Friday, March 28, 2008

Scenes From the Mortgage Crisis, Part Next

Bear Stearns' Chair James Cayne walks off with $61 million.
As somebody remarked, “...there’s no success like failure….”
You might recall said chairman was playing bridge as the store burned down….

No Home Price Rebound Until 2010

That’s what Freddie Mac’s Chief Economist Frank Nothaft says.

Thursday, March 27, 2008

Kitchen/Bath Dealers Average 29 Prospects, 16 Sales in February

Kitchen/bath dealers averaged 29 showroom visitors during the month of February and closed an average of 10 kitchen sales and 6 bath sales, according to the most recent Dealer Business Barometer survey by the NKBA. The survey was sent to more than 2,500 kitchen and bath dealers in March.
Some 18.2% of respondents said they had more showroom visitors in February of 2008 than they had in February a year earlier, while 44.4% stated that they had fewer visitors.
Similarly, while 24.2% of respondents said they had more kitchen sales close in February of this year than in the same month last year, 46.2% said they had fewer sales. The average price of a kitchen sale closed in February of 2008 was $32,967.

About one in every six dealers said they had more bathroom sales close in February 2008 than in February of last year, while 29.3% said they had fewer sales. The average price of a bath sale closed during the month was $13,012.

Scenes From the Mortgage Crisis, Part Next

The Oregonian newspaper gets hold of a JPMorgan Chase internal memo advising its employees how to falsify mortgage applications to get around automated safeguards in the system just as if it all were one big video game and not other people's homes and lives.
"It boggles my mind that any federally chartered organization would invite this kind of activity in such a flagrant way," said David Tatman, head of Oregon's Division of Finance and Corporate Securities.
But Tatman confirmed that as a state regulator, he doesn't have jurisdiction over the federally chartered Chase.
The U.S. Office of the Comptroller of the Currency has authority over Chase. OCC spokesman Dean DeBuck declined to comment on the document.

Wednesday, March 26, 2008

February New Home Sales Sink to Thirteen-Year Low

New home sales for February dipped 29.8% to a seasonally adjusted annualized rate of 590,000 units, the lowest rate since 1995, according to the Census Bureau. Through the first two months of the year, just 92,000 new homes have been sold, 30.8% below 2007's pace.
Median sales price for a new home in February was $244,100, up 8.2% from January but down 2.7% from the same month last year. At the current sales pace, builders have a 9.8 month supply of unsold homes, unchanged from last month.

Tuesday, March 25, 2008

Women Still Do Most Cooking, But Men Do More Than Ever

Via Learned on Women (now added to our blogroll), a new study finds that while women still prepare the majority (78%) of dinners in the home, men now produce 18% (up from 14% in 2003).
Two out of every three men under age 25 in a household will prepare at least one of the next 10 meals there. The study also found that the increasing number of male cooks has led to an increase in year-round grilling. Thirty-eight percent of the households surveyed indicate that they grill at least once in a two-week period, compared to 31% ten years ago.

March Consumer Confidence Plummets 40%

The Conference Board's Consumer Confidence Index fell 40.4% in March from the same month the previous year to an anemic 65.4 (1985 = 100). That mark was 15.6% below February's revised figure.
The Expectations Index declined to 47.9, while the Present Situation Index decreased to 89.2.
Consumers' short-term expectations also deteriorated further in March. Those expecting business conditions to worsen over the next six months increased to 25.4%, while those anticipating business conditions to improve declined to 8.1%.
Said Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumers' confidence in the state of the economy continues to fade and the Index remains at a five-year low. Looking ahead, consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon. The Expectations Index, in fact, is now at a 35-year low, levels not seen since the Oil Embargo and Watergate."

S&P: Home Prices Through January Down 11%

Existing single family home prices fell 10.7% through January year-over-year in the 20-City Composite Index compiled by Standard & Poor/Case-Shiller.
“Unfortunately it does not look like early 2008 is marking any turnaround in the housing market, after the declining year recorded throughout 2007,” says David M. Blitzer, Chairman of the Index Committee at S&P. “Home prices continue to fall, decelerate and reach record lows across the nation. No markets seem to be completely immune from the housing crisis."

ABC News: Mortgage Scams on the Rise

Because people who are facing foreclosure don't have enough misery....

Monday, March 24, 2008

Not Ready to Let Go of Easter?

Me neither. Have a peep.

February Existing Home Sales Dip 24%

Sales of existing homes in February dipped 23.8% from the same month in 2007 to a seasonally adjusted annualized rate of 5.03 million units, according to the most recent figures from the National Association of Realtors. That mark was 2.9% higher than the pace for January.
Sales of single family homes for the month were down 22.9% year-over-year, to a seasonally adjusted annualized rate of nearly 4.5 million units.
Median sales price for an existing home during February was $195,900, down 8.2% from the median in February of last year, and down 1.9% from January. At current sales rates, there were 9.6 months' inventory of unsold homes on the market, up 39.1% from the inventory in February, 2007.
“We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” said Lawrence Yun, NAR chief economist. “Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.”

Housekeeping Note

In order to avoid readers unwittingly clicking on a link that might peddle them Viagra or dirty pictures, this blog now has moderated comments. Sorry for any inconvenience.

