Really, Bulletin, I love you man.
I honestly believe you do a good job (fellow bubble bloggers may excoriate me for this), but you do have a few quirks. You do all the hard work, and I just poke holes from the sideline. Without you, I would be short of fodder material.
I especially hate to bug you about using the words "Glimmer of Hope" when they were originally spoken by Obama, who I'm really liking, these days. (Was talking to Jim from the Nugget, and he's taking a 'wait to see' attitude toward Obama, whereas I'm taking a 'like him until I don't' attitude.)
Glimmer of Hope? In Bend?
There's a blog over on the Bend Economy Bulletin board that has been posted under the heading, LIFE ON THE TITANIC, by Mike Whitney (Smirking Chimp) which has a contrary view.
As a writing experiment, I'm going to alternate paragraphs between the Bulletin story and this blog. Bulletin in Bold, blog in italics.
WARNING: It's really long, so move on if this doesn't interest you. I know they are comparing apples and oranges, but I'm more going for the dramatically different tones and perspectives.
BULLETIN: There's no way to know how long the national recession will continue its grip on Central Oregon's construction industry, but at least there were a few positive signs in March.
TITANIC: Why is the media misleading the public about housing?
BULLETIN: Some builders while not by any means seeing this as a return to the boom years of 2004-06, see demand for new homes returning at a time of low interest rates and dropping prices. They say there exist homebuyers who would rather buy new homes at relatively the same cost as foreclosed homes or ones bought through short sales that require approval.
TITANIC: The housing market is crashing. There are no "green shoots" or "glimmers of hope"; the market is worn to a stump, it's kaput. Still, whenever new housing figures are released, they're crunched and tweaked and spin-dried until they tell a totally different story; a hopeful story about an elusive "light in the tunnel". But there is no light in the tunnel; it's a myth. The truth is, there's no sign of a turnaround or a "bottom" in housing at all; not yet, at least. The real estate market is freefalling and it looks like its got a long way to go. So why is the media still peddling the same "rose-colored" claptrap that put the country in this pickle to begin with? Here's an example of media spin which appeared in Bloomberg News on Wednesday:
"US home prices rose 0.7 percent in February from the month before, the Federal Housing Finance Agency said in Washington today, a sign that low interest rates may be moderating declines in real estate values....Housing market data indicates prices are starting to “stabilize,” and households’ available cash should improve through each quarter of 2009 and into 2010." (Bloomberg)
BULLETIN: There were 24 building permits issued in March in Bend, up from seven in February and 13 in March 2008, according to the Central Oregon Housing Market Letter, a monthly housing-related report. Of those permits, 16 were taken out by two builders: Hayden Homes and Pahlisch Homes...
TITANIC: This report is complete gibberish. The only way to get a fix on what's really happening with housing is to compare prices year over year (yoy) not month to month. Clearly, the journalist decided to spin the story from this angle because it offered the one flimsy sign of hope in a sector that's been reduced to rubble. But, don't be fooled, housing isn't staging a comeback. Not by a long shot.
This is from Marketwatch:
"The Case-Shiller index of 20 major cities fell 2.8% in January, the fastest decline on record. The Case-Shiller index rose more than the Federal Housing Finance Agency (FHFA) index did during the bubble, and it's fallen faster since the bubble burst....The index was down 19% year-over-year in January."
BULLETIN: "If it hadn't been for them, it would have been the same as the month before," said Don Patton, publisher of the report. "For now, it seems to have been somewhat stabilized. But who knows where it is going to go?"
There were 16 permits issued in Central Oregon communities outside Bend: three in Redmond, 11 in Deschutes County and two in Jefferson County, all down from March 2008.
TITANIC: So, the only reason that housing prices rebounded (slightly) in February was because, one month earlier, they were "declining at the fastest pace on record." That's not a sign of "green shoots" like the Pollyannas say. It's a sign of a ferocious ongoing contraction.
BULLETIN: Even with Bend's uptick, the number of permits taken out in Central Oregon was still down 35 percent from March 2008. Through March, the number of permits was down 58% percent from the first quarter of 2008. And last year, the number of permits fell 63 percent from 2007.
