Economy Watch: REOs Up, GDP Low
- May 27, 2011
May 27, 2011
By Dees Stribling, Contributing Editor
RealtyTrac reported in its latest U.S. foreclosure sales report, which covers the first quarter of 2011, that REOs and other properties in some stage of foreclosure now account for 28 percent of U.S. residential sales, up slightly from the fourth quarter of 2010, when the total was 27 percent. The total is down from the first quarter of 2010, however, when it was 29 percent.
Foreclosure sales accounted for 53 percent of all residential sales in Nevada during the first quarter, the highest percentage of any state but down from nearly 54 percent in the previous quarter and down from 59 percent in the first quarter of 2010. California was next highest, with 45 percent of all residential sales out of foreclosure in the first quarter of 2011.
The average sales price of properties in some stage of foreclosure—default, scheduled for auction or flat-out REO—was $168,321 during the first quarter, down 1.89 percent from the fourth quarter of 2010 and off 1.46 percent from the first quarter of 2010, according to RealtyTrac. Ohio foreclosures sold for an average discount of 41 percent in the first quarter, the biggest discount of any state (and for once, Nevada isn’t leading in some unpleasant category). Ohio’s average foreclosure discount was down slightly from 42 percent during the previous quarter, but up slightly from 40 percent in the first quarter of 2010.
US GDP Anemic in First Quarter
Preliminary estimates of US GDP growth are often revised upward later, much to the relief of investors and other interested parties (which is just about everyone, in this economy). Unfortunately, the U.S. Department of Commerce said on Thursday that GPD growth for the first quarter of 2011 was a wheezing 1.8 percent–exactly the same as the preliminary estimate made last month.
A lag in consumer spending was the main culprit. Back in the fourth quarter of 2010, consumer spending grew at an annualized 4 percent, but in the very next quarter that rate was down to 2.7 percent. Why are consumers spending less? The unnerving increase in recent months in gas prices, for one thing, but also meager pay increases.
Government spending was also down at an annualized rate of 5.1 percent for the quarter. More attention might currently be on the federal budget and its discontents, but states and local governments all across the nation cutting and cutting hard, causing not only disruptions to public services but also an impact on GDP.
Americans Still Traveling, Despite Higher Costs
Ahead of the Memorial Day weekend, AAA is predicting that, despite higher prices for both airplane tickets and gas compared with last year, a few more people will be in the air and on the road this weekend than during the same weekend last year. All together, the organization posits, 34.9 million Americans will travel more than 50 miles this Memorial Day, up 0.2 percent from a year ago.
An AAA survey of ground travelers found that six out of ten said rising gasoline prices would not impact their travel plans. Of the remaining 40 percent–who said rising gas prices would impact their travel plans–70 percent of those will economize in other areas, while the rest will take a shorter trip or travel by an alternate mode of transportation.
Wall Street managed some minuscule advances on Thursday, with the Dow Jones Industrial Average up 8.1 points, or a scant 0.07 percent. The S&P 500 gained 0.4 percent and the Nasdaq was up 0.78 percent.