Empiric Student Property Share Discussion Threads

[briarberry] 27/5/2007 13:41

USD has bounced but according to the Fed the trade weighted is still down

is this another sign? as usual we won't know until after something happens

[briarberry] 27/5/2007 13:32

US retail sales, real growth y-o-y, even the Fed admits this is rolling over. And they don't fully adjust the figures for inflation, I'd like to see this without gasoline sales (to eliminate the effect gasoline price inflation)

[briarberry] 26/5/2007 13:55

US housing, things are a lot worse than reports suggest...

Housing accounts for about 23% of the US economy, when taking into account all housing-related purchases of furniture, appliances, and items for new homes, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts. So if the housing market is in recession, which it is, it is no small potatoes. Let's look at a few recent points of data.

The NAR (National Association of Realtors) says that home sales are off 9%. Real estate analyst John Burns ( says that "the housing market has softened much more than is being reported" by the Fed and the NAR. Let's look at some of his research. He gets it from purchasing the actual closing data for 55% of the country. Using this data, home sales are down 22% for the year through April 2007. The largest nationwide real estate brokerage firm reports sales down 18%.

Mortgage applications for home purchase have fallen 18%, even though many buyers now have to fill out several applications in order to get a mortgage. Taking the states with the worst housing sales/foreclosures crises, Burns found Florida home sales down 34%, not 28% as NAR reported; Arizona sales down 38%, not 28%; and California's down 37%, not 24% as NAR reports. This strong underreporting of the collapse by NAR, the firm says, only dates from the middle of 2006; it doesn't claim any intentional misrepresentation by NAR.

As for new-home sales, JBREC reports the Census Bureau is continuing not to subtract cancellations from reported sales, giving sales figures which are much rosier than the grim reality, and these are reported publicly by the Federal Reserve. And cancellations are a big factor, running 40-50% in some markets.

John Mauldin,

[briarberry] 26/5/2007 11:57

Interview about China on FSN - some good background info...

Peter Navarro, Ph.D. - The Coming China Wars

(10mb)

[briarberry] 25/5/2007 17:46

Resales of U.S. homes fell 2.6% in April to a seasonally adjusted annualized rate of 5.99 million, the slowest pace in four years, the National Association of Realtors said Friday.

[ian56] 25/5/2007 12:30

Yep prices down 10% yoy.
New home sales down 10%+ yoy.


Jobs (from Bob Carver and Bllomberg)

One sign of just how slack the economy is comes from the new job figures reported by the Bureau of Labor Statistics every month. Originally, the government counted 498,000 private sector jobs created in the Third Quarter of last year. Shocking revisions to their data now show that only 19,000 new jobs were created that quarter, or an error of over 96% in counting! The US economy needs to create over 100,000 new jobs every month just to keep pace with population growth. Obviously, this is a sign that the economy is bouncing along only on momentum with virtually no jobs in the private sector being created. (Source: U.S. Economy's Mixed Vital Signs Flummox Experts.) Data for the Fourth Quarter may show a net number of job losses due to the much slower GDP growth rate already reported for that quarter.

Regards,
Ian

[briarberry] 24/5/2007 17:41

Quote "The real story behind the housing numbers is that the median price dropped from $257,600 in March to $229,600 in April.
Many more homes sold in April than March in the below $199,000 catagory. Every price catagory above was flat or down. This tells me that builders are discounting heavily the entry level segment trying to unload the lower priced homes quickly as qualification standards for entry level are now higher and reducing the number of buyers for that price range".

[briarberry] 24/5/2007 15:44

I guess this must be the wave 2 retrace in the property market decline

peak season for sales and they had to drop the price 10.9% (more credit bubble trouble)

also new home sales include cancellations

and I think mortgage applications include those that get rejected (about 30% of subprime are being rejected - according to one big lender)


Toll expect their fiscal 2007 sales to be down at least 21% from 2006

The CFO said the company expects to deliver between 6,100 and 6,900 homes for the full year. In fiscal 2006, Toll closed 8,787 homes including unconsolidated entities.

