Saturday, June 29, 2013

The Internet is Truly Awesome (Leonard Bernstein Mahler edition).

David Denby wrote a nice piece in the New Yorker a little over a year ago about this ten most "perfect" orchestra recordings of all time.  Coming in at Number 5 was Leonard Bernstein's Mahler 7 (the second time through) with the New York Philharmonic. (FWIW, I know seven of his choices, and love them all).

If one looks it up on the NY Phil's website, one finds a link to Lenny's marked up score of the piece, allowing us to see, among other things, directions from the composer he really wanted to make sure got  emphasis.  As such, the internet allows us to see how Leonard Bernstein went about thinking about one of the great, quirky pieces of all time, at any time we wish.

This is truly awesome.

Thursday, June 27, 2013

Pending Home Sales: May 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for May showing that pending home sales improved notably with the seasonally adjusted national index climbing 6.7% from April and increasing 12.1% above the level seen in May 2012.

Meanwhile, the NARs chief economist Lawrence Yun is suggests the spike in contract activity is likely the result of sidelined buyers now jumping to buy before interest rates, increasing for several weeks now, rise further:

"Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher, ... This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand."

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Extended Unemployment: Initial, Continued and Extended Unemployment Claims June 27 2013

Today’s jobless claims report showed a decrease to both initial and continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by 9,000 to 346,000 claims from 355,000 claims for the prior week while seasonally adjusted “continued” claims declined by 1,000 claims to 2.965 million resulting in an “insured” unemployment rate of 2.3%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.70 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.77 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.48 million people on state and federal unemployment rolls.


Tuesday, June 25, 2013

John Roberts is supposed to be a smart man.

But he makes a specious argument.  He says that because in the presence of Voting Rights Acts, there is no disparity in voter turn-out, there is no need for a Voting Rights Act.  Huh?

S&P/Case-Shiller: April 2013

Today's release of the S&P/Case-Shiller (CSI) home price indices for April reported that the non-seasonally adjusted Composite-10 price index rose a notable 2.63% since March while the Composite-20 index also increased 2.52% over the same period.

The latest CSI data is continuing to demonstrate significant resiliency compared to past years, as prices remained stable through the typically slow winter and early spring period and now appear to be rising notably into the more active late spring.

The 10-city composite index increased 11.58% as compared to April 2012 while the 20-city composite increased 12.05% over the same period.

Both of the broad composite indices show significant peak declines slumping -26.81% for the 10-city national index and -26.22% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com to view the full release.

Monday, June 24, 2013

The Chicago Fed National Activity Index: May 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economy remained near contraction in May with the index improving to -0.30 from a level of -0.52 in April while the three month moving average declined to a level of -0.43.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

Sunday, June 23, 2013

Are models that assume linear utility useful?

I just saw a paper on how the desire of households to match with particular houses could explain housing market dynamics--in particular why house prices are more volatile than incomes.

Performing such an exercise is very difficult, and requires simplifying assumptions.  One of the most important simplifying assumptions in the paper is that utility is linear--that people value their last unit of consumption just as much as their first.  This assumption is clearly wrong--we know that marginal utility diminishes in consumption.  Yet the assumption was necessary to make the model tractable.

So do we know more about the world because of the model or not?  I really don't know.

Thursday, June 20, 2013

If in 1987 you bought the average house in the average place...


…you have about broken even relative to the consumer price index. The Case-Shiller National Index for March 1987 was 62.03; for March 2013, it was 136.70.  The Consumer Price Index in March 1987 was 112.7; in March 2013 it was 232.77.  So the Case-Shiller Index has risen by  120.4 percent in 26 years; the CPI has risen by 106.5 percent.  So in inflation adjusted terms, the average house in the average place has risen by 13 percent over the past 26 years, or a little less than half of one percent per year.
[At the suggestion of Austin Kelly, I looked to see what would happen if I used the unit-weighted FHFA index instead of the value-weighted Case-Shiller index.  I found that based on FHFA, real house prices rose by 11 percent since 1991 (the first year for which data are available), or a little less than .5 percent per year.  So even though the index is different, the result is the same.]
Reposted from Forbes.

Existing Home Sales Report: May 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for May showing an increase in sales with total home sales rising a notable 4.2% since April and climbing 12.9% above the level seen in May 2012.

Single family home sales also improved climbing a whopping 5.0% from April and rising 12.7% above the level seen in May 2012 while the median selling price increased a notable 15.8% above the level seen a year earlier.

Inventory of single family homes increased from April to 1.98 million units but still remained 9.2% below the level seen in May 2012 which, along with the sales pace, resulted in a monthly supply of 5.2 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.



