The Canadian housing market has “lost touch with fundamentals” according to a report by research firm Capital Economics. In the report released on June 29, the authors suggest that the Canadian housing sector has become an asset bubble nearing the point of bursting. The prediction is for a 25 per cent decline in property values over the next three years.
July 22, 2011
September 21, 2010
US Housing Starts Rise More Than Expected
The number of housing starts in August rose by 10.5 percent over the previous year as work began on 598,000 new homes. The number of actual new homes beat the forecast by 48,000 and building permits also rose.
“The housing market has found a bottom and we’re bouncing along here,” said Thomas Simons, an economist at Jefferies Group Inc. in New York. “The market is challenged by supply and until that is cleared out, it will be tough for the homebuilders. We also need additional job creation.”
Source: Bloomberg
September 16, 2010
US Home Foreclosures Jump 25%
Hopes for stability in the US housing market took a shot to the jaw as foreclosures in August outpaced any other single month since the start of the mortgage credit crisis. Banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.
Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.
Source: Associated Press
August 24, 2010
US Home Sales Fall 27%
Existing home sales fell a whopping 27 percent in July, marking the largest monthly loss since records were first kept dating back to 1968. Sales are now at a 15-year low and analysts are warning that this is a harbinger of even worse economic news in the coming months.
“The housing market is undermining the already faltering wider economic recovery,” said Paul Dales, U.S. economist with Capital Economics. “With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse.”
Source: Associated Press
August 19, 2010
Housing Glut Hurting Recovery: Obama
An over-supply of homes is hampering economic recovery in the US said President Obama during a stop in Ohio.
“The housing market is still a big drag on the economy as a whole,” the President said. “It is going to take some time for us to absorb this inventory, that was really too high… We were building 2 million homes a year when only 1.4 were being absorbed.”
Source: BBC News
EU OKs 2nd Tranche of Greek Rescue Loan
The European Commission said today that recent efforts by Greece to reduce its deficit has warranted releasing the next round of emergency funding. Greece has already received 20 billion euros (US$25.7 bn) of the 91 billion euros (US$145 bn) pledged in rescue loans.
“Greece has managed impressive budgetary consolidation during the first half of 2010 and has achieved swift progress with major structural reforms,” said European Economic and Monetary Affairs Commissioner Olli Rehn.
Source: BBC News
June 16, 2010
US Housing Starts Fall More Than Expected
The number of housing starts in the US fell by 10 percent in May to an annual rate of 593,000 new units. This is the largest single-month decline since March 2009, missing the target of 659,000 by 66,000 units.
In order to qualify for tax credits, contracts for new construction must have been signed by the end of April and closed by the end of June. The ending of the tax credit will likely lead to fewer new sales for the remainder of the year.
“With the tax credit expiring and sales slowing down, builders will ease up on starts,” Michael Moran, chief economist at Daiwa Capital Markets America Inc. in New York, said before the report. “I see the housing market staying neutral for a time, moving sideways rather than being a source of growth.”
Source: Bloomberg
March 15, 2010
U.S. Real Estate Appears Ready for Rebound
Even though the federal homebuyer tax credit is scheduled to be eliminated next month, officials and industry insiders alike remain confident that the US housing market is poised to gain 6 percent this year. Recent news may warrant greater optimism; the Standard & Poor’s Supercomposite Homebuilding Index hit a five- month high March 9, but the real key to a real estate will be employment.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts.
Source: Bloomberg
March 9, 2010
Risky Business!
From an outside perspective, some might be shocked at how quickly the market can flip-flop from market euphoria to fear on what seems almost like a daily occurrence. It’s like John Kerry on steroids! I kid, I kid. But on a more serious note, the market can wipe out days of gains in a single session as risk aversion can pop up for any number of reasons. Sometimes it’s justified; at other times it isn’t.
Case in point: this morning. The market had been moving along nicely then all of a sudden decides there’s too much risk in the world economy and then wham!—you get a market sell-off! What has changed so much from last Friday, to yesterday, to today?
Frankly, not much. You see, the financial markets are much like an expedition, venturing slowly into the unknown and then quick to retreat at the first sign of trouble. So what is that trouble today?
Damned if I know. Part of the role of market pundits is to “make sense of the chaos”. Most of the time I find these attempts to be lazy and disingenuous. So the top 5 I’ve heard this morning are (in no particular order): Greece, lower stock earnings, US healthcare legislation, the push for Chinese Yuan appreciation, and UK elections. And if you don’t believe any of these, I’ve got one of my own for you: it’s a technical pullback.
So be wary of attempting to try to “figure” the market out, and be sure to trade what you see and not what you think you know.
In currencies:
Aussie (AUD): The Aussie has pulled back from near its 2010 highs as risk aversion is dominating the morning market action today. However, the sell-off is not as bad as reports came in that Australian businesses are actively looking to hire and the business confidence index came in higher, prompting the market to believe that yet another rate hike may be coming next month.
Kiwi (NZD): The Kiwi isn’t faring as well as the Aussie, as yesterday’s big winner is now one of today’s bigger losers. Tomorrow’s rate decision and language may prove to be more exciting than previously expected, as the expectation is that it is the slimmest of slim chances that they will raise rates.
Loonie (CAD): The Loonie is lower this morning primarily on lower oil prices that are down roughly 1.5%. This snaps 7 days of gains, in what can be viewed as a welcome pause. This appears to be mild risk aversion so the Loonie is mixed.
Euro (EUR): The Euro is lower this morning across the board as stock earnings are lower and the ECB is saying that it potentially could accept lower rated bonds as collateral against new loans. Also the call for regulation on credit default swaps (CDS) and the news of the “lender of last resort” card being played all highlight the problems for the Euro zone. Notice I didn’t say Greece once—oops! Just did.
Pound (GBP): The Pound is lower this morning as reports came in that the UK housing market may be slowing as fewer price gains occurred than what was expected. This comes in advance of the UK GDP estimates due out tomorrow which could set the tone for UK rate policy going forward.
Dollar (USD): The Dollar is higher this morning on risk themes as stock market futures appear to set to open lower, though it not a certainty that they will remain that way all day. Look for some volatility as the markets trade back and forth, and definitely do not a rule out a reversal to the upside for equities which could be dollar-negative.
Yen (JPY): The yen is higher this morning on general risk themes and speculation that Japanese companies are repatriating profits before the end of the Japan fiscal year which is in April. This essentially means that demand for yen is higher as companies sell foreign currencies to buy yen, thereby increasing demand. This could be the reason why the market perceives that today is a risk-aversion day.
As you can see, there can be many reasons why currencies move outside of the normal risk themes which can disguise what may be really going on in the marketplace. When traders see these anomalies, they should be prepared to react. It would not surprise me today to see US dollar weakness, even though then yen may stay strong. Whether or not that is enough to push the US stock market and commodities higher remains to be seen.
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January 25, 2010
Home sales tumble as tax credit lift wanes
Sales of previously owned homes suffered a record drop last month as the boost from a popular tax credit waned, raising doubts the housing market recovery can be sustained without government support.
The National Association of Realtors said on Monday that existing home sales fell 16.7 percent in December to an annual rate of 5.45 million units. It was the sharpest decline on records dating to 1968 and the slowest sales pace since August.
Analysts, who had expected a 5.90 million unit pace, said the slump month underscored the degree to which the housing market recovery was reliant on government aid.
Source: Reuters