Although the report is a couple of months behind the market, I’ve always held the Case Shiller/S&P 20-city housing index out as the gold standard of real estate activity measurements and this morning’s report showed what I rather expected: Weakness continues:
New York, April 24, 2012 – Data through February 2012, released today by S&P Indices for its S&P/Case- Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed annual declines of 3.6% and 3.5% for the 10- and 20-City Composites, respectively. This is an improvement over the annual rates posted for the month of January, -4.1% and -3.9%, respectively. In addition to the two Composites, 15 of the 20 MSAs posted better annual returns in February compared to January; Atlanta, Chicago, Cleveland and Detroit fared worse in February and Washington DC’s rate remained unchanged. Nine MSAs and both Composites posted new cycle lows as of February 2012. Atlanta had the only double-digit negative annual at -17.3%. This was the fifth consecutive month of double-digit negative returns for Atlanta and the lowest annual return in its 20-year history.. Five of the 20 MSAs saw positive annual returns – Denver, Detroit, Miami, Minneapolis and Phoenix. Phoenix, which is one of the cities that fared the worst during the crisis, has now posted two consecutive months of positive annual returns and five consecutive positive monthly returns. However, it is still down 54.2% from its peak.
“While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirm that, broadly-speaking, home prices continued to decline in the early months of the year,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Nine MSAs — Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa — and both Composites hit new post-crisis lows. Atlanta continued its downward spiral, posting its lowest annual rate of decline in the 20-year history of the index at -17.3%. The 10-City Composite declined 3.6% and the 20-City was down 3.5% compared to February 2011.
“Due to delays in reporting for Mecklenburg County, we did not publish a January index level for Charlotte, North Carolina last month. With this month’s report we have enough data to publish data points for both January and February. The unfortunate news is that it confirms that Charlotte is one of the cities that is still reaching new lows.
“Phoenix and Atlanta stand out this month in terms of their contrasting relative strength and weakness in the early 2012 housing market. At one end of the spectrum, we have Atlanta posting a double-digit, and lowest on record, annual rate at -17.3%. Atlanta has now recorded five consecutive months of double-digit negative annual rates and seven consecutive monthly declines. On the other hand, Phoenix has posted two consecutive months of positive annual rates, with its latest being +3.3%, and five consecutive positive monthly returns.” Source:
The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of February 2012, average home prices across the United States are back to the levels where they were in late 2002 for the 20-City Composite and to early 2003 levels for the 10-City Composite. Measured from their June/July 2006 peaks through February 2012, the decline for both Composite is approximately 35%. February’s levels are new lows for both Composites in the current housing cycle.”
Some analysis tomorrow for Peoplenomics.com subscribers.
Between the Lines at FDIC
Not getting much play this week is the update of Projected Deposit Insurance Fund Losses, Incomes, and Reserve Ratios for the Restoration Plan which is summarized pretty well here:
“The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) requires that the DIF reserve ratio reach 1.35 percent by September 30, 2020.1 The FDIC is operating under a Deposit Insurance Fund (DIF) Restoration Plan that provides, among other things, that the reserve ratio will reach 1.35 percent by the statutory deadline. 2 The Restoration Plan requires the FDIC to update DIF loss and income projections at least semiannually, which allows the FDIC to evaluate whether growth in the DIF is likely to be sufficient to meet the statutory requirements. This memorandum is the first semi-annual update for 2012.
The DIF balance has risen for eight consecutive quarters and stood at $11.8 billion at year-end 2011, resulting in a reserve ratio of 0.17 percent. Staff projects that, undercurrent assessment rates, the DIF reserve ratio will reach 1.15 percent by the second half of 2018. Dodd- Frank requires the FDIC to offset the effect of increasing the reserve ratio from 1.15 percent to 1.35 percent on institutions with total consolidated assets of less than $10 billion. 3 Staff intends to present a proposed rule to the Board to implement this requirement when the DIF reserve ratio is closer to 1.15 percent.”
So, doesn’t this mean sunshine and happiness have broken out in the banking mess? No, explains our C-Level source who pointed out what it really means this way:
“So, it’s going to take another 6 years to get to the point where 1.15 cents of every insured deposit dollar is covered by cash, assuming that cash isn’t appropriated for something else, first.
Which is why, in addition to shorting France, I’m trying to find a pure-play in printers ink. Public finance in the US is all Greek to me, ifn’t you know what I’m sayin’.
Buying the Presidency
Yeah, people like to think they have free will, especially when it comes to politics, but that’s not really the case. Huge numbers of voters are simply bought with advertising messages and how is all that paid for? On the surface the report this morning on CNN about how Obama’s campaign tab may hit $1-billion (and Mitt Romney won’t be far behind) is sort of interesting.
If we were to see 50-million vote, I think that pencils out to $40 buck per voter between ‘em and frankly, since they are already the presumptive choices, why don’t they each agree to just send Elaine and I $40-bucks apiece, we’ll go out to dinner, and that will kick-start the local economy?
I know there’s some federal laws about “buying votes outright” but congress has managed to skate around that for year. Write us up for one of those “book deals” or something like that……
Much more serious are the charges which show up on the “Western Center for Journalism” site under the headline “Revealed by WikiLeaks: Obama Team Stole Election, Bribed Jesse Jackson and Took Russian Money in 2008.”
If you’re wondering who the Western Center for Journalism is, click here.
It was cold this morning – 38-degrees here at the ranch, and down into the 40′s across much of the south. And the drought of last year seems to have dissipated as a reader in Oklahoma remarked:
“Some good news to throw into the mix. The OK wheat drop is on track to be a record haul/acre. Practically perfect weather (for a change) & rainfall. They will start harvesting in 3-5 weeks unless things go to crap before then. Don’t know about other states.”
A little cool, but little if any frost damage, so far. But in places like Toms River there is some concern about what tonight could bring. If you’re geographically challenged, Toms River is in New Joisey.
Speaking of Climate Change: So, says Gaia theory scientist James Lovelock, he was wrong to be alarmist on Global Warming.
Around here, there’s no crime in being wrong, only in being dishonest about it…so we award extra points which, at least in NJ, may have frost on them.
Not sure that’s the word for it, but some new figures out suggest more people are going to Mexico than are coming here. A cynic might point to this as proof that America is “losing it.” But there’s more to it: Mexico isn’t a bad place, once you get past the beheadings and such, with a more agreeable climate than parts of the US, especially along the Caribbean side.
But, of course, that doesn’t keep immigration from being a political football with plans of democorps to challenge the tough Arizona law on immigration if it’s upheld by the Supreme Corps.
Crazy Building Materials
This one is going right up here with taking the leftovers of aluminum smelting (fluoride) and selling it to water companies to treat people’s teeth, whether they need it or not.
This little gem is called DUcrete - which you can read up on here. Might be an emerging market for it in, oh, Japan, for example.
More after this…