Extended Unemployment: Initial, Continued and Extended Unemployment Claims June 20 2013

Today’s jobless claims report showed an increase to initial unemployment claims and a decrease to continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims increased by 18,000 to 354,000 claims from 336,000 claims for the prior week while seasonally adjusted “continued” claims declined by 40,000 claims to 2.951 million resulting in an “insured” unemployment rate of 2.3%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.68 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.77 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.46 million people on state and federal unemployment rolls.


Reading Rates: MBA Application Survey – June 19 2013

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 as well as the volume of 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 (from FHA and conforming GSE data) rose again climbing 3 basis points to 4.01% since last week while the purchase application volume decreased 3% and the refinance application volume decreased 3% over the same period.

Rates have risen steadily for the past few weeks seemingly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.  Only time will tell if this is a trend or simply an aberration.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




Tuesday, June 18, 2013

Could someone explain the market failure that protecting car dealerships solves?

The Wall Street Journal has a good story today about how car dealerships are (successfully) lobbying legislatures to ban Tesla Motors from marketing their cars directly to consumers.  GOP legislators, who get the willies about regulation that actually solves real problems, are on board with supporting protectionist policies for auto dealerships.

Does anyone really think that the industrial organization of the automobile retail industry works well?  My family buys a car every five years or so, and our experience is that no one tries to exploit asymmetric information like auto dealers.  I have lots of reasons to believe that our experiences are not unique.

What amazes me is that even in the age of the internet, when one can use sites like Edmunds to figure out what to pay for a car, dealers start out by assuming that the consumer is stupid, hope they get an absurdly marked up price, and only get reasonable when they find out their customer actually knows something.

Elon Musk is a visionary in many ways.  With the Tesla, he might make two important contributions--he might free  from petroleum, and he might free us from car dealers.




New Residential Construction Report: May 2013

Today’s New Residential Construction Report showed mixed results in May with an 6.8% increase to total housing starts and a 3.1% decline to total housing permits while single family housing permits improved on the month.

Single family housing permits, the most leading of indicators, increased 1.3% from April to 622K single family units (SAAR), and  increased 24.6% above the level seen in May 2012 but still remained well below levels seen at the peak in September 2005.

Single family housing starts increased 0.3% from April to 599K units (SAAR), and rose 16.3% above the level seen in May 2012 but still remained well below the peak set in early 2006.


Monday, June 17, 2013

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings June 2013

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity improved notably in June with the composite HMI index climbing to 52, the highest level seen since early 2006, while the "buyer traffic" index also improved, rising to a level of 40.

It's important to note that June firmly reversed the weakening trend seen earlier in the year, suggesting that activity in the new home market has picked up notably and is remaining strong even beyond the traditionally strong first quarter period.

Looking at the data, it is fairly clear that the last year of results indicate a major change in builder sentiment likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory and a more balanced monthly supply.




Wednesday, June 12, 2013

Skaneateles Real Estate - The Long Overdue Update

I knew it had been a while, but I didn't think it was a month!  I have been busy, which is good.  I do like looking back this far because it shows trends more easily.

There are currently (only) 92 single family homes listed in the Skaneateles area of the multiple listing service.  Of these, 28 are in the Village and 29 are considered waterfront.

Since the last update on May 17th, 17 properties have come on the market.  Only one is a re-list.  Nine are waterfront, and seven are in the Village.  Three are multi-million dollar properties.  The new listings range from $279,000 (my Highland Ave. listing - a steal!) to an almost 8 million dollar waterfront estate.  Four of the Village homes are stately and large, and they range in price from $500,000 to almost $700,000.

Turning to the homes that have offers, there are 29 in this category.  Some are waiting for other homes to sell, but the vast majority have offers contingent on financing or attorneys' legal work.  Where the median price was somewhere around $600,000 in the new listings, the contingent homes' median price is about $300,000, or half that number.  A third are considered waterfront, similar to the percentage of all listings.

With all these high numbers being bandied about I expected to find a goodly number of closings, as well.  Instead I found five, all of them selling below $400,000.  In this case the median list price was in the mid-$200,000.  This means simply that, as we all know, the lower-priced homes sell quicker.  The pool of buyers is greater than the million dollar home-buyers.

We now have 31 homes that have sold so far this year.  Last year was a record-smashing year, and by this time there were 38 closings.  Interestingly enough, the median price was just about the same.  But there is a slow-down, and it can be felt in the number of showings requested in the past month.  There shouldn't be - we just re-financed our house to take advantage of the 2.9% rates because they are going up.  I believe everyone should get out there and BUY!  There are some fantastic homes in our wonderful Village, Town and on the lake!

