A durable recovery begins with increasing demand. More and more people have both stronger desire and more money to spend on housing when a sustained market rally takes hold. Both sales prices and sales volumes rise when demand increases. If you don’t have both, the rally is suspect. Right now, overall demand is slightly higher, but this is almost entirely due to an increase in investor activity. Despite record low interest rates, demand from owner-occupants is moribund. The truth is the recent increase in prices is almost entirely due to restricted supply, and durable recoveries are not built on weak demand and restricted supply.
Shrinking inventory misleads future sellers… for now
By Carrie B. Reyes • Aug 13th, 2012
California’s housing supply is shrinking! Is this a Wall Street Minsky Moment for California’s real estate market?
Data: Housing inventory has decreased by 49% in Los Angeles and 53% in San Diego this summer, compared to the same period one year ago. This lack of listings is causing bidding wars.
Result: Sellers have received high multiples of bids, 50 or more on a single property, lifting home sales volume and prices in the second quarter (Q2) of 2012. All this action puts sellers in the most competitive position they’ve held since the dead cat bounce of late 2009 and early 2010 during the tax credit episode, which stimulated a homebuying surge and resulted in momentum driven speculation.
Thus, a huge level of inventory displacement has taken place, but is it that moment of instant, long-term change?
If the reduced inventory happens to correspond to the bottom in pricing it will only be because lenders managed to maintain their grip on the supply. The problem with the housing market is lack of demand, and it’s not due to negative buyer psychology. There are not legions of scared buyers sitting on the sidelines who can be persuaded to act by any change in conditions. The potential buyers sitting on the sidelines are barred from buying because they have bad credit, likely from a recent short sale or foreclosure.
There has been conversation that this shrinkage in the MLS inventory will contribute to a reset of the housing cycle, as rising home prices will result in increased home equity and reduced negative equity across the board. Thus, more homeowners will be able to conventionally sell their homes without them or the mortgage lender taking a loss.
That’s the banker’s fantasy. It will only become reality if bankers can manage their liquidations without putting too much product on the MLS that they lower prices and without putting so little on the MLS that they snuff out the market’s momentum.
All of this ostensibly adds up to a balanced housing market and a return to more stable days of real estate sales.
first tuesday take
The current shrinking homes-for-sale inventory is a present disturbance which supply side thinkers – that is, most real estate licensees (but not all by any stretch) – profess has reset the market.
Most real estate agents are clueless, and anyone who relies on a realtor as an expert is a fool.
It hasn’t and it won’t, no more than the notion of build it and they will come has ever proven true (except in the movie environment of willful suspension of disbelief).
Rather, in order to bottom in sales volume and pricing there must be sufficient fuel to keep the market in the air, not grounded for failure to lift off. A run at the effort is practice, but does not count. …
The big danger for the market right now is the lack of supply. A low volume rally is easily reversed. Buyers get frustrated and give up, and a small increase in supply in the wrong places and play havoc with neighborhood comps.
What is better understood to move markets, be they labor or real estate, is demand from someone for the use of the stuff. For jobs it is motivated employers, private and public. For real estate, whether housing of any type or commercial properties, demand takes the form of end user-occupants, not flighty flipping speculators.
And as we have seen over and over again, demand from owner-occupants is at late 1990s levels and not increasing. If the chart below were for a stock, would it make you bullish? There is no sign of either reversal or positive upward momentum.
The level of inventory, or supply, merely affects pricing. Pricing (and mortgage rates) presently does not attract many buyer-occupants. Buyer demand is always the prerequisite, needed before the housing market can transition into a solid, upward-bound recovery in volume, then prices.
Without sufficient demand from owner-occupants, recent increases in pricing may prove ephemeral.
Builders get it; real estate brokers and agents need to.
The housing market is ultimately driven by end user demand – of which there is presently very little, probably less than half the sales volume experienced in the recently passed Q2 2012. The current low-level mini-bubble in home prices is due to speculators ferociously outbidding one another to snatch up properties, prompting real estate owned (REO) and short sale sellers and lenders to sense increased action then demands higher prices as a result. …
As a result, speculators and lenders have artificially driven volume and prices up a bit, though only temporarily. In the process, they have created the illusion of increased demand where very little actually exists.
I have made this point many times. Pundits talk about more demand, and anecdotes abound, but the data clearly shows demand is not increasing, and it’s not very strong.
