Sellers Can Have Their Cake And Eat It Too
A housing bubble topic for the weekend, the Hong Kong Standard. “In The Fabulous Decade, a book co-authored by Janet Yellen and former Fed vice-chairman Alan Blinder, she suggests behind the boom of the 1990s were monetarism combined with fiscal discipline. The book was published in 2001, therefore the authors missed that spectacular burst of the dotcom bubble and subsequently the housing boom and bust. Ten years lapsed. Despite all the ups and downs in the market, Yellen remains a believer in central banking. The US economy has been recovering, slowly but surely. There is no sign of consumer price inflation. Prices of stocks, bonds and even real estate are a little high, but not even close to an alarming level. There is no reason for the Fed to change the status quo, except the expectation that it has to do something.”
“The greatest uncertainty ahead is the ever strengthening US dollar. A strong dollar keeps domestic consumer prices in check while on the other hand the flood of liquidity from all over the world keeps asset prices in the United States afloat.”
From Bloomberg. “Investors are kicking themselves if they listened to Fed Chair Janet Yellen and the Board of Governors last July and sold their biotech stocks. As Bespoke Investment Group points out, the Nasdaq Biotech index is up well over 40 percent since Yellen’s valuation comments.”
“Here is what the Fed said in its Monetary Policy Report on July 15: ‘Nevertheless, valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year. Moreover, implied volatility for the overall S&P 500 index, as calculated from option prices, has declined in recent months to low levels last recorded in the mid-1990s and mid-2000s, reflecting improved market sentiment and, perhaps, the influence of ‘reach for yield’ behavior by some investors.’”
The Press Democrat in California. “We find ourselves about to embark on our spring rush in the North Bay real estate markets. Coming off last year’s supply-constrained market conditions, we are seeing even less inventory make its way to the table for consumption by eager buyers. Many sellers are searching to understand what the actual value may be of their current home, as well as wondering where and when they will find their next home.”
“Within the borders of Sonoma County, Windsor’s price-per-square foot soared to $405 for a single family home - a staggering leap of 96 percent over last year, partly due to a low volume of sales. The city of Sebastopol reported a 39 percent gain to close the month at $528psf. The west side of Petaluma boasted a hearty 21 percent rise as this submarkets tipped the scales at $390psf.”
“The markets are indicating aggressive demands from buyers with sellers trying to figure out how they can have their cake and eat it, too. Most are encountering madness in the process. This year may find the aggressive, yet patient buyer have the greatest success as they will likely be more creative in their attempts, eventually reaching their goal while helping to create momentum in the marketplace.”
The Mercury News in California. “The Bay Area’s housing market looks like it’s headed for a competitive free-for-all this year as a low supply of homes for sale has droves of buyers bidding up prices everywhere. February sales dropped by double digits from a year ago along the Peninsula and the South Bay and parts of the East Bay, CoreLogic DataQuick reported. ‘I don’t see any bubble at all,’ said Ken DeLeon of Ken DeLeon Realty in Palo Alto. ‘I just see a lack of inventory.’”
“It’s pretty much the same in the East Bay. ‘We are experiencing a little bit of craziness right now,’ said Tom Hendershot, a Redfin agent who covers the Oakland-Berkeley area.”
From Fox Business. “‘It was very difficult to definitively identify a bubble until after the fact–that is, when its bursting confirmed its existence.’–Alan Greenspan, former Federal Reserve Chairman, Jackson Hole, August of 2002. The Federal Reserve had driven the effective federal funds rate down to a low 1.7% when Greenspan made that comment, and the housing bubble was ballooning, ready to burst. Now, the next Fed-induced bubble is popping, a bubble that helped mask weaknesses in the economic recovery.”
“‘The beneficiary of the Fed’s easy-money policies – energy – has burst,’ says Stephanie Pomboy of MacroMavens. ‘The sudden and dramatic souring of the economic data in the last few months suggests the energy bubble had a much bigger role in the recovery than commonly perceived.’”
“Pomboy points to analysis put out by the Manhattan Institute last February which ‘is looking less outlandish.’ The Institute claimed the entire economic recovery was due to the U.S. oil and gas boom, which overall ‘has added $300 billion to $400 billion annually to the economy—without this contribution, GDP growth would have been negative and the nation would have continued to be in recession.’”
