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Weekly Chartology : "Investors Uncertain About Lower Uncertainty"

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Sat, 11/12/2011 - 12:41 | 1872127 Snakeeyes
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Speaking of charts and uncertainty, here are a few charts from my Willis Report interview on Fox Business yesterday:

Is Housing More Affordable Than In Previous Decades? U.S. Versus Phoenix and Los Angeles

http://confoundedinterest.wordpress.com/2011/11/12/is-housing-more-affor...

These charts highlight that while housing looks more affordable than it has in decades (mostly because of low mortgage rates), it still hasn't fired up the housing market and reduced foreclosures significantly. Why? Investor/borrower uncertainty about house prices and employment. Throw in a lack of credit for mortgages, and we have all positive chart signs but no ignition!

 

Sat, 11/12/2011 - 14:21 | 1872253 slewie the pi-rat
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for sure?

Sat, 11/12/2011 - 18:09 | 1872549 covert
covert's picture

uncertenty is the certency, capitalize on it.

http://expose2.wordpress.com

 

Sat, 11/12/2011 - 19:28 | 1872666 Hohum
Hohum's picture

Does this take into account potential first time home buyers with huge student loan balances?

Sun, 11/13/2011 - 00:37 | 1873093 Pitchman
Pitchman's picture

Snakeeyes said:

"But if housing is the most affordable it has been since 1987, why is housing stuck in a rut?

The answer is the same one I gave a few days ago: it is because 1) unemployment is still high (and stuck in a rut) and 2) there is still enormous inventories of foreclosed properties on bank, GSE and investor balance sheets. So, it boils down to 1) how fast unemployment declines and 2) how fast the foreclosed inventory of housing hits the market and is absorbed." - Per your linked post

Right - Shadow inventory projects 7 years of excess (best info. I can find: Boombustblog.com) 

Your top chart shows a steep decline in the Case-Shiller price index with very little rebound during "the recovery".  And now it's back near the bottom, projecting further weakness (LA is particularly scary).  Combined with historic low rates and an affordability index that's looking like it is reaching the terminal point of a impulse wave (I wish it was more detailed), I have to say things do not look good. 

The scenario of the top chart projects falling prices, Increased unemployment and rising interest rates... not good.  While hosing prices fall peoples wages and their inability to obtain a loan may outpace it.

It is interesting you mentioned DC.  It now has the richest metro communities in the country.  The center sucking the life out of the periphery.  50 years ago that area was Detroit, where today you can buy two houses for the price of a new car. 

Next time someone asks when will prices bottom in housing, look them square in the eyes and tell them sometime between 2015 to 2018

See: Chart of the Day: You Can Buy 2 Detroit Homes for the price of a new car

Sat, 11/12/2011 - 15:19 | 1872330 SheepDog-One
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The rally which no one bought... WELL I mean except for RoboTarder with his new 'blue chip' portfolio of course...traded off the momo-stuffed widows and orphans portfolio and loaded up on IBM. 

Sat, 11/12/2011 - 16:08 | 1872372 Zero Govt
Zero Govt's picture

IBM... a public sector dependent pile of computerised junk

Sat, 11/12/2011 - 16:14 | 1872377 Zero Govt
Zero Govt's picture

so one big dead cat bounce in a big bear market is enough to confuse the finance industry 

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