by Calculated Risk on 5/18/2012 08:49:00 AM

From HotelNewsNow.com: St. Louis posts top occupancy, RevPAR gains

Overall, the U.S. hotel industry’s occupancy ended the week virtually flat with a 0.1% increase to 62.7%, ADR increased 4.5% to $105.85 and RevPAR jumped 4.5% to $66.35.

Hotel occupancy and RevPAR have improved from 2011, and occupancy is back close to normal. However ADR is still 3% to 4% below the precession levels, and the same for RevPAR.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using a four week average.

Click on graph for larger image.

The red line is for 2012, yellow is for 2011, blue is "normal" and black is for 2009 - the worst year since the Great Depression for hotels.

Looking forward, leisure travel usually increases over the summer months, and occupancy rates will rise. So far it looks like 2012 will have higher occupancy than 2011, but still mostly below the pre-rececession median. Hotels have come a long way since 2008 when I was writing about The Coming Hotel Bust. But it will be sometime before investment increases again.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 5/17/2012 11:08:00 PM

The only economic release schedule for Friday is the State Employment and Unemployment report for April.

• From Freddie Mac: Fixed Mortgage Rates Hit Record Lows Again

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates again hitting new record lows. The 30-year fixed-rate mortgage at 3.79 percent continues to remain well below 4 percent and 15-year fixed-rate mortgages are also slightly down at 3.04 percent.

30-year fixed-rate mortgage (FRM) averaged 3.79 percent with an average 0.7 point for the week ending May 17, 2012, down from last week when it averaged 3.83 percent. Last year at this time, the 30-year FRM averaged 4.61 percent.

• From the WSJ: Ten-Year Treasury Yield Near Record Low

The benchmark note gained 18/32 in price by late-afternoon trading to yield 1.702% after sinking as far as 1.692%. The record low of 1.672% was matched in September and originally set in February 1946. Based on a 3 p.m. EDT finish, 1.702% would be the lowest yield ever to round out a session.

• From the Financial Times: Spain moves to calm bank fears

Moody’s downgraded 16 Spanish banks, with three-notch cuts for the “Big Three” lenders – Santander, BBVA and La Caixa – and three small institutions left in “junk” territory, though the agency made no mention of Bankia.

It said the downgrades were prompted primarily by the deteriorating Spanish economy and the reduced credit-worthiness of the government.
Excerpt with permission

Earlier in the day there were unfounded rumors of a bank run in Spain.

• The Asian markets are all red tonight. From MarketWatch: Asia stocks tumble as Spain joins list of fears

Japan’s Nikkei Stock fell 2.1%, South Korea’s Kopsi dropped 2.7%, and Australia’s S&P/ASX 200 index skidded 2.1%.

Hong Kong’s Hang Seng Index fell 2%, and the Shanghai Composite index lost 0.7%.

by Calculated Risk on 5/17/2012 07:17:00 PM

The election is a month away and Europe will support Greece financially through the next election, but no one knows what will happen at the end of June.

Until the election, the campaign rhetoric will be global front page news. Syriza leader Alexis Tsipras seems to think that Greece can stay in the euro and also break the bailout agreement. His opponents say a vote for Syriza is a vote to exit the euro.

From the AthensNews: Judge to lead Greece to critical eurozone vote

A senior judge was put in charge of an emergency government on Wednesday to lead Greece to new elections on June 17 and bankers sought to calm public fears after the president said political chaos risked causing panic and a run on deposits.

European leaders who once denied vociferously that they were fretting over Greece leaving their currency union have given up pretence. Asked if he was concerned about a Greek exit, European Central Bank chief Mario Draghi said simply: "No comment".

Citizens have been withdrawing hundreds of millions of euros from Greek banks in recent days, as the prospect of the country being forced out of the European Union's common currency zone seems ever more real ...

The "run" on Greek deposits started in 2010, and deposits were already down about one-third before the recent run started. There won't be much left on June 17th.

Right now Syriza is leading in the polls, but the election outcome is uncertain. From the WSJ: Greek Leftist Leader Throws Down Gauntlet on Debt

The head of Greece's radical left party says there is little chance Europe will cut off funding to the country and if it does, Greece will repudiate its debts ...

A financial collapse in Greece would drag down the rest of the euro zone, says Alexis Tsipras, the 37-year-old head of ... Syriza ... Instead, he says, Europe must consider a more growth-oriented policy to arrest Greece's spiraling recession and address what he calls a growing "humanitarian crisis" facing the country.