“The energy bust has also blown a hole in Treasury demand ‘created by reduced dollar recycling,’ Pomboy says. Meaning, profits from the boom in global oil transactions settled in U.S. dollars (the dollar is the reserve currency) had to be parked somewhere. As energy prices rose, more dollars were recycled in U.S. Treasuries, driving yields to historic lows and helping consumers to borrow to spend.”
“But as the dollar has strengthened, that has led to a sharp, ‘inexorable reduction’ in demand for U.S. Treasuries, Pomboy says. From their peak last September, foreign transactions in Treasuries have flipped from a positive $74 billion per quarter in purchases to a negative $26 billion in quarterly sales through year-end 2014, Pomboy adds.”
The Australian Financial Review. “Australia will run into a glut of apartments in just two years led by Melbourne and Brisbane - but other cities including Adelaide are also building more than they need, research house BIS Shrapnel predicts. By June next year, the country is likely to have more than 74,000 apartment completions, which is 5000 more apartments than it needs. Melbourne faces a surplus of 15,000 apartments.”
“Having led the growth of high-rise dwellings on a scale not yet seen, Melbourne’s construction industry needed to change tack to avoid being hit by the glut, said BIS Shrapnel associate director Kim Hawtrey. ‘Now is the time to start sounding the alarm,’ Dr Hawtrey said.”
“Chinese Estates net profit jumped 38 percent in 2014 after it pocketed HK$2.91 billion from selling its troubled unit Moon Ocean to major shareholder and former chairman Joseph Lau Luen-hung. Turnover dived 59 percent from a year earlier to HK$2.63 billion due to a nearly 90 percent drop in property sales. The developer sold considerably fewer homes in both Hong Kong and the mainland last year, with total sales plunging to HK$207 million and HK$410 million respectively from HK$2.92 billion HK$1.73 billion in 2013.”
“More than 99 percent of its local retail properties were leased during the year, though Hong Kong posted its first annual retail sales drop since 2003. ‘Rental rates for certain retail business sectors have shown signs of reaching their peak,’ Lau said.”
‘The Bay Area’s housing market looks like it’s headed for a competitive free-for-all this year as a low supply of homes for sale has droves of buyers bidding up prices everywhere.’
I actually had a post ready this past week that included this article, but had to put it off because this article changed. I’ll point out that the MN usually does this; the put out a report on the statistics, then update it with interviews, etc. But compare this sentence above with the URL:
http://www.mercurynews.com/business/ci_27735736/bay-area-home-sales-off-slow-start
The Globe & Mail in Canada. ‘One of Alberta’s biggest home builders says the current real estate downturn could soon be turned on its head, with resurgent demand and dwindling inventory.’
“My gut tells me it’s going to be a tough next six months until consumer confidence is re-established,” says Allan Klassen, president and managing partner of Calgary-based Albi Homes. “My gut also tells me we will get through this period and there will be pent-up demand this summer and fall, creating, potentially, another challenging issue – high demand and low supply.”
“This downturn is different because it’s due to geopolitical disputes that can change quickly, and is not a reflection of a typical recession,” Mr. Klassen says. “As well, unemployment numbers are still relatively low, rent rates are low, MLS inventories are manageable; and, in Calgary, a shortage of serviced land are all determinators that provide a solid foundation for a strong responding market.”
‘He says one thing not to expect is a decline in new home prices.’
‘Low borrowing costs and a potential shortage of serviced land will combine to prop up prices. “Low interest rates will initiate activity for many consumers who see 2015 as a great time to purchase a new home,” he says.’
‘Recent Calgary housing market statistics show that while sales activity in the city remained below long-term averages in Feb., inventory levels were the highest they have been in seven years.’
“Last year in February, there were 1,929 listings [single family metro], with a median price of $480,000,” said John Mayberry of CIR Realty. “This year there’s an extra 1,500 units, and a two per cent price difference.”
‘Mayberry says that even though it is normal forCalgary housing market inventory to climb at this time of year, there is more on hand at the moment than usual. Since the first two months of the year, 6,236 new listings have come onto the Calgary housing market, which is a greater number than what has been seen for sometime, but remains below the record high of nearly 7,000 in Feb. 2008.’
‘Mayberry says the recent steep decline in oil prices and industry-wide lay-offs are the main reason property is staying on the market longer. “People have been showing a pattern of thinking a little bit longer, and waiting to see what happens,” Mayberry said. “Especially in relation to more expensive properties
I heard similar stories in Texas in the 1980s, California in 1990, and the nation in 2005.
