Pundits continue to fret about “double dip” and mortgage application turn downs are rising. This article was chock full of great quotes:
In all, the nation’s 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009, according to an analysis by The Wall Street Journal of mortgage data filed with banking regulators.
Fannie and Freddie, in particular, “are behaving like a hurricane insurance company that won’t write any policies within 200 miles of an ocean.”
Usually lenders ease lending standards about a year into an economic recovery. Not this time.
Why?
the legacy of bad lending continues REO volume is expected to remain high
unemployment is not improving at a meaningful pace, if at all
lenders do not want to lend as they enjoy the spread from the Fed and demand AAA AAAA loan quality
consumer confidence, in terms of real estate, well, it, uh, stinks (ie Case Shiller’s monthly report)
Credit remains the achilles’ heel of housing.
Even more amazing is that New York had a higher denial rate than the FDIC “sand states”, markets characterized by rampant speculative activity. Why is New York getting a raw deal?
Posted by Jonathan J. Miller -Monday, June 6, 2011, 3:27 PM Comments Off
[Source: GoComics.com]
I love this cartoon because it suggests so much to me about today’s new development urban housing market in the US
Ok, so the housing boom paid for the Starchitect’s premium for highrise luxury condos built in most of US urban housing markets resulting in one of the coolest periods of architecture since Art Decco.
The much anticipated monthly S&P/Case Shiller Home Price Index was released today and the results are important, not because it provides an accurate description the current housing market (it doesn’t), but because it forms a foundation for consumer sentiment on the housing market…
Sales of new one-family houses in April 2011 were at a seasonally adjusted annual rate of 323,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.3 percent (±16.6%)* above the revised March rate of 301,000, but is 23.1 percent (±9.7%) below the April 2010 estimate of 420,000.
Think about this statistical clarification for a second: the month over month increase was 7.3% ± 16.6%. In other words, the monthly increase jumped as much as 23.9% or fell as much as 9.3%. Sort of ridiculous.
Here are the new home sale hard numbers:
up 7.3% from March 2011 to April 2011 (annualized, seasonally adjusted): We are finally leaving the post-tax credit artificially depressed market however for context, as the chart shows, sales have to DOUBLE to get back to the long term average of 600,000 (ignoring the ‘03 to ‘07 credit boom before we can get optimistic about anything. This incessant ping pong monthly release stream of meaningless nominal monthly changes may very well go on for a number of years.
down 23.8% from April 2010 to April 2011 (annualized, seasonally adjusted): The drop is primarily due to the artificial high level of sales caused by the federal tax credit for first time and existing homebuyers as part of the stimulus program that ended last year at this time.
Prediction: Next month (May) will show wildly high gains in new home sales simply because May 2010 showed a significant drop in sales after the market crashed.
Posted by Jonathan J. Miller -Wednesday, April 27, 2011, 10:05 PM Comments Off
[source: NPR. Click to open podcast]
Say what you want about the tragedy of the housing downturn, the opera loves a good tragedy.
NPR’s Planet Money, a must-subscrbe podcast about the economy in simple easy-to-follow language got me blogging again after a crazy month and a half (some announcements of my adventures coming soon).
Check out their post and definitely listen to their entire podcast (this feature covers the first portion).
The CSI index was converted to notes – it really drives home (no pun intended) on how different each market really is. Miami vs. Dallas. And was Karl Case actually humming “Pray for the dead?”
Posted by Jonathan J. Miller -Tuesday, March 1, 2011, 3:00 PM Comments Off
Other than getting the colors backwards (red is hot, blue is cool), this is a very cool heat map matrix on the US housing market. I feel like this would also look good using topographic style mapping in Excel. You can really appreciate the trough of September 2008 through April 2009.
Posted by Jonathan J. Miller -Thursday, February 17, 2011, 2:28 PM 9 Comments
[click to open article]
Matt Carter at Inman News wrote an interesting article on CoreLogic’s contention that NAR’s existing home sales numbers are inflated by as much as 20% and this has been going on for years. The article suggests since 2004, but it is more like since 2000…read on.
