by Calculated Risk on 10/15/2009 09:01:00 AM

From the BLS: Consumer Price Index Summary

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in September, the Bureau of Labor Statistics reported today. The increase was less than the 0.4 percent rise in August. The index has decreased 1.3 percent over the last 12 months on a not seasonally adjusted basis.

And on rents:

The increase occurred despite declines in the indexes for rent and owners' equivalent rent, the first decreases in those indexes since 1992.

The decrease in OER was at an annual rate of 1.7%. And rents will continue to fall for some time.

Also, it is now official, there will be no increase in Social Security benefits next year (see: Social Security: No Increase to 2010 Benefits or Maximum Contribution Base)

by Calculated Risk on 10/15/2009 08:30:00 AM

The DOL reports weekly unemployment insurance claims decreased to 514,000:

In the week ending Oct. 10, the advance figure for seasonally adjusted initial claims was 514,000, a decrease of 10,000 from the previous week's revised figure of 524,000. The 4-week moving average was 531,500, a decrease of 9,000 from the previous week's revised average of 540,500.
...
The advance number for seasonally adjusted insured unemployment during the week ending Oct. 3 was 5,992,000, a decrease of 75,000 from the preceding week's revised level of 6,067,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims decreased this week by 9,000 to 531,500, and is now 127,250 below the peak in April.

Initial weekly claims have peaked for this cycle. The key question is: Will claims continue to decline sharply, like following the recessions in the '70s and '80s, or will claims plateau for some time at an elevated level, as happened during the jobless recoveries in the early '90s and '00s?

The level is still high - indicating continuing job losses - and the four-week average of initial weekly claims will probably have to fall below 400,000 before total employment stops falling.

by Calculated Risk on 10/14/2009 09:54:00 PM

From Austin Kilgore at Housing Wire: Chances Are, Most HAMP Mods Won’t Work: Amherst

The Making Home Affordable Modification Program (HAMP) adds another layer of uncertainty for private label securitization investors, making it more difficult to predict cash flows, according to a report by analysts at Amherst Securities Group, who added they expect relatively few HAMP workouts to be successful.

Additionally, it’s taking longer for bad mortgages to move from last payment to liquidation, and the pace varies by servicer: “The trial modification period essentially holds the loan in a suspended state for 90 days, making it difficult to assess what is happening with modifications,” the report said ...

While HAMP workouts are keeping the pools of real estate owned (REO) property relatively small, Amherst predicts a low percentage of eventual success of HAMP modifications is inevitable.
emphasis added

A few comments:

The trial period has been extended for an additional 60 days - so make it suspended animation for 150 days! See One Company Responsible For Nearly Half Of All Permanent Mortgage Modifications

Treasury and COP note that many of those temporary modifications may be in process of getting paperwork submitted in order for them to achieve permanent status. Treasury granted a two-month extension -- on top of the three-month trial -- for borrowers and servicers to get their documentation ready.

Much depends on the success of HAMP. If many of these modifications don't become permanent there will be another flood of foreclosures on the market. BofA has already promised a "spike" in foreclosure at the end of this year, see: Delayed Foreclosures Stalk Market

We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running" for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman.

In many areas the "the pools of real estate owned (REO) property" has all but dried up. The HAMP program is restricting supply.

Note: On the demand side, the first-time homebuyer tax credit combined with loose FHA underwriting, is boosting demand. Restricted supply and more demand has created a buying frenzy and pushed up prices in some low end areas.

by Calculated Risk on 10/14/2009 06:20:00 PM

The real estate market has gone crazy. At the low end we've been seeing many offers per house for some time, and recently agents have been telling me there is almost no inventory. Jim the Realtor has been reporting on this in San Diego, see: Hot All Over and The “Euphoria Express”

And from Diana Olick at CNBC today: Lunacy in Las Vegas Housing (ht Larry)

Olick include an email from a real estate agent to a client "Katie":

- This market is crazy and many things are just not going to make any sense.
...
- Properties are selling in the blink of an eye.

- Properties are getting multiple offers within a few days of being on the market, the most offers I’ve heard a house had recently was 44 offers (I know, crazy).
...
- 40% of all transactions are cash purchases, which makes it harder for the buyers who are financing to get their offers accepted.

- We have 1/2 the inventory we had a year ago and 4 times as many buyers as we did a year ago.

And more ...

It definitely seems crazy.

by Calculated Risk on 10/14/2009 04:00:00 PM

From March 29, 1999: A CNBC Promo ...

Click on graph for larger image in new window.

This graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.