Quick, painless downturn….recovery only six months away.
Each of the periods noted above has take 7-10 years to recover.
“A strong dollar keeps domestic consumer prices in check while on the other hand the flood of liquidity from all over the world keeps asset prices in the United States afloat.”
Or maybe it’s the other way around: Maybe it’s the flood of liquidity from all over the world that keeps the dollar strong.
Or maybe it’s just acting strong - acting strong in comparison to other currencies, currencies that others are getting out of.
Maybe it’s a race to the bottom and in this race we are currently coming in last.
Strange way to look at it.
“Maybe it’s a race to the bottom and in this race we are currently coming in last.”
My neighbor just bought a new car:
2015 SRX Crossover
http://www.cadillac.com/srx-luxury-crossover.html
FWIW, he operates a garbage truck for employment.
FWIW, he operates a garbage truck for employment.
You’d think he’d be more of an F-350 type … with truck nutz of course.
How much does a garbage truck driver make? According to glassdoor.com Waste Management pays about $18/hr. Doesn’t seem like enough to buy a $40,000 car, but what do I know?
“In The Fabulous Decade, a book co-authored by Janet Yellen and former Fed vice-chairman Alan Blinder, she suggests behind the boom of the 1990s were monetarism combined with fiscal discipline. The book was published in 2001, therefore the authors missed that spectacular burst of the dotcom bubble and subsequently the housing boom and bust.”
Looking forward to the post-bust sequel. And I don’t mean the 2000-01 tech stock correction or the 2007-08 housing market correction, but rather the real bust, which lies ahead of us.
’she suggests behind the boom of the 1990s were monetarism combined with fiscal discipline’
Whoa Nellie, in the bits bucket today we were told discipline has gone the way of the horse and buggy. While I look forward to the end of bubbles, I’m worried too. It’s fun to laugh at the $24 million grilled cheese sandwich trucks, but when money goes poof, somebody gets hurt. There’s a whole lot of Phoney Bucks going to money heaven everyday, and the central bankers have pushed the panic button a couple dozen times in 2015 alone.
“…the central bankers have pushed the panic button a couple dozen times in 2015 alone.”
Can you offer an example of what you mean?
http://www.cbrates.com/decisions.htm
Negative interest rates are definitely a unique fixture of the late stages of this credit mania!
They’re not going to turn ants into grasshoppers with negative interest rates.
Ants are people who live frugally and take some satisfaction from their economic health and net worth.
Grasshoppers are people who feel living life to its fullest means spending every dollar they can get their hands on, from earnings or debt. Dying with money is the worst scenario in their minds.
There is a mix of ants and grasshoppers in any population. Threatening to confiscate money in banks is not going to turns ants into grasshoppers. It will merely make the ants find other place to store their money, or other forms. And those forms are probably not going to involve debt.
The only way to turn ants into grasshoppers is a very high inflation rate. And that can harm the wards of central banks, the financial sector, which it is supposed to help as the perceived cornerstone of the economy.
“Threatening to confiscate money in banks is not going to turns ants into grasshoppers. It will merely make the ants find other place to store their money, or other forms. And those forms are probably not going to involve debt.”
1. Mattress money (pays a higher interest rate of 0% than negative yielding government bonds)
2. Gold and other PMs
3. Bitcoin and other virtual currencies
4. Real estate investments
5. Energy and other commodity investments at 50% off sale prices
6. Other?
Ants are people who live frugally and take some satisfaction from their economic health and net worth.
I’ve always wondered about that stereotype. Sure, there are people who are frugal and save every penny they can, but why call them “ants”?
An ant works its butt off, not for itself, but for the colony. The worker ant that slaves away in the summer will most likely (depending on the species) be dead by the time winter comes around, and other newer, younger ants will benefit from its labor. If anything, an ant is the model collectivist, unlike the frugal human who is an individualist.
Professor Bear: 4. Real estate investments
I don’t think they’re going to go into debt, which is what the central BANK wants.
In Colorado: Sure, there are people who are frugal and save every penny they can, but why call them “ants”? … If anything, an ant is the model collectivist, unlike the frugal human who is an individualist.
I use ant versus grassphopper to identify people who are more willing to defer gratification and store the results of labor (ants) versus people who are less willing to defer gratification and less inclined to store results of labor(grasshoppers).
