Crashachusetts Existing Home Sales and Prices: February 2008

Today, the Massachusetts Association of Realtors (MAR) released their Existing Home Sales Report for February 2008 and simultaneously Standard & Poor’s released their Case-Shiller Home Price Index for January 2008 both showing, perfectly clearly, the truly dire circumstances that have now befallen the Bay State’s housing market.

Whether it was a slow depression brought about by over two solid years of steadily declining home sales and prices, the credit crunch, a looming recession, a palpable increase in inflation of necessities like food and fuel or just simply a change in attitudes toward the notion of a house as a vehicle for wealth, the regions housing markets have now hit a dangerous tipping point (particularly for fancy south end condos... see BostonBubble.com for more).

It appears that we have entered the “price freefall” phase of the housing decline where mounting inventory, declining sales, and negative sentiment all combine to result in plunging home prices which, quite possibly, may continue to decline substantially even through the spring and summer months which are typically strong periods in any selling season.

The Massachusetts Realtor leader Susan Renfrew, apparently left a bit speechless by poor results, could only muster a weak one-liner before degenerating into a robotic regurgitation of the NAR party line.

“February single-family home and condominium sales came in about where we expected them to, which was generally in line with January’s activity … The good buying opportunities that exist today, along with the recent increases in the FHA, Fannie Mae and Freddie Mac loan limits could help improve sales over the next quarter.”

MAR reports that in February, single family home sales plummeted 22.9% as compared to February 2007 with unchanged inventory translating to a truly massive 16.2 months of supply and a median selling price decline of 4.6% while condo sales plunged 34.6% with a 4.0% decrease in inventory translating to a startling 17.5 months of supply and a median selling price decrease of 6.7%.


The S&P/Case-Shiller Home Price Index for Boston, which is the most accurate indicator of the true price movement for single family homes, showed accelerating prices declines (prices are falling faster) with Boston declining 3.39% as compared to January 2007 leaving prices now 10.89% below the peak set in September 2005.

To better illustrate the drop-off in home prices and the potential length and depth of the current housing decline, I have compared BOTH the normalized price movement and peak percentage changes to the S&P/Case-Shiller home price index for Boston (BOXR) from the 80s-90s housing bust to today’s bust (ultra-hat tip to the great Massachusetts Housing Blog for the concept).


The “normalized” chart compares the normalized Boston price index from the peak of the 80s-90s bust to the peak of today’s bust.

Notice that during the 80s-90s bust prices took roughly 46 months (3.8 years) to bottom out.

The “peak” chart compares the percentage change, comparing monthly Boston index values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

In this way, this chart captures ALL months of the downturn from the peak to trough to peak again.

As you can see the last downturn lasted 105 months (almost 9 years) peak to peak including 34 months of annual price declines during the heart of the downturn.

As in months past, be on the lookout for the inflation adjusted charts produced by BostonBubble.com for an even more accurate "real" view of the current market trend.

February’s Key MAR Statistics:

• Single family sales declined 22.9% as compared to February 2007
• Single family median price decreased 4.6% as compared to February 2007
• Condo sales declined 34.6% as compared to February 2007
• Condo median price increased 6.7% as compared to February 2007
• The number of months supply of single family homes stands at 16.2 months.
• The number of months supply of condos stands at 17.5 months.
• The average “days on market” for single family homes stands at 166 days.
• The average “days on market” for condos stands at 165 days.

Reading Rates: MBA Application Survey – February 20 2008

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage jumped 37 basis points since last week to 6.09% while the purchase application volume dropped 11.5% and the refinance application volume plunged 27.9% compared to last week’s results.

The average fixed mortgage rate has climbed so significantly since last week that it now sits in-line with the mean trend seen during 2007 resulting in the obvious plunge in refinance and purchase application volume.

It’s important to note that all application volume values reflect only “initial” applications NOT approved applications… i.e. originations… I will post on originations on the coming weeks.

Also note that the interest rate for an 80% LTV 1 year ARM now rests 37 basis points below the rate equal to an 80% LTV 30 year fixed rate loan.

