Real estate values in the greater New York area may suffer less from underwater mortgages than in other parts of the nation, said Mr. Khater, of First American, because homeowners are less likely to fall into foreclosure. In the area that the report defines as greater New York City, $183 billion worth of mortgages were underwater. This area includes Long Island, northern New Jersey and eastern... [more]
Real estate values in the greater New York area may suffer less from underwater mortgages than in other parts of the nation, said Mr. Khater, of First American, because homeowners are less likely to fall into foreclosure.
In the area that the report defines as greater New York City, $183 billion worth of mortgages were underwater. This area includes Long Island, northern New Jersey and eastern Pennsylvania, but not Connecticut or New York State north of the city.
Negative equity is the best predictor for loan defaults, said Sam Khater, a senior economist for First American. Still, “a majority of people who are underwater probably will not default,” he said, “because if you have your job and don’t encounter economic shock, you’ll most likely keep paying on your home.”
In New York, the average loan-to-value ratio (the amount owed on the mortgage, divided by the home’s value) is 56 percent, the company said. In Connecticut, it is 63 percent, and in New Jersey, the figure is 70 percent. By contrast, the nation’s average loan-to-value ratio is 78 percent.
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Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
Case Shiller publishes a Condominium Value Index for NY with data going back to 1995. The latest data set came out on Aug 25.
The latest data set shows a decline in condo values in June '09. The index is down 15% from its maximum value (Feb '06).
Highlights:
a) CS NY Condo index covers NY Condos
b) CS NY Condo index has been lower each month for 11 straight months
c) CS NY Condo index suggests that the average condo purchased after Aug 2005 is underwater. The current index level is down 10% since Aug 2005.
d) CS NY Condo index data suggests that the average condo purchase after Dec 2003 is putatively underwater. If I deduct a 15% round trip transaction cost from the current index value when estimating the profit on sale of a home, the average purchaser post '03 has will not make any money if the property is sold at the current index level.
Why is Case Shiller touted as having bullish data? Everything I see in tne NY Condo Index is bad and getting worse.
******************************************
80's man.. Seems about right to me.
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Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
Case Shiller can't be too bad. It displaced OFHEO DATA. Not like there wasn't a choice..
Ofheo – The index tracks refinancings and sales of conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac, meaning that so-called jumbo loans over $417,000 aren’t included. The loan cap is revised regularly and will be raised to $700,000 in some areas under new legislation. Purchase-only index excludes refinancings.
Case-Shiller – The index obtains its information from county assessor and recorder offices, covering all loans including exotic nonconforming and subprime.
How much of the country is represented:
Ofheo — Essentially everywhere, since it covers all loans through Fannie and Freddie.
Case-Shiller — Though the national index looks at over 100 major metropolitan areas, it still only covers about 70% of the country.
How far back do the data go:
Ofheo — The main index goes back to 1976, while the purchase-only index began in 1991
Case-Shiller — National and 10-city indexes data back to 1987, while the 20-city starts in 2000
Are the data revised:
Ofheo — Entire history is revised slightly with each release
Case-Shiller — Only last eight quarters are revised
How often is the index published:
Ofheo — currently quarterly, but switches to monthly in March
Case-Shiller — The national index is released quarterly, with other indexes released monthly
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Response by aboutready
almost 17 years ago
Posts: 16354
Member since: Oct 2007
case shiller is a useful tool. the csi long-term futures, not so much.
Shiller:
All of this suggests that a social epidemic is supporting renewed confidence. This confidence can keep growing by contagion, as a kind of self-fulfilling prophecy, and we may see the markets and the economy recover further.
But in an economy that is still unstable, the stories could also morph into different forms, the price feedback could turn downward and the dynamic could turn ugly again — just as it has in the past.
Thoma's commentary:
It seems quite reasonable that the spread of information (wrong or right) can reinforce trends in economic activity, and hence magnify and propagate shocks, but as noted in a part of the article not included above, this doesn't help us much with the problem of predicting turning points in economic activity. Predicting when the stories suddenly "morph into different forms ... is actually very complex. And even when feedback mechanisms are straightforward, they can produce very strange outcomes, not predictable very far into the future..."
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Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
Another point about forward curves and futures. They are lousy predictors of the future. The are incredibly useful. To some this might seem like a contradiction so I'll explain. They show the term structure of the market of which hedge instruments are based. This is the collective view of the market place.
