Paper Economy
This 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 (Source: Mortgage Bankers Association )
A look at the latest Mortgage Bankers Association data
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 increased 9 basis points since the last week to 5.03% while the purchase application volume declined 7.3% and the refinance application volume decreased 8.9% over the same period.
It’s important to recognize that despite the Federal Reserve’s “quantitative easing” measures and record low interest rates, the purchase application volume now sits at the lowest reading since 1997.
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.
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S&P/Case-Shiller home price indices for December 2009 reported that the non-seasonally adjusted Composite-10 price index declined slightly since November further indicating that the government sponsored housing bounce has drawn to a close. (Analyst: SoldAtTheTop)
US housing bounce officially over
Tuesday’s release of the S&P/Case-Shiller (CSI) home price indices for December 2009 reported that the non-seasonally adjusted Composite-10 price index declined slightly since November further indicating that the government sponsored housing bounce has drawn to a close.
It’s important to remember that the CSI data is lagged by two months and that today’s results represent the trend of prices paid from home sales closed between October-December of 2009.
Now that the strongest selling months have been reported, look for all remaining CSI releases until early spring to continue to indicate notable price weakness coming from typical seasonal declines as well as extra-seasonal declines as a result of reduced demand from activity that was “stimulated” forward into the summer and early fall by the tax sham.
Also, looking at the 1990s-era comparison charts below its obvious that even after the main downward thrust has been reached, the housing markets have a long tough slog ahead with the ultimate bottom likely many years out…. Or if we are currently experiencing the Japanese model… decades out.
Further, is important to remember that the 90s housing recovery played out against the backdrop of a truly unique period of growth in the wider economy fueled primarily by novel and ubiquitous technological change (cell phones, internet, personal computers, telecommunications, etc).
Today, we may not be so lucky.
The 10-city composite index declined 2.41% as compared to December 2008 while the 20-city composite declined 3.08% over the same period.
Topping the list of regional peak decliners was Las Vegas at -55.54%, Phoenix at -50.52%, Miami at -47.07%, Detroit at -42.87% and Tampa at -41.67%.
Additionally, both of the broad composite indices show significant peak declines slumping -30.10% for the 10-city national index and -29.35% for the 20-city national index on a peak comparison basis.
To better visualize today’s results use Blytic.com and search for “case shiller”.
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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.
Major US work stoppages (1947-2009) (Bureau of Labor Statistics)
The diminishing risk of union strikes
Looking at the latest annual release of the Bureau of Labor Statistics Major Work Stoppages report, it’s a wonder workers unions hold any sway over politics or policy these days.
Certainly, as the data shows, union strikes and lockouts are no longer posing any functional risk to private industry. (Click here for a larger image of the chart.)
For the full year 2009, there were only five major strikes (strikes affecting 1000 or more workers) three of which consisted of state and local government workers with the other two affecting only 4000 private workers over relatively short periods resulting in a total of 73,500 idle work days.
Although this is by far the lowest number of major work stoppages on record, looking back at the trend of the last 25 years, the result is not very surprising.
Of course, it’s important to consider the fact that many of the jobs traditionally associated to the periods of greater union activity seen between the 40s – 70s essentially don’t exist anymore.
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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.
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