by Calculated Risk on 5/25/2012 10:07:00 PM

Friday night humor ...

LANGUAGE WARNING (ht Catherine Rampell, Princeton Alum).

by Calculated Risk on 5/25/2012 03:44:00 PM

From economist Tom Lawler:

FDIC released its Quarterly Banking Profile for the first quarter of 2012, and according to the report the carrying value of 1-4 family REO properties at FDIC-insured institutions at the end of March was $11.0819 billion, down from $11.6736 billion at the end of December and $13.2795 billion at the end of March. FDIC does not release institutions’ REO inventory by property count. If FDIC institutions’ average carrying value were 50% higher than the average for Fannie and Freddie, then the number of 1-4 family REO properties at the end of March at FDIC institutions would be about 89,398, down from 93,215 at the end of December and 100,530 at the end of last March.

Using this assumption, here is a chart showing SF REO inventory for Fannie, Freddie, FHA, private-label ABS, and FDIC-insured institutions. The estimated total for this group in March was 450,194, down 19.9% from last March.

Click on graph for larger image in new window.

CR note: As Tom Lawler has noted before: "This is NOT an estimate of total residential REO, as it excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other lender categories." However this is the bulk of the 1-4 family REO - probably 90% or more. Rounding up the estimate (using 90%) suggests total REO is just around 500,000 at the end of Q1.

REO inventories have declined over the last year. This was a combination of more sales, fewer acquisitions due to the slowdown in the foreclosure process, and a focus on modifications and short sales. With the mortgage servicer settlement, and relaxed guidance on institutions holding REOs as rentals, the number of REOs will probably increase over the next few quarters.

by Calculated Risk on 5/25/2012 02:35:00 PM

From the NY Times: Spanish Lender Seeks 19 Billion Euros; Ratings Cut on 5 Banks

Standard & Poor’s slashed its ratings on the creditworthiness of five Spanish banks on Friday, just as one of them — Bankia, the nation’s largest real estate lender — requested an additional 19 billion euros in rescue funds from the country, far beyond initial government estimates.

From the Financial Times: Spain to inject up to €19bn into Bankia

Madrid’s biggest bank nationalisation will take the total amount of state aid pumped into Bankia to €23.5bn, and will give the government as much as 90 per cent control of Spain’s second largest bank by domestic deposits. ...
Artur Mas, president of Catalonia, [said] the region was running out of options to refinance its debts, and wanted assistance from Madrid.

The Spanish 10 year bond yield is up to 6.31%.

by Calculated Risk on 5/25/2012 11:45:00 AM

Note: The Case-Shiller report is for March (really an average of prices in January, February and March). This data is released with a significant lag, see: House Prices and Lagged Data

Zillow Forecast: Zillow Forecast: March Case-Shiller Composite-20 Expected to Show 2.6% Decline from One Year Ago

On Tuesday, May 29th, the Case-Shiller Composite Home Price Indices for March will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will decline by 2.6 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will decline by 2.7 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from February to March will be 0.3 percent for both the 20 and 10-City Composite Home Price Index (SA).
...
This will be the second month in a row where both of the Case-Shiller composite indices show monthly appreciation on a seasonally adjusted basis. However prices are still down from year ago levels. Most likely, there will be some see-sawing in home prices along the bottom before we start to see a more sustained recovery.

Zillow's forecasts for Case-Shiller have been pretty close, and I expect Case-Shiller will report NSA house prices at a new post-bubble low in March.

One of the keys this year will be to watch the year-over-year change in the various house price indexes. The composite 10 and 20 indexes declined 3.6% and 3.5% respectively in February, after declining 4.1% and 3.9% in January. Zillow is forecasting a smaller year-over-year decline in March, and for the seasonally adjusted indexes to increase for the 2nd consecutive month.

		Case Shiller Composite 10		Case Shiller Composite 20
		NSA	SA	NSA	SA
Case Shiller (year ago)	March 2011	150.91	153.99	137.64	140.47
Case-Shiller (last month)	February 2012	146.90	149.36	134.20	136.71
Zillow March Forecast	YoY	-2.7%	-2.7%	-2.6%	-2.6%
	MoM	-0.1%	0.3%	-0.1%	0.3%
Zillow Forecasts1		146.8	149.8	134.1	136.9
Current Post Bubble Low		146.90	149.25	134.20	136.50
Date of Post Bubble Low		February 2012	January 2012	February 2012	January 2012
1Estimate based on Year-over-year and Month-over-month Zillow forecasts

Also from Zillow: Home Values Continue to Climb in April (released a month ahead of Case-Shiller)

Zillow’s April Real Estate Market Report, released today, shows that home values increased 0.7 percent to $147,300 from March to April. Compared to April 2011, home values are still down by 1.8 percent. This strong monthly appreciation follows March’s encouraging data point, which also had home values appreciating at a healthy clip.

by Calculated Risk on 5/25/2012 09:55:00 AM

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for May increased to 79.3, up from the preliminary reading 77.8, and up from the April reading of 76.4.

This was above the consensus forecast of 77.8 and the highest level since October 2007 - before the recession started. Overall sentiment is still fairly weak - probably due to a combination of the high unemployment rate, high gasoline prices and the sluggish economy - but falling gasoline prices probably helped in May.