Last year I thought that “housing lock” – where people couldn’t move because they were underwater – was a minor but important part of our unemployment and economic crisis. Now I think it’s not an issue, with a small probability that it is either a very small issue or perhaps even a plus. But many people still think this is important, and its understandable because its an easy idea to understand.

Let’s go over a few things we know about “housing lock” now that we didn’t know before from the latest research:

“In the available data, negative equity does not make homeownersless mobile [...] home-owners with negative equity are at least as mobile as those with positive equity, holding other characteristics constant. Homeowners with extremely negative equity are especially mobile.” (Sam Schulhofer-Woh-pdf.)

“After we remove the effect of the change in procedures, we find that the annual interstate migration rate

As Canadians go through yet another election, politicians of all stripes are busy dusting off campaign slogans, attack ads and policy books. Each party puts forth its best ideas to fix what ails the country and what will propel it forward on a wave of prosperity.

The amazing part of this election campaign is that nobody seems to be addressing the 800 pound gorilla in the room. That gorilla is named Canadian Real Estate. The overvaluation of real estate (“bubble” is so overused it has lost its shock value) in many parts of Canada has been propelled by a Canadian addiction to debt and federal government policies that helped to create a runaway freight train in the form of real estate prices. Outside of the Canadian political campaign trail the Conservatives have paid lip service to the issue through their recent series of mortgage lending restrictions, however, this tightening is

If you're a squeamish homeowner, you probably can't bear to follow the housing news anymore. Home prices have fallen by more than 30 percent over the last five years, yet the pain still isn't over: After a respite when it looked like the bust was ending, price declines have been accelerating once again. Sales are abysmal, despite the lowest interest rates in a generation. The inventory of foreclosures and other fire-sale homes is going up, not down, which will put further downward pressure on prices for much of 2011. Housing usually rebounds after a recession, giving the recovery legs. But the housing market is so bad that some analysts worry it could drag the whole economy back down into a dreaded double-dip recession.

Economists have continually misread the housing market over the last five years, as it metastasized from a modest correction into a once-a-century debacle. Part of the problem

By Karl Smith

Earlier I fretted about the possibility of an Aggregate Supply shock to housing. Well what if that doesn’t happen and resources do move as freely as my mental model of the economy predicts. It could produce roaring growth.

I draw a parallel to prediction I made earlier about the Great Recession. In early 2008 I began to become concerned about the possibility of a recession within a recession.

In a sense this means that we will be in the midst of a recession (high unemployment), at the same time that we are experiencing leading indications of a recession (construction slowdown). This sets up the possibility for a vicious cycle in which unemployment further depresses housing which leads to even greater unemployment, or a recession within a recession.

Again, I want to pile caveat on caveat but I would be remiss to point out that this dynamic does

The MBA's latest reporting of weekly mortgage activity offered up a sweet little surprise Wednesday. While the Market Composite Index fell 2.0% on a seasonally adjusted basis for the period ending April 1, there was an early Easter treat buried further within the real estate news basket.

The composite index was impacted by a sharp drop-off in refinancing activity. The Refinance Index decreased 6.2% in fact, to its lowest level since February 25, 2011. Mortgage rates were relatively unchanged, with contracted rates on 30-year and 15-year fixed rate mortgages at 4.93% (from 4.92%) and 4.14% (from 4.16%), respectively. The MBA attributed the rate-unrelated drop-off to the simple dwindling of eligible borrowers standing to benefit from refinancing at this point in the cycle. That's a valid argument indeed, but I think there was something more basic behind the lower level of refinancing this time around.

I think mortgage bankers were just

The Mortgage Bankers Association reported that its Purchase Index increased 6.7 percent last week, continuing to hold above the long-term low in 2010.

"Purchase application volume increased last week reaching the highest level of the year, but remains relatively low by historical standards, at levels last seen in 1997,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “The increase last week was due to a sharp increase in applications for government loans. Borrowers were likely motivated to apply before a scheduled increase in FHA insurance premiums that became effective last Friday.” Fratantoni continued, “Rates were flat last week, but refinance activity fell, as the pool of borrowers who have both the incentive and the ability to qualify for a refinance continues to shrink.”

