A Debate on the Housing Market
Keith Jurow from Minyanville and Susan Watcher from the Wharton School debate the health of the housing market. Talk about serious cross-currents. These two present very compelling evidence to support their positions that the housing market has not hit bottom (Jurow) and the housing market is recovering (Watcher). Also the discussion is very civil so it actually worth the 6 or 7 minutes of your life it will take to listen. I think hopping back in to the housing market because many think it is recovering is premature. There is no rush.
From Bloomberg TV:
Thursday, January 31, 2013
A Debate on the Housing Market
Posted by CSF - at 4:56 AM
Wednesday, January 30, 2013
How Much of the Market Downturn of 2008-2009 Has Been Recaptured
From Chart of the Day:
For some perspective on the post-financial crisis rally, today's chart illustrates how much of the downturn that occurred as a result of the financial crisis has been retraced by each of the five major stock market indexes. For example, the Dow peaked at 14,164.53 back in October 9, 2007 and troughed at 6,547.05 back on March 9, 2009. The most recent close for the Dow is 13,954.42 -- it has retraced 97.2% of its financial crisis bear market decline. As today's chart illustrates, each of these five major stock market indices have retraced over 90% of their financial crisis decline. However, it is the S&P 400 (mid-cap stocks), the tech-laden Nasdaq and the Russell 2000 (small-cap stocks) that have recouped all the losses incurred during the financial crisis and currently trade higher than their 2007 credit bubble peak.
Posted by CSF - at 3:21 AM
Tuesday, January 29, 2013
The Price of Homes and the Wealth Effect
As a key influence on households' spending decisions, the health of the housing sector trumps stock market moves, a paper released this week by the National Bureau for Economic Research claims.
Posted by CSF - at 7:29 PM
Monday, January 28, 2013
Robert Shiller on the Future of the Housing Market
Posted by CSF - at 4:59 AM
Saturday, January 26, 2013
Housing Sales are Increasing but Housing Inventory is Declining
Home sales in December dropped by 1% from November, the National Association of Realtors reported on Tuesday, but still stood nearly 13% above the levels of one year ago. That means home sales have risen from the year-ago month for 18 straight months.
For 2012 as a whole, sales were up 9% to 4.65 million units, the highest annual total since 2007.
Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November and a 21.6% decline from one year earlier, the Realtors’ group said on Tuesday.
Here’s a breakdown of why inventory has continued to drop this year:
Many homeowners are underwater: More than 10 million homeowners owe more on their mortgage than their homes are worth, according to CoreLogic Inc. That pencils out to around 22% of homeowners with a mortgage, or 15% of all homeowners (since not every homeowner has a mortgage). Underwater owners aren’t likely to sell unless they need to move due to changing life (marriage, divorce) or financial circumstances, and they’ll take a hit on their credit for pursuing a short sale, where the bank allows the home to sell for less than the amount owed. Data from CoreLogic show that inventory has been the most constrained in housing markets where there’s the largest concentration of underwater borrowers.
Others don’t have enough equity to “trade up”: Another 10 million homeowners have less than 20% equity in their current residence, meaning they can’t easily “trade up” to their next house. Traditionally, homeowners have relied on home equity to make the down payment on their next home, and to pay their real-estate agent to sell their current home and buy their next one. These “under-equitied” homeowners—meaning they don’t have enough equity to make a move to a more expensive home—have added to the drag on inventory.
Everyone wants to buy at the bottom, but few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow. Would you sell your largest asset today if you thought it might be worth 5% more next year? This helps explain why markets such as Denver and Dallas, which didn’t have huge housing bubbles and thus had smaller shares of underwater borrowers, have also seen double-digit inventory declines.
More purchases from investors of all stripes: From the big institutional investors that have been grabbing all the headlines, to the mom-and-pop landlords that have traditionally played a much larger role renting out homes, investors have increasingly bought homes that can be rented out rather than flipped and resold for quick profits. This is further keeping inventory off the market in two ways: homes that are bought at courthouse foreclosure auctions never show up on multiple-listing services when they’re initially sold. They’re also held out of the for-sale pool because they’re being rented out.
Banks have been slower at foreclosing: Banks and other companies that process delinquent mortgages have had trouble proving that they’ve followed state law in taking title to homes ever since the “robo-signing” scandal surfaced in late 2010, and they’ve also had to meet a host of new state and federal rules governing loan modifications and foreclosures from settlements spawned by the robo-scandal. Banks have also become better about approving short sales and loan modifications, which has curbed the flow of foreclosed properties onto the market.
Builders have been putting up fewer homes: Housing starts were severely depressed from 2009 through 2011 and have only recently rebounded off of those low levels. Consequently, there’s been much less new home inventory being added to the market at a time when demand (boosted by increases in household formation) is picking up. If more homes are held off the market—for any of the five reasons above—you can bet that builders will move in to fill the void.
