Unadjusted CPI-U was up 0.6% from March to April. Certainly nothing to cheer about.
From BLS Website: The unadjusted data are of primary interest to consumers concerned about the prices they actually pay. Unadjusted data also are used extensively for escalation purposes. Many collective bargaining contract agreements and pension plans, for example, tie compensation changes to the Consumer Price Index before adjustment for seasonal variation.
The reason news like this doesn't bring the market down is this only effects financials. Financials have already taken such a beating that the only people who hold them think that things will turnaround and they'll make a fortune. They don't worry about the possible 25% drop over the next few months. They look at the possible 200% increase over the next few years.
What they don't realize is the pricing in financials reflects the current business model of greatly reduced loan originations and doesn't include the possible massive losses due to holding toxic loans on their books. The best case scenario isn't a return to 2006 profits. The best case scenario is not being bought out at a near zero price and much lower profits for the next few years.
Energy and food prices way up, yet headline inflation, core inflation and wages are trending down. This is true for a number of other countries I look at as well, which is just another indication to me that the underlying US and global economies are quite weak.
While the hearing helps drag some of the issues into the light it still did not make absolutely clear that bankruptcy doesn't cause Mortgage Servicing Fraud. Mortgage Servicing Fraud causes bankruptcy.
It will be interesting to see if/how much of a spike in litigation there is in CA - and across the country for that matter - alleging fraudulent actions of mortgage servicers.
the "bottom" will not occur until some hedge fund starts buying chunks of these banks. Until then I believe none of the rhetoric espoused by the media.
Those hedgies would LOVE to own a piece of these banks and be able to tell them how to run a biz. That they have not put one damn dime of there own money towards them tells me all I need to know.
When they stop with OPM and use there own the bottom will be in.
Bloomberg reports "U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as rates on adjustable mortgages increased . . ."
I thought the multiple Fed rate cuts were supposed to have cured the ARM reset problem.
My conjecture would be that we're still seeing a lot of fall-out from people put into loans they never were able to afford. See for instance the other story on the FBI fraud investigation.
So, what about imports from asia and elsewhere, on the weak dollar? The import/export reports have shown for months that imports have been rocketing in the mid single digits. Our economy is services based. We import almost every consumer product. Prices for consumer products are increasing, at least for me. Suppliers & retailers can't be eating the entire difference. Something doesn't add up.
Oh boy! It's time for me to try to catch a falling knife!
There is a piece of land adjacent to two other parcels I already have (where I intend to live out my days), which a specuvestor out-bid me on a while back. This specuvestor is now rapidly approaching default and is willing to talk short sale.
So, CR denizens, what did we all decide was the long term-average rate of appreciation on RE? I'm thinking in terms of the 50 year window. I want to back out to the last non-bubble pricing and make an offer based on that compounded against the average rate of return.
I expect that the lender will not agree, and that it will go to foreclosure, and I'll take another shot at the auction. But, it can't hurt to go through the motions.
I hope to see a piece of FRE's use of FAS 157 and 159. That's $2.3B of losses that got reversed by discretionary accounting. Add that back in and you get a FNM type loss for the quarter.
Do all these foreclosures have to go through a court? I know a few people who are trying to foreclose for about a year now and they say that the lender is dragging their feet. Who pays for all processing of foreclosures?
Depending where you live I'd try 1997 to 2000 prices. But, without knowing anything about the property except it is made of dirt, this could be right or wrong.
Thomas Jefferson said, "If the America people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered."
Again, Realty Trac just looking for hits... real estate tabloids and papparazzi ...
Foreclosures.com, Alexis McGee noting that Sac area foreclosures are DECLINING and you should see the numbers of REOs selling. less than a 2 month supply. Looks like Sac area about a year ahead of many cities...
Scott asked: "So, CR denizens, what did we all decide was the long term-average rate of appreciation on RE? I'm thinking in terms of the 50 year window. I want to back out to the last non-bubble pricing and make an offer based on that compounded against the average rate of return."
I don't know of any sources of land-only RE prices (which sounds like what you're asking about), but I've got median new-home prices from the Census Bureau data going back to January, 1963.
