April 2012 U.S. Economic Fundamentals

[Ally]

Home prices in these 9 cities just hit new post-crisis lows





From the latest Case-Shiller, is your city among those that just hit a new post-crisis low for home prices? `While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirm that, broadly-speaking, home prices continued to decline in the early months of the year,` says David M. Blitzer, Chairman of the Index Committee at S&P Indices. `Nine MSAs -- Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa -- and both Composites hit new post-crisis lows. Atlanta continued its downward spiral, posting its lowest annual rate of decline in the 20-year history of the index at -17.3%. The 10-City Composite declined 3.6% and the 20-City was down 3.5% compared to February 2011.





Read the full article here.

 

[Ally]

Slowing U.S. growth leaves investors baffled





After a period of some market buoyancy followed by the declines of the past two weeks - with Apple falling 10 per cent from its record high - and tepid GDP numbers released in the U.S. on Friday, it's no wonder investors and market watchers are baffled as to whether they should be feeling upbeat or discouraged.




The U.S. GDP numbers told an interesting story.




The annualized growth of 2.2 per cent for the first quarter was below analyst consensus and was a drop from three per cent in the previous quarter. The positive news was that consumers were spending in the first quarter of the year, coming in at 2.9 per cent growth on an annualized basis instead of the 2.3 per cent analysts had been expecting.






Read the full article here.

 

[Ally]

Bankers are still wrecking housing market fundamentals




Regardless of the recent bullish stories on the housing market (examples here, here, here and here), housing market fundamentals are lousy. Demand in the last decade was wildly distorted by banker abandonment of underwriting and appraisals. Now bankers are worsening the crash they created. As a result, prices will just keep falling, and foreclosures cannot lead to clearing the market (regardless of what some say). Foreclosures can only make the problems worse.






Market Distortion From Excess Demand in Bubble Years


As a first step to seeing the problems, let`s get real about how profoundly market-distorting that lender-inflated bubble was. People who could not afford to buy homes, period, were nonetheless given loans, artificially expanding the number of people expressing demand. In addition, people who could have afforded a house, if not the house they purchased, expressed their natural demand in the `wrong` segment of the market. Both distortions combined to spike prices far higher than natural demand would have driven them.





Read the full article here.