1) Phil's Financial Tip of the Day:
Deal of the Day: Shipping deadlines have passed, and malls are crowded. What now?
With only 5 days until Christmas time is running out. Here are some last second gifts ideas for you procrastinators out there.
http://www.smartmoney.com/spend/deal-of-the-day/the-best-11th-hour-gifts-1324331906631/
2) In the Markets today:
Stocks surged Tuesday following encouraging signs out of Europe and a jump in apartment building in the U.S.
Stocks soar on Europe hopes, strong housing starts-From AP
The Dow Jones industrial average surged 337 points following encouraging signs out of Europe and a jump in apartment construction in the U.S. It was the best day for U.S. stocks this month.
The Spanish government pulled off a successful debt auction Tuesday and gauges of business and consumer confidence in Germany increased. Both helped ease worries about Europe's debt crisis.
The Dow gained 2.9 percent to close at 12,103. Caterpillar jumped 5 percent, the most in the Dow.
The S&P 500 index rose 36 points, or 3 percent, to 1,241. Only six stocks in the index fell.
The Nasdaq composite index rose 81, or 3.2 percent, to 2,604.
Seven stocks rose for every one that fell on the New York Stock Exchange. Trading volume was light at 3.8 billion.
3) Top financial story of the day:
U.S. home building hit its highest level in 19 months in November, with most of the increase coming from multifamily construction.
Rent Party! Apartments Drive Strong Housing Starts Data-From Contrary Indicator
The stock market rose sharply on Tuesday in part on the strength of a solid government report on new housing starts and permits. Housing starts in November checked in at an annual rate of 685,000, up 9.3 percent from October 2011, and up 24.3 percent from October 2010.
This would seem to be a strange time for a housing construction boom. As blogger Barry Ritholtz Tweeted: " Yeah, more inventory! Just what we need!" Indeed, a sharply higher amount of unsold homes would seem to fall near the bottom of the long list of things the U.S. economy needs. Existing home sales, while up this year, are way below their recent peaks. And so at the end of October, there were "3.33 million existing homes available for sale, which represents an 8.0-month supply at the current sales pace," according to the National Association of Realtors. That figure probably estimates the impending supply given the number of homes that are in foreclosure and likely to be puked onto the market by banks. Meanwhile, new home sales are running at a low pace — an annualized rate of 307,000 — which means it would take 6.3 months to clear the 162,000 new homes from the market. A four-month supply of new and existing homes would be much more healthy.
So why are housing starts rising? A look inside the data reveals the answer. Builders have learned their lesson. They aren't foolishly building amenity-rich McMansions and Tudors with four-car garages to sell to highly indebted aspirational consumers. Rather, they're building smaller, practical abodes that they plan to rent out. Indeed, recent housing data help flesh out a post-crisis cultural, societal and financial shift toward housing: less owning and more renting. Thanks to foreclosures, walking away and a general inability to get financing, the homeownership rate has fallen in the U.S. from 69 percent in the third quarter of 2006 to 66.3 percent in the third quarter of 2011. That translates into several million households that used to own homes that are now renting.
Builders have reacted to this shift. They're building fewer family homes and more multifamily buildings. Look at the data. Yes, in November, the headline housing starts number was up sharply from October 2011, and from November 2010. (See Table 3 in the above document) But single-family starts haven't done much: They were up only 2.3 percent from October 2011, and down 1.5 percent from November 2010. But the market for structures with five units or more is going gangbusters. In November 2011, starts in this sector came in at an annual rate of 230,000, up 32 percent from 174,000 in October 2011, and up an eye-popping 180 percent from November 2010. Through the first 11 months of the year, single family housing starts are off about 10 percent from the first 11 months of 2010. By contrast, starts of structures with five or more units were up 60 percent in the same time period, from 97,700 to 156,200. The sharp rise in apartment construction is more than compensating for the continuing decline in house construction. The data on permits (Table 1) tells a similar story.
Through first 11 months of 2011, permits for free-standing houses are off 7.7 percent from the first 11 months of 2010, while permits for 5+ unit structures are up 36.4 percent.
Rather than indicating optimism about the housing sales market, the data on housing starts and permits point to optimism about the apartment rental market. Builders, and the lenders who enable them, are looking ahead and concluding that it makes more sense to build multifamily units, which tend to be more efficient, smaller and less expensive than single-family homes. In addition, this type of housing offers developers far more flexibility. Depending on market conditions, they may decide to sell the units as condos, or rent them out. In recent years, as in the single-home market, the bias has shifted away from ownership. Check out the Census Bureau data that breaks down completed housing by purpose and design. (See Table Q6) In 2007, only 62 percent of the housing units in buildings with two or more units were built for rent; the percentage rose to 84 percent in 2009 and 87 percent in 2010. In the first three quarters of 2011, 90 percent of such units completed were built for rent.
4) Inspirational Quotes@Inspire_Us from Twitter
God doesn't require us to succeed; he only requires that you try. -Mother Teresa
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