From Jan. 1963 to Jan. 1993 (which would be well before the "bubble" but still offers a substantial 30-year record), the compound annual growth rate was 6.63%.
Including the entire 45-year history, the CAGR is 5.75%.
This may be laziness, but I can't seem to find a simple analysis of how home sales in the past are stacking up to foreclosures now. 60,000 foreclosures in a month seems like a lot, but I'd like to compare to how fast people were buying. In addition, what was the "baseline" sales rate? How would the difference between the baseline and peak sales rate compare to the current foreclosure rate?
I dont know if you read in my last post (posted last night in the oil thread) but it appears that Realtytrac really understates NTS and REO compared to Foreclosure Radar or DQ.
Want a good laugh? How does CNBC get away with this nonsense?
Read this:
Why The Government Says Gas Prices Were Lower In April
Posted By:Bob Pisani
Topics:Energy | Investment Strategy | Stock Market
Sectors:Oil and Gas
The government reported that gasoline prices in April were down 2 percent when "seasonally adjusted." How could this be, when we know prices went up at the pump?
Here's how it happened:
1) The actual increase in gasoline prices was 5.6%.
2) But the government statistics indicate that gasoline tends to rise by 7.6% in April.
3) But because they rose less than that--5.6%--gasoline was reported to be down 2 percent "seasonally adjusted"
It has to do with the phrase "seasonally adjusted." The government adjusts numbers to remove the impact of regular events that occur at the same time every year--like increases in gas prices in April, or the effect of cold weather on housing starts.
There is nothing nefarious about this--the question is whether the "adjustments" are fair and accurate.
Do all these foreclosures have to go through a court? I know a few people who are trying to foreclose for about a year now and they say that the lender is dragging their feet. Who pays for all processing of foreclosures?
Tim - Foreclosure is the act of taking the collateral to satisfy an unpaid mortgage debt. The borrower cannot institute a foreclosure, only the lender. If the borrower stops making his payments, the lender will almost certainly foreclose. Can you give us a little more detail about this situation? Is the borrower paying the mortgage? If so, the lender has no grounds to foreclose. Is the borrower not paying the mortgate? If so, what is he complaining about? He's living cost-free while the lender drags his feet.
I think Tim's post illustrates one of the major misconceptions that has helped cause our current real estate distress. It seems a lot of borrowers got into this homeownership thing without understanding the basic ground rules - for example, when you sign the note, you are obligating yourself to make regular payments for the term of the mortgage. So many seem to think that when they get tired of homeownership they can contact the bank and just call it off...
It has to do with the phrase "seasonally adjusted." The government adjusts numbers to remove the impact of regular events that occur at the same time every year--like increases in gas prices in April, or the effect of cold weather on housing starts.
i seem to recall someone losing around 6 billion a few years back betting on the winter/summer spread.
Say gas prices had gone up 9.6%. If the normal seasonal rise is 7.6%, I assume this means the gov't would say the increase is only 2%, seasonally adjusted.
These seasonal adjustments are useless in terms of being an accurate measure of reality, but then this is an administration that was bragging about creating its own reality a couple of years ago.
So you understand how seasonal adjustment works, and you still don't undestand how seasonal adjustment works?
Energy accouts for 9.7% of CPI, and came in flat. Food accounts for 13.8% of CPI, and showed the biggest gain since John McCain was a baby. That's how BLS lied about consumer prices in April? The most obvious, stupidest way imaginable. By jiggering energy prices so they came in right where a number of professional forecasters knew they would before the fact, while letting the bigger factor - food prices - post its biggest gain in years? Yeah, that's how they'd lie.
Guys, CPI came in below the median estimate because CPI ex-food and energy came in below the median estimate. Now, if you didn't do a forecast of CPI, maybe you could be surprised at the flat showing for energy, but let me assure you, that isn't where the surprise came. If you didn't do a forecast, look at the data and figure out how they work, why exactly are you carrying on about the reality of the data?
