by Calculated Risk on 11/14/2005 08:55:00 PM

CBS reports: Chill Settles Over Housing Market

"There is evidence of a cooling going on nationwide," she tells The Early Show co-anchor Julie Chen. "Median prices are falling some, inventory is up, rents are up, mortgage applications are down and if you look around, you probably see more signs for open houses, something that wasn't necessary just a couple of months ago. And more of those 'price reduced' signs as well, particularly in the luxury market.

"What's been happening, specifically, over the past couple of months is you have all these people putting their homes on the market. Investors and individuals alike are testing the market to some degree to see if they can cash out and get out while the going's good. That is pushing inventory up.

"But buyers aren't jumping in feet first, as they were just a couple of months ago. They are taking their sweet time and they can actually afford to take a little more time. There's more of a balance now between the buyers and the sellers that we haven't seen in quite awhile.

And the most "chilling" advice for sellers:

"You're probably not going to get the price you wanted for a comparable home six months ago."

by Calculated Risk on 11/14/2005 12:21:00 AM

My most recent post is up on Angry Bear, Housing: "With a pfffffffft or a fizzle"

On equity extraction, Freddie Mac reported on Nov 1st: CASH-OUT REFINANCE ACTIVITY STRONG IN THIRD QUARTER 2005

"Refinancing activity was strong in the third quarter, even with higher interest rates with 44 percent of new mortgage applications being submitted for refis," said Amy Crews Cutts, Freddie Mac deputy chief economist. "The large share of borrowers who took cash out when refinancing their mortgages combined with the strong overall refinance volume led to an extraction of home equity through prime first-lien refinances of $60.4 billion, almost equal to the revised estimate of $60.7 billion extracted in the second quarter. With the expectation that mortgage rates will rise further in the fourth quarter, refinance volumes overall should slow but cash-out refis will continue to be in demand, and equity extraction through refinance should hit over $200 billion this year, falling to about $114 billion in 2006."

So far equity extraction remains strong.

by Calculated Risk on 11/13/2005 08:32:00 PM

The San Diego Union Tribune reports: 'Median home price tops $500,000, a first'
Click on graph for larger image.

The year-over-year increase to $513,000 was 4.9 percent above October 2004's $489,000, the sixth month in a row that appreciation has been below 10 percent.

October was the 16th month in a row that sales volume has declined on a year-over-year basis. The total last month was 4,155, down from 4,758 a year ago.

And on inventories and foreclosures:

In a separate report from the San Diego Association of Realtors, the inventory of active, unsold listings crossed the 15,000 mark for the first time since the present boom began in 1997. By contrast, at the peak in March last year, there were only 3,113 listings.

Coupled with rising interest rates – which rose to a two-year high of 6.31 percent this week – and a suddenly soaring foreclosure notice rate – up nearly 40 percent for the third quarter compared with a year ago – industry analysts said San Diego's housing boom seems to be coming to a quiet end.
...
... there are early signs of distress. DataQuick's Karevoll said the notice of default rate – the first sign of foreclosure – soared nearly 40 percent to 906 notices in the third quarter. But he said it was far below the peak of 5,139 in the first quarterly of 1996. Only 47 actual foreclosures occurred in the third quarter, compared with 33 a year ago.

Foreclosures are still very low, but rising. The story doesn't provide the exact inventory number, but the inventory to sales ratio is about 3.6 months - still within the normal range.

by Calculated Risk on 11/11/2005 08:05:00 PM

Management Guru Peter Drucker, 95, Dies

Innovation, listening to your customers, taking care of your employees - it all seems so obvious today. It wasn't so obvious 60 years ago. Here are a few quotes from Drucker:

On bubbles:

"Pigs gorging themselves at the trough are always a disgusting spectacle, and you know it won't last long."

"The average duration of a soap bubble is known. It's about 26 seconds," Drucker said. "Then the surface tension becomes too great and it begins to burst.

"For speculative crazes, it's about 18 months."

On metrics:

"Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information."

On Leadership:

"Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes."

"Executives owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs."

by Calculated Risk on 11/11/2005 04:36:00 PM

First comes rising housing inventories, then slowing activity and less mortgage extraction, followed by a drop in retail sales, rising foreclosures, falling house prices and less housing related employment. At least that is the general sequence I expect.

In Massachusetts, inventories to sales is already over 8 months, prices have started to fall and foreclosures are rising: A rise in foreclosures

Don't look now, but that whistling sound you're hearing is the air leaking out of the housing bubble.
...
More disturbing yet is a sharp rise in foreclosures. Over the first nine months of this year, foreclosures in Massachusetts are up 33 percent over the same period in 2004.

"We are seeing a big increase, we've seen a steady increase, and there's going to be more going forward," Jeremy Shapiro, president and co-founder of Framingham-based ForeclosuresMass.com said.

Behind the figures lie several factors. Zero-interest mortgages allowed buyers to borrow more than they could afford. Interest rates are going up, pushing up payments for those holding adjustable-rate mortgages. Families mortgaged to the hilt can't handle it when one earner loses a job or some unexpected expense comes up.

And from Australia, a country that has already seen falling housing prices: Unemployment rate rises further

Job-shedding in Australia has extended into a second month.

A plunge in full-time job numbers has more than offset a solid rise in part-time positions.

Official figures show full-time places slumped in October by 60,800 - the worst outcome since the 1991 recession.

The number of people looking for work has declined, and that has kept a lid on the rise in the jobless rate.

It now stands at 5.2 per cent.

Most of the United States is in the 'rising inventories' phase, but these stories depict the probable future for much of the US.