It’s important to note that the data is reported (and charted) weekly and that the rate data represents average interest rates, and the index data represents mortgage loan application volume for home purchases, home refinances and a composite of all loans.

The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% “rule of thumb”) on a $400,000 loan has changed since November 2006.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages over the last number of weeks (click for larger version).


The following charts show the Purchase Index, Refinance Index and Market Composite Index since November 2006 (click for larger versions).

Envisioning Employment: Employment Situation December 2007

Today’s Employment Situation Report again showed declining growth to employment with both the Household and Establishment data indicating anemic conditions with only a 18K increase to non-farm payrolls, a 436K worker decline in civilian labor force employment, a 474K increase to unemployed workers, 179K increase to workers now not in the labor force, increasing the rate of unemployment at 5.0% rate, the highest rate seen since the fall of 2005.

The report also disclosed continued and even peaking below trend growth overall and substantial declines in sectors directly related to residential real estate.

The following chart combines both the “residential building” and “residential specialty trade contractors” into one payroll series and then plotting the data since 2002.

Notice that, in aggregate, these payrolls, having peaked in March 2006 and declined 6.83% or 293,100 jobs since then, appear to be headed lower.

Also note that independently, “residential building” has lost 6.14% of its payrolls or 84,900 jobs since it peaked during September 2006 and that “residential specialty trade contractors” have lost 7.74% of its payrolls or 224,300 jobs since it peaked during February 2006.

Next, let’s take a look a slightly broader set of industry sectors that have been directly impacted both by the housing boom and now the bust (click for larger chart).

Note that I carefully selected sectors that showed either an obvious expansion-to-contraction trend OR a flattening-to-contraction trend and that ALL sectors have both a historical and logical relationship to residential housing as well as recent industry press releases disclosing declining profits as a result of the housing bust.

As you can see, sectors that are now being directly impacted by the current housing decline are numerous and cut across many levels of the job market from construction and materials to manufacturing and finally to retail.

Combining these series into an aggregate of payrolls “directly impacted” by the housing boom and bust cycle and plotting it, along with the S&P/Case-Shiller Composite Home Price Index (click on chart below for larger version) since 1997 provides some pretty solid evidence that a relationship exists.

To expand the analysis a bit look at the following chart that shows percent change on year-over-year basis to BOTH the “directly impacted” payrolls sectors and ALL private non-farm payroll overlaid with the S&P/Case-Shiller Composite Home Price Index.

As you can see, the “directly impacted” payrolls are declining at an increasing rate and that overall private non-farm payrolls, while continuing to increase, are doing so at a declining rate.

To get a sense of the relative intensity of the pullback to the “directly impacted” payrolls by plotting both the percentage of overall private non-farm payrolls that the “directly impacted” aggregate represents as well as the contributions it is making to the rate of change of the underlying total private non-farm payrolls.

Notice that at its peak the “directly impacted” payrolls represented over 6.6% of Total Private Non-Farm Payrolls and now contracted to a degree similar to that seen during the entire course of the 2001-2003 contraction.

Plotting the ratio of overall and private non-farm payroll as well as the payroll of various business sectors to overall non-institutional population (above 16 years old and not in jail or “juvee”), the last eight years seem to pose more questions than answers.

The payroll-population ratio concept simply provides a mechanism for better isolating the changes to payroll rosters by calculating the percentage of population that is employed in a given sector at any given time.

In the following chart (click for larger version) you can see the ratio of overall non-farm payroll and private non-farm payroll to non-institutional population from 1948 overlaid with all U.S. recessions in that period.

As you can see, there is a fairly strong correlation to declining percent of population employed in non-farm and private non-farm endeavors and recession with particularly good peak-trough alignment for all recessions prior to 1990.

During the 2001 recession (and to a far lesser extent in 1990), although there where large declines to the ratio during the official recession period, the economy seemed to be able resume growth while the ratio continued to slide or stayed well below the peak of the prior expansion.

This is an interesting situation in that, although increases in population have been steady and could have replenished the literal number of jobs lost during the downdraft of 2000-2003, the latest expansion of payrolls has not been strong.

