04.03.2007 - Tuesday Open Thread
This is your open thread for Tuesday, April 3, 2007. You may post random links and off-topic discussions here.
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18 comments:
Today will be another day up in Acme for me. By the way, good guess Crashcadia. Of course, I can't think of another reason someone would go to Acme on business...
It's surprising to me that EMC would have a facility in such an isolated place -- but I guess commuting from Bellingham wouldn't be that bad.
Looks like the "housing crash" is indeed over, markets are celebrating. The new economics are working. I'm always on the wrong side of the fence - not for long this time. Goodbye
Are the March NWMLS #'s supposed to be out this week or next week? I can never keep that organization's release schedule straight...
I've been following how the MSM is reporting on the subprime lending fiasco lately. It is interesting to see how the talking heads are all gravely warning the populace of the risks associated with "creative financing" now - the exact same stuff you could have found on any housing bubble blog a year or more ago. Where were these guys back then?
cashing in on their mortgage stocks?
U.S. Economy: Pending Sales of Existing Homes Unexpectedly Gain
http://www.bloomberg.com/apps/news?pid=20601170&sid=a92Hv.ybHGE4&refer=home
Mercer Human Resources Consulting has released their "2007 Quality of Living Survey".
Some highlights:
Top ranking for cities in the Americas
The top five cities in the Americas were:
Vancouver (3rd)
Toronto (15th)
Ottawa (tied for 18th)
Montreal (22nd)
Calgary (24th)
The lowest ranking Americas city in the top 50 was Seattle (tied for 49th).
Yes, you read that right - horror of horrors, Seattle ranks dead last on the list of cities in the Americas. Of course this is just an HR consulting firm's survey, but it does say something about the "jobs, jobs, jobs" mantra we keep hearing.
Michael -
thanks for the link. This is the same spin that Bloomberg falls for every month. There is only one line in that story counts...
The National Association of Realtors' index of signed purchase agreements rose 0.7 percent after dropping 4.2 percent in January. Economists had forecast a decline. The index was down 8.5 percent from a year earlier.
Sales go up from Feb to March EVERY YEAR. That is the seasonal cycle. Last month the NAR sold the Jan/Feb seasonality successfully as "good news" so I guess their rolling the dice again.
Seriously, Bloomberg reporters must get paid for their typing speed - not their brains - cuz they don't use them!
I dug a little more on this and I am in total disbelief Bloomberg wrote the article with this spin. Even the NAR press release was negative!
(cuz of the weather, of course...)
Daily Real Estate News | April 3, 2007
Weather Dampens Pending Sales Forecast
A forward-looking index based on pending home sales indicates that bad weather — and possibly the loss of some subprime lending — will soften sales closed in March and April, according to the NATIONAL ASSOCIATION OF REALTORS®.
The Pending Home Sales Index, based on contracts signed in February, stood at 109.3 — down 8.5 percent from February 2006 when it reached 119.4. It is 0.7 percent higher, however, than a downwardly revised reading of 108.5 in January. Earlier, mild weather caused the index to spike at 113.3 in December.
David Lereah, NAR’s chief economist, says there’s been a steady narrowing from year-ago readings since last July. “If it wasn’t for the unusually bad weather in February, we’d be seeing a better performance in pending home sales,” he says. “We also may be seeing some fallout from a decline in subprime lending, but a slight improvement in the more volatile month-to-month index is encouraging — the data suggests an underlying stabilization is taking place in the housing market, but it will take another month or two to clarify.”
The extent of the problems in the subprime mortgage market will become more apparent over time, Lereah says. The Subprime market “will modestly depress the overall level of improvement in existing-home sales we expect as the year progresses,” Lereah says
Peter Taylor - At least we made the top 50! Woo Hoo!!!
The lowest ranking Americas city in the top 50 was Seattle (tied for 49th).