Are those numbers adjusted for the relative size of houses? House are a LOT larger now than they were in 1963. I thought that if you corrected for this...the number dropped to about 4%. Unless you have a magic house that grows on its own....you better correct for this.
Homeowners are in big trouble at this year. I don't see anything changing in the near future or even distant future. Some say that we can expect to see mortgage industry recover a bit after the elections but hey, even if that's true... it will take time before things settle down after the elections.
doesn't matter, things are good.
Market moving news. Dow will be up 200+
Energy costs went down by 1.6%. The same statisticians should be brought in to work on the foreclosure stats.
Regarding CPI:
Unadjusted CPI-U was up 0.6% from March to April. Certainly nothing to cheer about.
From BLS Website:
The unadjusted data are of primary interest to consumers concerned about the prices they actually pay. Unadjusted data also are used extensively for escalation purposes. Many collective bargaining contract agreements and pension plans, for example, tie compensation changes to the Consumer Price Index before adjustment for seasonal variation.
The reason news like this doesn't bring the market down is this only effects financials. Financials have already taken such a beating that the only people who hold them think that things will turnaround and they'll make a fortune. They don't worry about the possible 25% drop over the next few months. They look at the possible 200% increase over the next few years.
What they don't realize is the pricing in financials reflects the current business model of greatly reduced loan originations and doesn't include the possible massive losses due to holding toxic loans on their books. The best case scenario isn't a return to 2006 profits. The best case scenario is not being bought out at a near zero price and much lower profits for the next few years.
Energy and food prices way up, yet headline inflation, core inflation and wages are trending down. This is true for a number of other countries I look at as well, which is just another indication to me that the underlying US and global economies are quite weak.
More from BLS:
Average weekly earnings for April 2008 were up 1.9% yoy. CPI inflation for April 2008 was 3.9% yoy.
Also, average weekly earnings declined 1% from March to April.
Superficially, todays CPI report shows good news. The details show otherwise.
The typical American working stiff got poorer in April.
"Inflation. Deflation. This Government is against flation" Herb Stein circa 1975.
Stagflation? nope. Stagflatulation.
1000/day. I wonder how many of those are illegal foreclosures due to Mortgage Servicing Fraud?
A Senate Judiciary subcommittee, knowingly or unknowingly, focused on Mortgage Servicing Fraud in the bankruptcy world last week. http://www.senate.gov/cgi-bin/404s.pl?urlminushost=/hearing.cfm&remote_addr=67.170.2.103&httphost=judiciary.senate.gov - This page cannot be found.
While the hearing helps drag some of the issues into the light it still did not make absolutely clear that bankruptcy doesn't cause Mortgage Servicing Fraud. Mortgage Servicing Fraud causes bankruptcy.
It will be interesting to see if/how much of a spike in litigation there is in CA - and across the country for that matter - alleging fraudulent actions of mortgage servicers.
the "bottom" will not occur until some hedge fund starts buying chunks of these banks. Until then I believe none of the rhetoric espoused by the media.
Those hedgies would LOVE to own a piece of these banks and be able to tell them how to run a biz. That they have not put one damn dime of there own money towards them tells me all I need to know.
When they stop with OPM and use there own the bottom will be in.
Ciao
MS
Bloomberg reports "U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as rates on adjustable mortgages increased . . ."
I thought the multiple Fed rate cuts were supposed to have cured the ARM reset problem.
My conjecture would be that we're still seeing a lot of fall-out from people put into loans they never were able to afford. See for instance the other story on the FBI fraud investigation.
Despite the rise in foreclosures and the acceleration in home price declines Freddie Mac reported a smaller than expected loss...
Go figure.
Oh, and CPI came in lower than expected. Its almost magical.
Maybe they are multiplying the rate of change in food, and energy prices by negative one before dumping them into the CPI formula.
With April's 0.6% CPI inflation rate (not seasonally adjusted), purchasing power will be halved in less than ten years.
In that light, it's no wonder stocks are up.
