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Rabu, 30 September 2009

New bubble book

This Time is Different: Eight Centuries of Financial Folly, by Carmen Reinhart and Ken RogoffBook description:Throughout history, rich and poor countries alike have been lending, borrowing, crashing—and recovering—their way through an extraordinary range of financial crises. Each time, the experts have chimed, "this time is different"—claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past...

Video: CNBC Case-Shiller discussions

A sensible discussion of yesterday's S&P/Case-Shiller Home Price Index numbers:Here's a conversation with our old friend David Lereah:If Sue Herera pronounced David Lereah's name correctly, then I've been saying it wrong for years. She said "Leh-ray", while I've always pronounced it "Leh-ree-uh". Oops!Here's an interview with S&P's David Blitzer:Meanwhile, on CNBC's Realty Check blog, Diana Olick argues that the bounce in home prices is "seasonal and federally fuele...

Selasa, 29 September 2009

July Case-Shiller numbers

The S&P/Case-Shiller Home Price Index is up again:“The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “The two composites and all metro areas are showing an improvement in the annual rates of return, as seen through a moderation in their annual declines....

Arlington ghetto rap

For those Bubble Meter readers who think Arlington, Virginia is da bo...

Senin, 28 September 2009

American migration trends

Americans are constantly moving, but where are they going?Art Hall, executive director of the Center for Applied Economics at the KU School of Business, said he uncovered three key themes to American population shifts by looking at annual data collected by the Internal Revenue Service on county-to-county migration:He found that Populations are relocating to coastal areas (with the major exception that inhabitants for the first time are taking flight from California's prohibitively priced seaboard) People are moving out from major metropolises...

Sabtu, 26 September 2009

Teaser rates still exist

And they always will...

Jumat, 25 September 2009

Shadow inventory

Foreclosures in waiting:Henry Fishkind, an Orlando-based housing economist, says some banks tell him they “are holding back [foreclosed-home] inventory” to avoid depressing prices any more than necessary. “It’s in their interest” to avoid flooding the market, and regulators haven’t forced them to do so, he says. That suggests that the backlog of homes headed for foreclosure will be stretched out over several years. ...Jack McCabe, a housing analyst in Deerfield Beach, Fla. ... points to the temptation for borrowers to stop paying their mortgages...

Prices to Fall Over the Fall & Winter Months

During the summer months, in many major metropolitan areas places price declines have turned to prices increases. According to the Case Shiller Price Index housing prices in June were up in Chicago, San Fransisco, Washington - DC, Minneapolis, New York and Los Angeles. Reflecting these and other metropolitan areas the 20 city composite index rose 1.4%. It had also posted a smaller price increase in May. This reversed a long period of prices declines in the index which started in August 2006.Where do prices go from here? Will prices decline, remain...

Kamis, 24 September 2009

An interview with Michael Moore

His new documentary about the financial crisis is called Capitalism: A Love Story. It comes out October 2nd.As a free market capitalist, I don't agree with the views he expresses in this interview (and probably the movie), but I'm generally a fan of his works. He's got a good sense of humor.Note: Despite Poppy Harlow's claim in the interview, in practice shareholders have very little say in hiring and firing boards of directors and CEOs.When shareholders don't vote, those votes are not discarded. Instead, usually those votes are automatically cast...

Selasa, 22 September 2009

Economists should stop ignoring bubbles

Yale economist Robert Shiller has constructive criticism for his own profession:The widespread failure of economists to forecast the financial crisis that erupted last year has much to do with faulty models. This lack of sound models meant that economic policymakers and central bankers received no warning of what was to come.As George Akerlof and I argue in our recent book Animal Spirits, the current financial crisis was driven by speculative bubbles in the housing market, the stock market, energy and other commodities markets. Bubbles are caused...

Senin, 21 September 2009

Home prices could fall another 14%

From BusinessWeek's Hot Property blog:Daniel Alpert, Managing Partner at Manhattan boutique investment bank Westwood Capital, says that home prices could fall another 14% by the time the slump is over.To understand why, it helps to divide the metros into two separate categories, rather than to lump all of them together, he argues. According to his analysis, home prices in 13 of the 20 metros included in the Case Shiller index could continue to drop: Denver, Washington D.C., Atlanta, Chicago, Boston, Detroit, Minneapolis, Charlotte, New York, Cleveland,...

