Dr. Doom sounding less gloomy

"I believe that the basic scenario is going to be one of a U-shaped economic recovery where growth is going to remain below trend ... especially for the advanced economies, for at least 2 or 3 years," he said at a news conference here.

"Within that U scenario I also see a small probability, but a rising probability, that if we don't get the exit strategy right we could end up with a relapse in growth ... a double-dip recession," he added.

Roubini, a professor at New York University's Stern School of Business, said he was concerned economies which save a lot, such as China, Japan and Germany, might not boost consumption enough to compensate for any fall in demand from "overspenders" such as the United States and Britain.

"If U.S. consumers consume less, then for the global economy to grow at its potential rate, other countries that are saving too much will have to save less and consume more," he said.

SOURCE: REUTERS

Mortgage rates dip this week

Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.08 percent with an average 0.7 point for the week ending September 3, 2009, down from last week when it averaged 5.14 percent. Last year at this time, the 30-year FRM averaged 6.35 percent.

The 15-year FRM this week averaged 4.54 percent with an average 0.6 point, down from last week when it averaged 4.58 percent. A year ago at this time, the 15-year FRM averaged 5.90 percent.

“Bond yields pushed mortgage rates slightly lower this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Low mortgage rates are helping to keep housing very affordable. Seven of the top eight most affordable months occurred during this year, according to the National Association of Realtors’® (NAR) Housing Affordability Index, which dates back to 1971. As a result, pending sales of existing homes rose for the sixth straight month in July, a trend not seen since the NAR began reporting data in 2001. Moreover, July’s sales were the strongest since June 2007.

“Overall, inflation remains in check while certain sectors of the economy are experiencing some improvement. The core price index on consumer expenditures, a key indicator tracked by the Federal Reserve, rose 1.4 percent in July from the same time a year earlier and represented the smallest 12-month increase since October 2003. Meanwhile, the manufacturing industry expanded for the first time in 19 months, according to the Institute of Supply Management.”

SOURC: FREDDIE MAC

Fed: recession ended in August

With the economy on the mend, Federal Reserve policymakers last month felt comfortable slowing the pace of one of its economic revival programs and not changing any others, according to documents released Wednesday.

Minutes of the central bank's closed door deliberations, held Aug. 11-12, also showed Fed Chairman Ben Bernanke and his colleagues striking a much more hopeful note about the economy's prospects compared with an assessment made in late June. Many Fed officials saw "smaller downside risks," the documents stated.

Fed officials expected the pace of the recovery to "pick up" in 2010, but there was a range of views — and considerable uncertainty — about the likely strength of the upturn because of concerns about how consumers will behave.

After being pounded by the recession, consumer spending finally appeared to be leveling out, the housing market was firming and manufacturing was stabilizing, the Fed said. Plus, the outlook for other countries' economies improved, auguring well for the sale of U.S. exports.

Have we reached the "bottom" of our real estate market? It's starting to look more and more like the answer is yes. Loyal followers know we've been critical of economic conditions for the past 6 months (which is why most of our postings have been about economic news) but the stabilization of the economy and the local market seems to be real and sustained, at this point. Of course conditions can change (if interest rates jump up; if unemployment takes it's toll on the technology industry; if foreclosures continue to rise without loan modification workouts), but we should be fine in San Francisco for the time being.

As such, we're now comfortable getting back to providing information about specific properties and buildings. So if you're interested in new San Francisco developments, like Blu, Soma Grand, the Infinity, One Rincon Hill, Millennium Tower, or the Arterra, or a classic San Francisco home in another neighborhood, our agents are here to help. Feel free to email us at highrisesf@gmail.com.

SOURCE: AP

Consumer confidence up

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.

Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey. The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

SOURCE: CNN MONEY

June Case-Shiller Index up 3.8% MOM

June's Case-Shiller Index rose 3.8% from May to June in the San Francisco MSA.

After three years of declines, home prices increased 2.9% in the three months ended June 30, according to the latest S&P/Case-Shiller report. That is the first quarter-over-quarter improvement in three years.

Prices in the national index are down 14.9% compared with the second quarter of 2008, the report said. But that is better than the record 19.1% decline that was set in the first three months of 2009.

"We're seeing some positive signs," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.

Among cities, Cleveland reported the biggest rebound during the three months; prices improved by 4.2%. San Francisco prices rose 3.8% and Minneapolis 3.1%. Prices declined in only two of the 20 cities, Las Vegas, down 2%, and Detroit, down 0.8%.