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Response by aboutready
almost 17 years ago
Posts: 16354
Member since: Oct 2007
really. yes they are. but not long term for backward looking markets.
where's your source? you always have a source, although it's not always seemingly read before posting.
and shiller even came out with some stuff on his own the last day or so, saying predictive models could be very suspect.
but don't worry, as long as you don't have to sell, you're fine. and if you do have to sell for some sad reason, well, then you were probably just a victim. unlike other people who had to sell.
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Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
Radar Logic has Dec 2010 contracts 6% over 2009. Market seems to be saying, things are stabilizing.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
Is that Manhattan specific? Is it tradeable?
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Response by aboutready
almost 17 years ago
Posts: 16354
Member since: Oct 2007
and the stock market is telling me that fannie has some value. it can talk, but i don't have to listen.
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Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
that Manhattan specific? Is it tradeable?
YES
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
Please post the link and let me know how to get to it. The best this market can do is be flat in my view. Like a digestion period...a long one. I would buy puts all day.
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Response by truthskr10
almost 17 years ago
Posts: 4088
Member since: Jul 2009
But that's part of the problem, isn't it? I'm sure someone will correct me if I'm wrong but aren't housing sale numbers derived by contract numbers? And if so, isn't the percentage of succesful contracts (closings) much higher in previous years compared to this one?
Is there an adjustment down the road for failed contracts?
"The Commerce Department, in its small sampling, counts a new house as "sold" when someone signs a contract to buy it. But there are a lot of things that can go wrong between the time someone signs on the dotted line and moves in -- like actually coming up with the money.
The National Association of Realtors' existing-home sales, which were also up sharply, only counts a purchase when a buyer takes possession of the house. But that isn't true for the housing index the NAR will release this morning -- which is also based only on contracts."
ICAP / Radar Logic Official Fixings
Price fixings are established by a dealer poll. Results are published at 4pm each trading day. Numbers in parentheses indicate the number of dealers contributing quotes to the price. these aren't exchange traded.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
Truthskr, its however they want to set it up. That is why I will read the fine print before I short the crap out of it.
This product is doubly sexy because most of the people likely to trade this index live in... you guessed it... Manhattan Condos. I'm really looking forward to seeing if they get some volume.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
This is such a short, if only on a seasonal basis.
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Response by truthskr10
almost 17 years ago
Posts: 4088
Member since: Jul 2009
Rhino86
It's always about the fine print, innit?
Someone tell SteveF please.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
The tough part is guessing when the developers are going to break price.
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Response by truthskr10
almost 17 years ago
Posts: 4088
Member since: Jul 2009
Rhino86
My thoughts exactly as I ponder resigning a short term continued lease where I live now in the upcoming months.
I would say when the banks force/allow them to....
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Response by 80sMan
almost 17 years ago
Posts: 633
Member since: Jun 2008
The housing futures market volume/open interest is pretty close to 0. You don't get very much info from a financial instrument that doesn't trade.
A big problem with housing futures is they are unhedgeable. If you sell a stock index future you can hedge (and arbitrage) by buying the underlying index. If you sell the underlying index you can hedge (or arb) by buying the individual stocks in the index. With housing futures you cannot buy the index the futs are based on because there is no way to buy the houses ithe index is comprised on.
In general a lot of the housing mess we're in (average owner who bought post-2003 is underwater) is due to people treating housing like a fungible asset class. Which it most definitely is not.
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Response by Riversider
almost 17 years ago
Posts: 13573
Member since: Apr 2009
I don't see a future contract for Manhattan condo. Doesn't seem a like a natural instrument to trade. Too specific. National & Major MSA makes more sense.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
80s Man not being able to hedge is not a problem if your intention is to make a directional bet. Besides, the logical hedge in my view against a condo index is an office REIT.... Yield on that pays you to wait.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
"If you sell a stock index future you can hedge (and arbitrage) by buying the underlying index."
FYI this is what is called a perfect hedge...which makes no sense. You can accomplish the same thing with sizing.
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Response by 80sMan
almost 17 years ago
Posts: 633
Member since: Jun 2008
Rhino, index arb is a huge business on wall street based on selling index futures and buying the underlying stocks.
Without hedging housing futures won't even get as big as the beanie baby market.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
Index arb is a business, but its not the only business. Playing divergences between indicies and their components is a business. So is making a short call and pressing it. Paulson made a pretty decent business out of that in 2008.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
Whats the hedge for USO, the crude oil ETF? Equity players trade that with no involvement in the commodity futures market. That's a pretty big volume business. You are trying to sound smarter on this stuff than you are.
