RADAR LOGIC: CA, A LEADING INDICATOR OF REAL ESTATE IS HEADED DOWN ALREADY
by ilene - August 25th, 2010 11:30 pm
RADAR LOGIC: CA, A LEADING INDICATOR OF REAL ESTATE IS HEADED DOWN ALREADY
Courtesy of The Pragmatic Capitalist
Excellent commentary here from Michael Feder, chief
Facebook
Twitter
LinkedIn 
del.icio.us
DiggOverpriced Bay Area Real Estate Sees a 25% Gain in House Prices Thanks to Tax Credits
by ilene - August 11th, 2010 8:12 pm
Overpriced Bay Area Real Estate Sees a 25% Gain in House Prices Thanks to Tax Credits
Courtesy of Jr. Deputy Accountant
Anyone remember "whatever it takes"? Whatever it takes, even if it means keeping real estate at artificially high values just to stave off deflation, I guess.
If you guys wonder why I am so desperate to get out of this third world toilet I have called home for the last 11 years, look no further than the following. I hope every idiot who got stuck in a new home just for the $8000 tax break (no offense, WCV) enjoys the financial [violation] to come that is amortized over the next 30 years as still-broke municipalities scramble to pay their bills using property taxes as ATMs. Good luck with that, hope it was worth it!
The Bay Area’s two biggest metro areas had two of the nation’s three biggest housing price gains in the second quarter, the National Association of Realtors reported today.
The median house price in the beautiful San Jose-Sunnyvale-Santa Clara metro area jumped 26 percent year over year to $630,000. In the San Francisco-Oakland-Fremont area, the median price climbed 25 percent to $591,200. (Only Akron, Ohio, oddly enough, had a bigger gain, at 36 percent.)
Of course, prices in both the San Jose and San Francisco metro areas are still down sharply from the peak of the market. In 2007, for example, the median house price was $836,800 in the San Jose area (Santa Clara and San Benito counties) and $804,800 in the San Francisco area (which includes San Francisco, its relatively expensive suburbs in Marin and San Mateo counties, and more affordable — at least by Bay Area standards — communities in Alameda and Contra Costa counties).
Yes, you read that correctly. Read it again just to be sure.
The funny part is we were actually beat out by Akron, Ohio (of all God-forsaken places) as far as percent increases are concerned, though their median $119,700 looks pathetic next to our $591,000. $591,000? Man, what a steal!
Here are other winners and losers from around the country:
BIGGEST INCREASES
1) Akron, Ohio, $119,700 median price, up 36 percent
2) San Jose, $630,000, up 26 percent
3) San Francisco-Oakland-Fremont, $591,000, up 25 percent
4) Riverside, $190,200, up 18…
Foreclosures Continue To Dramatically Increase In 2010
by ilene - July 31st, 2010 9:39 pm
Foreclosures Continue To Dramatically Increase In 2010
Courtesy of Michael Snyder at The Economic Collapse
In a very alarming sign for the U.S. economy, foreclosures have continued to dramatically increase in 2010. But there has been a shift. Back in 2007 and 2008, experts tell us that most foreclosures were due to toxic mortgages. People were being suckered into mortgages that they couldn’t afford with "teaser rates" or with payments that would dramatically escalate after a few years, and when those mortgages reset, the people who had agreed to them no longer could make the payments. But now RealtyTrac says that unemployment has become the major reason for foreclosures. Millions of Americans have become chronically unemployed during the economic downturn and many of them are losing their homes as a result. But whatever the cause, one thing is certain – foreclosures have continued to skyrocket at a staggering rate.
According to a new report from RealtyTrac, foreclosure filings climbed in 75% of the nation’s metro areas during the first half of 2010. At a time when the Obama administration believes that we are "turning the corner", things just seem to get even worse.
Some areas of the country continue to be complete and total disaster areas when it comes to real estate. For example, you have got to feel really sorry for anyone trying to sell a house down in Florida right now. According to RealtyTrac, Florida led the way with nine of the top 20 metro foreclosure rates in the country during the first half of 2010.
Ouch.
