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» VISIT US ONLINE @ DSNEWS.COM FALLING INVENTORIES AND RISING PRICES SPAN NATION AND WEST COAST COMMENTARY: FED CELEBRATES, WALL STREET PARTIES Inventories are declining, and prices are rising, according to a recent report from Movoto Real Estate, a brokerage with a presence in 30 U.S. states. Examining data from Multiple Listing Services (MLSs) in 34 cities across the nation, Movoto found year-over-year declines in June's inventory in 32 of the 38 cities it tracks. The most drastic declines took place in Sacramento (-54.5 percent), Detroit (-47.1 percent), and Boston (-46.7 percent). Over the same time period, price per square foot increased in all but two of the cities Movoto observes. The exceptions were New Orleans (-2.2 percent) and Chicago (-3.2 percent). Sacramento topped the list with a 68.1 percent price-persquare-foot increase. Highlighting just the West Coast, Movoto found a year-over-year decrease in inventory but a month-over-month increase. A composite of 14 major metros on the West Coast reveals an 11.9 percent yearly decline in inventory in June, according to Movoto. In contrast, listings rose month-over-month from 12,218 to 13,698. West Coast cities with the steepest inventory decreases year-over-year in June were Salem, Oregon (-25.4 percent), Bellevue, Washington (-24.5 percent), and Los Angeles (-24.5 percent). San Jose, California (19.2 percent), and San Diego, California (3.6 percent), were the only two of the 14 West Coast cities in the index to experience rising inventories over the 12-month period. As inventory declines, price per square foot rises. However, the two cities with growing inventories are not left out of this trend. San Diego and San Jose take the second and third places, respectively, in the ranking of cities by price increase over the year. Price per square foot increased 20.8 percent in San Diego and 18.4 percent in San Jose. The only city to beat these two was Los Angeles with a 28.6 percent increase. As of June, the price per square foot for a home in Los Angeles was $432. This is the second-highest price per square foot on Movoto's June index for the West Coast. San Francisco outpaced all other cities with a price per square foot of $655. Ben Bernanke was up at the National Bureau of Economic Research (NBER) on July 10 to celebrate the Federal Reserve's 100th birthday. Despite being chairman of the Fed, instead of receiving a birthday gift, he gave a birthday gift—and Wall Street partied. Bernanke was generous not only to the stock market, but in comments at the NBER and at a question-and-answer session that followed, he also threw a bone to the beleaguered housing sector when he listed his reasons for optimism about the economy. "On the positive side, I think you would want to start with the housing sector, which has been of course a major drag on our economy now for quite a few years, and only in the last year or so has it really begun to turn around and show some strength, which has implications both for construction, for related industries, and also for house prices, which affect household balance sheets," he said. But Bernanke saved his biggest boost for stock investors when he made clear the Federal Reserve has no intention of abruptly raising interest rates or cutting back on its $85 billion a month bond purchase program—monetary policy "accommodation" to stimulate growth. What Bernanke really had to do at NBER was correct the impression that followed the last meeting of the Federal Open Market Committee. His remarks at a press conference after that meeting were interpreted as suggesting the Fed was going to scale back on its accommodation— that's at least what Wall Street heard—and traders, fearing that higher interest rates would lure investors from stocks, reacted by selling equities. The problem was Bernanke never actually said what Wall Street heard. This week, he put a little more definition on when the Fed would KNOW THIS The latest Housing Scorecard from the administration credits the Making Home Affordable program for more than 1.6 million homeowner assistance actions since the crisis and servicers' proprietary modification programs for providing relief to another 3.6 million homeowners. By Mark Lieberman, Chief Economist for the Five Star Institute reduce its stimulus efforts. The Fed has said for a few months now it will not raise rates until the unemployment rate drops to 6.5 percent (from its current 7.6 percent) and when the inflation rate stays around 2 percent (from its current 1 percent). Saying no action would be taken until certain targets are met is different from saying that when the targets are met an action will definitely be taken. So, Bernanke said as much, in clearer terms, at the NBER conference: When the unemployment rate drops to 6.5 percent, the Fed will think about cutting back on its bond purchase program or raising interest rates. He had to underscore that even when the Fed lifts its foot off the accelerator, it will not slam the brakes but will rather try to slow the economic engine gradually. Indeed, in response to critics who warned increasing the money supply—which is what the Fed did by lowering rates and buying Treasuries—would cause inflation to soar, Bernanke noted inflation is now too low and that we need a little inflation. "We are all very much committed to defending our inflation target from below as well as from above," Bernanke told the NBER. "Low inflation is not good for the economy because very low inflation increases the risks of deflation, which can cause an economy to stagnate. It raises the real cost of investing, and the evidence is that falling and low inflation can be very bad for an economy." Catch Mark Lieberman's commentary on P.O.T.U.S. radio (Sirius-XM 124) the first Friday of every month at 8:45 a.m. (EDT) and again at 12:30 p.m. (EDT), or tune in at 6:20 a.m. (EDT) to hear him any other Friday of the month. VERBOSITY "It is with great pleasure that I congratulate Richard Cordray on his long overdue confirmation as director of the CFPB. Under his leadership, the CFPB has been praised by industry representatives as both 'effective' and 'accessible.' In addition … Director Cordray has a strong enforcement record, securing $425 million in relief for over six million consumers." —Rep. Maxine Waters (D-California), Ranking Member of the House Financial Services Committee, on July 16 in response to the Senate's vote to confirm Cordray as head of CFPB 25

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