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Home sales drop 7.2%
According to the National Association of Realtors (NAR), existing-home sales fell in January but are above year-ago levels. Economists polled by Thomson Reuters had forecast that completed sales last month rose almost 1% to a seasonally adjusted annual rate of 5.5 million, up from 5.45 million in December. Existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 7.2% to a seasonally adjusted annual rate1 of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5% above the 4.53 million-unit level in January 2009. Total housing inventory at the end of January fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6% below a year ago, and is at the lowest level since March 2006. The national median existing-home price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38% of sales last month, continue to downwardly distort the median price because they typically are discounted in comparison with traditional homes in the same area. A parallel NAR practitioner survey4 shows first-time buyers purchased 40% of homes in January, down from 43% in December. Investors accounted for 17% of transactions in January, up from 15% in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4% in January.
Economy grows 5.9%
The Commerce Department reported today that the nation’s gross domestic product (GDP), the broadest measure of the nation’s economic activity, grew at an annual rate of 5.9% in the last three months of 2009. Economists surveyed by Briefing.com had forecast that the revision would show the same 5.7% growth that was originally reported a month ago. The solid growth follows a 2.2% annualized increase in the third quarter. Most economists now agree that the recession probably ended at some point last summer. Still, the recovery is widely perceived as fragile. Economists point out that much of the growth at the end of the year came because businesses were no longer slashing inventories. Federal Reserve Chairman Ben Bernanke testified to Congress this week that the central bank will need to keep interest rates low in order to support the economy. The recovery is even less apparent to the typical American. Job losses have continued in all but one month and most economists believe unemployment will stay close to 10% for much of the year. Credit remains tight for small businesses and consumers and the recovery in housing prices is uneven at best. The most recent survey of 5,000 American consumers by the Conference Board found the greatest level of worry about the current state of the economy in 27 years.
Housing recovery off the rails?
As the Federal Reserve nears the end of a critical, year-long program to support the mortgage market, the recent slump in housing is making some analysts uneasy about a recovery that many thought sustainable just a couple months ago. “Housing is at a pivotal, ambiguous point,” says Ted Gayer, co-director of Economic Studies at the Brookings Institution. Recent reports from home sales to mortgage activity has been starkly negative. And, even if some of it can be written off to seasonal patterns, namely weather, the weakness is not what people expected. New homes sales fell to a record low in January, extending a two-month slide; both pending and existing home sales were down in the most recent month; homebuilder sentiment in January fell back to where it was last June, and mortgage applications have fallen three of the past four weeks. No one expected a wonderful housing recovery with unemployment stubbornly high, the consumer balance sheet still in repair mode, and credit conditions stingy, but right now there’s palpable worry about momentum–especially given a string of solid months in mid- to late-2009. Global Insight, for one, says it will probably lower its projections for housing starts and new home sales. The homebuyer tax credit, which now applies to repeat buyers and not just first-time ones, “isn’t panning out, its’ not registering, “say Newport. “Demand for new housing is a lot weaker than we thought it would be.” Some 4.5 million homes are expected to fall to foreclosure this year, following 2.8 million in 2009. In contrast, existing homes sales for the two-year period will average about 5.5 million.
Green jobs mythology
“Green jobs” have become a central underpinning of the Obama administration’s rationale to promote clean energy. But how valid is the assumption that a “clean-energy” economy will generate enough jobs to mitigate today’s high level of unemployment? The Washington Post took a look at the question. Consider just one clean-energy sector, the smart grid, for its job-creation potential. The Obama administration allocated a little more than $4 billion in funding from the American Recovery and Reinvestment Act to the smart grid, most for installing smart meters — digital versions of the spinning electric meters that are omnipresent nationwide. Virtually eliminating human intervention by eliminating the need for meter-reading and transmitting data directly to utilities, smart meters promise more accurate measurement of electricity usage as well as increasingly efficient management of energy production resources. It typically takes a team of two certified electricians half an hour to replace the old, spinning meter.
