1 hour, 4 minutes ago
LOS ANGELES - The iTunes Store said Tuesday it had passed a milestone, selling more than 3 billion songs since launching four years ago.
The milestone came just six months after iTunes, Apple Inc.'s online music download service, surpassed the 2 billion tracks-sold mark. The service launched in April 2003 and it took until February 2006 to sell its first 1 billion songs.
In the first quarter of this year, it was ranked the third-biggest overall music retailer in the U.S., behind No. 1 Wal-Mart Stores Inc. and Best Buy Co., according to consumer surveys by The NPD Group.
The ranking was based on units sold, not revenue from sales, and counted every 12 tracks purchased online as equivalent to an album in compact disc format.
Apple's line of iPod portable music players has been key to iTunes' popularity.
In April, the Cupertino-based company said it had sold more than 100 million iPods. It reached that milestone in the five and a half years since the first iPod was sold.
Shares of Apple fell $9.71, or 6.9 percent, to $131.72 Tuesday.
Tuesday, July 31, 2007
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Tuesday, July 31, 2007, at 6:00 p.m. EST.
Stock prices turned lower in the afternoon when news surfaced that American Home Mortgage might liquidate assets after failing to meet its margin calls. At the close, the Dow dropped almost 149 points, to close at 13,209, while the Nasdaq fell 37 points, closing at 2,604. Oil closed up $1.38 to $78.21 per barrel, and gold closed up $2.70 at $679.30 an ounce.
Tame inflation in June, with consumer confidence at a six-year high, helped push stock prices higher intraday after an impressive gain on Monday. Second-quarter profits continue to beat analysts' expectations. Global liquidity is still at record levels. The global boom is on a solid track. Stay fully invested.
I still believe this market will continue to rise into year-end. The Fed is definitely on hold for the remainder of 2007. Fed Chairman Bernanke does not expect housing to bottom this year. Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting is cheaper than owning.
Do not forget that record global liquidity of $5.24 trillion is driving global growth and profits. The dollar has fallen to an all-time low against the euro, and a 26-year low against the British pound. A falling dollar will continue to enhance the return of your offshore investments. Consequently, you should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 3, 2007, at 6:00 p.m. EST.
Stock prices turned lower in the afternoon when news surfaced that American Home Mortgage might liquidate assets after failing to meet its margin calls. At the close, the Dow dropped almost 149 points, to close at 13,209, while the Nasdaq fell 37 points, closing at 2,604. Oil closed up $1.38 to $78.21 per barrel, and gold closed up $2.70 at $679.30 an ounce.
Tame inflation in June, with consumer confidence at a six-year high, helped push stock prices higher intraday after an impressive gain on Monday. Second-quarter profits continue to beat analysts' expectations. Global liquidity is still at record levels. The global boom is on a solid track. Stay fully invested.
I still believe this market will continue to rise into year-end. The Fed is definitely on hold for the remainder of 2007. Fed Chairman Bernanke does not expect housing to bottom this year. Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting is cheaper than owning.
Do not forget that record global liquidity of $5.24 trillion is driving global growth and profits. The dollar has fallen to an all-time low against the euro, and a 26-year low against the British pound. A falling dollar will continue to enhance the return of your offshore investments. Consequently, you should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 3, 2007, at 6:00 p.m. EST.
Monday, July 30, 2007
School adds PowerPoint to application
By JUSTIN POPE, AP Education Writer 1 hour, 22 minutes ago
At business meetings the world over, PowerPoint-style presentations are often met
But at one of the world's top business schools, such slide shows are now an entrance requirement. In a first, the University of Chicago will begin requiring prospective students to submit four pages of PowerPoint-like slides with their applications this fall.
The new requirement is partly an acknowledgment that Microsoft Corp.'s PowerPoint, along with similar but lesser-known programs, have become a ubiquitous tool in the business world. But Chicago says so-called "slideware," if used correctly, also can let students show off a creative side that might not reveal itself in test scores, recommendations and even essays.
By adding PowerPoint to its application, Chicago thinks it might attract more students who have the kind of cleverness that can really pay off in business, and fewer of the technocrat types who sometimes give the program a bad name.
"We wanted to have a freeform space for students to be able to say what they think is important, not always having the school run that dialogue," said Rose Martinelli, associate dean for student recruitment and admissions. "To me this is just four pieces of blank paper. You do what you want. It can be a presentation. It can be poetry. It can be anything."
Online applications are already the norm, and it's not uncommon for colleges to let students submit extra materials such as artwork. Undergraduate and graduate applications also are beginning to ask more creative and open-ended essays.
Partly that's to better identify the students with a creative spark. Partly it's to fend off the boredom of reading thousands of grinding, repetitive responses to "Why is University X right for you?"
But asking for four electronic slides appears to be a new idea.
Chicago's new requirement may provoke groans from some quarters. It could be called corporate America's final surrender to a technology that, in the name of promoting the flow of information, often gums it up by encouraging bureaucratic jargon and making colorful but useless graphics just a little too easy to produce.
Nonetheless, PowerPoint has become the lingua franca of business meetings worldwide. Its 500 million copies are used (or misused) in 30 million presentations per day, Microsoft has estimated. PowerPoint is so common in the business world that "it's actually your word processor," said Michael Avidan, a second-year Chicago MBA student, who reads applications for the graduate program and helped it do a dry run. His slides were a play featuring a Greek chorus questioning him about his application.
"When you apply to business school, he said, using a buzz word for the best a student has to offer, "it's only natural that your 'deliverables' be in PowerPoint."
Martinelli acknowledges one reason for the requirement is that students will inevitably have to master the technology in their jobs. But she says students won't be judged on the quality of their slides. Rather the slides are an outlet for judging the kind of creativity the business world needs.
Chicago's does have a few ground rules: no hyperlinks, and no video. Beyond that, "I really don't know what we're going to get," Martinelli said.
It's not surprising the first PowerPoint application is coming from the world of business schools. In an undergraduate admissions office there would likely be worries about the applicant pool's familiarity with and access to technology. Applicants to Chicago's MBA program generally already know Facebook and YouTube and are accustomed to presenting themselves online. They can also afford the $200 application fee. (True technophobes can fill out four pages in another fashion and mail them in).
Technology isn't a hurdle for most University of Chicago applicants, but "other schools might have to think about that," said Nicole Chestang, chief client officer for the Graduate Management Admission Council, a worldwide group of management programs that oversees the GMAT entrance exam.
It's also business schools that traditionally have the most boring essays, focusing on workplace accomplishments rather than passions or unusual talents, but which are increasingly interested in creativity.
Avidan predicts some applicants will be turned off by the requirement, but says it's an opportunity for clever students whose test scores and other application materials might not stand out to shine.
"If there's one foundation of business, it's innovation, and this is your change to elevate yourself and show you can do something innovative," he said.
The PowerPoint presentations will be the last part of the application the admissions office considers its decision.
"This can determine whether or not you get admitted," he said. "Here you are. Show us."
At business meetings the world over, PowerPoint-style presentations are often met
But at one of the world's top business schools, such slide shows are now an entrance requirement. In a first, the University of Chicago will begin requiring prospective students to submit four pages of PowerPoint-like slides with their applications this fall.
The new requirement is partly an acknowledgment that Microsoft Corp.'s PowerPoint, along with similar but lesser-known programs, have become a ubiquitous tool in the business world. But Chicago says so-called "slideware," if used correctly, also can let students show off a creative side that might not reveal itself in test scores, recommendations and even essays.
By adding PowerPoint to its application, Chicago thinks it might attract more students who have the kind of cleverness that can really pay off in business, and fewer of the technocrat types who sometimes give the program a bad name.
"We wanted to have a freeform space for students to be able to say what they think is important, not always having the school run that dialogue," said Rose Martinelli, associate dean for student recruitment and admissions. "To me this is just four pieces of blank paper. You do what you want. It can be a presentation. It can be poetry. It can be anything."
Online applications are already the norm, and it's not uncommon for colleges to let students submit extra materials such as artwork. Undergraduate and graduate applications also are beginning to ask more creative and open-ended essays.
Partly that's to better identify the students with a creative spark. Partly it's to fend off the boredom of reading thousands of grinding, repetitive responses to "Why is University X right for you?"
But asking for four electronic slides appears to be a new idea.
Chicago's new requirement may provoke groans from some quarters. It could be called corporate America's final surrender to a technology that, in the name of promoting the flow of information, often gums it up by encouraging bureaucratic jargon and making colorful but useless graphics just a little too easy to produce.
Nonetheless, PowerPoint has become the lingua franca of business meetings worldwide. Its 500 million copies are used (or misused) in 30 million presentations per day, Microsoft has estimated. PowerPoint is so common in the business world that "it's actually your word processor," said Michael Avidan, a second-year Chicago MBA student, who reads applications for the graduate program and helped it do a dry run. His slides were a play featuring a Greek chorus questioning him about his application.
"When you apply to business school, he said, using a buzz word for the best a student has to offer, "it's only natural that your 'deliverables' be in PowerPoint."
Martinelli acknowledges one reason for the requirement is that students will inevitably have to master the technology in their jobs. But she says students won't be judged on the quality of their slides. Rather the slides are an outlet for judging the kind of creativity the business world needs.
Chicago's does have a few ground rules: no hyperlinks, and no video. Beyond that, "I really don't know what we're going to get," Martinelli said.
It's not surprising the first PowerPoint application is coming from the world of business schools. In an undergraduate admissions office there would likely be worries about the applicant pool's familiarity with and access to technology. Applicants to Chicago's MBA program generally already know Facebook and YouTube and are accustomed to presenting themselves online. They can also afford the $200 application fee. (True technophobes can fill out four pages in another fashion and mail them in).
Technology isn't a hurdle for most University of Chicago applicants, but "other schools might have to think about that," said Nicole Chestang, chief client officer for the Graduate Management Admission Council, a worldwide group of management programs that oversees the GMAT entrance exam.
It's also business schools that traditionally have the most boring essays, focusing on workplace accomplishments rather than passions or unusual talents, but which are increasingly interested in creativity.
Avidan predicts some applicants will be turned off by the requirement, but says it's an opportunity for clever students whose test scores and other application materials might not stand out to shine.
"If there's one foundation of business, it's innovation, and this is your change to elevate yourself and show you can do something innovative," he said.
The PowerPoint presentations will be the last part of the application the admissions office considers its decision.
"This can determine whether or not you get admitted," he said. "Here you are. Show us."
Microsoft breaks ground on San Antonio datacenter
The new datacenter, which will rely on myriad green technologies, will serve Microsoft's software plus services and Windows Live initiatives
By Nancy Gohring, IDG News Service
July 30, 2007
Microsoft is relying on green technologies in its newest datacenters, including one in San Antonio where it is breaking ground on Monday.
The San Antonio building, one of several in the works at various locations, will be 500,000 square feet and contain tens of thousands of servers, said Michael Manos, senior director of datacenters at Microsoft. The company announced it would build the center in San Antonio earlier this year.
The first phase of the facility will be operational in July next year, he said.
Microsoft's software plus services and Windows Live initiatives are driving these construction efforts, which will support the online services, he said. Microsoft is not alone among Internet services companies building new facilities to support hosted services. Google and Yahoo have also both announced development of new large datacenters.
Microsoft uses 31 different criteria in choosing datacenter sites. While Manos couldn't describe them all for competitive reasons, access to environmentally friendly resources is one.
In San Antonio, Microsoft plans to use recycled water, sometimes called gray water, in its cooling systems. The option, which allows the use of water that is not fresh or drinkable but is not contaminated by any toxic substances, is offered by the local utility. It is considered environmentally friendly because it reduces demands for fresh water and doesn't consume the energy required to purify it at waste water treatment sites.
In addition, a significant portion of electricity in Texas is generated by wind, and that clean source of energy was attractive to Microsoft, Manos said.
The San Antonio facility will be one-third the size of a massive datacenter that Microsoft is building in Quincy, Wash. That center will be nearly carbon neutral, meaning it doesn't produce more carbon than it consumes. Electricity used at the Quincy datacenter will be generated by hydroelectric plants, which are commmon in western Washington. The center won't quite be totally carbon neutral, however, because the company uses diesel-powered generators for backup and must test those now and again, Manos said.