Sabtu, 19 September 2009

"Most brokers out of business January 1st 2010"

Interesting comments left by a reader on a recent MarketWatch.com article:I work for a bank, I'm a loan officer. This year we went from 580 minimum Fico for Government loans (VA/FHA) to 620, then to 640, soon to be 660. Appraisals now have to go through an HVCC system (on conventional loans) that are holding up closings, reducing values and costing buyers more. FHA just annouced today guideline changes that will essentially put most brokers out of business January 1st 2010, Taylor Bean & Whitaker, previously the 4th largest Ginnie Mae servicer...

Kamis, 17 September 2009

Lawrence Yun speaks

Here's a CNBC interview with our favorite person, National Association of Realtors chief economist Lawrence Yun. He is arguing for an extension of the first-time home buyer tax credit. Basically, he wants to use our tax dollars to prop up a bubble.More tax money to be wasted:When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it.As many as 40 percent of all home buyers this year will...

Rabu, 16 September 2009

CNBC housing discussion

...

Selasa, 15 September 2009

No more housing ATM

From yesterday's Wall Street Journal:Many ... Americans have been forced to accept that they'll be living in their current place for a long while, even if they'd planned to flip or trade up. While sales of low-cost housing are picking up, for many, a house is back to what it traditionally was: a long-term financial commitment, a sturdy shelter and a place to hang your h...

Happy anniversary!

It feels like it's been much more than just one ye...

Jumat, 11 September 2009

Whitney: Home prices to fall another 25%

Star bank analyst Meredith Whitney predicts home prices will fall by a quarter from current levels:Home prices in the US could fall by another 25 percent because of high unemployment and another leg down will come for stocks, banking analyst Meredith Whitney told CNBC Thursday."No bank underwrote a loan with 10 percent unemployment on the horizon," Whitney said. "I think there is no doubt that home prices will go down dramatically from here, it's...

More homeowners cutting their asking prices

More people are cutting their asking prices when trying to sell their home:More than one in four U.S. homes for sale on Sept. 1 had their prices cut at least once since landing on the market, up slightly from a month earlier, a study showed on Friday. ...Driving the increase was the pending expiration of the government's $8,000 tax credit for first-time home buyers — part of the stimulus bill — and summer months which are the peak sales period, according to data compiled by Trulia.com.The average discount was 10 percent from the original price,...

Rabu, 09 September 2009

The Google Real Estate Index

Here is a graph of Google searches for real estate–related terms since the beginning of 2004, a sign of interest in the topic:Google's description of the data being measured:The Google Real Estate Index tracks queries related to "real estate, mortgage, rent, apartments". ... The index is set to 1.0 on January 1, 2004 and is calculated and displayed below as a 7-day moving average....

Senin, 07 September 2009

Recession perhaps not over

Last month, as the unemployment rate took a reprieve from its upward spike, I speculated that the recession might be over. Friday's release of the August unemployment rate showed a resumption of the upward spike, suggesting that the end of the recession may be yet to come.Here's a graph of the official unemployment rate over the past ten years. Gray bars indicate recessions:Here's a graph of the official monthly job loss numbers during this recession:For...

Rabu, 02 September 2009

End of housing crisis is a "mirage"

Fortune says the housing recovery won't last:Earlier this year, as many as half of all transactions nationally were resales of foreclosed properties, largely at low prices. Since then, so-called organic sales (those not involving distressed properties) have risen while foreclosure sales have remained stable. This improved mix — together with cheap financing and a couple of popular tax incentives — helped to revive prices in some hard-hit areas. ... But with schools opening up again and the summer home-selling season winding down, sales by nondistressed...

Selasa, 01 September 2009

New mortgage crisis coming?

WSJ: Commercial real estate could knock out the recovering economy:Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. ... The $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn,...

More Robert Shiller!

Here's an excellent article by Robert Shiller, but not about housing.Note: Prof. Shiller plugs his book, Animal Spirits, which also happens to be on Harvard professor Greg Mankiw's econ reading li...