by Calculated Risk on 12/10/2012 03:55:00 PM

Economist Tom Lawler sent me the following preliminary table today of short sales and foreclosures for a few selected cities in November.

There will be more cities added soon.

For all of these cities, the percentage of foreclosures is down from a year ago.   The percentage of short sales is up in Las Vegas and Reno, but down in Phoenix and in the mid-Atlantic area.

Look at the overall percent of distressed sales (combined foreclosures and short sales).  There is a large year-over-year decline in distressed sales in all of these cities. 

I think the two key numbers for real estate markets are 1) inventory, and 2) the percent of conventional sales (non-distressed sales).  Inventory is falling, and the percent of conventional sales is increasing - and those are positive signs.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share
	12-Nov	11-Nov	12-Nov	11-Nov	12-Nov	11-Nov
Las Vegas	41.2%	26.8%	10.7%	46.0%	51.9%	72.8%
Reno	40.0%	32.0%	12.0%	38.0%	52.0%	70.0%
Phoenix	23.2%	29.8%	12.9%	29.8%	36.1%	59.6%
Mid-Atlantic (MRIS)	11.9%	13.7%	8.7%	14.2%	20.6%	27.9%

by Calculated Risk on 12/10/2012 01:13:00 PM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

From the GLVAR: GLVAR November 2012 Housing Statistics

GLVAR said the total number of local homes, condominiums and townhomes sold in November was 3,293. That’s down from 3,651 in October and down from 3,883 total sales in November 2011. Compared to October, single-family home sales during November decreased by 10.1 percent, while sales of condos and townhomes decreased by 8.5 percent. Compared to one year ago, home sales were down 15.1 percent, while condo and townhome sales were down 15.6 percent.
...
The total number of homes listed for sale on GLVAR’s Multiple Listing Service declined in November, with a total of 15,637 single-family homes listed for sale at the end of the month. That’s down 6.8 percent from 16,778 homes listed for sale at the end October and down 24.9 percent from 2011. ...

The number of available homes listed for sale without any sort of pending or contingent offer also decreased from the previous month. By the end of November, GLVAR reported 3,849 single-family homes listed without any sort of offer. That’s down 5.6 percent from 4,079 such homes listed in October and down 60.6 percent from one year ago.
...
Meanwhile, 41.2 percent of all existing local homes sold during November were short sales. That’s down from 44.7 percent in October and from a record 44.8 percent in September, but still up from 26.8 percent one year ago. Continuing a trend of declining foreclosure sales, bank-owned homes accounted for 10.7 percent of all existing home sales in November, down from 11.6 percent in October.

A few key points:
• Inventory decreased in November, and inventory is down 24.9% from November 2011.  For single family homes without contingent offers, inventory is down sharply from a year ago (down 60.6% year-over-year).

• Short sales are almost four times foreclosures now. The GLVAR reported 41.2% of sales were short sales, and only 10.7% foreclosures. We've seen a shift from foreclosures to short sales in most areas (not just in areas with new foreclosure laws).  Note: If the Mortgage Debt Relief Act of 2007 is not extended, the number of short sales could decline significantly in 2013.

• The percent distressed sales was extremely high at 51.9% in November (short sales and foreclosures), but down from 56.3% in October. This means conventional sales are finally almost half the market in Las Vegas.

Overall these are signs of a distressed market slowly improving. The decline in overall sales is because of fewer distressed sales (Las Vegas had a record number of real estate sales last year, even higher than at the peak of the bubble in 2005, because of all the distressed sales!).

The numbers to watch are inventory (and non-contingent inventory), and the percent conventional sales. Inventory is down sharply, and conventional sales are increasing.

by Calculated Risk on 12/10/2012 10:15:00 AM

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008.

The following data is calculated from the Fed's Flow of Funds data and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW", but there is little MEW right now - and normal principal payments and debt cancellation.

For Q3 2012, the Net Equity Extraction was minus $112 billion, or a negative 3.8% of Disposable Personal Income (DPI). This is not seasonally adjusted.

Click on graph for larger image in new window.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

There are smaller seasonal swings right now, perhaps because there is a little actual MEW (this is heavily impacted by debt cancellation right now).

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding declined sharply in Q3. Mortgage debt has declined by $1.15 trillion since the peak. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance.

For reference:

Dr. James Kennedy also has a new method for calculating equity extraction: "A Simple Method for Estimating Gross Equity Extracted from Housing Wealth". Here is a companion spread sheet (the above uses my simple method).

For those interested in the last Kennedy data included in the graph, the spreadsheet from the Fed is available here.

by Calculated Risk on 12/10/2012 09:10:00 AM

From the Financial Times: Monti decision to go rattles markets

Italy’s government borrowing costs jumped and its stock market fell sharply on Monday after Mario Monti’s weekend decision to resign as prime minister threatened to send a new shudder of uncertainty into the eurozone’s most vulnerable economies.
excerpt with permission

According to Bloomberg, the yield on the Italian 2-year increased sharply to 2.32%, and the 10 year yield increased to 4.8%. A large jump, but still lower than a few months ago.

From the NY Times: Next Act in Italian Drama: Exit Monti the Technocrat, Enter Monti the Politician?

Mr. Monti’s surprise announcement on Saturday raised the prospect of more political uncertainty and market turmoil for Italy, Europe’s fourth-largest economy, in what is expected to be a gloves-off political campaign. But it also increased the possibility that Mr. Monti might run as a candidate — a shift from the role of an apolitical leader — who is open to governing if no clear winner emerges from elections expected as soon as February.

Three years into Europe’s debt crisis, the new developments in Italy underscored the clash between the economically sound and the politically sustainable. While Mr. Monti, an economist and a former European commissioner, has reassured investors and helped keep Italian borrowing rates down, the tax increases and spending cuts passed by his Parliament have eroded lawmakers’ standing with voters.

by Calculated Risk on 12/09/2012 08:30:00 PM

Weekend:
• Labor Force Participation Rate Update
• FOMC Projections Preview
• Summary for Week Ending Dec 7th
• Schedule for Week of Dec 9th

The Asian markets are mostly green tonight, with the Nikkei up 0.2%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up slightly and DOW futures are up 15.

Oil prices are mostly moving sideways with WTI futures at $86.26 per barrel and Brent at $107.41 per barrel. Gasoline prices are now near the low for the year.

Here is a graph from Gasbuddy.com showing the roller coaster ride for gasoline prices. If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Three more questions this week for the December economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).