Last week Microsoft confirmed that its construction company in Quincy switched to biodiesel to fuel cement trucks and other equipment in order to solve a health and safety problem. At that site, builders erected the walls and ceiling of the structure before laying the floor. Cement trucks, originally using petrodiesel fuel, were letting off exhaust that would be harmful to workers who were inside the enclosed building. Switching to biodiesel, which has cleaner exhaust, solved the health and safety issue at the site.
Manos wasn't sure if Microsoft would continue to use biodiesel at the Quincy site or other locations. Generally, the company plans to continue using such green technologies. "There is a great alignment between going green and being economical," he said.
At some datacenters, Microsoft has systems that use outside air, if it's cool enough, to help regulate the temperature in the building rather than solely using air cooling systems.
About 75 jobs will be available at the San Antonio facility. But Microsoft likes to consider the broader affect on local economies. The facilities often bring business to other nearby companies, such as those that might service generators. In addition, not long after Microsoft announced that it was building in Quincy, Yahoo and Intuit also decided to build datacenters there.
Microsoft has other new datacenters "in the works," but none that it is ready to talk about just yet, Manos said.
By Nancy Gohring, IDG News Service
July 30, 2007
Microsoft is relying on green technologies in its newest datacenters, including one in San Antonio where it is breaking ground on Monday.
The San Antonio building, one of several in the works at various locations, will be 500,000 square feet and contain tens of thousands of servers, said Michael Manos, senior director of datacenters at Microsoft. The company announced it would build the center in San Antonio earlier this year.
The first phase of the facility will be operational in July next year, he said.
Microsoft's software plus services and Windows Live initiatives are driving these construction efforts, which will support the online services, he said. Microsoft is not alone among Internet services companies building new facilities to support hosted services. Google and Yahoo have also both announced development of new large datacenters.
Microsoft uses 31 different criteria in choosing datacenter sites. While Manos couldn't describe them all for competitive reasons, access to environmentally friendly resources is one.
In San Antonio, Microsoft plans to use recycled water, sometimes called gray water, in its cooling systems. The option, which allows the use of water that is not fresh or drinkable but is not contaminated by any toxic substances, is offered by the local utility. It is considered environmentally friendly because it reduces demands for fresh water and doesn't consume the energy required to purify it at waste water treatment sites.
In addition, a significant portion of electricity in Texas is generated by wind, and that clean source of energy was attractive to Microsoft, Manos said.
The San Antonio facility will be one-third the size of a massive datacenter that Microsoft is building in Quincy, Wash. That center will be nearly carbon neutral, meaning it doesn't produce more carbon than it consumes. Electricity used at the Quincy datacenter will be generated by hydroelectric plants, which are commmon in western Washington. The center won't quite be totally carbon neutral, however, because the company uses diesel-powered generators for backup and must test those now and again, Manos said.
Last week Microsoft confirmed that its construction company in Quincy switched to biodiesel to fuel cement trucks and other equipment in order to solve a health and safety problem. At that site, builders erected the walls and ceiling of the structure before laying the floor. Cement trucks, originally using petrodiesel fuel, were letting off exhaust that would be harmful to workers who were inside the enclosed building. Switching to biodiesel, which has cleaner exhaust, solved the health and safety issue at the site.
Manos wasn't sure if Microsoft would continue to use biodiesel at the Quincy site or other locations. Generally, the company plans to continue using such green technologies. "There is a great alignment between going green and being economical," he said.
At some datacenters, Microsoft has systems that use outside air, if it's cool enough, to help regulate the temperature in the building rather than solely using air cooling systems.
About 75 jobs will be available at the San Antonio facility. But Microsoft likes to consider the broader affect on local economies. The facilities often bring business to other nearby companies, such as those that might service generators. In addition, not long after Microsoft announced that it was building in Quincy, Yahoo and Intuit also decided to build datacenters there.
Microsoft has other new datacenters "in the works," but none that it is ready to talk about just yet, Manos said.
Friday, July 27, 2007
Newspapers feel real estate woes
By SETH SUTEL, AP Business Writer 10 minutes ago
NEW YORK - It's bad enough that a cratering housing market is leading to a slump in real estate advertising at newspapers, as a dreary series of earnings reports showed this week.
What's worse is that a lot of that advertising may never come back to newspapers even if the real estate sector recovers. That's because a significant chunk of those advertising dollars are moving — you guessed, online.
Exactly how much of a shift is occurring is difficult to measure in terms of dollars or market share, but several real estate executives say they are making a conscious decision to move money out of newspapers and onto the Internet as that medium grows in importance as a tool for researching home-buying decisions.
Granted, a significant amount of the declines in real estate advertising in newspapers can be attributed to the general weakness in real estate markets, particularly in hard-hit markets such as California and Florida, which were booming a year ago — leading to big gains in advertising back then.
This week Tribune Co., the No. 2 publisher by circulation, posted a 24 percent drop in the second quarter, while industry leader Gannett Co. has reported a 9.9 percent decline and McClatchy Co. reported a 19 percent decline, citing big losses in California and Florida.
Like the housing market itself, much of the up-and-down movement in newspaper real estate advertising can be viewed as cyclical, meaning it will be weak in down markets and bounce back in the upward part of the cycle, whenever that comes up.
But what's worrying analysts this time around is that real estate could become the next category of classified advertising — after help-wanted ads — to mark a significant and permanent shift away onto the Internet. The stakes are big for newspapers since classifieds are highly lucrative and make up more than 35 percent of their revenues.
Mike Simonton, the top media industry analyst at the Fitch Ratings credit analysis service, says that currently a good 30 percent of help-wanted classified advertising is now online, while the Internet's share of real estate and auto classified advertising is lower, at about 15 to 20 percent, but poised to move higher.
"The threats from the Internet are real," Simonton said. "Newspaper advertising should remain under pressure until newspapers are better able to address the threat of online advertising."
Representatives of several major real estate franchisors said in interviews that many home sellers still see newspaper advertising as an essential component of selling a home, but that younger brokers, home sellers and buyers are clearly more focused on using the Internet.
"For our agents, newspapers are an old standby," said Abby Lee, director of regional advertising in Denver for RE/MAX, a major real estate franchisor. "With younger agents, there's a trend of going online. There's a realization that's where they need to be."
Suzy Antal, director of marketing, communications and public relations for Prudential Real Estate Affiliates, a unit of Prudential Financial Inc., said many Prudential agents have been pulling back on advertising during the current downturn, but as they return, they're shifting ad budgets to their own Web sites, creating blogs, and taking different approaches beyond newspapers.
"Is newspaper a high priority? No," Antal said. "I don't believe my buyers and sellers are going to be in that market."
Newspaper publishers understand they need to move more aggressively to hold on to real estate advertising. "We can't sit on our hands," says Charlie Diederich, the director of marketing and advertising at the Newspaper Association of America, an industry group.
Diederich said newspapers are still a key part of most people's real estate searches and an important tool for realtors to make people aware of their brands. But he also acknowledged that newspapers need to do more to make their own Web sites essential to home buying decisions.
"We've got to improve both our print but especially our online products ... so consumers will continue to come to us first so we can deliver that audience to the professional realtor," Diederich said.
A group of five major newspaper publishers also owns Classified Ventures, a Chicago-based business that powers the real estate sections of the Web sites of its 125 member newspapers.
Tim Fagan, president of that group's real estate division, said Classified Ventures would "significantly increase" its investment in Homescape, a real estate-related Web site that provides home listings, but he declined to provide specific numbers.
Whether those efforts will be enough to stanch the flow of real estate ad dollars to online alternatives remains to be seen.
Blanche Evans, the editor of Realty Times, an online real estate news service, says that realtors now have a number of alternatives besides newspapers for listing homes for sale, such as Realtor.org, a site run by the National Association of Realtors, in addition to major online destinations such as Yahoo Inc. (Nasdaq:YHOO - news)/span>.
As home-buyers flock online, it's also tough on realtors, Evans said, since home-buyers are becoming accustomed to seeing extensive color photos, descriptions of the neighborhood as well as video tours of the property — all of which costs money to produce.
With all the online tools available today, realtors "have the ability now to really expose the property in a significant way," Evans said. "People have the ability to tour the house. That has changed everything."
NEW YORK - It's bad enough that a cratering housing market is leading to a slump in real estate advertising at newspapers, as a dreary series of earnings reports showed this week.
What's worse is that a lot of that advertising may never come back to newspapers even if the real estate sector recovers. That's because a significant chunk of those advertising dollars are moving — you guessed, online.
Exactly how much of a shift is occurring is difficult to measure in terms of dollars or market share, but several real estate executives say they are making a conscious decision to move money out of newspapers and onto the Internet as that medium grows in importance as a tool for researching home-buying decisions.
Granted, a significant amount of the declines in real estate advertising in newspapers can be attributed to the general weakness in real estate markets, particularly in hard-hit markets such as California and Florida, which were booming a year ago — leading to big gains in advertising back then.
This week Tribune Co., the No. 2 publisher by circulation, posted a 24 percent drop in the second quarter, while industry leader Gannett Co. has reported a 9.9 percent decline and McClatchy Co. reported a 19 percent decline, citing big losses in California and Florida.
Like the housing market itself, much of the up-and-down movement in newspaper real estate advertising can be viewed as cyclical, meaning it will be weak in down markets and bounce back in the upward part of the cycle, whenever that comes up.
But what's worrying analysts this time around is that real estate could become the next category of classified advertising — after help-wanted ads — to mark a significant and permanent shift away onto the Internet. The stakes are big for newspapers since classifieds are highly lucrative and make up more than 35 percent of their revenues.
Mike Simonton, the top media industry analyst at the Fitch Ratings credit analysis service, says that currently a good 30 percent of help-wanted classified advertising is now online, while the Internet's share of real estate and auto classified advertising is lower, at about 15 to 20 percent, but poised to move higher.
"The threats from the Internet are real," Simonton said. "Newspaper advertising should remain under pressure until newspapers are better able to address the threat of online advertising."
Representatives of several major real estate franchisors said in interviews that many home sellers still see newspaper advertising as an essential component of selling a home, but that younger brokers, home sellers and buyers are clearly more focused on using the Internet.
"For our agents, newspapers are an old standby," said Abby Lee, director of regional advertising in Denver for RE/MAX, a major real estate franchisor. "With younger agents, there's a trend of going online. There's a realization that's where they need to be."
Suzy Antal, director of marketing, communications and public relations for Prudential Real Estate Affiliates, a unit of Prudential Financial Inc., said many Prudential agents have been pulling back on advertising during the current downturn, but as they return, they're shifting ad budgets to their own Web sites, creating blogs, and taking different approaches beyond newspapers.
"Is newspaper a high priority? No," Antal said. "I don't believe my buyers and sellers are going to be in that market."
Newspaper publishers understand they need to move more aggressively to hold on to real estate advertising. "We can't sit on our hands," says Charlie Diederich, the director of marketing and advertising at the Newspaper Association of America, an industry group.
Diederich said newspapers are still a key part of most people's real estate searches and an important tool for realtors to make people aware of their brands. But he also acknowledged that newspapers need to do more to make their own Web sites essential to home buying decisions.
"We've got to improve both our print but especially our online products ... so consumers will continue to come to us first so we can deliver that audience to the professional realtor," Diederich said.
A group of five major newspaper publishers also owns Classified Ventures, a Chicago-based business that powers the real estate sections of the Web sites of its 125 member newspapers.
Tim Fagan, president of that group's real estate division, said Classified Ventures would "significantly increase" its investment in Homescape, a real estate-related Web site that provides home listings, but he declined to provide specific numbers.
Whether those efforts will be enough to stanch the flow of real estate ad dollars to online alternatives remains to be seen.
