Capital Economics
By Esther Cho | 05/04/2012
The economy added 115,000 jobs, and the unemployment rate dropped to 8.1 percent. With an upward revision of 53,000, March's payroll growth is now 159,000. Economists expected payrolls to grow by 165,000 for April. The government sector cut 15,000 jobs, and the private sector added 130,000 jobs. With these reported numbers from the Bureau of Labor Statistics, economists from IHS Global Insight, Capital Economics, and Fannie Mae provided their own analysis on what the numbers really mean and what they may indicate for the future.
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By Esther Cho | 03/30/2012
With numbers from a CoreLogic report revealing 22.8 percent of borrowers are underwater, principal reduction has been eyed as a key solution to keeping borrowers in their homes. The Center for American Progress has released a report detailing solutions to the "moral hazard" issue. One is to make principal reduction a one-time program open to borrowers already delinquent; another is to open the program only to current borrowers who are at-risk of default; and the third is "shared appreciation" modifications.
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By Esther Cho | 03/19/2012
Even with recent reports of rising mortgage rates and falling home prices, Capital Economics stated it still expects the housing recovery to be under way. The research firm cites two reasons in a report on why mortgage rates won't threaten recovery: rates can only rise so far when tighter monetary policy is still years away, and homes will still be affordable even if mortgage rates were to rise back to normal levels. Capital Economics notes that over the last six months, total home sales have increased by 13 percent.
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By Esther Cho | 03/14/2012
If extremely severe economic conditions were to fall upon the U.S., 15 of the 19 banks tested by the Fed's stress scenario projections are said to be able to survive and continue to lend. The hypothetical stressful scenario included a 13 percent unemployment rate, 50 percent decline in equity prices, and a 20 percent decline in home prices. The scenario covers nine quarters into the fourth quarter of 2013, and the four banks that failed - Ally Financial, Citigroup, SunTrust, and MetLife - were said to have one or more projected regulatory capital ratios that fell below the 5 percent minimum levels at some point over the stress scenario horizon, according to the Fed.
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By Esther Cho | 03/07/2012
The housing market is healing, a Capital Economics report stated, but the road to recovery will be a long and gradual one. The research firm expects to see home sales and homebuilding continue with increases, while house prices are expected to finally stop falling later this year. While certain areas of the housing market appear to be moving in a positive direction, Capital Economics still points out that with the growth come constraints, such as Eurozone issues and tightened lending standards.
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By Esther Cho | 03/07/2012
While home prices declined on a year-over-year basis in January 2012, a month-over-month gain was seen when excluding distressed sales, according to CoreLogic's January Home Price Index (HPI). Prices declined 3.1 percent in January 2012 compared to a year ago in January 2011. But, when excluding distressed sales, year-over-year prices declined by 0.9 percent, and a month-over-month gain of 0.7 percent was seen for January. Distressed sales include short sales and REO transactions.
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By Esther Cho | 02/28/2012
While the Case-Shiller indexes reported new lows for house prices for the end of 2011, responses from analysts are mixed when determining what the data means for home values in the long run. Experts representing Capital Economics, IHS Global Insight, and Standard and Poor’s assessed the implications of the data for the future. While Capital Economics believes the decline may come to an end after a few more months, others are expecting this trend to continue into 2012.
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By Carrie Bay | 01/31/2012
The percentage of single-family homes sitting empty fell to 2.3 percent in the fourth quarter of 2011, according to data released Tuesday by the U.S. Census Bureau.
That's down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006. Analysts say it's a sign that excess inventory - at least the visible inventory - is slowly but surely beginning to clear.
The Census Bureau also reported that the nation's homeownership rate dropped to 66.0 percent - its lowest level in nearly 14 years.
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By Carrie Bay | 01/30/2012
The analysts at Capital Economics are holding fast to their forecast that the downturn in the housing market is drawing to a close. As a result, they say housing should soon start to boost economic growth, but as it now makes up only a small share of the economy, the sector is unlikely to add much more than 0.2 percentage points to annual gross domestic product (GDP) growth this year. In the fourth quarter of 2011, residential investment accounted for just 2.5 percent of overall GDP. That's down from the 2005 peak of 6.3 percent and the 1946 to 2008 average of 4.8 percent.
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By Krista Franks | 01/20/2012
The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales data.
While admitting home sales are "still very low," the chief economist at Capital Economics says it is clear the housing recovery is now well underway. The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December, according to the latest market study released by the National Association of Realtors.
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