My core point is that the central bank and government want a nation of grasshoppers, and institute policies that will encourage ants to behave like grasshoppers. However, ant vs. grasshopper I think is a question of innate nature and trying to change that is unlikely to succeed.
“I don’t think they’re going to go into debt, which is what the central BANK wants.”
That’s not the only way to own real estate. There are also REITs, which are by nature diversified and divisible, in contrast to lumpy individual real estate properties with values in the $100Ks which most investors can only afford to purchase with the aid of massive leverage.
“Pomboy points to analysis put out by the Manhattan Institute last February which ‘is looking less outlandish.’ The Institute claimed the entire economic recovery was due to the U.S. oil and gas boom, which overall ‘has added $300 billion to $400 billion annually to the economy—without this contribution, GDP growth would have been negative and the nation would have continued to be in recession.’”
Roh-roh…no wonder some panicked HBB posters are pimping higher future oil prices 24/7!
The easy money has dried up in the oil & gas business. Orders that were placed for capital goods for refinery expansion projects are being placed on hold on several equipment manufacturers. Some are being slowed down - typically by calling way too many design reviews.
The strike happened at the right time for the refineries on two fronts: slowing down production and putting off planned turnarounds.
The question that needs to be asked is: why do refineries favor high crude oil prices? Logically, the refineries would have better margins if the cost of their raw material went down. It appears all these big oil companies (independent refiners like Marathon, Valero also included) have become financial companies. It is possible that they have off-book financial shenanigans.
I am seeing way too many design reviews in the downstream Chem Plant expansions as well.
The funny thing is that the EPC contractors (Jacobs, Fluor, Bechtel) are making out like bandits since they are billing by the hour.
‘Turnover dived 59 percent from a year earlier to HK$2.63 billion due to a nearly 90 percent drop in property sales’
From yesterday:
‘On March 17, Evergrande Real Estate Group, one of the country’s largest developers announced it had secured new financing (i.e. a bailout) from large state-owned banks. How much? A staggering $16 billion. This makes the $4.1 billion Bank of America spent on Countrywide Financial at the beginning of 2008 pale in comparison.’
http://thehousingbubbleblog.com/?p=8915
‘…a nearly 90 percent drop in property sales’
Seems a bit surreal, no?
I love how there is no mention of CA’s drought in any of this….just wait until more municipalities have to bring in water and the state gets serious about mandatory conservation/cutbacks.
I love how there is no mention of CA’s drought in any of this….
Last night I had dinner in Copacabana and I saw three huge water trucks in a row rumbling down the street. I had never seen that before in Rio. P.S. Brazilians might take the most showers in the world.
Shower-mad Brazil grapples with drought
http://www.iol.co.za/news/world/shower-mad-brazil-grapples-with-drought-1.1830973#.VQ3pV2bsMfo
Rio de Janeiro - During Rio de Janeiro’s long summers of sticky subtropical heat, Viviane Vargas says she needs not one, not two, but three showers a day to feel clean.
The saleswoman is not alone: Surveys say Brazilians are the world’s most frequent bathers, taking on average 12 showers a week, putting rub-a-dub-dub up there with soccer and Carnival as essentials of the culture.
But a historic drought that is making taps run dry across southeastern Brazil, particularly in South America’s largest city of Sao Paulo, has people worried they might be asked to cut down on their beloved showers. While it may not be the most serious problem created by the drought, observers warn that restricting showers could spell trouble for political leaders.
“Showers are part of our roots as Brazilians. Not being able to shower in a country as hot as this, where hygiene is as culturally important as is it, well, it’s enough to cause a revolt,” said Renata Ashcar, co-author of the book “
Copacabana? Lola?
Copacabana?
And why not? You can see me here tonight if you want to make a wager to be paid to Ben’s blog.
http://vejoaovivo.com.br/rj/rio-de-janeiro/rua-bolivar-42-copacabana.html
Back to your old charades again eh Lola?
I think you got your links mixed up.
http://www.azlyrics.com/lyrics/barrymanilow/copacabanaatthecopa.html
‘Freddie Mac is selling more than $1 billion of soured U.S. home loans in its largest sale of the debt. Potential buyers are bidding on three pools of nonperforming loans, with unpaid principal balances of about $660 million, $249 million and $125 million, according to debt broker Mission Capital Advisors.’
“The loans involved in this transaction are deeply delinquent, including a large share that are more than two years delinquent,” Thomas Fitzgerald, a Freddie Mac spokesman, said in an e-mail. He wouldn’t comment on the size of the pools being sold.’