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50% of all residential mortgage originations. It also tracks the average interest rate for 30-year and 15-year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30-year fixed rate mortgage increased 1 basis point to 4.93% since last week, while the purchase application volume increased 6.7% and the refinance application volume declined 6.2% over the same period.

U.S. home builder KB Home (NYSE:KBH) reported Tuesday that it widened its first quarter losses as orders plummeted, reflecting a continued slump in the housing market.

For the three months ending February 28, the company, which operates in nine states including California, Nevada and Arizona, posted a net loss of $114.5 million, or $1.49 per diluted share. This compares to a net loss of $54.7 million, or $0.71 per diluted share, for the year-ago period.

The results from the first quarter of 2011 included a $53.7 million joint venture impairment charge and a loss on loan guaranty of $22.8 million, both related to KB's investment in South Edge, in which it owns a 48.5% stake.

Revenues dropped 25% to $196.9 million, reflecting a 28% decrease in homes delivered. The company said this was partly offset by a 4% year-over-year increase in the average selling price.

Company-wide net orders in the

By Lucas Scholhamer

Fool the public once, shame on the housing market — but fool them twice?

Not likely, according to the latest data from the S&P Case-Shiller index, whose 10- and 20-City Composites both indicate that housing prices have dropped dramatically back to their summer 2003 levels. With cautious spenders worried that the decreasing level of residential investment will drag the economy into a double-dip recession, we take a look at some stocks that have been performing well, performing poorly, and some others that have been hit hard but may be a steal if we see an upturn in the market come summer.

Home Depot, Inc. (HD): The world’s largest chain of home improvement stores has certainly capitalized on the dismal housing market, as skeptical consumers increasingly opt to sink some cash into enhancing their current homes rather than risk purchasing tanking real estate. As we noted here, Bill

No, this is not an April Fool's joke. In a surprising turn of events, listing prices rose sharply in March.

It could be a case of hope springs eternal, but may also be a result of less foreclosure inventory on the market and a strong gain in total employment in March.

The reduction in supply is largely due to the legal foreclosure problems the banks are having now for screwing the mortgage pooch in the first place, but the shadow inventory is still out there. The clock is ticking. The question is whether the lenders will be able to clear up the legal issues faster than the properties become functionally obsolete due to neglect or vandalism. Total obsolescence occurs when the repair costs and legal costs are greater than what can be recovered in a sale. Bad for the lender and the financial system in the short run, but good

Every once in awhile, I keep tabs on what's going on with real estate. I have friends and clients who will ask me my thoughts and I try to analyze what's going on in real estate with a non-biased approach, as opposed to your typical real estate agent. I approach gold and silver the same way, sometimes giving reasons why short term, the price may fall. There are many more reasons why gold and silver will be much higher in the future compared with real estate. Anyone who is thinking about buying real estate now better have a good reason because the data show the propensity for still lower prices ahead.

This article will look at what could possibly drive real estate prices lower in the next few years and is meant to help people look seriously at why they even need to be buying a home in an economy

Doom Boom & Gloom Marc Faber recently pronounced that if you want to buy a house in USA; or (presumably) also figure out a way to not walk away from the one you got, this is an OK time.

…if you can find a house you like, it may not be a bad time to buy a house in the U.S. It may not go up in value, but it may preserve its value.

That’s pretty much in line with the "BubbleomiX" view, he said 10% to go, and that said 15%.

Of course the longer the market is "supported" by the recently nationalized State Housing Bank [formerly known as Freddie (FMCC.OB) and Fannie (FNMA.OB)], plus the handouts of money borrowed by the Treasury from the Fed to pay people to buy houses, the longer the pain can be drawn out.

It's starting to look like the "splat" part of

A few months ago I had the temerity to ask: Is it time to start looking for the end of the housing bust? That's because, in talking about the housing market, it is important to differentiate between housing sales and housing prices. Housing sales have been bouncing along the bottom for over two years. Housing prices, after being temporarily propped up by the housing

Anyone calling for a bottom in the residential housing market should see a doctor.