Blanche Evans, the editor of Realty Times, an online real estate news service, says that realtors now have a number of alternatives besides newspapers for listing homes for sale, such as Realtor.org, a site run by the National Association of Realtors, in addition to major online destinations such as Yahoo Inc. (Nasdaq:YHOO - news)/span>.
As home-buyers flock online, it's also tough on realtors, Evans said, since home-buyers are becoming accustomed to seeing extensive color photos, descriptions of the neighborhood as well as video tours of the property — all of which costs money to produce.
With all the online tools available today, realtors "have the ability now to really expose the property in a significant way," Evans said. "People have the ability to tour the house. That has changed everything."
Thursday, July 26, 2007
The State of the Slump
Tighter Credit Helps Keep Housing Inventories Rising,
Though Some Hard-Hit Cities See Signs of a Turnaround
By JAMES R. HAGERTY and RUTH SIMON
July 26, 2007
Tighter credit is prolonging a deep slump in home sales, but a quarterly Wall Street Journal survey of 28 major metro areas shows that the surge in inventories of unsold homes is slowing. In two of those markets -- Boston and Denver -- the number listed for sale has actually declined from a year ago.
The latest trends offer some hope for an eventual recovery in a U.S. housing market that generally has been cooling since mid-2005. Even so, many economists and industry executives say that recovery will be very gradual and won't start before 2008 at the earliest. That's partly because more-stringent lending policies are keeping many potential buyers on the sidelines, while others are holding off in hopes of prices heading even lower. Meanwhile, there is still a glut of homes on the market in much of the country, especially in Florida and parts of Arizona, Nevada and California.
Home sales and prices generally should bottom out around mid-2008, says Mark Zandi, chief economist at Moody's Economy.com, a research firm in West Chester, Pa. "The market will not revive quickly, however," he says. "It won't be until the turn of the decade before housing activity returns to more normal conditions."
The message for home sellers is that they need to be flexible on price and may have to spruce up their house to stand out against plenty of competition, including from builders desperate to shed inventory. In Atlanta's southwestern suburbs, builder Winstar Neighborhoods is offering free Chevrolet Aveo subcompacts to buyers of certain new homes. Given the glut, buyers in most markets can take their time and bargain hard on price.
Yesterday, the National Association of Realtors reported that sales of previously occupied homes in June were down 3.8% from the prior month to a seasonally adjusted annual rate of 5.75 million. The number of homes listed for sale nationwide was 4.2 million, up 12% from a year earlier but down 4.2% from May, the Realtors said. The median home price was $230,100, up 0.3% from a year earlier.
Median prices can be skewed by shifts in the market, however. Lenders are turning down more and more people with weak credit records or high debt in relation to income, and that is hurting sales of lower-end homes. Jeffrey Mezger, chief executive of KB Home, one of the nation's largest mass-market builders, says its average home price has fallen about 12% from a year ago. In some markets, such as Southern California, he says, "there are two markets emerging." While the high-end housing market has remained strong, prices are down in the entry-level and first-time move-up market.
As measured by the S&P/Case-Shiller national index, house prices in this year's fourth quarter are likely to be down about 7% from a year earlier, says Thomas Lawler, a housing economist in Vienna, Va. He expects a further fall of about 3.5% in 2008.
Yet the picture varies greatly by region and even by neighborhood. The well-heeled can still get loans on attractive terms, and demand has held up far better for homes in desirable neighborhoods near city centers than for homes in more distant and humdrum suburbs. In the San Francisco Bay area, prices have continued to rise briskly in Marin County, a posh area with fairly short commutes to the city, and Santa Clara County, buoyed by hiring at Silicon Valley firms, says Scott Kucirek, general manager of Prudential California Realty. But prices generally have fallen in Solano County, which is a longer commute and has more new construction and entry-level homes.
But tight credit is squeezing lots of people still trying to buy a first home. William and Kimberly Glass were preapproved for a mortgage in May and found a $540,000, four-bedroom, three-bathroom home in Santa Clarita, Calif., near Los Angeles. But by the time they made the offer, lending standards had tightened to the point where they could no longer buy the home with no money down. "It's a little frustrating that a month and a half ago we were in a better position than we are now," says Mr. Glass, an actor. Putting "3% to 5% down would have basically drained our savings and put us in a precarious position with the renovations [the house] needed."
Lenders, under pressure from regulators and investors, are continuing to tighten the screws. Countrywide Financial Corp., J.P. Morgan Chase & Co., National City Corp. and others are making it tougher for borrowers to finance 100% or even 95% of their home's value by combining a home-equity loan or line of credit with a mortgage. Lenders had earlier cut back on such loans to borrowers with weak credit records and are now tightening standards for borrowers with better credit profiles, particularly those who aren't documenting their income and assets.
National City has been tightening standards for home-equity loans every month or so in an effort to stay one step ahead of its competitors, says E. Kennedy Carter Jr., an executive vice president there. "We don't want to be the last girl at the dance when it comes to credit quality." With home prices falling, he says, lenders are moving closer to standards set earlier in the decade, when most required at least a 10% down payment.
On Tuesday, Countrywide blamed its 33% drop in second-quarter earnings largely on sharply higher defaults on home-equity loans, particularly those made to borrowers who had little money for a down payment.
[Housing]
One three-bedroom condo in this Orlando, Fla., building, listed at $749,000, has been on sale since March.
Lenders are adopting federal guidelines for nontraditional mortgages, making it harder for borrowers to qualify for mortgages that allow them to pay interest but no principal in the loan's early years, or make a minimum payment that may not even cover the total interest owed. Lehman Brothers Inc.'s Aurora Loan Services unit put the guidelines into effect over a six-month period beginning in December, and Wells Fargo & Co. said it will do so in August. Fannie Mae and Freddie Mac, which purchase loans from lenders and package them into securities, will apply the guidelines to loan applications beginning in September.
"The noose is definitely tightening" around interest-only loans and option adjustable-rate mortgages, two products that were often used by cash-strapped borrowers to make their loan payments more affordable, says Brian Chappelle, a mortgage banking consultant in Washington. About one-third of borrowers who have used these loans in recent years wouldn't qualify under the tighter standards, he says.
House prices are likely to remain weak in many areas until inventories of unsold homes fall. That process has begun in a few places, including the Boston metro area, where the number of homes listed for sale at the end of June was down 16% from a year earlier. Boston's market cooled in early 2005, before most other areas, and so has had more time to adjust. Some frustrated sellers who don't need to move have taken their homes off the market.
The fall in inventories is a "hopeful sign," says Timothy Warren Jr., chief executive of Warren Group, a financial publisher in Boston, but he thinks sales won't begin rising again before next year. Sales of single-family homes in Massachusetts as a whole in the first half of this year were down 4.3% from a year earlier, and the median price declined 3.6%, to $318,000, according to Warren.
[Housing]
In the Denver area, the number of homes listed for sale is down 5% from a year ago. Contrary to the national trend, Denver's housing market began cooling in 2001 amid losses of jobs in technology and telecommunications. Job growth in the Denver metro area lagged the national average from mid-2001 through late 2004, but has since been above average. "The market is recovering," says Jeff Bernard, a Denver real-estate broker and developer.
But inventories have continued to bloat in Florida, where a speculative binge has led to an enormous glut of condos. Miami-Dade County has enough condos on the market to last 31 months at the current sales rate, says Esslinger-Wooten-Maxwell Inc., a big real-estate brokerage firm there. Still, the rate of increase in unsold homes in the Miami area has slowed recently, says Ronald Shuffield, president of the firm.
Atlanta's inventory of unsold homes is up 43% from a year ago, according to Smart Numbers, a local research firm. It says there are enough homes on the market to last more than 10 months at the current sales rate, up from six months a year earlier. "We haven't hit the bottom yet in Atlanta," says Steve Palm, the firm's chief executive. Job growth in Atlanta remains strong, but many of the jobs aren't very high-paying, Mr. Palm says.
Lewis Glenn, president of Harry Norman Realtors in Atlanta, says he believes lots of potential buyers are waiting to see whether prices will come down. Some of them are marooned because they can't sell their current homes for what they consider a fair price -- or enough to pay off their mortgages.
In the Seattle metro area, the number of listings is up 55% from a year ago. But inventories were unusually lean there last year, and the market is now regaining balance.
In the New Jersey suburbs near New York, listings surged in 2005 and 2006. At the end of June, though, listings in 12 northern New Jersey counties were up just 3% from a year ago, according to Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. In Manhattan, inventories are down 17%, according to Corcoran Group, a real-estate brokerage. A torrent of Wall Street bonuses and foreign buyers lured by the weaker dollar have helped keep the market firm there, says Jonathan Miller, chief executive of Miller Samuel Inc., an appraisal firm in New York. The median sale price for co-ops and condos in Manhattan was $895,000 in the second quarter, up 1.7% from a year earlier, according to Miller Samuel.
Jeffrey G. Otteau, president of Otteau Valuation Group, says the parts of New Jersey popular with commuters into New York are doing best. In those areas, he says, sales are no longer slumping and the number of homes on the market has leveled off. "Proximity to Manhattan is once again becoming the primary force in the market," he says.
--Joseph De Avila contributed to this article.
Write to James R. Hagerty at bob.hagerty@wsj.com and Ruth Simon at ruth.simon@wsj.com
Though Some Hard-Hit Cities See Signs of a Turnaround
By JAMES R. HAGERTY and RUTH SIMON
July 26, 2007
Tighter credit is prolonging a deep slump in home sales, but a quarterly Wall Street Journal survey of 28 major metro areas shows that the surge in inventories of unsold homes is slowing. In two of those markets -- Boston and Denver -- the number listed for sale has actually declined from a year ago.
The latest trends offer some hope for an eventual recovery in a U.S. housing market that generally has been cooling since mid-2005. Even so, many economists and industry executives say that recovery will be very gradual and won't start before 2008 at the earliest. That's partly because more-stringent lending policies are keeping many potential buyers on the sidelines, while others are holding off in hopes of prices heading even lower. Meanwhile, there is still a glut of homes on the market in much of the country, especially in Florida and parts of Arizona, Nevada and California.
Home sales and prices generally should bottom out around mid-2008, says Mark Zandi, chief economist at Moody's Economy.com, a research firm in West Chester, Pa. "The market will not revive quickly, however," he says. "It won't be until the turn of the decade before housing activity returns to more normal conditions."
The message for home sellers is that they need to be flexible on price and may have to spruce up their house to stand out against plenty of competition, including from builders desperate to shed inventory. In Atlanta's southwestern suburbs, builder Winstar Neighborhoods is offering free Chevrolet Aveo subcompacts to buyers of certain new homes. Given the glut, buyers in most markets can take their time and bargain hard on price.
Yesterday, the National Association of Realtors reported that sales of previously occupied homes in June were down 3.8% from the prior month to a seasonally adjusted annual rate of 5.75 million. The number of homes listed for sale nationwide was 4.2 million, up 12% from a year earlier but down 4.2% from May, the Realtors said. The median home price was $230,100, up 0.3% from a year earlier.
Median prices can be skewed by shifts in the market, however. Lenders are turning down more and more people with weak credit records or high debt in relation to income, and that is hurting sales of lower-end homes. Jeffrey Mezger, chief executive of KB Home, one of the nation's largest mass-market builders, says its average home price has fallen about 12% from a year ago. In some markets, such as Southern California, he says, "there are two markets emerging." While the high-end housing market has remained strong, prices are down in the entry-level and first-time move-up market.
As measured by the S&P/Case-Shiller national index, house prices in this year's fourth quarter are likely to be down about 7% from a year earlier, says Thomas Lawler, a housing economist in Vienna, Va. He expects a further fall of about 3.5% in 2008.
Yet the picture varies greatly by region and even by neighborhood. The well-heeled can still get loans on attractive terms, and demand has held up far better for homes in desirable neighborhoods near city centers than for homes in more distant and humdrum suburbs. In the San Francisco Bay area, prices have continued to rise briskly in Marin County, a posh area with fairly short commutes to the city, and Santa Clara County, buoyed by hiring at Silicon Valley firms, says Scott Kucirek, general manager of Prudential California Realty. But prices generally have fallen in Solano County, which is a longer commute and has more new construction and entry-level homes.