But the worst city for foreclosures continues to be Las Vegas.…
Time for a Dollar Bounce
by ilene - July 16th, 2010 8:56 pm
Time for a Dollar Bounce
Courtesy of Mish
The time for a dollar bounce is at hand. One reason I make that statement is the single best contrarian indicator on the US dollar has spoken.
Please consider Dollar Rout by Peter Schiff, July 15, 2010.
Peter Schiff has proven to be a huge contrarian indicator on commodities, on China, on foreign investments, and on the US dollar. I suspect this video will be no different.
In the video, Schiff makes a case that it was impossible to see these bounces coming. I disagree and have called for several of them.
Political Alignment vs. Investment Decisions
Politically I align with Peter Schiff. The financial sector bailouts were obscene, as are all of the stimulus efforts. There will be hell to pay for both.
However, investment-wise I cannot and do not agree with Schiff. His hyperinflationary rants are simply unfounded. The reason he cannot see the forest for the trees is he fails to consider the role of credit in a fiat-based credit world.
Credit dwarfs money supply. Much of that credit cannot and will not be paid back. Schiff got that part correct, in spades, predicting as many others did a collapse in housing. His mistake was in assuming the dollar would crash with it.
Think about that for a second. If the dollar crashed to zero, the number of dollars it would take to buy a house would be infinite. There has never been a hyperinflation in history where home prices crashed and barring some war-zone anomaly, I doubt it ever happens.
If hyperinflation was in the cards, the correct response would be to buy as much real estate as possible given real estate only requires 5% down. That amount of margin is hard to come by in any other play except derivatives.
Are we "Trending Towards Deflation" or in It?
For a recap on the inflation-deflation debate, please see Are we "Trending Towards Deflation" or in It?
One of us took into consideration the role of credit, one of us didn’t.
Technical Euro Bounce
The reason for the recent bounce in the Euro is without a doubt a pledge by European governments to adhere to various austerity measures. Another reason is purely technical.
The Euro plunged nonstop, nearly straight down from 1.50 to 1.18. For currencies that is an enormous move in a short period…
What Bond Bubble?
by ilene - July 7th, 2010 12:16 pm
What Bond Bubble?
Courtesy of Rom Badilla of Bondsquawk.com
Interest rates have rallied tremendously in recent months as concerns of an economic slowdown and the potential for a double dip weigh on the minds of both Wall Street and Main Street. Since early April, which marks the recent high in rates, the long-end of the curve has rallied significantly. The yield on the 10-Year U.S. Treasury has declined more than 100 basis points to 2.97 percent during that time frame.
That type of change usually takes many months, if not years, to accomplish. The average implied volatility of both interest rate swaptions and options on Treasuries over the last 10 years is around 100-120 basis points on an annualized basis. Hence, the move to where we are now is quite significant.
Admittedly, part of the decline is attributed to a flight to quality due to fears of contagion from Greece and the European debt crisis. However, the last leg of the drop in yields was due to signs of a slowing economy and declining price pressures. If it were a continuation of the flight-to-quality trade, we would have seen the dollar appreciate as was the case earlier when the Euro approached parity as sovereign risk escalated. Lately with the recent string of weak domestic economic data, the dollar has declined 1.7 percent from June 21 while the 10-Year rallied 26 basis points and pushed below 3 percent.
If there’s any argument that there is a bond bubble, keep in mind that there needs to be an imbalance, i.e. a shift in outlook toward lower rates. Basically, the majority of the world needs to be on one side of the boat, where tipping over is a possibility and the imbalance is ultimately rectified. Right now, we are far from that.
According to Bloomberg’s economic and interest rate survey, market participants still expect higher rates to materialize with the Federal Reserve raising rates in early 2011. In additions, forecasters expect the 10-Year to increase 40 basis points to 3.37 percent by the end of the Third Quarter.
Bloomberg Economic Forecasts
Rate hawks and bond vigilantes are still advocating for higher rates as the U.S. grapples with both perceived higher inflationary expectations fueled by future economic growth and higher fiscal deficits. To be honest, after packing on the calories by downing countless hotdogs and…
New Home Sales Suffer Enormous Collapse
by ilene - June 23rd, 2010 10:53 am
New Home Sales Suffer Enormous Collapse
Courtesy of Vincent Fernando, Clusterstock
May new residential home sales were just 300,000 vs. 423,000 expected according to Fact Set consensus.
