Continue reading Hopes for Housing -- Squashed

Hopes for Housing -- Squashed originally appeared on BloggingStocks on Thu, 11 Nov 2010 18:30:00 EST. Please see our terms for use of feeds.

Continue reading Housing Market Slides, but Some Silver Lining Visible

Housing Market Slides, but Some Silver Lining Visible originally appeared on BloggingStocks on Wed, 27 Jan 2010 08:00:00 EST. Please see our terms for use of feeds.

It looks like the housing market is coming back, but there's still reason to be careful. In July, home resales had their highest monthly increase in at least a decade. The rush is driven in part by a tax credit that expires on November 30, 2009. The rate of sale grew 7.2%, ahead of expectations.

Last month, sales hit a seasonally adjusted annual rate of 5.24 million in July -- up from a 4.89 million in June. This is the fourth month in a row in which seasonally adjusted sales increased, and it was the strongest growth rate since August 2007. A Thomson Reuters survey had forecast 5 million, but the reality exceeded that.

Continue reading Housing sales come back, led by first-timers

Housing sales come back, led by first-timers originally appeared on BloggingStocks on Sun, 23 Aug 2009 11:10:00 EST. Please see our terms for use of feeds.

Here's some good news. Home prices unexpectedly rose in May according to the Case Shiller index that measures changes in home prices.

Some 13 of 20 metropolitan areas saw the biggest monthly gains. The four highest were Cleveland, San Francisco, Dallas, and Chicago.

Concerning the change in dynamics, David Blitzer, chairman of the committee at Standard & Poor's, which publishes the Case Shiller index, said: "This could be an indication that home price declines are finally stabilizing."

Continue reading Good news! Home prices rise in May

Good news! Home prices rise in May originally appeared on BloggingStocks on Wed, 29 Jul 2009 12:00:00 EST. Please see our terms for use of feeds.

Early estimates of a contraction in the U.K. economy were not enough. First quarter 2009 estimates were revisited, showing a 2.4% fall in gross domestic product from the last quarter of 2008 to 2009. This downward revision made the first three months of the year the worst since people wore skinny ties, hated communism, and bore nicknames like "Buzz."

In the second quarter of 1958, U.K. GDP plummeted 2.6%, though the 2.4% threshold matches the depths hit in 1979. The original 2009 Q1 estimate was -1.9%, according to the Office for National Statistics in London.

Continue reading U.K. economy has worst quarter since 1958

U.K. economy has worst quarter since 1958 originally appeared on BloggingStocks on Tue, 30 Jun 2009 10:40:00 EST. Please see our terms for use of feeds.

Before celebrating, though, remember that depressed housing prices and constrained financial markets make it tougher to dip into home equity to pay for school (a favorite strategy of the past few years), and layoffs are putting an obvious strain on household finances. So, the bargain in all this may be hard to find, even with financial aid increases of 9.2%.

Continue reading Recession: something (finally) strong enough to slow tuition hikes

Recession: something (finally) strong enough to slow tuition hikes originally appeared on BloggingStocks on Mon, 29 Jun 2009 15:00:00 EST. Please see our terms for use of feeds.

Continue reading More bank stress tests needed?

More bank stress tests needed? originally appeared on BloggingStocks on Tue, 09 Jun 2009 10:10:00 EST. Please see our terms for use of feeds.

This post is part of our feature on Money Losers of 2008. See all 20.

For a second year in a row, American homeowners are among the biggest losers of 2008. In 2007, predictions were that American homeowners would lose over $103 billion. Now at the end of 2008 the number jumped to losses of $2 trillion as the value of homes continue to fall with no end in sight. As job losses increase, even more families will be forced into foreclosure.

Homeowners who bought at the top of the housing bubble between 2005 and 2006, could wait decades for the prices to reach that level again. People who must move for a new job or family crisis find they either have to come up with cash for closing (if they find a willing buyer) or they must walk away from the loan and give the house back to the bank either through foreclosure or through a deed-in-lieu of foreclosure.

The housing bubble that started to inflate in 2002 and burst in 2007 drove housing prices way out of the normal range. The normal ranges for housing prices track these measures:

• Income: The house price should not exceed three times your average household income, which was true from 1950 to 2000. In 2006 the average household income was $66,600, so the average home price should have been about $200,000. But during that year the average home price was about $300,000.

Continue reading Money losers of 2008: The American homeowner, still sinking after the bubble burst

Money losers of 2008: The American homeowner, still sinking after the bubble burst originally appeared on BloggingStocks on Tue, 23 Dec 2008 15:15:00 EST. Please see our terms for use of feeds.