Friday, March 21, 2008

You'll Find That You're in the Rotogravure

Happy Easter!

Mortgage Crisis Hits Small Builders

The Wall Street Journal surveys the damage. Failure of small and mid-size builders will hurt many companies in our industry who sell to these companies.

Tuesday, March 18, 2008

February Single Family Starts Drop 41%

Starts for single family homes in February dipped 40.5% from the year before to a seasonally adjusted annualized rate of 707,000 units, according to the Census Bureau. That's the lowest rate since 1991. Starts for all homes hit an annual rate of 1.07 million units last month, down 28.4% from February, 2007.
Starts to date hit 98,300 units at the end of February, down 26.9% from the same period of 2007, and single family starts totalled 98,300 units over that span, a 37.9% drop.
The seasonally adjusted annualized rate for building permits in February was 978,000 units, down 36.5% from the same month last year, while the single family permit rate for the month plummeted 41.9% to just 639,000 units per year.

Monday, March 17, 2008

February Kitchen Appliance Shipments Dip 13%

Shipments of kitchen appliances in February dipped 13.3% from the same month last year to 2.9 million units, according to the most recent figures from the Association of Home Appliance Manufacturers.
Shipments in the first two months of 2008 are 13.3% behind levels for the same period of 2007.
Electric cooking appliance shipments dipped 15.1% year-over-year to 375,600 units shipped, while gas cooking appliances were down 15.8% to 250,900 units shipped. Microwave ovens and ranges were down 12.6% to 804,700 units.
Refrigerator shipments dipped 16.5% during the month to 577,800 units, and dishwasher shipments were down 13.6% to 453,000 units. Disposers slipped 7.4% to 472,900 units shipped, and compactors were down 9.9% to 7,300 units shipped.

Scenes From the Mortgage Crisis, Part Next

Bear Stearns, which this time last year was buying sub-prime mortgages and announcing the worst was over, has been sold to JP Morgan Chase & Co. for $2 a share, which the Wall Street Journal characterized as a"fire sale." The Fed is throwing in $30 billion to shore up the deal.
The stock closed at $88.25 on December 31st, and was trading at $30 a share when the market closed Friday.
Bear Stearns Chairman Jimmy Cayne spent last week playing cards in a bridge tournament.
A report in Britain's Guardian notes that while most executives and traders are going to be stiffed, $1 billion has been set aside for exit packages for the top executives.

Added note: JP Morgan paid less for Bear Stearns than the Yankees paid for Alex Rodriguez.

Yet Another 'Since the Great Depression' Moment...

From the lead of a Wall Street Journal report: "The Federal Reserve announced one of the broadest expansions of its lending authority since the 1930s in an effort to stem a credit crisis that is engulfing the financial system and threatening a deep recession."

Friday, March 14, 2008

What Does 2008 Hold for Kitchens and Baths?

Kitchen & Bath Design News gives us a shout for the answer.

Construction Workers Wages Up 4% in February

Workers in construction trades saw their average hourly wages rise 4.3% in February compare to the same month last year to $21.34, according to the Bureau of Labor Statistics. Weekly wages for the construction industry rose 4.3% year-over-year to $798.12, but that was a slight decline from January's average $802.49.
However, the BLS also reported that the Consumer Price Index had increased 4.0% in February over the same month in 2007, up 18.9% in energy, 9.0% in transportation, 4.6% in food, and 4.5% in health care over that span.

Thursday, March 13, 2008

Scenes From the Mortgage Crisis, Part Next

The Wall Street Journal reports that banks who made home equity loans are seeing losses accumulating...and because lenders who are stuck with bad mortgages can foreclose before the home equity lender can collect, the banks find themselves stuck for the amounts they lent with nothing to collect. About 5% of home equity loans were delinquent in the fourth quarter.
Meanwhile, the CEO of Freddie Mac is quoted as saying that the problem is that too many poor people bought houses. Do you suppose anyone helped expand housing opportunities for all families, including low-income and minority families?

February Foreclosures Dip Slightly From January

Foreclosures in February dipped 4% from the previous month to 223,651 properties according to RealtyTrac. That figure was 60% higher than February, 2007, levels.
“The 4% monthly decrease this February was similar to the 6% monthly decrease we saw in February, 2007,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, the year-over-year increase of 60% this February was significantly higher than the 19% year-over-year increase in February, 2007, indicating we have still not reached the peak of foreclosure activity in this cycle.”
Nevada, California, Florida and Arizona led the nation in the rate of foreclosures.

Tuesday, March 11, 2008

Way Cool Prototype Appliance

Via Materialicious, a prototype cooking appliance for people living alone that combines chopping block, cooking hob, pots, utensils and a Wifi-enabled screen to allow users to pull recipes off the Internet.

HIRI Sets Lineup for Spring Conference

HIRI will focus on the mortgage crisis, the credit market and their impact on home remodeling at its Spring Conference, April 3 in Washington, DC. Register here.

Monday, March 10, 2008

Now THIS Is the Way to Motivate Salespeople!

