The Great Recession and the Housing Market
The housing market is showing clear signs of stabilization.
Existing home sales: were up 3.6 percent in June, while condo sales surged 14.0 percent. This has been the longest string of sales increases since 2004, quite a healthy upturn. see chart here Foreclosures too are looking less grim. According to NAR, distressed sales were 31% of total sales in June, declining from the 45 % to 50% earlier in the year. We are beginning to absorb supply.
Housing inventory continues to trend down, declining 15.0 percent from June 08. There is an expected new wave of foreclosures and many say it will get worse before it really begins to subside, but we seem to be in a better position to absorb inventory than before.
Home Prices: The Federal Housing Finance Agency Purchase Only House Price Index rose .09% for the third month in a row. The price trend is still not positive, but reflects a decline in the downtrend.
The Consumer: Bernanke testified that better conditions in financial markets have seen improvements in consumer spending and the decline in housing activity has moderated. see chart here Moodys Economy.com notes that Household credit conditions should improve significantly by this time next year, based on a study of 7.5 million credit files from Equifax.
The Banks: The Feds Term Auction Facilities, which loan money to banks, is reducing its auction from 125 billion to 100 billion, big banks are in better shape. The Feds Bernanke expects positive growth in the second half of this year.
Unemployment: will continue to rise even as the recovery takes hold. As long as 70% of the economy is consumer based and we have a weak consumer ours is a long and fragile recovery. In the 2001 recession, unemployment did not peak until 18 months after the recession ended. The Conference Boards Index of Leading Indicators called the start of the this recession and its now signaling the end of a monster of a recession.
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Comments (1)
All this seems fine except when you examine the total foreclosures vs the total sales that are supposed to be a percentage of the total sales. When you examine this figure you will see that the 31% of total sales (whcih is supposed to include distressed sales) does not equal the forcloseure totals and therefore with those distressed sales (short sales) subtracted out you will find that there is a very large lot of foreclosures that have not yet reached the market yet. A larger amount than even was in June 08. This means that those figures are artifically created to make consumer confidence raise in hopes of stimulating the economy soomer that otherwise it would. Until the lag time for those foreclosures to hit the market shrinks you can not rely on those figures as true indicators.
Jim Wineinger, over 14 years ago