But tight credit is squeezing lots of people still trying to buy a first home. William and Kimberly Glass were preapproved for a mortgage in May and found a $540,000, four-bedroom, three-bathroom home in Santa Clarita, Calif., near Los Angeles. But by the time they made the offer, lending standards had tightened to the point where they could no longer buy the home with no money down. "It's a little frustrating that a month and a half ago we were in a better position than we are now," says Mr. Glass, an actor. Putting "3% to 5% down would have basically drained our savings and put us in a precarious position with the renovations [the house] needed."
Lenders, under pressure from regulators and investors, are continuing to tighten the screws. Countrywide Financial Corp., J.P. Morgan Chase & Co., National City Corp. and others are making it tougher for borrowers to finance 100% or even 95% of their home's value by combining a home-equity loan or line of credit with a mortgage. Lenders had earlier cut back on such loans to borrowers with weak credit records and are now tightening standards for borrowers with better credit profiles, particularly those who aren't documenting their income and assets.
National City has been tightening standards for home-equity loans every month or so in an effort to stay one step ahead of its competitors, says E. Kennedy Carter Jr., an executive vice president there. "We don't want to be the last girl at the dance when it comes to credit quality." With home prices falling, he says, lenders are moving closer to standards set earlier in the decade, when most required at least a 10% down payment.
On Tuesday, Countrywide blamed its 33% drop in second-quarter earnings largely on sharply higher defaults on home-equity loans, particularly those made to borrowers who had little money for a down payment.
[Housing]
One three-bedroom condo in this Orlando, Fla., building, listed at $749,000, has been on sale since March.
Lenders are adopting federal guidelines for nontraditional mortgages, making it harder for borrowers to qualify for mortgages that allow them to pay interest but no principal in the loan's early years, or make a minimum payment that may not even cover the total interest owed. Lehman Brothers Inc.'s Aurora Loan Services unit put the guidelines into effect over a six-month period beginning in December, and Wells Fargo & Co. said it will do so in August. Fannie Mae and Freddie Mac, which purchase loans from lenders and package them into securities, will apply the guidelines to loan applications beginning in September.
"The noose is definitely tightening" around interest-only loans and option adjustable-rate mortgages, two products that were often used by cash-strapped borrowers to make their loan payments more affordable, says Brian Chappelle, a mortgage banking consultant in Washington. About one-third of borrowers who have used these loans in recent years wouldn't qualify under the tighter standards, he says.
House prices are likely to remain weak in many areas until inventories of unsold homes fall. That process has begun in a few places, including the Boston metro area, where the number of homes listed for sale at the end of June was down 16% from a year earlier. Boston's market cooled in early 2005, before most other areas, and so has had more time to adjust. Some frustrated sellers who don't need to move have taken their homes off the market.
The fall in inventories is a "hopeful sign," says Timothy Warren Jr., chief executive of Warren Group, a financial publisher in Boston, but he thinks sales won't begin rising again before next year. Sales of single-family homes in Massachusetts as a whole in the first half of this year were down 4.3% from a year earlier, and the median price declined 3.6%, to $318,000, according to Warren.
[Housing]
In the Denver area, the number of homes listed for sale is down 5% from a year ago. Contrary to the national trend, Denver's housing market began cooling in 2001 amid losses of jobs in technology and telecommunications. Job growth in the Denver metro area lagged the national average from mid-2001 through late 2004, but has since been above average. "The market is recovering," says Jeff Bernard, a Denver real-estate broker and developer.
But inventories have continued to bloat in Florida, where a speculative binge has led to an enormous glut of condos. Miami-Dade County has enough condos on the market to last 31 months at the current sales rate, says Esslinger-Wooten-Maxwell Inc., a big real-estate brokerage firm there. Still, the rate of increase in unsold homes in the Miami area has slowed recently, says Ronald Shuffield, president of the firm.
Atlanta's inventory of unsold homes is up 43% from a year ago, according to Smart Numbers, a local research firm. It says there are enough homes on the market to last more than 10 months at the current sales rate, up from six months a year earlier. "We haven't hit the bottom yet in Atlanta," says Steve Palm, the firm's chief executive. Job growth in Atlanta remains strong, but many of the jobs aren't very high-paying, Mr. Palm says.
Lewis Glenn, president of Harry Norman Realtors in Atlanta, says he believes lots of potential buyers are waiting to see whether prices will come down. Some of them are marooned because they can't sell their current homes for what they consider a fair price -- or enough to pay off their mortgages.
In the Seattle metro area, the number of listings is up 55% from a year ago. But inventories were unusually lean there last year, and the market is now regaining balance.
In the New Jersey suburbs near New York, listings surged in 2005 and 2006. At the end of June, though, listings in 12 northern New Jersey counties were up just 3% from a year ago, according to Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. In Manhattan, inventories are down 17%, according to Corcoran Group, a real-estate brokerage. A torrent of Wall Street bonuses and foreign buyers lured by the weaker dollar have helped keep the market firm there, says Jonathan Miller, chief executive of Miller Samuel Inc., an appraisal firm in New York. The median sale price for co-ops and condos in Manhattan was $895,000 in the second quarter, up 1.7% from a year earlier, according to Miller Samuel.
Jeffrey G. Otteau, president of Otteau Valuation Group, says the parts of New Jersey popular with commuters into New York are doing best. In those areas, he says, sales are no longer slumping and the number of homes on the market has leveled off. "Proximity to Manhattan is once again becoming the primary force in the market," he says.
--Joseph De Avila contributed to this article.
Write to James R. Hagerty at bob.hagerty@wsj.com and Ruth Simon at ruth.simon@wsj.com
Smaller western cities buck national real estate bust
PRICES OF HOMES IN PLACES LIKE SALEM, ORE., CONTINUE TO RISE
By Aaron Clark
Associated Press
Article Launched: 07/26/2007 07:10:52 PM PDT
SALEM, Ore. - Aside from being Oregon's capital city, Salem doesn't have much to boast about. Most downtown restaurants close by 7 p.m. and Lefty's - the only cool bar in town, according to local college students - is known for its karaoke fundraisers.
But the real estate market here is buzzing. For-sale signs litter front yards and the local paper is fat with ads for homes.
The community of 150,000 or so souls is a prime example of an overlooked phenomenon in the country's overheated housing market: While demand for homes has nose-dived from Florida to California, some smaller metropolitan pockets continue to thrive.
Sleepy towns like Salem, Ore.; Wenatchee, Wash.; and Provo-Orem, Utah may lack glamour but they are among the few places in the country where housing prices are growing at double-digit rates, according to a recent federal study.
Experts say population growth and job growth are one reason. Local factors - like proximity to ski slopes, mountain bike trails or nearby cities - are also helping some Western markets escape one of the nation's worst housing downturns in years. And most of these small-to-mid-size cities weren't a part of the original housing boom and speculation that followed, so many of them are still playing catch-up.
"The Pacific Northwest was a little bit late coming to the party," said Andrew Leventis, an economist with a federal housing agency. "The extreme appreciation over the past five or six
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years in the country only just began in the Northwest a few years ago."
In Wenatchee, Wash., a 30,000-resident town east of the Cascade Mountains, homes appreciated an average of 25 percent between the first quarter of 2006 and the first quarter of 2007, according to a recent study by the Office of Federal Housing Enterprise Oversight. The agency tracks average home appreciation for mortgages and refinancings not greater than $417,000, on single-family properties.
Bob Seltzer, a local real estate agent, said the boom there is being fueled by an influx of retirees from rain-plagued Seattle who are looking for warmer weather.
"The economy here does not support high-paying jobs," said Seltzer. But "people can come from Seattle and buy an equivalent house for half the price."
But it's not just the Pacific Northwest that's seeing double-digit home appreciation. While some of the worst-hit housing markets include cities in California, Nevada and Arizona, many of the remaining strong markets are also clustered west of the Rocky Mountains.
Fifteen out of 20 metropolitan areas with the highest rates of home appreciation in the country were in Washington, Idaho, Utah, Oregon, Colorado or New Mexico, according to the federal study, which looked at markets with at least 15,000 transactions over the past 10 years.
Between the first quarters of 2006 and 2007, homes in Salem appreciated 13.4 percent, 14.5 in Boise City-Nampa, Idaho, and 16.8 percent in Grand Junction, Colo.
Nationwide house prices, based on sales and refinancing data, rose only 0.5 percent the first quarter of this year above the fourth quarter of last year - the lowest rate in the past decade, according to the federal study. Meanwhile, Oregon had 10.77 percent growth in home price appreciation over the past year.
"Our corner of the world has really held up pretty well," said John Mitchell, an economist for U.S. Bancorp, based in Portland. "We've got very strong population growth, we've got good employment growth and we didn't have the kind of speculation you saw elsewhere."
In Portland, Oregon's largest city, the median home price climbed from $169,000 in 2001 to $270,500 in 2006, according to a local real estate association. Average home price appreciation grew 11 percent between the first quarter of 2006 and the same quarter this year, according to the federal agency.
Just 40 minutes to the south, prices in Salem are rising faster and closing in on Portland's. That's because until recently the capital city has been overlooked and bargains are still easy to find.
The median price for a home in Salem was $221,600 at the beginning of this year, according to the National Association of Realtors. Still, that's one of the cheapest buys along Oregon's heavily populated I-5 freeway corridor, real estate agents say.
"The $185,000 range is actually not bad at all," said Ben Brubaker, 24, who along with his wife, Chantle, 23, is planning to buy his first house in the area.
On a recent sunny afternoon a real estate agent showed the couple a three-bedroom, two-bathroom, pale-blue home in a subdivision in south Salem, with a list price of $184,500. A small but trim back yard, large living room and kitchen tiles caught the couple's eye.
"You'll be able to be there for a few years, turn it around and make some money out of it," said Sylvia Perry, a real estate agent for RE/MAX equity group.
Young, first-time home buyers like the Brubakers are also triggering demand in Utah, said state economist Mark Knold.
Utah, which has the highest job growth rate in the country this year at 4.5 percent, has the youngest workforce in the country with 48 percent under the age of 35. Knold said over the past few years low interest rates have turbo-charged that demand.
"We had a spike of young people hitting the market" the past few years, said Knold. "A 23-year-old who might have waited until they were 28 to buy a house may have jumped on and bought one."
The Provo-Orem metro area was ranked second in the nation in house price appreciation: nearly 20 percent between the first quarters of 2006 and 2007 in the federal study.
Still, some observers caution smaller Western markets are far from immune from the same forces that have tanked housing markets across the country.
"It's pretty plain to me that the same patterns that have played out in all these other inflated markets are playing out in the Northwest," said Ben Jones, a consultant who runs www.thehousingbubbleblog.com. "It's almost unavoidable. They (builders) are going to continue to build until there is no longer any profit in it."
In Portland, the amount of time it would take to sell homes on the market at the most recent month's rate of sales increased from 2.6 months in June 2006 to 5 months in June of this year. In the western half of Washington where 80 percent of the state's population lives, the number of homes and condos available to buy is up 51 percent from a year ago - an all-time high.
But Brubaker said he's not too concerned about a Salem housing bubble and he expects to turn a profit if he sells his new home five years from now.
Besides, he added, it's time for a change: "Quite honestly, I'm tired of living in a rental."
By Aaron Clark
Associated Press
Article Launched: 07/26/2007 07:10:52 PM PDT
SALEM, Ore. - Aside from being Oregon's capital city, Salem doesn't have much to boast about. Most downtown restaurants close by 7 p.m. and Lefty's - the only cool bar in town, according to local college students - is known for its karaoke fundraisers.
But the real estate market here is buzzing. For-sale signs litter front yards and the local paper is fat with ads for homes.
The community of 150,000 or so souls is a prime example of an overlooked phenomenon in the country's overheated housing market: While demand for homes has nose-dived from Florida to California, some smaller metropolitan pockets continue to thrive.
Sleepy towns like Salem, Ore.; Wenatchee, Wash.; and Provo-Orem, Utah may lack glamour but they are among the few places in the country where housing prices are growing at double-digit rates, according to a recent federal study.
