Seasonal Effects In Home Sales

Econbrowser has some bad news about the current housing market:

In a typical year, most new home sales occur between March and August. In each of those months we usually might expect 35% more homes to be sold than at the seasonal low in December. This August, home sales were actually less than in December, the first time that's happened in the 44 years these numbers are available.

For comparison, using MLS data on home sales, the 7 Rivers Region saw 102 listings sold in December of 2006, while August of 2007 saw 155 listings sold. That is a 52% increase. Although August 2007 is 11% below August 2006, at least its not below December of 2006!

Milk Prices

According to this NYT piece:

Driven by a combination of climate change, trade policies and competition for cattle feed from biofuel producers, global milk prices have doubled over the last two years. In parts of the United States, milk is more expensive than gasoline. There are reports of cows being stolen from Wisconsin dairy farms.

I've heard as little as a few years ago, all dairy farms in Wisconsin were cash flow negative. I guess this means things have turned around.

For an interesting look into the economics of the dairy industry read this fedgazette piece which covers the price problems of 2002-2003. And this piece discusses the economies of scale disadvantage most Wisconsin farms face.

Technological advances in dairy production—from automated milking parlors to computer systems and management protocols—have dramatically increased dairy productivity, the number of pounds of milk a cow can produce. The average cow can produce four times more milk today than in 1930. But those technologies are most economical on large-scale operations, and small farmers have been unable or unwilling to grow large enough to incorporate them. A 1998 Minnesota State Colleges and Universities analysis of Minnesota dairy farms found that small dairy herds (under 100 head) averaged 17,699 pounds of milk per cow per year, whereas cows in large herds (300+) produced 21,284 pounds.

Time To Refinance?

When interest rates were falling, did you wonder as I did if it was the right time to refinance? I remember hearing a rule of thumb, if the interest rate had fallen by over 1% and you expected to be in your home for more than 5 years, it would most likely make sense to refinance. As an economist this answer was never precise enough for me. So I should have sat down and calculated the exact rate at which I should refinance, but the procrastinator in me always put it off. Now thanks to my good friend Sumit Agarwal, I don't need to do any heavy lifting or mathematical computation.

Sumit and his co-authors have a nice little calculator up at the NBER website.

Optimal Time to Refinance Calculator

Wow. Rates never fell low enough for me to refinance, so it looks as though my procrastination paid off. Well, it saved me the time it would have taken to calculate the optimal rate anyhow.