Via RetroRenovation, the Mullinaires sing the praises of Youngstown Steel Kitchens in 1953.

10 Good Reasons Kitchens and Baths Will Stay Strong in 2008

1. Remodeling a kitchen or bath becomes a high priority for homeowners looking to sell an existing home, creating a selling point in a sluggish market.

2. Homeowners not interested in selling will remodel the heart of the home to help shore up sagging real estate value, as well as make their home more livable as their circumstances change.

3. Lenders who have foreclosed on homes will have to enhance kitchens and bathrooms to make them attractive to potential buyers, and in some cases, will have to repair damage to those rooms done by disgruntled former occupants.

4. Baby boomers are aging and caring for aging parents themselves. They need to remodel their kitchens and baths to make them more usable for individuals with limited mobility.

5. Cocooning continues to be the dominant lifestyle trend, with consumers retreating to the privacy of their home for leisure time, which results in the rooms’ functions evolving to meet these new needs. The kitchen has become the family room where members socialize, while the bath provides spa-like amenities in an intimate meeting place. Economic uncertainty will intensify the impulse to cocoon.

6. The number of households with two earners continues to grow, which means that bathrooms have to change to accommodate two adults getting ready for work at the same time.

7. The number of adults who cook as a hobby continues to grow, spurring kitchen remodeling to accommodate more ambitious cooks.

8. Media attention on kitchens and baths continues to grow, with television programs, websites, magazines and books giving consumers more choices in products, materials and styling. Consumers who are aware of choices will be likely to replace what they have with more desirable items.

9. Nearly 18% of all homes in the U.S. were built between 1970 and 1979, and another 16% were built between 1980 and 1989. Many of these houses have yet to be remodeled and therefore have kitchens and baths in need of remodeling.

10. Electricity and water, mostly used by consumers in a home’s kitchen and baths, will become more expensive during the coming years, driving a new need for remodeling using more efficient fixtures and appliances.

All of these factors will help make kitchen and bath remodeling popular throughout all income levels during 2008 and beyond.
A comprehensive look at the current state of the kitchen and bath market in new construction and remodeling will be found in the NKBA’s 2008 Kitchen/Bath Industry Outlook. The Executive Summary can be downloaded at no charge and ordering information can be found here.
A free web-based seminar to discuss the K/BIO results and their implications will be held on April 24 at 1:00 p.m. For information on the webinar, please contact Ed Pell at (908) 813-4828 or by email at

G-Men Probe Countrywide

The Wall Street Journal says the FBI is investigating Countrywide for possible securities fraud connected with its mortgage loans.

Scenes From the Mortgage Crisis, Part 5

JP Morgan sees home prices falling 30%, according to Reuters.

Friday, March 7, 2008

Upscale Consumers Make an Environmental Statement

A study published in Brandweek finds that luxury car customers are more than twice as likely to trade to a more expensive environmentally friendly car than a more affordable alternative. Could the same be true of high end kitchens and baths?

Residential construction jobs down 10% in February

Some 875,000 workers were employed in residential construction during February, according to the Bureau of Labor Statistics, down 10.4% from February of last year. Nearly 2.2 million workers were employed in residential specialty trades last month, down 6% from the same month in 2007.
Average hourly wages for the construction segment were up 4.3% year-over-year to $21.34, with average weekly wages up the same amount to $798.12. Although hourly wages in February edged up half a percentage point from the previous month, weekly wages dipped the same amount from January.

Scenes From the Mortgage Crisis, Part Four

Three of the beebos most responsible for the mortgage crisis got paid $460 million for their management "skills".

Thursday, March 6, 2008

Mortgage Delinquency Rate Nears 6%

Almost 6% of all mortgages in the fourth quarter of last year were delinquent, according to the Mortgage Bankers Association. The measure does not include the slightly more than 2% of all homes that were being foreclosed upon. The delinquency rate is the highest since 1985, and the foreclosure rate is a new record.
While sub-prime adjustable rate mortgages make up just 7% of all mortgages, they represent 42% of the foreclosures started during the fourth quarter.

Homeowner Equity Now Below 50%

The Associated Press is reporting that homeowner equity has fallen below 50% for the past three quarters, the first time since 1945 it's been below that mark. The report adds "Moody's estimates that 8.8 million homeowners, or about 10.3% of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9%, will be "upside down" if prices fall 20% from their peak."

Wednesday, March 5, 2008

Paula Deen 1, Jenny Craig 0

No contest.

Another 'Since the Great Depression' Moment

This is a benchmark that's getting mighty ominous as it pops up: MarketWatch reports that NAHB's chief economist Dave Seiders says housing's in its deepest and most rapid downswing since the days of breadlines and soup kitchens. Seiders sees no recovery until 2009 and points out there are more than 2 million vacant homes that are unsold.
Home prices fell year-over year, and the average family's savings rate turned negative last year; economists noted that those were two other signposts that hadn't occurred since the 1930s.

Scenes From the Mortgage Crisis, Part Three

Three oil rich Middle Eastern investment groups announce they need more cash to "save Citibank." The nation's largest bank is crippled by its exposure to bad subprime mortgages and wrote off $18 billion in losses in the fourth quarter last year.