Residential real-estate prices increased in the year ended August by the most in two years, a sign housing will continue to boost U.S. economic growth.
The S&P/Case-Shiller index of property values in 20 cities rose 2 percent from August 2011, the biggest year-to-year gain since July 2010, after climbing 1.2 percent the prior month, the group said today in New York. The median forecast of 25 economists in a Bloomberg survey projected a 1.9 percent gain.
A Coldwell Banker LLC realty sign stands outside of a home for sale in Peoria, Illinois. Photographer: Daniel Acker/Bloomberg
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The stabilization in values is rippling through the economy after the housing slump helped trigger the recession, supporting gains in consumer confidence and spending that are benefitting companies such as Lowe’s Cos. Inc. (LOW) and Whirlpool Corp. (WHR) Federal Reserve policy makers have promised to keep interest rates low through mid 2015 to spur growth and reduce unemployment.
“The housing recovery has had modest momentum,” said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “We still are looking for housing improvement and think that trend will continue.”
Estimates in the Bloomberg survey ranged from gains of 1.5 percent to 3.1 percent. The Case-Shiller index is based on a three-month average, which means the August data were influenced by transactions in June and July.
All U.S. equity markets are closed again today in the aftermath of Sandy, the Atlantic superstorm that slammed into the East Coast. It was the first shutdown for stock markets in consecutive days due to weather since 1888. The Securities Industry and Financial Markets Association said bond trading will also be suspended today.
German Unemployment
Elsewhere today, the number of unemployed in Germany rose twice as much as economists forecast in October and the jobless rate climbed for the first time in three years.
In Asia, the Bank of Japan expanded its asset-purchase program for the second time in two months amid mounting evidence that the economy contracted last quarter.
U.S. home prices adjusted for seasonal variations increased 0.5 percent in August from the prior month, with 19 of 20 cities showing gains, today’s Case-Shiller report showed. Seattle was the exception, showing a 0.1 percent decline. Unadjusted prices climbed 0.9 percent.
The softening in unadjusted prices that typically happens starting around this time of year as sales cool may be exacerbated in the short-run by Sandy, said Khan.
Northeast Pullback
“We could see in the Northeast in particular a little bit of a pullback in home sales,” Khan said. “The month-to-month declines are going to be because of the seasonally slow” time of year, she said.
Lenders may put transactions on hold in the affected areas until the properties can be inspected for damage, said David Stevens, president of the Mortgage Bankers Association. Homes in seven states valued at almost $88 billion were at risk of having been damaged, according to a report by CoreLogic Inc., a mortgage software and data firm in Irvine, California.
The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Seventeen of the 20 cities in the index showed a year-over- year gain, led by an 18.8 percent increase in Phoenix. Atlanta led declines, with a 6.1 percent drop.
“The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market,” David Blitzer, chairman of the index committee, said in a statement.
Confidence Improves
The pickup may be helping gain confidence. The Thomson Reuters/University of Michigan sentiment gauge advanced this month to the highest level since September 2007, before the recession began.
Household purchases, which account for about 70 percent of gross domestic product, rose 0.8 percent in September, the most since February, Commerce Department data showed yesterday.
A drop in borrowing costs to record lows, thanks in part to the Fed’s open-ended commitment to purchase $40 billion of mortgage debt a month, may continue to buoy the housing market. The average rate on a 30-year, fixed-rate loan was at 3.41 percent last week compared with 3.36 percent in early October that was the lowest in data going back to 1972, according to Freddie Mac.
Americans bought new homes in September at the fastest pace in two years, the Commerce Department reported last week, with demand up 27.1 percent from a year ago.
Shares of Benton Harbor, Michigan-based Whirlpool, the world’s largest appliance maker, reached their highest in more than two years this month after the company raised its 2012 earnings forecast.
“We continue to see some early but consistent signs of housing recovery, which makes us increasingly optimistic about a more structural-demand recovery,” Marc Bitzer, president of Whirlpool North America, said during an Oct. 23 earnings call.
Bloomberg Table ============================================================ 1-months 3-months 1-year 2-years 3-years earlier earlier earlier earlier earlier ============================================================ US Composite-20 0.88% 4.78% 2.03% -1.76% -0.16% ------------------------------------------------------------ Detroit 2.27% 11.62% 7.58% 10.74% 10.60% Phoenix 1.76% 6.58% 18.77% 9.59% 10.03% Atlanta 1.75% 9.02% -6.12% -12.07% -13.90% Las Vegas 1.55% 3.77% 0.90% -4.94% -9.21% Los Angeles 1.29% 4.38% 2.15% -1.44% 3.84% Minneapolis 1.19% 9.87% 7.44% -1.36% 1.36% Washington DC 1.08% 4.35% 4.32% 3.72% 8.04% Cleveland 1.00% 3.67% 1.13% -3.70% -4.08% Miami 0.95% 4.72% 6.66% 1.80% 0.81% ============================================================ 1-months 3-months 1-year 2-years 3-years earlier earlier earlier earlier earlier ============================================================ San Diego 0.87% 3.12% 1.89% -3.75% 2.93% Chicago 0.71% 8.13% -1.63% -7.30% -10.03% New York 0.71% 3.77% -2.28% -5.06% -5.03% Boston 0.69% 5.07% 1.73% -0.05% 1.49% Charlotte 0.56% 2.81% 2.80% 0.01% -3.43% Denver 0.52% 3.89% 5.53% 3.82% 2.62% Portland 0.49% 4.23% 3.60% -4.23% -6.42% San Francisco 0.47% 5.24% 5.30% -0.32% 7.47% Tampa 0.45% 3.51% 4.19% -1.91% -5.94% Dallas 0.12% 2.31% 3.59% 1.67% -0.13% Seattle -0.06% 3.14% 3.36% -2.91% -5.25% ============================================================
To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
The Huffington Post | By Harry Bradford
Greedy
Typical
Scary
Outrageous
Amazing
Innovative
Infuriating
The former home of the King of Pop may be landing in the hands of a king of investments.
Steven Mayer, who TMZ identifies as a “a super-rich investment banker,” has reportedly purchased the home where Michael Jackson passed away in 2009 for between $17 and $20 million. The house, which has been listed for as much as $29 million since the singer’s death, has attracted interest from a wide range of famous buyers, including Robbie Williams, as well as at least one other unnamed “major celebrity” but it seems it's Mayer’s zeal that’s won the day.
TMZ attempted to get in touch with Mayer's real estate agent, who is also reportedly the agent for the seller of the home, but didn't hear back.
The home just days after Jackson's death in June, 2009:
Given Mayer's apparent enthusiasm for the seven-bedroom home which features a pool, guest house and even an elevator, few would have been surprised if he paid more for the home than the asking price, but as it happens celebrity homes rarely receive a price boost despite their association with fame and fortune, according to The Los Angeles Times. Celebrities like Penelope Cruz and Meg Ryan have slashed prices on their homes, while those unfortunate enough to enter foreclosure such as R. Kelly and Burt Reynolds have had to sell their homes for well below the asking price.