“All the traditional NPL players will certainly be interested in bidding on these pools,” said Gary McCarthy, a partner in HMC Assets LLC, a Redondo Beach, California-based firm that invests in delinquent loans. “This is something that we’re going to see on an ongoing basis for a period of time.”
http://www.bloomberg.com/news/articles/2015-03-20/freddie-mac-selling-1-billion-of-loans-in-largest-deal
I thought the Fed snapped up all the dodgy MBS with its QE3 mortgage bond purchase operations. How did these “soured U.S. home loans” get left behind?
This is just the tip of the iceberg.
Are you suggesting that Californians don’t honor their commitments?
California. A state full of deadbeats, welfare cases and hopeless debt junkies.
“A state full of deadbeats, welfare cases and hopeless debt junkies.”
+1 Well said.
Silver Spring, MD List Prices Crater 7% As Inventory Explodes 98%
http://www.movoto.com/silver-spring-md/market-trends/
http://www.movoto.com/austin-tx/market-trends/#city=&time=1Y&metric=Inventory&type=0
http://www.movoto.com/dallas-tx/market-trends/#city=&time=1Y&metric=Median%20%24%2Fsqft&type=0
Oh dear
http://www.movoto.com/houston-tx/market-trends/#city=&time=1Y&metric=Inventory&type=0
Yeah I saw the falling prices in Austin. It’s going to send a few of our speculators to the psych ward.
Or to BK court … or to both.
What could an overnight doubling of Houston housing inventory possibly portend?
Newsday(Long Island NY) is doing a terrific series on their Zombie Home
problem. I had no idea that even in this area these problems exist in NY.
NY has a massive excess housing inventory unmatched by any state except for CA.
“But as the dollar has strengthened, that has led to a sharp, ‘inexorable reduction’ in demand for U.S. Treasuries, Pomboy says. From their peak last September, foreign transactions in Treasuries have flipped from a positive $74 billion per quarter in purchases to a negative $26 billion in quarterly sales through year-end 2014, Pomboy adds.”
Given that the Fed has ended its QE3 Treasury purchases and foreign demand has fallen off the map, what keeps the yields suppressed these days?
Journal Reports Mixing It Up
Scared of Deflation? Head It Off at the Pass
Adviser Bert Whitehead suggests owning Treasurys of different maturities
By Shefali Anand
March 8, 2015 11:02 p.m. ET
What’s the best way to safeguard a portfolio against the danger that slow growth in many parts of the world including Europe could push the global economy into a period of falling prices or deflation? Own U.S. Treasurys, says Bert Whitehead, a financial adviser in Bloomfield Hills, Mich.
“We really have a danger of deflation world-wide,” the 70-year-old founder of Cambridge Connection Inc. says, adding that Treasurys are “the best protection” against that.
For clients who are near or in the early years of retirement Mr. Whitehead allocates 40% of the portfolio in a ladder of individual Treasury bonds. Even without the risk of deflation, he holds a chunk of Treasury bonds for clients because it provides a safety net, not only against risks in the portfolio, but against other risks. Entrepreneurs, for instance, are taking a lot of risk in their businesses and thus should have a solid anchor in their investment portfolios, he says.
…
Macroscope
DAVID BROWN
PUBLISHED : Sunday, 22 March, 2015, 7:26pm
UPDATED : Sunday, 22 March, 2015, 7:26pm
End of US bond rally looms as Fed prepares for rate rises
Central bank is expected to tighten its policy gradually to keep the markets happy while the road to higher treasury yields is about to begin
The 34-year rally in the US bond market is coming to the end of the line. The Federal Reserve might have given the treasury market one final flurry with recent hints that it is in no rush to tighten interest rates just yet, but in the bigger picture, the party is over. A new epoch of higher US treasury yields is about to set in.
This bond super-cycle has seen 30-year US government debt yields crashing to a recent 2.25 per cent low from a peak of more than 15 per cent in 1981, when the bond market was in full flight, thanks to rampant inflation, a weak dollar and a yawning budget deficit.
There has been a lot of volatility along the way, but the trend has led inexorably towards lower yields.
In recent years, bond market bulls have latched on to economic downturn, financial crisis, safe-haven factors, zero interest rates, quantitative easing, deflation and the stronger dollar as reasons to buy the rally. But the bull market is fast running out of excuses to go much further.
