Its Been Busy, Here are Some Links

It has been busy at work. :-O Here are some links:

The BubbleSphere welcomes Housing Doom Housing Blog. Doom is too strong a term to describe the housing market in the coming years. As I've said before, I am prophet of upcoming housing and economic gloom, but not doom.

BubbleTrack blog has a informative post regarding the Northeastern housing market.

Check out Calculated Risk's GDP: Q1 Personal Savings.

After yesterday's 1/4 point Fed announcement the dollar declined from about 1.2540 to the current price of 127.70 against the euro. I made over $200 yesterday betting on the euro. Sold to soon at 1.2646. Can't compain as I made money.

There will be posts over the July 4th weekend. Material is planned. Happy 4th! :-)

Fed Raises Rates by 1/4

Here is the FOMC Press Release:

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 5-1/4 percent.

Recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months. Ongoing productivity gains have held down the rise in unit labor costs, and inflation expectations remain contained. However, the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures.

Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.

The FOMC mislead when it stated there is a 'gradual cooling of the housing market.' *Nice* euphemism. The FOMC can't really tell the truth at this time and use a term like 'significant decline' as its utterance would cause a housing panic!

FOMC Meeting, Announcement Expected Soon

"The Federal Open Market Committee will release its decision and statement on interest rates at 2:15 p.m. ET today. There is an 88% chance that the Fed will boost the overnight lending rate to 5.25% from 5%, and a 12% chance it will boost rates up to 5.5%, according to fed funds futures traded on the Chicago Board of Trade.

"While a rate hike is a virtual certainty, the FOMC's statement will again be carefully analyzed for any clues as to where rates will go from here." (CNBC Money 6/29/06)

Looking foward to the announcement! :-)

Fannie Mae

Part of Fannie Mae's website

Blanche Evans of Realty Times Sounds Desperate

Blanche Evans, the editor for Realty Times, has a post 'Are Banks, Newspapers Behind Recent Real Estate Industry Rants?.' Thanks to Nikki at Baltimore Housing Bubble for the hat tip. Blanche Evans' post sounds extremely desperate. She attacks the media for some unfavorable publicity related to the housing market.

First, the blow below the belt.

On Tuesday, June 20, 2006, dozens of newspapers across the nation published the so-called report, "How The Real Estate Cartel Harms Consumers and How Consumers Can Protect Themselves," by the executive director of the Consumer Federation of America.

Then the uppercut, published the same day in the New York Times by a Brookings Institution senior fellow. "Commission Accomplished" is also a diatribe that criticizes the real estate industry and its commissions. Both reports are unabashed, unsubstantiated opinion pieces, and what's strange is that they both appeared on exactly the same day. Why?

Dozens of news services gleefully joined in the tarring and feathering of the real estate industry by reporting the CFA opinion piece as news when it should have been placed in the editorial section along with the Brookings Institution fellow's piece.

News organizations reported that the consumer group called the real estate industry a "cartel." Not one paper questioned why neither the CFA report or the Brookings Institute editorial had any quotes, facts, or anything other than the opinion of the authors. The real estate industry's side of the commission question was all but ignored by virtually every newspaper.

The bubbleheads were ignored last year. It seems that what she is really upset about is the attack on real estate commissions.

What we have is two venerable research institutions slamming real estate commissions on exactly the same day using the biggest name newspapers in the country.

She claims it was a planned attack. Blance Evan then goes on to declare war on the media that published the CFA (pdf)

What really ought to happen here is two things:

1. Every Realtor in America should jerk their housing ads to any newspaper that published the Brookings or the CFA "editorials." We should have a advertising holiday where not one agent puts an ad in the newspaper out of protest. Then, we can see if not having newspaper ads really hurt sales, which my guess is, it won't.
2. Forward this story to every Realtor in America so they'll stop putting money in the enemy's war chest. Every dime you give to newspapers is a dime that will be used to put you out of business. Stop supporting any company that wants to put you out of business!

If money talks for donors, it should sure as hell talk for advertisers.

Wow! She is pretty desperate. The housing industrial complex is scared. Many in the housing industrial complex have made significant money during the unsustainable boom years. Now, as the housing market is declining many feel threatened and a few are lashing back. Watch out it will be a rough ride.

Blog Rules

In order to create a more perfect blog, these are the rules that will be followed. Additional rules may be added as necessary.