TITANIC: "We are now in uncharted territory — new home starts have never fallen to these levels for as long as the Commerce Department has been tracking this data (since 1959). Note also the magnitude of the drop — it is unprecedented, having easily surpassed the 1982 collapse, the present circumstances have now become slightly worse than the 1973-75 fall."
BULLETIN: Still, the fact that two companies were pulling permits last month could be a sign that the market may have hit bottom, Patton said.
Bend-based Pahlisch Homes, which had not pulled a building permit since August, pulled nine permits in March and plans to file for 16 additional permits in the next few months...
TITANIC: Housing will continue to deteriorate no matter what the Fed does; the downward momentum is too great to resist. And although the refi-business is booming, new home sales are still flat. Buyers are just too scared or too broke to take advantage of the ultra-low interest rates. (4.80% 30-year fixed) And now that Obama's foreclosure moratorium is over, delinquencies are stacking up faster than ever before auguring another wave of foreclosures. This is from DataQuick: "Golden State Mortgage Defaults jump to record High":
"Lenders filed a record number of mortgage default notices against California homeowners during the first three months of this year, the result of the recession and of lenders playing catch-up after a temporary lull in foreclosure activity ...
A total of 135,431 default notices were sent out during the January- to-March period. That was up 80.0 percent from 75,230 for the prior quarter and up 19.0 percent from 113,809 in first quarter 2008, according to MDA DataQuick.
BULLETIN: Pahlisch pointed to favorable loan terms ranging between 3.875 and 4.5 percent as a reason construction is starting again.
"These lenders are intelligent enough to know to keep things moving," Pahlisch said. "They have got to offer good rates."
TITANIC: Fannie Mae and Freddie Mac mortgage delinquencies among the most creditworthy homeowners rose 50 percent in a month as borrowers said drops in income or too much debt caused them to fall behind, according to data from federal regulators.
The number of so-called prime borrowers at least 60 days behind on mortgages owned or guaranteed by the companies rose to 743,686 in January, from 497,131 in December, and is almost double the total for October, the Federal Housing Finance Agency said in a report to Congress today." (Bloomberg)
BULLETIN: The profit margins are not what they were three years ago, but home prices starting at $185,000 are enough to maintain cash flow, move existing product and keep people employed, Pahlisch said.
Pahlisch feels confident that while heavy job losses have taken their toll in Bend -- Deschutes County's unemployment rate stood at almost 15 percent last month, the highest among Oregon metropolitan areas -- people who still have their jobs see this as opportunity to buy.
TITANIC: So, even top-of-the-line prime borrowers are having trouble making their payments. The debt-virus has now spread to all loan categories. But what about Obama's mortgage relief program; won't that help keep people in their homes?
In the last two months, roughly 9,000 mortgage modifications have been worked out under Obama's Streamlined Modification Program. At the same time delinquencies have increased by roughly 195,000 per month. That means there are 186,000 more delinquencies than modifications per month. Obama's program is like a re-staging of grunting Sisyphus pushing his boulder up the hill; utter futility.
BULLETIN: Sellers of new homes are competing with a glut of foreclosed and short-sale properties, which have driven Bend's median sales prices down 44 percent from their peak in May 2007, according to the latest data from the Bratton Appraisal Group.
TITANIC: The problem with housing goes far beyond the supply/demand imbalance. True, buyers are staying away because they know that prices could fall another 15 to 20 percent, but there's more to it than just that. The housing crisis has been a shock to the psyche. The dream of home ownership--which is so closely linked to the so-called American dream--has turned into a nightmare. The trauma of watching one's life savings and retirement vanish in a matter of months is devastating. It's not an experience that's easily forgotten. Naturally, people will be more skeptical in the future about seductive interest rates and other faux-inducements. Keep in mind, that after investors were burned for $7 trillion in the dot.com swindle, tech stocks swooned and the NASDAQ plunged 80 percent over the next year and a half. Housing is headed down that same bumpy path. There probably won't be an uptick in housing until the market is flat on its back and given up for dead.
Enough. You get the idea.
Pick your poison.
3 days ago