The following chart (click for larger version), on the other hand, the payroll ratio related to construction has remained above even the peak set in the 90s expansion but now seems to be coming down.

As you can see, although 3.21% of the population currently is employed in a construction occupation, there is a chance that this percentage could drop below the trend resulting in 2,327,150 lost construction jobs for every 1% drop in ratio.

Of course these lost jobs could shift to some other part of the labor force but the point is, the current ratio appears poised to drop and with it will inevitably go many construction jobs.

BNN MUST SEE TV! – Greenspan on Comedy Central, Ron Paul, Zandi, Shiller, Farber and Realtor’s Lampooned!

There were a lot of revealing and informative video segments this week (and last) covering topics related to the housing-mortgage-credit turmoil, the outlook for the consumer and prospects for recession.

Better yet, Realtor’s are now being lampooned in a whole raft of comedic segments on You Tube… I just love the information era!

First, there was an interesting Greenspan appearance on The Daily Show where he suggests that the Fed acts as regulation on the “free” market and that although monetary policy is intended to keep prices stable, lowering interest rates can cause asset and general inflation.

Watch Greenspan Comes Clean on BNN!

Next up is a great Diana Olick segment covering the truly awful state of housing and general recession occurring in Michigan.

Detroit home prices are down 32% with 1 foreclosure for every 29 homes. There has been a local subprime implosion and a recent auction saw homes being sold for the price of a new sofa! Could this be a harbinger of things to come?

Watch into the Future on BNN!

Next, Ron Paul deftly outlines his view of our monetary system, the devaluing of the US dollar, the expense of financing the war and its impact and implications for the poor, middle and upper class.

Watch Ron Paul Talk Economy on BNN!

Next, Mark Zandi, Chief Economist of Moody’s Economy.com joins Bloomberg to discuss the latest housing data showing foreclosure’s doubling in September as compared to 2006.

Zandi suggests that foreclosure will continue into 2009 with Alt-A and Jumbo loans now firmly joined in the fray. As Zandi sees it, states that Boston, Florida, Las Vegas etc… are “a complete mess”.

Watch Zandi Talk Turmoil on BNN!

Next, an excellent News Hour appearance by Professor Robert Shiller and Economist David Hale discussing the latest state of the housing market, it impact on the economy, and its outlook and the outlook for recession in the general economy.

Shiller points out that the recently announced CitiGroup, BofA and Chase rescue fund is reminiscent of past responses by banks during times of crisis (JP Morgan, etc.) and that, although it may help to restore confidence, it may also simply be one of the many events to occur during the unwinding.

Watch Shiller’s Cliffhanger on BNN!

Next, here is easily one of the best interviews I have ever seen concerning economics or otherwise.

Marc Faber, publisher of the Gloom, Boom and Doom Report seems to effortlessly and completely express virtually every aspect of cautious sentiment relating to our current economic predicaments. This interview is just over 30 minutes long but is thoroughly engrossing and well worth the investment.

Watch Farber’s Gloom, Boom and Doom on BNN!

Next, here is kind of a funny interview with Equifax CEO Richard Smith which, although uncomfortable, possibly discloses some interesting facets of the American credit-consumer.

Smith suggests that, although things are NOT getting any better in the credit markets, the majority of the sub-prime housing pain is “isolated” to seven states.

Furthermore, Smith states that lending practices are getting “far tighter” and that the number of mortgages being underwritten today is “far less” than just six months ago.

Watch Credit Squeeze the Consumer on BNN!

Finally, we have a comical short starring Brent Chapman that I think says it all concerning the true nature of the Realtor business. Things must be really going awry for the National Association of Realtors when everyday folks start taking comedic pot shots at ‘em!

Watch Realtors be Lampooned on BNN!

The Boston Globe’s New Bubble?

It appears that yesterday, The Boston Globe finally completed the National Association of Realtors (NAR) training course titled “how to become a willing shill for the real estate industry in… 90 days or less!”.

Of course, it did take them a little longer… but, come on… these are staff reporters and section editors we are talking about here!