"Our first choice is to convince our European partners that, in their own interest, financing must not be stopped," Mr. Tsipras said in an interview with The Wall Street Journal. "If we can't convince them—because we don't have the intention to take unilateral action—but if they proceed with unilateral action on their side, in other words they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors."

I think Tsipras is both right and wrong. He is correct about the need for growth policies, but he might be misjudging the European policymakers who seem more and more willing to stop financing Greece.

Many people are asking: Will this be a Lehman moment? US policymakers had many months to prepare for the collapse of Lehman, and the Bush administration was still unprepared when it happened. Are the policymakers in Europe ready for Greece leaving the euro? They sure haven't inspired confidence so far ...

by Calculated Risk on 5/17/2012 03:47:00 PM

From economist Tom Lawler:

Based on local realtor/MLS reports I’ve seen so far, I estimate that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of about 4.53 million in April, up 1.1% from March’s pace, and up 7.9% from last April’s pace. As was the case in March, the “subdued” nature of April sales relative to “anecdotal” reports of significantly improved conditions in many markets across the country in part reflected the sized YOY decline in REO sales, which in turn were the result of sharply lower REO inventories.

On the inventory front, my and other’s tracking would suggest a monthly increase in the number of existing homes listing for sale of a bit over 2% in April. However, for some reason the NAR’s inventory number in April has for many years shown a much larger monthly gain than listings data might suggest, for reasons that aren’t clear to me. YOY, I’d estimate that existing home inventories were down by about 21% YOY in April, and if the NAR’s inventory number showed a 21% YOY decline, that would imply a monthly increase of around 6.8% (assuming March’s inventory number is not revised, though I suspect it will be revised upward a bit.)

On the median sales price front, the story for April was the sharp increase in the number of markets reporting YOY increases in median sales prices – in some areas some substantial gains. In many (though not all markets) one reason was substantial YOY declines in the “distressed” sales share of total sales, and especially declines in the foreclosure share of sales. In other areas, however, anecdotal evidence suggests that many areas were seeing “real” price increases, though one can’t rightly tell for sure based on median sales prices. Net, I estimate that the NAR’s median SF sales price will show a YOY increase of about 5.1% in April, which would be the largest YOY increase since May 2006. Of course, a 5.1% YOY gain in the SF MSP for April would still leave last months median sales price almost 26% below the median sales price in April 2006!

CR Note: As Lawler notes, the median sales price is impacted by the mix, so I use other measures to track prices.

Other measures of inventory suggest a much smaller increase in inventory in April. However, if reported inventory increases 6.8% that would be 2.53 million, with month-of-supply at 6.7 months, up from 6.3 in March.

The NAR is scheduled to report April existing home sales on Tuesday, May 22nd.

by Calculated Risk on 5/17/2012 12:33:00 PM

This was released earlier this morning by RealtyTrac: U.S. Foreclosure Activity Shifts Eastward in April

RealtyTrac® ... today released its U.S. Foreclosure Market Report™ for April 2012, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 188,780 U.S. properties in April, the lowest monthly total since July 2007.

April foreclosure activity decreased 5 percent from the previous month and was down 14 percent from April 2011. ...

"Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona and Nevada,” said Brandon Moore, CEO of RealtyTrac. “Those three states, and several other non-judicial foreclosure states like them, more efficiently processed foreclosures last year, resulting in fewer catch-up foreclosures this year."

“In addition, more distressed loans are being diverted into short sales rather than becoming completed foreclosures,” Moore continued. “Our preliminary first quarter sales data shows that pre-foreclosure sales — typically short sales — are on pace to outnumber sales of bank-owned properties during the quarter in California, Arizona and 10 other states.”

First, by "Eastward", RealtyTrac really means a "shift to judicial foreclosure states".

Click on graph for larger image in graph gallery.

Here is a repeat of a graph from the MBA showing the percent of loans in the foreclosure process by state. See: Q1 MBA National Delinquency Survey Comments. According to RealtyTrac, foreclosure activity is picking up in the judicial states - and most of those are in the east.

Note: Graph posted with permission.

Last month, RealtyTrac was saying "The [foreclosure] dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen". It is still early, but they seem to be backing off the "dam bursting" a little. As I noted earlier this year, Some thoughts on housing and foreclosures:

One of the "givens" for 2012 is that the number of foreclosures will increase following the mortgage servicer settlement agreement. But I've been wondering just how big that increase will be ... the increase might be less than many people expect.

I reviewed some of the reasons that there might not be a huge flood. It is still early, but a combination of more short sales, more modifications, REO-to-rentals (including banks holding more REOs as rentals), underwater homeowners refinancing with HARP, and the slow process in judicial states will probably keep this from being a massive flood.