November 2010 U.S. Economic Fundamentals

[Ally]

Halt in foreclosures process in October shows up in monthly drop

The number of U.S. homes repossessed by lenders last month fell, as several major lenders temporarily halted the process amid allegations that thousands of foreclosures were handled improperly.

Home repossessions dropped 9 percent from September to October, foreclosure listing firm RealtyTrac said Thursday.

Repossessions fell 8 percent in Washington state and 12 percent in King County, but were unchanged in Snohomish County from the previous month.

RealtyTrac reported 1,175 King County homeowners received notices in October that their homes face foreclosure — up 31 percent from September and a whopping 239 percent from October 2009.

Lenders such as Bank of America, Ally Financial`s GMAC Mortgage and JPMorgan Chase & Co. suspended some or all of their foreclosure activity after the foreclosure documents mess erupted in late September. In recent weeks, they announced plans to resume some foreclosure actions.

Banks have seized more than 909,000 homes through the first 10 months of the year. and, even with the delays caused by the temporary foreclosure freeze, are on pace to take back more than 1 million homes this year.

Read the full article here.

 

[Ally]

U.S. home builder sentiment low

The latest in a seemingly never-ending series of housing stats came out today. This time it`s the National Association of Home Builders in the United States. The trade organization has what amounts to a confidence index which measures how confident they are about the housing market. The answer is not very confident at all, but more confident than they were last month.

The index in November rose one point to 16, the highest level since June, according to USA Today.

Readings below 50 -- and you don`t have to be a math whiz to see that 16 is well below 50 -- indicate negative sentiment about the housing market. The index hasn`t been above 50 since April 2006.

"Though the gains have been incremental, the fact that builder confidence has improved over the past two months is encouraging," NAHB Chairman Bob Jones said in a press release.

Sal Guatieri, from BMO Capital Markets expected the index to rise, as was the consensus. That increase suggests that " a few more homebuyers (with the emphasis on few) are starting to root around new building sites again." Guatieri wrote in a note.

Read the full article here.

 

[Ally]

Better than expected growth reported in U.S. economy

WASHINGTON — The economy grew slightly faster last summer than first thought, benefiting from stronger spending by U.S. shoppers and improved overseas sales of U.S. goods.

The Commerce Department reports that gross domestic product increased at a 2.5 percent annual rate in the July-September quarter. That was better than the 2 percent pace initially estimated last month.

More brisk spending by American consumers, especially on autos and other big-ticket goods, and stronger sales of U.S. exports to foreign customers were the main reasons for the upgrade.

Read the full article here.

 

[Ally]

New home sales in U.S. fall unexpectedly

WASHINGTON — New U.S. single-family home sales fell unexpectedly in October and prices dropped to a seven-year low, a government report showed on Wednesday, pointing sustained weakness in the housing market following the end of a home-buyer tax credit.

The Commerce Department said sales dropped 8.1% to a 283,000 unit annual rate after an upwardly revised 308,000 unit pace in September. Analysts polled by Reuters had forecast new home sales rising to a 310,000 unit pace in October. Compared to October last year, sales were down 28.5%.

Housing remains one of the weak spots in the economy, which is showing some strength. With unemployment stuck at an uncomfortably high 9.6%, homeowners are struggling to hang on to their houses, keeping the foreclosure wave high and stifling the sector`s recovery. Data on Tuesday showed a drop in the sales of previously owned homes last month. October`s weak sales pace pushed up the supply of new homes on the market to 8.6 months` worth from 7.9 months` worth in September.

Read the full article here.

 

[Ally]

Watch out for falling home pricesUnfortunately, home prices will continue to fall for quite some time. The imbalance between housing supply and demand can only be cured by an increase in the number of people wanting to live in Tallahassee houses, not by shifting people from the leasing side of the market to the owning side of the market.

When I read national real estate reports talk about the real estate recovery hinging on interest rates, tax incentives, and even on consumer confidence, I ask myself …

Where Are These Buyers Living Right Now?

I mean after all, we have a simple problem of falling home prices due to an over-supply in real estate. All those previously mentioned things are great stimulants for demand, but I`m not so sure that real estate is any different than other commodities. If there is too much supply, you must "grow" the demand side. A shift just isn`t going to help.

A shift occurs when tenants become owners or when owners become tenants. Nothing changes in the market in terms of consumption or supply and demand, because the "resident count" does not change. Getting all the people in Southwood to move to Killearn Estates is not going to positively affect Tallahassee home prices either. We need more residents in our local markets in order to consume the glut of homes for sale before the housing market truly embraces a recovery.

Read the full article here.

 

[Ally]

Staring into the abyss of U.S. debt: It`s not all doom and gloomWhen will the government debt crisis turn really serious? Greece, Ireland, Portugal – sure, they`re hard-luck stories, but put together, the three aren`t even as big as Australia, in economic terms.

True.

Now people are fretting about Belgium, of all places. When was the last time anyone even noticed Belgium?

That would be in 2007, when The Economist called for the abolition of Belgium.

So when is a major country going to tip over into a full-blown debt crisis?

Anyone who tells you he can pinpoint that date is a liar. But let`s run down the list and eliminate a few. China is fairly healthy; so is Germany, compared with most other developed countries. France is less so, but its debt levels are roughly the same as Germany`s. The United Kingdom has a whopping deficit, but it also has a new government with a serious austerity plan. To lend money to the British government for 10 years right now, you get 3.3 per cent. That doesn`t exactly scream "panic."

That`s four of the six largest economies. And the other two?

Japan`s books are a disaster, but it has one salvation: Its people are formidable savers. So while its public debt is nearly twice the size of its GDP, most of that is held by Japanese citizens. Japan isn`t so reliant on the kindness of foreigners.

Read the full article here.

 

[Ally]

Florida retirement homes on sale

Maryellen "Mel" Healy and her husband, Vincent Cerniglia, are lifelong musicians. Healy once fronted a band called Mel and the Meltdowns; Cerniglia recorded albums called Voodoo Blues and Doodyhead #1. Both now 58, they enjoy performing together as Mel and Vinnie. When they chanced upon a one-bedroom condo within walking distance of a beachside open microphone night in Lake Worth, Fla., they leaped to buy it. The price: $33,000.

"We just wanted to be able to walk to the ocean, and in a week we owned the condo," says Healy, a retired teacher.

Healy and Cerniglia`s new digs are actually on the pricey side these days compared with many in southern Florida`s age-restricted communities, where living in a style befitting an affluent retiree has become absurdly affordable. At Century Village, which has locations for those 55 and older in West Palm Beach and Boca Raton, basic one-bedroom units are going for as little as $8,500. Monthly fees of $250 or so pay for swimming pools, tennis courts and a golf course, a shuttle bus service to nearby malls and, of course, bingo and shuffleboard.

"What do I say to people who are thinking of retiring in Panama? I tell them, `You don`t know Florida,`" says Adam Raizin, a Realtor at the Corcoran Group in Palm Beach, Fla.

For high-tax-bracket retirees, the deals are sweet as well. In Pompano Beach an owner is asking $100,000 for a two-bedroom apartment near the water that listed for $240,000 six months ago. In Highland Beach the asking price has been cut 40% in a year to $550,000 on a two-bedroom town home with marble floors, granite countertops and ocean views.

Read the full article here.

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