Six years of US economic recovery, budget deficit problems, the Fed’s bond-buying spree coming to an end and interest rates getting ready to rise all argue that US treasuries are past their sell-by date. Pretty soon, the Fed will have to commit to higher rates and that should be the point where the euphoria in the bond market starts to crumple.
The bond market is in the Fed’s hands now and how it manages the transition back to normality in the coming months will set the scene. The Fed needs to keep a middle path between what is best for the economy and keeping the markets happy at the same time.
So far, the Fed has succeeded in keeping the markets on its side. It dropped the word “patient” from its rate guidance as a sign that it is returning to rate decisions being made on a meeting-by-meeting basis. And it balanced it off by downgrading its projections for growth and inflation, signalling no rush to push up borrowing costs just yet. The consensus still favours a slow crawl to tightening, with the market betting on an October “lift-off” for rates.
But the “Goldilocks” scenario where growth is not too hot and inflation is not too cold is a perception that is unlikely to last too long. Recent US economic activity has been slowed by cold weather factors, but underlying growth remains strong. Credit conditions are lax, employment is booming and consumer confidence and demand remain upbeat. Fourth-quarter gross domestic product growth slipped back to 2.2 per cent, but it was preceded by two quarters of very strong growth of 4.6 per cent and 5 per cent.
…
The 30-year T-bond yield has plummeted by over 30bps since early March, retracing half of the recent increase off the 2015 low. It doesn’t appear those yields are on the brink of taking off any time soon.
ft dot com > Companies >
Financials
March 22, 2015 3:53 pm
Global fund managers warn of a bond bubble
David Oakley
A broker works in a trading room of a Portuguese bank in Lisbon, Tuesday, May 7, 2013. Portugal held a sale of its 10-year bonds on Tuesday for the first time since it needed a bailout in 2011, representing a milestone in its efforts to regain investor confidence and prove its contested austerity policies are paying off. (AP Photo/Francisco Seco)©AP
A growing number of professional investors are warning that bonds are overvalued as fears grow that a fixed income bubble will collapse in a disorderly sell-off.
Four out of five fund managers said bonds were overvalued in a survey of 300 global managers by CFA UK. Corporate bonds are more overvalued than ever before, while government bonds are the most overvalued asset class, the group said.
The group, which represents 11,000 investment professionals, says their valuations index, which has been running for three years, is in effect flashing red over the high valuations of bonds.
Brad Crombie, head of fixed income at Aberdeen Asset Management, said: “You only know you’re in a bubble when it pops. But this market could pop. There is more tension and anxiety over valuations than for a long while.”
John Stopford, head of multi-assets at Investec, said: “There could be a bubble as investors have loaded up on high yield and corporate bonds. If we do see a reverse in the market, there could be price dislocation and a messy unwind.”
In the past six years, low interest rates and central bank quantitative easing have spurred a desperate search for yield. This has encouraged investors to buy investment grade, high yield and emerging market bonds to supplement their treasuries and gilts.
But bond trading volumes have not expanded as fast as the funds’ bond holdings — new capital rules have made it more expensive for banks to keep large trading books and the new US Volcker rule has barred American banks from trading out their own accounts, known as proprietary trading.
As a result investment managers fear that bond markets could seize up if falling prices or a financial crisis prompt investors to pull their money out of bond funds. Without the banks to act as backstops, there may not be enough institutions prepared to buy bonds when the funds have to sell.
The stakes have also risen for the fixed income markets because the US Federal Reserve is expected to increase interest rates this year for the first time since 2006. Investors say the move will spark volatility and could cause a mass rush to the exits, even though the monetary tightening has been well flagged.
…
March 19, 2015
U.S. commercial crude oil inventories now provide the most days of supply since 1985
graph of monthly U.S. commercial crude inventories’ days of supply, as explained in the article text
Source: U.S. Energy Information Administration, Petroleum and Other Liquids and Short-Term Energy Outlook
Note: U.S. crude oil inventories exclude Strategic Petroleum Reserves. December 2014 to February 2015 are estimates.
With lower U.S. refinery runs and increases in domestic crude oil production, U.S. commercial crude oil inventories at the end of February provided the most days of supply since the mid-1980s. Commercial crude inventories were sufficient to supply 29 days of U.S. refinery demand, based on expected refinery runs in March.