The truth is in the numbers: there were roughly half as many buyer-occupants as sellers in the second quarter of 2012, the speculators merely taking the seller’s risk position of locating that buyer-occupant (or interim tenant for lack of an immediate flip).
However, speculators will soon realize their investments aren’t paying off as expected. At some point in the second half of 2012, this mini-bubble will deflate and we’ll be back to square one, a point which may have already passed. Stay tuned for Q4 2012.
Any speculators hoping to flip will likely be disappointed. This rally is reminiscent of the tax-credit rally of 2010 which abruptly reversed. The biggest difference between this rally and that one is the stimulus. The 2010 rally ended with the stimulus was removed. The stimulus for this rally is super low interest rates, and those are likely to be with us for a while, particularly now that the fed is printing more money to buy mortgages.
Agents will then begin talking more frequently with actual homebuyers – seeking them out from the growing stock of tenants, an activity which will build, and reset, the market.
The process of getting renters bank into the housing market may hasten if the FHA waives 3-year waiting period.
This current nostalgic, and hopefully temporary, foray back into that supply-side world of the seller’s market will prove short-lived indeed.
Related article:
Bold and confident statement. The reasoning is sound, but will it come to pass?
So, what will signal rising demand from end users?
While demand from buyer-occupants and long-term investors is stimulated by lowering interest rates (which have been consistently zero-bound this year), rates must go lower to bring out the buyer-occupants. Mortgage rates, at 3.5%, are actually too high, the yield spread (lender profit margin) between the mortgage rate and the 10-year Treasury Note rate being at least 0.5% too large to excite homebuyers (although the spread does excite the lenders and is putting juicy profits back into their returns).
Market analyst Mark Hanson also stated the current stimulus would fail and that we may see 3% interest rates next year to get more buyers into the market.
Additionally, employment and consumer confidence will need to rise before potential buyer-occupants feel financially secure enough to borrow and buy a home.
What’s a buyer-occupant and buy-to-hold income property investor to do in this environment where supply is sparse due to speculator interference and competition driven prices?
Wait it out, as they are.
Waiting is a wise course of action right now. My OCHN report is giving a buy signal in nearly every city in Orange County, but with such limited supply, it’s nearly impossible to take advantage of the opportunity. If lenders do manage to raise prices by restricting supply, it will hurt affordability and thereby squelch demand. I am waiting for more supply before I seriously consider buying a house.
This mini-bubble will soon pop if it hasn’t already. Actual homebuyers will once again be able to move freely about the inventory, exercising their position as the primary source of demand.
Further, the shadow inventory still waits to get on the market, as lenders are replete with delinquent loans. The properties underlying these delinquencies will eventually be released back into California’s now temporarily depleted inventory. Much like the rising of the tides, the parched California sand will soon be saturated yet again, and buyer’s will have a lot to choose from.
I believe that to be true, but I can’t state it with such confidence. Lenders have been surprising successful at limiting inventory.
Property sellers would be wise to get the most out of this mini-bubble while they can, because it, like the last stimulus of 2009-2010, is the bridge to nowhere.
Many potential sellers think this is a poor time to sell because the market is bottoming. It’s actually a great time to sell. There are many competing buyers, and few sellers providing alternatives. A seller in today’s market can get a 5% to 10% premium over recent comps. That’s an aberration, not the beginning of a new uptrend.
HELOCs are a girl’s best friend
Last week in the post , I lamented about how people consistently run up credit card bills and go to the housing ATM to pay off their bills. It must have been great for the irresponsible when the house was providing them a healthy yearly stipend to pay off their foolish debts.
With so many among us being spenders rather than savers, as long as we have HELOCs, we will always have plenty of desire from spenders to buy houses with built-in ATM machines.
- The former owners of today’s featured REO paid 354,000 back on 4/12/1999. They used a $247,800 first mortgage and a $106,200 down payment.
- On 9/15/1999 they opened a HELOC for $45,000.
- On 6/13/2000 they refinanced with a $328,500 first mortgage.
- On 10/18/2001 the obtained a $44,000 HELOC.
- On 7/31/2002 the refinanced with a $414,000 first mortgage. At this point, we can establish that this family was well acquainted with the housing ATM machine.
- In early 2003, the husband passed away, and the widow had to figure out how to cope with $372,500 in mortgage debt. She could have sold the house for a profit and downsized. Instead, she went Ponzi.
- On 12/31/2003 she refinanced with a $465,000 first mortgage.
