Real Estate Day Synopsis

Yesterday seemed to be Real Estate day around here. A more eclectic set of posts in one place you are unlikely to find. (I hope to return to a more focused economics/markets/trading posts later today).

In case you missed any of it:

The Pending Home Sales Contract Rally? Was Monday’s Rally realy caused by the slight bump in the pending home sales index?
Doubtful.

Real Estate Roller Coaster Very clever visualization (via SpeculativeBubble) of US Home prices plotted as a roller coaster.

Top 15 Creditors (by Size) to New Century: Goldman Sachs has emerged as the single biggest creditor of New Century, the American sub-prime mortgage lender, which filed for Chapter 11 bankruptcy.

Shiller on Housing: Yale professor Robert J. Shiller on "Long-Term Perspectives on the Current Boom in Home Prices" in The Economists’ Voice. 

Good stuff — must reading for the perenial R/E bottom callers . .  .

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What's been said:

Discussions found on the web:
  1. Ted Craig commented on Apr 5

    I just found out something really interesting today. I’m in the process of shopping for a new house and for the past four months have been told “You don’t count the basement in the square footage.” Well, guess what real estate agents are suddenly doing now? The new phrase is “finished square footage.” Obviously this is being done to keep prices up. They’ll argue the price per square foot is in line with the current market but the reality is this is a de facto price hike because something that was free now costs money. It’s as is four foul balls suddenly became a strike out half way through a baseball game.

  2. wally commented on Apr 5

    Ted,

    Are you talking about finished or unfinished basement space? The counting of ‘finished’ space is standard no matter what level the space is on, but maybe that is not what you are saying?

  3. Leisa commented on Apr 5

    Please me sure to see calculated risk today and do access the Market Pulse report if you have an interest in how subprime is nestled into the bond portfolios of others and what the potential impact might be.

  4. Josh commented on Apr 5

    Unless a “finished” basement is above grade, it is not/should not be counted as square footage of a house.

  5. John F. commented on Apr 5

    The bottom will occur when we see a levered short falling Case-Shiller index ETF. Within the next two years max. Set your watch by it.

  6. Fullcarry commented on Apr 5

    Could it be that people are obsessing about the wrong thing, ie housing?

    The Euro just hit the highest level since March 2005.

  7. James Bednar commented on Apr 5

    Senator Dodd’s Campaign Contributors
    1 Citigroup Inc *
    2 Bear Stearns
    3 United Technologies
    4 American International Group
    5 St Paul Travelers Companies
    6 Credit Suisse Group *
    7 National Westminster Bank
    8 Hartford Financial Services
    9 Morgan Stanley *
    10 Goldman Sachs *
    11 Lehman Brothers *
    12 JP Morgan Chase & Co *
    13 Merrill Lynch
    14 Deloitte Touche Tohmatsu
    14 KPMG LLP
    16 Royal Bank of Scotland
    17 UBS AG *
    18 General Electric
    19 Prudential Financial
    20 Pfizer Inc

    New Century Creditors
    1 Goldman Sachs Mortgage Company *
    2 Credit Suisse First Boston Mortgage Capital LLC *
    3 Credit-Based Asset Servicing and Securitization LLC
    4 Morgan Stanley Mortgage Capital *
    5 DB Structured Products
    6 Deutsche Bank
    7 Bank of America
    8 UBS Real Estate Securities *
    9 Lehman Brothers Bank FSB *
    10 Countrywide
    11 Citigroup Global Markets Realty *
    12 Residential Funding Corporation
    13 SG Mortgage Finance
    14 IXIS Real Estate Capital
    15 Barclays Bank
    Uncategorized
    JPMorgan Chase Bank *

    Dodd’s bailouts make perfect sense…

  8. James Bednar commented on Apr 5

    The #2 contributor, Bear Stearns, has no shortage of exposure either.

    jb

  9. tjofpa commented on Apr 5

    Aww, Barringo.
    How come Eclectic always gets the credit?

  10. lewis commented on Apr 5

    Barry was so busy yesterday he didn’t have time to beat up Lereah, who has been working his thesaurus overtime. I just loved it when he said the 0.7% monthly uptick showed “underlying stability”. I believe the medical term for that is flatlining, as in
    DR: I have good news, bad news and more good news. Good news: Your mother now has underlying stability. Bad news: You’ll have to bury her. More good news: She should reach her target weight very soon.

    Finished walk out basements have always been included. Finished non walk out basements shouldn’t be, but it’s not like there is a law against it, so……..

  11. fat mary commented on Apr 5

    April 5 (Bloomberg) — The euro rose to a two-year high against the dollar on speculation economic growth in Europe will outpace that of the U.S.

    “The euro is aggressively bought,” said Tim O’Sullivan, chief foreign exchange trader at Forex.com, a unit of online currency trading company Gain Capital in Bedminster, New Jersey, which has about $250 million funds under management.

    The euro advanced 0.48 percent to $1.3432 at 9:27 a.m. in New York, the highest since March 2005.

  12. Nova Law commented on Apr 5

    James Bednar, those companies did not make contributions to Senator Dodd’s campaign. They are barred by law from doing so. Those contributions come from employees of those firms. Not quite the same thing.

    But moreover, Senator Dodd chairs the Banking Committee and if memory serves formerly was the ranking member when in the minority. Since when is it news that the employees of companies regulated by a Congressional committee donate to the members of that committee? I’ll bet if you look at the Senate Agriculture Committee, you’ll find campaign contributions from people employed by companies like Monsanto and Archer Daniels Midland.

    That’s rather like a “dog bites man” story.

  13. Michael Schumacher commented on Apr 5

    Nova law-

    You’re absolutley serious?????

    You don’t see the problem of both of your examples???? Of course you would’nt……

    Just the employees huh?….damn you’re alot more naive than I originally thought

    “It’s different THIS time”.

    look at it from this perspective: Is there a law against speeding???????? and no one is guilty until they are caught.

    Same thing however I take it you are offended becasue of your political persuasions…which are failrly obvious now.

    Ciao
    MS

  14. Nova Law commented on Apr 5

    Michael Schumacher, maybe things are different in Italy, but in America we have a little thing called the “First Amendment.” One of the parts of that says that Congress shall make no law abridging the right of people “to petition the government for a redress of grievances.”

    That amendment protects the right of people to donate money to political candidates’ campaigns. Buckley v. Valeo, 424 U.S. 1 (1976).

    So while you may think the First Amendment is a problem, I think that people are free to pressure the government to do what they wish. Even if I might disagree with the legislation they might urge on their legislators, people have every right (in my country, at least) to lobby their elected representatives.

  15. Eclectic commented on Apr 5

    tjofpa,

    It’s cause I’m born of a love of truth, justice and the American Way.

  16. wunsacon commented on Apr 7

    I didn’t think much about how reporting only on “conforming” loans might seriously distort the picture. But, consider these #’s in a scenario where the whole market decreases by 10% from 2006 to 2007. In this scenario, the price of homes with conforming mortgages actually *increases* by about 10%:

    House, 2006, 2007
    —— —— ——
    Non-Conforming Sales (Price > 370k)
    House A, 600, 540
    House B, 500, 450
    House C, 400,

    Conforming Sales (Price < 370k) House C, , 360 House D, 300, 270 House E, 200, 180 House F, 100, 90 Avg A-F, 350, 315 Avg Conforming, 200, 225 Yes, with many more data points, the magnitude of the increase would probably be minimal. But, you can see how limiting reporting of sales to a subpopulation WITH A DEFINED PRICE RANGE obviously distorts overall market price changes. I.e., won't the average and the mean sale between $0 and $370k pretty much have to stay stable?

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