It’s actually the worst number we’ve seen yet:
Census Bureau:
Sales of new single-family houses in May 2010 were at a seasonally adjusted annual rate of 300,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 32.7 percent (±9.9%) below the revised April rate of 446,000 and is 18.3 percent (±13.0%) below the May 2009 estimate of 367,000.
The median sales price of new houses sold in May 2010 was $200,900; the average sales price was $263,400. The seasonally adjusted estimate of new houses for sale at the end of May was 213,000. This represents a supply of 8.5 months at the current sales rate.
Check out the full official release below:
Email From Canada: It’s Different Up Here – It Really Is!
by ilene - May 16th, 2010 12:53 am
Email From Canada: It’s Different Up Here – It Really Is!
Courtesy of Mish
In response to Canada’s Household Debt Reaches Record $42,000 a Person I received an email from Paul Kilby of Canada (city unknown), who thinks it’s different in Canada.
After correcting at least 20 typos and spelling errors, Paul writes …
As a Canadian I take great umbrage at yet another irresponsible bearish article from you.
Reasons:
1)Your type of advice has lost investors a double over the past 15 months
2)You have no understanding of how high ratio mortgages are funded in Canada(hint: Its not the cowboy Fannie, Freddie, package them and sell them as AAA debts etc)
3)Canada’s vast natural resources and tiny population largely insulate us from all but the direst long lasting downturn which we are obviously not having worldwide nor are we likely to
4)Our banks are very solidly capitalized and would require a 25% downturn in real estate values to even begin to dent this solid position as well as vast defaults on other debts. That’s nationwide. We are not, I repeat not, oversupplied in housing in the vast majority of the country.
5) Barring a worldwide collapse that would make 08-early09 look like child’s play what calamity do you have in mind that would knock Canadian RE values for such a loop.Even you must admit the most likely scenario now is a world muddling through the next 3 to 5 years, hardly the stuff real estate collapses are made of.
Do I think we will have a correction in overheated markets (Van to Calgary. Yes, but nationally this will likely translate into a 10 to 15 % overall decline and likely take 18 months to 2 years to complete.
In case you haven’t noticed, Bernanke, Geithner et al will not permit asset prices to collapse worldwide, the US dollar be damned. As an American this must be very upsetting to you but please don’t pretend to know anything of Canada s economic position as you clearly don’t.
Paul Kilby
Dear Paul…
It is not different in Canada no matter what you think.
However, let’s start at the beginning of your rant. For starters, I did not cost anyone in Canada a dime. Most of my readers believe as I do and were not about to plunge into an…
When Will China’s Bubble Burst?
by ilene - May 12th, 2010 5:12 pm
When Will China’s Bubble Burst?
Courtesy of Washington’s Blog
As Bloomberg notes, Marc Faber thinks China may crash in 9 to 12 months, and hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff are also warning of a crash.
Nouriel Roubini told Bloomberg:
In China, where property prices rose at a record pace in April and consumer prices climbed at the fastest rate in 18 months, the economy faces the risk of a “significant slowdown,” Roubini said.
“China should be tightening monetary policy, increasing interest rates and let its currency appreciate over time,” he said. “They are too slow, they are not doing it fast enough.”
On April 20th, BusinessWeek wrote:
China’s Shanghai Composite Index may drop as much as 6 percent after breaching the 250-day moving average for the first time in a year, Shenyin & Wanguo Securities Co. said.
The benchmark gauge plunged 4.8 percent to 2,980.3 yesterday, the most in eight months, on concern government measures to curb real estate speculation will slow economic growth. The index may extend losses until reaching the next support level of 2,803…
Yesterday, Calculated Risk noted that the Shanghai composite is continuing down:
Keep an eye on the Shanghai index (in red). It appears China’s economy is slowing.
This graph shows the Shanghai SSE Composite Index and the S&P 500 (in blue).
The SSE Composite Index is at 2,622.67 mid-day – down about 300 points from 2 weeks ago.