- On 4/26/2004 she opened a $50,000 HELOC.
- On 5/10/2006 she obtained a $150,000 HELOC.
- On 5/14/2007 she refinanced with a $664,000 Option ARM.
- On 10/12/2007 she opened a $32,911 HELOC.
- She managed to extract $324,411 in four years as she spent the rest of the family home.
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Proprietary OC Housing News home purchase analysis
39 PHEASANT Ln Aliso Viejo, CA 92656
$614,900 …….. Asking Price
$354,000 ………. Purchase Price
4/12/1999 ………. Purchase Date
$260,900 ………. Gross Gain (Loss)
($28,320) ………… Commissions and Costs at 8%
============================================
$232,580 ………. Net Gain (Loss)
============================================
73.7% ………. Gross Percent Change
65.7% ………. Net Percent Change
4.1% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$614,900 …….. Asking Price
$122,980 ………… 20% Down Conventional
3.51% …………. Mortgage Interest Rate
30 ……………… Number of Years
$491,920 …….. Mortgage
$116,871 ………. Income Requirement
$2,212 ………… Monthly Mortgage Payment
$533 ………… Property Tax at 1.04%
$71 ………… Mello Roos & Special Taxes
$154 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$50 ………… Homeowners Association Fees
============================================
$3,019 ………. Monthly Cash Outlays
($345) ………. Tax Savings
($773) ………. Equity Hidden in Payment
$137 ………….. Lost Income to Down Payment
$97 ………….. Maintenance and Replacement Reserves
============================================
$2,135 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,649 ………… Furnishing and Move In at 1% + $1,500
$7,649 ………… Closing Costs at 1% + $1,500
$4,919 ………… Interest Points
$122,980 ………… Down Payment
============================================
$143,197 ………. Total Cash Costs
$32,700 ………. Emergency Cash Reserves
============================================
$175,897 ………. Total Savings Needed
The property above is available for sale on the MLS.
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[...] FT Alphaville China unveils financial reform plan for 12th Five-Year Plan period – xinhuanet A durable recovery would be demand driven not supported by restricted supply – O.C. Housing News Should homeowner wait it out until values increase? – O.C. Register [...]
Basel III Will Increase Mortgage Costs, Limit Riskier Lending: Fitch
Proposals found in Basel III to raise capital requirements for mortgage loans would increase borrower costs for traditional mortgages and make nontraditional mortgages less available at regulated banks, according to a commentary from Fitch Ratings.
“U.S. regulators’ ‘notice of proposed rulemaking’ (NPR) addressing capital requirements and risk-weighted asset (RWA) calculation criteria would, if adopted, ultimately push banks away from all but the most conventional and low risk forms of mortgage lending,” Fitch stated.
Nontraditional loans that carry higher risks fall under Category 2, while traditional loans are in Category 1. Under the NRP, Category 2 loans, such as negative amortization mortgages, loans with a balloon payment, loans lacking verification of a borrower’s ability to repay, loans that take more than 30 years to mature, require banks to hold two to three times more capital, Fitch explained.
“For example, current capital rules place a 50% risk weighting on mortgages with an 85% loan to value. However, under the NPR, the same loan could generate a 150% risk weighting if classified as a Category 2 loan,” the agency stated.
Fitch also added that under current regulations, risk-based capital charges are not applied to mortgages that are sold, even when the seller provides representations and warranties to buy back loans that go into default within 120 days of sale.
However, under the NPR, lenders would be required to “hold capital for the duration of the credit-enhancing reps and warranties, including early default and premium refund clauses that regulators regard as off-balance sheet guarantees,” the agency explained.
Thus, Fitch said the proposed capital changes will lead banks to pass on the additional capital cost to borrowers for traditional loan products, and with “the stricter treatment of Category 2 loans in the NPR and Dodd-Frank Act, it is unlikely that banks will continue to originate or sell significant volumes of nontraditional mortgage products, thereby reducing availability of credit to many borrowers.”
Woodward Asset Capital Argues for Buyer Demand to Determine Prices
Woodward Asset Capital (WAC), parent company to software solutions OfferSubmission and VerifiedShortSale, expressed frustration in a release over how property values are currently determined. Rather than relying on BPOs and appraisals, the company said market demand from buyers should dictate home values.
