Wednesday, February 25, 2009

Existing Home Sales Drop 5.3% in January 2009 from December 2008

National Association of Realtors Report

Existing Home Sales Drop -5.3% in January 2009 from December 2008

Existing home sales:
December 2008: 4.74 million annual pace

January 2009: 4.49 million annual pace

45% of total sales involve distressed property, including foreclosures

Home sales price:
January 2008 median price: $199,800
January 2009 median price: $170,00

Average 30 year mortgage (According to Freddie Mac):
December 2008: 5.29%
January 2009: 5.05%

Home prices are down 27% from their 2006 high, according to the Standard & Poor's/Case-Shiller data released on Feb. 24th. The massive overhang in the supply of housing was down to 9.3 months in December from 11.2 months in November, the l
argest drop since the NAR started keeping records in 1999. However, the supply of housing is still over twice its long-term average of 3.5 months, insuring that the plentiful supply of houses on the market will continue to depress prices.

Supply of Pre-Owned Homes on the Market Measured in Months

The Fed's Forecast on Unemployment, Inflation, and GDP

Fed data released Tuesday (2/24/09):

Delinquency rates on home mortgages in 4th quarter 2008: Almost 7% of outstanding mortgages

Unemployment rate in 4th quarter 2008: 7.6%, expected to rise to 8.8% this year

The Consumer Board's Consumer Confidence Index: 25, lowest level since data were first collected in 1967

February 2009 views on the job market:
"Jobs are hard to get": 48% of people surveyed, highest since Feruary 1992
"Expect jobs to decrease in the months ahead": 47%, highest percentage since December 1973

The Fed's Economic Forecast for the Next Few Years:
Unemployment, Inflation, GDP

The Depression-Recession: How We Got Here

In a negative feedback loop, job loses and falling corporate profits are creating new loan defaults, hurting banks beyond the original damage caused by the home mortgage crisis. The banks' falling stock prices together with the loan defaults make it harder for them to raise capital and more reluctant to lend. All of this saps spending by consumers (which makes up 70% of the US economy) and business which results in more job cuts, more loan and mortgage defaults, ... and so the negative feedback loop spirals down. The government keeps threatening to step in to save the failing banks, which raises the specter of nationalization which would wipe-out bank stock holders, who become even more reluctant to buy bank stocks and makes it harder again for the banks to raise capital for loans... And so it goes.

How Bad Are the Times? Photographer Annie Leibowitz Hocks Her Entire Life's Work to Pay the Mortgage

Iconic photographer Annie Leibowitz has hocked her entire ouevre for 10 million pounds to help pay the mortgages on the homes she inherited from lover Susan Sontag. Leibowitz is famous for her photographs of iconic figures such as John Lennon and Yoko Ono, Demi Moore pregnant, Michelle Obama (for the March 2009 cover of Vogue Magazine) and Queen Elizabeth. And they say the recession will end by 2010? Do 'ya think?