Despite the upbeat report, Robert Shiller, one of the principle authors of the Case-Shiller index, expressed caution, pointing out that last year's turnaround quickly fizzled out.

In early 2008, prices were falling 3% a month. That improved to -0.5% a month in the spring, giving the impression that the market would turn around. But prices quickly started falling more steeply again. The same thing could happen again, especially with the economy still in a downspin.

"The really important things [affecting home prices] are unemployment and momentum," said Shiller, who is a Yale economist. "We have momentum, which is very important, but we also have high unemployment."

And, he added, "the government has not yet handled the foreclosure problem."

Shiller, too, is relatively optimistic despite being cautious. "I have found that momentum matters," he said, "and this is a sudden break in [downward] momentum. The [market] psychology seems to be changing."

SOURCES: S&P and CNN MONEY

Roubini: risk of double-dip recession

Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the world's recent financial troubles, sees a "big risk" of a double-dip recession, according to an opinion piece posted on the Financial Times' Web site on Sunday.

Roubini, a professor at New York University's Stern School of Business, said it appears the global economy will bottom out in the second half of this year, and that U.S. and western
European economies will likely experience "anemic" and "below trend" growth for at least a couple of years.

Yet he warned that policymakers face a "damned if they do and damned if they don't" conundrum in trying to unwind their massive fiscal and monetary stimuli to keep the global economy from toppling into a depression.

SOURCE: CNBC

Resales jump 7.2% in July - largest increase in 2 years

Sales of previously owned U.S. homes jumped 7.2 percent in July to mark the fastest sales pace in nearly two years, an industry survey showed Friday, in a strong sign that housing is pulling out of a three-year slump.

Sales in July rose for the fourth straight month to hit an annual rate of 5.24 million units, the highest rate since August 2007, the National Association of Realtors said, beating market expectations for a 5 million unit pace. Sales in June had been at a 4.89 million pace.

July's increase was the largest monthly gain since the series started in 1999. The last time sales rose for four consecutive months was in June 2004, the NAR said.

SOURCE: CNBC

2nd quarter existing home sales up 3.8% nationwide

"Just the facts please, ma'am":

Existing-home sales in the second quarter showed healthy gains from the first quarter in the vast majority of states, and price declines have increased affordability in most metro areas, according to the latest survey by the National Association of Realtors®.

Total state existing-home sales, including single-family and condo, rose 3.8 percent to a seasonally adjusted annual rate1 of 4.76 million units in the second quarter from 4.58 million units in the first quarter, but remain 2.9 percent below the 4.90 million-unit pace in the second quarter of 2008.

Thirty-nine states experienced sales increases from the first quarter, and nine states were higher than a year ago; the District of Columbia showed both quarterly and annual rises.

Lawrence Yun, NAR chief economist, said the sales gain appears to be sustainable. “With low interest rates, lower home prices and a first-time buyer tax credit, we’ve been seeing healthy increases in home sales, which are a hopeful sign for the economy,” he said. “There have been sustained sales gains in Arizona, Nevada and Florida, as well as diverse areas such as Maryland, the District of Columbia and Nebraska. More recently, we’ve seen strong double-digit gains in Idaho, Utah, New Mexico, Washington, Hawaii, New York, New Jersey, Maine, Vermont, Wisconsin, Indiana, South Dakota and Montana.”

Good news for Q2, on top of the previously discussed good news on price, DOM, and inventory.

SOURCE: NATIONAL ASSOCIATION OF REALTORS

Hump Day blues

In true "Hump Day" style, today we bring you news from Zillow's COO regarding the outlook for the coming year. The bottom line: foreclosures may still drag housing prices lower.

Despite a new report from Zillow.com that the annual rate of home price declines improved for the first time in ten quarters, the company’s COO does not think prices are anywhere near out of the woods yet.

He thinks some of the real estate bulls are not factoring in foreclosures nearly enough.

“One in four Americans now who have a mortgage are underwater on their loan at least somewhat so a lot of Americans can't qualify for Making Home Affordable [govt. modification plan], can't qualify for a loan modification or are caught up in the paperwork and bureaucracy of what it takes to modify your loan,” says Zillow’s Spencer Rascoff.

“In the second half of 2009, home values are going to continue to decline. Foreclosures are going to keep making up a significant part of the sales, probably about a quarter of all sales in the back half of 2009 nationwide will be foreclosures,” says Rascoff, adding, “I think you'll have those homes clear off the market but new foreclosures come on the market right behind them.”