Experts say population growth and job growth are one reason. Local factors - like proximity to ski slopes, mountain bike trails or nearby cities - are also helping some Western markets escape one of the nation's worst housing downturns in years. And most of these small-to-mid-size cities weren't a part of the original housing boom and speculation that followed, so many of them are still playing catch-up.
"The Pacific Northwest was a little bit late coming to the party," said Andrew Leventis, an economist with a federal housing agency. "The extreme appreciation over the past five or six
Advertisement
years in the country only just began in the Northwest a few years ago."
In Wenatchee, Wash., a 30,000-resident town east of the Cascade Mountains, homes appreciated an average of 25 percent between the first quarter of 2006 and the first quarter of 2007, according to a recent study by the Office of Federal Housing Enterprise Oversight. The agency tracks average home appreciation for mortgages and refinancings not greater than $417,000, on single-family properties.
Bob Seltzer, a local real estate agent, said the boom there is being fueled by an influx of retirees from rain-plagued Seattle who are looking for warmer weather.
"The economy here does not support high-paying jobs," said Seltzer. But "people can come from Seattle and buy an equivalent house for half the price."
But it's not just the Pacific Northwest that's seeing double-digit home appreciation. While some of the worst-hit housing markets include cities in California, Nevada and Arizona, many of the remaining strong markets are also clustered west of the Rocky Mountains.
Fifteen out of 20 metropolitan areas with the highest rates of home appreciation in the country were in Washington, Idaho, Utah, Oregon, Colorado or New Mexico, according to the federal study, which looked at markets with at least 15,000 transactions over the past 10 years.
Between the first quarters of 2006 and 2007, homes in Salem appreciated 13.4 percent, 14.5 in Boise City-Nampa, Idaho, and 16.8 percent in Grand Junction, Colo.
Nationwide house prices, based on sales and refinancing data, rose only 0.5 percent the first quarter of this year above the fourth quarter of last year - the lowest rate in the past decade, according to the federal study. Meanwhile, Oregon had 10.77 percent growth in home price appreciation over the past year.
"Our corner of the world has really held up pretty well," said John Mitchell, an economist for U.S. Bancorp, based in Portland. "We've got very strong population growth, we've got good employment growth and we didn't have the kind of speculation you saw elsewhere."
In Portland, Oregon's largest city, the median home price climbed from $169,000 in 2001 to $270,500 in 2006, according to a local real estate association. Average home price appreciation grew 11 percent between the first quarter of 2006 and the same quarter this year, according to the federal agency.
Just 40 minutes to the south, prices in Salem are rising faster and closing in on Portland's. That's because until recently the capital city has been overlooked and bargains are still easy to find.
The median price for a home in Salem was $221,600 at the beginning of this year, according to the National Association of Realtors. Still, that's one of the cheapest buys along Oregon's heavily populated I-5 freeway corridor, real estate agents say.
"The $185,000 range is actually not bad at all," said Ben Brubaker, 24, who along with his wife, Chantle, 23, is planning to buy his first house in the area.
On a recent sunny afternoon a real estate agent showed the couple a three-bedroom, two-bathroom, pale-blue home in a subdivision in south Salem, with a list price of $184,500. A small but trim back yard, large living room and kitchen tiles caught the couple's eye.
"You'll be able to be there for a few years, turn it around and make some money out of it," said Sylvia Perry, a real estate agent for RE/MAX equity group.
Young, first-time home buyers like the Brubakers are also triggering demand in Utah, said state economist Mark Knold.
Utah, which has the highest job growth rate in the country this year at 4.5 percent, has the youngest workforce in the country with 48 percent under the age of 35. Knold said over the past few years low interest rates have turbo-charged that demand.
"We had a spike of young people hitting the market" the past few years, said Knold. "A 23-year-old who might have waited until they were 28 to buy a house may have jumped on and bought one."
The Provo-Orem metro area was ranked second in the nation in house price appreciation: nearly 20 percent between the first quarters of 2006 and 2007 in the federal study.
Still, some observers caution smaller Western markets are far from immune from the same forces that have tanked housing markets across the country.
"It's pretty plain to me that the same patterns that have played out in all these other inflated markets are playing out in the Northwest," said Ben Jones, a consultant who runs www.thehousingbubbleblog.com. "It's almost unavoidable. They (builders) are going to continue to build until there is no longer any profit in it."
In Portland, the amount of time it would take to sell homes on the market at the most recent month's rate of sales increased from 2.6 months in June 2006 to 5 months in June of this year. In the western half of Washington where 80 percent of the state's population lives, the number of homes and condos available to buy is up 51 percent from a year ago - an all-time high.
But Brubaker said he's not too concerned about a Salem housing bubble and he expects to turn a profit if he sells his new home five years from now.
Besides, he added, it's time for a change: "Quite honestly, I'm tired of living in a rental."
Apple Macs fuel record quarterly profit
By MAY WONG, AP Technology Writer Thu Jul 26, 9:37 AM ET
SAN JOSE, Calif. - All eyes have recently been on the iPhone, Apple Inc.'s newest family member, but the company's fiscal third-quarter results showed the elder Macintosh computer was still flexing its muscles, helping to drive record profits that blew past Wall Street's expectations.
Apple shares surged $8.94, or 6.5 percent, to $146.20 in mid-morning trading Thursday after the computer and gadget maker reported that earnings grew 73 percent.
The company sold a record 1.76 million Macintosh computers during the quarter, up 33 percent from the year-ago period, far outpacing the industry's growth rate. Mac sales and services accounted for more than 60 percent of the quarter's revenue, the company said.
"Our Mac business has tremendous momentum and has grown faster than the industry for 11 consecutive quarters," Apple's chief financial officer Peter Oppenheimer said in a phone interview.
IPod music players remained a strong contributor as well, growing 21 percent in unit sales to 9.8 million.
The company also said it sold 270,000 iPhones in their first two days on the market — disappointing some who had loftier projections. The multimedia handset had little impact on the quarter's results, however, because the company plans to account for its sales as subscription revenue over two years.
"We're still at the early stage of the iPhone, but it looks like the other parts of Apple's business are still growing strong," said Caris & Co. analyst Shebly Seyrafi.
Jane Snorek, a senior analyst with Minneapolis-based First American Fund, said she thinks Apple could achieve 40 percent growth in Mac sales next year. She boosted her earnings estimates for the current fiscal year from $4.75 to $5.25 per share based on the robust Mac performance.
"The only thing that kept people from getting Macs before is that they thought it was expensive and you couldn't do some Windows programs on them," Snorek said. "But they've taken down all those barriers, and that's why you've seen it take off."
For the quarter ended June 30, Apple's profit rose to $818 million, or 92 cents per share, up from $472 million, or 54 cents a share, in the year-ago quarter.
Sales grew to $5.41 billion from $4.37 billion last year.
Analysts polled by Thomson Financial expected Apple to report earnings of 72 cents per share on sales of $5.28 billion, while Apple itself had projected earnings of 66 cents per share on quarterly sales of $5.1 billion.
"We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever," said Steve Jobs, Apple's chief executive.
For the quarter ending in September, Apple issued what analysts predicted was a typically conservative outlook. The Cupertino-based company said it expects to earn about 65 cents per share on revenue of about $5.7 billion. Analysts were expecting earnings of 83 cents per share on sales of $6 billion.
The gadget maker's highly anticipated iPhone launched June 29 and sold out within days. Wall Street analysts and investors have had lofty expectations for the multimedia cell phone, driving up Apple's stock more than 30 percent during the quarter.
"IPhone is off to a great start," said Jobs, who added that Apple hopes to have sold 1 million iPhones by the end of the current quarter.
Apple officials reiterated the company's target of selling 10 million iPhones in 2008 but declined to elaborate on how much of a cut it will also be getting from exclusive service provider AT&T Inc. under their multiyear deal.
During the June quarter, revenue from iPhones and iPhone accessories totaled $5 million, Apple said. Shared revenue from AT&T was not included, it said.
Investors seemed uncertain at first with how to react to Apple's financial report.
"There was initially some disappointment in the 270,000 iPhone units, but as people realized the gross margins came in at 37 percent, they were very encouraged by the profitability of the company," Seyrafi said. "Clearly, Apple is a growth story."
SAN JOSE, Calif. - All eyes have recently been on the iPhone, Apple Inc.'s newest family member, but the company's fiscal third-quarter results showed the elder Macintosh computer was still flexing its muscles, helping to drive record profits that blew past Wall Street's expectations.
Apple shares surged $8.94, or 6.5 percent, to $146.20 in mid-morning trading Thursday after the computer and gadget maker reported that earnings grew 73 percent.
The company sold a record 1.76 million Macintosh computers during the quarter, up 33 percent from the year-ago period, far outpacing the industry's growth rate. Mac sales and services accounted for more than 60 percent of the quarter's revenue, the company said.
"Our Mac business has tremendous momentum and has grown faster than the industry for 11 consecutive quarters," Apple's chief financial officer Peter Oppenheimer said in a phone interview.
IPod music players remained a strong contributor as well, growing 21 percent in unit sales to 9.8 million.
The company also said it sold 270,000 iPhones in their first two days on the market — disappointing some who had loftier projections. The multimedia handset had little impact on the quarter's results, however, because the company plans to account for its sales as subscription revenue over two years.
"We're still at the early stage of the iPhone, but it looks like the other parts of Apple's business are still growing strong," said Caris & Co. analyst Shebly Seyrafi.
Jane Snorek, a senior analyst with Minneapolis-based First American Fund, said she thinks Apple could achieve 40 percent growth in Mac sales next year. She boosted her earnings estimates for the current fiscal year from $4.75 to $5.25 per share based on the robust Mac performance.
"The only thing that kept people from getting Macs before is that they thought it was expensive and you couldn't do some Windows programs on them," Snorek said. "But they've taken down all those barriers, and that's why you've seen it take off."
For the quarter ended June 30, Apple's profit rose to $818 million, or 92 cents per share, up from $472 million, or 54 cents a share, in the year-ago quarter.
Sales grew to $5.41 billion from $4.37 billion last year.
Analysts polled by Thomson Financial expected Apple to report earnings of 72 cents per share on sales of $5.28 billion, while Apple itself had projected earnings of 66 cents per share on quarterly sales of $5.1 billion.
"We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever," said Steve Jobs, Apple's chief executive.
For the quarter ending in September, Apple issued what analysts predicted was a typically conservative outlook. The Cupertino-based company said it expects to earn about 65 cents per share on revenue of about $5.7 billion. Analysts were expecting earnings of 83 cents per share on sales of $6 billion.
The gadget maker's highly anticipated iPhone launched June 29 and sold out within days. Wall Street analysts and investors have had lofty expectations for the multimedia cell phone, driving up Apple's stock more than 30 percent during the quarter.
"IPhone is off to a great start," said Jobs, who added that Apple hopes to have sold 1 million iPhones by the end of the current quarter.
Apple officials reiterated the company's target of selling 10 million iPhones in 2008 but declined to elaborate on how much of a cut it will also be getting from exclusive service provider AT&T Inc. under their multiyear deal.
During the June quarter, revenue from iPhones and iPhone accessories totaled $5 million, Apple said. Shared revenue from AT&T was not included, it said.
Investors seemed uncertain at first with how to react to Apple's financial report.
"There was initially some disappointment in the 270,000 iPhone units, but as people realized the gross margins came in at 37 percent, they were very encouraged by the profitability of the company," Seyrafi said. "Clearly, Apple is a growth story."
Wednesday, July 25, 2007
Local home-loan defaults spike
HIGHEST RATE IN 14 YEARS AS PAYMENTS BALLOON
By Sue McAllister
Mercury News
Article Launched: 07/25/2007 01:29:19 AM PDT
With monthly payments rising for homeowners with adjustable-rate mortgages, more Santa Clara County borrowers defaulted on their loans in the second quarter than any time in the past 14 years, a real estate information firm reported Tuesday.