Option Trading Indicators: Investor's Intelligence - SchaeffersResearch.com
Turbo - "Energy and food prices way up"
So, what about imports from asia and elsewhere, on the weak dollar? The import/export reports have shown for months that imports have been rocketing in the mid single digits. Our economy is services based. We import almost every consumer product. Prices for consumer products are increasing, at least for me. Suppliers & retailers can't be eating the entire difference. Something doesn't add up.
Oh boy! It's time for me to try to catch a falling knife!
There is a piece of land adjacent to two other parcels I already have (where I intend to live out my days), which a specuvestor out-bid me on a while back. This specuvestor is now rapidly approaching default and is willing to talk short sale.
So, CR denizens, what did we all decide was the long term-average rate of appreciation on RE? I'm thinking in terms of the 50 year window. I want to back out to the last non-bubble pricing and make an offer based on that compounded against the average rate of return.
I expect that the lender will not agree, and that it will go to foreclosure, and I'll take another shot at the auction. But, it can't hurt to go through the motions.
What say you?
"what did we all decide was the long term-average rate of appreciation on RE"
Real returns are -1%.
I hope to see a piece of FRE's use of FAS 157 and 159. That's $2.3B of losses that got reversed by discretionary accounting. Add that back in and you get a FNM type loss for the quarter.
Question,
Do all these foreclosures have to go through a court? I know a few people who are trying to foreclose for about a year now and they say that the lender is dragging their feet. Who pays for all processing of foreclosures?
Heh...ok barely...how about nominal?
What say you?
Scott
Depending where you live I'd try 1997 to 2000 prices. But, without knowing anything about the property except it is made of dirt, this could be right or wrong.
OT
this china quake os freaky.
check this sky news graphic
Error
30 million people in one town, 12 million in another.
how do they estimate the number's?
census?
The reason news like this doesn't bring the market down is this only effects financials.
Yeah, good thing there were no real people involved.
This is a nice quote apropos to the post:
Thomas Jefferson said, "If the America people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered."
Again, Realty Trac just looking for hits... real estate tabloids and papparazzi ...
Foreclosures.com, Alexis McGee noting that Sac area foreclosures are DECLINING and you should see the numbers of REOs selling. less than a 2 month supply. Looks like Sac area about a year ahead of many cities...
Scott asked: "So, CR denizens, what did we all decide was the long term-average rate of appreciation on RE? I'm thinking in terms of the 50 year window. I want to back out to the last non-bubble pricing and make an offer based on that compounded against the average rate of return."
I don't know of any sources of land-only RE prices (which sounds like what you're asking about), but I've got median new-home prices from the Census Bureau data going back to January, 1963.
From Jan. 1963 to Jan. 1993 (which would be well before the "bubble" but still offers a substantial 30-year record), the compound annual growth rate was 6.63%.
Including the entire 45-year history, the CAGR is 5.75%.
Sebastia
This may be laziness, but I can't seem to find a simple analysis of how home sales in the past are stacking up to foreclosures now. 60,000 foreclosures in a month seems like a lot, but I'd like to compare to how fast people were buying. In addition, what was the "baseline" sales rate? How would the difference between the baseline and peak sales rate compare to the current foreclosure rate?
Sebastian -
I am asking about land only - this is in very rural Virginia - and those numbers will do.
The sales history:
7/1973 - $12k - 18ac
8/2001 - $120k (18ac + house)
subdivided
2/2002 - $125k - 5ac + house
6/2002 - $60k (13ac)
1/2007 - $140k (13ac)
It's the 13AC parcel I'm after. I think the 2001 price was a little low - distressed owner (literally on life support).
The specuvestor owes $120k, so I'm not holding my breath here.
Such fun.
Yikes! I hope these homeowners are trying/ have tried loan modifications... it might just save their home!
CR,
I dont know if you read in my last post (posted last night in the oil thread) but it appears that Realtytrac really understates NTS and REO compared to Foreclosure Radar or DQ.
Want a good laugh? How does CNBC get away with this nonsense?
Read this:
Why The Government Says Gas Prices Were Lower In April
Posted By:Bob Pisani
Topics:Energy | Investment Strategy | Stock Market
Sectors:Oil and Gas
The government reported that gasoline prices in April were down 2 percent when "seasonally adjusted." How could this be, when we know prices went up at the pump?
