Morning Report – House prices still in historical value range 8/30/13

Posted on August 30, 2013 by Brent Nyitray

Vital Statistics:

	Last	Change	Percent
S&P Futures	1637.3	0.6	0.04%
Eurostoxx Index	2737.1	-21.3	-0.77%
Oil (WTI)	107.9	-0.9	-0.83%
LIBOR	0.26	-0.002	-0.65%
US Dollar Index (DXY)	82	0.055	0.07%
10 Year Govt Bond Yield	2.76%	0.00%
Current Coupon Ginnie Mae TBA	104.1	0.3
Current Coupon Fannie Mae TBA	103.3	0.0
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.47

Markets are flat after disappointing income and spending data. Bonds and MBS are more or less flat. Expect a relatively dull day, trading wise as most of the Street will be on the L.I.E. by noon.

The BEA released July personal income and spending data this morning and it was below expectations. Both rose .1%, below expectations and below June data. Since consumption is 70% of the US economy, these numbers suggest that yesterday’s 2.5% GDP estimate for 2Q was more of a fluke than a change in trend.

Cash purchases accounted for 40% of all sales as volume increased to an estimated 5.5 million pace in July, according to RealtyTrac. The national median sales price was $174,500 in July, up 4% from June and up 6% from a year ago. Median income is estimated to be at $52,100 as of the end of June, putting the median house price to median income ratio at 3.35. Pre-bubble, this ratio tended to oscillate in a range of 3.15 – 3.35, before peaking at 4.48 during the bubble. Even with the increase in house prices over the past year, housing still remains fairly valued compared to historical norms and affordability is quite high due our (still) quite low interest rates.

Budget talks between the WH and Republicans seem to be going nowhere. The President wants to replace the sequester with more taxes, which is a non-starter for Republicans. The two sides seem far apart, but how much of this is just posturing for the various bases. If Republicans dig in their heels on de-funding obamacare and Obama digs in his heels for more taxes, then we could have a problem.

Dr. Cowbell weighs in on the recent QE-withdrawal driven slump in the emerging markets. Unsurprisingly, he concludes that the problem is deregulation, which is surprising given that developed markets all over the world tightened regulation over the financial system half a decade ago. He goes on to discuss how the Asian Tigers rebounded so quickly from the crisis, which he attributes to a drop in their currencies. What is the difference between Japan’s recovery from a deflated asset bubble and, say, Indonesia’s? Hint: One followed his Keynsian prescription to the letter and the other had austerity imposed on it by the IMF.

Filed under: Morning Report |

19 Responses

novahockey, on August 30, 2013 at 8:00 am said:

Troll mentioned Friday link-bait.

here’s a good one.

Pandas had a good run, but it’s time to let them die.
http://www.bloomberg.com/news/2013-08-27/why-i-hate-pandas-and-you-should-too.html

“Here’s a species that of its own accord has gone down an evolutionary cul-de-sac,” Chris Packham, a British author and wildlife activist, said in 2009. He argues that “the panda is possibly one of the grossest wastes of conservation money in the last half-century.”

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Troll McWingnut or George, whichever, on August 30, 2013 at 8:19 am said:

I was just thinking it was time for a “Your Doing It Wrong” column by Dr. Cowbell, and no shit, there it is.

He never fails to fail.

Hey, how’s MMfA gonna defend President Go it Alone when he goes to war without UN permission?

Wasn’t a President Kerry promising to defer all foreign policy decisions to a UN type body in aught four? Guess he decided to fuck it.

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Troll McWingnut or George, whichever, on August 30, 2013 at 8:59 am said:

Tweet of the Day!

@JohnEkdahl: The UK bails on us and Obama is meeting with fucking Magic Johnson instead of his foreign policy team discussing Syrian response.

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jnc4p, on August 30, 2013 at 9:37 am said:

“Hey, how’s MMfA gonna defend President Go it Alone when he goes to war without UN permission?”

Go read the PL. It’s Bush’s fault for destroying US credibility.

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jnc4p, on August 30, 2013 at 10:25 am said:

Michi – I read your posts attempting to educate the PL on the difference between WMD’s and unconventional weapons.

Now you know how Nova and John/Banned feel.

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novahockey, on August 30, 2013 at 10:44 am said:

jnc — FYI, not that it matters, but i’m taking a break from PL.

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yellojkt, on August 30, 2013 at 12:34 pm said:

The Panda Dilemma has been voiced by others. There is no sense in preserving a species so determined to make itself extinct. Charismatic megafauna get a disproportionate amount of attention.

At one time I had read that nobody has ever witnessed giant three-toed tree sloths mate in the wild because it happens so infrequently and covertly.

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yellojkt, on August 30, 2013 at 12:38 pm said:

Dr Cowbell also mentions that the rupee in India is falling as well. We are losing the race to devalue our currency faster than the other nations. We can’t have a decent export driven recovery with that kind of thing going on. Not that I know what India wants to buy from us.

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Brent Nyitray, on August 30, 2013 at 2:14 pm said:

Re the rupee, I think this is fast money exiting emerging markets ahead of the end of QE. I don’t see it as a permanent thing.

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Michigoose, on August 30, 2013 at 2:59 pm said:

jnc: At least it got me a couple of new epithets–I’m a weapons nerd AND a tool. I don’t think they quite measure up to godless, soulless Libertarian, though.

Why Sheila Bahr?

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jnc4p, on August 30, 2013 at 3:35 pm said:

Because of her record as head of the FDIC and I believe she showed good judgement in pushing back against Geithner regarding Citibank, Wachovia, and Wells Fargo.

I believe she would be a more aggressive, and independent, regulator of the right things.

http://finance.fortune.cnn.com/2012/09/20/bair-bull-horns/

http://dealbook.nytimes.com/2012/09/24/ex-regulator-has-harsh-words-for-bankers-and-geithner/

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- markinaustin, on August 30, 2013 at 3:42 pm said:
  
  Bair. +1.
  
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- ScottC, on August 30, 2013 at 6:19 pm said:
  
  jnc:
  
  I believe (Bair) would be a more aggressive, and independent, regulator of the right things.
  
  I think you must mean the politically correct things. As I’ve pointed out before, the things Bair prefers banks do are no less risky than the things she wants to demonize.
  
  And she’s shown herself willing to demagogue on people’s ignorance like the worst politician. She’s just a typical, power hungry regulator.
  
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Troll McWingnut or George, whichever, on August 30, 2013 at 4:01 pm said:

Like I keep saying, there are NO secrets.

http://joshuafoust.com/extraordinary-court-statement/

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Michigoose, on August 30, 2013 at 4:37 pm said:

Re Sheila Bair:

The world really should be more perfect sometimes.

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Troll McWingnut or George, whichever, on August 30, 2013 at 4:59 pm said:

Snort.

@seanmdav: I’m not old enough to remember the last time we got militarily involved w/ a troubled former French satellite, but I know it ended poorly.

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Michigoose, on August 30, 2013 at 5:44 pm said:

McWing:

I’m not old enough to really remember it, either, but I think he’s right!

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Michigoose, on August 30, 2013 at 8:39 pm said:

I just got done watching Sec. Kerry’s speech.

I don’t buy a single word of it, sad to say.

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Michigoose, on August 30, 2013 at 11:59 pm said:

Phillip Agnew of Dream Defenders. He was scheduled to talk in Washington, but got cut due to time. So he decided to record his two-minute speech and post it on youtube. Well worth the two minutes (-ish) to watch.

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