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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

It’s 2 out of 3: GM joins Chrysler on the bankruptcy production line, so my take on Ford’s advertising slogan seems relevant.

Bank and automakers’ similarities end with GM and Citigroup being removed from the Dow Jones Industrial Average today.

Automakers WANT to sell cars.

Banks DO NOT WANT to make loans.

Here’s a compelling reason for banks’ recent need for self-preservation.

In Floyd Norris’ column this weekend titled Troubled Bank Loans Hit a Record High

OVERALL loan quality at American banks is the worst in at least a quarter century, and the quality of loans is deteriorating at the fastest pace ever, according to statistics released this week by the Federal Deposit Insurance Corporation.

Bank underwriting is notoriously difficult right now and who can blame them? They have to make loans in an economic environment where:

• Housing prices are declining
• Mortgage defaults are rising
• Unemployment is rising

Banks are in survival mode at the moment.

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The Federal Reserve Bank of New York has a nifty summary of all the major economic indicators that are incessantly belched out by business news networks. All can be viewed here, but I parsed out my favorites below:

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Here’s a slew of easy to understand charts from the Federal Reserve Bank of New York on the key national economic indicators that relate to housing such as consumption, housing starts and sales, employment, oil, consumer confidence, GDP and others. They tell a consistent story.

My favorites are below (here are all of them/expanded in size):

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Zubin Jelveh’s Odd Numbers blog at Portfolio.com from has a terrifc chart that ranks countries with a bailout in place by percentage of GDP.

Staggering – it makes the US $700B bailout seem like a drop in the bucket relative to other countries. Of course, more drops are coming. Incidentally, those countries on the list have been on a US consumer buying spree, including real estate.

Check out the Paulson interview on Charlie Rose on Tuesday. Is it just me, or was US Treasury Secretary Paulson’s defense of the current administration’s handling of the credit crunch and his job exit strategy strange? I wonder why he would not consider remaining in office (assuming the new president wants him) to oversee the largest financial crisis since the Great Depression?

This just in: The evil man theory of failure.

UPDATE: If you are feeling a little upbeat today – confidence feeling better, likely because it is Friday, I have just the thing to knock you down. No I am not talking about the Dow Futures falling 500 points overnight. Next year, someone is predicting the Dow to drop another 41% over the next year because earnings estimates are too high.

Click here for original graphic.

At some point down the road, albeit later than sooner, won’t we see a surge in real estate activity? Stock market volatility is crazy and borrowers are restrained from financing now. Pent up demand and bloated inventory…

Tags: Getting Graphic, Henry Paulson

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

In the It’s Newer Homes That Stand Empty as Vacancies Rise by Floyd Norris the sharp increase in vacant houses are more heavily weighted toward new construction.

The Census Bureau reported that 2.9 percent of homes intended for owner occupancy were vacant at the end of the first quarter. That figure had begun to rise even during the housing boom, a little-noticed byproduct of the aggressive construction of homes encouraged by easy credit. Before 2006, that figure had never exceeded 2 percent.

The ease of credit combined with limited underwriting resulted in an excessive level of new construction to enter the market. That’s why the rental market is as weak as the sales market in those areas that were characterized by new development. The speculation drove development beyond the level of reasonable absorption causing investor units to enter the market as competitors to existing rentals.

Tags: Getting Graphic, Commerce Dept, Census, Absorption

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Northern Trust’s Paul L. Kasriel has a great monthly publication and this month’s issue struck me as particularly telling.

First of all, home mortgage debt is at the highest level it has ever been and that is a serious problem. High leverage and volatile rates place many homeowners at serious risk. However, from the news coverage, it feels like it’s 95% rather than 52.5%.

The ratio of home sales to inventory is almost as high as levels seen in the early 1980s. The chart shows that a lot of time is needed to pass in order for excess inventory to be absorbed. Not much magic will change that. Talk of market bottoms in the next few quarters appears to be beyond silly.

And beyond that, if a seller happens to die in the next decade, the buyer of this house gets the insurance money (hat tip: Bankrate).

Tags: Getting Graphic, Bankrate.com

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MATRIX GETTING GRAPHIC Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

In Floyd Norris’ Off The Charts column, Across the Globe, Hints of More Perils in Housing he comments on the results of International Monetary Fund report: Managing Housing Sector Boom-Bust Cycles and points out its contrarian conclusion.

