Friday, September 14, 2012

Market, Real Estates Updates

1. DQ News -- "Southern California home sales rose to the highest level for the month of August in six years, fueled by low mortgage rates, a healthier move-up market and near-record levels of investor and cash buying. The median price paid for a home rose to a four-year high, lifted partly by the ongoing shift toward fewer foreclosure resales and more mid- to high-end deals." 

MP: August home sales in Southern California increased 14.2% compared to last year, and the median sales price increased by 10.8% to the highest level since August 2008.     

2. DQ News -- "The Bay Area posted its strongest home sales for the month of August in six years, the result of low mortgage interest rates, an improving economy and increasing demand in mid- to move-up market segments. The median price paid for a home eased back a notch from June and July, but was well ahead of last year for the fifth consecutive month." 

MP: Sales in the Bay Area increased 14.2% above last year, and median prices by 10.8%.  

3. The Bloomberg U.S. Financial Conditions Index closed today at the highest level since early July 2007, more than five years ago. The index is updated daily by Bloomberg, and assesses the relative strength/weakness of the U.S. money market, bond market and equity market, and is considered a useful gauge of bank lending conditions and the overall availability of credit in the economy.  

4. The S&P 500 Equal Weighted Index closed today at the highest level in the index's history, which goes back to 2003.  

5. According to yesterday's September MarketPulse Report from CoreLogic, "the housing market is accelerating in all areas, sales are up, mortgage performance is improving, and prices are rapidly improving."

6. The S&P 500 Homebuilders Index closed today at the highest level since early August 2007, more than five years ago.  


At 9/14/2012 5:31 PM, Blogger Scott Drum said...

Clearly the Fed's actions to reflate asset prices is having some effect.

At 9/14/2012 6:08 PM, Blogger hancke said...

This comment has been removed by the author.

At 9/14/2012 6:10 PM, Blogger hancke said...

I wonder about the long term effect of the Fed pushing down interest rates and home owners/buyers jumping into an ARM seeking the lowest initial payment. That lead to trouble before. Interest rates and energy costs will go back up eventually.

It's a bit like being saved from near drowning and then being encouraged to jump back in the water without ever taking the recommended swimming lessons.

At 9/14/2012 7:58 PM, Blogger Tamerlane said...

The news about So Cal home sales is troubling. Home prices still seem too high in relation to income/slash wages in LA County and Ventura County.

Anyone know of information concerning the relationship between median income and home prices in So Cal or these two counties?

At 9/14/2012 8:03 PM, Blogger Tamerlane said...

If the BFCIUS shows an adequate availability of credit then why do we need the Fed buying $40 billion of MBS every month? Doesn't this represent the Fed clearing the books of the institutions that own those Mortgage Backed Securities so they can lend more? Yet the BFCIUS shows there is plenty of available credit.

Isn't the true shortage one of credit worthy borrowers?

At 9/14/2012 9:01 PM, Blogger VangelV said...

Sorry Mark but the Fed does not agree with the optimism. It has decided that the market is so weak that it has to buy mortgage paper and continue to inflate in perpetuity. It is in panic mode, a fact that speaks loudly against your view.

At 9/15/2012 7:06 AM, Blogger sykes.1 said...

What Bernanke is doing (inflating all asset prices) is building the foundation for hyperinflation, economic collapse and widespread insurrections, possibly civil war. This will be followed by a socialist dictatorship.

At 9/15/2012 9:15 AM, Blogger morganovich said...

again, be really careful with these "median price increase" figures.

they are saying more about mix than about like to like pricing.

they get these numbers by literally just grabbing the median home. they do not adjust for neighborhood, square footage, amenities, etc.

thus, if, as has happened, the weak hands all had to sell at the bottom and those living in better neighborhoods with bigger and nicer homes and more financial stability were able to wait it out, you get huge reported jumps in median price than is being driven mostly by mix.

it appears that prices are up, but the numbers are more like 3-4%, not these double digit figures.

this has been shown month after month when the better figures from the nar and cs have come out.

At 9/15/2012 9:22 AM, Blogger morganovich said...


my fear is that what bernanke is really doing is helping the treasury (through freddy and fannie) basically take everyhting but govvies off the balance sheets of banks.

the gse's buy up the mortgages. the fed buys up the mbs's, and the banks are awash in capital that they then use to buy levered govvies.

sure, you can get a yield even on 71 bp 5 years if you lever them at 10-20:1, but consider the risk and the corner that paints us into.

the principal losses on a 10:1 geared bond portfolio if the 5 year went back to 3%, much less 4.5%, would be catastrophic.

this is the next crisis setting up and it will make that last one look positively benign.

we are well past the point where there is an easy climb down from all this qe and twisty zirp.


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