by Calculated Risk on 2/13/2012 03:39:00 PM

CR Note: There are only a few areas where the MLS breaks down monthly sales by foreclosure, short sales and conventional (non-distressed) sale. I've been tracking the Sacramento market to watch for changes in the mix over time. (here was my post this morning: Distressed House Sales using Sacramento Data)

Economist Tom Lawler sent me the following table today for several other areas. For most of the areas (with the exception of Reno), the distressed share of sales is down from January 2011. The share of short sales has increased in most areas, while the share of foreclosure sales are down - and down significantly in some areas.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share
	11-Jan	12-Jan	11-Jan	12-Jan	11-Jan	12-Jan
Las Vegas	26.6%	28.1%	48.8%	45.5%	75.4%	73.6%
Reno	40.0%	37.0%	37.0%	40.0%	77.0%	77.0%
Phoenix	22.6%	29.8%	47.6%	27.9%	70.2%	57.7%
Sacramento	25.6%	32.1%	47.6%	34.5%	73.2%	66.6%
Minneapolis	15.6%	16.2%	45.3%	39.1%	60.9%	55.3%
Mid-Atlantic (MRIS)	14.7%	16.4%	26.7%	16.9%	41.4%	33.3%

Note: The table is a percentage of total sales.

The general trend is short sales are up, and foreclosure sales are down - and total distressed sales are down too, although this could be related to the foreclosure process issues.

by Calculated Risk on 2/13/2012 12:41:00 PM

The BuildFax Residential Remodeling Index was at 127.4 in December, down from 137.9 in November, but up 22.8% from December 2010. This is based on the number of properties pulling residential construction permits in a given month.

From BuildFax Remodeling Index

The Residential BuildFax Remodeling Index is up 22.8% year-over-year in December 2011 at 127.4 points. Residential remodels in December were down month-over-month 10.5 points (7.6%) from the November value of 137.9, and up year-over-year 23.6 points from the December 2010 value of 103.8.
...
“Remodeling activity slowed from November to December 2011 as it did in 2010 ─ an expected change seen in previous years around the holidays. The BuildFax Remodeling Index is still showing notable year-over-year growth,” said Joe Emison, Vice President of Research and Development at BuildFax.

Click on graph for larger image.

Although the index declined in December from November, this is the highest level for a December since the index started in 2004, even above the levels from 2004 through 2006 during the home equity ("home ATM") withdrawal boom.

Starting next month, BuildFax will release a seasonally adjusted index.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

Since there is a strong seasonal pattern for remodeling, the second graph shows the year-over-year change from the same month of the previous year.

The remodeling index is up 22.8% from December 2010. This is the 26th consecutive month with a year-over-year increase.

For residential investment, multi-family construction and home improvement have already picked up, and it appears single family construction will increase in 2012.

Data Source: BuildFax, Courtesy of Index.BuildFax.com

by Calculated Risk on 2/13/2012 09:53:00 AM

I've been following the Sacramento market to look for changes in the mix of house sales in a distressed area over time (conventional, REOs, and short sales). The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

This will be interesting once something changes significantly. So far there has been a shift from REO to short sales, and the percentage of distressed sales has declined year-over-year. The percent of distressed sales in Sacramento increased in January compared to December 2011; the normal seasonal pattern. Usually January has the largest percentage of short sales for the year.

In January 2012, 66.6% of all resales (single family homes and condos) were distressed sales. This was down from 73.1% in January 2011, and the lowest percentage of January distressed sales since Sacramento started breaking out the data.

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales. There is a seasonal pattern for conventional sales (stronger in the spring and summer), and distressed sales happen all year - so the percentage of distressed sales decreases every summer and the increases in the fall and winter.

Total sales were up 4.7% compared to January 2011. Active Listing Inventory declined 49.4% from last January, and total inventory, including "short sale contingent", was off almost 30% year-over-year.

Cash buyers accounted for 32.4% of all sales (frequently investors), and median prices are off 5.9% from last January.