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Response by 80sMan
almost 17 years ago
Posts: 633
Member since: Jun 2008
Rhino the hedge for crude is physical barrels of oil. Morgan and goldman will take physical delivery of oil and send it to a refinery for processing if the arb is big enough. Housing is not a commodity. Stop trying to treat it like one. All the busted dotcom day traders looking for a new angle are not helping sort out the housing mess. All they are is another group of people who have to go bankrupt before we can call a bottom.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
The point is that USO and UNG have grown into healthy markets without being arbitrage markets. They are public investor vehicles for the most part, not markets for oil traders to play arbs. I am sure trading a condo price index could grow into something without a natural hedge. The ETF market is a zoo, what's one more.
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Response by Rhino86
almost 17 years ago
Posts: 4925
Member since: Sep 2006
And I didn't ask what the hedge for crude is, I asked what the hedge for the crude ETF, USO, is.
Case Shiller publishes a Condominium Value Index for NY with data going back to 1995. The latest data set came out on Aug 25.
The latest data set shows a decline in condo values in June '09. The index is down 15% from its maximum value (Feb '06).
Highlights:
a) CS NY Condo index covers NY Condos
b) CS NY Condo index has been lower each month for 11 straight months
c) CS NY Condo index suggests that the average condo purchased after Aug 2005 is underwater. The current index level is down 10% since Aug 2005.
d) CS NY Condo index data suggests that the average condo purchase after Dec 2003 is putatively underwater. If I deduct a 15% round trip transaction cost from the current index value when estimating the profit on sale of a home, the average purchaser post '03 has will not make any money if the property is sold at the current index level.
Why is Case Shiller touted as having bullish data? Everything I see in tne NY Condo Index is bad and getting worse.
******************************************
80's man.. Seems about right to me.
Case Shiller can't be too bad. It displaced OFHEO DATA. Not like there wasn't a choice..
http://blogs.wsj.com/economics/2008/02/26/ofheo-vs-case-shiller-a-primer/
Ofheo – The index tracks refinancings and sales of conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac, meaning that so-called jumbo loans over $417,000 aren’t included. The loan cap is revised regularly and will be raised to $700,000 in some areas under new legislation. Purchase-only index excludes refinancings.
Case-Shiller – The index obtains its information from county assessor and recorder offices, covering all loans including exotic nonconforming and subprime.
How much of the country is represented:
Ofheo — Essentially everywhere, since it covers all loans through Fannie and Freddie.
Case-Shiller — Though the national index looks at over 100 major metropolitan areas, it still only covers about 70% of the country.
How far back do the data go:
Ofheo — The main index goes back to 1976, while the purchase-only index began in 1991
Case-Shiller — National and 10-city indexes data back to 1987, while the 20-city starts in 2000
Are the data revised:
Ofheo — Entire history is revised slightly with each release
Case-Shiller — Only last eight quarters are revised
How often is the index published:
Ofheo — currently quarterly, but switches to monthly in March
Case-Shiller — The national index is released quarterly, with other indexes released monthly
case shiller is a useful tool. the csi long-term futures, not so much.
http://economistsview.typepad.com/economistsview/2009/08/an-echo-chamber-of-boom-and-bust.html
Shiller:
All of this suggests that a social epidemic is supporting renewed confidence. This confidence can keep growing by contagion, as a kind of self-fulfilling prophecy, and we may see the markets and the economy recover further.
But in an economy that is still unstable, the stories could also morph into different forms, the price feedback could turn downward and the dynamic could turn ugly again — just as it has in the past.
Thoma's commentary:
It seems quite reasonable that the spread of information (wrong or right) can reinforce trends in economic activity, and hence magnify and propagate shocks, but as noted in a part of the article not included above, this doesn't help us much with the problem of predicting turning points in economic activity. Predicting when the stories suddenly "morph into different forms ... is actually very complex. And even when feedback mechanisms are straightforward, they can produce very strange outcomes, not predictable very far into the future..."
Another point about forward curves and futures. They are lousy predictors of the future. The are incredibly useful. To some this might seem like a contradiction so I'll explain. They show the term structure of the market of which hedge instruments are based. This is the collective view of the market place.
really. yes they are. but not long term for backward looking markets.
where's your source? you always have a source, although it's not always seemingly read before posting.
and shiller even came out with some stuff on his own the last day or so, saying predictive models could be very suspect.
but don't worry, as long as you don't have to sell, you're fine. and if you do have to sell for some sad reason, well, then you were probably just a victim. unlike other people who had to sell.