I know I always consult Mercer rankings when deciding where to live... NOT
I'd say overall, coming in 50th is not too shabby - but it's really a meaningless list
Here is a cool website you guys will love (Im sure Mr. Bubble, synthetik and econe will bookmark it)...of course the credit tightening is only in the subprime area so there is nothing to worry about right?...ya ya ya, I know it will impact the whole market to some extent.
http://www.ml-implode.com/
WHY EXISTING HOME SALES RATES ARE SMOKE AND MIRRORS
I was watching the stocks go up today and relieved to see the economy is still chugging out dividends; but amazed at the ambiguous reason it did. Well, oil prices going down and Great Britain negotiating with Iran made sense; but the existing home sales rate increasing means nothing. Here's an excerpt from Dr. Roubini's blog:
"...Nouriel Roubini | Mar 26, 2007
There is an ongoing debate on whether the housing recession is bottoming out. The signals that have recently come from new home sales and existing homes sales have been slightly different. Existing homes sales went up 3.9% in February while new home sales – reported this morning – fell another 3.9%, after falling a whopping 16% in January. The stock market cheered on Friday the data on existing homes sales while it reacted negatively this morning to the new home sales data. The reality is that the stock market should have ignored the existing home sales data on Friday and concentrate mostly on the new home sales data. Why?
Conceptually the more relevant measure of the trouble in the housing market is new home sales rather than existing home sales. Existing home sales are mostly a measure of the “turnover” in the housing market. They are a little bit like turnover in financial markets as they measure how many already existing homes are purchased or sold. This market/turnover or market liquidity measure has some importance and during housing recession both existing home sales and new home sales fall.
But in housing – and economy wide - recessions existing homes sales do not move much downward while new home sales tend to fall in a range of 40% to 60%. New home sales are a more important measure of the state of housing as they represent the new demand for housing that is associated with new production and new supply of housing. What enters in the GDP measure is new homes production (i.e. residential investment) and new homes demand (new home sales). Thus, on the supply side the relevant measures of new housing activity are building permits, housing starts, residential construction, and housing completions.
Conversely, existing homes sales do not enter in the GDP measure as they are not related to the production or demand of new goods and services; they are just market turnover/liquidity of existing assets. Among the measures related to existing homes the price of existing homes and the supply of unsold existing homes are more interesting measures of the slack in the existing home market than the level of existing home sales. That supply of unsold existing homes depends on the existing homes that are on sale relative to the purchases of existing homes. The rising excess supply and glut of existing homes will be discussed in more detail below. But note now that with rising distressed sales of foreclosed homes and of homeowners unwilling or unable to service their mortgages, the future supply of existing homes will go up this year and next and, given downward price adjustment, the equilibrium level of existing home sales will increase over this year and next. Thus, observation of increases in the sales of existing homes over time - as long as existing home prices fall - will be signs of further distress in the housing market, not improvement. Basic economics 101 suggests that.
Thus, today’s data that new home sales have fallen another 3.9% in February on top of the 16% fall in January is really ominous. It confirms that the housing recession is getting worse rather than better, as discussed and argued in a recent paper with Menegatti.
As it will be discussed in a forthcoming blog the excess supply of new and existing homes will increase over 2007 and 2008 and will put significant downward pressures on home prices this year and next with the risk of a vicious circle of falling prices, falling home equity withdrawals, falling consumption demand, falling output, rising defaults and foreclosures and further fall in new home supply and demand and, again, downward price pressure that will lead to a US hard landing. As Larry Summers correctly put it today in the FT the main potential risk now is:
a vicious cycle of foreclosures, declining property values, reduced consumption demand, rising unemployment, more delinquencies and more foreclosures...."
Don't forget to watch KCTS tonite at 7:30 financial program interviewing head of Coldwell Banker here in Seattle. Expected: housing spin....
MSNBC reports...
Trouble at Fannie Mae.
http://www.msnbc.msn.com/id/17931700/
Bruce,
I sent you an email. In short, no, you cannot deduct you initial investment into an LLC. It's just like purchasing stock.
>http://www.ml-implode.com/
Thanks.. yeah, have been looking at that website and subprime since november...
glad you are catching on
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