This post is part of AOL Money & Finance's Best & Worst in Money 2008 feature.

The year 2008 brought the word "greed" to new levels with major companies going bankrupt thanks to the greed of their top execs, who were more worried about lining their own pockets than about the interests of their customers and shareholders. This greed also helped to fuel the housing bubble that burst and sent home prices falling in what seems like an unending downward spiral. As the financial news continues to worsen, it's hard to pick the biggest money story of the year. We've pulled together our top four picks, and it's up to you to vote on the biggest money story of the year.

Here are our top four picks in alphabetical order:

Collapse of Wall Street
The world hasn't seen so many Wall Street firms go bust since the Great Depression, and we seem to be teetering on the edge of another worldwide depression. Top Wall Street execs pocketed millions, and in some cases, billions of dollars thanks to sales of complex financial instruments that it appears no one truly understood (or if they did understand their toxic natures they perpetrated a huge fraud on the investors who bought them). Now these same executives pocket millions in golden parachutes as they leave the firms they destroyed. And, while they enjoy their millions, investors, customers and employees of these now defunct or badly bruised firms face destroyed careers and/or portfolios.

Continue reading Best & Worst in Money 2008: Money story of the year

Best & Worst in Money 2008: Money story of the year originally appeared on BloggingStocks on Tue, 09 Dec 2008 18:40:00 EST. Please see our terms for use of feeds.

Continue reading Existing home sales jump, but are we out of the woods just yet?

Existing home sales jump, but are we out of the woods just yet? originally appeared on BloggingStocks on Mon, 25 Aug 2008 14:03:00 EST. Please see our terms for use of feeds.

I've lived through the internet bubble (and have some scars) and tried to avoid the real estate bubble (it wasn't easy). But, bubbles have a way of being painful and longlasting.

So, no doubt, the real estate bubble has been painful (may be the worst market for at least the past 50 years). But, could this be a short-run thing?

Perhaps so. In fact, this is the view from the front-cover piece in this week's Barron's [a paid publication]. Actually, there may be the start of a real estate recovery by the end of this year.

This is certainly a controversial stand. Keep in mind that inventory levels are stubbornly high (helped by foreclosures) and housing prices seem to fall further and further. What's more, the credit crunch is still here and there are serious problems with major real estate operators, such as with the implosion of IndyMac Bancorp (NYSE: IMB), as well as the deterioration of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

OK, so why the optimism? Well, if you peel back some of the recent housing data, it appears that things are stabilizing in terms of home sales and inventories. Basically, market forces are making the necessary adjustments.

Continue reading Barron's: Real estate poised for the giddy days again?

Barron's: Real estate poised for the giddy days again? originally appeared on BloggingStocks on Sat, 12 Jul 2008 14:40:00 EST. Please see our terms for use of feeds.

The housing market can use all the good news it can get, and the latest news out of Southern California is definitely good, as home sales in the month of April reportedly jumped 22% in that part of the state.

California has been hit pretty hard in the recent housing crunch. Of course, the reason why California has been so hard hit is because it was also one of the states that had the best growth during the housing boom.

The flip side of the story is that the rise in home sales was mostly led by bargain hunters who swooped into the market and picked up foreclosed properties. According to the report, 38% of the homes purchased last month had been involved in foreclosure procedures at some point over the past year.

Continue reading Some good housing news from California

Some good housing news from California originally appeared on BloggingStocks on Tue, 20 May 2008 15:34:00 EST. Please see our terms for use of feeds.

Continue reading Donald Trump pulls $100 million for his Palm Beach home

Donald Trump pulls $100 million for his Palm Beach home originally appeared on BloggingStocks on Thu, 15 May 2008 13:48:00 EST. Please see our terms for use of feeds.

Continue reading Finally some good housing news

Finally some good housing news originally appeared on BloggingStocks on Wed, 07 May 2008 16:00:00 EST. Please see our terms for use of feeds.

AP reports that home sales dropped to levels not seen since the George H. W. Bush housing recession in 1991. And home prices are plummeting faster than they have since 1970.

Here are the details: new homes dropped by 8.5% in March to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991. And the median price of a home sold in March dropped by 13.3% compared to March 2007, the biggest annual price decline since a 14.6% plunge in July 1970.

