Feds’ Fisher Bubble Warning

Fed’s Fisher warns of potential U.S. housing bubble, MBS buys

By Jonathan Spicer, NEW YORK, Thu Oct 17, 2013 11:14am EDT

Credit: Reuters/Carlos Barria/Files

NEW YORK (Reuters) – A top Federal Reserve official said on Thursday he is seeing fresh signs of a U.S. “housing bubble” and warned about the central bank’s ongoing purchases of mortgage-based bonds.

“I’m beginning to see signs not just in my district but across the country that we are entering, once again, a housing bubble,” Dallas Fed President Richard Fisher told reporters after a speech in New York. “So that leads me … to be very cautious about our mortgage-backed securities purchase program.”

A mortgage-market bubble in part caused the 2007-2009 financial crisis and Great Recession from which the world’s largest economy is still recovering. In response, the Fed has depressed interest rates and is buying $85 billion in assets each month, including $40 billion in mortgage-backed securities (MBS).

Fisher, a vocal hawk on monetary policy, repeated he would not support a reduction in the quantitative easing (QE) program at a Fed meeting later this month in large part because of the fiscal “mess” in Washington.

But citing rising year-on-year house prices in Texas cities, and elsewhere in the country, he warned that the central bank’s hyper-accommodative policies could be inflating dangerous asset price bubbles.

Home resales rose in August and median prices were up 14.7 percent over the previous 12 months, according to the National Association of Realtors, although other data have suggested a sharp rise in mortgage rates has dented the housing recovery.

“We have to be watchful and realize there has historically been an era of the Fed over-stimulating” since the Great Depression, Fisher said.

“I worry we are following that tradition now,” he added on the sidelines of a meeting of the New York Economic Club. “No one knows when the bubble pops. But I would argue that … with each dollar we buy in Treasuries and mortgage-backed securities, we’re getting closer to the tipping point.”

‘KICKING THE CAN’

A frustrated Fed has unleashed three rounds of QE and has promised to keep rates low for a long time to come in order to stimulate the economy, all while tighter fiscal policies and political gridlock have pushed in the opposite direction.

Speaking just hours after President Barack Obama signed off on a last-minute deal to avoid a U.S. default until February, and to re-open the government until January, Fisher said: “kicking the can down the road for a few months will not solve the pathology of fiscal misfeasance that undermines our economy and threatens our future.”

The central bank cannot effectively fight high unemployment unless Congress and Obama “get their act together” and fix the nation’s fiscal problems, he said in the breakfast speech to the club.

U.S. unemployment remained high at 7.3 percent in August, down from a post-recession peak of 10 percent in 2009. The government shutdown has delayed jobs data for September.

“As long as inflationary expectations are held at bay, we can fully open the monetary throttle in an effort to deliver on the mandate Congress gave us to help achieve full employment,” Fisher said.

“But it is for naught as long as the fiscal authorities are slamming on the brakes and leaving everyone in the dark as to how they will cure the fiscal mess they have wrought,” he said at the end of three days of speeches in New York that focused on fiscal threats to the economy and too-big banks.

The deal approved in Washington late Wednesday reopens the government after a 16-day shutdown. The measure resolves no fundamental differences on spending and taxes that divide Democrats and Republicans.

But it also leaves open the possibility of another government shutdown – and potentially another debt crisis – early next year.

Fisher often blames lawmakers’ inaction on resolving long-term U.S. fiscal imbalances for dragging down the economy. Though he has also been a vocal critic of the Fed’s massive bond-buying stimulus, Fisher told Reuters on Tuesday he would not urge a reduction in QE at an October 29-30 meeting.

On Thursday, with the fiscal crisis temporarily at bay, he said: “Given all this uncertainty it would be hard for me even to argue a change in course of monetary policy. I don’t like the course we’re on… but my view will be to stay the course at the next meeting.”

Known for his turn of phrase, Fisher compared U.S. lawmakers’ willingness to take the nation to the brink of default to a person ready to slit his wrists in a lukewarm bathtub. And, he said, continued Fed bond-buying could actually make matters worse, if the U.S. central bank is seen as an agent of financial “recklessness.”

No amount of bond-buying can “offset the rot that is destroying our fiscal house and the blight it spreads over our economy,” he said.

“To be clear,” he said, the Fed will take “all appropriate measures to preserve money market functioning and stability in periods of acute distress.”

But any Fed action “to prevent serious disruptions of U.S. dollar funding markets should not be executed in a way that they might be construed to substitute for fiscal redress,” he said.

(Additional reporting and writing by Ann Saphir; Editing by Lisa Shumaker and Krista Hughes)

Feds’ Fisher Bubble Warning

Online Real Estate Values

Zillow

Zillow gives value estimates of homes.  Zillow has data on 100 million homes across the United States, not just those homes currently for sale.   In addition to giving value estimates of homes, it offers several features including value changes of each home in a given time frame (such as one, five, or 10 years), aerial views of homes, and prices of comparable homes in the area. Where it can access appropriate public data, it also provides basic information on a given home, such as square footage and the number of bedrooms and bathrooms. Users can also get current estimates of homes if there was a significant change made, such as a recently remodeled kitchen. Zillow provides an application programming interface (API) and developer support network.

