Posts filed under “Really, really bad calls”
Everyone knew that Existing Home Sales were going to stink the joint up today — but I just had to laugh when I read the NAR commentary; The headline along was priceless: July Existing-Home Sales Fall as Expected but Prices Rise. Too bad they don’t cover other events: “Lincoln attends theater opening; leaves early with headache.”
They are the world’s most awesome/awful cheerleaders on the planet.
Bloomberg notes: “Foreclosures and short-sales are boosting the so-called shadow inventory, and competing with owners trying to sell properties. Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.”
The housing data itself contains some worthwhile data points:
• National median existing-home price was $182,600 in July 2010 — 0.7% higher than June 2009.
• Distressed homes were 32% of sales, vs. 31% in July 2009.
• First-time buyers purchased 38% of all homes, down from 43% in June, according to an NAR survey. The decrease in the purchase of starter homes helps to explain the price rise.
• All-cash sales were at 30%, up from 24% in June.
• Total housing inventory rose 2.5% to 3.98 million homes — an 12.5 month supply at the current sales pace, up from 8.9 months in May.
• Unsold inventory remains 12.9% below the record of 4.58 million in July 2008.
• Existing-home sales in the Northeast dropped 29.5% (30.3% down from July 2009): They were down 35% in the Midwest (off 33.3% from July 2009); They fell 22.6% in the South (19.8% lower than July 2009); and were down 25% in the West (off 23% from July 2009).
Note that July home sales still have some tax credit closings, so the data is not perfect.
UPDATE: An error was made in transcribing some of the data from the NAR release; it has been corrected; the bullet points above reflect the updated data. Our apologies for the error.
Existing-Home Sales Slow in June but Remain Above Year-Ago Levels
National Association of Realtors, July 22, 2010
July Existing-Home Sales Fall as Expected but Prices Rise
National Association of Realtors, August 24, 2010
One of the things we have harped on around here is the tendency for humans to be backwards looking in their sentiment. The Recency Effect means we monkeys place disproportionate emphasis on recent stimuli or observations, regardless of worth or significance. Indeed, investors become bullish after they buy stocks, bearish after they sell them, as…Read More
“Something has to happen for this product to be marketable. I just find the whole thing ironic that FHA is providing financing for luxury housing.” -Jonathan Miller, Miller Samuel Inc. > That’s my pal JM discussing condos in today’s WTF?! article. Via Bloomberg, we learn: “The Federal Housing Administration agreed in March to insure mortgages…Read More
There are two OpEds in today’s New York Times regarding the GSEs. One of them is full of insight and intelligence and rationality. The other is by John Carney. The insightful column, Say Goodbye to Fannie and Freddie, was written by former St. Louis Fed president Bill Poole. During the credit bubble and housing boom,…Read More
While it’s interesting to see how the Fed statement changes from one meeting to the next, it’s also instructive to see how it changes over time. That said, let’s look at almost one year’s worth of commentary on the housing market and see how far we’ve come:
Sept. 23, 2009 (link is to all statements and minutes):
Conditions in financial markets have improved further, and activity in the housing sector has increased.
Nov. 4, 2009:
Activity in the housing sector has increased over recent months.
Dec. 16, 2009:
The housing sector has shown some signs of improvement over recent months.
Mar. 16, 2010
However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls.
April 28, 2010
Housing starts have edged up but remain at a depressed level.
June 23, 2010
Housing starts remain at a depressed level.
Aug. 10, 2010
Housing starts remain at a depressed level.
When something is “depressed” long enough, is it fair to say it’s a “depression”?
And my post would not be complete without a few words about Mr. Hoenig’s dissent (making five in a row). Today’s Yesterday’s release says:
Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected.
“As projected?” As projected by whom? Back in April, the Fed upgraded — yes, upgraded — its central tendency for 2010 GDP from its January forecasts. January’s forecasts had been for 2010 to fall in a range of 2.8 to 3.5, and that was raised in April to a range of 3.2 to 3.7. We’ve now got Q2 coming in at 2.4 (with a downward revision likely) and no one looking for anything better for the balance of the year. So what, exactly, is he talking about?
The Treasury Dept today announced that they had begun compiling a list of the economically insane, and will be publishing this list on a regular basis, according to a Washington Post article. The reason for this: Commentaries regarding mortgage refinancing and/or forgiveness — from both political and investment players — that the Treasury department said…Read More
It is a very hot August and the heat seems to be getting to people on Wall Street. In Washington the greater heat stems from fears about the impact of the economy and housing on the mid-term elections. As a result, Wall Street is expecting a big “surprise” in the form of a massive GSE…Read More
Over at Economix, Harvard economics professor Ed Glaeser looks at the ultra-low interest rates of the aughts, and does not find them to be much to blame for the US Housing boom and bust: “The most common explanation for the great surge in prices is the availability of easy credit, which took the form of…Read More
Whenever a company’s executives get caught doing something stupid/illegal, and are forced to pony up a hefty fine, a hue and cry go up: You are only punishing the shareholders. Well, yes, you are. That is, in fact, the purpose of these fines: To punish the companies engaging in violations of SEC laws, and to…Read More
“Our problem, basically, is that we have a very distorted economy in the sense that there has been a significant recovery in a limited area of the economy amongst high-income individuals who have just had $800 billion added to their 401(k)s and are spending it and are carrying what consumption there is. Large banks, who…Read More