Territorial Pissing Match
This reminds me of the aggressive stance by FHFA on Case Shiller a few years ago. Aggressive because FHFA is a government entity (at that time they were known as OFHEO) and they were under fire for being asleep at the switch regulating Fannie Mae and Freddie Mac so for relevance, they implemented an unprecedented public assault on the S&P/Case Shiller Index.
Posted by Jonathan J. Miller -Tuesday, January 25, 2011, 10:31 PM 1 Comment
Pimm Fox does a great job asking the right questions about the region. Glad I also got a chance to elaborate on the Case Shiller numbers released today.
Here’s the full story by Kathleen Howley who pulls together the interviews and Case Shiller report.
Posted by Jonathan J. Miller -Wednesday, December 1, 2010, 10:06 AM Comments Off
[click to open report]
The November 2010 S&P/Case Shiller report showed near term declines as the extracation of the tax credit from the real estate economy continues.
While I understand this chart, I find the S&P releases to be a very confusing read – a jumble of results from the many different metrics they provide.
Data through September 2010, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined 2.0% in the third quarter of 2010, after having risen 4.7% in the second quarter. Nationally, home prices are 1.5% below their year-earlier levels. In September, 18 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down; and only the two composites and five MSAs showed year-over-year gains. While housing prices are still above their spring 2009 lows, the end of the tax incentives and still active foreclosures appear to be weighing down the market.
Here’s a visual comparing the 10 and 20 city index to the two markets I report on (NYC and DC) and two of the weakest markets (Detroit and Las Vegas).
[click to expand]
Note: Jonathan. take a memo: not all housing markets are the same.
While I think housing has a ways to go before we can pronounce a recovery, this is not a “double dip”….
Posted by Jonathan J. Miller -Sunday, October 24, 2010, 12:01 AM Comments Off
Finally, Manhattan gets an accessible condo index.
Apples to Apples!
StreetEasy launched their monthly repeat sales index that covers the Manhattan condo market. It’s a valiant effort and a work in progress. Here’s their methodology.
It’s a repeat sales index which means it uses prior sales of the recent sales to show changes in market condition. It’s tackling that age old dilemma of comparing repeat sales versus an aggregate of all sales activity like I do in my market report series.
Some thoughts on the challenges faced by StreetEasy:
I love the way the volume and regions are mapped out and the interactive embed feature (but needs work) and the fact that the index reflects average sales price: ie September 2010 is 1,852 as in $1,852,000. I also like their transparency and how they respect the fact that data by neighborhoods for their index is too thin to analyze.
Co-ops sales – I get the impression from SE and validating from my own experience that there are MANY co-op sales missing from ACRIS public records. I can’t figure out why it is a phenomenon, but it is and they are. Still, co-ops comprise 50% of the housing stock and even if sales are missing, it’s a random event (ie not a specific type that is missing). The problem is that public record for co-ops only goes back to January 2003 (I’ve got co-op data back to the early 1980’s but I am not as smart as SE to build this index).
PPSF – They should also consider creating an index using the PPSF metric. PPSF sees less skew from changes in mix than price does. In Manhattan there is a premium for larger contiguous space but PPSF sees less skew than actual prices do. This is a core value item of the Manhattan housing market. I’m guessing they were missing a bunch of sqft data to calculate ppsf since ACRIS drops some of this information, especially in the older data.
Weekly, then daily frequency – I would imagine they could increase the frequency of reporting eventually. Perhaps as a moving average.
Apples to Oranges?
Of course, I have to put my 2 cents toward the way I have been tracking the market since 1994 (appraising since 1986) since I like oranges (its my mid-life favorite color after two-score+ years with blue). Their methodology paper says that using PPSF is a “quick and dirty” approach because it is vulnerable to skew in the mix of what sells and of course StreetEasy is correct within that narrow definition. However, our strategy is to provide a combination of many indicators in addition to price trends and provide plenty of neutral commentary. It’s a different approach and ours has proved to be accurate (so far). Most importantly, a repeat sales index is vulnerable to skew based on what sold today, since the repeat sales are based on what has recently sold and different segments of the market perform differently.
Still, its a very solid, and reliable approach to tracking the market and provides additional transparency to a housing market whose participants can’t seem to get enough information.
I’ll be checking back monthly and reporting on their index and future enhancements here on Matrix. Clever ingenuity is a boundless resource.