A total of 1,275 default notices were sent to Santa Clara County homeowners in the second quarter, up 20.5 percent from the first quarter of 2007, and 140.6 percent from the April-to-June period in 2006, according to DataQuick Information Systems. The county mirrored a trend in which defaults spiked statewide to an 11-year high, climbing 158 percent from a year earlier.
However, Santa Clara County's homeowners are among the least likely state wide to be in default, DataQuick said.
Only homeowners in Marin, San Francisco and San Mateo counties are less likely to be in default than Santa Clara County owners.
Most of the loans that defaulted in the second quarter were originated between summer 2005 and summer 2006, DataQuick said. Then, many lenders were offering mortgages with low "teaser" rates for the first two years of the loan, allowing many people who may not have qualified for traditional loan terms to become first-time buyers. Now the rates on those loans are climbing, and many owners can't afford the new payments, said Michelle Gutierrez, local president of the National Association of Hispanic Real Estate Professionals, which has held foreclosure-prevention classes in the county this year.
"People
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are getting notices that their payments are going up anywhere from $800 to $2,000 more," she said. "They got into this home that they thought was going to appreciate - of course that's what we all want - but it's just not happening. They have no equity and they have to go back to renting homes."
The number of California homeowners who actually lost their homes to foreclosure hit a record 17,408 last quarter, DataQuick said.
The default notices are the first step in the foreclosure process, and are typically sent to homeowners who have failed to make their mortgage payments for a few consecutive months. Foreclosures and defaults were relatively rare in Santa Clara County and the Bay Area in 2004 and 2005, when rising home appreciation and a seller's market meant that most homeowners who found themselves in financial distress were able to sell their homes and pay off their lenders. But with appreciation now flat or falling in many areas, that's not as feasible these days.
In the Bay Area, very few foreclosed-upon homes have been resold at prices that significantly undercut the market, so there's no evidence to show that foreclosure activity is directly responsible for dragging down home prices in the Bay Area yet, said DataQuick's John Karevoll. But that could change: He said defaults are likely to increase in the third quarter as more of the huge number of loans made in 2005 hit their rate-reset dates.
The foreclosure situation in the San Jose area is nowhere near as serious as in such places as the Central Valley or Inland Empire (San Bernardino and Riverside counties), but some local homeowners are hurting nonetheless. Annette Kirkham, senior attorney with the Fair Housing Law Project in Santa Clara County, said her organization has received about 80 calls or walk-ins per week since May from people who feel they were misled into taking out mortgages they could not afford, and who are facing or in the midst of foreclosure.
"With minor variations, it's the same kind of story over and over again," she said.
Peter Van Dam, a Coldwell Banker associate broker who specializes in listing properties that have been repossessed by lenders, said three of the 18 such listings he has were sold at auction in the past week. Two were three-bedroom houses in San Jose's East Side, priced at around $600,000 a few months ago. At a crowded public auction held Saturday in Concord, he said, one house sold for $420,000, the other for $445,000.
"How is a couple of $450,000 comps (comparable sales) going to change the market? The more of those auction prices hit the market, the more downward pressure we'll see on prices," he said. Van Dam said he thinks lenders are only now beginning to sell the homes they repossess after foreclosures - called REOs in the industry, for "real estate owned" - at a significant discount compared with previous sales.
Last quarter, 256 homeowners in the county lost their homes to foreclosure. The peak for the county was in the second quarter of 1994, when 296 foreclosures were recorded.
Realty agent Robert Aldana of radio program "Let's Talk Real Estate" said prices could fall for another year or so in the neighborhoods where values were inflated based on the easy availability of no-money-down loans for which borrowers did not need to provide verification of income.
"Home values have to drop to the level where people who live in certain areas can afford to own," he said.
Both he and Gutierrez noted that a much higher percentage of for-sale homes than normal are being sold as "short sales," in which the owner is selling for less than what he or she owes to the mortgage lender, in order to avoid foreclosure.
Contact Sue McAllister at smcallister@mercurynews. com or (408) 920-5833
Thursday, July 19, 2007
Google's profit falls short, shares drop
By MICHAEL LIEDTKE, AP Business Writer 17 minutes ago
SAN FRANCISCO - Google Inc.'s second-quarter profit climbed 28 percent, but it wasn't enough to fulfill Wall Street's high expectations for the Internet's search leader.
Investors quickly expressed their dismay, causing Google shares to plunge by nearly 8 percent after the results were released Thursday.
The Mountain View-based company earned $925.1 million, or $2.93 per share, during the three months ended in June. That compared with net income of $721.1 million, or $2.33 per share, at the same time last year.
If not for costs associated with employee stock compensation, Google said it would have earned $3.56 per share. That figure missed the average analyst estimate of $3.59 per share among analysts polled by Thomson Financial.
Revenue for the period totaled $3.87 billion, a 58 percent increase from $2.46 billion at the same time last year.
After subtracting commissions paid to its advertising partners, Google's revenue was $2.72 billion — about $40 million above analyst projections.
But the quarter's bottom line raised concerns that the rapid growth propelling Google's lofty stock price is slowing more dramatically than analysts thought.
The second quarter represented the first time that Google's year-over-year profit hasn't improved by at least 60 percent since the company went public in August 2004. What's more, it's just the second time Google's earnings have fallen below analyst estimates in its 12 quarters as a public company.
Google's track record had many investors taking another blowout quarter for granted. The anticipation lifted the company stock price by 10 percent since the end of May. Most of those recent gains evaporated Thursday as Google shares plummeted $43.10, or 7.9 percent, in extended trading. The stock ended Thursday's regular session at $548.59.
Despite the earnings letdown, Google Chairman Eric Schmidt told analysts in a conference call that he was pleased with the company's performance, particularly its revenue growth and increased traffic on its Web site.
Echoing a familiar theme, Schmidt said Google relinquished some of its profit to invest in more computing power and hire more employees. The company's capital expenditures totaled $575 million in the quarter, down 17 percent from the same time last year. Meanwhile, Google hired 1,548 additional employees during the quarter compared with the 1,152 workers it added last year.
Schmidt indicated Google may not hire as briskly in future quarters, saying the company intended to be more "careful" about adding employees. Google ended June with 13,786 employees, a 74 percent increase during the past year.
"When I look at the quarter, we are very pleased with what we delivered," Schmidt said.
Google fared far better than one of its biggest rivals, Yahoo Inc., which runs the second most popular search engine largest ad network behind Google. Yahoo's profit dipped 2 percent in the second quarter while revenue increased by 8 percent.
SAN FRANCISCO - Google Inc.'s second-quarter profit climbed 28 percent, but it wasn't enough to fulfill Wall Street's high expectations for the Internet's search leader.
Investors quickly expressed their dismay, causing Google shares to plunge by nearly 8 percent after the results were released Thursday.
The Mountain View-based company earned $925.1 million, or $2.93 per share, during the three months ended in June. That compared with net income of $721.1 million, or $2.33 per share, at the same time last year.
If not for costs associated with employee stock compensation, Google said it would have earned $3.56 per share. That figure missed the average analyst estimate of $3.59 per share among analysts polled by Thomson Financial.
Revenue for the period totaled $3.87 billion, a 58 percent increase from $2.46 billion at the same time last year.
After subtracting commissions paid to its advertising partners, Google's revenue was $2.72 billion — about $40 million above analyst projections.
But the quarter's bottom line raised concerns that the rapid growth propelling Google's lofty stock price is slowing more dramatically than analysts thought.
The second quarter represented the first time that Google's year-over-year profit hasn't improved by at least 60 percent since the company went public in August 2004. What's more, it's just the second time Google's earnings have fallen below analyst estimates in its 12 quarters as a public company.
Google's track record had many investors taking another blowout quarter for granted. The anticipation lifted the company stock price by 10 percent since the end of May. Most of those recent gains evaporated Thursday as Google shares plummeted $43.10, or 7.9 percent, in extended trading. The stock ended Thursday's regular session at $548.59.
Despite the earnings letdown, Google Chairman Eric Schmidt told analysts in a conference call that he was pleased with the company's performance, particularly its revenue growth and increased traffic on its Web site.
Echoing a familiar theme, Schmidt said Google relinquished some of its profit to invest in more computing power and hire more employees. The company's capital expenditures totaled $575 million in the quarter, down 17 percent from the same time last year. Meanwhile, Google hired 1,548 additional employees during the quarter compared with the 1,152 workers it added last year.
Schmidt indicated Google may not hire as briskly in future quarters, saying the company intended to be more "careful" about adding employees. Google ended June with 13,786 employees, a 74 percent increase during the past year.
"When I look at the quarter, we are very pleased with what we delivered," Schmidt said.
Google fared far better than one of its biggest rivals, Yahoo Inc., which runs the second most popular search engine largest ad network behind Google. Yahoo's profit dipped 2 percent in the second quarter while revenue increased by 8 percent.
Google's profit falls short, shares drop
By MICHAEL LIEDTKE, AP Business Writer 17 minutes ago
SAN FRANCISCO - Google Inc.'s second-quarter profit climbed 28 percent, but it wasn't enough to fulfill Wall Street's high expectations for the Internet's search leader.
Investors quickly expressed their dismay, causing Google shares to plunge by nearly 8 percent after the results were released Thursday.
The Mountain View-based company earned $925.1 million, or $2.93 per share, during the three months ended in June. That compared with net income of $721.1 million, or $2.33 per share, at the same time last year.
If not for costs associated with employee stock compensation, Google said it would have earned $3.56 per share. That figure missed the average analyst estimate of $3.59 per share among analysts polled by Thomson Financial.
Revenue for the period totaled $3.87 billion, a 58 percent increase from $2.46 billion at the same time last year.
After subtracting commissions paid to its advertising partners, Google's revenue was $2.72 billion — about $40 million above analyst projections.
But the quarter's bottom line raised concerns that the rapid growth propelling Google's lofty stock price is slowing more dramatically than analysts thought.
The second quarter represented the first time that Google's year-over-year profit hasn't improved by at least 60 percent since the company went public in August 2004. What's more, it's just the second time Google's earnings have fallen below analyst estimates in its 12 quarters as a public company.
Google's track record had many investors taking another blowout quarter for granted. The anticipation lifted the company stock price by 10 percent since the end of May. Most of those recent gains evaporated Thursday as Google shares plummeted $43.10, or 7.9 percent, in extended trading. The stock ended Thursday's regular session at $548.59.
Despite the earnings letdown, Google Chairman Eric Schmidt told analysts in a conference call that he was pleased with the company's performance, particularly its revenue growth and increased traffic on its Web site.
Echoing a familiar theme, Schmidt said Google relinquished some of its profit to invest in more computing power and hire more employees. The company's capital expenditures totaled $575 million in the quarter, down 17 percent from the same time last year. Meanwhile, Google hired 1,548 additional employees during the quarter compared with the 1,152 workers it added last year.
Schmidt indicated Google may not hire as briskly in future quarters, saying the company intended to be more "careful" about adding employees. Google ended June with 13,786 employees, a 74 percent increase during the past year.
"When I look at the quarter, we are very pleased with what we delivered," Schmidt said.
Google fared far better than one of its biggest rivals, Yahoo Inc., which runs the second most popular search engine largest ad network behind Google. Yahoo's profit dipped 2 percent in the second quarter while revenue increased by 8 percent.
SAN FRANCISCO - Google Inc.'s second-quarter profit climbed 28 percent, but it wasn't enough to fulfill Wall Street's high expectations for the Internet's search leader.
Investors quickly expressed their dismay, causing Google shares to plunge by nearly 8 percent after the results were released Thursday.
The Mountain View-based company earned $925.1 million, or $2.93 per share, during the three months ended in June. That compared with net income of $721.1 million, or $2.33 per share, at the same time last year.
If not for costs associated with employee stock compensation, Google said it would have earned $3.56 per share. That figure missed the average analyst estimate of $3.59 per share among analysts polled by Thomson Financial.
Revenue for the period totaled $3.87 billion, a 58 percent increase from $2.46 billion at the same time last year.
