by Calculated Risk on 6/25/2011 11:11:00 AM

Probably the three most talked about stories of the week were 1) the Greek financial situation, 2) the release of oil from the petroleum reserves, and 3) Fed Chairman Bernanke’s press briefing following the FOMC meeting.

Oil prices fell sharply after the announcement of oil releases from reserves. And gasoline prices are expected to continue to decline (Gasoline prices are already down over 30 cents per gallon from the recent peak).

There were no surprises with the FOMC announcement or during Bernanke’s press briefing. The Fed’s forecast for growth was revised down, and the forecast for the unemployment rate and inflation were revised up. The Fed believes that most of the recent economic weakness was temporary, and the increase in inflation was transitory. QE2 will end as scheduled and the Fed is clearly on hold waiting for additional data.

This was a light week for economic data: Home sales – both existing and new home sales – were weak. However durable goods orders were a little better this month, and there were several house price reports suggesting prices increased slightly in April (Case-Shiller will be released next Tuesday).

Below is a summary of economic data last week mostly in graphs:

• May Existing Home Sales: 4.81 million SAAR, 9.3 months of supply

The NAR reports: Existing-Home Sales Decline in May

Click on graph for larger image in graph gallery.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in May 2011 (4.81 million SAAR) were 3.8% lower than last month, and were 15.3% lower than in May 2010.

The next graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, so it really helps to look at the YoY change.

Inventory decreased 4.4% year-over-year in May from May 2010. This is the fourth consecutive month with a YoY decrease in inventory.

Inventory should increase over the next couple of months months (the normal seasonal pattern), and the YoY change is something to watch closely this year.

This graph shows existing home sales Not Seasonally Adjusted (NSA).

The red columns are for 2011.

Sales NSA are well below the tax credit boosted level of sales in May 2010, but slightly above the level of May sales in 2009. The level of sales is still elevated due to investor buying.

• New Home Sales in May at 319 Thousand SAAR

The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 319 thousand. This was down from a revised 326 thousand in April (revised from 323 thousand).

This graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Sales of new one-family houses in May 2011 were at a seasonally adjusted annual rate of 319,000 ... This is 2.1 percent (±10.7%)* below the revised April rate of 326,000, but is 13.5 percent (±13.6%)* above the May 2010 estimate of 281,000.

Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale fell to 64,000 units in May. The combined total of completed and under construction is at the lowest level since this series started.

This graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In May 2011 (red column), 30 thousand new homes were sold (NSA). The record low for May was 26 thousand in 2010 (following the expiration of the homebuyer tax credit) and now 2011. The high was 120 thousand in 2005.

Although above the consensus forecast of 305 thousand, this was just above the record low for May - and new home sales have averaged only 300 thousand SAAR since the expiration of the tax credit ... moving sideways at a very low level.

• AIA: Architecture Billings Index indicates declining demand in May

Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.

This graph shows the Architecture Billings Index since 1996. The index decreased in May to 47.2 from 47.6 in April. Anything below 50 indicates a decrease in billings.

Note: Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So this suggests another dip in CRE investment towards the end of this year - and into 2012.

• Moody's: Commercial Real Estate Prices declined 3.7% in April, Prices at new Post-Bubble Low

Moody's reported that the Moody’s/REAL All Property Type Aggregate Index declined 3.7% in April.

Here is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index. Beware of the "Real" in the title - this index is not inflation adjusted.

CRE prices only go back to December 2000. The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

According to Moody's, CRE prices are down 13% from a year ago and down about 49% from the peak in 2007. Prices are at new post-bubble lows - and at new lows for the index.

• Other Economic Stories ...
• From CoreLogic: CoreLogic® Reports Shadow Inventory Continues to Decline
• DOT: Vehicle Miles Driven decreased -2.4% in April compared to April 2010
• FOMC Statement: No Change, "Economic recovery is continuing at a moderate pace"
• FHA sells record number of REO in May, Freddie Mac Serious Delinquency Rate declines
• Q1 real GDP growth revised up to 1.9%, Durable-goods orders up 1.9%

Best wishes to all!

by Calculated Risk on 6/25/2011 08:26:00 AM

Note: this is an unofficial list of Problem Banks compiled only from public sources. This post includes an update to the transition matrix (see comments and table at bottom).

Here is the unofficial problem bank list for June 24, 2011.

Changes and comments from surferdude808:

As anticipated, the FDIC released its actions for May 2011, which contributed to many changes to the Unofficial Problem Bank List. This week there are eight additions and three removals. The net five additions push the list back over the 1,000 threshold to 1,001. Assets total $419.2 billion, up $2.5 billion from last week. For the month of June, changes included 17 additions and 13 removals, with four from failure, two from unassisted mergers, and seven from action terminations.

