DFW Real Estate News » Economic News

Inflation and Deflation – An Economic Research Paper

John Jones — Thu, 21 Oct 2010 23:05:19 +0000

There has been a lot of talk recently about the risk of deflation in our economy. But what, exactly, is deflation? And more importantly, what is “debt-deflation”?

Debt deflation is essentially a term used to describe deflation when it occurs in an overly debt-based economy such as our own. The savings rate in the United States has typically been much lower than many other economies that have experienced deflation, such as Japan. As a result, the Fed believes the consequences of deflation could be much more severe in the US as a result, which possibly lends more justification for their relentless money printing and quantitative easing.

Bank reserves are also at all time highs as the Fed has expanded its balance sheet by over a tillion dollars in the last two years, but banks are not lending despite this fact. Why?

Read the paper in its entirety from the Real Estate Center at TAMU

SEC Looking Into Foreclosure Practices of Some Companies

John Jones — Sun, 17 Oct 2010 19:53:39 +0000

A source with the Securities and Exchange Commission told Reuters that the agency is looking into the practices of some of the nations mortgage servicers to see if any securities laws were violated. At this point, they have stopped short of calling it an “investigation” and also said that they are not targeting any specific company.

At the heart of this speculation may be whether some companies engaged in multiple securitizations of the same mortgage notes. The fact that many servicers were apparently not following the required protocol for recording legal ownership of some mortgage notes certainly opens up the possibility that some type of securities fraud may have occured. But at this point, we’ll have to wait and see if this inquiry will develop into a full-blown investigation with possible criminal indictments. It can take the SEC years to gather the evidence to put a case together, so there may not be any additional news to report on this for a while even if evidence exists that some servicers may have violated securities laws.

Article from CNBC

Dallas Population Swells by 100,000

John Jones — Mon, 13 Sep 2010 20:18:19 +0000

Population in Dallas, as well as many other areas around the metroplex, continues to grow. This has kept our economy going stronger than many other cities in the United States.

Article from Dallas Business Journal

Dallas Ranks Average in Economic Stress According to Study Released by Portfolio.com

John Jones — Mon, 13 Sep 2010 20:16:12 +0000

A new study just released ranked Dallas 24th out of 50 US metro areas for level of economic stress according to Portfolio.com.

Part of what kept Dallas from ranking more stressful was the relatively low cost of mortgage payments here. Home affordability has remained competitive in DFW compared to higher cost areas.

Factors that contributed to higher stress included the fact that 9.9% of Dallas families are living below the poverty line, as well as the fact that per capita income has dropped by 5.17%.

Article from TAMU

Potential Losses Could Total More Than One Trillion from Fannie Mae and Freddie Mac

John Jones — Wed, 30 Jun 2010 19:12:21 +0000

Now that the U.S. Government (meaning US, the taxpayers) are on the hook for an “unlimited” amount of losses from Fannie Mae and Freddie Mac, how high might those losses go?

Article from CNBC

Dallas Has 2nd Highest Credit Card Debt Per Consumer in U.S.

John Jones — Fri, 14 May 2010 20:51:32 +0000

According to Experian, consumers in Dallas have the second highest credit card debt per consumer in the United States.

The average dollar amount of credit card debt was reported to be $26,549. That’s barely under $100 less than the $26,646 average for consumers in Seattle, WA, which was reported to be the highest in the nation.

Article from Dallas Business Journal

Are Mortgage Defaults Increasing Consumer Spending?

John Jones — Sat, 24 Apr 2010 15:06:50 +0000

It may seem a bit counter intuitive, but after reading this article, I’m wondering if there isn’t some truth to this.

When home buyers default on their mortgages, especially in situations such as an adjustable rate mortgage that suddenly increases to a payment that the home owner doesn’t stand a chance of paying, do they increase their consumer spending when they stop paying the mortgage? It makes some sense.

Original Article from CNBC

Surge in House Flippers May Be A Good Sign For The Real Estate Market

John Jones — Sat, 24 Apr 2010 14:28:35 +0000

Here’s an article from MSNBC about the resurgence in real estate “flippers”, who are basically investors whose goal is to purchase a home, perform needed repairs and then quickly sell it to make a profit.

This may be a good sign for some of the hardest hit areas like Phoenix and parts of California that the bottom may either be near or here. Flippers will often stay away from markets that may have not hit bottom as of yet because they can quickly lose their investment if the market moves down in between the time they purchase and sell their investment home.

Original Article from MSNBC

Federal Reserve Plans To Keep Short Term Interest Rates Low

John Jones — Sat, 24 Apr 2010 14:23:28 +0000

The Federal Reserve announced recently that it plans on keeping its policy of low short term interest rates for the foreseeable future. The Federal Reserve controls two key interest rates called the Federal Funds Rate and the Discount Rate. They do not directly control mortgage rates, but keeping these rates low does have some indirect impact on mortgage rates.

The good news for mortgage rates is that the end of the Federal Reserve Program to purchase mortgage backed securities has not had that much impact on mortgage rates. At least not yet.

Original Article from CNBC