by Calculated Risk on 2/08/2011 11:07:00 AM

Notes: CoreLogic reports the year-over-year change. The headline for this post is for the change from November to December 2010. The CoreLogic HPI is a three month weighted average of October, November, and December and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® Home Price Index Shows Decline for Fifth Straight Month

CoreLogic ... released its December Home Price Index (HPI) which shows that home prices in the U.S. declined for the fifth month in a row. According to the CoreLogic HPI, national home prices, including distressed sales, declined by 5.46 percent in December 2010 compared to December 2009 and declined by 4.39 percent in November 2010 compared to November 2009.

Excluding distressed sales, year-over-year prices declined by 2.31 percent in December 2010 compared to December 2009 and declined by 2.81 percent in November 2010 compared to November 2009.
...
According to Mark Fleming, chief economist with CoreLogic, 2010 was a year of ups and downs as a result of the improvements brought on by the tax credits followed by the declines that occurred when they expired. “It was a bumpy ride which ended with a net gain/loss of zero. Despite the continued monthly decline in home prices and year-over-year depreciation, we’re encouraged that on an annual basis we’re unchanged relative to a year ago. Excess supply continues to drive prices downward, but the silver lining is that the rate of decline is decelerating,” he said.

Click on graph for larger image in graph gallery.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index is down 5.46% over the last year, and off 31.6% from the peak.

This is the fifth straight month of year-over-year declines, and the sixth straight month of month-to-month declines. The index is only 0.07% above the low set in March 2009 (essentially at the low), and I expect to see a new post-bubble low for this index with the January release.

by Calculated Risk on 2/08/2011 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings in December was 3.1 million, which was little changed from 3.2 million in November. Since the most recent series trough in July 2009, the level of job openings has risen by 0.7 million, or 31 percent.

The following graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Unfortunately this is a new series and only started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for December, the most recent employment report was for January.

Click on graph for larger image in graphics gallery.

Notice that hires (purple) and total separations (red and blue columns stacked) are pretty close each month. When the purple line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Note: The temporary decennial Census hiring and layoffs distorted this series last summer.

In December, about 4.162 million people lost (or left) their jobs, and 4.184 million were hired (this is the labor turnover in the economy) adding 20 thousand total jobs.

Even with the decline in December, job openings (yellow) are up significantly over the last year.

by Calculated Risk on 2/08/2011 08:02:00 AM

From National Federation of Independent Business (NFIB): NFIB Small Business Optimism Index - Up Modestly

The National Federation of Independent Business Index of Small Business Optimism rose 1.5 points in January, a modest increase, opening the new year with a reading of 94.1. The slight overall uptick in optimism might have been higher, but was blunted by small business owners’ skepticism about the future and continued hesitancy to spend and hire. Weak sales is still the most frequently cited top business problem.
...
“Manufacturing and exporting are leading the recovery—industries and activities that are not labor intensive—while construction, an industry historically dominated by small firms, remains depressed,” said NFIB chief economist Bill Dunkelberg.

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Click on graph for larger image in new window.

The first graph shows the small business optimism index since 1986. The index increased to 94.1 in January from 92.6 in December.

Although still fairly low, this is the highest level for the index since December 2007.

The second graph shows the net hiring plans over the next three months.

Hiring plans decreased slightly in January but are still positive. According to NFIB: "Over the next three months, 12 percent plan to increase employment (up 2 points), and 8 percent plan to reduce their workforce (down 1 point), yielding a seasonally adjusted net 3 percent of owners planning to create new jobs—a 3 point loss from December."

Weak sales is still the top business problem:

Only 3 percent reported financing as their top business problem, down 2 points from December. Twenty-seven percent of the owners reported that weak sales continued to be their top business problem (down 6 points) in the last month, followed by 19 percent citing taxes and 17 percent government regulations and red tape (taxes that consume capital and entrepreneurial time).

The recovery is sluggish for this index (probably because of the high concentration of real estate related companies), but this is the highest level for the optimism index since December 2007.

by Calculated Risk on 2/07/2011 09:27:00 PM

From Mitra Kalita at the WSJ: Cash Buyers Lift Housing

Cash buyers represented more than half of all transactions in the Miami-Fort Lauderdale area last year ... In the fourth quarter of 2006, they represented just 13% of deals.
...
The percentage of buyers in Phoenix paying cash hit 42% in 2010—more than triple the rate in 2008 ... Nationally, 28% of sales were all-cash transactions last year, according to the National Association of Realtors. The rate was 14% in October 2008 ...

This is a quite an increase in cash buyers. Most of the cash transactions are at the low end - and are frequently investors - although the article mentioned one buyer paying cash for $1+ million properties.

The good news is these buyers won't ever have negative equity!

Note: The MBA mortgage index is suggesting weak home sales over the next couple of months, but obviously that index doesn't capture this increase in cash buyers.

by Calculated Risk on 2/07/2011 06:10:00 PM

This morning I posted some data and analysis from economist Tom Lawler based on the 2010 Census: Lawler: Housing Vacancy Survey appears to massively overstate number of vacant housing units.

Lawler's key point was that when compared to the Census 2010 data, the Housing Vacancy Survey (that most analysts use) "massively overstates" the number of vacant housing units in these four states (and probably nationally).

Note: The Census bureau has released data for only four states so far, and will release data for all 50 states by April 1st.

Here is another question: At the current rate of population growth, how long will it take to lower the vacancy rate back to the Census 2000 level?

	Louisiana	Mississippi	New Jersey	Virginia
Percent Excess Housing Units compared to Census 2000	1.7%	2.6%	2.1%	2.1%
Excess Housing Units	33,405	33,143	74,625	70,664
Population Needed to Absorb at current people per household ratio	87,618	88,140	204,113	185,004
Years to absorb at current rate of population growth	13.6	7.2	5.4	2.0

The above table provides the calculation. Note: This assumes that the people per household in each state will remain the same.

Of course Louisiana, and to some extent Mississippi, are special cases because of hurricane Katrina. The population in both states increased slowly over the last decade - and at that rate of population growth it will take many years to absorb the excess vacant units.

In New Jersey it will take 5.4 years to absorb the excess, and in Virginia (a fast growing state over the last decade) it will still take 2.0 years.

Of course the number of people per household could decline or the population could grow quicker over the next few years - but this suggests there is still a large excess inventory of vacant housing units in these states. This is one of the calculations I'll be looking at as the Census 2010 data is released.

by Calculated Risk on 2/07/2011 03:00:00 PM

The Federal Reserve reports:

Consumer credit increased at an annual rate of 2-1/2 percent in the fourth quarter. Revolving credit declined at an annual rate of 2-3/4 percent,
and nonrevolving credit increased at an annual rate of 5-1/2 percent. In December, consumer credit increased 3 percent at an annual rate.

Click on graph for larger image in graph gallery.

This graph shows consumer credit since 1978. The amounts are nominal (not inflation adjusted).

Revolving credit (credit card debt) is off 17.8% from the peak. Non-revolving debt (auto, furniture, and other loans) is now slightly above the old peak. Note: Consumer credit does not include real estate debt.

Both revolving and non-revolving credit were up slightly in December. This was the first increase in revolving credit since August 2008 following 27 consecutive months of declines. This fits with the recent Senior Loan Officer survey that showed:

Banks again reported an increased willingness to make consumer installment loans, and a small net fraction of respondents reported easing standards for approving consumer credit card applications.