Some new data on foreclosures was released today by RealtyTrac. Here's a summary from MarketWatch:
Foreclosure filings, which include those late-payment notices plus auction announcements and bank repossessions, rose 7% in August compared with July, hitting a total of 228,098 U.S. properties. But the filing rate fell 33% from a year earlier....And while the number of those first-time default notices sent rose 33% in August versus July, to a total of 78,880 properties, they fell 18% compared with a year ago, and they’re 44% lower than the monthly peak in April 2009....That is, the year-over-year data looks relatively positive, but the monthly data appears to be cause for worry — or, perhaps, relief, depending on your point of view.
The relief comes in the form of banks working through all their legal issues related to foreclosures and forseeing enough upside in the market to again repossess and re-sell properties. In other words, the banks are anticipating a bottom in the downturn and are lining up supply to sell into the rebound.
I went on KPCC's AirTalk with Larry Mantle this morning to talk about the Solyndra bankruptcy and what's turning into something of a scandal. This was hot on the heels of the Atlantic's Megan McArdle and Reason's Tim Cavanaugh going after not just the politics of this sucker, but also the very notion that the Federal government should be investing in renewable energy in the first place.
Just for background, Solyndra got a $535 million loan guarantee from the Department of Energy in 2009, four years after it was founded and well into an application process that was initiated under the Bush administration (Grist has the blow-by-blow on all this). Prior the the DOE loan, Solyndra had raised venture funding; after the DOE loan, it raised even more, eventually amounting to $1 billion. Post-bankruptcy, the Washington Post reported that the White House had been edging the DOE toward an approval, so that Joe Biden and DOE head Stephen Chu could schedule appearances. And just to make things extra juicy, a big Obama supporter and "bundler" of campaign donations, George Kaiser, has a venture fund that was heavy into Solyndra.
Libertarians attack! Megan McArdle at the Atlantic and my old pal Tim Cavanaugh of Reason focus on the political football that bankrupt California solar startup Solyndra has become. Megan: "Its technology was essentially a large bet that prices of silicon would stay high, making its product competitive." And Tim: "[T]he real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into. Once this violation of common sense has taken place, the story can only end, as it appears to have ended here, in suffering and crime." (The Atlantic, Reason)
Central banks to the rescue! For now... "The European Central Bank said it will coordinate with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to offer three-month dollar loans to banks through the end of this year. The move is an effort to prevent Europe's debt crisis from derailing the global economy's rebound from recession." (AP, via the LAT)
KPCC's business commentator and LABiz blogger Mark Lacter takes a look at the SoCal housing markets, checking in with the DataQuick numbers. What we notice is that August sales volume was up from August of last year, but sales prices are down. Here's DataQuick's analysis:
The region’s overall median sale price is suppressed somewhat by abnormally low sales of newly built homes, which typically sell for more than resale homes. Southland builders sold 1,184 new houses and condos last month, down 14.3 percent from a year earlier and the lowest new-home tally for an August in DataQuick’s records back to 1988.
But despite that, what's worrying is that price deflation still seems to be a major factor in the regional housing market. These numbers jumped out at me:
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,101 last month, down 4.6 percent from $1,154 in July and down 4.9 percent from $1,158 in August 2010. Adjusted for inflation, current payments are 52.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 61.1 percent below the current cycle’s peak in July 2007.
This is a most vivid evidence I've seen of why everyone is so freaked out about Europe and its debt crisis. As you can see from the chart, 10-year bond yields for European countries marched along in neat lockstep for a decade after the introduction of the Euro. Exactly what you would want from a currency union, if your goal was to present the impression of uniform debt costs acorss member nations. But then, in 2008-2009, it all goes kerflooey. It looks like somebody spilled the colorful spaghetti. Greece isn't even on the chart, probably because you would need another whole chart on top of this one to display a yield in excess of 20 percent for September.