You might remember that about a year ago, the Globe published an article titled “End of housing decline near?” with the summary line “Drops in price and sales moderate, hinting market may be starting to stabilize” within which reporter Kimberly Blanton quoted a host of real estate insiders who, in typical fashion at the time, portrayed the housing decline in Massachusetts as having shown signs of stabilization.

When I called her on the obvious disconnect between reality and her reporting (during a live moderated Boston.com chat) and asked her directly how she was able to responsibly report that there were "signs of market stabilization" she replied:

“That's a great question. Frankly, an editor threw that in & I'm not sure why.”

Just too perfect…

Well, it seems now that other Boston Globe “reporters” want to get in to the act.

Yesterday, The Globe published an article entitled “Arlington is hottest place in Eastern Mass.” With the summary line “Blend of amenities, convenience keeps town's housing market strong despite slump” within which staff “reporter” Sacha Pfeiffer recounts tales of “frenzied” bidding wars leading to homes selling over list, high median prices and a “brisk” rate of sales.

No… this isn’t a retelling of the wild and bubbly days of 2000-2005… The Boston Globe is reporting that this is occurring right now!

The article even goes so far as to suggest that Arlington, a nice clean and well placed Boston suburb, is currently “enjoying its own housing bubble while many other communities in Eastern Massachusetts struggle with declining sales and prices.”

Seem fishy to you? It should.

After doing a little fact checking of my own (against MLS sales data), I’m left utterly speechless at how a supposedly celebrated national newspaper could report such absurd and fictitious information.

First, looking at the completed single family home sales for 2007 shows that 156 of 235 homes sold, or a whopping 66.4%, were sold UNDER LIST while only 56 homes, or 23.8%, were sold over the list price.

Taking into account the fact that Arlington has seen an average of 50% of all listed single family homes have price reductions (currently 55%), the sheer number of homes still selling under list is staggering.

Furthermore, the total dollar amount of all discounts on under list sales totaled $3,541,903 versus a $1,002,800 total of all over list bonuses with an average discount of $22,704 and an average bonus of $17,907.

Additionally, the median under list discount was $14,000 versus the median over list bonus of $12,250 and the median selling price of an under list home was $470,000 versus the median selling price of an over list home of $478,500.

Still further, the year-to-date median selling price for a home in Arlington is in fact $465,500, the lowest seen since 2003, according to the Warren Group NOT the $510,000 as reported in the article.

In fact, I don’t see where the Boston Globe got the $510,000 figure as it doesn’t match the median number reported for the year-to-date figure, the latest reported month or the current calendar year.

As you can see from the chart, the median price is coming down while the number of homes sold has remained nearly constant for the last 15 years.

Arlington is a nice town… It’s clean and prosperous with many young families and a good location BUT none of that justifies writing a baseless article that distorts and even fabricates statistics in an effort to create an atmosphere of exuberance.

I’m calling on the The Boston Globe to publish a complete retraction placed in a comparable position to the fictitious article published yesterday and to cease and desist functioning as the loudest part of the NAR/MAR propaganda machine.

I’m sure that making the advertisers happy is important but not nearly as important as getting the story and the facts straight.

Be sure to let The Boston Globe's Editor know what you think of his shoddy paper.

The Daily 2¢ - New Math, Old Reality

It’s been about a year and a half now since the husband and wife team of Gary and Margaret Hwang Smith, two professors of economics from Pomona College presented a paper at the Brookings Institute entitled “Bubble, Bubble Where’s the Housing Bubble?”.

Their paper initially took the fairly sound position of estimating a home’s “net present value” by calculating its potential cash flow, including rental income, but then proceeded at great lengths to justify the price appreciation seen during the boom years by making overly optimistic assumptions as well as including some truly fuzzy logic.

For example, the Smith’s assist the cash flow derived from rental income with additional value derived from “non-financial factors”, such as a “pride of ownership” and “desire for privacy”.

That’s about where the papers leaves reality and enters the realm of shameless contrivance.

I guess that might not be too surprising from a couple of professional real estate and financial “experts” who, having just recently purchased a nearly million dollar Craftsman style single family home in Claremont California, clearly had a lot at stake in justifying their “investment”.

