Housing’s Dilemma: There’s Not Enough To Buy – CNBC

UK housing market heading for ‘lost decade’ – Telegraph

Existing Home Sales: Is NAR Data Correct for January? – Global Economic Intersection

 At this point there is no doubt sales volumes are increasing – but the improvement originally conveyed in December makes the January “improvement” a step backwards.

Courts to Hasten Efforts to Prevent Foreclosures – NYT

New York State’s courts, frustrated by delays in thousands of foreclosure cases, are planning to speed them along in a new program that would give judges added control and require banks to send officials who have the power to alter loans to keep people in their homes.

Why Renters Rule U.S. Housing Market (Part 2) – Gary Shilling

Housing market perks up, but prices are still falling – MSN

Economy

It’s Now All Gas Prices, All the Time - Tim Iacono

With gasoline consumption trending down, motorists wonder why price keeps rising – McClatchy

‘EU Has Not Yet Faced the Whole Sad Truth About Greece’ – Spiegel

55 Interesting Facts About The U.S. Economy In 2012 – Economic Collapse

#24 The number of children living in poverty in the state of California has increased by 30 percent since 2007.

Misc.

Amazon Pulls Thousands of E-Books in Dispute – NYT

Amazon.com removed more than 4,000 e-books from its site this week after it tried and failed to get them more cheaply, a muscle-flexing move that is likely to have significant repercussions for the digital book market.

DataQuick reports:

La Jolla, CA.—-Bay Area home sales rose last month to the highest level for the month of January in five years, boosted by lower prices, ultra-low mortgage rates, a modestly improved economy and a record level of investor purchases. The median price paid for a home fell year-over-year for the 16th consecutive month as “distressed” sales rose to the highest level since early last year, a real estate information service reported.

A total of 5,479 new and resale houses and condos sold in the nine-county Bay Area in January. That was down 26.9 percent from 7,494 in December, and up 10.3 percent from 4,966 in January 2011. The year-over-year sales increase was the seventh in a row, according to San Diego-based DataQuick.

The December-to-January drop was normal for the season. On average, sales have fallen 28.0 percent between those two months since 1988, when DataQuick’s statistics begin. Last month’s sales were 10.5 percent below the average number of homes sold during January. Since 1988, January sales have varied from 3,586 in 2008 to 8,298 in 2005.

The median price paid for all new and resale houses and condos sold in the Bay Area last month was $326,000. That was down 2.8 percent from a revised $335,500 in December, and down 3.6 percent from $338,000 in January 2011. Last month’s median was the lowest since April 2009, when it was $304,000.

The median’s low point of the current real estate cycle was $290,000 in March 2009. The peak was $665,000 in June/July 2007. Around half of the median’s peak-to-trough drop was the result of a decline in home values, while the other half reflected a shift in the sales mix.

“While it’s clear prices have edged lower in some areas recently, last month’s Bay Area median of just $326,000 is a reflection of how skewed the market has become toward distressed, lower-cost properties. The higher-end sales have slowed in recent months as many struggle to qualify for loans and others just sit tight. This is also the time of year that we caution people not to try to read too much into the statistics. The winter numbers are based on a smaller pool of buyers and they haven’t proved very predictive,” said John Walsh, DataQuick president.

“Meanwhile, we’ll be watching to see how the purchase market might be impacted by the government’s recently announced efforts to help homeowners refinance, or otherwise avoid foreclosure. The federal-state settlement with five major banks reportedly calls for billions to be spent in California to help certain underwater homeowners reduce their principal or do a short sale. The state Attorney General says there are ‘incentives’ to ensure much of that money is spent in hard-hit counties ‘within the first year.’ What’s not clear is the extent to which these efforts will kick in during the first half of 2012, which could alter the course of some who are on the brink of foreclosure right now.”

Last month distressed property sales – the combination of foreclosure resales and “short sales” – rose to 51.9 percent of the Bay Area resale market. That’s up from 48.5 percent in December and down slightly from 54.5 percent in January 2011.

We do have the conditions for a powerful seller’s market.  Inventory is low; especially in the starter market price range.  There are plenty of qualified buyers looking for property.  Yet, there are very few transactions and potential sellers are not willing to jump in to take advantage of these conditions.  These sellers sit on the sideline because they are either 1) underwater on their mortgage of or 2) waiting for values to go up so they have more net dollars at point of sale.