What the current Bush housing collapse and the earlier one share is the after math of too much capital flowing in to the housing market. Under Bush the elder, the capital flowed in due to the deregulation of the Savings & Loan industry -- resulting in a $250 billion bailout. Under Bush II, the problem was the $1.3 trillion subprime mortgage market which made capital available to people who couldn't afford to pay the mortgage -- after all, 47% of those loans required no documentation of borrower's income.

Continue reading Home prices fell 13.3% in March

Home prices fell 13.3% in March originally appeared on BloggingStocks on Thu, 24 Apr 2008 12:05:00 EST. Please see our terms for use of feeds.

The Boston Globe interviews Warren Group CEO Timothy Warren whose firm tracks housing in Massachusetts. He suggests that it could take about 10 years before housing prices return to where they were at the peak in 2005.

Warren is a breath of fresh air when it comes to analyzing the housing market. Unlike industry-sponsored studies -- such as this bubbly comment from the National Association of Realtors -- Warren carefully tracks and analyzes data and his observations are not filtered by the need to use public pronouncements to spur real estate transactions.

But Warren's loyalty appears to lie with objective data gathering and analysis, rather than having an ulterior motive. He thinks that the declining number of home sales is worse than the previous housing slump of the early 1990s. He notes that "In the 1990s, we had just two years when the number of sales declined. We are in the fourth year of declining sales in the current slump."

Continue reading Could housing take a decade to recover?

Could housing take a decade to recover? originally appeared on BloggingStocks on Sun, 30 Mar 2008 09:36:00 EST. Please see our terms for use of feeds.

Yesterday I received a great comment from long-time reader Dr. Michael Schneider of barrelomoney.com. He wrote:

Every market has buyers and sellers-- so far it seems the remedies for the housing mess have been directed at helping the banks and homeowners (sellers) and, rightly or wrongly, propping up housing prices. This has the effect of helping those who created the mess or who profited from it while possibly hurting potential buyers-- including 1st time home-buyers who may have to pay higher prices for homes that may still be overpriced.

This may seem like fairly obvious point but it has profound ramifications: it's been completely missed by the people who are supposedly working to solve these problems. Propping up home prices delays the inevitable reversion to something resembling intrinsic value, and prices first time home buyers out of the market.

This was one of the effects of the subprime bubble as well: lax lending prices that made homes available to people with brand new SUVs and double-digit FICO scores made it difficult for people who wanted to do it the right way: work hard, save money, and make a 20% down payment on an affordable home with a 30-year fixed mortgage.

When you think about it like that, you have to wonder why there is so much resistance by supposedly reasonable politicians to just letting the darn prices come back down to earth: it's a zero-sum game, and lower home prices will help just as many people as they hurt.

The real victims of a housing industry bailout originally appeared on BloggingStocks on Sat, 29 Mar 2008 09:40:00 EST. Please see our terms for use of feeds.

The New York Times reports that Berkshire Hathaway Inc. (NYSE: BRK.A) Warren Buffett's annual letter includes some important observations about the state of the securities markets. The one I found most eye opening was that companies are using unrealistically high assumptions about pension fund returns to boost their reported earnings.

Here are three themes I found most interesting:

• 8% pension fund return assumptions. Buffett said that many companies assume their pension funds will earn 8% a year from investments, a return he deems unlikely given the low level of interest rates, but one that lets them report higher profits now. Buffett notes that by the time those managers need to lower those assumptions to be more realistic, they'll be long gone from their jobs -- along with their bonuses.
• Ending of Home Price Appreciation (HPA) exposes financial folly. Buffett coined a new acronym, HPA, to highlight a familiar point. People were willing to take on risky mortgages because they assumed that their houses would rise in value. He noted that "As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out - and what we are witnessing at some of our largest financial institutions is an ugly sight."

Continue reading Golden nuggets in Buffett's annual letter

Golden nuggets in Buffett's annual letter originally appeared on BloggingStocks on Sat, 01 Mar 2008 08:22:00 EST. Please see our terms for use of feeds.

Continue reading Bank of England cuts benchmark interest rate by a quarter point

Bank of England cuts benchmark interest rate by a quarter point originally appeared on BloggingStocks on Thu, 07 Feb 2008 11:23:00 EST. Please see our terms for use of feeds.

Continue reading Market's latest rumbling seen speeding U.S. fiscal stimulus package

Market's latest rumbling seen speeding U.S. fiscal stimulus package originally appeared on BloggingStocks on Tue, 22 Jan 2008 14:35:00 EST. Please see our terms for use of feeds.