The paper eventually concluded that many of the hyper inflated metro areas such as Boston, Los Angeles and Chicago were not only NOT bubbles they were actually UNDER PRICED.

"Buying a house at current market prices still appears to be an attractive long-term investment."

What’s worse though is that their paper (and story of their home purchase etc.) was picked up by the New York Times and published in an article titled “Some New Math on Homes” ironically on April Fool’s Day in 2006.

This article and the Smith’s paper undoubtedly did some serious damage as it painted that classic “things are different now” picture at the exact moment that the nation’s housing markets were beginning peak and then steadily decline.

I can only imagine the scores of people who read their story, bought into their proposition, and then felt more comfortable taking the plunge to home ownership right at the very peak of the market.

As if to add a final "insult to injury" the Smith’s now have a blog where they persist in making their “housing market still appears attractive” claim and further reveal that their analysis is to become the basis of a new book they have coming out titled “Houseonomics”.

Well, if it’s any consolation, it appears that the Smith’s home has not escaped the “actual” fundamentals of the downturn dropping nearly 2% on a year-over-year basis in August according to a SoCal Real Estate News and Data Source DataQuick.

Furthermore, southern California is now seeing homes sales fall steeply and steadily with the latest results showing sales dropping to their lowest level in 15 years.

With the S&P/Case-Shiller Futures for Los Angeles predicting continued declines to the price for single family homes and the inventory for Claremont climbing to new highs, the Smith’s may get what they deserve after all.

S&P/Case-Shiller: July 2007

The most recent release of the S&P/Case-Shiller home price indices for July continued to show weakness for the nation’s housing markets with 15 of the 20 metro areas tracked reporting significant declines.

Topping the list of decliners on a year-over-year basis was Detroit at -9.69%, Tampa at -8.77%, San Diego at -7.78%, Phoenix at -7.30, Washington DC at -7.22%, Miami at -6.14% and Las Vegas at -6.14.

Additionally, both of the broad composite indices showed accelerating declines slumping -4.52% for the 10 city national index and -3.91% for the 20 city national index continuing the first negative slump in annualized appreciation seen since the early 90’s housing bust.

To better visualize the results use the PaperEconomy S&P/Case-Shiller/Futures Charting Tool and be sure to read the Tutorial in order to best understand how best to utilize the tool.

Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data with side-by-side columns (click for larger version).

What’s most interesting about this particular comparison is that it highlights how young the current housing decline is, having only posted four consecutive year-over-year (YOY) monthly declines to home prices.

Looking at the actual index values normalized and compared from the respective peaks, you can see that we are only ten months into a decline that, last cycle, lasted for roughly fifty four months during the last cycle (click the following chart for larger version).

The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

In this way, this chart captures ALL months of the downturn from the peak to trough to peak again.

As you can see the last downturn lasted 97 months (over 8 years) peak to peak including roughly 43 months of annual price declines during the heart of the downturn.

Notice that peak declines have been FAR more significant to date and, keeping in mind that our current run-up was many times more magnificent than the 80s-90s run-up, it is not inconceivable that current decline will run deeper and last longer.

BNN MUST SEE TV! – Ron Paul vs. Ben Bernanke, Greenspan, Yucky Collapse in the Inland Empire, Shiller and More

There were a lot of really great and informative video segments this week covering topics ranging from the Fed’s effectiveness and the outlook for inflation to regional accounts of housing stress to the forthcoming emergency actions by the federal government in response to the calamitous fall off in the housing and mortgage markets.

First, in one of the numerous Greenspan interviews this week, the former Federal Reserve Chairman suggested that we are now beyond the era of favorable interest rates and further that the 10 year note will be heading up to 8%.

Watch Greenspan Talk Doom on BNN!

In an interview with a somewhat ornery but VERY informative Jim Rogers of Beeland Interests, Rogers suggests that the Fed is irrelevant in that they, in his view, generally move after market turmoil has occurred. Rogers also points out astutely that the current market conditions shouldn’t qualify as being termed a “crisis” the as all the major indexes are only 4% – 6% below their all time highs.