After subtracting commissions paid to its advertising partners, Google's revenue was $2.72 billion — about $40 million above analyst projections.
But the quarter's bottom line raised concerns that the rapid growth propelling Google's lofty stock price is slowing more dramatically than analysts thought.
The second quarter represented the first time that Google's year-over-year profit hasn't improved by at least 60 percent since the company went public in August 2004. What's more, it's just the second time Google's earnings have fallen below analyst estimates in its 12 quarters as a public company.
Google's track record had many investors taking another blowout quarter for granted. The anticipation lifted the company stock price by 10 percent since the end of May. Most of those recent gains evaporated Thursday as Google shares plummeted $43.10, or 7.9 percent, in extended trading. The stock ended Thursday's regular session at $548.59.
Despite the earnings letdown, Google Chairman Eric Schmidt told analysts in a conference call that he was pleased with the company's performance, particularly its revenue growth and increased traffic on its Web site.
Echoing a familiar theme, Schmidt said Google relinquished some of its profit to invest in more computing power and hire more employees. The company's capital expenditures totaled $575 million in the quarter, down 17 percent from the same time last year. Meanwhile, Google hired 1,548 additional employees during the quarter compared with the 1,152 workers it added last year.
Schmidt indicated Google may not hire as briskly in future quarters, saying the company intended to be more "careful" about adding employees. Google ended June with 13,786 employees, a 74 percent increase during the past year.
"When I look at the quarter, we are very pleased with what we delivered," Schmidt said.
Google fared far better than one of its biggest rivals, Yahoo Inc., which runs the second most popular search engine largest ad network behind Google. Yahoo's profit dipped 2 percent in the second quarter while revenue increased by 8 percent.
U.S. economic growth seen slowing
By CANDICE CHOI, AP Business Writer 7 minutes ago
NEW YORK - U.S. economic growth is likely to slow in coming months as the ongoing slump in the housing industry takes a deeper toll on businesses and consumers, a gauge of future business activity showed Thursday.
The Conference Board said its index of leading economic indicators fell 0.3 percent in June, higher than the 0.1 percent drop analysts were expecting and more than reversing last month's revised growth of 0.2 percent.
The Conference Board report, designed to forecast economic activity over the next three to six months, tracks 10 economic indicators.
The five negative contributors, beginning with the largest, were building permits, unemployment claims, consumer expectations, vendor performance and interest rate spread.
The positive contributors, starting with the largest, were weekly manufacturing hours, new orders for non-defense capital goods and stock prices. Manufacturers' orders for consumer goods and materials and real money supply held steady in June.
With the latest report, the cumulative change in the index over the past six months has dropped 0.7 percent.
In his midyear economic report to Congress Wednesday, Federal Reserve Chairman Ben Bernanke said that if the housing slump turns out worse than expected, consumer spending may drop and weaken overall economic growth.
Bernanke also said growth for the year will be slower than the central bank projected in February.
Another risk to the economy is if energy prices continue to rise sharply, Bernanke said. That could raise prices of goods and services, spreading inflation through the economy.
Stocks traded higher Thursday, following some upbeat earnings reports. The Dow rose 0.69 percent to 14.013.74.
Broader stock indicators rose. The Standard & Poor's 500 index advanced 8.88, or 0.57 percent, to 1,555.05, while the Nasdaq composite index rose 0.75 percent to 2,719.83.
NEW YORK - U.S. economic growth is likely to slow in coming months as the ongoing slump in the housing industry takes a deeper toll on businesses and consumers, a gauge of future business activity showed Thursday.
The Conference Board said its index of leading economic indicators fell 0.3 percent in June, higher than the 0.1 percent drop analysts were expecting and more than reversing last month's revised growth of 0.2 percent.
The Conference Board report, designed to forecast economic activity over the next three to six months, tracks 10 economic indicators.
The five negative contributors, beginning with the largest, were building permits, unemployment claims, consumer expectations, vendor performance and interest rate spread.
The positive contributors, starting with the largest, were weekly manufacturing hours, new orders for non-defense capital goods and stock prices. Manufacturers' orders for consumer goods and materials and real money supply held steady in June.
With the latest report, the cumulative change in the index over the past six months has dropped 0.7 percent.
In his midyear economic report to Congress Wednesday, Federal Reserve Chairman Ben Bernanke said that if the housing slump turns out worse than expected, consumer spending may drop and weaken overall economic growth.
Bernanke also said growth for the year will be slower than the central bank projected in February.
Another risk to the economy is if energy prices continue to rise sharply, Bernanke said. That could raise prices of goods and services, spreading inflation through the economy.
Stocks traded higher Thursday, following some upbeat earnings reports. The Dow rose 0.69 percent to 14.013.74.
Broader stock indicators rose. The Standard & Poor's 500 index advanced 8.88, or 0.57 percent, to 1,555.05, while the Nasdaq composite index rose 0.75 percent to 2,719.83.
Tuesday, July 17, 2007
Terror threat against U.S. said serious
By KATHERINE SHRADER and ANNE FLAHERTY, Associated Press Writers 5 minutes ago
WASHINGTON - The terrorist network Al-Qaida will likely leverage its contacts and capabilities in Iraq to mount an attack on U.S. soil, according to a new National Intelligence Estimate on threats to the United States.
The declassified key findings, to be released publicly on Tuesday, were obtained in advance by The Associated Press.
The report lays out a range of dangers — from al-Qaida to Lebanese Hezbollah to non-Muslim radical groups — that pose a "persistent and evolving threat" to the country over the next three years. As expected, however, the findings focus most of their attention on the gravest terror problem: Osama bin Laden's al-Qaida network.
The report makes clear that al-Qaida in Iraq, which has not yet posed a direct threat to U.S. soil, could become a problem here.
"Of note," the analysts said, "we assess that al-Qaida will probably seek to leverage the contacts and capabilities of al-Qaida in Iraq (AQI), its most visible and capable affiliate and the only one known to have expressed a desire to attack the homeland."
The analysts also found that al-Qaida's association with its Iraqi affiliate helps the group to energize the broader Sunni Muslim extremist community, raise resources and recruit and indoctrinate operatives — "including for homeland attacks."
National Intelligence Estimates are the most authoritative written judgments of the 16 spy agencies across the breadth of the U.S. government. These agencies reflect the consensus long-term thinking of top intelligence analysts. Portions of the documents are occasionally declassified for public release.
The White House brushed off critics who allege the administration released the intelligence estimate at the same time the Senate is debating Iraq. White House press secretary Tony Snow pushed back at the critics Tuesday, saying they are "engaged in a little selective hearing themselves to shape the story in their own political ways."
"We don't keep it on the shelf and say `Let's look for a convenient time,'" Snow said.
"We're trying to remind people is that this is a real threat. This is not an attempt to divert. As a matter of fact ... we would much rather — one of the things we'd like to do is call attention to the successes in the field" in Iraq, he said.
House Republican leader Rep. John Boehner of Ohio said the report confirms gains made by Bush and blamed Democrats for being too soft on terrorism.
"Retreat is not a new way forward when the safety and security of future generations of Americans are at stake," he said in a statement.
The new report echoed statements made by senior intelligence officials over the last year, including the assessment of spy agencies that the country is in a "heightened threat environment." It also provided new details on their thinking and concerns.
For instance, the report says that worldwide counterterrorism efforts since 2001 have constrained al-Qaida's ability to attack the U.S. again and convinced terror groups that U.S. soil is a tougher target.
But, the report quickly adds, analysts are concerned "that this level of international cooperation may wane as 9/11 becomes a more distant memory and perceptions of the threat diverge."
Among the report's other findings:
_Al-Qaida is likely to continue to focus on high-profile political, economic and infrastructure targets to cause mass casualties, visually dramatic destruction, economic aftershocks and fear. "The group is proficient with conventional small arms and improvised explosive devices and is innovative in creating new capabilities and overcoming security obstacles."
_The group has been able to restore key capabilities it would need to launch an attack on U.S. soil: a safe haven in Pakistan's tribal areas, operational lieutenants and senior leaders. U.S. officials have warned publicly that a deal between the Pakistani government and tribal leaders allowed al-Qaida to plot and train more freely in parts of western Pakistan for the last 10 months.
_The group will continue to seek weapons of mass destruction — chemical, biological or nuclear material — and "would not hesitate to use them."
_Lebanese Hezbollah, a Shiite Muslim extremist group that has conducted anti-American attacks overseas, may be more likely to consider attacking here, especially if it believes the United States is directly threatening the group or its main sponsor, Iran.
_Non-Muslim terrorist groups probably will attack here in the next several years, although on a smaller scale. The judgments don't name any specific groups, but the FBI often warns of violent environmental groups, such as Earth Liberation Front, and others.
The publicly disclosed judgments, laid out over two pages, are part of a longer document, which remains classified. It was approved by the heads of all 16 intelligence agencies on June 21.
In the last week, reports on this document and another threat assessment on al-Qaida's resurgence have renewed the debate in Washington about whether the Bush administration is on the right course in its war on terror, particularly in Iraq.
The White House has used the reports as evidence that the country must continue to go after al-Qaida in Iraq, Afghanistan and elsewhere. But critics say the evolving threat is evidence of a policy gone wrong.
The debate — and the underlying global problem — will not go away soon.
The high-level estimate notes that the spread of radical ideas, especially on the Internet, growing anti-U.S. rhetoric and increasing numbers of radical cells throughout Western countries indicate the violent segments of the Muslim populations is expanding.
"The arrest and prosecution by U.S. law enforcement of a small number of violent Islamic extremists inside the United States ... points to the possibility that others may become sufficiently radicalized that they will view the use of violence here as legitimate," the estimate said. "We assess that this internal Muslim terrorist threat is not likely to be as severe as it is in Europe, however."
WASHINGTON - The terrorist network Al-Qaida will likely leverage its contacts and capabilities in Iraq to mount an attack on U.S. soil, according to a new National Intelligence Estimate on threats to the United States.
The declassified key findings, to be released publicly on Tuesday, were obtained in advance by The Associated Press.
The report lays out a range of dangers — from al-Qaida to Lebanese Hezbollah to non-Muslim radical groups — that pose a "persistent and evolving threat" to the country over the next three years. As expected, however, the findings focus most of their attention on the gravest terror problem: Osama bin Laden's al-Qaida network.
The report makes clear that al-Qaida in Iraq, which has not yet posed a direct threat to U.S. soil, could become a problem here.
"Of note," the analysts said, "we assess that al-Qaida will probably seek to leverage the contacts and capabilities of al-Qaida in Iraq (AQI), its most visible and capable affiliate and the only one known to have expressed a desire to attack the homeland."
The analysts also found that al-Qaida's association with its Iraqi affiliate helps the group to energize the broader Sunni Muslim extremist community, raise resources and recruit and indoctrinate operatives — "including for homeland attacks."
National Intelligence Estimates are the most authoritative written judgments of the 16 spy agencies across the breadth of the U.S. government. These agencies reflect the consensus long-term thinking of top intelligence analysts. Portions of the documents are occasionally declassified for public release.
The White House brushed off critics who allege the administration released the intelligence estimate at the same time the Senate is debating Iraq. White House press secretary Tony Snow pushed back at the critics Tuesday, saying they are "engaged in a little selective hearing themselves to shape the story in their own political ways."
"We don't keep it on the shelf and say `Let's look for a convenient time,'" Snow said.
"We're trying to remind people is that this is a real threat. This is not an attempt to divert. As a matter of fact ... we would much rather — one of the things we'd like to do is call attention to the successes in the field" in Iraq, he said.
House Republican leader Rep. John Boehner of Ohio said the report confirms gains made by Bush and blamed Democrats for being too soft on terrorism.
"Retreat is not a new way forward when the safety and security of future generations of Americans are at stake," he said in a statement.
The new report echoed statements made by senior intelligence officials over the last year, including the assessment of spy agencies that the country is in a "heightened threat environment." It also provided new details on their thinking and concerns.
For instance, the report says that worldwide counterterrorism efforts since 2001 have constrained al-Qaida's ability to attack the U.S. again and convinced terror groups that U.S. soil is a tougher target.
