October 24, 2007

Will September’s Home-Price Declines Continue? We’ll Know Soon

Filed under: Economy,MSM Biz/Other Bias,Taxes & Government — Tom @ 4:33 pm

From a National Association of Realtors spreadsheet you can download once you get to this page — September 2007 is the first month where you can credibly say that there was softness in existing home sales prices across the board (the Sept. 2007 comparisons to 2006, 2005, and 2004 were separately calculated by me):

0907ExistingHomeSales.jpg

Note that until July, every region’s median selling price was higher than the 2006 average. In fact, three of the four regions were pretty close to or even well above inflation of roughly 2.5%. In August, the Northeast and West slid seriously, and September was just plain bad news.

All things considered, the Midwest is suffering the least in the home-price department, and even after the bleak September, is really doing pretty well. September’s median price is still almost 10% higher than February’s. I’m guessing that it you take out problem children like Cleveland and Detroit, the rest of the region is probably for the most part holding its own, and then some.

Depending on how you see things, this means either that the chickens are coming home to roost, Old Media has finally succeeded in talking the mortgage and credit markets down (after, based on the above and earlier posts, falsely reporting about falling across-the-board prices for many months), some combination of the above, or that September was a fluke (note that January 2007 looked like a sky-is-falling month, but prices came back pretty quickly).

The real test will be what the next Office of Federal Housing Enterprise Oversight (OFHEO) report shows. The second quarter’s report showed a tiny quarterly gain of 0.08% in nationwide home prices, and a 3.2% nationwide increase during the previous 12 months.

OFHEO’s third quarter report won’t be out until November 29. That’s too bad. I don’t think there’s any dispute that it is considered the best, last, and most comprehensive word on what has happened in the nation’s housing market, as well as individual housing markets, during the previous quarter (anyone else is more than welcome to disagree and point to why). Unfortunately until then, the talking-down-the-economy business press has five weeks of nearly free rein.

Cross-posted at Wide Open.

Couldn’t Help But Notice (102407)

Filed under: Business Moves,Economy,Education,Taxes & Government — Tom @ 8:44 am

Spreading the pain:

Merrill Lynch & Co. Inc. took a $7.9 billion writedown in the third quarter due to bad mortgage bets, well exceeding its initial estimates and raising questions about the bank’s risk management.

The Wall Street firm said Wednesday it took losses on home loans given to borrowers with poor credit and collateralized debt obligations – pools of bonds sold off in slices of varying credit risk.

The hit is well above the $5 billion writedown Merrill (Charts, Fortune 500) estimated it would take just a little more than two weeks ago. The blow is likely to renew credit fears as well as raise pressure on Merrill chief executive Stanley O’Neal.

As to the bolded item, I don’t think so. What you’re seeing a correction of an imbalanced situation that is resetting the credit markets back to normalcy. The above also shows that, in addition to borrowers who made bad choices, those involved in making bad lending decisions and/or those who supported them are also paying a heavy price.

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You might think I’d be a fan of this:

A final regulation to be issued by the Labor Department on Tuesday is expected to significantly boost employee participation in 401(k) retirement plans.

The regulation clarifies how employers can invest money from workers who were automatically enrolled in the plans rather than actively signing up.

One aspect of the regulation will also give companies a green light to automatically enroll existing employees. Many employers have been unsure about whether they faced legal liability if they automatically enrolled existing, rather than just new, workers.

You would be wrong. Automatic enrollment of new employees makes sense, in that employees are making conscious choices at the time they are hired. They are told what’s about to happen, and decide to opt out.

Though existing employees will presumably get similar notice before automatic enrollment occurs, I still don’t like it.

The presence of a 401(k) plan is not, or should not be, a mystery. If an employee isn’t in it, there’s a reason. It may not be a good reason, but at some point you have to decide that they’re big boys and girls, and that it’s their call not to be in it.

Of course, gently reminding them from time to time what they are missing out on is perfectly fine. Telling them that they’ll be forced into the plan unless they do something to stop it is overbearing.

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This is just one number, so you don’t want to make too much of it, but it flies in the face of the “credit isn’t available” meme:

Refinance applications up 4% last week, MBA survey shows

….. The volume of applications to refinance an existing loan increased 4.0% last week compared with the previous week.

Since rates haven’t changed all that much, you would think most of the refis are being done by people facing ARM adjustments — y’know the ones that are supposed to be driving “millions” (reminder: it’s a few hundred thousand at most; to whom some sympathy is of course due) to Armageddon.

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So much for respect of religious beliefs (HT Hot Air).

Positivity: Grandma Says Granddaughter Saved Her Life

Filed under: Positivity — Tom @ 8:02 am

From Middletown, OH:

Last Update: 10/12 8:55 pm

A Middletown teenager is getting credit for saving her grandmother’s life. Pauline Back was eating a Fruit Roll-Up when it got stuck in her throat.
She says it’s a good thing her granddaughter knew exactly what to do.

“Thank God for her, saved my life,” said Back. “I was chewing it, went into my daughter’s bedroom. The girls were in there on the computer playing games,” said Back. “All of a sudden the Fruit Roll-Up got lodged in my throat. I couldn’t breathe and I kept coughing and coughing. I couldn’t get it up. It wouldn’t budge. She got behind me and did the Heimlich Maneuver and second time it came up,” said Back.

Her granddaughter Jessica Frongia said, “I was scared. I thought she was going to like drop on the floor or something and I would have to call my mom and tell her everything and have an ambulance and everything but it didn’t happen.”

Jessica is an 8th grader at Middletown’s Verity Middle School. She says she learned how to do the Heimlich Maneuver five years ago as a Girl Scout.

Go here for the rest of the story.