This data might be helpful in determining when the market is improving. So far it looks like REO sales have declined, partially offset by an increase in short sales, and a small decline in the total percent of distressed sales. This data might also show if there is a surge in distressed sales following the mortgage servicer settlement.

Also inventory has plummeted - even inventory including "short sale contingent" listings.

by Calculated Risk on 2/13/2012 08:49:00 AM

SNL Financial put together a list of the settlement by state.

From Lindsey White and Sam Carr at SNL: In foreclosure deal, California, Florida come out on top

The accounting in the settlement is somewhat confusing. The much-quoted $25 billion figure includes $17 billion that banks must spend on a variety of programs to help beleaguered borrowers. Banks will receive credits for each dollar spent. "Sometimes they get a dollar for dollar credit, sometimes they get 45 cents on the dollar, sometimes they get 10 cents on the dollar," Iowa Attorney General Tom Miller explained during a press conference. "The benefit to homeowners on the full dollar amount is $32 billion." In addition, the deal includes $3 billion dedicated to refinancing loans and $5 billion to be paid to federal and state governments.

Using these figures, the settlement totals closer to $40 billion. California will receive up to $18 billion ... Florida Attorney General Pam Bondi estimated that her state will get $8.4 billion in the deal.

The housing markets in Arizona and Nevada were also hit hard by the crisis. The states stand to receive $1.6 billion and $1.5 billion, respectively.

See the article for the list.

Weekend:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/12/2012 10:48:00 PM

From the Financial Times Alphaville: One Greek hurdle down, but more ahead

[F]rom the WSJ — here’s something we suspect ... won’t be viewed favourably by the EU and IMF:

But in a sign of the intense public pressure facing Greek politicians, Antonis Samaras, leader of New Democracy and likely the next prime minister, said the measures should be renegotiated after national elections expected in April. ...

Euro-zone finance ministers will meet on Wednesday in Brussels to sign off on the deal. Their expected approval will trigger an offer to private-sector holders of Greek government bonds, who will be asked to exchange their existing bonds for new bonds with half the face value.

The Euro rallied slightly on news of the vote, but as Reuters reported earlier in the day, there is much work left to be done:

There are more immediate hurdles as euro zone finance ministers, who are expected to meet later in the week to sign off on the deal, have told Athens it must also explain 325 million euros ($430 million) out of this year’s total budget cuts will be achieved before the bailout is agreed.

Highlighting the exasperation on the side of paymaster, German Finance Minister Wolfgang Schaeuble said in an interview with German newspaper Welt am Sonntag that Greek promises on austerity measures are no longer good enough because so many vows have been broken and the country has to dramatically change its ways.

The Asian markets are mostly green tonight. The Nikkei is up about 0.5%, and the Hang Seng is up 0.7%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are up 8 and Dow futures are up 60.

Oil: WTI futures are up to $99.61 and Brent is up to $118.27 per barrel.

Yesterday:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/12/2012 06:00:00 PM

The vote just finished, and the NY Times is reporting the austerity bill has passed.

From Athens News: Live news blog, Feb 12-13

In the final tally, 199 MPs voted in favour and 74 against the second bailout memorandum.

Parliament voted in favor of new austerity bill. All of KKE, Syriza and Democratic Left MPs voted No, as well as 21 New Democracy MPs (one in four- ND has 83 MPs in total) and 13 Pasok MPs. Laos MPs voted No, leader absent, the two former ministers voted Yes. All but one Democratic Alliance MPs voted Yes.

The next key date is Thursday. From the NY Times: Greek Protesters Clash With Police Before Vote

“The reason for the urgency is that by Thursday the euro group must approve the release of rescue funding,” Mr. Venizelos said.

