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Written by John Truccillo
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For an individual homeowner, prices mean a lot, because they will decide the sum of his wealth when he sells his home. But for the market as a whole, prices are a distracting and misleading indicator. There are two basic reasons for this. First, the state of the market depends on units—sales and listings—since they describe the current relationship of supply and demand in any local market and for the nation as a whole. Price is a result of this relationship, not the cause. Measures like the NAR’s Existing Home Sales, its Pending Sales Index, and the Department of Commerce’s New Home Sales series explain far more about real estate than any price does. |
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Written by John Truccillo
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This has been a good week for the economy. The jobs report for November was better than expected (unemployment rate down to 10, only 11,000 jobs lost) and Bank of America is paying back $45 billion in TARP funds to the government. In addition, the Beige Book, the monthly compilation of business condition from the regional Federal Reserve banks, carried remarkably upbeat news. So why are we still feeling so bad? Why was Black Friday so ho-hum? And what will the future hold? |
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Written by John Truccillo
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The Good
Most of these are in the real estate sector, as they should be, since real estate began the recession and it will end it as well. Existing home sales, new home sales and pending sales have all risen steadily for the past six months, suggesting that the housing slump is over. The fact that a great many of these sales are distressed properties is not an issue since a sale of any kind represents a home removed from inventory and thus an improvement in the market. But there are others. The Dow-Jones Industrial Average bottomed out in March and has risen since. Historically, the Dow turns six months before the economy, which should mean that the recession is ending in September. Similarly, the Index of Leading Indicators in July was 12 percent above its low point, another change that historically coincides with the end of a recession. Finally, consumer confidence has risen significantly from its low, suggesting that consumers are ready to come back into the market. |
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Written by John Truccillo
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The Recovery, Part I: The Economy This is a commentary dealing with how and when we will get out of the current mess. This first part deals with the economy since it is the easiest of the four. Others will deal with real estate, finance and the unraveling of the stimulus when the economy does recover. |
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Written by John Truccillo
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I suppose we could start out with the old Dickens line about “the best of times…worst of times” but, when it comes to the economy, that would only be half right. From housing downturn to financial meltdown to economic recession, the past three years have been disaster, and 2008 was t he worst of them all for both the United States and the world. All the excesses, missteps and flat out fraud of the decade came to fruition in 2008, with the economy in recession and losing nearly three million jobs, the Dow down a third and major industries coming hat in hand to beg for handouts. No, I don’t think we want
to dwell on 2008 any more than we must. |
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