[briarberry] 23/5/2007 22:23

Mortgage Applications - a bit up on last May

The Mortgage Bankers Association (MBA)- Weekly Mortgage Applications Survey

The four week moving average is up 1.6 percent to 434 from 427.2 for the Purchase Index

[briarberry] 22/5/2007 20:50

Kennedy-Greenspan MEW - The Feds own model - 2006 Q4

Here are the updated estimates of home equity extraction for Q4 2006, provided by Jim Kennedy based on the mortgage system presented in "Estimates of Home Mortgage Originations, Repayments, and Debt On One-to-Four-Family Residences," Alan Greenspan and James Kennedy, Federal Reserve Board FEDS working paper no. 2005-41.

For Q4 2006, Dr. Kennedy has calculated Net Equity Extraction as $82.8 Billion, or 3.42% of Disposable Personal Income (DPI).

This graph shows the MEW results, both in billions of dollars quarterly (not annual rate), and as a percent of personal disposable income.



from a making money point of view, we really we need to know the trend for MEW right now :( :(

[briarberry] 22/5/2007 19:48

CDOs and MBSs

The levels at which investors are carrying the paper is not reflecting underlying reality as the holders simply hold their collective breath and the rating agencies ignore a worsening environment.

I asked them what would force the rating agencies to change their ratings and the response was "it's just a matter of time if the market continues to deteriorate, for the agencies at some point will be forced by the cumulative losses to acquiesce." Because these losses have been compressed, any re-adjusting of ratings by these agencies are likely to result in a massive repricing of risk.



Collateralized debt obligations (CDOs) are a type of asset-backed security or structured finance product. In a CDO a portfolio of bonds, loans, or other fixed income securities is gathered together, and used to create a new set of fixed income securities.

[briarberry] 21/5/2007 15:18

you know these big money guys cannot be as clever as they seem because, they could have got 73 of these subprime firms for nothing by now ???


I think the only response to this is question is: "Duh!"

"Did Merrill, Morgan Stanley Overpay?

Both Spent Big Money On Subprime Lenders Just Before Slowdown
By RANDALL SMITH - May 19, 2007; Page B1

Some of Wall Street's biggest players bet heavily on the subprime mortgage sector last year just as it started to head south. Now, investors are questioning whether the firms overpaid to get into a sector that has become less profitable."

[briarberry] 21/5/2007 12:59

As sales fall off, the Medians hit new highs - Data Quick

It is odd for this to happen when the slump is worsening, but there is an explanation.

Sales are not falling off uniformly across all price ranges. The lower end or the entry level homes are the ones that are not selling as they used to before. (Read marginal buyers trying to get into the market with starter homes.)

Now what that does in the monthly sample is that the lower priced sales are missing as compared to a year earlier. And since everything that actually sold was on the higher end, the Medians, which are the mid point of all sales, are also rising.

At this point I think Case-Shiller Indices are a better measure of price movements, which is published every month. And also the OFHEO HPI, though it is published quarterly and usually reflects market conditions at least six months prior from the date of the release.

[briarberry] 21/5/2007 11:23

Subprime loans, 18.9% gone bad...


The key points remain:
1. The delinquency ratio on subprime now is 14.4%
2. The press, including myself sadly, either didn't know or bother pointing out that the 13% number (now 14.4%) didn't include subprime loan in some state of foreclosure.

(MBA = Mortgage Bankers Association)

I quizzed the MBA and got this in response from Jay Brinkmann, vice president of research and economics:

our latest subprime numbers are 14.4% delinquent by at least one payment, plus another 4.5% in foreclosure, for a total of 18.9% either delinquent or in foreclosure. For just subprime ARMs that number is 21.1%



73 lenders gone

[briarberry] 19/5/2007 21:31

housing starts - as expected builders always start building in April - every year



permits lead starts by about 1 month, starts lead completions by about 6 months
looking at the drop in permits there will be a lot of construction workers laid off over the next few months



six of the past seven recessions followed a decline in housing permits of 20% to 30% over the previous year's issuance; the exception was the 2001 recession that followed the NASDAQ crash

Single family housing permits down 6.0% from March, down 28.8% as compared to April 2006