Many of these factors that have been dragging down inventory aren’t signs of “normal” or “healthy” housing markets—but then, we probably haven’t had a normal market for around a decade now. If anything, declining inventory shows that normal supply-and-demand dynamics are returning, which is an important step towards putting a floor under home prices and giving markets time to get back to health.
Posted by CSF - at 5:49 AM
Friday, January 25, 2013
5 Risks the World Economies Face
Posted by CSF - at 5:37 AM
Wednesday, January 23, 2013
Consumer Loans Continue to Decline as of Q3 2012 Except for Student Loans
In spite a reduction in consumer borrowing student loans continue to increase. I am sure it is some type of "can't find a job then go to school" coupled with the cost of college is increasing. By the way, serious delinquency, that is 90+ dpd (days past due) is now over 10%. Fairly serious delinquency problems. What happens when the students graduate and they cannot find a job? What happens when they pay too much for college and they cannot afford the debt? When happens when they graduate in a major they do not like? A lot to think about before one takes on that much debt. This article is from the NY Federal Reserve Bank:
In its latest Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York announced that in the third quarter, non-real estate household debt jumped 2.3 percent to $2.7 trillion. The increase was due to a boost in student loans ($42 billion), auto loans ($18 billion) and credit card balances ($2 billion).
The Quarterly Report on Household Debt and Credit is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative random sample drawn from Equifax credit report data. During the third quarter of 2012, total consumer indebtedness shrank $74 billion to $11.31 trillion, a 0.7 percent decrease from the previous quarter. The reduction in overall debt is attributed to a decrease in mortgage debt ($120 billion) and home equity lines of credit ($16 billion), despite mortgage originations increasing for a fourth consecutive quarter.
“The increase in mortgage originations, auto loans and credit card balances suggests that consumers are slowly gaining confidence in their financial position,” said Donghoon Lee, senior economist at the New York Fed. “As consumers feel more comfortable, they may start to make purchases that were previously delayed.”
Outstanding student loan debt now stands at $956 billion, an increase of $42 billion since last quarter. However, of the $42 billion, $23 billion is new debt while the remaining $19 billion is attributed to previously defaulted student loans that have been updated on credit reports this quarter.1 As a result, the percent of student loan balances 90+ days delinquent increased to 11 percent this quarter.2
Other highlights from the report include:
Outstanding auto loans ($768 billion) are the highest in nearly four years.
Auto loan balances increased for the sixth consecutive quarter.
Mortgage debt at $8.03 trillion is at its lowest level since 2006.
Delinquency rates for mortgages decreased from 6.3 percent to 5.9 percent.
HELOC delinquency rates remain high by historical standards (4.9 percent).
New foreclosures are returning to their pre-crisis levels, as about 242,000 consumers had a new foreclosure added to their credit report, the lowest in nearly six years.
Mortgage originations, which we measure as the appearance of new mortgages on consumer credit reports, rose to $521 billion, the fourth consecutive quarterly increase.
Posted by CSF - at 5:13 AM
Tuesday, January 22, 2013
Posted by CSF - at 6:36 AM
Monday, January 21, 2013
Posted by CSF - at 6:00 AM
Sunday, January 20, 2013
10 Trends to Watch in 2013
Posted by CSF - at 2:26 PM
Saturday, January 19, 2013
Dividend Paying Stocks Outperform Equities in Bull and Bear Markets
The article is in italics. The source of the article is the Business Insider, a good source of market information. The original research was done by Black Rock, always a good source of market information, and published in their weekly chart section.
Posted by CSF - at 5:21 AM
Wednesday, January 16, 2013
It is All About Making Money or "Things I Don't Care About"
Below is an article I recently found that basically echoes my sentiments. By the way, if you are looking for a good source of reliable information about the economy and markets spend some time paging through the The Big Picture by Barry Ritholtz.
1) Focus on the data (not the commentary);
2) Keep refining your process;
3) Eliminate bad or biased sources with extreme prejudice
• Who the next Treasury Secretary will be
• The Herbalife hedge fund battle
• 90% of Wall Street Research
• People who don’t believe in Evolution
• The Fiscal Cliff
• Dell Going Private
• Why Ben Bernake is going to cause hyper-inflation!
• 75% of what is on CNBC
• Any reality television
• Those QE and Gold cartoons from ExtraNormal
• Lance Armstrong’s doping
• What the European Central Bank will do next
• Nouriel Roubini’s parties
• Birthers, 9/11 Conspiracists, Global Warming Denialists
• Lindsay Lohan’s next movie/arrest/rehab visit
Posted by CSF - at 5:31 AM