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What We Read Today 28 January 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number accepted.

Today we are focused on the U.S. housing market.

  • As Promised, We Decode The Big Banks (Shah Gilani, Wall Street Insights & Indictments) Shah Gilani has contributed to Global Economic Intersection. He says that banks are susceptible to earnings disappointments in 2014 due to slowdown in wealth management business growth and mortgage originations and refis. He sees the 4Q collapse of mortgage originations as an ominous sign for housing in 2014.

What experience and history teach is this — that people and governments never have learned anything from history, or acted on principles deduced from it.”

— Hegel’s Lectures on the Philosophy of History (1832)

There are ten articles following about the U.S. housing market.

  • All-cash home sales reach new high (Quentin Fottrell, MarketWatch, The Wall Street Journal) In December a new record for all-cash home purchases: 42%, up from 39% in November. Just one year ago only 18% of home purchases were all cash. According to Zero Hedge there are five states with more than 50% all-cash home purchases:
  • Florida (62.5 percent),
  • Wisconsin (59.8 percent),
  • Alabama (55.7 percent),
  • South Carolina (51.3 percent),
  • Georgia (51.3 percent).

housing-cash-ritholtx-bloomber-2014-jan-24

housing-single-fam-starts-nahb-2014-jan

  • This 100-year-old idea could end San Francisco’s class war (Noah Smith, Quartz) Noah Smith proposes that the high housing costs in San Francisco derive from inefficient use of land. He then proposes instituting the 100-year old ideas of Henry George to tax land itself and not the improvements thereon. The current property tax laws are substantially levied on the improvements and relatively less on the land itself. This creates a disincentive for optimizing use of the land - the fewer improvements the lower the tax. See following article.
  • Land Value Tax Won't Fix San Francisco (Matthew Iglesias, Slate) Matt likes the land tax idea but disagrees with the idea that it could solve the class tensions in San Francisco resulting from high hoiusing costs. Matt says the high costs are imposed by zoning and not by land "hoarding".
  • Fred Graph MORTGAGE30US (St. Louis Fed, 24 January 2014) The 30-year mortgage rate average has shot up by more than 30% in the last seven months.

mortgage-30-year-2-year-history-2014-jan

mortgage-rates-30-year-2014-jan-23

Note: There are some more housing articles being carried over to tomorrow's "What We Read Today".


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