Reading Rates: MBA Application Survey – June 12 2013

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 as well as the volume of 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 (from FHA and conforming GSE data) jumped again climbing 7 basis points to 3.98% since last week while the purchase application volume increased 5% and the refinance application volume increased 5% over the same period.

Rates have risen steadily for the past few weeks seemingly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.  Only time will tell if this is a trend or simply an aberration.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




Tuesday, June 11, 2013

SNAP Food Stamp Participation: March 2013

As a logical consequence of the prolonged economic downturn, participation in the federal food stamp program is continuing to rise.

In fact, household participation has been climbing so steadily that it has dwarfed the last peak (which looks like a minor blip by comparison) set as a result of the immediate fallout following hurricane Katrina.

The latest data released by the Department of Agriculture indicated that in March, a notable 168,888 individual recipients were added to the food stamps program with the current total increasing 2.85% on a year-over-year basis.

Individuals receiving food stamp benefits increased to 47.72 million which, as a ratio of the overall civilian non-institutional population now stands at a whopping 19.48% of the population.

Households receiving food stamps benefits increased by 109,731 to 23.11 million households with the current total rising 3.86% above the level seen a year earlier

As participation continues to swell, so too has the total nominal benefit cost climbing 2.58% on a year-over-year basis to $6.34 billion for the month.

Friday, June 7, 2013

Envisioning Employment: Employment Situation May 2013

Today’s Employment Situation Report indicated that in May, net non-farm payrolls increased by 175,000 jobs overall with the private non-farm payrolls sub-component adding 178,000 jobs while the civilian unemployment rate increased slightly to 7.6% over the same period.

Net private sector jobs increased 0.16% since last month climbing 1.95% above the level seen a year ago but remained 1.62% below the peak level of employment seen in December 2007.

Recovery-less Recovery: Unemployment Duration May 2013


Today's employment situation report showed that conditions for the long term unemployed were mixed in May while still remaining distressed by historic standards.

Workers unemployed 27 weeks or more increased to 4.357 million or 37.3% of all unemployed workers while the median term of unemployment declined to 17.3 weeks and the average stay on unemployment increased to 36.9 weeks.

Looking at the charts below (click for super interactive versions) you can see that today’s sorry situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s, long considered by economists to be the worst period of unemployment since the Great Depression.



On The Margin: Total Unemployment May 2013

Today’s Employment Situation report showed that in May “total unemployment” including all marginally attached workers declined slightly to 13.8% while the traditionally reported unemployment rate increased to 7.6%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

Wednesday, June 5, 2013

ISM Non-Manufacturing Report on Business: May 2013

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity continued to expand in May with the overall non-manufacturing index climbing to 53.7 from last months reading of 53.1.

At 56.5 the business activity index improved since last month climbing 2.73% above the level seen a year earlier.

This month, service industry respondents are sounding mixed to flat with some respondents citing improving activity but also uncertainty and lingering weakness:


"Sales remain slightly higher than the same period last year, but still below pre-recession sales figures." (Public Administration)

"The job order market slowed in April/May. We saw a slight increase in employment due to working down the order/inquiry backlog." (Professional, Scientific & Technical Services)

"Business seems to be improving through the second half of the year." (Information)

"Fairly stable the last month; overall optimistic going forward." (Accommodation & Food Services)

"The flat sequential sales — which began in January 2012 — are still continuing. At this point, we do not predict any lift in the foreseeable future. We do not see any negatives; it appears that business has reached its 'cruising altitude' and is staying there." (Wholesale Trade)

"Healthcare reform and sequestration are having a strong negative impact on business." (Health Care & Social Assistance)

"North America continues to improve at a modest rate. Europe is still a problem for global recovery." (Mining)


ADP National Employment Report: May 2013

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in May as private employers added 135,000 jobs in the month bringing the total employment level 1.62% above the level seen in May 2012.

Perusing the rest of the data in the ADP dataset you can see the the economy is currently showing the most growth for small to mid-sized service providing jobs with goods-producing jobs remaining near trough levels.

Look for Friday’s BLS Employment Situation Report to likely show somewhat similar trends.

Reading Rates: MBA Application Survey – June 05 2013

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 as well as the volume of 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 (from FHA and conforming GSE data) jumped a notable 16 basis points to 3.91% since last week while the purchase application volume declined 2% and the refinance application volume declined 15% over the same period.

Rates have risen steadily for the past few weeks seemingly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.  Only time will tell if this is a trend or simply an aberration.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).