In one day, two people can install about 15 new meters, or about 5,000 in a year. Were a million smart meters to be installed in a year, 400 installation jobs would be created. It follows that the planned U.S. deployment of 20 million smart meters over five years, or 4 million per year, should create 1,600 installation jobs. Unless more meters are added to the annual deployment schedule, this workforce of 1,600 should cover installation needs for the next five years. Now let’s consider job losses. It takes one worker today roughly 15 minutes to read a single meter. So in a day, a meter reader can scan about 30 meters, or about 700 meters a month. Meters are typically read once a month, making it the base period to calculate meter-reading jobs. Reading a million meters every month engages about 1,400 personnel. In five years, 20 million manually read meters are expected to disappear, taking with them some 28,000 meter-reading jobs. That’s not an increase in jobs. It’s a loss. And this metric is one that follows “greening” everywhere – the sad fact is that to streamline to “greener” technologies eliminates jobs. It’s all fine and well to treat mother nature better, but patently dishonest to pretend it’s a jobs strategy.
DSNews.com — House prices fall
According to the Federal Housing Finance Agency’s (FHFA) seasonally-adjusted purchase-only house price index (HPI), house prices declined modestly in the fourth quarter of 2009. On a seasonally adjusted basis, the fourth quarter HPI was just 0.1% lower than it was in the third quarter of 2009. However, the quarter-to-quarter decline in prices was much more significant when measured without seasonal adjustment. According to FHFA, the unadjusted national decline was 1.5%. FHFA’s seasonally-adjusted monthly index for December was down 1.6% from its November value, and over the year, seasonally-adjusted prices fell 1.2%. Although house prices in the fourth quarter of last year dropped notably from the fourth quarter of 2008, prices of other goods and services during this same period rose 1.9%. Accordingly, the inflation-adjusted price of homes fell approximately 3.1% over the latest year. The all-transactions HPI, which includes data from mortgages used for both home purchases and refinancings, also fell in the fourth quarter of last year. Compared to the previous quarter, the index declined 0.7%, and over the four-quarter period it plummeted 4.7%. FHFA said the difference between appreciation rates in the two indexes is entirely explained by the inclusion of refinancings in the all-transactions index.
Now on to our real estate investing educational section…
Friday File – 15 Minute Real Estate Resolution
This week we spent some time discussion the use of social media marketing for real estate including several specific tips to enhance your LinkedIn profile page. This week’s 15 minute real estate resolution takes it to the next level by suggesting you take the time to adopt an actual strategy for using LinkedIn. Before implementing these advanced level tips be sure you have a firm handle on the basic LinkedIn process.
1. Set-up a “Company Buzz” application. Simple select any keyword desired (ie, short sale real estate) and the Company Buzz application will show you what is being said about the topic on Twitter. It’s easy to get started; simply log in to LinkedIn, click on the “applications” menu to the left then click on “Company Buzz” on the application page. Install the application, allow it to display on your LinkedIn profile page and then type in your Twitter ID or topic keywords etc… All the tweets will then automatically show on your LinkedIn page.
2. Ask & Answer. Questions are a great way to engage others or show what you know. Ask and answer at least one question this week just to get a taste for the application. It’s quick and convenient enough that you might find yourself using it more frequently than anticipated.
3. LinkedIn Lions. There is a lot of debate whether or not someone should join a LIONS group or not. These meta networkers can certainly raise your ratings but LinkedIn has also suggested a rather negative position in relation to these groups. On the other hand, open networking has been shown to work especially when used properly and not abused. For more information on the general LinkedIn LIONS visit http://finance.groups.yahoo.com/group/linkedinlions/ or perform a search for real estate specific LIONS groups in your area. Remember, LInkedIn has now limited the total number of connections to only 30,000 so use discretion.
See you at the top!
Chris McLaughlin
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Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
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