Redfin

Redfin gives value estimates of homes.  Redfin is an online real estate brokerage with agents in several regions throughout the United States. The company was founded by David Eraker in his small apartment in the Capitol Hill neighborhood of Seattle, Washington. Among many options for the company’s name, he settled on “redfin,” an inversion of the word “finder.” Redfin combines a real estate search site with real estate agents. Redfin.com’s map search displays homes for sale and information about those homes. Customers use the site to search broker databases, past sales records and third-party appraisals, while the company’s local agents handle property access, legal paperwork and negotiations.  Redfin offers buyers up to a 50% rebate (except in Oregon where real-estate laws prohibit it) on the commission paid to the buyer’s agent.

Trulia

Trulia gives value estimates of homes.   Trulia (NYSE: TRLA) is an online residential real estate site for home buyers, sellers, renters and real estate professionals. It lists properties for sale and rent as well as neighborhood information and community insights. The company is headquartered in downtown San Francisco and has offices in New York City and Denver, Colorado.

Cyberhomes

Cyberhomes gives value estimates of homes.   Cyberhomes is a real estate website owned by Fidelity National Financial and Lender Processing Services (LPS). It lists the most current sales of homes in a neighborhood by similar sales

Online Real Estate Values

East County Business Links

Below are local businesses located in the Eastern Contra Costa County region of the San Francisco East Bay Area.  Also see East Bay Linksexternal link

 OAKLEY INSURANCE AGENCY – Brentwood  
 ANTIOCH INDOOR SPORTS CENTER       Roller Hockey ~ Batting Cages ~ Pro Shop
 DELTA BASEBALL LEAGUE – Antioch, CA       No “bench riders”… everyone plays
 ALADINOS PIZZA – Antioch        Locally Famous Family Pizza
 DRAGON CITY RESTAURANT       Order “Spoons” from the special menu
 CHARLIE’S GRILLED SUBS      Crispy Fries – Flavored Lemonaid – Hot Subs
 EL TACO FACTORY     Fresh ingredients, best tacos around
 STICKY CHICKEN & RIBS       Barbeque Pork Ribs, mmmm
  FIVE GUYS – Brentwood       Burgers -n- Fries
 OODLES OF NOODLES      Try the “Spicy Mongolian” Noodles
 PAUL CONNELL REAL ESTATE – Oakley, CA     Helping Buyers & Sellers since 2002
 TITANIUM MOTORSPORTS – Oakley, CA       Quality gas saver commuter cars
 JERRY’S HOME SERVICES – Brentwood, CA       Hard working get-er-done attitute.
 STRAW HAT PIZZA       The place to go after a Little League Game
 WINCO      Way cheaper than the other chain stores
 SMOKE SHOP      Lottery Tickets and other stuff too
 H&R BLOCK – Brentwood        Tax time!
 JOHNS ICE CREAM – Brentwood         The home of the $1 scoop!
 QUICK CHECK – Brentwood          $ Check cashing

HUD Links

A

B

Housing Analysis 2006

 Housing and real estate websites used to show the housing bubble (before Zillow, Redfin, and other internet sites were available) – in 2005 it was NOT popular to speak of the “housing bubble” even though it had already shown signs of deflation for many individual sales.  Housing Analysis 2006.
Contra Costa County Housing Supply-demand-ratio pdf
20060401-Antioch-Home-Sales-Prices pdf 

20060501-Antioch-Active-Pending-Sold pdf

20060501-ccc-supply-demand-ratio pdf

20060501-central-ccc-supply-demand-ratio pdf

20060501-Concord-Active-Pending-Sold pdf

20060501-Discovery-Bay-Active-Pending-Sold  pdf

20060501-eastern-ccc-supply-demand-ratios pdf

20060501-Oakley-Active-Pending-Sold pdf

Sources of housing data and analysis

US Census Bureau Housing Topics

US Census Bureau Population Projections

US Department of Housing and Urban Development – HUD

www.economicindicators.gov

Provides timely access to the daily releases of key economic indicators from the Bureau of Economic Analysis and the U.S. Census Bureau. (Includes housing vacancies and home ownership, new residential construction and sales)

Federal Reserve Beige Book
American Housing Survey
Seized real estate auctions

US Department  of the Treasury

FM Watch

Monitors the activities of Fannie Mae and Freddie Mac

American Real Estate Society
National Association of Realtors®
National Association of Home Builders
NAHB economic and housing data
Philadelphia Exchange Housing Index (HGXSM)

Index composed of whose primary lines of business are directly associated with the U.S. housing construction market.

Property Owner’s Network

Articles covering both sides of the housing bubble debate, real estate news and Denver market conditions.

National Bureau of Economic Research

A private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works.

Economic Cycle Research Institute

A private institute focused on cyclical research and forecasting. Publishes the Leading Home Price Index.

National Association of Real Estate Investment Trusts®

Research and Statistics

The Joint Center for Housing Studies, Harvard University

The Joint Center for Housing Studies is Harvard University’s center for information and research on housing in the United States.

Property Assessment Database

Research Ventures

Wealthy ZIP Codes Of The United States

USC Development Research Department

Real Estate Bubble News Links

A website posting current links to news related to the housing bubble.  Housing and Real Estate Websites used in 2005 analysis

Housing Analysis 2006