Here's how it happened:
1) The actual increase in gasoline prices was 5.6%.
2) But the government statistics indicate that gasoline tends to rise by 7.6% in April.
3) But because they rose less than that--5.6%--gasoline was reported to be down 2 percent "seasonally adjusted"
It has to do with the phrase "seasonally adjusted." The government adjusts numbers to remove the impact of regular events that occur at the same time every year--like increases in gas prices in April, or the effect of cold weather on housing starts.
There is nothing nefarious about this--the question is whether the "adjustments" are fair and accurate.
Tim writes:
Question,
Do all these foreclosures have to go through a court? I know a few people who are trying to foreclose for about a year now and they say that the lender is dragging their feet. Who pays for all processing of foreclosures?
Tim - Foreclosure is the act of taking the collateral to satisfy an unpaid mortgage debt. The borrower cannot institute a foreclosure, only the lender. If the borrower stops making his payments, the lender will almost certainly foreclose. Can you give us a little more detail about this situation? Is the borrower paying the mortgage? If so, the lender has no grounds to foreclose. Is the borrower not paying the mortgate? If so, what is he complaining about? He's living cost-free while the lender drags his feet.
I think Tim's post illustrates one of the major misconceptions that has helped cause our current real estate distress. It seems a lot of borrowers got into this homeownership thing without understanding the basic ground rules - for example, when you sign the note, you are obligating yourself to make regular payments for the term of the mortgage. So many seem to think that when they get tired of homeownership they can contact the bank and just call it off...
It has to do with the phrase "seasonally adjusted." The government adjusts numbers to remove the impact of regular events that occur at the same time every year--like increases in gas prices in April, or the effect of cold weather on housing starts.
i seem to recall someone losing around 6 billion a few years back betting on the winter/summer spread.
Say gas prices had gone up 9.6%. If the normal seasonal rise is 7.6%, I assume this means the gov't would say the increase is only 2%, seasonally adjusted.
These seasonal adjustments are useless in terms of being an accurate measure of reality, but then this is an administration that was bragging about creating its own reality a couple of years ago.
bluestatedon, et al,
So you understand how seasonal adjustment works, and you still don't undestand how seasonal adjustment works?
Energy accouts for 9.7% of CPI, and came in flat. Food accounts for 13.8% of CPI, and showed the biggest gain since John McCain was a baby. That's how BLS lied about consumer prices in April? The most obvious, stupidest way imaginable. By jiggering energy prices so they came in right where a number of professional forecasters knew they would before the fact, while letting the bigger factor - food prices - post its biggest gain in years? Yeah, that's how they'd lie.
Guys, CPI came in below the median estimate because CPI ex-food and energy came in below the median estimate. Now, if you didn't do a forecast of CPI, maybe you could be surprised at the flat showing for energy, but let me assure you, that isn't where the surprise came. If you didn't do a forecast, look at the data and figure out how they work, why exactly are you carrying on about the reality of the data?
It is real nice to be a bitter renter NOW.
LOL!
Some more 911 truth « Aotearoa: a wider perspective
Sound more and more like revolution time is comming near a theater near you ...
I wonder what would happen ...
Scott, rural dirt isn't worth anything more than $1000/acre irrespective of location.
Sebastian,
Are those numbers adjusted for the relative size of houses? House are a LOT larger now than they were in 1963. I thought that if you corrected for this...the number dropped to about 4%. Unless you have a magic house that grows on its own....you better correct for this.
1) The actual increase in gasoline prices was 5.6%.
2) But the government statistics indicate that gasoline tends to rise by 7.6% in April.
Also 7.6% of 2.00= .152
And 5.6% 0f 3.00= .158
So when people see the price increase, they're usually not thinking percentages. They're thinking cash.
Homeowners are in big trouble at this year. I don't see anything changing in the near future or even distant future. Some say that we can expect to see mortgage industry recover a bit after the elections but hey, even if that's true... it will take time before things settle down after the elections.
Zee
Personal loans for bad credit