Norris writes:

the fund also concluded that central banks should pay close attention to home prices and consider raising interest rates when prices are rising rapidly. That conclusion is directly contrary to the established policy of most central banks, including the Federal Reserve, which ignores home prices when they are expanding.

In other words, flatten out, or keep markets relatively flat, or without significant boom and bust periods.

The IMF report concludes:

we conclude that economies with more developed mortgage markets could become more economically stable by pursuing a monetary policy approach that responds to house price movements, particularly when they are unusually rapid or lead prices away from past relationships with fundamentals, in addition to consumer price inflation and the output gap (that is, the difference between potential GDP and actual GDP, or output). But this approach must be followed within a broader risk management framework that recognizes the uncertainty over the factors driving house price dynamics and their impact on the economy.

Of course, it’s really, really (really) easy to say these things in hindsight. Try making such policy when economies are clicking, tax revenues are flooding in and the economy is booming.

Too many issues to deal with? Google helps you build paper airplanes.

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MATRIX GETTING GRAPHIC Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

In a world where the contract of a third baseman for playing baseball is $275M and the purchase price of an 85 year old venerable investment bank with 14,000 employees worldwide is $236M, it helps to look at charts on the economy to seek out something that makes sense.

The New York Fed posts some very clear, easy to understand charts on all aspects of the US economy. Click here for full sized graphic.

With the exception of the account balance charts, most of the news is pretty bleak.

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s). Here’s several econ charts I culled from my weekend reading. They all point to weakness (shocking!).

Are we talking ourselves into a recession? I don’t think we need to talk when we have charts:

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Tags: Getting Graphic

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

In David Leonhardt’ page 1 NYT front and center was an awesome chart which shows the trouble the economy is in. Jobs, financial markets and housing – that pretty much sums it up.

Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account.

Over the last year, the number of officially unemployed has risen by 500,000, while the number of people outside the labor force — neither working nor looking for a job — has risen by 1.3 million.

Employment has risen by 100,000, but even that comes with a caveat: there are also 600,000 more people who are working part time because they could not find full-time work, according to the Labor Department.

David’s article is based on the premise that the good times weren’t really of substance. Consumers as a force in the economy were driven by tapping their home equity. Their home equity was increased artificially because of easy credit. Ready credit enabled greater corporate revenues, mergers, etc. which made the financial markets happy.

Without liquid credit markets, employment weakens, housing slips and the financial markets are in turmoil.

Case in point:

The median household earned $48,201 in 2006, down from $49,244 in 1999, according to the Census Bureau. It now looks as if a full decade may pass before most Americans receive a raise.

Although housing is generally considered a trailing economic indicator, it is in sync with jobs and the financial markets.

Tags: Getting Graphic, Commerce Dept, Census

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

The evolving story in the state of the housing market is the growth in foreclosures, to the point where some markets have more foreclosure sales than normal sales. I remember markets in the early 1990s when foreclosure sales were the market.

Floyd Norris covers the trend in his article In Parts of U.S., Foreclosures Top Sales.

There were 153,745 initial foreclosure notices sent out in the United States in January, according to RealtyTrac.

I suspect the next 24 months will see larger foreclosure numbers as mortgage rate resets reach their peak for the next 2 years. RealtyTrac must be pretty excited to be at the right place at the right time with the right data.

So much for a market on fire.

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Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

In Floyd Norris’ column this weekend titled Housing Illness Spreading to Rest of Construction lays out the idea that while construction played an important role in the economy in 2007, it was non-residential construction that supported the economy.

Falling residential construction was a major factor in slowing the economy to a tiny 0.6 percent gain, at an annual rate, in the fourth quarter of last year, according to estimates released by the Commerce Department this week. With home prices falling, and new-home sales running at a rate less than half what it was two years ago, that sector’s share of total economic activity has fallen to a 12-year low.

But rapid increases in other construction spending made up for a large part of the decline. Nonresidential construction spending rose at an annual rate of almost 16 percent in the quarter, and local government investment spending — principally on things like roads and schools — climbed at an annual rate of almost 10 percent.

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