“Existing models of valuation are inherently flawed because they are subject to human selection and error,” said Ronald Jasgur, WAC president, in a release. “23% of all listings in our systems consistently sell above the bank’s list price, which the client formulated using appraisals, BPOs and automated modeling. The only value that matters when negotiating an REO
or short sale is what the actual market is willing to pay today. The past is history; it’s no indication of what’s happening today or what could happen tomorrow. An appraisal is an estimate based on history. A BPO is an expectation based on history.”
Woodward Asset Capital shared data on properties that sold far above the BPO and appraisal price based on demand. One example was a foreclosed home in Chicago that sold for $154,157 when the list price was at $53,900 in June. The BPO valued the property at $50,000, and the appraisal at $49,000. The bank property had 75 hours.
Another foreclosure in San Diego had 76 offers and sold for $301,000 when it was listed at $204,750, but had BPO and appraisal values at $195,000 and $180,000, respectively.
“This data speaks to the fact that the traditional way of marketing distressed assets leaves a lot of money on the table. That’s a loss for everyone… servicer, investor, neighbors, and local taxing authorities. The industry cannot afford to continue to rely on outdated practices when available technology can help us determine true market value,” added Jasgur.
Both OfferSubmission and VerifiedShortSale work to ensure offers are to help maximize the sales price, move inventory faster, and prevent fraud.
WAC, headquartered in Southfield, Michigan, provides customizable technology solutions to help manage real estate sales and prevent fraud in the distressed asset marketplace.
Getting a system like OfferSubmission in wide use would rid us of much of the slime in CA real estate. Wonder if it will ever happen…
At some point, someone will develop a truly disruptive technology to make real estate negotiation easy and transparent. That will eliminate much of the slime from real estate because far fewer agents will be needed and those that remain will not be able to hide their misdeeds.
BLS Breaks Down Unemployment Stats, West Region Still Hurting Most
While the national unemployment dropped in August, some regions are still reeling from above-average jobless rates, the Bureau of Labor Statistics (BLS) reported Friday.
Across the United States, 26 states recorded unemployment rate increases in August, while 12 states and the District of Columbia posted decreases. Unemployment didn’t change month-to-month in the remaining 12 states.
BLS also reported that non-farm payroll employment increased in 28 states, with Texas, Florida, and Missouri leading the pack in month-over-month increases. Meanwhile, Virginia, D.C., and Washington led the 21 states that saw a decline in employment. Colorado was the only state with no changes reported.
Regionally, the West continued to record the highest unemployment in August, posting 9.4 percent. The Midwest once again reported the lowest rate at 7.5 percent. Over the month, the Northeast experienced the only “statistically significant” change in unemployment rate, a 0.2 percent increase.
Meanwhile, among the nine geographic divisions, the Pacific continued to report the highest jobless rate, posting 10.0 percent in August. The West North Central registered the lowest rate at 5.9 percent.
In terms of state-by-state unemployment rate, Nevada again placed highest among the states with 12.1 percent. It was followed by Rhode Island and California, which posted 10.7 percent and 10.6 percent, respectively. North Dakota continued its trend of low unemployment, recording 3.0 percent.
In total, 21 states reported jobless rates significantly lower than the national average of 8.1 percent, while 12 had “measurably higher” rates, and 17 states and D.C. had rates that weren’t appreciably different.
Of the 17 states that reported statistically significant year-over-year changes in unemployment, only New York recorded an increase (increasing 0.8 percentage point).
The fact that current market dynamics are being driven by unprecedented intervention + perception management, it’s not going to end well for most homedebtor buyers because all of their eggs are in one basket for just an ownership interest.
Many people do put all their investment eggs in housing, particularly here in California. What happens if prices stagnate for a decade with people making excessive debt service payments? The money they “invested” in debt service could have gone to savings or other investments which appreciated in value.
“Market analyst Mark Hanson also stated the current stimulus would fail and that we may see 3% interest rates next year to get more buyers into the market.”
The lower the rates go, the harder impact will be on home values when mortgage rates return to their 7% to 10% norm….eventually.
Yes. In my monthly reports, the low interest rates have pushed rental parity almost back to peak pricing. Based on the historic relationship to rental parity, prices have overshot to the downside. However, if interest rates go up prior to wages going up, rental parity values will collapse, and the affordability will collapse along with it.
This is my prediction:
Banks will restrict inventory until they (QE..subsidized) every last dollar from the last busted bubble. Once they are flush with enough cash, they will then reflate another bubble. Rinse and repeat. This is what happens when your govt is controled by banks and wall st.
