Ira Artman

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

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."

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

Did the Fed Miss the Housing Decline?

See Part II of this article at:

Housing Indexes: When Will The Fed Get Smart?
seekingalpha.com/artic...

Housing Indexes - When Will the Fed Get Smart?

Thanks for comments.

The S&P Case Shiller Index that I am using is NOT the 10 MSA or 20 MSA version, which I believe that Tom Armistead is referencing. It is the "S&P Case Shiller National Index", as noted in post and in link that refers to S&P website. - Ira

Did the Fed Miss the Housing Decline?

A final 'humorous' note.

The Fed has just released the Bulletin Article:

February 12 2009
Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances
Brian K. Bucks, Arthur B. Kennickell, Traci L. Mach, and Kevin B. Moore
PDF (398 KB)
www.federalreserve.gov...

I would think (but who can say) that this Bulletin/publication has been iin development for some time.

Page A34, left column, discusses use of same 'LoanPerformance' index that was used by Fed in the Dec 11, 2008 "Flow of Funds" release, but NOT in the Sep 18, 2008 "F-o-F" release.

Hmmmm...

Did the Fed Miss the Housing Decline?

Also - should note that Fed's linking convention incorporates the word "current" in the link of the most recent release.

Once the next release comes out, the word "current" is replaced by a datestring.

As a result, the link for the 11 Dec 2008 release will change [!] once the next Z1 is released. Scheduled release (for 2008Q4 data) is 12 March 2009.

The link in the post above for 11 Dec 2008 will NOT change, so use the following link to navigate around the releases if you are reading this note on or after 12 March 2009:

www.federalreserve.gov.../

Did the Fed Miss the Housing Decline?

Apologize - My comment/note above has immaterial typo. Date of Dec 2008 release is Dec 11 (as noted in original article), NOT Dec 18. - Ira

Did the Fed Miss the Housing Decline?

Thanks all for comments.

By the way, below is the full text of the "explanation" provided by Fed in the release dated Dec 18 2008 (Page 8 of 124 page pdf), a portion of which appears above in my article.

When I read the 'note', it makes it appear, I believe, as if two data series might somehow be consistent (i.e., "benchmarked" - content-free term?) on '01Q2, '03Q2, & '05Q2.

As my chart indicates, they're not.

So this may be case where meaning of Fed's note "depends upon what the meaning of 'benchmarked' is."

But big issue is * timing * of conversion to new index.

Why did the Fed wait to report the largest decline in US housing values until after the Nov 2008 elections? Or is that also the answer? ;^)

======================...
From 2008Q3 Flow of Funds Report, 18 Dec 2008

7. The market value of residential real estate (B.100, B.102, and B.103) has been revised from 2000:Q1 forward to reflect improved data sources.

The value of owner-occupied housing in 2001:Q3, 2003:Q2,
and 2005:Q2 is now benchmarked to data from the American Housing Survey, and changes in the value of single-family homes in non-benchmark quarters are now estimated using a repeat-sales house-price index from LoanPerformance (a division of First American CoreLogic).

Previously we used a price index from the Federal Housing Finance Agency (formerly the Office of Federal Housing Enterprise Oversight).

Is the Economic Recovery Plan Big Enough?

Doug and John:

Thanks for comments and agree - tax cuts would be preferred to spending.

Below is link to Bruce Bartlett article @ Forbes, with another view re: why program might be too small.
www.forbes.com/2009/02...