This is no surprise - existing home sales will be through the roof nationwide in November as buyers rushed to beat the initial deadline for the homebuyer tax credit. Also ignore the median price - it is skewed by the mix of properties sold. A few key points: A large portion of market activity is from first time homebuyers using FHA loans and investors. This is not a healthy market. The percentage of foreclosure resales has decline to 39.1 percent - still very high historically. The number of NODs (Notice of Default) has "flattened out or trended lower in many areas". This could be a positive, although I think the foreclosure activity is moving up the price chain - and these NODs are for more expensive properties. From DataQuick: A total of 19,181 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 13.3 percent from October’s 22,132, and up 14.7 percent from 16,720 for November 2008, according to MDA DataQuick of San Diego. Sales almost always decline from October to November. The year-over-year increase was the 17th in a row. In DataQuick’s statistics, which go back to 1988, the average November had 22,312 sales. ... Sales have been stoked in recent months by several factors: A federal tax credit for first-time buyers, which had been set to expire last month before it was extended and expanded; robust investor activity, especially inland; super-low mortgage rates; the availability of government-insured, low-down-payment mortgages for first-time buyers; and the allure of a potential “deal” on a distressed property. “This market is still really lopsided. Foreclosures and short sales are huge factors. There’s still not a lot of discretionary buying and selling outside the more affordable markets....” said John Walsh, MDA DataQuick president. ... Foreclosure resales – houses and condos sold in November that had been foreclosed on in the prior 12 months – made up 39.1 percent of all...

The high-end real estate market hit new lows this year as multimillion-dollar properties failed to attract buyers even after huge discounts. New-home sales rose 24% and pending home sales jumped 32% in October from a year earlier, but estates with wine cellars, infinity pools and servants' quarters saw their prices drop 7%. Basketball star Shaquille O'Neal and rapper 50 Cent were among the bigger names to take losses or pull their homes off the market. Some luxury sellers are still weathering the storm. While the former home of the Detroit Lions took perhaps the biggest beating of the year, the former mailing addresses of Leona Helmsley, Nicolas Cage and Bernie Madoff still have no takers. Here are five property duds whose oversized infamy was matched by their inflated price tags:

Public policy experts have spent much of 2009 debating how to fix the market. In 2010, they’ll be wrestling with a different question: What should the government do with Fannie Mae and Freddie Mac? The answers to that question rests largely on a reading of what got the companies in trouble in the first place. Longtime critics, including some Republicans, argue that the company was increasingly steered to lower its standards and buy more bad loans because of misguided affordable housing goals. Defenders of the companies, meanwhile, argue that lax lending in the private market forced Fannie and Freddie to lower their standards to compete. Figuring out what to do with Fannie and Freddie, let alone actually getting anything done, is a huge challenge that won’t be solved anytime soon given the myriad financial and political complexities, but a few white papers are trying to get the debate rolling. We wrote about on Monday from a group convened by the Center for American Progress, a liberal think tank, that included a number of well-regarded housing experts. The paper calls for explicit federal guarantees on certain mortgage-backed securities and robust federal regulation to ensure that mortgages offered to the public are safe. Another paper, completed for Genworth Financial Corp. and released last month, similarly calls for the government to play a continued role in the mortgage market by explicitly guaranteeing issues of securities backed by certain mortgage products. The was written by Ann Schnare, a former Freddie Mac executive, and Richard Green, the director of USC’s Lusk Center for Real Estate. The paper provides a concise summary of the different options for Fannie and Freddie as well as a primer on the companies’ history. Here’s what they see as six major flaws that any overhaul would have to correct: Moral hazard and poor oversight : “Critics have long maintained that Fannie Mae and Freddie Mac are incented to take on excessive risk in order to maximize shareholder...

From the Fed: Industrial production increased 0.8 percent in November after having been unchanged in October. Manufacturing production advanced 1.1 percent, with broad-based gains among both durables and nondurables. ... At 99.4 percent of its 2002 average, total industrial production was 5.1 percent below its level of a year earlier. Capacity utilization for total industry moved up 0.7 percentage point to 71.3 percent, a rate 9.6 percentage points below its average for the period from 1972 through 2008. Click on graph for larger image in new window. This graph shows Capacity Utilization. This series is up from the record low set in June (the series starts in 1967), and still well below the level of last year. Note: y-axis doesn't start at zero to better show the change.

submits: A closer look at Moody’s Delinquency Tracker for Commercial Mortgage-Backed Securities provides little reason for optimism. The delinquency rate of loans in US CMBS conduit deals reached 4.47% at the end of November, a 46-basis point increase over the month before, and the largest monthly increase yet of the economic downturn.

I think and are coming to agreement about housing as an investment, thanks to Ryan Avent at The Economist, who a grand unifying theory of housing investment. Let me give a few final thoughts on this issue, and hopefully make this my last on this topic. Felix suggests, for the most part correctly, that I would agree with this statement by Ryan: “Sure, it’s fine to think of homes as investments, so long as the kind of investment you have in mind is the highly risky sort you wouldn’t recommend to anyone who didn’t have the ample knowledge and financial cushion you’d expect to see in a successful entrepreneur. And that does not describe most potential homeowners.” I certainly agree with the general sentiment that homeowners should know the risks, understand fully what they’re getting into, and have some financial safety nets in the event of an income shock. However, I can’t agree that only people aware of the risks and with ample financial cushions should think of homes as investments. In fact, quite the opposite, I think the people who most need to think of a home as an investment are those who are unaware of the risks, don’t have a financial cushion, but are going to do it anyway. Felix and Ryan may think we should tell people like this not to buy homes at all, but we don’t know their preferences. Remember, buying a house is an investment and consumption, and whether or not someone should buy a house depends on how much they value owning versus renting. (I don’t think we need to get into the non-financial reasons people value homeowning, but one important reason is that the stock of homes to buy is systematically different than the stock of homes to rent, and people may be unable to rent a home they like in a neighborhood a want.) Felix gets at the core problem with home buying, and I think the thing that is both his and my biggest concern, when he argues that buyers aren’t thinking about the decision like they should be. He says that “…no one ever buys a house with their...

Fannie Mae and Freddie Mac's federal regulator is renegotiating the companies' financing plan with the U.S. Treasury Department and may seek an increase to their $400 billion federal lifeline before the end of the year, according to people familiar with the talks.