Modifications lead to another drop in U.S. CMBS delinquencies
Increased loan workouts have led to a second consecutive month of declines for U.S. CMBS delinquencies, according to the latest index results from Fitch Ratings.
CMBS late-pays fell 14 basis points (bps) last month to 8.48% from 8.62% in June. Helping to drive the downward movement were two large loan modifications. In July, the $305 million Schron Industrial Portfolio (GCCFC 2007-GG9) and the $210 million Savoy Park (CSMC 2007-C1) were both modified.
A closer look at the numbers shows that office CMBS delinquencies, increasing for much of this year, took a step back this past month with a 15-bp drop. In contrast, hotel CMBS delinquencies, falling for much of the last several months, stumbled in July with a 24-bp increase.
Flood of foreclosures could cause home prices to drop 20%
There is a consensus forming that the U.S. housing market may finally be on the rebound. Home prices are up 4-straight months, according to the latest S&P Case-Shiller index and Zillow's U.S. home value index increased for the first time since 2007 in the second quarter.
But Gary Shilling of A. Gary Shilling is not convinced home prices have turned to the upside for good.
"The fundamental reason is there is a huge excess of inventory out there," he tells The Daily Ticker's Henry Blodget. "Some of it is listed but a lot of it is a so-called shadow inventory."
U.S. banks told to make plans for staving off collapse
U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
The two-year-old program, which has been largely secret until now, is in addition to the "living wills" the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.
As reported in the latest REALTORSÂ Confidence Index report (RCI), time on the market when a property is sold has been declining. Approximately a third of REALTORSÂ noted that recently sold properties were on the market for less than a month when sold, and 59 percent were sold within 3 months. The proportion of REALTORS who responded that the house had been on the market for 6 months or more when sold fell to 21 percent from 30 percent a year ago.
The housing market is improving because there are more buyers chasing fewer homes. Skeptics of a housing bottom, however, often point to a scary set of numbers: the `shadow inventory` of potential foreclosures`the millions of mortgages that are either in foreclosure or in default.
It`s true that home prices are unlikely to see brisk gains once they do hit bottom because it will take years to absorb this glut. But will this phantom inventory derail the incipient housing bottom? Maybe not, say a number of housing analysts.
"Florida's amusement parks and real estate are a lot alike. Lots of peaks and valleys, dark tunnels, hairpin turns, screaming and occasional vomiting. Sooner or later, the ride starts all over again with brand new people sweating and praying," says Bob Walsh, project director at TopTenRealEstateDeals.com.
In 2006, Florida condo prices hit record highs and people waited in line to buy pre-construction dreams that were being sold out of tin-can trailers. By 2010, many of those same buyers had walked away from their dreams, losing thousands of dollars, and on one else was waiting in line. The Sunshine state was awash with empty condos, and prices plummeted about 50% by 2011. New buildings that were completed in 2007 and 2008 sat empty, buyers were nowhere to be seen. Developers filed bankruptcy all over the state and slashed prices to liquidate the excess inventory.
The housing market is receiving growing media attention as a place to invest. We are seeing an upward move in homebuilder stocks, as the optimism picks up.
We are near a housing bottom, but I`m not convinced it will be all up from here for the housing market.
While the housing market has definitely imp roved from last year and the start of the subprime housing crisis in 2008 that led to the worst recession since the Great Depression, I still feel the optimism is somewhat high and feel there will continue to be hurdles ahead.
The chart of the S&P Homebuilders Select Industry Index (NYSE/XHB) shows the upward trend from the October 2011 bottom to the May peak. Yet we are currently witnessing some stalling on the chart with the XHB showing some topping at around $22.00. The $18.50 to $19.00 levels are showing some buying support at above the 200-day moving average of $17.97.
Strong sales growth this spring whittled down inventories resulting in rising prices in a majority of markets.
