From the Associated Press about today's jobs report:

Today's disappointing jobless claim numbers indicate what the chart has been showing all year - namely, the economy is moving sideways. Most financial people I speak with, myself included, understand well that given the magnitude of the economic destruction that caused the financial system to near-collapse in September 2008 will take a proportionate amount of time to recover from. Still, sideways is not recovery.



As you see in this Calculated Risk chart of unemployment claims (4-week moving average), jobless claims soared at an unprecedented rate from January 2008 through 1Q 2009 when they started to reverse and did so in upside down "V" fashion until... January of this year. Since this January, jobless claims have been moving sideways at an unsustainable 475k-500k. Economic consensus is that economic recovery can't really get going untill we get back to the near 300k mark as you see mostly from 2005-2007.

Sideways cannot get us there.

There is much fearmongering in the U.S. media about deficits right now. And the deficit, along with the debt, is an important long term economic issue, and they both have a long history dating back to the mid-20th century. How pressing a concern in the short run can be guaged by the yield on a 10-year U.S. Treasury: the lower the yield, the more global and institutional investors are hungry to buy U.S. debt (and finance our deficits). Right now the 10-year is at about 2.6% yield, only about 50 basis points off an historical low in 2009. That alone indicates that, in the short term at least, the world's sober-minded investors are most confident in the U.S. economy.

While an unsustainable deficit or debt can spook Treasury investors, they are not doing so now. What can spook those investors also, though? A tanking economy. If U.S. policy makers do not respond to this sluggishness in the recovery with true stimulative policies, such as those promoted by bond king Bill Gross of PIMCO to refinance federally-backed mortgages (just one of several great ideas that should be on the table), or known traditional measures with high multiplier effects -- then we can see not just a stalled recovery, but a failed one.

The charts don't lie. Something has to happen. It's time policy makers acknowledge the issue and start taking action. It's time policy makers speak the truth and not the politics and speak it loudly. It's time for true and historical leadership.

From The Wall Street Journal's Lingling Wei comes news that new private firms are getting into the mix of providing commercial real estate loans, which could boost the sagging sector.

From the invaluable Real Estate Center at Texas A&M University:

 

An Open Letter to the Texas Real Estate Commission

Monday, May 10, 2010

In the wake of last week's astounding job creation numbers and upward job revisions from prior months, confidence is definitely returning to the market. It's always important when considering broad market conditions and consumer sentiment not to dwell on the antics of the exchange market indices like the Dow and Nasaq. Stocks are only one asset class and should be factored into any market analysis as such. A strong market analysis includes as many data points as possible, with reliable analysis.

I'm not the best market analyst, but I'm far from the worst. One of my advantages is that I can read broad market indicators including the stock markets and official economic data, but I also as a real estate broker practicing on the ground am privy to first hand real time data in real estate and finance.

Accordingly, I feel confident in saying that overall market confidence is organic and remains stronger than last year and is gaining as data keeps building that a modest and sustainable recovery is underway. With the largest net gain of jobs last month in 4 years along with revised net gains from prior months, that presages an increase in consumer and job confidence. Indeed we can already see signs of that confidence on the ground in our own business.

As job confidence returns and worries about further layoffs subside, employees will breathe a sigh of relief and begin to think about the transactions and moves they've been putting off during the last couple (few) years of frightening uncertainty. Add to that the passage of major health care legislation which hung over the nation for a year, the finalizing of banking reform, and already implemented consumer protection regulations in the lending industry that are now settling in, and we're beginning to see that businesses and consumers have better forward visibility, which again breeds confidence. The shaking of the shaking out is subsiding, although it is not gone.

May's home sales figures will be astonishingly strong, since buyers who were already in the market rushed to put down contracts before the April 30th deadline for home buyer tax credits. But while that demand was pulled-forward a bit, we're still seeing healthy buyer activity in the wake of the tax credit deadlines that foretells a probable strong June, although it's too early to tell if June's sales will match May's sales.

Builders are not as shy this year about building up their spec inventory ahead of the summer sales season, which indicates revived builder confidence by the nation's largest builders, especially in Houston markets. They can be wrong, but it's a positive sign. Clearly the strongest activity will be among well-qualified buyers as new conservative lending standards are keeping the marginally qualified buyers mostly to the sidelines for now.

Commercial real estate activity will continue to lag through this year, although some multi-billion dollar investment funds have been formed to acquire distressed CRE, and I think many good opportunities exist in Texas for future economic growth in the industrial and services sectors, with energy, logistics, and high-tech leading the way for the rest.

We continue to be modestly (though not cautiously anymore) optimistic about both the real estate market and the economic prospects for Houston and Texas overall. The national recovery is being led now by the industrial sector, and fortunately that is a strength in Houston. With jobs recovering, employees are also relocating to take those jobs, which is leading to increased buying and selling activity in the strong Houston economy.

With many foreclosures still on the market, right now is a particularly good time to buy distressed property, however we are not seeing significant price declines in prime properties, which continue to be in demand by relocating, upsizing, and downsizing prime buyers. The properties languishing the most are properties that are not in top condition and are priced incongruently. Effective sellers aren't necessarily selling lower (though some choose to do so for personal reasons), but they are selling with effective investments in maintenance and upgrades. Buyers and lenders in more conservative modes are seeking the most reliable properties that have little or no accumulated deferred maintenance and deferred updates.

Overall expect to see growing confidence market-wide, especially once May sales figures are released in June and as jobs continue to recover. After a wickedly slow first two months, the market has surged back and we expect moderate improvement throughout the year that will result in a notably better year in 2010 over 2009.

In times of fear, the courageous get wealthy. We're seeing smart money get invested in this economy, including in real estate. Don't get me wrong - there are a million ways to screw it up (that's why you need an expert broker/adviser). But the underlying dynamics are getting more solid with each new economic report.

The following is an open letter to Ocwen Financial, a large mortgage servicer in the U.S.
--------
Dear Ocwen Financial: 
Dorette Crawford lost her job in November 2008. In January, she took a job for 50% less pay in Oklahoma, rented an apartment there, paid utilities on both her Houston home and her apartment, and her husband traveled between Houston and Oklahoma as they tried to sell their home and pay off the mortgage for which you are the servicer. Now with an eager and exceptionally well-qualified buyer on contract willing to close the deal in May, meet your terms, and save the Crawfords from foreclosure – you have repeatedly refused a one month stay of foreclosure. One month. Really? Why are you so eager to foreclose?

Square footage is the most common driver of a comparables approach to market valuation of real estate. For example #SF x average comparable sale price per square foot = market value assessment. There are other methods of valuation, but this is most common. It's also laden with complexity.