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Economics
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Written by Jonathan Smoke
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12.03.2008 |
 As we continue to live through the worst recorded decline in home prices, it has become popular sport to deride housing or investing in residential real estate as an outdated and misinformed investment concept that will decline in interest if it hasn’t already.
Yesterday’s Wall Street Journal included an in-depth feature article entitled “The Future for Home Prices.” The mocking subtitle gave away the subtext of the financial intellectual elite viewpoint: “Americans still see real estate as their best shot at wealth. It may be wishful thinking.” | | No comments for this item |
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Economics
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Written by Jonathan Smoke
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11.26.2008 |
 The Commerce Department reported preliminary new home sales for October today. Sales of new single family homes were reported at a seasonally adjusted annual rate of 433,000 units in October 2008, which was 5.3% below the revised lower rate of 457,000 units in September.
As the data is collected by survey sampling, the decline was substantially within the margin of error, so it’s not statistically significant. That simply means we really don’t know if it was lower, higher or more or less the same. So don’t get hung up on quoting the decline percentage. | | No comments for this item |
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Economics
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Written by Jonathan Smoke
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11.25.2008 |
 With the broad financial market and consumer sentiment extremely negative in October, existing home sales reversed the September uptick to deliver month-over-month and year-over-year declines.
In a report released yesterday, the National Association of Realtors reported that total existing-home sales fell 3.1% to a seasonally adjusted annual rate of 4.98 million units in October from a downwardly revised pace of 5.14 million in September. The October level was 1.6% below the 5.06 million-unit level in October 2007. | | No comments for this item |
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Economics
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Written by Jonathan Smoke
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11.20.2008 |
 Given the overall funk that the entire world economy is going through at present, it is no surprise that the primary gauge of homebuilder sentiment hit new lows for its November reading.
The National Association of Home Builders reported earlier this week that “[b]uilder confidence plunged in November as worsening problems in the financial markets, job market weakness and overwhelming uncertainty about the economy continued to negatively impact consumer behavior.” The reading of the Housing Market Index hit a new recorded low of 9. | | No comments for this item |
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Economics
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Written by Jonathan Smoke
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11.19.2008 |
 The Commerce Department reported preliminary permits and starts data for October today, and the declines were pretty much as bad as expected.
Total building permits in October were at a seasonally adjusted annual rate of 708,000, which is 12% below the revised September rate of 805,000 and 40% percent below the revised October 2007 estimate of 1,182,000. Single-family permits, the better barometer of homebuilding, came in at a rate of 460,000 units in October, which is 14.5% below the September rate of 538,000. All of these declines were statistically significant. | | No comments for this item |
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Housing Derivatives
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Written by Jonathan Smoke
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11.18.2008 |
 For residential real estate in the U.S., derivatives remain a relatively esoteric concept. For more than two years now, futures based on the Case-Shiller 10-city composite price index and underlying market price indices have been traded on the Chicago Mercantile Exchange.
Trading volumes for the CME housing futures remain relatively thin. Brokers and analysts are perplexed why builders and developers haven’t widely adopted them in such a challenging market. | | No comments for this item |
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Market Research
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Written by Jonathan Smoke
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11.13.2008 |
 Earlier this week I shared the bottom markets in our updated Housing Prospects Index. Florida dominated the list. As we switch to the top markets for future prospects, we leave Florida and head to Big 12 territory.
Our Prospects Index calculations are based on the latest historical data and forecasts for key housing metrics, including market equilibrium, economic outlook, home price risk, and long-term home price appreciation. The index calculations are meant to give a picture of what we expect markets to be like in 3-5 years. While the market equilibrium is current, the other variables are based on the most recent forecasts out for five years. The indices are relative so they score the markets against one another. | | No comments for this item |
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