Rascoff believes we are a full year away from a true national bottom in housing, but even then, he says, don’t expect to make money fast. “You're not going to see a return to rapid appreciation from a couple of years ago," he opines. "This is probably going to be an L-shaped recovery where home values stay relatively constant once they hit the bottom."

The potential for new foreclosures, on top of the rumored "shadow inventory" on the banks balance sheets, could spell further price reductions. Will this impact us here in San Francisco? Possibly, and probably if foreclosures become a big issue here, but to what degree is anyone's guess. An additional 15-20% drop? Maybe not, if our job market continues to improve. Keep following to find out.

SOURCE: CNBC

Commercial real estate troubles keeping interest rates low

The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed.

Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service. That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale...

If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.

Commercial property is “certainly going to be a significant drag” on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.”

SOURCE: BLOOMBERG

Robert Shiller on Charlie Rose

Worth watching. Shiller touches on real estate, financial innovation, herd mentality, The Great Depression, and much more.

Q2 analysis

A quick breakdown of Q2 activity, nationwide. Visit the pdf via link below for raw numbers by MSA

The Altos Research 10-City Composite Index was up by 1.3% in June and 3.9% during the most recent three-month period.

 Prices increased in 22 of 26 markets with 21 markets currently showing three months of sequential price increases. Through the first half of 2009, listing prices for single family home rose materially in most of the country. There is some recent evidence, not yet reflected in the data in this report that the home price rebound peaked in early June, and prices may resume a decline for the near-term future.

 The Altos 10-City Composite Index continues to highlight a shift in properties available on the market. The market has experienced some turnover at the low-end (two years after the first sub-prime collapse) while new properties on the market are shifting to the higher-end.

 The California markets of Los Angeles and San Diego showed the largest monthly listing price increase with rises of 6.6% and 6.0% respectively. The largest monthly drop in asking prices occurred in Las Vegas with prices falling 2.1% but that was a markedly slower rate of decline than the 3.7% rate last month.

 Listed property inventory increased in 16 of 26 markets and was down in 10markets. Although inventory grew in most markets during June, growth remained restrained with all markets showing increases of less than 4%.

 All markets except Boston and San Francisco had a median days-on-market of 100 or more in May. By far, the market with the slowest rate of inventory turnover was Miami with a median of 262 days-on-market or more than eight months. The Altos 10-City

For San Francisco real estate, specifically:

Price Index:
$697,376 - April
$720,060 - May
$742,596 - June
3.1% - % change May to June
6.5% - 3 mo. % change

Listing Inventory:
10,283 - April
9,302 - May
9,014 - June
-3.1% - % change May to June
-12.3% - 3 mo. % change

Average Days on Market:
96 - April
96 - May
94 - June
-1.4% - % change May to June
-1.9% - 3 mo. % change

SOURCE: ALTOS RESEARCH

Case-Shiller numbers for May up from April

Data through May 2009, released today by Standard & Poor’s for its
S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that, although still negative, the annual rate of decline of the 10-City and 20-City Composites improved for the fourth consecutive month in 2009.

“The pace of descent in home price values appears to be slowing” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall
of 2005. In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April.

“While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.” Mr. Blitzer added.

The San Francisco MSA increased from 118.46 to 120.16, a 1.4% increase. This is down from 162.70 in May 2008, and well below May 2007's number of over 200.

SOURCE: S&P

New home sales up big; down 21% from June 2008

Sales of new homes in the United States posted their largest monthly gain in eight years in June, the government reported on Monday, a sign that the housing market is bottoming as buyers take advantage of lower prices.

The Commerce Department reported that new single-family home sales rose 11 percent in June, an increase that dwarfed economists’ expectations of a 3 percent increase. The pace of home sales rose to a seasonally adjusted rate of 384,000 a year, the highest level since November.

Despite the monthly increase, sales of new homes were still down 21 percent from June 2008, and the market is still swamped by a glut of for-sale houses and foreclosed properties.

“These are still really bad numbers,” an economist at IHS Global Insight, Patrick Newport, said. “The market just couldn’t have dropped much further.” As sales rose, median prices of new homes continued to fall, slipping to $206,200 from $232,100 in June a year ago.

SOURCE: NY TIMES

More appraisal woes

The good news is that sales volumes of new construction are rising; the bad news is they're doing so despite growing trouble with appraisals.