Removals this week include the failed Mountain Heritage Bank, Clayton, GA ($104 million) and action terminations against Commercial State Bank of El Campo, El Campo, TX ($127 million) and Slovak Savings Bank, Pittsburgh, PA ($85 million). This month the FDIC terminated 13 consent orders and two Prompt Corrective Action orders, but, strangely, nine of the terminations were for banks that had failed.

Among the eight additions this week are Patriot Bank, Houston, TX ($1.3 billion); American Bank of the North, Nashwauk, MN ($644 million); and Stonebridge Bank, Exton, PA ($365 million). One other change of note includes the FDIC issuing a Prompt Corrective Action Order against Colorado Capital Bank, Castle Rock, CO ($718 million).

With this being the last Friday of the second quarter, it is time to update the transition matrix. The Unofficial Problem Bank List debuted on August 7, 2009 with 389 institutions with assets of $276.3 billion (see table below).

Over the past 22 months, about 49 percent or 192 institutions have been removed from the original list with 125 due to failure, 49 due to action termination, and 18 due to unassisted merger. About 32 percent of the 389 institutions on the original list have failed, which is substantially higher than the 12 percent figure usually cited by the media as the failure rate for institutions on the FDIC Problem Bank List.

Since the publication of the original list, another 1,009 institutions have been added. However, only 804 of those 1,009 additions remain on the current list as 205 institutions have been removed in the interim. Of the 205 interim removals, 134 were from failure, 44 were from an unassisted merger, 25 from action termination, and two from voluntary liquidation.

In total, 1,398 institutions have made an appearance on the Unofficial Problem Bank List and 259 or 18.5 percent have failed. Of the 397 total removals, the primary way of exit from the list is failure at 259 or 65 percent. Only 74 or 18.6 percent have been rehabilitated while another 62 or 15.6% have found merger partners. Total assets that have appeared on the list amount to $768.9 billion and $258.6 billion have been removed due to failure. The average asset size of removals from failure is nearly $1 billion.

Unofficial Problem Bank List
Change Summary
		Number of Institutions	Assets ($Thousands)
Start (8/7/2009)		389	276,313,429
Subtractions
	Action Terminated	49	(12,581,702)
	Unassisted Merger	18	(3,105,440)
	Voluntary Liquidation	0	-
	Failures	125	(169,470,405)
	Asset Change		(20,083,711)
Still on List at 6/24/2011		197	71,072,171
Additions		804	348,177,411
End (6/24/2011)		1001	419,249,582
Intraperiod Deletions1
	Action Terminated	25	22,538,068
	Unassisted Merger	44	31,856,880
	Voluntary Liquidation	2	833,567
	Failures	134	89,146,292
	Total	205	144,374,807
1Institution not on 8/7/2009 or 6/24/2011 list but appeared on a list between these dates.

by Calculated Risk on 6/24/2011 09:39:00 PM

Steve Kanigher at the Las Vegas Sun presents several photos of bubble monuments in Nevada: Abandoned projects leave lasting reminder of economic crash

"It wasn’t long ago that hotels, high-rise condominiums and massive retail and office complexes sprang up in Southern Nevada seemingly faster than one could drive from one end of the valley to the other. Take that same drive today, though, and you’ll likely see vestiges of the Great Recession: partially built structures with exposed foundations or steel beams ..."

Check out the photos ...

It sure seemed like projects with names like "Manhattan West" (see the 4th slide) or "Central Park West" were doomed.

by Calculated Risk on 6/24/2011 05:38:00 PM

From the FDIC: First American Bank and Trust Company, Athens, Georgia, Assumes All of the Deposits of Mountain Heritage Bank, Clayton, Georgia

As of March 31, 2011, Mountain Heritage Bank had approximately $103.7 million in total assets and $89.6 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $41.1 million. ... Mountain Heritage Bank is the 48th FDIC-insured institution to fail in the nation this year, and the fourteenth in Georgia.

What a surprise ... a bank in Georgia fails. That is a pretty big percentage loss.

by Calculated Risk on 6/24/2011 05:31:00 PM

Oh my ...

From the NY Times: Overbuilding in Spain Leaves Many White Elephants

Last March, local officials inaugurated a brand new airport in Castellón, a small city on Spain’s Mediterranean coast. They are still waiting for the first scheduled flight.

That made me laugh ...

Castellón Airport, built at a cost of €150 million, or $213 million, is not the only white elephant that now dots Spain’s infrastructure landscape. ... Across the country, nearly empty toll roads are struggling to turn a profit. Other projects are surviving only with continued public financing ...

This sounds like a classic bubble attitude: "Build it and they will come". Just a reminder that during a bubble, every project seems to make sense ... on paper.