Bruce Krasting takes note of a fascinating, searchable database provided by the Federal Housing Finance Agency:

I think it is inferior to the Case-Shiller index in terms of measuring what is actually going on month over month. However, the FHFA gets its data from their own pool of mortgages. Given that FHFA represents more than 50% of all mortgages (Fannie+Freddie+FHLB=$5.9 Trillion) they have a unique database. The good news is that they have packaged this up on their website so that anyone can check out trends on both a city by city or a state by state basis.

The graph above was produced from the data for Illinois and, as you can see, it illustrates a roughly 10% drop for a $1 million house from the first quarter of 2006 through the first quarter of 2010. Clicking on it will give you a somewhat larger image. Bruce includes a number of graphs for various states and the District of Columbia. Those he includes show sharp drops in value except for Texas, which has shown great stability (although that appears to have changed somewhat in recent months which are not reflected in the database) and DC (natch).

However, I think the database should be used with caution. Like a fan dancer, the database promises to reveal while actually concealing. The scale of the Y-axis varies from state to state to keep the graphs within the same footprint. This makes California’s 40% decline over the period look very much like Illinois’s 10% decline.

What the graphs show is a neat case in point of something I’ve been saying around here for some time: what we’ve seen in the economy and, particularly, in housing over the period of the last three or four years isn’t so much a national crisis as a local crisis with national implications. To my mind that means the “one size fits all” solution which is what Washington is likely to produce is peculiarly unsuited to the problem at hand. California, Arizona, Florida, and Nevada have all seen precipitous declines in housing values. Texas—not so much. Prescribing a solution tailored to the problems in California, Arizona, Florida, and Nevada but implemented nationally can have wildly unforeseen consequences in other markets.

And anyone who’s ever uttered the words “a good neighborhood” implicitly understands that not only are the problems not statewide, they aren’t even countrywide and can even vary from street to street.

Housing will always be a good investment in some neighborhoods. That’s not in dispute. The notion that housing everywhere, regardless of location, will always appreciate in value is what’s in question and the answer to the question has always been apparent: there ain’t no such thing as a free lunch.

Or, at least, nobody who was paying attention. The National Association of Realtors reports that housing sales had a terrible, horrible, no good, very bad month in July:

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.

Lots of neat graphs here.

Megan McArdle puts it well:

The depth of the collapse suggests that in fact, the housing tax credit was not generating new demand as much as moving demand forward a few months. That means that we’re going to have to work out the aftermath in months of low home sales.

My recollection is that this was practically everybody’s prediction of what would happen as a consequence of the Administration’s home-buyer’s tax credit. Not only would it reduce tax revenues, it would merely time-shift home sales by a few months. That certainly was my prediction.

What is it about time-shifting that people don’t understand? If your policy is going to be one of time-shifting, you’ve got to shift it far enough so you’re beyond the crisis. Now it’s just in time for the mid-term election campaigns! Jolly.

The Manufacturers Alliance is reporting that manufacturing isn’t growing as fast as they’d hoped but high tech manufacturing is doing nicely, thank you:

Interestingly, they nevertheless expect the U.S. manufacturing sector to expand at a faster rate than the greater U.S. economy, forecasting manufacturing production growth of 5.7% in 2010 and 4.7% in 2011. Digging a bit deeper, it’s a substantially different economy environment for high tech vs. ‘non-high tech’ companies. While non-high tech output is only expect to grow by 5.1% and 4.3% in 2010 and 2011 respectively, high-tech production is forecast to surge by 14.5% and 13%. It’s a completely different economy for those in the high-tech space.

and the projected hiring by manufacturers won’t be as high as they’d thought:

While the association expects 650,000 manufacturing jobs to be created through 2011, this is a sharp drop of about 350,000 from the 900,000 new jobs previously expected for the period, back in May. Hiring will likely be skewed towards the high tech industries where there’s double-digit production growth, so high tech is the place to be.

It’s a bit hard for me to imagine 40 to 50 year old guys who’ve spent the last 20 or 30 years in housing construction getting into high tech manufacturing.

Arnold Kling, in a post complaining that regardless of the precise nature of the argument being made at the time the “consensus opinion” is always to subsidize Fannie Mae and Freddie Mac, explains the consequences of subsidizing house prices:

The effort to prop up home prices does the following:

1. Diverts capital from other uses.
2. Uses up taxpayer money that could be spent on other things.
3. Increases the wealth of people who find suckers to buy their houses at too-high prices.
4. Decreases the wealth of the suckers who buy now.
5. Decreases the liquidity and mobility of people who cannot find rational buyers for their houses because rational buyers do not buy into a rigged market.
6. Decreases the investment opportunities for rational buyers, who are unable to buy homes in an un-rigged market.

If you think that housing is just about to rebound and homes are a better investment than ever you probably think this is rank heresy and what possible better use of the money could there be. If you think, as I do and I presume Arnold does, that housing is unlikely to resume its preeminence as the driver of the national economy any time soon, propping up home prices is actually damaging to the economy.

If you think, as I presume the Administration does, that propping up home prices is likely to prove popular and while housing construction isn’t much, it’s the only game in town, then you think we’re in a real pickle.

