joi, 16 septembrie 2010

SEOmoz Daily SEO Blog

SEOmoz Daily SEO Blog


4 Valuable Link Building Services (Zemanta, MyBlogGuest, EightfoldLogic & Whitespark)

Posted: 16 Sep 2010 04:53 AM PDT

Posted by randfish

In the last year, there's been a plethora of entrants to the field of link building services outside the traditional software basis of reversing competitors' backlinks (like our Link Intersect, LAA or Open Site Explorer tools) and consulting/direct purchase. In this post, I'll try to cover some of the interesting major new services, as well as present some long-standing options that some SEOs may not have discovered.

I've segmented the services below into unique sections to help differentiate the types of link building they offer. Some are more service-based, others are pure-software and the first section is more visibility-based than direct link  acquisition.

Zemanta

One of the more unique offerings in the last few years, Zemanta lets publishers submit a feed of content or images to them, which then appear in front of bloggers in the "composition" window (while they write their posts). These are labeled as "related posts" and have multiple benefits:

  • They can improve branding amongst a blogging audience (as bloggers will see your site/brand name while they write)
  • They can draw in direct links (if the blogger chooses to link to your work in the post or as a "related post" at the bottom - or through links from image references)
  • They can attract direct traffic from the bloggers themselves, who are likely to click on links/content that appears to be interesting

Zemanta's Content Recommendations
You can try Zemanta's service via a demo on their site

Zemanta has (according to their team) been formally approved by Google's search quality folks as a white-hat service (which makes sense since all they're doing is showing advertising content to writers, who then determine if they want to link or not) and is now included in Wordpress and Blogger.

SEOmoz has been using them for over a year now (we started with a trial and continued on) and we've seen good results - we tend to get a half dozen or so links to our content (the blog and YOUmoz) each month which can be seen through their reporting system (which has some upgrades in the works).

*Other than our paid use of the service, SEOmoz does not have any affiliations with Zemanta or its founders.

MyBlogGuest

Founded by Ann Smarty, MyBlogGuest provides a platform for those seeking to write and receive guest posts. The service is relatively simple, but potentially quite powerful. If a reasonable number of quality blogs and sites participate in the marketplace, the opportunities for providing great posts and receiving traffic and links back are tremendous (as are the opportunities for those seeking more content and relationships).

Blogging is an inherently social field and while the links may be a primary driver for many interested in the site, Ann has made it clear that she hopes deeper relationships will emerge from the connections. The site's layout and signup process are impressive and compelling, though driving action once inside the platform could still use a bit more polish.

MyBlogGuest Screenshot
The marketplace is currently based on a forum connections system

You can read more about the project in SearchEngineLand's interview with Ann from February.

I'll be surprised if some Silicon Valley style startups don't pop up to copy this model. Hopefully Ann can stay far enough ahead of the game through a network effect to remain compeitive. It's a terrific idea that needs only enough branding and awareness in the space to take off.

*SEOmoz does not have an affiliation with this site, though we have contracted Ann, personally, to do projects for us in the past.

EightFoldLogic's Linker

Originally known as Enquisite, EightFoldLogic, a software company with offices in Victoria BC and San Francisco has recently launched a marketplace of their own for website owners of all stripes called "Linker." The premise is similar to MyBlogGuest, but the audience is wider and the interface more customized for creating one-to-one, private connections.

Eightfoldlogic's Linker
Linker enables the creation of "criteria" much like personal ads for linking connections

EightFoldLogic Linker
Within a day of signing up in a single category, I had four potential "matches"

Linker's goal is to connect sites and marketers interested in partnerships or link relationships with one another. Since their service ends at the time of connection, the method of obtaining the link is up to the parties involved. This means plenty of white hat options, but also potential gray hat ones - however, EightFoldLogic's Richard Zwicky and the audience they've traditionally attracted lean white hat, so I expect this won't be an issue unless the audience changes substantially.

The concept of marketplaces for link acquisition and connecting to site owners interested in links is a compelling one, but the key, as with MyBlogGuest above, will be achieving the critical mass of users necessary to make the service valuable. To that end, Linker's made their product completely free for the next couple months - you can sign up here.

*SEOmoz provides link data via our API to EightFoldLogic but does not have a financial stake in the company or this product.

Whitespark's Local Citation Finder

A few months ago, I wrote a blog post about a tactic to grow your Google local/maps rankings that involved a similar principle to the automated tool built by Whitespark and Ontolo.

The concept is to find sites that are included in Google Local's "sources" for maps and local review data that link to or reference multiple sites that rank in the local results. It's a simple idea, but well executed and incredibly useful for those seeking to optimize their local listings. You can try the Local Citation Finder here - results take just a few minutes to be returned.

Whitespark Local Citation Finder
Enter some data about your site/goals and the citation finder will email you potential sources for listings

As the local results grow in importance and competition, and as the value of having these consistent, multiple listings rises, I suspect this tool will be incredibly popular. I'd love to see further productization around showing more data about the importance/value of particular local listing sites, and some opportunities to help control and manage those listings, but this first version is pretty exciting on its own.