The number of days of supply is calculated by dividing the commercial crude oil inventory level at the end of the month by the forecast crude oil refinery runs in the following month. This calculation excludes government-held inventories such as the U.S. Strategic Petroleum Reserve. The days-of-supply calculation is an indicator of how loose or tight oil markets are by showing the number of days current commercial inventories will last given the future consumption rate at refineries. Refinery runs (or throughput) are the amount of crude oil that refineries process and are used as a proxy to measure the consumption rate.
As explained in This Week in Petroleum, commercial crude oil inventories across all Organization for Economic Cooperation and Development (OECD) countries are also high, but to a lesser extent than U.S. inventories considered alone. OECD crude oil inventories in January were sufficient to supply almost 28 days of OECD crude oil demand. However, unlike in the United States, OECD inventories have exceeded 28 days of supply in several months over the previous two years.
The recent increase in U.S. crude oil inventories (both absolutely and on a days-of-supply basis) in January and February, compared with the more typical OECD days-of-supply, helps to explain why the February increase of U.S. crude oil prices, such as the benchmark West Texas Intermediate (WTI), was smaller compared to the February price increase of the international benchmark Brent. The Brent-WTI price spread settled at $7.53 per barrel on March 10, an increase from the start of the year, when these prices were nearly equal. Other factors that have led to a wider Brent-WTI spread are planned and unplanned refinery maintenance in the United States and increased refinery use in Europe.
…
Where is the $1.50 gasoline? Unless gasoline prices come down, cheap oil doesn’t help me.
A 40% decline in fuel prices is unacceptable to you?
‘The city of San Luis Obispo, where even fixer-uppers are in high demand, can be a particularly difficult market to get into, especially for first-time homebuyers who often have to compete with Cal Poly parents purchasing homes for their children, Tartaglia said.’
‘5 percent down is typical for first-time buyers, and 20 percent is required to avoid private mortgage insurance, Burk said. “We are not seeing very much available in loan programs with less than 5 percent down,” he said. “When the last boom occurred, there were many zero-down programs.”
5 percent isn’t that much different than zero. 5 percent can be wiped out in a couple months.
‘Another key factor in housing sales is the “mortgage side of the equation,” said Jordan Levine, an economist with Beacon Economics. “People see prices going up and want to partake in the market…”
I seem to recall that higher prices result in less demand, not more. Unless they are buying with the expectation to make a profit.
Parents buying houses for college students to live in for 4 years? (OK, 7 years, this being Cal Poly.) We’ve never heard of that. It must be less expensive to pay half a million than to rent an apartment for 7 years.
The realtliars yakking in the article sound just like the frauds here on the blog.
first-time homebuyers who often have to compete with Cal Poly parents purchasing homes for their children, Tartaglia said.’ ??
Thats BS….If its walking distance to Poly then yes there are some parents and investors who will buy houses…If it is not walking distance then the investors or parents are really not much in play…With that said, there are not many good paying jobs in SLO even far away from the school, and the housing is expensive…
“With that said, there are not many good paying jobs in SLO even far away from the school, and the housing is expensive…”
+1 True.
San Luis Obispo, CA 93401
$521,471 Median sale price
http://www.zillow.com/san-luis-obispo-ca-93401/home-values/
$58,697 Median household income, 2009-2013
http://quickfacts.census.gov/qfd/states/06/06079.html
San Luis Obispo also has California’s most expensive power, sewer and water rates.
“Parents buying houses for college students to live in for 4 years?”
Children of the well-off need a garage for the toyz, you know like surf boards, universal gym, etc., and they get to watch those brown “beasts of burden” mow their lawn, rake the leaves, etc., all part of enjoying privilege ‘ya know.
Redmond, WA Inventory Explodes 131%; Prices Dive 6% As Housing Correction Ramps Up
http://www.movoto.com/redmond-wa/market-trends/
Um, dude, give it a rest! So we have one more house for sale than last year. 131% increase on a tiny number is meaningless.
Housing demand and prices now are even higher than they were in 2007. Will it stay that way? I doubt it. But here in rainy Redmond, the bubble has yet to pop. Very high demand by wealthy millenial techie DINKS and H1Bs will continue for the forseeable future.
Now if Microsoft and Google and Nintendo and Rocketdyne all have massive layoffs, then things will change.
Touched a nerve, did ‘e?
I hate to tell you bud but demand is down 13% in Redmond in just the last year…. and falling. See for yourself.
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
You’re struggling with what is and what you want it to be.