The push was also needed, he said, to meet a March 5 deadline to swap bonds between the government and private debt holders. That debt swap, Mr. Venizelos said, would allow Greece to make a $19 billion bond payment on March 20 to avoid default.

by Calculated Risk on 2/12/2012 01:05:00 PM

Someone sent me an article by Dylan Ratigan in the HuffPo: On the Mortgage Settlement: There Is No Political Solution to a Math Problem

Unfortunately some of the numbers are incorrect.

Ratigan wrote:

"Roughly half of homeowners with mortgages are underwater, which means they owe more than they own ..."

This is way too high. According to Zillow, 28.6 percent of all single-family homes with mortgages had negative equity in Q3 2011. And according to CoreLogic, "10.7 million, or 22.1 percent, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011".

And many of these homeowners were only slightly underwater, and will probably keep making their mortgages payments (especially if they are eligible for the new HARP program).

And on the employment-population ratio and the participation rate:

[T]his is by far the worst recovery we've had since the end of World War II. The best way to measure this is not through traditional unemployment indices (which can be gamed), but by asking the question of how many Americans are working as a percentage of the population. In 2007, this was 63 out of 100. Today, it's a full five percentage points lower. The ratio hasn't been this bad since the early 1980s recession, and remember, we're in a recovery. And the labor force participation rate is dropping, which is a long-term bigger crisis.

Ratigan is referring to the employment-population ratio, but as I've pointed out several times, this ratio is being impacted by demographics. A decline in the participation rate has been predicted for years, and a decline in the participation rate pushes down the overall employment-population ratio. So the employment-population ratio is not "the best way" to measure the recovery, and the decline in the participation rate is not a "crisis".

Click on graph for larger image.

During this period of a significant shift in demographics, it helps to look at the employment-population ratio for the prime working age group (25 to 54 years old). This leaves out most changes in demographics (although this can be impacted by the ratio of men to women in the prime working age cohort and other factors).

For this key demographic, it appears the employment situation for men is improving a little, but the employment situation for women is still lagging behind.

Ratigan also wrote:

[R]oughly thirty million jobs ... will bring America back to full employment.

Currently, according to the BLS household report, there are 12.8 million unemployed out of a labor force of 154.4 million, or about 8.3% unemployed. If full unemployment is 5% (structural unemployment is probably a little higher), then the US economy is short 5 million jobs - not 30 million.

Based on his comment about the employment-population ratio and the participation rate, Ratigan is probably expecting the participation rate to increase significantly. That isn't going to happen (see this post).

There are plenty of issues currently with negative equity and unemployment, but it is important to get the size of the problems correct.

Yesterday:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/12/2012 09:25:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Feb 10, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Something new and unusual happened to the Unofficial Problem Bank List since its publication, the institution count was unchanged for two consecutive weeks. This week there were two removals and two additions, which leaves the list at 958 institutions. Assets were virtually unchanged as well at $389.6 billion. A year ago, the list held 944 institutions with assets of $412.95 billion.

The two removals that came from failure are SCB Bank, Shelbyville, IN ($200 million Ticker: BRBI) and Charter National Bank and Trust, Hoffman Estates, IL ($98 million). The two additions are Alliance Bank & Trust Company, Gastonia, NC ($216 million Ticker: ABTO) and United Bank of Philadelphia, Philadelphia, PA ($78 million). Next week, we anticipate the OCC will release its actions through mid-January 2012.

Yesterday:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/11/2012 10:52:00 PM

From the WSJ: Greek Party Leaders Urge Yes Vote on Austerity

The bills that will be voted on midnight Sunday include a set of austerity cuts, structural reforms and the terms of a debt restructuring. They need to get a majority in parliament if Greece is to receive a second, EUR130-billion ($171 billion) bailout from its official-sector creditors, the European Union, the European Central Banks and the International Monetary Fund.

From the Athens News: PM warns of collapse if bailout deal rejected

"This agreement will decide the country's future," [Prime minister Lucas Papademos] said. "We are just a breath away from ground zero."

"A disorderly default would set the country on a disastrous adventure," Papademos said. "Living standards would collapse and it would lead sooner or later to an exit from the euro."

