US Housing Vacancies Hit All-Time High

National figures. Note how sharply this figure has increased over the past two years.

I imagine the local numbers are much stronger. Still, things will deteriorate here over the next 18 months as new condos roll out, while Wall Street layoffs and tight credit conditions challenge the market.

More from Bloomberg:

Friday News Roundup

A few important bits of news:
- After an animated discussion, CB6 Land Use Committee voted 9-4 to support closing the "wide streets" loophole. The Committee, as well as Bill deBlasio (who was instrumental in making this happen) and our other local elected officials (Millman and Connor) all deserve praise for working to preserve the character of our community. Several steps still to go. Next is the full Board, then the Borough President.

- Another sign that DOB is a broken organization that needs a major cultural change, not just a new Commissioner: "City officials admit they wrongly gave the green light to the project at 303 East 51st St., where a tower-crane collapse on March 15 killed seven people." We must end the farce called self certification that outsources DOB oversight to the developers. Now.

- Consumer confidence "fell deeper into recessionary territory, to 62.6 from 69.5 in March . . . the lowest since March 1982's level of 62.0., when the "stagflationary" period of low growth and high inflation was still an issue for many Americans." We are in for a serious adjustment; the real estate recession has not even begun here yet, but realtors with long memories will remember what the early 1990s were like, and that's what we're facing in the near future.

- Generalissimo Francisco Franco is still dead. Have a good weekend!

February Existing Home Sales: A Bloodbath

For some reason, the AP and nearly all major media outlets still swallow the spin from the National Association of Realtors and their spokesperson, comedian Lawrence Yun.

And so we get headlines lauding the "improvement" in February, as sales were up 2.9% from January . . . "The first increase since July!" Further down the page is the other news, that average prices were down 8.2%.

Newsflash: this is a seasonal business. Sales ALWAYS increase from January to February. On top of that, there was an extra day in February this year due to leap year. The increase of 2.9% in February is absolutely meaningless. The real news, which was buried in most articles (presumably, because it was underplayed in the NAR's press release) was that year-over-year, February sales were DOWN 23.8%. There is not a more dishonest group of shills in all the land - the deceit of the NAR borders on criminal fraud.

For a more in depth and sober analysis of the February numbers, see this post and this post at Calculated Risk, the best economics blog in all the tubez. As CR makes clear, February is a relatively unimportant month for housing . . . you'll want to pay close attention to the March numbers when they come out next month. More from The Big Picture. And did I mention that prices are tumbling at record rates as well?

We're not immune here. I'd expect the tone on local real estate to get progressively more sour as 2008 wears on, continuing in 2009.

Back on My Feet

Was on my back sick for a few days. Been a long time since I had a 103 degree fever, and I hope it's a longer time before it happens again.

Sicker than me, it turns out, was Bear Stearns. Bear Stearns, which 1 year ago traded at $170 per share, was sold last night to JP Morgan for $2 per share. It gets more interesting- the FED basically GAVE JPM $30 Billion to buy Bear for $250 Million. (A $30 billion non-recourse loan to JPM secured by crap mortgages on BSC's books)

Why? Because Bear Stearns was bankrupt. Insolvent. Broke. And why? Because at bottom, they facilitated the housing bubble, where mortgage brokers lent money to people who couldn't pay it back to buy houses they couldn't afford. The mortgage brokers and investment banks didn't care, because they were shuttling the repayment risk off to the bond and CDO investors, and huge fees were made at every step of the process. Except when the music stopped, Bear was left with heaping armloads of crap, and no one was left that would take them away. They lost a giant game of Old Maid . . . only in this game, it seems, the Fed is willing to hold the Old Maid card . . . in a couple of years, we'll be able to figure out just how much this bailout cost. (It IS a bailout . . . because JPM would not have paid a nickel for BSC without that $30 billion from the Fed. And they're getting a $1.25 Billion office building in the deal. Peel that out, and they're valuing BSC's business not at $250 million, but at -$1 billion.)

