Ira Artman

California and Florida Housing Outlook: More Hope for Recovery in 2010

Thank you all ffor comments.

If you'd like to see what I proposed for the title of the above, please see my Instablog version, available here:

seekingalpha.com/insta...

A New Proposal: Bank Annual Optional Warrant Acquisition Operation

Note:
The SeekingAlpha "Instablog" version of this same article contains a slightly more evocative title, as well as a compelling opening graphic.

It may be found at the following link:
seekingalpha.com/insta...

The Long and Short of Bond and Equity Returns

Quick note regarding the opening image. The working title of this article was:

The Long and Short of Bond and Equity Returns:
40 Weak Years And A Rule

Thanks for reading. - Ira

Home Sales and Foreclosures: Drawn and Quartered

Re: NYM - Request for larger figures. They are available at the following sites:

MortgageNewsClips.com/... Slivers
mortgagenewsclips.com/.../

and

RiskCenter.com (free registration required)
www.riskcenter.com/sto...

Thanks for reading. - Ira

Banks, Home Prices, Home Sales Are 'Just Fine'

Thanks all for comments. There are many problems, I think, with my analysis, just as I think that it is NOT a good idea to take comfort from claim that "majority of banks are well capitalized."

As I noted at open of piece - so what? That's not - and never was - the issue.

Believe that the "relationship" that I charted in piece, while remarkable, ignores the problem and concludes that things are fine, as noted.

Key problem - such as it is - with my analysis is use of the Freddie CMHPI, which is virtual clone of FHFA/OFHEO index, and both of these include prices ONLY of homes financed by conforming mortgages.

At peak, however, believe more than half of the mortgage originations were non-conforming. This began as a subprime crisis, and then became a jumbo and an AltA crisis. These borrowers (at one time half of the market) had no financing alternatives, and it is their removal from the market, and struggles to get them back, that has led to the mess.

All of which is missed if you use CMHPI or FHFA/OFHEO. Or, think things are fine if you take comfort in fact that majority of banks are well-capitalized.

Jawbone: Whither Foreclosures?

Thanks for comments.

Hardwood suggested:

>>"With respect to foreclosures, they won't hit 3% they will
>>continue to trend between 1-1.5%"

Interesting conclusion.

If the banks had NOT responded to jawboning and held off on foreclosures in response to jawboning, foreclosure starts would already be at 1.65%, as noted above. And you say that they won't get higher than 1.5%? I hope you're correct.

Greed, Fear and Loathing: What’s Next for Home Prices?

Thank you all for reading and comments.

Quick comment responding to Charles Lieberman's note that my notion of affordability is suspect because it differs from that produced by the NAR - National Association of Realtors; i.e. people who sell homes for a living.

1. Sure, the NAR is objective - why wouldn't they be?

2. But more seriously - the notion of affordability used by the NAR uses median income (derived by NAR) and median home prices (also by NAR).

I'm using average income, per BLS Census, along with average home price from FHFB.

While NAR uses FHFB rate information as is, they assume 20% down, all the time. I'm using down payment per the FHFB.

Finally, I also make an adjustment to the FHFB reported rates, reflecting the fact the dislocation in non conforming markets (i.e., requirement that borrowers have relatively spotless credit, currently) has made mortgage credit somewhat scarce for those with imperfect credit histories.

Think that - IMHO - the NAR is a "best case" figure, for reasons that I snarkily suggested above, and that mine is more realistic. Think the NAR - by definition - assumes the problem away and then proudly reports that there are no problems.

Well, .... sure, but ...

A Bimodal, Metrocensual Model of Foreclosures

Arnold S:
Thanks for reading.

Perhaps. But think - as noted by today's release of S&P Case Shiller, as wonderfully highlighted at SoldAtTheTops' Blog:

paper-money.blogspot.c...

the scale of current decline blows away past declines, so optimization/market timing must use history of much weaker corrections. Think that will make it tough. - Ira

A Bimodal, Metrocensual Model of Foreclosures

User 68420 - Thanks for reading, and sorry that you missed the definition which appears early on in the piece. I've reprinted it below (or see above), reformatted for emphasis. - Ira

"To build a simple and rough:

bimodal
[two factors, home prices and unemployment]; and

metrocensual
[metro area, determined by US Census Bureau]

model of foreclosures."

Out of America: Farewell to Private Industry and Property

Thanks all for comments.

re: Ferdinand Banks':

"Get the right bottom line and you should have a real good career in this business..."

What -business- is that exactly? Not sure if it's apparent, but I am between jobs and careers these days, and doing this to keep mine sharp, or at least active.

Any suggestions that don;t begin "go jump in..." or the equivalent would be most appreciated.

Thanks again! - Ira

What Does Dr. Doom Say About U.S. Home Prices?

re Hmm?! , about lax lending, etc.

Think that would account, to large degree, for the explosion and collapse in the S&P Case Shiller index - lending of sort you describe was largely for non-conforming (non Fannie/Freddie/Ginnie) loans. Correction I focussed on in piece was for FHFA/OFHEO.

Thanks for comments. - Ira

What Does Dr. Doom Say About U.S. Home Prices?

John Lounsbury

Thanks for reading and note. Not in this case.

Look at Figures 1 and/or 2.

Last Boomer is using a series that begins in 1991 and ends in 1998. He picks up post 91 weakness and then ends series in 98, well before or just as the market began to revive. So for practical purposes, most of his 91-98 period represents what seemed like a housing bust, for those of us that lived through it, prior to current.

Make sense? - Ira

What Does Dr. Doom Say About U.S. Home Prices?

Dear Last Boomer:

Thanks for reading and note. Your analysis, which constructs a trend by avoiding the bubble, is not bad. If I had to quibble, it would be with your choice of starting year (forced upon you by series you selected, I believe), which is 1991.

Think that was the beginning of recession (from my living memory), so think your trend - beginning as it were,in a recession, could be low due to your choice of start.

But idea of "bubble avoidance" is good one/metric to develop. - Ira

Why Obama Should Terminate All Federal Reserve and Treasury Programs

Thanks for reading and comments.

re:
"Where does the money come from for all these myriad of lending, purchase, funding facilities?" [Bill Jencks' question]

I'm not sure I understand your question.

All of those facilities are *currently* effective, they are not some 'hypotheticals' of my invention - they are out there now.

As to specifics of question - I recall an investment bank's old advertising campaign:

"They make money the old-fashioned way - they print it."

Why Obama Should Terminate All Federal Reserve and Treasury Programs

network.nationalpost.c...

Thanks for comments. Above is link (at Canada's National Post) to transcript of Paul Volcker's comments. Portion (not included in my article) appears below.

Even Paul Volcker, the man who broke the back of US inflation, can't say (at this point) how we get "from here to there." - See below -

What is important is that we have an understanding or conception of what we are aiming at, since only then will we know if we've arrived.

Assuming that (assumption!) that the President is listening to his sole advisor that actually has experience in the taxing business [sorry] of correcting systemic financial failures, then think that we should know what Mr. Volcker is thinking and saying.

Above was simply my attempt (a device) to bring Mr. Volcker's views to your attention in a memorable way.

Hope that it is, or was, successful.

Thanks for reading. Volcker's words below. - Ira
----------------------...

Paul Volcker:
...The system is broken. I’m not going to linger over what to do about it. It is very difficult. It is going to take a lot of money and a lot of losses in the banking system....

So I’ll jump over the short-term process, which is how we get out of the mess, and consider what we should be aiming for when we get out of the mess. That, in turn, might help instruct the kind of action we should be taking in the interim to get out of it.