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HomeAmerica’s Hidden Inflation and How You’re Getting Screwed
Posted by Larry Doyle on March 23rd, 2010 1:47 PM |
Inflation is dead, right?
If we believe The Wall Street Journal, all we had to do was read yesterday’s edition to learn this fact. The WSJ wrote, Inflation is Dead? Long Live Long-Term Treasurys:
The Treasury Department is selling $118 billion in debt this week, just as Congress tackled a $940 billion health-care bill over the weekend, shining the spotlight on the U.S.’s hefty fiscal commitments.
Budget-deficit and debt levels are forecast to worsen: Total deficits including interest costs are set to remain above $1 trillion in the next decade, according to Barclays Capital. But longer-dated U.S. government debt is as popular as ever, even at the measly 3.689% and 4.580% yields that 10- and 30-year Treasurys are paying, respectively.
That popularity is supported by a single, compelling economic fact: Inflation is dead.
There you go. The WSJ said it, so it must be right. The policy wonks in Washington continually repeat it, so they must be right, too. Or are they? (more…)
Housing Plans Promote Long, Slow Decline
Posted by senseoncents on February 26th, 2010 9:32 AM |
Why do I remain overall bearish on housing?
All reports to the contrary, the pace of delinquencies will continue to steadily pressure housing — especially in selected markets.
While the Obama administration is dogged by the issues within housing, I continue to believe that their approach is more exacerbating the situation than improving it. What is the crux of the problem within housing? The law of unintended consequences which changes the behaviors of some, given the engagement with others.
Bloomberg provides some insights on Obama’s new proposals toward housing in writing, Obama May Prohibit Home-Loan Foreclosures Without Preview:
The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program. (more…)
Morgan Stanley Remains Bearish on Housing
Posted by Larry Doyle on January 13th, 2010 1:20 PM |
The equity markets can and will do whatever they want, but when I look at the economy I remain steadfastly fixed on our housing and labor situation. When these cornerstones of our economic landscape not only stabilize but show marked improvements I will become more constructive on our overall outlook. Are we there yet? No way.
Thanks to a loyal Sense on Cents supporter, I am happy to provide Morgan Stanley’s U.S. Housing Outlook for 2010. What are the key points to this report?
1. Housing transactions have increased and prices have stabilized due to massive government supports.
2. The bottoming process continues and the trend for housing remains down given the high percentages of homeowners with negative equity, the high rate of unemployment, the lack of a viable Jumbo mortgage market, and increasing rates of mortgage delinquencies. (more…)
Foreclosures Cast Increasingly Long ‘Shadow Inventory’
Posted by Larry Doyle on December 17th, 2009 5:52 PM |
I continue to reiterate that as long as mortgage delinquencies increase, we will experience a subsequent increase in foreclosures, in turn excessive housing supply, and a weak housing market.
This dynamic is not about to change anytime soon. We saw evidence of this today as one of the largest homebuilders, Hovnanian Enterprises, reported extremely weak earnings. The Wall Street Journal covers the Hovnanian story specifically and housing in general in this video clip.
Specifically on the foreclosure front, Bloomberg reports Shadow Inventory of U.S. Homes Climbs:
The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.
The “shadow inventory” rose from 1.1 million a year earlier. Such properties include those taken over by banks and mortgage companies and those where the loans are at least 90 days delinquent, the Santa Ana, California-based research firm said in a report today.
How long might it take for the excess housing supply and foreclosure problem to abate? Bloomberg offers:
the pending supply reveals there is still quite a bit of inventory that will impact the housing market for the next few years,” First American said.
Batten down the hatches.
LD
Gaming Housing Statistics or Time Reveals Truth
Posted by Larry Doyle on November 18th, 2009 10:46 AM |
Time reveals truth.
