Housing Market Tracker - Macro Outlook Implies Recession?

Quotes of the Day

"The silver lining in today's modern capital market meltdown is that technology now provides for rapid information travel, therefore compressing cycles and accelerating recovery times." - Douglas Harmon, senior managing director at Eastdil Secured. (NY Sun, Jan. 24th)

"If the American economy is not now in recession, it is close enough not to make a practical difference to sentiment." - The Economist. (Tim Iacono in Seeking Alpha, Jan. 22nd)

Macro Impact, And Will The Housing Slump Cause A Recession?

U.S. Policies Evoke Scorn at Davos "Economist Nouriel Roubini said bluntly: “The United States looks like an emerging market,” with large deficits and a weak currency. Brazil, an actual emerging market, had done a better job overhauling its economy... The U.S. would suffer a recession lasting at least a year." He foresees a flood of defaults on car loans and corporate bonds, and a prolonged bear market. “The debate is not whether we’re going to have a soft landing or a hard landing,” he said, as his audience squirmed. “The question is only how hard the hard landing will be.” (NY Times, Jan. 24th)

Fed Move Underwhelms Elite "Executives, economists and policy makers gathered at the World Economic Forum's annual conference in Switzerland agreed Tuesday's three-quarter-point cut in the U.S. benchmark interest rate did little to smooth a rough road ahead. With numerous global economic growth indicators pointed downward and the broad market declines since the start of the year, investors appear resigned to a U.S. recession and a protracted period of adjustment to the grimmer realities of a post-subprime world." (Wall St. Journal, Jan. 24th)

White House, Lawmakers Near Economy Plan "The White House and U.S. lawmakers moved closer on Wednesday to agreement on an election-year economic package that President George W. Bush said would be "robust" enough to lift the economy out of the doldrums. House Speaker Nancy Pelosi, a California Democrat, House Republican Leader John Boehner of Ohio, and Treasury Secretary Henry Paulson talked into the evening and were upbeat about a possible deal on a $150 billion package likely to include tax rebates to workers and other measures aimed at heading off a recession." (Gresham Outlook, Jan. 23rd)

U.S. Copper Ends Off 4 Percent On Recession Fears "U.S. copper futures closed 4% lower in volatile trading Wednesday amid fears of a recession and uncertainties over the red metal's near-term direction... It hit a one-month low of $3.0120 on Tuesday as global equity and commodity markets came under heavy selling pressure on fears that the U.S. economy will post negative growth this year and dampen global growth along with it. A surprise interest rate cut by the U.S. Federal Reserve on Tuesday, however, gave commodity markets a reprieve before they closed as the rate cut took the dollar down, boosting export prospects for commodities." (Reuters, Jan. 23rd)

Is the Chemical Industry Set To Brave a U.S. Downturn? "As providers of America's building-block materials, chemical companies are a bellwether industry, and slumping sales in housing and autos have been deflating chemical and plastic sales for several quarters. If the economy sinks into a recession this year, the U.S. operations of chemical makers could become a bigger drag on earnings... DuPont Co., due to report fourth-quarter results today, said earlier this month that its 2007 earnings will be higher than it had expected. It said sales from its global agriculture business and other operations in developing international markets will help offset weakness in the U.S." (Wall St. Journal, Jan. 22nd)

Declining Property Values Require Spending Vigilance Michigan: "Oakland County officials... expect housing values to stay depressed for the next two years, decreasing county government tax revenues. A presentation by Deputy County Executive Bob Daddow earlier this month noted that declines in home values are expected to cost Oakland County government $5.7 million in 2008, $6.8M in 2009 and $13.3M in 2010 from previous estimates. With the number of new homes under construction in such steep decline, the new taxes to be gained from homes being assessed at their full market value is also falling off, adding to the decline in revenues." (Detroit News, Jan. 22nd)

Recession Woes Cloud Multihousing Picture in ‘08 "At the National Multi Housing Council’s annual conference, 56% of the participants said the likelihood of an economic recession is high, with only 7% believing that likelihood is low. Ric Campo, chairman and CEO of Camden Property Trust, explained that if consumers’ debt levels get too high they will start cutting back... David Schwartz, managing member of Waterton Associates LLC: “The effect of consumer debt is already being seen in retail, but this time we will not have housing to bail us out [of a recession...] The majority of participants, 60%, also believe the housing recession will last into 2009, with an additional 35% believing it will last beyond 2009. (Globe St., Jan. 17th)

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Comments

[Rocktex:]

Great Post!

Brazil, an actual emerging market, had done a better job overhauling its economy. The United States looks like an "emerging market,” with large deficits and a weak currency.

I believe, USA is due to have a "system overhaul." We have to check our system, not mainly in economic parts. Time is changing so rapidly. How come we are still used to 230 year old political and legal parts without modernization.

Look at the current presidential election, many institutions such as cacusas or electorial college are not suitable in this modern world. If we just overhaul the economic or financial mechanism, it is not going to improve the fundamental functions put upon us.

Maybe, we could say it is just a call to a plumber when we ask Mr. BB of FED to cut interest rate in the chaos of the Wall. Nothing really cures the disease. They are minor repairs, not even a remodeling.

2008 Jan 24 10:21 AM

[Rocktex:]

Judy,

The following is not from my mouth, but souds like it:

"The debacle — which has rattled an already nervous banking sector and appeared to be the biggest-ever trading fraud by one person — has fueled a debate about risk management, with France's conservative president condemning speculation.

"If we can make profits in a matter of hours, we can also have huge losses," said President Nicolas Sarkozy during a visit to India. "We must stop with this system that has gone haywire and that has lost track of its aim."

"It appears to be time to ... inject a bit of common sense into all these systems," he added.

------ quoted from news.yahoo.com/s/ap/20...;_ylt=Ah2bfrSawWrHSQrT...

2008 Jan 26 05:07 PM

[debtcollect...:]

You're right, the us has a weak currency, which is hurting everybody. We are about to make a turnaround in 2009, the election is coming.

www.debtcollectionor.c...

debtcollectionor

2008 Sep 06 07:44 PM

[Singh001:]

Hi,
Yes, I agree this current recession has huge affect on real estate. In fact, you can see that there is a steep downfall in the housing sector.

CSK


Home Loans

Jan 15 01:46 AM