Failing to adopt the bill, he said, "would disrupt imports of fuel, medicine and machinery".

From the New York Times: Greek Leaders Urge Lawmakers to Approve Debt Deal

Earlier:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/11/2012 01:36:00 PM

Earlier:
• Summary for Week ending February 10th

The key reports this week are January retail sales on Tuesday, and January housing starts on Thursday. The NAHB builder confidence report for February will be released on Wednesday.

For manufacturing, the February NY Fed (Empire state) and Philly Fed surveys, and the January Industrial Production and Capacity Utilization report will be released this week.

On prices, the January Producer Price index (PPI) will be released Thursday, and CPI will be released on Friday.

----- Monday, Feb 13th-----
No economic releases scheduled.

----- Tuesday, Feb 14th -----
7:30 AM: NFIB Small Business Optimism Index for January.

Click on graph for larger image in graph gallery.

This graph shows the small business optimism index since 1986. The index increased to 93.8 in December from 92.0 in November. That was the fourth increase in a row after declining for six consecutive months.  The consensus is for an increase to 95.0.

8:30 AM: Retail Sales for January.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales are up 20.4% from the bottom, and now 5.9% above the pre-recession peak (not inflation adjusted).

The consensus is for retail sales to increase 0.7% in January, and for retail sales ex-autos to increase 0.5%.

9:00 AM: Ceridian-UCLA Pulse of Commerce Index™ This is the diesel fuel index for January (a measure of transportation).

10:00 AM: Manufacturing and Trade: Inventories and Sales for December (Business inventories). The consensus is for 0.4% increase in inventories.

----- Wednesday, Feb 15th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index was especially weak last year, although this does not include all the cash buyers.

8:30 AM ET: NY Fed Empire Manufacturing Survey for February. The consensus is for a reading of +14.1, up from +13.5 in January (above zero is expansion).

9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for January.

This shows industrial production since 1967. Industrial production increased in December to 95.3, and previous months were revised up slightly.

The consensus is for a 0.6% increase in Industrial Production in December, and for Capacity Utilization to increase to 78.6% (from 78.1%).

10:00 AM: The February NAHB homebuilder survey. The consensus is for a reading of 26, up slightly from 25 in January. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

2:00 PM: FOMC Minutes, Meeting of January 24-25, 2010.

----- Thursday, Feb 16th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 365,000 from 358,000 last week.

8:30 AM: Housing Starts for January.

This shows the huge collapse following the housing bubble, and that total housing starts have been increasing a little lately, but have mostly moved sideways for about two years and a half years. Multi-family starts increased in 2011 - although from a very low level. Single family starts appear to be increasing lately, but are still mostly "moving sideways".

The consensus is for an increase in total housing starts to 670,000 (SAAR) from 657,000 (SAAR) in December.

8:30 AM: Producer Price Index for January. The consensus is for a 0.3% increase in producer prices (0.1% increase in core).

9:00 AM: Fed Chairman Ben Bernanke speaks: "Community Banking" At the FDIC Conference on the Future of Community Banking, Arlington, Virginia

10:00 AM: Philly Fed Survey for February. The consensus is for a reading of 8.4, up from 7.3 last month (above zero indicates expansion).

10:00 AM: Mortgage Bankers Association (MBA) 4th Quarter 2011 National Delinquency Survey (NDS).

This graph shows the percent of loans delinquent by days past due in Q3. Based on other data, the delinquency rate probably was unchanged or only declined slightly in Q4.

However the key problem is the large number of seriously delinquent loans (90+ days and in the foreclosure process). With the mortgage servicer settlement, the delinquency rate will probably start falling faster by mid-2012 (a combination of more modifications and more foreclosures).

----- Friday, Feb 17th -----
8:30 AM: Consumer Price Index for January. The consensus is a 0.3% increase in prices. The consensus for core CPI to increase 0.2%.

10:00 AM: Conference Board Leading Indicators for January. The consensus is for a 0.5% increase in this index.