KPIG Radio / The Profit Motive July 27

Stocks struggled to hold early gains and enter the final hour about even. Another 7 banks went to the recievers Friday bringing the 2010 total to 103.

Today’s data is centered around real estate. The Census Bureau reports that the Homeownership Rate hit an 11-year low of 66.9% in the 2nd quarter. This is 2.3% lower than the peak of 69.2% set in the middle of the decade, though the home ownership rate remains some 2% higher than its expected average, its worth remembering that data series tend to over shoot on the way down after a bubble. Vacancy rates saw some improvements, Homeowner Vacancy slipped to 2.5% still about .8% to high as the average is 1.7%. Rental vacancy remained unchanged at 10.6%, which is some 2.5% higher than a normal figure of about 8%. This means that there are roughly 1.5 million excess vacant properties currently owned.

The Case Schiller Home Price Index increased 4.6% from a year ago and 1.6% in May. Some notable standouts include San Francisco +18.3% since last year and + 1.7% in May; San Diego + 12.4% and +1.1%; Los Angeles +9.7% and +1.7%. Las Vegas continues to fall losing 6.5% last year and .5% in May. The usual cautions about undue seasonal influences remain for the index and based on the national median price the annualized gain of 4.6% more or less equals the 4.4% gain compliments of the tax credit. While prices are holding up well the index uses a 3-month average so it will be a few months yet before the price effects of the expired tax credit start to show up.

That said the June Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions showed prices falling in most categories, following a drop in buyer traffic. Occupancy ready foreclosures fell 6.8%, short-sales 6.3% and regular sales 4.6%.