Timber Industry Report Addendum

Timber Industry Report August 2010 Addendum
Rick Sohn
Umpqua Coquille LLC

The Financial Times of London carried an in-depth series on homebuying August 16-17.  It includes an international map of house price changes in the first quarter of 2010.  For example, China, Australia, and Canada were up 68%¬, 20¬%, 11.6%, respectively.  In contrast, Latvia, Ireland, and Spain were down 26.3%, 18.9%, and 4.7%, respectively, due to oversupply.  City of Dubai was down 48%, while Beijing was up 37%..  While prices decreased 17% worldwide in 2007 and 2008, they have bounced back 10%, subsequently.  While another collapse in housing is not predicted, there are adverse scenarios that suggest a further 10% reduction in European (and American)  home prices.  

The Financial Times also analzyes home ownership rates in the US, which were 45% in 1945 (the rest were renters), and rose to 64% in 1968, due to changes in American housing policies, including the establishment of Fannie Mae and Freddie Mac.  Ownership remained around 64% or higher until 1998 when lending policies were further eased starting under President Clinton, to push the ownership rate to 69% by 2005, with subprime and no-down-payment loans, etc..  The rate today is reported to have dropped to around 67%.  Some Obama administration officials  have sugested that homes are not a good investment, and indicate that the US may have over-emphasized housing to the neglect of education and infrastructure.  Attentive trade and business associations, as well as Political Action Committees will be tracking changes in national housing policy and their long term impacts on the timber industy and home ownership.

For the 17th month in a row, over 300,000 homes were foreclosed on in July, according to RealtyTrac.  Also in July, 92,858 homes were repossessed.  Moody’s Economy.com estimates 1.9 million homes will be lost this year, barely down from the 2.0  million lost last year.  With only  398,198 loans permanently modified so far, the International Herald Tribune (Global edition of the New York Times) concludes that, banks are insufficiently motivated and the Obama Administration has not done enough to support keeping Americans in their homes, and more should be done.  As home prices go down, more people are under water, and this is a vicious cycle.

Finally, for a snapshot of changes in unemployment, a key driver in any sustainable recovery, click on this website:  http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

Issue  #3-8b © Copyright Rick Sohn, Umpqua Coquille LLC.   For permission to reprint for nominal fee, Email  [email protected]

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