Watch the Cantankerous Rogers on BNN!

In an EXCELLENT and complementary segment to the prior Rogers piece, Marc Faber of the Gloom, Boom and Doom Report joins Bloomberg to discuss his predictions for the latest Fed actions and his assertion that the US economy is already in recession. Although Faber believes that the Fed will cut interest rates, he suggests that the better move would be to actually raise them in order to fulfill their real role of maintaining the integrity of money.

Watch the always interesting Faber on BNN!

Yale Professor Robert Shiller joins CNBC to discuss the latest Fed action and his outlook for the future of housing and the economy. Shiller states that given the nature of the fallout of the credit market turmoil, namely the money market instability and the bank run in the UK, economists generally believe that the Fed’s 50 basis point rate cut was “entirely reasonable and not an aggressive cut”.

Watch Shiller weigh in on BNN!

In a particularly icky segment, Bloomberg chronicles some of the truly ugly fallout currently being experienced in California’s “Inland Empire” including foreclosure homes breeding pathogen laden mosquitoes in their stewing backyard pools, 25% home price declines, job losses and families downsizing to mobile home parks.

Watch the more Yucky side of the downturn on BNN!

Next, this segment chronicles a tough story of a homeowner that purchased an expensive home (over the conforming limit) with a 2 year adjustable loan and now after a $700 reset, is straining to make it.

Watch a real face of the downturn on BNN!

Finally, Texas Representative Ron Paul questions, at some length, Federal Reserve Chairman Ben Bernanke on the soundness of this weeks 50 basis point fed funds rate reduction eliciting a terse and guarded response.

Watch Ron Paul vs. Bernanke on BNN!

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings September 2007

Today, the National Association of Home Builders (NAHB) released their Housing Market Index (HMI) showing additional evidence that the new home market is experiencing a new leg down in declines.

The release came along with a guarded yet optimistic perspective from Chief Economist David Seiders who now sees home sales recovering by the second quarter of 2008.

“Certainly problems across the mortgage finance arena are taking their toll on buyer demand, which is weighing heavily on builder confidence measures, … We now expect to see home sales return to an upward path by the second quarter of 2008 and we expect housing starts to begin a gradual recovery process by the third quarter of next year. At that point, the market will have substantial growth potential.”

Measuring builder confidence across six key data points, the builder survey has been a bellwether for the new home market since 1985.

The component measures used to formulate the overall HMI are respondent ratings on “present conditions”, “future conditions” and “buyer traffic” all of which continue to indicating significant current and future weakness as the new home market slumps its way slowly forward, now long separated from an exceptionally disappointing spring selling season.

In fact, July’s “present”, “future” and “buyer traffic” condition results have moved even nearer to the worst levels seen since early 1991 when the nation’s housing market was slumping through its last major housing bust.

The following charts show “present conditions”, “future conditions” and “buyer traffic” both smoothed since 1986 and unadjusted since 2005 (click for larger versions).

Keep in mind that for each measure respondents are asked to assign both a “good” and “poor” rating so in each chart you will notice “good” slumping while “poor” is surging.

The Daily 2¢ - Greenspan’s Benevolent Era

Greenspan Greenspan Greenspan!

He’s back, the gloves are off and he’s coming for your economy!

Look out everyone, the oracle hath spoken…

The “benevolent” era is over, inflation is on the rise and the problem will not be short lived.

Additionally, not only is there a housing bubble in America, but they have occurred all over the world!

These are some of the “revealing” concepts Greenspan is now putting forward as he makes the rounds on the national TV talk shows pumping his new book “The Age of Turbulence: Adventures in a New World”.

Greenspan is either a little late to the party or, more likely, simply exercising a little legacy damage control in the face of the now obvious unwinding of his easy money days of the past.

Forgive me for feeling a little short changed when contemplating Greenspan’s suggestion that the Federal Reserve’s low funds rate between 2001 and 2004 and call for more innovative mortgage products in 2004 was not even partly to blame for inflating the US housing bubble since housing bubbles also occurred in as many as twenty other countries around the world.