I love that pearl of wisdom shared by Danielle Park, my guest this past Sunday evening on No Quarter Radio’s Sense on Cents with Larry Doyle. I find it very applicable to the economic report released this morning on housing starts. What did that report indicate? Housing starts in October registered a supposed surprising decline of 10.6% to a seasonally adjusted 529, 000 annual rate.
Is this truly a surprise? Market analysts and government pundits who continually ‘oversell’ economic data as legitimate, when in fact that data is gamed via government props, need to show surprise when a report disappoints. If they do not act surprised, then they merely expose themselves and lose credibility.
The simple fact is the housing market in our country remains in decline. One merely needs to look at the continually increasing levels of delinquencies to understand that. I addressed this important data last May in writing, “The Most Critical Economic Statistic”:
Which economic statistic is the most important? Unemployment? Housing starts? Trade deficit? Inflation? Retail sales?
Well, they are all important . . . but as I review the many statistics, the economic data that I believe most significant are loan delinquencies. Now, mind you a delinquency does not mean that the loan has defaulted and been foreclosed upon. A delinquency is merely a late payment. Typically loans are classified as 30 day, 60 day, or 90 day delinquent. There is a very high correlation between delinquent loans and those that default. (more…)
Mortgage Modifications: Statistically Insignificant
Posted by Larry Doyle on October 29th, 2009 4:16 PM |
How meaningful is the mortgage modification program? What have we gotten for the billions committed to this initiative? Are you sitting down?
For frame of reference, the U.S. Census Housing Data indicates there were 110.3 million occupied housing units in the country in 2007. Of that number, 68.1% were owner-occupied. Simple math tells us 75.1 million people owned their home at that point.
Various studies indicate that approximately one of every three homeowners are now ‘underwater’ (mortgage balance exceeds home value). Many analysts believe that number is headed higher. A Deutsche Bank analyst projects one of every two homeowners will ultimately be ‘underwater.’
Simple math indicates that approximately 25 million homeowners are underwater. What is being done to support these homeowners? Uncle Sam’s primary program to support this growing problem is the ‘mortgage modification’ program. This program is supposed to be driven by mortgage servicers. How is it working? Let’s navigate. (more…)
Jobs + Housing = Consumer Confidence
Posted by Larry Doyle on October 27th, 2009 3:05 PM |
Market analysts and government officials would attempt to define overall confidence in the economy utilizing a variety of data. In my opinion, consumer confidence is ultimately a function of two factors: employment and housing.
While Uncle Sam has spent trillions of dollars backstopping various sectors of the financial markets and billions in economic stimulus, the size and scope of our employment and housing markets vastly overwhelm Uncle Sam’s ability to ‘prop them up.’ As a result, I am not surprised to see the monthly data on consumer confidence reflecting real weakness.
Bloomberg provides further insight on this topic in writing, U.S. Economy: Consumer Confidence Drops On Unemployment Concern:
Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment.
The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low. (LD’s highlight) (more…)
Obama Administration Won’t Release Mortgage Modification Figures; Sense on Cents Already Did
Posted by Larry Doyle on November 11th, 2009 2:50 PM |
No news is good news, right?
Well, that may work in raising teenagers but when it comes to public policy in general and housing policy specifically the American public deserves to know what is going on. Why? American taxpayers are picking up the tab, that’s why.
Regrettably, our wizards in Washington are often reluctant to provide the transparency the American public deserves.
I witness this dynamic again today in reviewing a story on the mortgage modification program. The Wall Street Journal puts a positive spin on developments in the mortgage modification process by writing, Mortgage Program Gathers Steam After Slow Start:
Won’t release figures on completed modifications until December? Why not? What’s up with that? (more…)
Tags: HAMP, housing policy, Making Home Affordable, mortgage modifications, Mortgage Program GAthers Steam After Slow Start, Obama administration won't release successful mortgage modifications, review of TARP, success of mortgage modifications, Treasury comments on mortgage modifications
Posted in General, Housing Crisis, Mortgage Crisis, Mortgages, Obama Administration | 6 Comments »