Because of the mortgage mess that was enabled by BSC and it's peers, prices on houses and condos went through the roof the past few years, while incomes for the average guy stayed the same or even dipped slightly. This is George W. Bush's "ownership society", brought to you by "Easy Al" Greenspan.

Our economy, if you haven't guessed already, is in a lot of trouble. And the real estate market is in for a rough patch for the next couple of years. And that most certainly includes NYC.

Building America's Future

The Tri-State Transportation campaign has a post up on this new coalition that could not be more timely.

Arguing that rebuilding America’s roads, bridges and transit systems will do far more for the flailing economy than the $300-$1,200 family tax rebates included in the recently passed $168 billion stimulus package, 15 governors from a non-partisan coalition called on the federal government last month to dramatically boost infrastructure spending.

The Building America’s Future coalition, chaired by Pennsylvania Gov. Edward Rendell, California Gov. Arnold Schwarzenegger, and NYC Mayor Michael Bloomberg, was established to serve as a “repository of best practices on infrastructure funding issues” according to a press release issued at the National Governors Association (NGA) meeting on Feb. 24. New Jersey Gov. Jon Corzine is also a member of the coalition. Speaking at the NGA meeting, Corzine told the audience, “We need a national program. We need federal help.”

This is exactly right. The tax rebate plan is an abject failure of vision and leadership. This country has a serious environmental and national security problem in our addiction to oil. We re also in the early stages of the worst economic crisis this nation has seen since the 1930s.

A major investment program in our transit and water/sewer infrastructure would help to cure many ills leftover from the failed policies of the latter half of the 20th century . . . and dig us out from the failed economic policies of the worst administration in American history.

Auto Sales Diving Off A Cliff

Recall, a few weeks ago I wrote about the packed car lots in North Carolina, and the fact that nothing was selling.

Well, today via Calculated Risk we see that sales are way off at GM, Ford, and Toyota. Sales at GM were off 12.9% in February.

It will be a while before the Bush administration will admit it, but we are in a recession.

Credit Bubble: Not Just Houses - Cars Too

Last weekend we travelled to North Carolina to visit my saintly grandmother and her new husband (both widowed last year). It's great to see two people find each other like that, to find a new source of happiness late in life.

But that's the end of the good news. My new grandpa, a gearhead, mentioned that the the market for used cars and trucks was a mess, and that on the new lots, nothing was selling. "They got 'em packed in like sardines." And it was true. Brand new pickup trucks were crammed into lots practically door to door . . . which indicates channel stuffing by the auto makers. And none of it selling.

Shorter: things in the auto world will get much much worse before they get better. And it's already god-awful.

Then, the stories out this week in the NYT and today on CNN indicate that lenders (particularly those tied to the automakers), possibly desperate to keep up sales, reached too far to make the sales. from CNN:

Delinquencies among assets backed by prime auto loans hit a 10-year high in January. The number of delinquencies in assets backed by subprime auto loans jumped 10% since December and 43% from a year ago.

Wages are not going up (except recently for I-Bankers - and those record bonus days are over) for the vast majority . . . and a person can only service so much debt. Times like these, I am very grateful that I slogged through and got that economics degree.

Still, carefully picking your steps doesn't help much when you can be stampeded by a frenzied mob. I hear a steadily growing rumbling in the distance. And it's getting closer.

Brace Yourself For Recession

I've been saying for a while now that this will be the worst recession we've had in my lifetime, and possibly since the Great Depression. Why? Because the economy (in particular, the housing market) was due to correct in 2001. We had a lot of choices after the attacks of 9/11 with how to stimulate the economy, and the Bush administration and "Easy Al" Greenspan made the wrong ones. Dropping the Fed Funds rate close to zero created a massive bubble in asset prices.

Now we're going to pay for it as 7 years of distorted economics get sorted out very, very painfully. Take a look at that chart above (found at the Wall Street Examiner). One of two things needs to happen to get back into the normal range: wage inflation, or home price deflation. Which do you think will happen first?

Bernanke seems to be following Easy Al's policy of dropping cash on the problems. Unfortunately, this time I don't think it will work . . . and we're turning the dollar into the peso.