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Friday, June 04, 2010

Fannie Mae economist: House "price appreciation not supportable" and more

by Calculated Risk on 6/04/2010 04:00:00 PM

“Temporary tax credits change behavior temporarily. It’s simply shifted
demand forward. ... It actually created some price appreciation that’s not
supportable long term.”

Douglas Duncan, Fannie Mae Chief Economist, June 4, 2010 via Bloomberg (ht Brian)

And more on condo shadow inventory in New York from Bloomberg: Manhattan Empty Condos May Be Rentals as Leases Reign (ht Mike In Long Island)

About 8,700 new condos sit empty in Manhattan, with 75 percent not even listed for sale yet ... Developers taking out construction loans borrow an additional amount for interest reserves, which is intended to cover the monthly payments on the loan while the project is under construction and until sales begin ... reserves on loans made in 2007 and 2008 will dwindle in the second half of 2010 and early 2011.
We've discussed this before - the flood comes when the interest reserves run dry.

The euro is down to 1.196 dollars. This is the lowest level since March 2006.

The TED spread increased to 41.59 (a measure of credit stress). This is still fairly low, but this is the highest level in eleven months. Note: This is the difference between the interbank rate for three month loans and the three month Treasury. The peak was 463 on Oct 10th and a normal spread is below 50 bps.

Stock Market CrashesClick on graph for larger image in new window.

This is a slightly different graph from Doug Short of (financial planner).

This graph shows the ups and downs of the market since the high in 2007.

Earlier employment posts today:
  • May Employment Report: 20K Jobs ex-Census, 9.7% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.
  • Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks (including graph of job losses during recessions aligned at the bottom)