I can't seem to talk to anyone in the real estate industry on any topic without hearing something about appraisals. We've been over the new appraisal rules, requiring the fire wall between lenders and appraisers. We know the new rules are resulting in less qualified appraisers, perhaps with no knowledge of a local market, mucking up the process.

Now we're hearing from builders that appraisers are using distressed properties, that is foreclosures and short sales, as comps for new construction. In her monthly homebuilding Survey, analyst Ivy Zelman notes:

Commentary in this month’s survey was dominated by frustration with inconsistencies in the appraisal process. Survey respondents are concerned that these appraisal issues will make it difficult to stabilize home values, as appraisers are being extremely conservative using foreclosures and short sales predominantly as comps, based on fears of potential backlash or liability.

Home builders are in direct competition with foreclosures in many markets, because a lot of foreclosures are new construction.

SOURCE: CNBC

A quick barometer of where we're at...

Companies that a few months ago were too fearful even to project their future earnings are now seeing glimmers of hope in the year ahead. The rate of home sales has risen for three straight months. And the number of people drawing unemployment insurance benefits has fallen back to April levels, having receded for the third straight week.

All those recent signals sent the stock market surging Thursday as investors sensed that the recession could be in its waning days. Many suspect that even if no recovery is imminent, the steep economic decline has either already ended or will soon.

That confidence drove the stock market, as measured by the Standard & Poor's 500-stock index, up 2.3 percent Thursday -- continuing a rally that has driven the broad measure up 44 percent since March 9 and 11 percent in the past two weeks. The Dow Jones industrial average has gained 39 percent since March 9 and closed above 9000 for the first time since January. European markets rose by a similar amount on Thursday, and Asian markets opened up in early trading Friday.

SOURCE: WASHINGTON POST

Home sales rise for 3rd consecutive month

More good news keep coming in

A real estate trade group said on Thursday that sales of previously occupied homes rose 3.6 percent from May to June, the third consecutive monthly increase.

The National Association of Realtors said that home sales rose to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised rate of 4.72 million in May.

It was the highest level of sales since October 2008 and beat economists’ expectations. Sales had been expected to rise to an annual pace of 4.84 million units, according to Thomson Reuters.

SOURCE: NY TIMES

Lending activity flat from April to May; originations down due to rate increases

From the Obama Administration comes a snapshot of lending in May (the most recent month for which data is available)

The overall outstanding loan balance ... was flat from April to May at the top 21 participants in the Capital Purchase Program (CPP). Total origination of new loans at the 21 surveyed institutions increased 1 percent from April to May.

In May, the 21 surveyed institutions originated approximately $277 billion in new loans. Total originations of loans by all respondents rose in four categories, specifically: mortgages, credit card loans, commercial real estate renewals and commercial real estate new commitments.

Total originations fell in the following three loan categories: home equity lines of credit, other consumer lending products, and commercial and industrial renewals, and were flat in one loan category, commercial and industrial new commitments.

And as we noted back in June

Many respondents reported high mortgage application volume through the month of May, but indicated that pipelines decreased as rates began to rise toward the end of May.

SOURCE: US TREASURY DEPT

Commercial real estate down 7.6% from April to May

According to data compiled by MIT's Center for Real Estate, their Moodys/REAL Commercial Property Price Index dropped 7.6% from April to May. This represents a 28.5% drop from May 2008, and down 34.8% from the October 2007 peak.

Transaction volumes are at the lowest point this cycle, coming in at $2.7 billion on 282 transactions, 52 which are considered "repeat-sales" transactions.

The silver lining, however, might be that this month-to-month decrease is less than April's 8.6% decline. We'll see next month whether the trend continues to improve.

SOURCE: MIT CENTER FOR REAL ESTATE

Roubini: recovery to be "very ugly"; recession over Dec 2009

Nouriel Roubini, the economist whose dire forecasts earned him the nickname "Doctor Doom", told CNBC Monday that the economic recovery is going to be "very ugly."

"The recovery is going to be subpar," Roubini said. "I see a one percent growth in the economy in the next few years. There will also be 11 percent unemployment next year and the recovery is going to be slow. It's going to feel like a recession even when it ends."

Asked about his comments in a speech last week about the recession ending in 2009, Roubini said, "I've been saying all along the recession is going to last 24 months. It started in December of 2007 and my view is that it won't be over until December of this year."

SOURCE: CNBC