I dont know how long this can go on, becuase it defies every rule
Of econonomics, but its still working.
That is certainly where we are headed. And unless we stop backing all these new loans, the US taxpayer will be on the hook for the graft.
I am also surprised that the market manipulations have succeeded as well as they have. Or course, it require them to change the rules of the game, but since the banks control the government with their lobbyists, they managed to suspend mark-to-market accounting and delay millions of foreclosures. Aided by zero cost loans from the federal reserve, the banks will eventually earn their way to solvency.
Uh…… the big problem for banks is that due to artificially induced ultra low rates, another massive crisis continues to build simply because all types of loans that shouldn’t be originated, are being originated.
“because all types of loans that shouldn’t be originated, are being originated.”
Thats the game! Who are you to say they “shouldnt” be made? Its relative. The tax payer will continue to hyperinflate themselves into perpetual debt. As long as the banks can make the loan owners “feel” wealthy the game will go on.
I’m hearing more “home improvement” loans and HELOC ads on the radio due to the low rates. The Funny thing is that really only the 45 and older demo has equity in their homes.
And only the people in that demographic who didn’t HELOC themselves to the max. That takes out about a third of them.
Housing – Elephant that is holding up the 600 lb Ape in the room.
Romney’s Housing Plan Looks a Lot Like Obama’s
By Karen Weise | BusinessWeek – 3 hours ago
Amid a Friday afternoon focused squarely on the details of Mitt Romney’s 2011 tax returns, the Republican candidate also quietly released a white paper on the candidate’s housing policy. As I’ve written before, the campaigns have remained quite silent on housing and foreclosures, even though the housing market is struggling and more than one in five homeowners owe more than their house is worth. The new Romney plan document is all of seven pages long–one of those pages is the cover, and three pages lay out the current situation and bash Obama’s policies. That leaves a one-page executive summary that recaps the two pages that actually outline the “plan.”
That part of the plan is, shall we say, light on details. So much so that Business Insider’s Joe Weisenthal wrote (in his headline no less) that the paper “has got to be a joke.” He pointed to how Romney addressed Fannie Mae and Freddie Mac, the Government Sponsored Enterprises that guarantee mortgages and got a nearly $190 billion bailout. The white paper says: “The Romney-Ryan plan will completely end ‘too-big-to-fail’ by reforming the GSEs… Rather than just talk about reform, a Romney-Ryan Administration will protect taxpayers from additional risk in the future by reforming Fannie Mae and Freddie Mac and provide a long-term, sustainable solution for the future of housing finance reform in our country.” Got that? So Romney will reform them and do something new. How Romney will “reform” them and what will replace them isn’t specified. Republicans typically talk about ending the GSEs, so if reforming them involves something different, it could be a departure from many in the party.
Other parts of the Romney plan look an awful lot like what Obama’s plan has done–much of which has had only a limited impact. Romney wants to “responsibly” sell the 200,000 vacant homes that the GSEs picked up when borrowers defaulted and faced foreclosure. He explains the government can do this by “returning these homes to private hands and renting them out.” The GSEs already began in February with a pilot to sell 2,500 homes and recently sold the first part of that portfolio.
Romney also wants to make it easier for struggling borrowers to get foreclosure alternatives such as short sales, deed-in-lieu-of-foreclosure, and modifications. As we’ve reported before, promoting these alternatives have been the Obama administration’s primary anti-foreclosure tool–and that approach has had limited success. For example, a recent academic analysis found the administrations’ efforts will only increase the number of loan modifications banks make by about 0.7 percent. That’s because the big banks that service mortgages have done a lousy job at implementing the program. Interestingly, the Romney plan briefly mentions support for “shared appreciation” modifications, where servicers write down the principal of a mortgage and then get a cut of any price increase when a homeowner eventually sells the home. The Obama administration started supporting principal reduction this summer, but this would be quite a departure from the stance of many Republicans, who say that principal reduction encourages people to purposely default on their loans.
In perhaps the most marked difference with Obama, Romney calls for the repeal of Dodd-Frank and to replace it with “sensible” regulation that will “eliminate the regulatory uncertainty that is paralyzing lenders.” What those regulations will be, or how they’ll protect consumers while opening up more private lending, isn’t clear.
Taken together, perhaps its not surprising Romney buried the release on a Friday afternoon after posting the headline-grabbing tax documents.
I read the report hoping there would be some new information for a post. There isn’t any. If covers no new ground from the post I did recently Romney’s housing plan lacks fresh ideas while Obama is boosted by bottom callers.