It’s pretty hard for me to believe that he could seriously see US monetary policy as being totally isolated from affecting the other world economies and that our housing bubble is simply a result of some benevolent disinflationary era that independently affected the US and other major economies alike.

I suppose the new book and all the interviews will supply plenty of fodder for those that that would defend and others that are critical of Alan Greenspan’s legacy but one thing I have noticed seems to be now firmly unarguable.

Starting today, there IS a housing bubble in America and it is now in the process of unwinding.

All debate is over, it is now totally unequivocal given that Bears have been using this term for years and now, with Alan Greenspan’s gentle guidance, Bulls must join in the fray, a point that is positively clear after watching just a few hours of CNBC this morning.

Existing Home Sales Report: July 2007

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for July showing that the fall-off in demand for residential real estate is continuing and occurring uniformly across the nation’s housing markets.

Senior Economist Lawrence Yun is now suggesting that the weakness, if it were not for the mortgage-credit meltdown, home sales would “probably” be rising.

“Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months, … Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.”

Additionally, NAR President Pat Vredevoogd Combs continues to attempt to persuade potential buyers to ignore the obvious dramatic housing correction.

“For buyers able to qualify for conventional financing, there are ample opportunities in the current market, … Availability and pricing of conventional loans are reasonable, and FHA-insured mortgage applications have been rising as low- and moderate-income buyers seek alternatives to subprime loans. If buyers are in it for the long haul, now can be a good time to get into your home.”

Looking at July’s Existing Home Sales report should only result in additional confirmation that the nation’s housing markets are continuing to experience weakness with EVERY region showing considerable declines to sales of BOTH single family and condos as well as significant increases to inventory and monthly supply.

Keep in mind that we are now seeing existing home sales declines on the back of last years fairly dramatic declines further indicating that the housing markets are not bottoming as many had been suggested last fall.

Below is a chart consolidating all the year-over-year changes reported by NAR in their July 2007 report.

Particularly notable are the following:

• Sales are down significantly in EVERY region and for BOTH single family and condo.
• ALL Inventory and Months Supply show significant increases on a year-over-year basis.

The Blog Formerly Known As PaperMoney

It was brought to my attention earlier this week that by using the term “PaperMoney”, a duly reserved and registered service mark, I have been inadvertently infringing on the rights of its owner.

I can assure all my readers, as I have the owner, that I had no prior knowledge of the existence of an online eZine-style website baring the same name and that, had I known, I would have not chosen to use this term.

In order to remedy this situation and as a sign of respect and goodwill for the owner who registered this term long ago and has maintained continuous use ever since, I am today formally changing the name of this blog to PaperEconomy.

I am disappointed, to say the least, as the term PaperMoney was, to me, a perfect representation of my current sentiment and outlook for housing and the economy in general.

In fact, it literally occurred to me instantaneously when I decided to start my own blog on the housing bubble.

I felt it was just the right way of suggesting the ephemeral nature of unrealized wealth, a notion that seemed to suit the state of housing particularly well.

Maybe it was a bit snarky, but over the last 16 months I have grown to really see it has my own as I have with the blog itself.

Oh well… you can’t have everything.

To that end, the new name, PaperEconomy, is not too shabby either!

It’s reminiscent of the prior name and even seems to broaden the original message a bit…

As in:

“…at first I thought it was strong and resilient, then I realized it was a Paper Economy! (like Paper Tiger maybe?)”

Or even:

“…this whole dammed economy is propped up on paper!”

Well, that might be a bit over the top but you get the picture.

The key point here is that neither the blogger nor the blog has changed… just the title.

So keep reading, we have a long long way to go in the housing decline and the story is only just beginning to heat up!

One final note…

PLEASE UPDATE ALL YOUR WEB BROWSER LINKS TO:

http://www.papereconomy.com

Here are the new links to each service:

BNN - The Bubble News Network
The BubbleTimes
The Inventory Tracker Tool
The S&P/Case-Shiller/Futures Tool
The OFHEO Home Price Index Tool

(No need to update RSS news feeds or email subscription as the content itself will be updated automatically)