Federal Reserve

Balance Sheet Unwind Hits Reverse As Interest Paid To Banks Soars

True to form, the Federal Reserve is taking a rather cautious approach to their balance sheet unwind with this week's System Open Market Account (SOMA) report showing an INCREASE of a $million in the Fed's bloated account holdings. So much for unwinding!  If you were wondering how equity markets could be marching to new highs every week in the face of tepid organic economic growth, you have your answer. Today's inflation numbers show that the Federal Reserve still can't seem to generate any inflation in the economy, with core inflation rising only 1.8% year-over-year. Home [...]

Another Fed “Senior Economist” Demonstrates Willful Ignorance

The Federal Reserve and its army of economists continue to demonstrate willful ignorance of their failed policies. This week it was the Kansas City Fed's Jordan Rappaport who penned another dose of misdirection on the housing market. Rappaport's piece, "Pent-Up Demand and Continuing Price Increases: The Outlook for Housing in 2018" is yet another example of how the Federal Reserve touts itself as a champion of real economy while they continue toe the line for Wall Street and wealthy investors. In the usual captured culture of Fed Mr. Rappaport lays out the theme of continued [...]

Misguided Expectations For Inflation And Bond Yields In 2018

The Federal Reserve has proven they are devoid of credibility when it comes to their advertised mandates of full employment and price stability. What the Fed is good at is the same thing it has always been good at...blowing bubbles and serving the interests of Wall Street banks. Thus it should come as no surprise that many of the clueless PhD economists working for the Federal Reserve are calling for an uptick in inflation in 2018. You know, because the labor market is so "tight" and current inflation is still tepid. The Fed of course [...]

Denton County Real Estate 2018: All Eyes On The Fed

As we embrace the new year, and the freezing temperatures that arrived with it, Denton County real estate prices continued to climb higher as sales continue to grow at a measured pace. The housing boom seen during the last 4-5 years has been impressive by any standards. As the Fed continues its much anticipated balance sheet "normalization", there is a lot at stake for local real estate markets.  The U.S. housing market is now heavily dependent on Fed stimulus, in the form of artificially depressed mortgage interest rates, and the artificial "wealth effect" created by [...]

Fed Balance Sheet Unwind Proceeding At Snails Pace

The balance sheet unwind for the Federal Reserve is proceeding at a snails pace. After a rather large jump in the securities holdings last week, we should have seen a resumption in the balance sheet shrinkage. Interestingly the Fed's holdings of Treasury and mortgage securities only fell by $4.8 billion this past week. A look at the weekly System Open Market Account Holdings shows there is a lot of work to do in the last week of the year if the Fed is going to stick to it's stated unwind schedule. While the Fed has [...]

Average New Home Size Continues To Shrink

The National Association of Home Builders reported that the median and average size of a new home in the U.S. continued to decline in the third quarter. Third quarter numbers on housing starts show that the median single-family new home size was 2,378 square feet.  The average square footage for new single-family homes declined to 2,518 square feet. According to the NAHB, this is apparently just part of the normal housing cycle. "The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a [...]

More Denton County Homes For Sale As QE Unwind Begins

As the Federal Reserve begins their QE unwind, one interesting metric to watch will be the number of Denton County homes for sale. The number of Denton TX homes for sale was up 34 percent year-over-year in October. In Denton County inventory was roughly 18 percent higher through October. In Collin County the number of homes for sale was up a surprising 38 percent compared to last year. Reading between the lines, it appears the Goldilocks economy that the DFW area has enjoyed for the past 5 years is due for some consolidation. The inventory [...]

DFW Home Prices Pushing Limits Of Affordability

DFW home prices have been on a tear during the last 5 years. That begs the question of whether the recent price gains are sustainable. The answer to that inquiry generally boils down to who is selling what. In our hyper-financialized housing market it is not surprising when real estate practitioners or lenders suggest that we are not in a housing bubble. Whether you call it a housing bubble or not, there is no denying that the past decade has seen some dramatic shifts in the real estate market. Dallas/Fort Worth is certainly part of [...]

Dallas Home Prices Challenge Builders

Dallas home prices are expensive, and builders are finally getting the message. That's the news from the most recent data on home starts in the DFW area, which reportedly surged in the 3rd quarter. Builders reportedly started 8,853 single-family homes in the DFW metroplex. For the 12 months ending in September there were apparently 32,234 permits recorded. This was the highest total in a decade. More interestingly, builders' starts for houses under $500,000 rose by 14.5% during the past year. Builders are finally waking up to the fact that the Dallas Fort Worth housing market [...]

Monkey Business – Expert Says Affordable Homes Are Going Away

Affordable homes are going away. With the prospect of rising rates, now is the time to buy a home. That is apparently the opinion of Dr. Luis Torres, a research economist with the Real Estate Center at Texas A&M. Torres, in a rather interesting piece in the Houston Business Journal seems to be confident that Houston's real estate market is on the road to recovery:  “I can say this with some certainty that the worst of the downturn is behind us.” I'm not surprised that HBJ would print a piece like this (after all it is [...]

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