News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

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  1. Apartment Buildings on Solid Ground – YouTube

    Freddie Mac’s Vice President and Chief Economist, Frank Nothaft, gives a video preview of the September 2013 U.S. Economic and Housing Market Outlook

    The source …

  2. Why did the Fed delay tapering of bond purchases? – CBS News News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

    (MoneyWatch) Despite widespread expectations that the Federal Reserve would begin reducing the stimulus it provides the economy through quantitative easing, the central bank said today that it will maintain its current pace of Treasury and mortgage bond purchases.

    Four possible reasons explain why the Fed decided to delay tapering the $85 billion-a-month program.

    Fiscal policy. …

    Inflation and unemployment. …

    The Fed is gun-shy. …

    Capital flight from developing markets. …

    We disagree with Professor Thoma’s position that continuing the QE won’t do much of anything for the US economy. The fact is that the Fed is financing the economy, and it doesn’t have to collect on the US bonds if it doesn’t want to.

    You heard it here first, folks.

    Read the source article …

  3. Two Scatterplots Regarding Labor Market Weakness | Jared Bernstein | On the Economy News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

    Great post:

    First, it’s pretty well understood at this point that the tick down in unemployment last month, from 7.4% to 7.3% was a function of weakness not strength: the rate fell not because more folks got jobs but because more folks left the job market. But will they come back?

    This kind of question feeds into the important “structural vs. cyclical” debate among those of us monitoring these developments. Is the decline in the labor force a negative, yet temporary, side effect of the underperforming economy/job market, another casualty of the residual of the great recession and our lousy, contractionary fiscal policy? Or is it a structural decline that will persist when (if??) the cyclical weakness is finally behind us, at which point the labor force will reverse course as increased labor demand pulls folks back in?

    I thought these Federal Reserve economists did a nice bit of simple, clear analysis of this question in this note from a few months back.

    It’s worth repeating and repeating that we (Americans) need more and well-targeted fiscal spending (government spending) during the recovery to speed it up.

    The private sector is still deleveraging from debt that is much, much larger than the government’s. If both the private and public sectors refuse to spend during the recovery, it will take a very, very long time, if ever, to get out of the huge hole that risk-management-averse investment bankers got the whole world in.

    Read the source article …

  4. Office Vacancies Remain Elevated | Distress content from National Real Estate Investor News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

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    With the labor market unable to generate significant office-using employment, demand for space remains muted. It is therefore unsurprising that national vacancies have not declined much since they peaked at 17.6 percent in late 2010. Vacancies refused to budge during the second quarter, remaining at 17.0 percent. This is a nominal slowdown from the prior quarter’s 10 basis point decline in vacancy.

    The pace of the office sector’s recovery has been very weak: on a year-over-year basis, the vacancy rate fell by a scant 30 basis points. National vacancies remain elevated at 450 basis points above the sector’s cyclical low, recorded in the third quarter of 2007 before the recession began that December.

    It’s the jobs.

    Read the source article …

  5. Uh oh. People buying houses fear rising prices News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

    How should we define a housing bubble?

    There’s no clear cut answer. The term “bubble” means different things to different people. The classic housing 2004 housing bubble paper by Karl Case and Robert Schiller explains it this way (emphasis added):

    The term “bubble” is widely used but rarely clearly defined. We believe that in its widespread use the term refers to a situation in which excessive public expectations of future price increases cause prices to be temporarily elevated. During a housing price bubble, homebuyers think that a home that they would normally consider too expensive for them is now an acceptable purchase because they will be compensated by significant further price increases. They will not need to save as much as they otherwise might, because they expect the increased value of their home to do the saving for them. First-time homebuyers may also worry during a housing bubble that if they do not buy now, they will not be able to afford a home later. Furthermore, the expectation of large price increases may have a strong impact on demand if people think that home prices are very unlikely to fall, and certainly not likely to fall for long, so that there is little perceived risk associated with an investment in a home.

    So where do we stand today? Well people buying homes are cite future price increases as one of the “key factors” motivating them to buy. The most recent survey by the real-estate company Redfin found that almost one third of buyers are motivated by rising prices.

    That’s an admirable attempt and necessary, as we’ve said many times.

    Bubbles can be local without being regional or national.

    They are also awareness dependent. A boom town isn’t necessarily a bubble if the people realize there will be a time when the “gold” no longer pans out {when the major industry(s) supporting the boom must shut down or slow considerably}.

    Read the source article …

  6. Richmond City Council Approves Launch of Eminent Domain Trial | Mortgage News | Daily National and State Headlines News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

    The issue of eminent domain law has been widely discussed over the past few weeks, since news of Mayor Gayle McLaughlin proposed a process of seizure through which residents of Richmond, Calif. would receive a break from underwater mortgages. Working with Mortgage Resolution Partners to broker the eminent domain deals, the city of Richmond was attempting to complete the sale of various underwater homes using eminent domain as a way to give private investors a discount and the city could begin refinancing its citizens’ mortgages into brand-new loans, with better rates and values.

    Early Wednesday morning, Richmond’s City Council voted 4-3 in favor of Mayor McLaughlin’s proposal, thus allowing the outlined plan to go into effect.

    “The use of a municipality’s power of eminent domain to seize mortgage loans raises profound Constitutional and other legal concerns,” said Michelle Korsmo, chief executive officer of the American Land Title Association (ALTA). “It is clear that the recent proposal in Richmond, Calif., and subsequent legal filings are likely the start of a long and drawn out legal process.”

    The eminent domain seizure plan, in effect, could threaten the market for private-label mortgage-backed securities, which could result in a “domino effect” of sorts in the mortgage industry, should this eminent domain seizure experiment work in Richmond, where the unemployment rate is slightly higher than the state average, could it lead to a domino effect in other cities plagued by the housing crisis blight?

    A federal judge has also thrown out a law suit by banks against the plan. More on that later.

    Read the source article …

  7. Housing bust’s recovery hampered by tight credit News Alerts. Sept. 19, 2013. Morning Edition. #RealEstate

    Echos of past bubbles

    Loose lending standards weren’t the only factor driving the bubble.

    An even bigger factor may have been the widespread expectation that home prices would only go up, says Harvard economics professor Edward Glaeser.

    The same optimism has long fueled real estate bubbles in America, including the frontier land boom of the 1790s, the Alabama land boom in 1820, the skyscraper craze of the 1920s and the Southern California housing boom in the 1990s, he says.

    “It’s the same American instinct to gamble on land,” Glaeser says, noting that even George Washington was a big land speculator.

    It’s a rather detailed article.

    Read the source …