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Tuesday, March 03, 2009

How Unsurprising

Pending home sales are reported as strongly down, but they show the same pattern as existing home sales. They are strongly down in the NE, but are rebounding healthily in the west. On a YoY non-seasonally adjusted basis, pending home sales by region for January:
Northeast: -20.8%
Midwest.: -14.6%
South......: -9.1%
West.......: +10.3%
Now it does not seem to have registered in DC, but the same old economic maxims are holding. Prices have dropped more in the west and therefore sales are increasing. Attempts to shortcut the fix are going to be self-defeating.

Those sales generate considerable economic activity, because for each house sold, there is some fixup, thus construction/remodeling work.

Existing home sales by region (NSA):
Northeast: -22.2%
Midwest.: -16.1%
South......: -16.5%
West.......: +32.1%
Perhaps we should stop worrying about affordable housing? If we want to tie ourselves in knots spending huge sums of money to try to prevent people who overbought from losing their phantom equity, it is going to fail in the long term, and it is going to come at the price of job and economic activity in the near term.

The same old tried-and-true bad ideas just don't ever seem to get jettisoned this correction cycle. When ARE we going to wake up and smell the coffee?

Look at the "executive summary" of the Homeowner Affordability and Stability Plan (all docs): This is the most amazing idiocy I have ever seen. I plan to go over this in detail, but the bottom line is that the US government is going to buy all the mortgages, plus pay parts of them in order to prevent more homes from being sold.

Plus, the government intends to pay banks not to foreclose. Every time I try to write something about this I end up in complete, dumbfounded amazement. It defies belief.

More later.

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