Of the 146 markets reporting data in the first quarter, 109 or 75% reported an increase in the median home price compared to the same time period in 2011. This improvement stands in contrast to just 23 markets or 16% that showed a gain over the prior 24-month period from June of 2009 through June of 2011.
At a European conference on the sovereign-debt crises that I attended this week, my overwhelming conclusion, after listening to many experts, is that the U.S. is in far more trouble than Europe.
This was brought home by calculations presented by Larry Kotlikoff of Boston University at a lecture held at the International Institute of Public Finance, the biggest gathering of public-finance experts in the world. Greece may be bankrupt, but the U.S. looks like a giant Ponzi scheme.
Kotlikoff`s calculations show that U.S. unfunded liabilities total US$222-trillion, the highest of all major OECD countries (12% of the time value of U.S. GDP) once accounting for monetary public debt, Social Security deficits and public-health-care unfunded liabilities. One can quibble with some of the calculations, but no one can doubt that the U.S. is in serious fiscal trouble, more so than any other developed economy.
Arizona last year pulled in 99 percent of its Colorado River water allotment, but demand on the river is continuing to grow.
The Cronkite News Service reported the state pulled almost all of its 2.8 million acre-feet allotment for a variety of uses, including housing, business and agriculture.
Sales of existing U.S. homes rose in July, but failed to beat analysts expectations.
Barron's reported the data from the National Association of Realtors apparently leaked early and showed sales were up 2.3 percent to 4.47 million units. That was below the 4.5 million units analysts expected.
Tropical storm Isaac could destroy $36 billion in housing
The latest track of Tropical Storm Isaac puts more than $36 billion in Gulf Coast residential property at risk of flooding from storm surges, with southeastern Louisiana at greatest peril of huge losses, residential data analysis company CoreLogic said on Sunday.
Isaac bore down on the Florida Keys Sunday afternoon, with the latest National Hurricane Center forecasts suggesting a Mississippi landfall Wednesday morning as a Category 2 hurricane.
A possible QE3 has already started damaging the economy
Those (including some of the dovish members of the FOMC) who still think that the policy of a new round of asset purchases is a low risk proposition should only take a look at US gasoline futures. They hit a multi-year high within the past couple of hours (Sunday night).
The U.S. economic recovery hasn't felt much like one, even for people who managed to find new jobs after being laid off. Most of them have had to settle for less pay.
Only 56 per cent of Americans laid off from January 2009 through December 2011 had found jobs by the start of this year, the U.S. Labor Department said Friday.
More than half of them took jobs with lower pay. One-third took pay cuts of 20 per cent or more.
U.S. home prices post first 12-month gain since September 2010, further evidence of housing rebound
WASHINGTON - U.S. home prices rose in June from the same month last year, the first year-over-year increase since the summer of 2010. The increase is the latest evidence of a nascent recovery in the housing market.
The Standard & Poor's/Case-Shiller home price index released Tuesday showed a gain of 0.5 per cent from June 2011.
The last time the year-over-year index increased was in September 2010. For much of that 12-month period, the government was offering a home-buying tax credit.
` Data through June 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the second quarter of 2012 with positive annual growth rates for the first time since the summer of 2010. The national composite was up 1.2% in the second quarter of 2012 versus the second quarter of 2011, and was up 6.9% versus the first quarter of 2012. The 10- and 20-City Composites posted respective annual returns of +0.1% and +0.5% in June 2012. Month-over-month, average home prices in the 10-City Composite were up 2.2% and in the 20-City Composite were up 2.3% versus May. For the second consecutive month, all 20 cities and both Composites recorded positive monthly gains. Eighteen of the 20 MSAs and both Composites posted better annual returns in June as compared to May 2012 ` only Charlotte and Dallas saw a deceleration in their annual rates.
U.S. single-family home prices gained for the fifth month in a row in June, a fresh sign of improvement in the housing market, a closely watched survey showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.9 per cent on a seasonally adjusted basis, topping economists` forecasts for 0.5 per cent, according to a Reuters poll.
