WSJ reports housing wrong

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Thanks, the negatively biased reporting continues as the evidence grows that the Obamaboom is underway.

The driving force is clear- the federal deficit seems to have gotten large (albeit the ugly way- falling revenues and rising transfer payments as output falls and unemployment rises) to again support incomes and spending.

This is how it most often happens with leadership that doesn’t understand how the monetary system works.

And analysts who don’t understand how the monetary system works will be late to anticipate the recovery as well, just as they initially failed to recognize that ‘monetary policy’ would be ineffective.

But no doubt the will cast whatever happens in terms of the monetary policy actions taken by the Fed and Treasury, rather than a result of the fiscal forces from the ‘automatic stabilizers.’

>   On Wed, Mar 25, wrote:
>   See excerpt from todays WSJ. See they say that average prices declined
>   month over month. Then look at the actual data. The mean or average
>   price actually went UP from 239K to 251K but they say “and prices
>   month over month fell too.
>   They don’t even read the release. These numbers are confirmed on BB.

New-Home Sales Rise as Prices Fall

by Jeff Bater

Mar 25 (WSJ) — The median price of a new home tumbled 18.1% to $200,900 in February from $245,300 in February 2008. The average price decreased 16.7% to $251,000 from $301,200 a year earlier. And prices month over month fell, too; in January 2009, the median price was $206,800 and the average was $239,100.


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5 Responses to WSJ reports housing wrong


    The US economic collapse began in the mortgage and housing markets and any significant turnaround is unlikely without first fixing the mortgage and housing problems.

    Annually, re-sales, refinances, development and construction, residential real estate may require as much as two to three trillion dollars in mortgage funding. There could be as many as nine years of mortgage production with questionable underwriting practices and $18 to $27 Trillion in the US mortgage portfolio with varying, but unknown, levels of toxicity.

    Some yet to be identified, but an increasing portion of these residential mortgages now held in investment portfolios exceed the value of the homes used as collateral. This leads to three immediate items: 1) there likely isn’t enough government bailout money to solve our mortgage problems, 2) the process of identification of toxic loans needs to start as soon as possible so private capital will return to the mortgage pipeline, and 3) investors who purchase mortgage-backed securities, the ultimate source of funding for home buyers, won’t reinvest until they feel their funds are safe.

    Without segregating the bad mortgages in our current portfolio and accurate grading of risk on newly originated loans, mortgage investors will continue to take their capital elsewhere, ultimately increasing the cost of home mortgages and further devaluing real estate.

    In order for stress testing of the US mortgage portfolio to begin, participation from banks and Realtors is needed. This might come sooner, voluntarily, or eventually, by government mandate. But it must come in order to prevent further deterioration of the US economy.

    In conjunction with the Realtors MLS in Phoenix (ARMLS), we recently launched a pilot project to address the mortgage risk problems. It is cost effective and accurately forecasts risk to mortgage investors three to five years in advance. See

    We are proposing the creation of a private/public venture (potentially, FDIC/Treasury, Realtors, and bankers) that would be self sufficient within the first year of operation and run for five to seven years as the economy stabilizes, after which it could be sold to the private sector.

    The days of passing blind risk upstream to mortgage investors are over. The longer it takes to deliver accurate risk return forecasts to mortgage investors, the greater the severity and duration of this painful contraction in the US economy.

    Robert Rothstein


  2. Dave Begotka says:

    Oops! See you go without the web for a week or so and you turn stupid!

    That’s even worse news for us conspiracy NuTS! Plays right into my thinking!

    You guys are too nice on here, other forums I would have been slammed!



  3. zanon says:

    LookTwice: You are right. I don’t see the demand for savings going down yet. Job market is still too weak.


  4. Dave Begotka says:


    I have had my finger on the pulse of the real estate markets in TX and WI and these numbers seem low, its closer to 50% on a lot of properties.

    Wow did I miss a lot in 10 days! When you move to a county in TX with only 5000 people total and there is only one option for web service you wait!


  5. LookTwice says:

    Median prices fell from 206,800 to 200,900 while average (or mean) prices rose from 239,100 to 251,000. Thus the reporting is correct. Futhermore, the market and market economists looks at median prices given that high-end sales can significantly skew the figures.


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