chances of those facing foreclosure in the current mortgage and financial crisis of ever gaining relief from their hardship. Read the rest of the article Labels: Fannie Mae, financial crisis bailout, Fredddie Mac, housing market, Julian delasantellis, mortgage innsurance, mortgage meltdown, securitization Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Detroit Houses Going For $7,500Actually, $7,500 is the median price of a home sold in Detroit in December, so many went for even less.From the Chicago Tribune DETROIT — It may be tough to get financing for a new car these days, but in Detroit you can buy a house with a credit card. Read the full story here. Labels: Detroit, housing market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
