Has the Fed 'Walked Away' From Housing? + The Fallacy of a Pain-Free Path to a Healthy Housing Market

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Has the Fed 'Walked Away' From Housing?
http://seekingalpha.com/article/243472-has-the-fed-walked-away-from-housing?source=dashboard_macro-view
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The Fallacy of a Pain-Free Path to a Healthy Housing Market
http://dallasfed.org/research/eclett/2010/el1014.html
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Comments on November Personal Income and Outlays Report

[mEDITate-OR:
not see that it IS turning around...
and why.
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The two-month method of estimating real PCE growth for Q4 (a fairly accurate method), suggests real PCE growth of 4.3% in Q4!
So this looks like a pretty strong quarter for growth in personal consumption.
The last time real PCE grew at more than 4% was in 2006.
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Comments on November Personal Income and Outlays Report
http://www.calculatedriskblog.com/2010/12/comments-on-november-personal-income.html
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Lawler: Overall Housing Stock Growth Likely to Slow Even Further in 2011

[mEDITate-OR:
not ask some questions that NEED to be asked...
and
then be given info that not only we need, to understand...
but that helps us see other things we would not see.
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For some unknown reason, many housing “analysts” who talk about housing “supply” (shadow inventory, listings, etc.) do not even MENTION the outlook for the supply of the aggregate housing stock!!!!!!!
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When we discuss residential investment and real GDP growth in 2011, we are talking about growth from the levels at the end of 2010.
Even though the overall housing production might be lower in 2011 (per Lawler's forecast), residential investment will probably make a positive contribution to GDP growth for the first time since 2005
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Lawler: Overall Housing Stock Growth Likely to Slow Even Further in 2011
http://www.calculatedriskblog.com/2010/12/lawler-overall-housing-stock-growth.html
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Older Workers and the Lump of Labor Fallacy + Toil and Trouble By PAULA SPAN

[mEDITate-OR:
be shocked, yes shocked, that times they are a'chang'n
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The participation rate is trending up for all older age groups.
Unfortunately Span concluded:
So to that Wisconsin reader who grumped, “Too many older people (professors, Morley Safer, etc.) continue to work for selfish reasons, thereby taking jobs from the young and unemployed” — I’m afraid you ain’t seen nothin’ yet.
That is a classic lump of labor fallacy. This is a common error people make with immigration - that immigrants displace other workers, when in fact immigration increases the size of the economy. I suspect we will see more and more of this age related "lump of labor" fallacy. The number of jobs in the economy is not fixed, and people staying in the work force just means the economy will be larger.
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You need to read, and think, about this.
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Older Workers and the Lump of Labor Fallacy
http://www.calculatedriskblog.com/2010/12/older-workers-and-lump-of-labor-fallacy.html
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Toil and Trouble
By PAULA SPAN
http://newoldage.blogs.nytimes.com/2010/12/22/toil-and-trouble/
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New Home Sales weak in November

[mEDITate-OR:
not see a very interesting re-interpretation of CR's wonderful charts
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Dirk van Dijk, CFA, in the 2nd article below takes a brand new take on CR.
Both of these are worth reading.
But, this is from Dirk:

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It's important to keep in mind how low sales were in October to put November's 5.5% increase in context.

If October's original sales rate hadn't been revised, November's increase would have been just 2.5%

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The seven lowest months on record (back to 1963) for new home sales have all been in the last seven months.

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Regionally, things were all over the map.

New home sales in the West soared by 37.3% on the month but are down 16.5%% year over year.

The South is the biggest and therefore most important of the Census regions when it comes to housing data it was up 5.8% on the month, but down 12.7% from a year ago.

Worst hit for both the month was the Northeast. There sales plunged 26.7% on the month and are off 29.0% from a year ago.

Sales in the Midwest were off 13.3% from September and are down 53.5% from a year ago, easily making it the hardest hit on a year-over-year basis.

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New Home Sales weak in November
http://www.calculatedriskblog.com/2010/12/new-home-sales-weak-in-november.html
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New Home Sales Disappoint
http://www.zacks.com/stock/news/45100/New+Home+Sales+Disappoint
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$305 on gas this month - Bah! Humbug! + Oil settles above $90 - up 11% this month

[mEDITate-OR:
"What me worry" about getting to grandma's house for Christmas...
on time &/or under budget.
And,
not see how wise ol' Santa was to use reindeers to create his "parting (sp?) wind power.
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Please note - if you compare the first and last charts, you will see that the recent "crude" (no pun intended, before Christmas) has NOT reached your gas pumps - yet.
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Oil prices haven't settled above $90 a barrel since October of 2008.