[briarberry] 18/5/2007 19:16

TNX up - broken out of recent downtrend





mortgage rates

[briarberry] 18/5/2007 02:58

Here are some comments from Jim Willie

Premeditated doctored and falsified economic statistics are the laughing stock of the USGovt reporting system. The are the tarnish on a once respected emblem. The two most important chronically corrupted pulse measures for the USEconomy are the Gross Domestic Product (GDP) on the economic growth, and the Consumer Price Index (CPI) on the price inflation. The GDP is lifted improperly by 4% to 5% in order to conceal the ongoing fight with a recession since the 2000 stock bust. The enabling device is a ridiculously low price inflation figure which might be wrong by 7% to 8%. Most reported growth is merely improperly adjusted price inflation. Be sure that the practical benefit from suppressing the CPI is to keep Social Security payments down, along with federal pensions related to agency workers, military retirees, and those who used to sit on judge benches. The direct market motive is to sell USTreasury Bonds and other debt securities, while painting a picture of fiscal health for a nation far more sickly than official statistics reveal. Lying has become an institutional feature of US government, if not corporate life.

The objective is to achieve plausible deniability of falsehood by means of abstruse goofy confusing indefensible methods behind the calculations. Like who besides math/stat jocks knows the effect of using a geometric average rather than simple arithmetic average? Doing so drops the CPI by at least 1%, a useful gimmick. Does anyone realize milk and cheese were absent from the March CPI carefully crafted calculation founded in convenient deception? If an item rises, remove it or substitute it. We all buy milk and cheese. Former USFed Chairman Arthur Burns starting the nonsense, which has taken a life of its own. He first removed volatile food & energy from the CPI, now a standard practice. The moral of the CPI/GDP story is that if you lie by at least 5% on the CPI, you not only save on the USGovt budget deficit but you enable a 5% lie on the economic growth. Who wants to report the USEconomy is stuck in a recession, now at minus 2% to 3% decline?
?

[briarberry] 17/5/2007 19:14

yeah mortgage payments are twice rents in many areas in the USA

I think that borrowers will still have to meet higher standards to get mortgages from their local States ie they will have to be able to pay the money back :) apparently there has always been grants like this in some States for poorer people.


June gasoline is doing well today - tried to short it with tight stop - stopped out :(

[ian56] 17/5/2007 14:39

There are a number of State schemes to re-finance sub prime borrowers who cannot re-finance due to tighter lending restrictions by the banks.

These have only just started and take up so far is negligible.

Regards,
Ian

[ian56] 17/5/2007 14:37

In the UK there is now a rough balance where rents are about equal to mortgage costs plus bills.

This is not the case in the US.

In the US rents are now about half the mortgage costs.
Mortgage costs are not included in official US inflation.
Helping the government under report inflation.

Are we now just starting the phase where :-
good news = bad news because there is less chance of interest rate cuts
bad news = good news beecause there is more chance of interest rate cuts.

Regards,
Ian

[briarberry] 17/5/2007 14:11

No government aid for foreclosures, poll says

There's much talk about various ways the government could get financial help to certain homeowners, primarily lower-income households, who can't meet their mortgage payments. We asked visitors to the Lansner on Real Estate blog if any homeowners facing foreclosure should get government aid. And the results from 870 votes cast online in what's an unscientific sample of public sentiment were stark:

9.2 percent: Yes
90.8 percent: No

[briarberry] 17/5/2007 14:07

initial claims probably looks good because it's building contractors who are being laid off and they cannot claim unemployment benefits from the gov ???



Single family housing permits down 6.0% from March, down 28.8% as compared to April 2006

Single family housing starts up 1.6% from March, down 18.9% as compared to April 2006.

Single family housing completions down 3.4% from March, down 26.9% as compared to April 2006.

[briarberry] 16/5/2007 23:01

will they be trying to claim there's price deflation next ?

Owner's equivalent rent, which carries the greatest weight of any item in the core CPI, rose at only about a 3 percent annual rate in the six months ended in April. That's down from a 4.6 percent rate in the six months ended last September."


although more potential price inflation from China, and what happens when Chinese workers get a pay rise ?