Not a single statistic that I’ve come across suggests a rebound is imminent. On the contrary, in fact. All the data points to more pain and suffering (and prices declines) ahead.

Consider these five sobering statistics:

1. New Home Sales

Some folks blame it on the weather, too much inventory, or seasonality. Whatever. I don’t care how you try to rationalize it… the fact remains that new home sales just hit a record low, dropping 16.9% in February, to an annual rate of 250,000.

Bespoke Investment Group does a good job of putting that annual rate into perspective. It’s equivalent to one new home sold for every 1,246 Americans, compared with a long-term average of one new home sold for every 370 Americans. Clearly, we’re far from getting to any semblance of a normal real estate

The Federal Reserve, Congress and the Obama Administration have been engaging in an expensive attempt to keep house prices from falling along their trend line. They have spent hundreds of billions of dollars subsidizing first time home buyers, buying mortgage-backed securities, subsidizing mortgage buyers, and in other measures.

Yet, despite these subsidies, house prices have been falling rapidly for the past six months according to the S&P/Case-Shiller Composite-10 Index, and the trend downward looks pretty steady, as shown in the graph below:

The following graph shows the long-term trend line. The red line shows the actual house prices, adjusted for inflation (using the CPI). The black line is my projection of where real house prices will go over the next four years:

The downward trend of the past six months appears to be following the slope of the falling house prices just before the federal government and Federal Reserve began

On Tuesday, the House, dominated by Republicans, voted an end to the current program, known as HAMP (Home Affordable Modification Program). Yesterday, the NY Times lamented the fact that the government's attempts to solve the housing crisis have failed miserably. It isn't through want of trying.

Here are some of the programs listed under the government's MakingHomeAffordable.com site (888-995-HOPE):

• Home Affordable Modification Program (HAMP)
• Principal Reduction Alternative (PRA)
• Second Lien Modification Program (2MP)
• FHA Home Affordable Modification Program (FHA-HAMP)
• USDA's RHS Special Loan Servicing
• Veteran's Administration Home Affordable Modification (VA-HAMP)
• Home Affordable Unemployment Program (UP)
• Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)
• Home Affordable Refinance Program (HARP)
• FHA Refinance for Borrowers in Negative Equity (FHA Short Refi)
• Treasury/FHA Second Lien Program (FHA2LP)
• Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)
• Home Affordable Foreclosure Alternatives (HAFA)

And don't forget these programs:

The

Continuing the dissection of the XHB, Pulte Group (PHM) is the second largest member of the Homebuilder Index, at 3.93%.

Pulte Group's main business is building homes in 29 states and Washington DC. The firm also has a mortgage banking business, Pulte Mortgage LLC. The company acquired Centex Corp in August of 2009 in an all stock deal worth $1.3 billion, and Centex is now a wholly owned subsidiary of Pulte. Adding Centex to Pulte's other brands of Pulte Homes, Del Webb, and DiVosta allow it to target first time buyers, move up buyers, and active adults, all at varying price points. In addition to single-family detached homes, the firm also offers townhouses, condos, and duplexes.

According to the 2010 10-K, at the end of 2010, prices for homes offered by Pulte ranged from under $100,000 to over $1 million. The $100,000 to $400,000 price band contained 89% of the

The SPDR S&P Homebuilders ETF (XHB) is designed to "closely match the returns and characteristics of the S&P Homebuilders Select Industry." What the name fails to convey, however, is that actual homebuilders (and by 'homebuilders' I mean companies that build homes) only make up 29% of the actual index. The rest of XHB is made up of Building Products (25%), Homefurnishing Retail (15%), Home Furnishings (12%), Household Appliances (9%), and Home Improvement Retail (9%).

This diversity has allowed XHB to rise 6% over the last year, trailing the S&P 500's 12% gain. However, the fact the index is positive may come as a surprise to many investors, given the negative housing data of the last few weeks. With this divergence in mind, here are the 10 largest holdings of XHB, listed by weighting.

1. Williams Sonoma (WSM) 3.94%

2. Pulte Group (PHM) 3.93%

3. Bed Bath & Beyond (BBBY) 3.71%

4. Pier 1 Imports