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Gas prices near $3 a gallon
http://money.cnn.com/2010/12/13/news/economy/three_dollar_gas/index.htm
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$305 on gas this month - Bah! Humbug!
http://money.cnn.com/2010/12/21/news/economy/gas_prices/index.htm
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Oil settles above $90
http://money.cnn.com/2010/12/22/markets/copper_commodities/index.htm
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Buy vs. Rent: An Update

[mEDITate-OR:
not know that what you are paid controls what you can afford to pay...
Disirregardless, the differences between Seattle-Portland and the San Francisco Bay area are very small. While all of them are MUCH higher than Manhatten, NY or Washington DC.
And, tis shocking, shocking we say, to see how low Las Vegas and Phoenix are down below.

The reason for the last is, of course, the effects of both the boom/peak and now the foreclosures.
Stunning, numbers.
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It’s pretty amazing when you think about it. The country has suffered through a terrible crash in home prices, yet buying a house remains an iffy proposition in many markets.
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Below is an updated list of rent ratios — the price of a typical home divided by the annual cost of renting that home — for 55 metropolitan areas across the country. most ratios have not changed much since then.
A good rule of thumb is that you should often buy when the ratio is below 15 and rent when the ratio is above 20. If it’s between 15 and 20, lean toward renting — unless you find a home you really like and expect to stay there for many years.
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Metro area	Ratio
East Bay, Calif.	35.9
Honolulu	34.4
San Jose, Calif.	32.7
San Francisco	27.9
Seattle	27.3
Charlotte, N.C.	27
Orange County, Calif.	27
New York (Manhattan)	26.7
Raleigh, N.C.	26.2
Portland, Ore.	25.9
North – Central New Jersey	25.2
Nashville	24
Denver	22.6
San Diego	22.1
Long Island, N.Y.	21.4
Milwaukee	21.4
Austin, Tex.	20.5
Norfolk, Va.	19.9
Richmond	19.7
Memphis	19.3
Bridgeport, Conn.	18.5
Hartford	18.4
Boston	18.4
Washington – Northern Virginia – Maryland	18.3
Oklahoma City	18.2
Baltimore	17.6
Columbus, Ohio	17.6
Palm Beach County, Fla.	17.6
Salt Lake City	17.6
Sacramento	16.7
San Antonio	16.7
Chicago	16.6
New Orleans	16.2
Philadelphia	16.1
Houston	15.9
Fort Lauderdale, Fla.	15.7
Miami	15.6
New York	15.4
Los Angeles	15.4
Kansas City, Kan.	15.3
Inland Empire, Calif.	15.1
National average for metro areas	15.1
Indianapolis	15.1
Jacksonville, Fla.	15
Minneapolis	14.9
St. Louis	14.6
Las Vegas	14.3
Atlanta	14.3
Orlando, Fla.	14.1
Tampa, Fla.	14
Cincinnati	13.9
Dallas – Fort Worth	13.8
Phoenix	13.3
Detroit	12.4
Cleveland	11.7
Pittsburgh	11.4

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Buy vs. Rent: An Update
http://economix.blogs.nytimes.com/2010/12/22/buy-vs-rent-an-update/
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November Existing Home Sales: 4.68 million SAAR, 9.5 months of supply

[mEDITate-OR:
spend too little time looking at, and reading, CRs charts & articles.

If these still are not the best available, show me any better.
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The bottom line: Sales were weak in November - below consensus and close to Tom Lawler's forecast - and existing home sales will continue to be weak for some time.
Inventory is very high, and the year-over-year increase in inventory is very concerning. The high level of inventory will continue to put downward pressure on house prices.
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IMPORTANT: On a seasonal basis, inventory usually bottoms in December and January, and then will start increasing again in February and March. Since the NAR "months-of-supply" metric uses Seasonally Adjusted (SA) sales, but Not Seasonally Adjusted (NSA) inventory, this seasonal decline in inventory will lead to a lower "months-of-supply" in December and January. I expect inventory in December to decline to around 3.4 million units, and the months-of-supply to fall to the mid-to-high 8s.
The key is to recognize the seasonal pattern, and watch the YoY change in inventory.
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Inventory increased 5.4% YoY in November.
The year-over-year increase in inventory is especially bad news because the reported inventory is very high (3.71 million), and the 9.5 months of supply in November is well above normal.

