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The Fed fund futures market expectations of a rate hike continue to diminish after today's modest rise in the University of Michigan's consumer sentiment index.
Markets are currently pricing in an 88% chance of no rate hike for the Sept. 16 meeting. This is a 2% increase from yesterday's 86% reading and 4% rise from last week's result.
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Reuters - Billionaire businessman Donald
Trump is offering to rescue TV personality Ed McMahon from
foreclosure on his multimillion dollar Beverly Hills home.
I was playing around this morning with the National Association of Realtors’ second-quarter home sales data (I know, I lead an exciting life) and I noticed something startling.
We’re entering a kind of real estate Twilight Zone.
Many of the states with the best housing and job markets (Washington, Idaho, Oregon, Hawaii, North Carolina) have had the biggest drops in sales, and the worst markets, in terms of foreclosure rates and home price declines (Arizona, California, Nevada, Ohio and Florida), are now seeing the strongest sales. Home sales in the robust Washington state market fell 36.6% in the second quarter compared to the same period a year ago. During the same one-year stretch, home prices in the Yakima (Wash.) metro area increased by 8.9% -- the highest appreciation of any metro area tracked by the Realtor group. Home sales in Nevada increased 17.9% in the second quarter and home prices fell 23.6% in the Las Vegas-Paradise metro area.
To explain this phenomenon, it helps to remember that the credit crisis began one year ago. Last summer, the weakest housing markets, in Nevada, California, Arizona and Florida, were already seeing rapidly falling home prices and sales. But the stable markets in Utah, Idaho, Washington and North Carolina weren't. After the credit-crunch began in August, those markets suddenly began to flag as buyers found it increasingly difficult to secure mortgages.
At the same time, foreclosures pushed home prices so low in California, Arizona, Florida, and Nevada markets that they became more affordable and attractive for first-time homebuyers and investors. Sales in many of the weakest markets suddenly began increasing. I’ve heard anecdotally that some foreclosed homes in California are getting competing offers from investors and first-time buyers.
States like New York and Texas, which have good job markets, don't seem to be following this trend. They have maintained relatively stable home prices and sales.
And now, the states with the best and worst sales for the second quarter:
BEST
1. NEVADA 17.9%
2. CALIFORNIA 3.7%
3. ARIZONA -4.2%
4. VIRGINIA -8.1%
5. SOUTH DAKOTA -8.7%
6. OHIO -10.5%
7. MINNESOTA -10.8%
8. NORTH DAKOTA -11.4%
9. NEW YORK -11.6%
10. COLORADO -11.7%
WORST
1. WASHINGTON -36.6%
2. IDAHO -33.7%
3. OREGON -33.5%
4. IOWA -31.7%
5. HAWAII -31.1%
6. MARYLAND -30.0%
7. DELAWARE -29.3%
8. NORTH CAROLINA -29.1%
9. WYOMING -28.2%
10. District of Columbia -28.0%
Greenspan said that he expects housing prices to begin to stabilize in the first half of 2009 although they could continue to drift lower for quite some time thereafter, even after essentially reaching bottom.
Greenspan, however, is not changing his long-standing belief that Freddie Mac and Fannie Mae represent the root of all evil...
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The downside risks to growth have recently risen and the economy is expected to be "extremely sluggish" in 2008, according to one Fed official on Friday.
Chicago Fed President Charles Evans (non-voter) said the U.S. economy faces a triple-front threat as growth risks are on the rise, inflation is "unsettingly high" and financial markets remain in turmoil amidst depressed housing and auto markets.
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Economists say the unexpected boost in the Fed's industrial production report doesn't change the overall trend in the economy, which is clearly on a downward slope. The report unexpectedly rose 0.2% in the month of July, against expectations that it would come in flat, while the previous month's gain was downwardly revised one-tenth to 0.4%.
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The preliminary consumer sentiment survey from Reuters & the University of Michigan improved half a point to 61.7, following the previous month's near five-point rebound. Also, one-year inflation expectations moved down to 4.8% from July's 5.1% forecast.
The slight improvement contrasts with the recent deterioration in the weekly survey of consumer comfort from ABC News.
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AP - Inflation is running at the fastest pace in 17 years, the job market is under further strain and foreclosure filings are surging.
AP - Rates on 30-year mortgages remained at the same level for a third week while rates on other types of home loans posted small declines.
The current economic turmoil is comparable to the early 1990s, which can be a valuable guide to understanding what's next as the U.S. economy seeks to rebound into healthy growth, according to one Fed official on Thursday.
Minneapolis Fed President Gary Stern, a voter on the FOMC who is known to tilt towards the hawkish viewpoint, said...
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AFP - US home foreclosures rocketed 55 percent in the past year, a private research report showed Thursday underlining that the American property market remains mired in a troublesome downturn.
Avoiding Realtor commissions might seem like a good idea now that home prices are falling and many people owe more in mortgages than their homes are worth. Free sites like Craigslist.org certainly help that approach. Forsalebyowner.com was among the first sites to facilitate such sales online. It charges a fee of from $90 to $900 for advertising on its site. That’s a lot less than a 6% commission.
Data from the National Association of Realtors shows that fewer people are finding the homes they buy through agents. Last year 29% of all home buyers found their home on the Internet first versus 34% through their agent. Ten years ago those numbers were dramatically different. Half found their homes through an agent and only 2% through the Internet.
Those are the home buyers though. I'm sure the agents don't mind that home buyers are doing some of their work for them. I’d like to see data on how many people try to sell their homes on their own first and then call an agent.
Prices of homes in the United States fell by an average of 7.6% in the second quarter of 2008, compared to the previous year, as 115 of the 150 metro areas surveyed saw declines, according to a new release from the National Association of Realtors.
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U.S. home foreclosures jumped by 55% from the previous month's year-over-year results, according to RealtyTrac's July 2008 U.S. Foreclosure Market Report.
There were 272,171 foreclosure filings in the month of July, an 8% increase from the prior month. According to RealtyTrac, one in every 464 U.S. households received a foreclosure filing...
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The seasonally adjusted Consumer Price Index rose more than expected on both fronts, as the core rate ticked up 0.3% (0.327%) in July, contributing to a 2.5% year-over-year change. Total inflation rose 0.8% (0.818%) in the month and 5.6% on the year, according to data released by the U.S. Labor Department on Thursday.
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Ignoring a higher CPI report, U.S. fixed income markets took worse- than-expected jobless claims figures at face value on Thursday, with bonds increasing on the arguably soft data.
Initial claims for unemployment benefits in the United States dropped back slightly to 450K in the week ending Aug. 9, but forecasts were for initial claims to fall to 435k this week, following last week's upwardly revised reading of 460k...
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Reuters - U.S. foreclosure activity in July rose
55 percent from a year earlier as a slump in once-sizzling
housing markets forced yet more borrowers to default on their
mortgages, according to a monthly report.
Reuters - Former Federal Reserve
Chairman Alan Greenspan predicts U.S. house prices will begin
to stabilize in the first half of next year, even as he faulted
the government's rescue of mortgage market giants Fannie Mae
and Freddie Mac, the Wall Street Journal reported on Thursday.
Reuters - It may be just a blip in
the housing downturn, but even a temporary rebound in home
sales is a welcome respite for California's Riverside County,
one of the places hardest hit in the U.S. mortgage and
foreclosures crisis.
