A long home run

By Ben Walsh
September 24, 2013

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

It’s been a very, very good first seven months of the year for home prices. The WSJ’s Nick Timiraos notes that home prices rose in the first seven months of 2013 at the fastest rate since 2004, the approximate start of the housing bubble. “The year-to-date gains,” he adds, “are the most eye-opening”:

Prices in July stood 11.2% above the level of December 2012. By contrast, prices in the same period last year were up 5.8%. In 2004, prices rose by 11.3% year-to-date through July.

Extend the timeframe to a year and things still look rosy, bordering on bubbly depending on your perspective: Bloomberg’s Shobhana Chandra writes that the 12-month increase of 12.4% is the biggest annual gain since February 2006. Calculated Risk’s Bill McBride notes that this mean that “in real terms – and as a price-to-rent ratio – prices are mostly back to early 2000 levels”.

There are indications that some investors are ready to use strong price increases as a reason to exit investments made after the financial crisis. Goldman Sachs, JP Morgan, and George Soros are filing to sell a little more than half of their $500 million initial investment in mortgage insurer Essent.

Reuters’ Matt Goldstein reports that in another part of the housing market, the “pressure keeps building on small players in the buy-to-rent trade to cash out and flip the foreclosed homes they snapped up to the biggest investors in the space”. Larger investors like Blackstone, meanwhile, seem content to wait for securitizations or IPOs to see gains. — Ben Walsh

On to today’s links:

Big Mistakes
Someone lost $4 million trying to manipulate Intrade in favor of Mitt Romney – BuzzFeed

Charts
Is college worth it? A visual guide – Priceonomics

Land Grabs
China just bought 5% of the Ukraine – Quartz

Politicking
The economic impact of a government shutdown vs. a default – Annie Lowrey

They’re Just Like Us
A new paper “indicates that the Fed may have been misled by meaningless data” – Matthew Klein

Alpha
Did some traders get the “no taper” news early? – Nanex

Ugh
AIG’s CEO says the persecution of his company was “just as bad” as racist lynch mobs, apologies – Ryan Chittum

Solid Advice
“Investment consultants as an industry appear to add no value in fund selection” – FT

EU Mess
Greece and its lenders agree that this year’s recession will be slightly less bad than projected – Reuters

Legalese
A “Virginia-based regulator, said it sued the banks yesterday at a US court in Kansas” – Bloomberg

Crisis Retro
Regulator suing 12 big banks over MBS sales to credit unions – Reuters

The Fed
Sheila Bair warns that opposing a Yellen nomination will hurt the GOP – CNN Money

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/