by Calculated Risk on 4/05/2011 08:30:00 AM

From Bloomberg: Office Market in U.S. Begins Recovery as Vacancy Rate Declines

Office vacancies in the U.S. dropped for the first time in more than three years in the most recent quarter and rents climbed ... The national vacancy rate fell to 17.5 percent in the first quarter from 17.6 percent in the previous three months, Reis Inc. said in a report today.

“This is the first quarter, at least on a national basis, where the change is strong enough to qualify it as the first quarter of a recovery,” Ryan Severino, an economist at Reis, said in an interview. ...

Click on graph for larger image in graph gallery.

This graph shows the office vacancy rate starting in 1991.

Reis is reporting the vacancy rate was at 17.5% in Q1 2011, down slightly from 17.6% in Q4 2010, and up from 17.3% in Q1 2010. This was a small decline in the vacancy rate - but it was the first decline since 2007.

Reis should release the Mall and Apartment vacancy rates over the next few days.

by Calculated Risk on 4/04/2011 10:22:00 PM

From Dow Jones: Fed's Bernanke Downplays Inflation Fears

Federal Reserve Chairman Ben Bernanke Monday downplayed inflation fears ... Bernanke said the rise in global commodity prices is likely to be temporary and shouldn't translate into a broader inflation problem. ...

"I think the increase in inflation will be transitory," Bernanke said ... He attributed the strong gain in global energy and food prices to supply and demand conditions, adding he reckons these prices "will eventually stabilize."

The Fed chief's remarks, which came in response to audience questions...

Bernanke pointed to continued weakness in the economy, saying the housing sector is one reason why the recovery is not stronger. He said the Fed expects the high rate of foreclosures to continue, and noted this will hurt consumer wealth and confidence.

Here is the full quote on inflation from CNBC:

"I think the increase in inflation will be transitory. Our expectation at this point is that in the medium term inflation, if anything, will be a bit low. We will monitor inflation and inflation expectations very closely." [Bernanke said]

CR: I also think inflation will be transitory. With the sluggish recovery - and the view that inflation will be transitory - it is very unlikely that the Fed will end QE2 early (as some have suggested) and it is also unlikely the Fed will raise rates this year.

by Calculated Risk on 4/04/2011 07:15:00 PM

From Fed Chairman Ben Bernanke: Clearinghouses, Financial Stability, and Financial Reform

This is a historical review of clearinghouses (some of the financial system "plumbing"), and a discussion of the impact of Dodd-Frank. There is no discussion of current monetary policy.

"Tonight I would like to discuss post-crisis reform as it relates to a prominent part of our financial market infrastructure--namely, clearinghouses for payments, securities, and derivatives transactions. This audience, I know, recognizes the importance of what is often called the "plumbing" of the financial system--a set of institutions that very safely and efficiently handles, under most circumstances, enormous volumes of financial transactions each day. Because clearinghouses and other parts of the financial infrastructure fared relatively well during the crisis--despite moments of significant stress--the public debate on financial reform has understandably focused on the risks posed by so-called too-big-to-fail financial firms, whose dramatic failures or near failures put our financial system and economy in dire jeopardy. Nevertheless, the smooth operation and financial soundness of clearinghouses and related institutions are essential for financial stability, and we must not take them for granted."

by Calculated Risk on 4/04/2011 04:24:00 PM

From the American Bankruptcy Institute: First Quarter Consumer Bankruptcy Filings Fall 6 Percent from 2010

Consumer bankruptcies for the first quarter of 2011 (Jan. 1 – March 31) decreased 6 percent nationwide from the same time period in 2010, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC). The data showed that the overall consumer filing total for the first three months of 2011 (Jan. 1-March 31) reached 340,012, down from the 363,215 consumer filings recorded for the first quarter of 2010.

“Though bankruptcy filings are still elevated, consumers continue to take steps to reduce debt levels and shore up their finances,” said ABI Executive Director Samuel J. Gerdano. “As a result, we now expect that consumer bankruptcy filings will dip below the 1.5 million filings recorded last year.”

Click on graph for larger image in graph gallery.

This graph shows the non-business bankruptcy filings by quarter using monthly data from the ABI and previous quarterly data from USCourts.gov.

Note: The spike in 2005 was due to the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005". (a good example of Orwellian named legislation).

It is possible that consumer bankruptcy filings peaked in 2010, but they will probably stay elevated for some time.

by Calculated Risk on 4/04/2011 03:22:00 PM

From Dow Jones: Beazer Homes To Form Rental Unit, Starts In Phoenix

Beazer Homes ... is acquiring newer homes in distress--including some it built--and renting them out.

... Builders are unable to compete with bargain-priced foreclosures, some located within walking distance of new homes under construction. ...

The company launched its program in Phoenix, one of the areas hardest hit by the housing crisis. It completed its first home purchases last month and expects to have more than 100 by the end of this fiscal year.

This seems like a dumb idea for a "home builder". The scale is insignificant, and they have no special expertise in being a landlord. I guess they need something to do.