[Click here for full chart]
Vincent Fernando notes that Beijing property prices are starting to fall rapidly (and that Shanghai is next), as China clamps down on the property bubble.
As MarketWatch notes:
China’s economy is teetering on the edge of a major slowdown … according to a noted China strategist.
David Roche, an economic and political analyst who manages the Hong Kong-based hedge fund Independent Strategy, says the world’s third-largest economy is now on the brink, faced with the inevitable reckoning that follows an extended bank-lending binge.
"We’ve got the beginnings of a credit-bubble collapse in China," said Roche, predicting the economy will likely cool from its stellar double-digit growth rate to a 6% annual expansion as a result.
While that may not sound bad, Roche believes the collateral damage from the cooling will be anything but mild, as the banking sector comes under pressure from cumulative
…
Beijing Real Estate Association Admits There’s A ‘Big Bubble’…
by ilene - May 1st, 2010 4:24 pm
Beijing Real Estate Association Admits There’s A ‘Big Bubble’, Supports New Measure To Ban Home Buying
.png)
Courtesy of Vincent Fernando at Clusterstock
Beijing on Friday announced a ban on families buying more than one home, in addition to other measures aimed at cooling the city’s hot property market.
As of Friday, "one family can only buy one new apartment in the city for the time being," the municipal government said in a statement. The government also ordered the implementation of central government policies that ban mortgages for purchases of a third or third-plus home.
It also instigated a central government ban on mortgages to non-local residents who cannot provide more than one year of tax returns or proof of social security payments in Beijing. The statement called for "resolutely curbing unreasonable housing demand." It ordered the implementation of measures earlier unveiled by the State Council on second-home purchases.
One of these days, property market tightening measures are going to hit the market hard. It’s fat chance that these regulatory efforts can perfectly balance out the market so that prices simply stop rising and all is calm.
The latest measures, more harsh than those released by the State Council, are aimed clearly at curbing speculation and promoting healthy and stable development of the property sector, Chen Zhi, deputy secretary-general of Beijing Real Estate Association, told Xinhua.
Speculation is the main reason behind high home prices in Beijing, Chen said.
"There exists a rather big bubble in the city’s real estate market. Housing has become more unaffordable for many," he added.
So even the Beijing real estate association is worrying about a bubble. At least give them some credit here. Did America’s National Association of Realtors (NAR) ever caution that the U.S. housing market has a ‘big bubble’? If they did, we don’t recall it.
****
See also: Beijing city limits home-buyers to one new apartment: Media
BEIJING: The city of Beijing has issued rules limiting families to one new apartment purchase as authorities try to rein in rampant property speculation and soaring prices, state media reported Friday. More here.>>
Another $586 billion “Stimulus” Coming to China?
by ilene - April 28th, 2010 6:59 pm
Another $586 billion "Stimulus" Coming to China?
Courtesy of Mish
China Business says China May Announce 4 Trillion Yuan Stimulus.
China will announce in August a new stimulus package of possibly 4 trillion yuan ($586 billion), the China Business newspaper reported on its Web site, citing unidentified sources.
The plan, from China’s National Development and Reform Commission, will likely cover nine industries including information technology and new energy, the report said.
I have no idea if that is true or not. What I do know is how insane that is, if it is true.
China has the biggest property bubble in the world. Another massive stimulus would fuel that bubble. In turn, increased demand for commodities would further stimulate the property bubbles in Canada and Australia.
If the recovery was genuine, we would not need to see round after round after round of global "stimulus" none of which has created any jobs. Indeed, all this stimulus has done is push up the price of financial assets and commodities everywhere, while fueling property bubbles in Asia and the commodity producing countries.
The one thing Bernanke has wanted but not gotten is stabilization in the US housing market.
The thing about stimulus plans is governments can throw money at problems, but they do not really get to decide exactly where the money goes in the global economy.
The US wanted housing and jobs, it got increases in equities, commodity prices, and gold instead.
China being a command economy can do a bit better at throwing money where it wants, but China cannot control the resultant property bubbles in Canada or Australia.
The net effect of all this stimulus was to create renewed speculation in financial assets and equities with the real economy sucking the gas of blowhards talking nonsense about the nascent recovery.
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(