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Sales in November 2010 (4.68 million SAAR) were 5.6% higher than last month, and were 27.9% lower than November 2009. 

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Months of supply decreased to 9.5 months in November from 10.5 months in October.
This is very high and suggests prices, as measured by the repeat sales indexes like Case-Shiller and CoreLogic, will continue to decline.

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Existing Home Inventory increases 5.4% Year-over-Year
http://www.calculatedriskblog.com/2010/12/existing-home-inventory-increases-54.html
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November Existing Home Sales: 4.68 million SAAR, 9.5 months of supply
http://www.calculatedriskblog.com/2010/12/november-existing-home-sales-468.html
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Employment Growth Lags GDP in Recoveries

[mEDITate-OR:
wonder who really is on first....
jobs..., housing..., manufacturing..., exports..., agriculture...?

Inquiring minds, those who want to know...
will enjoy reading this interesting article.
U can 2
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Employment Growth Lags GDP in Recoveries
http://seekingalpha.com/article/242753-employment-growth-lags-gdp-in-recoveries
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Weighing Costs, Companies Favor Temporary Help VS Should the Rise in Temporary Workers Scare Us? VS Explaining the Statistics on Temporary Hires

[mEDITate-OR:
Finally, we will not miss out on a wonderful debate, between economists...!!!

But, this issue is very important for U.S., and you, two, too, may be missing something critical.
IF employers are hiring new, part- timers
and not full-timers...
what are they really doing?

One argument is that they are cherry picking those out of work with the best skill sets, and by picking up more part-timers than full-timers they are simply maximizing their current opportunities.

What we also think they are doing, since the layoff & fires are about equal to new hires...!!!
is to "replace" current lower quality employees with newer, cheaper, higher quality workers.
Again, maximizing their "golden", to them but not U.S., opportunity.

IF this "replacement" shift is taking place, both of you may be economically correct, but missing the real point.
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The articles are in the order published: 1st Motoko Rich, 2nd Daniel Indiviglio rejoinder, and 3rd Motoko's rejoinder.
The 1st chart is from NYTimes
The next 2 are from Atlantic.
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Weighing Costs, Companies Favor Temporary Help
http://www.nytimes.com/2010/12/20/business/economy/20temp.html?_r=1&src=me&ref=general
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Should the Rise in Temporary Workers Scare Us?
http://www.theatlantic.com/business/archive/2010/12/should-the-rise-in-temporary-workers-scare-us/68293/
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Explaining the Statistics on Temporary Hires
http://economix.blogs.nytimes.com/2010/12/20/explaining-the-statistics-on-temporary-hires/
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Said CNN: Stimulus price tag: $2.8 trillion = They lied to U.S.

[mEDITate-OR:
find out that "The News you can trust"
ain't all that trustworthy anymore...
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John Bell4:32 pm

This CNN chart is intentionally false.
While most Fortune charts are accurate and informative, and CNN charts were also; CNN is now inaccurate economic date and info, and biased.
Why?

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Stimulus price tag: $2.8 trillion
http://money.cnn.com/2010/12/20/news/economy/total_stimulus_cost/index.htm
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Europe: Kicking the Can Down the Road = PIIGS R US

[mEDITate-OR:
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anesthesiaman
Dec 19 10:37 AM
Be it known that:
I, AnesthesiaMan, a cardiothoracic/general anesthesiologist in Dallas, Texas, do hereby create and coin the new catch phrase for all of Wall Street to use free of charge:
PIIGS R US
That is PIIGS plus Romania and the US.
Thank you for your attention.
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JGBHimself
Dec 19 06:47 PM
We were bluntly told that "Those People" - Like U, should not be read!!!
Stop, immediately, if not sooner, whenever we see CAPITAL and/or CAPITOL letters.
U R worse than those of U.S. who zin, for the pun of it.
Other than that, you really are a "gas".
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JGBHimself

Dec 19 07:07 PM

Do we remember the 80's bank crisis? Oh, yes.

