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When Will Wall Street Question “Taking Market Share” in Tough Times? Economics Written by Jonathan Smoke    06.23.2007 In the June 20th edition of the NAHB’s Eye on the Economy, David Seiders, NAHB Chief Economist, reported that the housing downturn has been more significant for large builders. “Large home builders, as a group, are experiencing even sharper reductions in home sales and even higher cancellation rates than the rest of the housing industry, primarily because of their relatively heavy geographic concentration in previously hot markets that now are experiencing relatively sharp reversals.” No comments for this item Read more...

Bankruptcy as Predictor Economics Written by Bill Russell    06.22.2007 To further explore the question of what factors create a hot housing market, I went back to the full set of economic variables we have at Housing Intelligence. Out of 40 variables, the single best predictor of home appreciation, with an R-squared of .265, is the growth of the bankruptcy rate (bankruptcies per household). The more bankruptcies declined, the more homes appreciated. No comments for this item Read more...   Explaining Home Appreciation Economics Written by Bill Russell    06.21.2007 To further our analysis Jonathan started earlier this week, and follow up a suggestion from a reader, I decided to test a couple more series to see which best explain home price appreciation. A reader suggested that year-to-year job changes are too noisy to properly measure the full impact of employment on appreciation, so I calculated 5-year growth rates from 2001 – 2006 for both employment and home prices. The scatter plot is presented below. The R-squared for this relationship is .190, very similar to the R-squared from the one-year growth rate. This item includes 1 comment Read more...   Thoughtful Comment Sparks Our Drive for More Serious Analysis Economics Written by Jonathan Smoke    06.20.2007 We enjoyed receiving a thoughtful message today from a user who has been following our review of the connection between jobs and house price appreciation: “Job growth, depending on how it is defined, often includes components that are transitory or temporary in nature. As such, it would not be expected to be the main driver of house price appreciation, which is shown by the low R-squared value (in either plot). A better driver would be more permanent in nature like a change in wealth, income, or earnings.... This item includes 1 comment Read more...   Silver Lining in the Week’s Negative News Economics Written by Jonathan Smoke    06.20.2007 The news so far this week has been decidedly negative in tone for housing. On Monday, the National Association of Home Builders/Wells Fargo Housing Market Index was released. The index, a gauge of builder confidence and expectations over the short term, was 28 and at its lowest level in over 16 years. “Builder confidence in June slid to its lowest level since February 1991 as concerns about subprime mortgage lending and rising prime mortgage rates soured the outlook for recovery.” No comments for this item Read more...   Jobs Are a Good Signal of Housing Market Health Economics Written by Jonathan Smoke    06.18.2007 As promised in Friday’s post, we pulled the data on all metropolitan statistical areas in the U.S., and it confirmed that job growth (or losses) are a good indicator of the future performance of housing at least as it relates to the home price appreciation. We used home appreciation between 2006 and 2005 and compared the results to job growth over the same period. As you can see from the chart below, the two measures are positively correlated, confirming our hypothesis and supporting the finding that job losses are the single biggest factor that drive declines in home price appreciation reported in The State of the Nation’s Housing 2007. No comments for this item Read more...   Beware of the Weak Job Markets Economics Written by Jonathan Smoke    06.15.2007 Continuing the post from June 13, we ran the numbers for job losses (i.e., negative job growth) over one year, comparing 2006 to 2005. Based on job losses being the single largest factor foretelling a decline in home prices, we found our worst performing markets in the country from a jobs perspective. Topping the list were New Orleans and Gulf Port-Biloxi, as their local economies reflect the damage from Katrina in 2005. The rest of the list is an interesting assortment of mostly smaller markets in the Midwest and South. No comments for this item Read more...

More... What Factors Signal Likely Home Price Declines? The Bell is Tolling for the Remodeling Business in 2007 and 2008 Didn’t We Tell You Affordability Was the Key Issue? Affordability Should Be a Top Concern According to NAR, Prospects for 2007 Continue to Decline Which Part of the Bell Curve Is Best for the Success of a Market? In Search of Leading Indicators Taking a Cue from Stock Fund Managers Were New Home Buyers in a Funk in April? Second Round of Cuts at Pulte

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