Radar Logic has Dec 2010 contracts 6% over 2009. Market seems to be saying, things are stabilizing.
Is that Manhattan specific? Is it tradeable?
and the stock market is telling me that fannie has some value. it can talk, but i don't have to listen.
that Manhattan specific? Is it tradeable?
YES
Please post the link and let me know how to get to it. The best this market can do is be flat in my view. Like a digestion period...a long one. I would buy puts all day.
But that's part of the problem, isn't it? I'm sure someone will correct me if I'm wrong but aren't housing sale numbers derived by contract numbers? And if so, isn't the percentage of succesful contracts (closings) much higher in previous years compared to this one?
Is there an adjustment down the road for failed contracts?
"The Commerce Department, in its small sampling, counts a new house as "sold" when someone signs a contract to buy it. But there are a lot of things that can go wrong between the time someone signs on the dotted line and moves in -- like actually coming up with the money.
The National Association of Realtors' existing-home sales, which were also up sharply, only counts a purchase when a buyer takes possession of the house. But that isn't true for the housing index the NAR will release this morning -- which is also based only on contracts."
http://www.nypost.com/seven/09012009/business/facts__figures_and_fantasies_187499.htm
ICAP / Radar Logic Official Fixings
Price fixings are established by a dealer poll. Results are published at 4pm each trading day. Numbers in parentheses indicate the number of dealers contributing quotes to the price. these aren't exchange traded.
Truthskr, its however they want to set it up. That is why I will read the fine print before I short the crap out of it.
http://www.altosresearch.com/blog/categories/45-Radar-Logic-RPX
This product is doubly sexy because most of the people likely to trade this index live in... you guessed it... Manhattan Condos. I'm really looking forward to seeing if they get some volume.
This is such a short, if only on a seasonal basis.
Rhino86
It's always about the fine print, innit?
Someone tell SteveF please.
The tough part is guessing when the developers are going to break price.
Rhino86
My thoughts exactly as I ponder resigning a short term continued lease where I live now in the upcoming months.
I would say when the banks force/allow them to....
The housing futures market volume/open interest is pretty close to 0. You don't get very much info from a financial instrument that doesn't trade.
A big problem with housing futures is they are unhedgeable. If you sell a stock index future you can hedge (and arbitrage) by buying the underlying index. If you sell the underlying index you can hedge (or arb) by buying the individual stocks in the index. With housing futures you cannot buy the index the futs are based on because there is no way to buy the houses ithe index is comprised on.
In general a lot of the housing mess we're in (average owner who bought post-2003 is underwater) is due to people treating housing like a fungible asset class. Which it most definitely is not.
I don't see a future contract for Manhattan condo. Doesn't seem a like a natural instrument to trade. Too specific. National & Major MSA makes more sense.
80s Man not being able to hedge is not a problem if your intention is to make a directional bet. Besides, the logical hedge in my view against a condo index is an office REIT.... Yield on that pays you to wait.
"If you sell a stock index future you can hedge (and arbitrage) by buying the underlying index."
FYI this is what is called a perfect hedge...which makes no sense. You can accomplish the same thing with sizing.
Rhino, index arb is a huge business on wall street based on selling index futures and buying the underlying stocks.
Without hedging housing futures won't even get as big as the beanie baby market.
Index arb is a business, but its not the only business. Playing divergences between indicies and their components is a business. So is making a short call and pressing it. Paulson made a pretty decent business out of that in 2008.
Whats the hedge for USO, the crude oil ETF? Equity players trade that with no involvement in the commodity futures market. That's a pretty big volume business. You are trying to sound smarter on this stuff than you are.
Rhino the hedge for crude is physical barrels of oil. Morgan and goldman will take physical delivery of oil and send it to a refinery for processing if the arb is big enough. Housing is not a commodity. Stop trying to treat it like one. All the busted dotcom day traders looking for a new angle are not helping sort out the housing mess. All they are is another group of people who have to go bankrupt before we can call a bottom.
The point is that USO and UNG have grown into healthy markets without being arbitrage markets. They are public investor vehicles for the most part, not markets for oil traders to play arbs. I am sure trading a condo price index could grow into something without a natural hedge. The ETF market is a zoo, what's one more.
And I didn't ask what the hedge for crude is, I asked what the hedge for the crude ETF, USO, is.