We also have the conditions for a powerful buyer’s market.  Interest rates are incredibly low and home prices are at fire sale level.  Yet, there are very few transactions and many potential buyers are not willing to jump in to the market.  These buyers are sitting on the sidelines because they either 1) can’t find the home they want or 2) are waiting for values to go even lower before they jump in.  They want a steal of a deal (who doesn’t?)

So, how does one unstick the log jam?  While there is no single answer, a lot has to do with consumer confidence.  If buyers feel increased confidence and  believe that prices have bottomed out, the increased demand will kick in the natural forces of low supply-high demand and values will start to go up.  If sellers sense that prices are going up due to increased consumer confidence, they will place their properties on the market in order to get on with their lives.  The cycle will gather momentum as the increased inventory of nicer properties stimulate more buyers to come on the market.  These buyers will be motivated to buy before they are priced out of the home they really want.  Consumer confidence is one key to bring about the return to a more traditional market.

Consumer confidence is a very powerful motivator.  Pay attention to it!

“Think you can or think you can’t either way-you’re right.”  Henry Ford

There are other models that might help us unravel this, especially those that explain the dynamics of networks. In particular, there is a phenomenon in economics that’s known as a “Knowledge Spillover.” It is one of the reasons that cities are such powerful economic engines. Within a city, if you are making x, and I am making y, then our combined knowledge might allow us to make z together, but only if we are physically close enough that our knowledge can spill over from one sort of enterprise to another.

In practice, many such spillovers gradually connect and reinforce each other, creating a kind of virtuous circle of economic activity, and whole new industries. (Think of the automotive industry centered in Detroit, or the personal computer industry centered around Palo Alto.) This pattern is a classic kind of “network,” familiar to those who work with metabolic processes in biology.

Cities can certainly have a contagious energy in the same way that an office can buzz with enthusiasm. Suburbia, by contrast, can seem sleepy – which is in part why a lot of us choose to live there.

What do you guys think? Could we all benefit from a little more urbanist proximity in our lives?

Experts Respond to January Home Sales Report - DS News

Why Renters Rule U.S. Housing Market (Part 1) – Gary Shilling

The collapse in housing and the 33 percent plunge in house prices since 2006 are favoring renting over homeownership. This trend will dominate the housing market for the next four or five years, and put additional pressure on a weak economy.

Keeping the Poorest in Housing – NYT

Some in Congress support raising the minimum rent as an adjustment for inflation, but the resources of poor families generally have not increased.

Freddie follows Fannie with cautiously optimistic housing report – HousingWire

Mortgage fraud hits ‘eye-opening’ level in Canada – Vancouver Sun

Redfin Brings Transparency to Title, Inspection, Mortgage, Staging - Redfin

National Mortgage…Fiasco? – The Investigative Fund (hat-tip Yves Smith)

Economy & Europe

‘Why This Time Could Be Different’ With High Gasoline Prices – WSJ

Stop the Nonsense About the “Falling Dollar” Being the Cause of Rising Gasoline Prices - Mish

Gas prices spike – SF Gate

Californians now pay, on average, $4.04 for a gallon of regular, according to the AAA auto club. San Francisco’s average on Tuesday hit $4.08. In San Jose and Oakland, it was $4.03.

Never before has the statewide average hit $4 so early in the year.

Misc.

2 Journalists Are Among the Dead in Syrian Shelling – NYT

For Women Under 30, Most Births Occur Outside Marriage – NYT

By the mid-1990s, such figures looked quaint: a third of Americans were born outside marriage. Congress, largely blaming welfare, imposed tough restrictions. Now the figure is 41 percent — and 53 percent for children born to women under 30, according to Child Trends, which analyzed 2009 data from the National Center for Health Statistics.

Lin Files Own Request for ‘Linsanity’ Trademark – Bloomberg

Zillow Falls 6.1% After Stock Sales by Execs – Bloomberg

“Investors are seeing the headlines around insider sales and that’s causing some concern,” Chad Bartley, senior research analyst at Pacific Crest Securities Inc. in Portland, Oregon, said in a telephone interview. “The stock is expensive.”

Even on $15,000 a Year, Most Young People Buy Smartphones - Mashable

NAR reports:

Existing-home sales rose in January, marking three gains in the past four months, while inventories continued to improve, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.3 percent to a seasonally adjusted annual rate of 4.57 million in January from a downwardly revised 4.38 million-unit pace in December and are 0.7 percent above a spike to 4.54 million in January 2011.

Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favorable market conditions. “The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents.”

Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, which represents a 6.1-month supply at the current sales pace, down from a 6.4-month supply in December.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun said. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago.

…

The national median existing-home price for all housing types was $154,700 in January, down 2.0 percent from January 2011. Distressed homes – foreclosures and short sales which sell at deep discounts – accounted for 35 percent of January sales (22 percent were foreclosures and 13 percent were short sales), up from 32 percent in December; they were 37 percent in January 2011.

Zero Hedge adds:

And here is yet another reason why we will permanently ignore the pathologically lying real estate syndicate known as the NAR (link): December data was just revised from +5% to -0.5% (from 4.61 million to 4.38 million). Since December market expectations were for a +5.2% print, imagine the sheer horror the algos would have been faced with had the real number been reported on time. Needless to say, if this number had been unrevised, the January +4.3% increase would have been a decline. This way the aglos focused only on the immediate moment get two months of beats in a row. Huzzah. Anyone who trades anything based on this borderline criminal self-reportingenterprise needs to have their head checked. In other news, when will the LIBOR investigation finally target the NAR?

And some graphs from Calculated Risk:

Foreclosure Auction Buyers Are Breaking and Entering Into Homes – Patrick.net

http://pastebin.com/KrnzPYjH

-Before you go to auction you need to actually scout the houses. Its common for previous owners to gut the house or completely remove the kitchen. It was my job to drive to these houses and asses them, damage, repairs cost ect… Part of this was getting into the house witch were many times locked, so we would B&E all day, every day. If you could gain access a lot of times we would try and block as many windows and secure the house as much as possible. If I could block any view of the kitchen, other competitors will have to assume another 10K in cost because they cant verify an intact kitchen.

Quelle Surprise! Servicers Rip Off Investors as Well as Homeowners - Yves Smith

For Women, Is Home Really So Sweet? – WSJ

Just as the “marriage crisis”—the fact that we are marrying later and less—has given us the opportunity to rethink traditional marriage as society’s highest ideal, the housing crisis is our chance to reconsider the centrality of homeownership to the national psyche. Buying a home still works for many people, but it should no longer be taken as the embodiment of the American dream.

Home Depot shines as warm winter helps sales – Reuters

The world’s largest home improvement chain also gave a better-than expected profit forecast for the year, just days after a report showed U.S. homebuilder sentiment had risen in February to its highest level in more than four years. That report raised hopes that the housing market was stabilizing.

Massachusetts Home Seizures Threatened in Loan Case – BusinessWeek

The justices are deciding whether to uphold a lower court ruling that gave a Boston home back to Henrietta Eaton after Sam Levine, a 25-year-old Harvard Law School student, argued in front of the nation’s oldest appellate court that the loan servicer made mistakes when it foreclosed because it didn’t hold the note proving she was obliged to pay the mortgage.

“If the Massachusetts court says this defense works, that would have a huge ripple effect across the country,” said Kurt Eggert, a professor at Chapman University School of Law in Orange, California.

Economy & Europe

What Austerity Hath Wrought – The Atlantic

The Greek Debt Deal is Done … For Now - Tim Iacono

The improbable Greece plan – Felix Salmon

More to the point, the plan assumes that Greece’s politicians will stick to what they’ve agreed, and start selling off huge chunks of their country’s patrimony while at the same time imposing enormous budget cuts. Needless to say, there is no indication that Greece’s politicians are willing or able to do this, nor that Greece’s population will put up with such a thing. It could easily all fall apart within months; the chances of it gliding to success and a 120% debt-to-GDP ratio in 2020 have got to be de minimis.

Europe’s politicians know this, of course. But at the very least they’re buying time: this deal might well delay catastrophic capital flight from Greece, and give the Europeans more time to work out how to shore up Portugal if and when that happens. Will they make good use of the time that they’re buying? I hope so. Because once the Greek domino falls, it’s going to take a huge amount of money, statesmanship, and luck to prevent further dominoes from toppling.

Surging gas prices threaten to derail economic recovery – LA Times

Misc.

Happy Late Birthday Ansel Adams (Feb 20th)

Envisioning a Post-Campus America – Megan McArdle

Dead for 32,000 Years, an Arctic Plant Is Revived – NY Times

2012 James Beard Award Semifinalists announced, with lots of Bay Area faces - SF Gate