IR – I think using the MBA purchase index is a valiant attempt on your part to quantify the demand. However, I don’t think it tells the whole story. In order to apply for a purchase loan you need to have a property under contract. With the limited amount of supply on the market, it’s going to put a lid on the number of mortgage applications that actually occur, so this measurement of demand is being restricted by the lack of supply.
Also, flippers were using alt-a or subprime money during the bubble because it was relatively cheap and easy to qualify for. These days, they have switched to using private hard money lenders. I believe most of what gets categorized as “investor cash deals” is actually being financed by hard money. Obviously, these loans don’t show up in the MBA statistics either.
Utter nonsense! Total inventory>total sales each and every month. Thus, it’s not possible for demand to be restricted by lack of supply.
As usual, you’ve got the camel riding the jockey
.
A sales transaction occurs when demand and supply converge. It would take unbounded naivety to equate total sales with total demand.
P.S. Your favorite metric, the OC SFR median, is hovering at 525k. Do you think we are in for another 530k deathgrip?
Mellow Ruse,
Those factors may influence the data somewhat, but if you look at the long history of that index, there was a steady increase in purchase originations reflecting population growth in an expanding economy. The current low level of originations is more to do with the lack of available buyers than the lack of available inventory.
Think about it, back in 2008 and 2009, there was plenty of inventory, but the origination index was at record lows at the same level it is today. Perhaps you can argue that originations would be higher today if inventories were higher, but it’s still range-bound at the bottom. Until we see a breakout following by a sustained uptrend in the number of originations, I am not buying the argument that demand is getting better.
What was that, like 10 days?
Fed Williams: QE3 asset purchases may be expanded
By Sue Chang | MarketWatch – 25 minutes ago
SAN FRANCISCO (MarketWatch) — The Federal Reserve could expand its stimulus package to include assets other than mortgage-backed securities if the U.S. economy fails to respond to its latest effort to jump-start the economy.
Reuters The Federal Reserve building in Washington.
“Unlike our past asset-purchase programs, this one doesn’t have a preset expiration date,” said San Francisco Fed President John Williams at a speech at the City Club on Monday. “Instead, it is explicitly linked to what happens with the economy.”
At its monetary-policy meeting on Sept. 13, the U.S. central bank said it would buy $40 billion worth of mortgage-backed securities per month as part of a stimulus plan colloquially known as QE3 — for Round 3 of quantitative easing.
“We might even expand our purchases to include other assets,” he said.
While the Fed is limited to what it can hold on its books, it can increase purchases of U.S. Treasurys, mortgage-backed securities, and debt issued by agencies such as Freddie Mac and Fannie Mac, Williams said.
He also suggested that the Fed could extend Operation Twist beyond the end of the year, when it is due to expire, and continue buying longer-term Treasurys if the economic recovery does not make substantial progress.
There are measurable and significant impacts from Fed’s policies from QE1 and QE2 in the market, but economic growth is not strong enough and still has a long way to go, he said.
Meanwhile, unless Europe heads nearer a worst-case scenario — a wholesale breakup of the euro zone — Williams considers the domestic “fiscal cliff” scenario a bigger threat to the U.S. economy, he said. The fiscal cliff refers to the federal tax increases and spending cuts that set to go into effect under current legislation.
“I don’t expect all these tax hikes and spending cuts to take place as scheduled,” Williams allowed. “Still, there’s little doubt that a number of austerity measures will hit. I expect that to slow our economy’s forward progress.”
Williams projected U.S. gross domestic product to expand by about 1.75% this year, followed by an acceleration in growth to 2.5% in 2013 and 3.25% in 2014. The unemployment rate, he said, is likely to ease to 7.25% by the end of 2014, while inflation remains below the Fed’s target of 2% “for the next several years.”
If they really wanted to stimulate the economy, the federal reserve could start paying interest on savings accounts, particularly to seniors.
[...] I wrote that a durable recovery would be demand driven, not supported by restricted supply. Reductions in supply may temporarily force house prices higher, but a sustained recovery requires [...]
[...] I wrote that a durable recovery would be demand driven, not supported by restricted supply. Reductions in supply may temporarily force house prices higher, but a sustained recovery requires [...]
[...] I wrote that a durable recovery would be demand driven, not supported by restricted supply. Reductions in supply may temporarily force house prices higher, but a sustained recovery requires [...]