Over at Outside the Beltway it’s seemingly all Ground Zero Mosque/Cordoba House/Park51 all of the time. I have been reluctant to weigh in on this subject for two reasons. First, I don’t believe it’s any of my business. I have complete confidence in the ability of New Yorkers to work the matter out by themselves in a reasonable and prudent fashion if left to their own devices. Furthermore, as long as New Yorkers aren’t being murdered in their thousands by terrorist attacks I don’t much care what goes on there. IMO New York and Los Angeles receive attention disproportionate to their actual importance in the scheme of things because so many television journalists live in those places.

Second, there’s a matter of simple logic that appears to have been missed in the discussion. If A implies C and B implies C and A and B are the only alternatives and mutually contradictory then C is true and which of A or B is true is irrelevant in determining the truth of C.

We are not going to go to war with all Muslims at the same time. IMO President Bush’s finest moment in the White House was, in the immediate aftermath of the attacks on September 11, 2001, he proclaimed that we are not at war with a religion.

There are two extreme positions held in the United States. From the point of view of one minority, Islam is completely irrelevant to the attacks on 9/11. From that position believing that a mosque, Muslim community center, or whatever you care to call it within shouting distance of where the Twin Towers used to be located is wrong is plain unvarnished bigotry, pure and simple. The other extreme point of view, held by a different minority, is that we are in fact at war with all of Islam, Muslims cannot be taken at their word because their religion endorses lying to non-Muslims for the sake of Islam, and that a mosque of Islamic community center anywhere in the United States, let alone within a couple of blocks of the most successful attack by Muslims on the United States is an affront.

Even if that were the case wouldn’t it be extremely imprudent to announce it? Divide ut impera. Wouldn’t the prudent thing be to attempt to divide Muslims between its radicals and those less radical so they could be confronted in detail? From that point of view we should at least be appearing to arrive at accommodations with Muslims to reduce the size of the imminent threat to one more manageable at the present time.

Hence my observation. Once you’ve processed the reality that we’re not going to war with all of Islam regardless of whether Islam is benign or reprehensible I think you arrive at my position: silence is golden.

Honestly, I think I’m out-living my time and don’t know what to believe anymore. My mother taught me that sticks and stones may break my bones but words will never hurt me. And I learned in college that one good approach to tolerating this vale of tears is to tend my garden. Those taken together tell me that although I should defend myself when attacked I should be tolerant of the views of others and, basically, mind my own business. For me that’s true whether it’s a matter of flying the Confederate flag over southern cities or building mosques in New York.

Now I’ll shut up again.

Perhaps because of the egg-linked salmonella outbreak eggs are much on my mind this morning. It may be that the signs posted in my local grocery store announcing that their egg suppliers aren’t implicated in the outbreak might have something to do with it. This morning I encountered in a Wall Street Journal op-ed the same balderdash I’ve been seeing about bank loans for some time:

What’s missing in these times is a strong desire among businesses and consumers to take on new debt, low rates notwithstanding. Corporations can’t even decide what to do with all the surpluses their businesses are generating; they are sitting on vast amounts of cash even though it is earning them minimal investment returns. Because business’s “animal spirits” are suppressed by caution, private-sector hiring is weak, which means the unemployment rate is likely to remain high. As the New York Fed report shows, householders on balance are struggling to pay off the debts piled up during the 2003-2007 credit binge and are building up savings. Consumer spending is relatively flat.

Are the rates low? Or are they merely lower? Unless economics has changed since I was in school as long a good remaining on the market means that the market clearing price has not been reached. To me that would mean that banks are asking too much for loans as much as businesses are reluctant to borrow.

A purchase is a transaction between a buyer and a seller. Attributing a reduction in the number of purchases to buyers alone is promulgating a falsehood by telling only half of the truth. At this point bankers are being paid not to make loans since they can make money with very little risk by borrowing from the Fed, buying Treasury notes, and pocketing the difference between what they pay and what they earn. Why make loans?

In my view a key challenge to righting our economy lies in adjusting our expectations to the new reality at hand. But homeowners continue to believe that their houses are great investments, retailers continue to believe that the glory days of the Aughts will return, bankers continue to believe that they will continue to reap riches beyond the dreams of avarice by the same means that have worked so well for a generation or more, and policy-makers encourage them in those beliefs by pouring money down every available rathole, secure in the conviction that they will be able to uncrack the egg.

Keep looking up!

Those are the words with which Jack Horkheimer ended his Star Hustler/Star Gazer astronomy featurettes on public television for 30 years. He delighted and inspired PBS audiences with his eccentric style and his obvious enthusiasm for his subject, the night skies.

He died last Friday. The Miami Sun-Sentinel has a fine obituary:

Born Foley Arthur Horkheimer on June 11, 1938, he grew up in Wisconsin, where he began a promising career as a jazz organist, nightclub entertainer, actor and playwright.

He came to Miami in 1964 after studying pre-med and theater at Purdue University. Doctors had recommended a warm, humid climate for a degenerative lung condition that plagued him all his life.

His father was mayor of Randolph, Wisc., for 24 years, and wanted his son to become an athlete — impossible due to his health.

He was director of the Miami Museum of Science and Space Transit Planetarium for 35 years and is credited with saving that institution. But he is known to millions more as the quirky little guy with the bad toupee who fascinated all of us with naked eye astronomy.

The Watcher’s Council has announced its winners for last week. First place in the Council category was The Razor with The Rage Beneath The Surface.

First place in the non-Council category was Pascal Bruckner @ City Journal with Europe’s Guilty Conscience.

Full results are here.

In style.