But, the report quickly adds, analysts are concerned "that this level of international cooperation may wane as 9/11 becomes a more distant memory and perceptions of the threat diverge."
Among the report's other findings:
_Al-Qaida is likely to continue to focus on high-profile political, economic and infrastructure targets to cause mass casualties, visually dramatic destruction, economic aftershocks and fear. "The group is proficient with conventional small arms and improvised explosive devices and is innovative in creating new capabilities and overcoming security obstacles."
_The group has been able to restore key capabilities it would need to launch an attack on U.S. soil: a safe haven in Pakistan's tribal areas, operational lieutenants and senior leaders. U.S. officials have warned publicly that a deal between the Pakistani government and tribal leaders allowed al-Qaida to plot and train more freely in parts of western Pakistan for the last 10 months.
_The group will continue to seek weapons of mass destruction — chemical, biological or nuclear material — and "would not hesitate to use them."
_Lebanese Hezbollah, a Shiite Muslim extremist group that has conducted anti-American attacks overseas, may be more likely to consider attacking here, especially if it believes the United States is directly threatening the group or its main sponsor, Iran.
_Non-Muslim terrorist groups probably will attack here in the next several years, although on a smaller scale. The judgments don't name any specific groups, but the FBI often warns of violent environmental groups, such as Earth Liberation Front, and others.
The publicly disclosed judgments, laid out over two pages, are part of a longer document, which remains classified. It was approved by the heads of all 16 intelligence agencies on June 21.
In the last week, reports on this document and another threat assessment on al-Qaida's resurgence have renewed the debate in Washington about whether the Bush administration is on the right course in its war on terror, particularly in Iraq.
The White House has used the reports as evidence that the country must continue to go after al-Qaida in Iraq, Afghanistan and elsewhere. But critics say the evolving threat is evidence of a policy gone wrong.
The debate — and the underlying global problem — will not go away soon.
The high-level estimate notes that the spread of radical ideas, especially on the Internet, growing anti-U.S. rhetoric and increasing numbers of radical cells throughout Western countries indicate the violent segments of the Muslim populations is expanding.
"The arrest and prosecution by U.S. law enforcement of a small number of violent Islamic extremists inside the United States ... points to the possibility that others may become sufficiently radicalized that they will view the use of violence here as legitimate," the estimate said. "We assess that this internal Muslim terrorist threat is not likely to be as severe as it is in Europe, however."
Thursday, July 12, 2007
Real estate Web sites boom, despite market slump
NEW YORK (Reuters) - Home buyers and home sellers alike can find more innovative and useful features than ever on real estate Web sites, which are nimbly adapting to the U.S. housing slump.
For those poking around the real estate market, it might be worthwhile to check out sites like buysiderealty.com, iggyshouse.com, zillow.com and trulia.com to see just how much online home shopping has changed lately.
In the past, most real estate sites primarily offered property listing services. That's no longer the case thanks to improved online mapping services and the spread of broadband connections, which have allowed sites to take advantage of new technology.
What's more, as a means to drum up business, real estate sites have looked to expand their features to include services like alerts, "heat maps" showing active sales areas, video postings, home estimates and Q&A forums. Some are even offering rebates to home buyers.
Chuck Cole, for instance, recently bought a home in Oakland, California, worth almost $450,000 -- and met his realtor just once through the entire month-long process.
Cole used the multiple listing service tool on buysiderealty.com to pick the properties he wanted to visit. Later, after deciding on a house and submitting an offer, he had a realtor from buysiderealty.com handle the transaction.
For doing all the groundwork himself and bypassing a traditional realtor, Cole was rewarded with a rebate of over $8,000, or 75 percent of the buyer's commission that buysiderealty.com earned from the deal.
"We liked that everything was done pretty much by e-mail and phone. When we've worked with realtors in the past it was a big pain in the neck to try to connect with people in person and to have to go to their office," said Cole.
MARKET SLUMP SPURS BOOM
If you're looking to sell your house without using a real estate agent, consider a visit to iggyshouse.com, a sister concern of buysiderealty.com.
The site lures sellers with freebies like a multiple listing service, a listing on realtor.com and posts on other sites. Home sellers once paid agents a premium for such services.
Iggyshouse.com also lets sellers and real estate agents post photographs, videos and details about the property for sale -- at no cost.
"With 75 or 80 percent of sellers (also) being buyers, we know that if we give them this free service and they are self directed enough to sell on their own, there is a pretty good chance that they'd want to use (the) buyside," said Joe Fox, chief executive of iggyshouse.com and buysiderealty.com.
"We're basically giving a free service to educate consumers about another service that pays them to use it and that's exactly what is happening today," said Fox.
Another Web site that has entered this increasingly crowded space is zillow.com, which launched in early 2006. It not only offers free property listings, but also gives away a home valuation service it calls Zestimate.
Pete Flint, CEO of trulia.com, says the housing market's downturn has played to the strengths of real estate Web sites.
"Although it's unfortunate what's going on in the housing market, it's really the online sites that are benefiting because consumers are spending a little bit more time before they make decisions and traditional real estate brokers are rethinking the way they're marketing themselves," Flint said.
"So the change in the housing market has forced a change both in consumer behavior and forced a change within marketing activity for real estate professionals and we are a perfect platform for them both," he added.
Trulia.com, which launched in 2005, has signed agreements with thousands of agencies that post all their available property listings on the site. Trulia.com, in turn, generates revenue through advertisements placed on its site.
On the site you'll find services like trulia voices, which allows you to pose questions to local residents and agents on subjects as unexpected as the location of the nearest dog park.
If you'd like to be alerted every time a property in a particular neighborhood goes on sale, trulia.com also sends you free alerts. Another feature is "heat maps" that help you gauge the demand and average price of properties in certain spots.
"The reality is that the actual (real estate) transaction is not changing, so people are still going to go to open houses and drive around neighborhoods, but the actual process of research for the real estate transaction has radically changed," said Flint.
For those poking around the real estate market, it might be worthwhile to check out sites like buysiderealty.com, iggyshouse.com, zillow.com and trulia.com to see just how much online home shopping has changed lately.
In the past, most real estate sites primarily offered property listing services. That's no longer the case thanks to improved online mapping services and the spread of broadband connections, which have allowed sites to take advantage of new technology.
What's more, as a means to drum up business, real estate sites have looked to expand their features to include services like alerts, "heat maps" showing active sales areas, video postings, home estimates and Q&A forums. Some are even offering rebates to home buyers.
Chuck Cole, for instance, recently bought a home in Oakland, California, worth almost $450,000 -- and met his realtor just once through the entire month-long process.
Cole used the multiple listing service tool on buysiderealty.com to pick the properties he wanted to visit. Later, after deciding on a house and submitting an offer, he had a realtor from buysiderealty.com handle the transaction.
For doing all the groundwork himself and bypassing a traditional realtor, Cole was rewarded with a rebate of over $8,000, or 75 percent of the buyer's commission that buysiderealty.com earned from the deal.
"We liked that everything was done pretty much by e-mail and phone. When we've worked with realtors in the past it was a big pain in the neck to try to connect with people in person and to have to go to their office," said Cole.
MARKET SLUMP SPURS BOOM
If you're looking to sell your house without using a real estate agent, consider a visit to iggyshouse.com, a sister concern of buysiderealty.com.
The site lures sellers with freebies like a multiple listing service, a listing on realtor.com and posts on other sites. Home sellers once paid agents a premium for such services.
Iggyshouse.com also lets sellers and real estate agents post photographs, videos and details about the property for sale -- at no cost.
"With 75 or 80 percent of sellers (also) being buyers, we know that if we give them this free service and they are self directed enough to sell on their own, there is a pretty good chance that they'd want to use (the) buyside," said Joe Fox, chief executive of iggyshouse.com and buysiderealty.com.
"We're basically giving a free service to educate consumers about another service that pays them to use it and that's exactly what is happening today," said Fox.
Another Web site that has entered this increasingly crowded space is zillow.com, which launched in early 2006. It not only offers free property listings, but also gives away a home valuation service it calls Zestimate.
Pete Flint, CEO of trulia.com, says the housing market's downturn has played to the strengths of real estate Web sites.
"Although it's unfortunate what's going on in the housing market, it's really the online sites that are benefiting because consumers are spending a little bit more time before they make decisions and traditional real estate brokers are rethinking the way they're marketing themselves," Flint said.
"So the change in the housing market has forced a change both in consumer behavior and forced a change within marketing activity for real estate professionals and we are a perfect platform for them both," he added.
Trulia.com, which launched in 2005, has signed agreements with thousands of agencies that post all their available property listings on the site. Trulia.com, in turn, generates revenue through advertisements placed on its site.
On the site you'll find services like trulia voices, which allows you to pose questions to local residents and agents on subjects as unexpected as the location of the nearest dog park.
If you'd like to be alerted every time a property in a particular neighborhood goes on sale, trulia.com also sends you free alerts. Another feature is "heat maps" that help you gauge the demand and average price of properties in certain spots.
"The reality is that the actual (real estate) transaction is not changing, so people are still going to go to open houses and drive around neighborhoods, but the actual process of research for the real estate transaction has radically changed," said Flint.
Tuesday, July 10, 2007
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Tuesday, July 10, 2007 at 6:00 p.m. EST.
Oil and subprime worries pushed stock prices lower today. At the close, the Dow lost 148 points, closing at 13,501, while the Nasdaq fell almost 31 points, to close at 2,639. Oil closed up $0.62 at $72.81 per barrel, and gold closed up $1.90 at $664.40 an ounce.
I am making additional portfolio adjustments today to keep you properly invested in four ongoing bull markets. First, the global economic boom is unprecedented. You must invest substantial portions of your portfolio offshore, where the falling dollar will enhance your investment returns. The global economic boom has created a bull market in the energy sector, where demand is growing faster than supply, and also in commodities, natural resources, and basic materials.
Finally, the U.S. stock market is still the most undervalued market and, hence, the market with the lowest risk. Consequently, you should allocate up to one third of you portfolio in the Fidelity Select funds or the Ultra ProFunds. Global investors are avoiding the U.S. stock market because the falling dollar will continue to diminish their returns. Consequently, we must focus our investment positions in the global bull market; for example, in Brazil, Latin America, Southeast Asia, and the emerging markets.
I have added positions in the energy services sector and the basic materials sector. I have also added the Brazil ETF because of strong economic growth, impressive energy reserves, and also because the Brazilian currency is rising against the U.S. dollar.
You should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. The dollar just fell to an all time low against the euro, and 26-year low against the British pound. A falling dollar will enhance the return of your offshore investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, July 13, 2007, at 6:00 p.m. EST.
Oil and subprime worries pushed stock prices lower today. At the close, the Dow lost 148 points, closing at 13,501, while the Nasdaq fell almost 31 points, to close at 2,639. Oil closed up $0.62 at $72.81 per barrel, and gold closed up $1.90 at $664.40 an ounce.
I am making additional portfolio adjustments today to keep you properly invested in four ongoing bull markets. First, the global economic boom is unprecedented. You must invest substantial portions of your portfolio offshore, where the falling dollar will enhance your investment returns. The global economic boom has created a bull market in the energy sector, where demand is growing faster than supply, and also in commodities, natural resources, and basic materials.
Finally, the U.S. stock market is still the most undervalued market and, hence, the market with the lowest risk. Consequently, you should allocate up to one third of you portfolio in the Fidelity Select funds or the Ultra ProFunds. Global investors are avoiding the U.S. stock market because the falling dollar will continue to diminish their returns. Consequently, we must focus our investment positions in the global bull market; for example, in Brazil, Latin America, Southeast Asia, and the emerging markets.
I have added positions in the energy services sector and the basic materials sector. I have also added the Brazil ETF because of strong economic growth, impressive energy reserves, and also because the Brazilian currency is rising against the U.S. dollar.
You should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. The dollar just fell to an all time low against the euro, and 26-year low against the British pound. A falling dollar will enhance the return of your offshore investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, July 13, 2007, at 6:00 p.m. EST.
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