by Calculated Risk on 9/25/2009 04:36:00 PM

Atlanta Georgia
Just five simple syllables
Foreclosure central
by Rob Dawg (SGIP out today)
From the FDIC: First Citizens Bank and Trust Company, Incorporated, Columbia, South Carolina, Assumes All of the Deposits of Georgian Bank, Atlanta, Georgia

Georgian Bank, Atlanta, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of July 24, 2009, Georgian Bank had total assets of $2 billion and total deposits of approximately $2 billion. In addition to assuming all of the deposits of the failed bank, First Citizens Bank agreed to purchase essentially all of the assets.

The FDIC and First Citizens Bank entered into a loss-share transaction on approximately $2 billion of Georgian Bank's assets. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $892 million. ... Georgian Bank is the 95th FDIC-insured institution to fail in the nation this year, and the nineteenth in Georgia. The last FDIC-insured institution closed in the state was First Coweta, Newnan, on August 21, 2009.

Friday starts early ...

by Calculated Risk on 9/25/2009 04:00:00 PM

Michelle at Footnoted.org digs up the employment contract for Freddie Mac's new CFO: Taxpayer funded signing bonus at Freddie Mac?

• annual compensation of $3.5 million (this includes $675K in salary, $1.6 million in something called “additional annual salary” and $1.1 million in a target incentive
• a $1.95 million signing bonus
• immediate buyout of Kari’s house

Why is Freddie paying more than the private sector? And I bet Geithner is jealous about the house deal!

Click on graph for larger image in new window.

This graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

And the Bandos are moving on up in Miami! From nbcphiladelphia.com: After Miami's Ritzy Bubble Bursts, Squatters Move on Up

Miami's squatter problem has garnered national media attention over the past year and a half, as the foreclosure crisis threatened to transform the Magic City into something resembling a lawless, "Mad Max"-esque landscape.

The squatters mostly kept a low profile, moving in ... to neighborhoods where they could take over unnoticed.

But now come reports that squatters are seeking out more ritzy neighborhoods, including the pricey, tree-lined streets of Coral Gables.
...
A check of county records found that the home went into foreclosure over a year ago, just about the time residents said the alleged squatters showed up.

The bank which owns the property hired a realtor to sell it last month ...

Maybe the lenders should sell the foreclosed homes?

And from the LA Times: Calls to renew home buyer tax credit get louder in Washington. Yeah, an expensive, poorly targeted tax credit for those not suffering during the recession. This isn't as dumb as allowing the FHA DAP to continue (Downpayment Assistance Program - the poster child for bad housing policy), but close. Why not a "first-time renters" tax credit for anyone who hasn't rented for 3 years? That makes as much economic sense.

by Calculated Risk on 9/25/2009 02:23:00 PM

From the American Trucking Association: ATA Truck Tonnage Index Rose 2.1 Percent in August

Click on graph for slightly larger image in new window.

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.1 percent in August, matching July’s increase of the same magnitude. The latest gain raised the SA index to 104.1 (2000=100), which was the best reading since February 2009. ... Compared with August 2008, SA tonnage fell 7.5 percent, which was the best year-over-year showing since November 2008. ...

“The gains in tonnage during July and August reflect a growing economy and less of an overhang in inventories,” [ATA Chief Economist Bob Costello] noted. “While I am optimistic that the worst is behind us, most economic indicators, including industrial output and household spending, suggest freight tonnage will exhibit moderate, and probably inconsistent, growth in the months ahead."

The Rail Freight Traffic shows some recent pickup too, but the level is still way below 2008 and 2007. (ht Bob_in_MA) Note: Trucking accounts for about 70% of tonnage carried by all modes of domestic freight transportation, and about 83% of total revenue.

It appears the economy has reset to a new lower level, and growth will probably be sluggish. Trucking is probably benefiting from inventory restocking, and exports - the key positive areas for the economy.

by Calculated Risk on 9/25/2009 12:16:00 PM

For graphs based on the new home sales report this morning, please see: New Home Sales Flat in August

The following graph is a turnover ratio for existing home sales. This is annual sales and year end inventory divided by the total number of owner occupied units. For 2009, sales were estimated at 4.8 million units, and inventory at the August level.

Click on graph for larger image in new window.

Although the turnover ratio has fallen from the bubble years, the level is still above the median for the last 40 years. This suggests 2009 is about a normal year for existing home turnover.

That might seem shocking based on all the reports of weak existing home sales. But the problem isn't the number of sales (except as compared to the bubble years), but the type and price of sales.

The reason turnover hasn't fallen further is because of all the distressed sales (foreclosures and short sales) primarily in the low priced areas. Distressed sales declined in August, and this is a major reason existing home sales declined.

There is another wave of foreclosures coming, so existing home sales might stay elevated for some time. Plus, the "first-time" homebuyers tax credit might be extended (a poorly targeted an inefficient credit).

Note: there is a substantial shadow inventory too.

All this distressed sales activity has created a gap between new and existing sales as shown in the following graph that I've jokingly labeled the "Distressing" gap.

This graph shows existing home sales (left axis) and new home sales (right axis) through August.

As I've noted before, I believe this gap was caused primarily by distressed sales. Even with the recent rebound in new and existing home sales, the gap is still very wide.

The third graph shows the same information, but as a ratio for existing home sales divided by new home sales.

Although distressed sales will stay elevated for some time, eventually I expect this ratio to decline back to the previous ratio.

The ratio could decline because of a further increase in new home sales, or a decrease in existing home sales - or a combination of both. I expect the ratio will decline mostly from a decline in existing home sales as the first-time home buyer frenzy subsides, and as the foreclosure crisis moves into mid-to-high priced areas (with fewer cash flow investors).

by Calculated Risk on 9/25/2009 10:00:00 AM

The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 429 thousand. This is a slight increase from the revised rate of 426 thousand in July (revised from 433 thousand).

Click on graph for larger image in new window.

The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).

Note the Red columns for 2009. Sales in August 2009 were the same as August 2008. This is the 4th lowest sales for August since the Census Bureau started tracking sales in 1963.

In August 2009, 38 thousand new homes were sold (NSA); the record low was 34 thousand in August 1981; the record high for August was 110 thousand in 2005.

The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales fell off a cliff, but are now 30% above the low in January.

Sales of new one-family houses in August 2009 were at a seasonally adjusted annual rate of 429,000 ...

This is 0.7 percent (±16.2%)* above the revised July rate of 426,000, but is 3.4 percent (±13.3%) below the August 2008 estimate of 444,000.

And another long term graph - this one for New Home Months of Supply.

There were 7.3 months of supply in August - significantly below the all time record of 12.4 months of supply set in January.

The seasonally adjusted estimate of new houses for sale at the end of August was 262,000. This represents a supply of 7.3 months at the current sales rate.

The final graph shows new home inventory.

Note that new home inventory does not include many condos (especially high rise condos), and areas with significant condo construction will have much higher inventory levels.

Months-of-supply and inventory have both peaked for this cycle, and new homes sales has probably also bottomed for this cycle. However any further recovery in sales will likely be modest because of the huge overhang of existing homes for sale.

I'll have more later ...