by Calculated Risk on 5/30/2011 08:50:00 AM

From the Financial Times: Greece set for severe bail-out conditions

European leaders are negotiating a deal that would lead to unprecedented outside intervention in the Greek economy, including international involvement in tax collection and privatisation of state assets ... the package would also include incentives for private holders of Greek debt voluntarily to extend Athens’ repayment schedule, as well as another round of austerity measures
excerpts with permission

From Reuters: EU racing to draft second Greek bailout: sources

The European Union is working on a second bailout package for Greece in a race to release vital loans next month and avert the risk of the euro zone country defaulting ... a new 65 billion euro package could involve a mixture of collateralized loans from the EU and IMF, and additional revenue measures, with unprecedented intrusive external supervision of Greece's privatisation program.
...
The next scheduled meeting of euro zone finance ministers is on June 20 in Luxembourg

The bond yields in Europe are fairly stable this morning. Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

Weekend ...
• Summary for Week Ending May 27th
• Schedule for Week of May 29th

by Calculated Risk on 5/29/2011 11:03:00 PM

Another update on Europe - the IMF, the European Central Bank and the European Commission are trying to decide on the next step for Greece.

Lorenzo Bini Smaghi, an ECB executive board member told the Financial Times in an interview that a Greek "soft" restructuring is a "fairy tale". Here is quote:

LBS: There is no such thing as an “orderly” debt restructuring in the current circumstances. It would be a mess. And I haven’t mentioned contagion – which would come on top.

If you look at financial markets, every time there is mention of word like restructuring or “soft restructuring,” they go crazy ... “soft restructurings” “re-profilings” do not exist. They are catchwords that politicians have tried to use, but without any content.
excerpt with permission

And from the WSJ: Bond Auctions Set to Measure Contagion Fears

A team of European and International Monetary Fund officials is scheduled to conclude a closely watched examination of Greek government finances this week as bellwether bond auctions are expected to provide a sign of whether anxiety over Greece's debts is infecting investor appetite for sovereign bonds elsewhere in the euro zone.

Italy will seek to raise as much as €8.5 billion ($12.1 billion) from bond investors Monday, while Spain is seeking an estimated €3.5 billion ...

The crisis in Greece doesn't seem to be impacting Spain or Italy ... yet.

Yesterday ...
• Summary for Week Ending May 27th
• Schedule for Week of May 29th

by Calculated Risk on 5/29/2011 05:40:00 PM

From Eric Wolff at the North County Times: HOUSING: Builders feeling hopeful, opening lots for sale

The North San Diego County and Southwest Riverside County housing markets are glutted with bank-owned houses and short sales, which put a drag on local house prices. ... Yet builders opened 18 new communities in San Diego County in the first three months of 2011, five more than in the same period of 2010, and 16 opened in Riverside County, six more than during the same period last year, according to MarketPointe Realty Advisers.
...
Builders have also been able to slash costs: Many have laid off staff and found ways to become more efficient, and they're able to take advantage of reduced prices from contractors desperate to stay in business. ... Developers acquired unfinished communities at fire-sale prices from banks and desperate sellers.
...
"Every piece of property that we've bought in the last two years has been a distressed sale of some kind or another," said Brent Anderson, vice president for investor relations for Meritage. "All of these communities we're buying ---- they're distressed assets we're picking up for pennies on the dollar."

Cheap land, along with stiff competition among contractors, allows builders to slash their selling prices.

I've talked to builders in some other areas who are able to compete with distressed home pricing based on a combination of cheaper land prices, lower labor costs and also building smaller homes. (note: Eric didn't mention house size in his article).

These are still quite a few distressed homes available, but they don't appeal to every buyer. Perhaps the homes are too large, too beat up, or just too difficult to buy (short sales) - so there is still a market for new homes. I doubt this indicates a significant increase in new home construction, although we might see a little pick up later this year in a few areas as the local excess supply continues to shrink.

Yesterday ...
• Summary for Week Ending May 27th
• Schedule for Week of May 29th

by Calculated Risk on 5/29/2011 01:41:00 PM

Just a quick note: The publicly available S&P Case-Shiller release on Tuesday will include the two composite indexes (10 and 20 cities) for March, the National Index for Q1, and the indexes for 20 cities.

In nominal terms, the two Case-Shiller composite indexes for February were still above the previous post bubble lows set in April 2009. The Case-Shiller national index (released quarterly), hit a new post bubble low in Q4 2010.

I expect both the National Index and the Composite 20 index to be at new post bubble nominal lows in March. Radar Logic provides a forecast each month that has been pretty close. Here is their estimate for the March Case-Shiller indexes (Not Seasonally Adjusted, NSA):

Last month, we predicted that the S&P/Case-Shiller 10-City composite for February 2010 would be about 153 and the 20-City composite would be roughly 139. In fact, the 10-City composite was 152.70 and the 20-City composite was 139.27.

This month, we expect the March 2011 10-City composite index to be about 152 and the 20-City index to be roughly 138.

That would put the composite 20 at a new low (both NSA and SA), but the Composite 10 would still be about 1% above the low in April 2009.

by Calculated Risk on 5/29/2011 08:53:00 AM

From Bloomberg: Arizona Land Sells for 8% of Price Calpers Group Paid at Peak (ht Justin)

A 10,200-acre desert site in Arizona sold for $32.5 million this week, five years after a group with investors including the California Public Employees’ Retirement System paid $400 million for the land.
...
The site ... had been planned for a 42,000-home community by the Calpers- financed group when it was purchased in 2006.

This was one of those crazy deals that happened right at the peak.

I suppose paying under $10,000 per lot sounded good to someone in 2005, but the new owners are more realistic: “This won’t be developed in my lifetime.” said Kent Kleinman, a spokesman for the buyer ...

Yesterday ...
• Summary for Week Ending May 27th
• Schedule for Week of May 29th