1) I shall be the final decision maker as to what comments are acceptable on this blog.

2) Any personal insults directed at me or commentators on this site will be deleted. Calling me or others 'stupid', 'moron', 'pathetic' is NOT allowed. Ad Hominem attacks are not allowed against me or commentators. [However, one can call a particular comment 'pathetic', 'moronic' etc if they give a reason.]

3) Any comment that is entirely unrelated to the post is highly likely to be deleted. [If the post is about foreclosures and you comment about conditions in the Chinese prison system].

4) Any comment which uses foul language such as 'f*ck', 'sh*t' is highly likely to be deleted.

5) Commentators often ask for more evidence when I post. This is acceptable. Please bear in mind that I have a full time job and can't answer everyone's questions or requests. Attacks against me for not responding to a question or comment are prohibited.

6) I do indeed welcome opposing opinions on this blog as long as they follow the blog rules detailed in this post. [If someone would like to construct a well reasoned post on why there will be a soft landing or why the boom will start up again I will post it].

7) Statements that clearly are false will be deleted. [China has less land mass then Singapore. Or everyone in China is wealthy.]

8) If there are any questions regarding blog rules please email me at bubblemeter@gmail.com .

Federal Reserve Board Starts Two Day Meeting

The Federal Reserve Board starts its two day meeting today. June's meeting is a big one as the tightening cycle will be ending shortly.

Despite, the speculative talk of 50bps increase in short term interest rates, I am still predicting a 25bps increase at tommorow's announcement. That would bring rates to 5.25%.

What will happen at August's FOMC Meeting?

Condos in U Street Corridor in DC

The Flats at Union Row being constructed on the left (condos). On the right is a completed condo building.

NAR: May Existing Home Sales

The National Association of Realtors May Existing Home Sales numbers are out. Total housing inventory levels rose 5.5 percent at the end of May to 3.604 million existing homes available for sale, from April 2006 when inventory stood at 3.415 million. In May, there was a 6.5-month supply of inventory at the current sales pace. Inventory has risen 41% from May 2005 when it stood at 2.556 million.

Total existing-home sales– including single-family, townhomes, condominiums and co-ops – eased 1.2 percent to a seasonally adjusted annual rate of 6.67 million units in May from a pace of 6.75 million in April, and were 6.6 percent below the 7.14 million-unit level in May
2005.

The national median existing-home price for all housing types was $230,000 in May, up 6.0 percent from May 2005 when the median was $217,000.

Single-family home sales slipped 1.5 percent to a seasonally adjusted annual rate of 5.82 million in May from 5.91 million in April, and were 6.6 percent below the 6.23 million-unit level in May 2005. The median existing single-family home price was $229,700 in May, up 6.4 percent from a year ago.

The National Association of Realtors used the term 'eases' to describe the month over month seasonally adjusted 1.2% drop in existing housing unit sales. Ok.

It's the Inventory Stupid! Nationally, inventory has increased by 41% from last May, and a full 5.5% from April 2006. In the bubble markets, the growth in inventory is a much greater percentage. Keep your eyes on that inventory!

Extremely Bubblicious in Phoenix Metro Area

Inventory is exploding in the Phoenix, Arizona metropolitan area. The Bubble Markets Inventory Tracking Blog has been tracking housing inventory on the MLS for the greater Phoenix area. The numbers include some lots that are for sales, but on the other hand do not include a decent number of for sale by owner properties that are not listed on the MLS.

1/2/06: 26,715
2/10/06: 34,608
4/20/06: 43,054
6/24/06: 50,440

Many in the bubblesphere have been watching as the number of active listings has exploded in the Phoenix area. The amount of inventory has nearly double since the beggining of the year.

The housing market in the Phoenix area is about to enter the meltdown mode as inventory continues to skyrocket. A t the very same time, the number of sales per months has fallen compared to last year at this time. The Dallas Morning News had this to report:

In the Valley, where used-home sales are down 34 percent from last year's record pace and below 2004's more normal pace, the slowing is likely to be more acute.

The median price of a used home in Pinal County fell to $211,500 in this year's first quarter. That's down from the $220,000 the typical existing home was selling for at the end of 2005.

Meanwhile, a large amount of new housing units continue to be built. Furthermore, the Phoenix economy is unusually dependent on the housing industry. It is a sad situation that the intense speculation of the past few years has inevitably brought the upcoming housing meltdown.