When the largest bank in WA, Seattle First NatBk declared themselves BK, and MUST be sold to an out-of-state BkofA, they told the Leg that they could not recover from US$ 400 Million in bad Oklahoma oil loans. The largest bank in WA was sold to the largest bank in Cal, bcuz of bad loans.
What we pointed out to the WA Senate was that BkofA had at the time something like US$ 500 Billion in bad Brazilian loans, that they could never collect. One Billion for each Sea 1st Million. That BkofA was in fact in worse financial shape than Sea 1st. - both were technically BK. They voted for the sale, they said, bcuz they had to - save Sea 1st.
Oddly, BkofA/Sea1st still exists - with US$ Trillions in bad Countrywide RE debts - not just, in Californicate, U.S. Now, isn't that too funny - for words or numbers?
So, you do see, kicking the can full of Shiites onto someone else's property sometimes does work.

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These are three "Greasy" charts.
If the meanings are too slippery for you, try reading the article.
Well worth doing.
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Europe: Kicking the Can Down the Road
http://seekingalpha.com/article/242580-europe-kicking-the-can-down-the-road?source=dashboard_macro-view
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Climbing Mortgage Rates not Offset by Falling Home Prices + Mortgage rates rise for fifth straight week + 30-year mortgage jumps to 7-month high

[mEDITate-OR:
not have that sinking feeling...
eligibility, costs of loan, price paid...
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Climbing Mortgage Rates not Offset by Falling Home Prices

http://personalfinancebulletin.com/climbing-mortgage-rates-not-offset-by-falling-home-prices/4727/

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All of the Piigs are equal, but some are more equal than others. = Ireland, Iceland and Greece Outperform Germany? Really?

[mEDITate-OR:
think that we are still in a sand "state"...
no puns intended.
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These charts show that the three basket-case countries of Europe - Greece, Ireland and Iceland - substantially outperform Germany during the boom years, which is to be expected (blue bars). For example, Greece had productivity growth averaging 2.4% per year from 1997 to 2007, compared to only 1% per year for Germany.
What is more surprising is that Greece, Ireland and Iceland continue to outperform Germany, even when we factor in the five years of the bust, including forecasts through 2012 (the red bar). For example, average real GDP growth in Iceland is projected to be 2.7% annually over the 1997-2012 time period, almost double the 1.4% growth rate of Germany.
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Dec 18 07:44 PM
while your charts are very interesting, first, please, notice that we could create the same picture for the Sand State RE loans during the dead zone.

That was then, this is now.

What we need YOU to do for U.S. is look at those same countries for the three years AFTER your charts ending. Not what was forecast to, but what DID happen. Now, what do we - you and U.S. - see?
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Dec 18 07:38 PM
Said you: "bank capital (or lack therein) as [Ireland's] current impediment to growth?" & "If bankers don't lend, what do they do?"

Said we: Well, first, what the Irish banks did was allow, as in trick?, the Govt to "guarantee" that they would suffer NO losses on bad RE loans they made using borrowed EURO bank's money. Then, they allowed, as in tricked?, the German, French & UK Govts to guarantee the German, French & UK banks NEW loans to the Irish Govt to cover the guarantees to the the Irish banks to cover the loans from the German, French & UK banks. You Do follow that, do you not.

So, like W before them, the EURO Govts "nationalized" the RE debts of THEIR own bank's loans in Ireland.

Everybody says that Ireland LOST on that deal. Oh, really?

If the Irish people default on their home loans, the Irish Govt has to pay them off. If, however, the Irish Govt defaults on their new Euro bank loans, the EURO Govts will have to pay off the EURO banks.

My question: Who, if anyone, understood THAT shell game?

So, to answer your question, the EURO banksters are taking their chips back off the Irish roulette wheel of fortune, and cashing them in - to be Franc with you! And, no, they will not loan it back out again.
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Ireland, Iceland and Greece Outperform Germany? Really?
http://seekingalpha.com/article/242455-ireland-iceland-and-greece-outperform-germany-really?source=email_the_macro_view
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State Personal Income: Third Quarter 2010

[mEDITate-OR:
not notice that the sand states have..., in addition to:
the most foreclosures, underwater RE mortgages, unemployment...
the lowest personal income growth.

What ELSE can go wrong, they might ask.
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State Personal Income: Third Quarter 2010
http://www.bea.gov/newsreleases/regional/spi/sqpi_newsrelease.htm
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