Housing Prices Higher

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The housing market in Buffalo has tightened considerably. We are seeing multiple bids and bids above asking prices. USA Today reports lower housing supplies in 47 out of 50 nation-wide markets, but Case Shiller reports lower prices. The index fund for REITs (IYR) recovered to where it is now in the middle of 2011 (stocks typically anticipate other markets). The FED has fed this rise. It currently holds $956 billion of mortgage-backed and Federal agency securities. GUESS: There is enough momentum built up to get Obama re-elected. The FED’s holdings over time of these housing securities look like this:

May 2007: $0

May 2008: $0

May 2009: $510.655 billion

May 2010: $1,291 billion

May 2011: $1,041.830 billion

May 2012: $956.041 billion

Its total credit issued at these same times runs $850b (2007), $878b (2008), $2,074.5b (2009), $2,323.8b (2010), $2,750.7b (2011) and $2,842.6b (2012).

The FED has lifted its heavy foot off the accelerator for about a year now. GUESS: This will continue, i.e., no QE3 is in view. The opposite of QE3 is possible once the election is over, especially as headline unemployment falls and headline consumer prices tick up. (Beneath the headlines, they are already higher.) Democracies move very slowly in bringing about fiscal restraint. GUESS: This is happening now, if only as the two wars wind down somewhat, and will be somewhat more visible post-election. Wild cards include a new war (Iran) and further breakdown  in Europe. GUESS for Iran: War won’t break out. GUESS for Europe: Bubble, bubble, toil, and trouble. Chances I’m correct about anything: flip a coin.

12:40 pm on May 25, 2012