Some Glimmers of Lightby Tim Manni
Our friends at Calculated Risk check out a few new indicators and, despite the mixed bag, I think they came away a little more optimistic:
LIBOR declined today from Bloomberg…
The yield on 3 month treasuries declined slightly to 0.42% from 0.48%. (slightly worse)…
The TED spread: 2.60, down from 2.70 (Slightly better)…
Meanwhile, in case you hadn’t heard, California real estate sales are really taking off:
An estimated 40,317 new and resale houses and condos sold statewide last month [September]. That was up 6.1 percent from 37,988 in August and up 64.8 percent from 24,460 in September last year. California sales for the month of September have varied from last year’s record low to a peak of 69,304 in 2003, while the average is 45,035.
DataQuick notes, unsurprisingly, that over half of the resales were foreclosed homes. But as we said in a recent Market Trends, “So what?”
Government intervention aside, the market is functioning as it should: homes will sell when some form of fair market price is reached. It also disproves claims that the mortgage market is hopelessly broken or shut down; most, of not all, of the (probable) five million plus new and existing homes that will be sold in this year to new owners need mortgages, and that financing has to come from somewhere. Older borrowers who had mortgages in the 1960s, 1970s, 1980s, and even the 1990s find today’s ‘highly restrictive’ underwriting standards to be fairly normal and customary, and although we may be a long way from ‘healed,’ with many more issues to be addressed as we go along, there is still a market for mortgages and homes in America.
California more or less led the on the way down to real-estate hell; it stands to reason it’ll be a leading indicator, of sorts, as the market slowly recovers.