by Calculated Risk on 11/22/2011 12:35:00 AM

From the WSJ: BofA Warned to Get Stronger

Bank of America Corp.'s board has been told that the company could face a public enforcement action if regulators aren't satisfied with recent steps taken to strengthen the bank ... The nation's second-largest lender has been operating under a memorandum of understanding since May 2009 ... In recent months, regulators met with Bank of America's board and said they wanted to see more progress ... Otherwise the informal order could turn into a formal and public action ...

This would be a huge addition to the "Unofficial" problem bank list (We only include banks operating under a formal action on the list). A formal action would mean greater restrictions - and would bring more negative publicity to the bank.

Earlier:
• Existing Home Sales in October: 4.97 million SAAR, 8.0 months of supply
• Existing Home Sales: More on Inventory and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 11/21/2011 08:46:00 PM

Just a quick note - for anyone accessing Calculatedriskblog via an iPad, I'm trying out some new software with a customized tablet layout. I'll be adding smart phone software soon ...

Earlier:
• Existing Home Sales in October: 4.97 million SAAR, 8.0 months of supply
• Existing Home Sales: More on Inventory and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 11/21/2011 06:03:00 PM

From Dow Jones: Moody's: Commercial Real-Estate Prices Fell In September

U.S. commercial real-estate prices fell 1.4% in September, ending a four-month growth streak ... Moody's expects "multi-family and hotel properties to lead the price recovery," said Nick Levidy, Moody's managing director. "Office and retail will lag mostly because of a very high number of vacancies and the burn-off of above-market rent leases."

Below is a graph of the Moodys/REAL Commercial Property Price Index (CPPI) - Beware of the "Real" in the title - this index is not inflation adjusted.

Click on graph for larger image.

CRE prices only go back to December 2000.

According to Moody's, CRE prices are up 1.3% from a year ago, and down about 42% from the peak in 2007. This index is very volatile because there are relatively few transactions - but it does appear to be mostly moving sideways.
All current Commercial Real Estate graphs

Earlier:
• Existing Home Sales in October: 4.97 million SAAR, 8.0 months of supply
• Existing Home Sales: More on Inventory and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 11/21/2011 03:45:00 PM

The Department of Transportation (DOT) reported:

• Travel on all roads and streets changed by -1.5% (-3.7 billion vehicle miles) for September 2011 as compared with September 2010.

• Travel for the month is estimated to be 244.2 billion vehicle miles.

• Cumulative Travel for 2011 changed by -1.3% (-29.8 billion vehicle miles).

The following graph shows the rolling 12 month total vehicle miles driven.

Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 46 months - so this is a new record for longest period below the previous peak - and still counting! Talk about moving sideways ...

The second graph shows the year-over-year change from the same month in the previous year. The current decline is not as a severe as in 2008, but this is significant.

The year-over-year decline in September wasn't as severe as in July and August, but was still negative for the seventh straight month.

Earlier:
• Existing Home Sales in October: 4.97 million SAAR, 8.0 months of supply
• Existing Home Sales: More on Inventory and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 11/21/2011 12:56:00 PM

Yesterday I discussed the expected downward revisions to the NAR estimates for sales and inventory. The NAR didn't provide any update on the benchmark revision process in the release today. I expect sales and inventory estimates to be revised down by 10% to 15% for the current year - and less in earlier years - probably about 2% or so in 2006 or 2007.

The NAR reported inventory fell to 3.33 million in October, but if my guess is correct, inventory will be adjusted to something in the 2.85 to 3.0 million range after the benchmark revision. This is close to the same level as in October 2005 (with listed inventory at 2.87 million units).

Click on graph for larger image in graph gallery.

This graph shows inventory by month since 2004. In 2004 (black line), inventory was fairly flat and declined at the end of the year. In 2005 (dark blue line), inventory kept rising all year - and that was a clear sign that the housing bubble was ending.

This year (dark red) inventory is at the lowest level since 2005. And with the coming revisions correcting the "drift" in the reported data (both sales and inventory were too high for the last few years), the red line will probably be close to the 2005 (blue) line. Inventory will still be elevated - especially with the much lower sales rate - but this will put less downward pressure on house prices (of course the level of distressed properties is still very high, and there is a significant shadow inventory).

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

The red columns are for 2011.

Sales NSA are above last October when sales declined sharply following the expiration of the tax credit in June 2010. Sales are close to the October 2008 level, but will be lower after the benchmark revision is released.

The level of sales is still elevated due to investor buying. The NAR noted:

All-cash sales accounted for 29 percent of purchases in October, little changed from 30 percent in September and 29 percent in October 2010; investors make up the bulk of cash transactions.

Investors purchased 18 percent of homes in October, compared with 19 percent in September and 19 percent in October 2010.

Earlier:
• Existing Home Sales in October: 4.97 million SAAR, 8.0 months of supply
• Existing Home Sales graphs