*SEOmoz does not have a financial or product relationship with either WhiteSpark or Ontolo, though we have been talking to the latter about use of our API in other products.

---------------

Although there are dozens of other services I'd love to cover, these are some of the most interesting to me, personally. As always, looking forward to your thoughts and recommendations, too!


Do you like this post? Yes No

LDA correlation 0.17 not 0.32

Posted: 15 Sep 2010 03:03 PM PDT

Posted by bhendrickson

LDA is remarkably well correlated to SERPs, but by substantially less than I thought or claimed. Expected correlation (as measured by expected spearman's correlation coefficient over our dataset) is 0.17 instead of 0.32. I found a mistake with the calculation that produced the 0.32 score.

0.17 is a fine number, but it is awkward having previously claimed it was 0.32.

Some Implications:
Statements I made in the past two weeks along the lines of "LDA is more important (as we measure it, yada yada) than other ways we've found to evaluate page content, and even more surprising than any single link metric like the number of linking root domains" are incorrect. A corrected statement would be "LDA is better correlated (yada yada) than other ways to measure page content relevance to a query that we've looked at, but less correlated (yada) than several ways to count links."

Topic modeling is still another promising piece of the pie, but the slice is not as large as I thought. Or claimed.

Slightly long winded description of the bug and what evidence there was of it:
I was looking into the discrepancy between Russ Jones's chart, which showed roughly a linear relationship between SERP ranking and sum LDA scores, and Sean Ferguson's chart, which showed a huge jump for the mean LDA score but the rest pretty random.  Russ Jones had based his chart off our tool. Sean based his chart off the spreadsheet. After looking at it for a little bit, it was pretty clear the source of the discrepancy was that the tool and the spreadsheet are inconsistent.

I tried reproducing a few results of the queries in the spreadsheet using the tool. After about a dozen, it was clear the spreadsheet (compared to the tool) had a consistently higher scores for the first result, and consistently lower scores for the other results. That is technically referred to as the ah shit moment.

I reviewed the code that differs for the web page and the spreadsheet, and found a bug that explains this. When generating scores for the spreadsheet, it caused the topics for the query to be largely replaced with topics for the first result. This made the first result to be scored too highly, and later results to be scored lower.

Excluding the first result from every SERP, the bug actually made the results less correlated in the spreadsheet, but the help getting the first result correct was enough to boost the correlation up a lot.

A Few Related Thoughts:

  1. When I release statistics in the future, I will continue to try to ensure we provide enough data to verify (or in this case show a flaw with) the calculation. Although I found the bug, it was only a matter of time before someone else would try reproducing a few of the queries in the tool and see the discrepancy. So releasing data is a good way to ensure mistakes get discovered.
  2. The actual expected correlation coefficient, 0.17, still is, at least to us at SEOmoz, exciting. But the smaller number is less exciting, and it really really sucks I first reported the expected value for the coefficient as 0.32.
  3. Some have claimed there is something invalid with measuring correlation by reporting the expected value of Spearman's correlation coefficients for SERPs. They are still wrong. Two wrongs don't make a right. My programming mistake doesn't invalidate any of the arguments I've made about the math behind the methodology.
  4. Mistakes suck. I feel shitty about it. I'm particularly sorry to anyone who got really excited about 0.32.

Here is a corrected spreadsheet and below is a corrected chart. For historical purposes, I'll leave the incorrect spreadsheet available.  I'll edit the two prior LDA blog posts to include links to this one.


Do you like this post? Yes No

Seth's Blog : Beyond crowdsourcing

[You're getting this note because you subscribed to Seth Godin's blog.]

Beyond crowdsourcing

Crowd accelerated innovation is the latest TED talk. It's from TED boss Chris Anderson.

The idea is one of those big ones, a simple one that will stick with you for a long time... Online video radically changes the reach and speed of the improvement cycle. Things like dance, snowboarding and TED talks keep getting better, and faster, because artists see the best and improve on it. Even more than that, it requires you to top what's out there, or you'll be ignored.

The same thing has been done with scientific journals for two hundred years. Now, though, instead of a long cycle and a few readers, we have a nearly instant cycle and millions of 'readers'. Video scales, now. And to quote the other Chris Anderson, there's going to be a long tail of these video cycles.

Also worth thinking on: Chris is using the medium itself to do something that would have required a traditionally published book five years ago. His video will be seen by more than a million people by the end of the week--something he could never have achieved with a traditional method.

  • Email to a friend

More Recent Articles

Don't want to get this email anymore? Click the link below to unsubscribe.


Click here to safely unsubscribe now from "Seth's Blog" or change your subscription or subscribe

Your requested content delivery powered by FeedBlitz, LLC, 9 Thoreau Way, Sudbury, MA 01776, USA. +1.978.776.9498

 

Michael Gray - Graywolf's SEO Blog

Michael Gray - Graywolf's SEO Blog


Your Facebook Fan Page – 5 Ways to Make the Most of It

Posted: 15 Sep 2010 08:23 AM PDT

Post image for Your Facebook Fan Page – 5 Ways to Make the Most of It

If your business targets consumers, do you already have a Facebook fan page?  If not, why?  With more than 350 million active Facebook users, it is time to embrace social media and let it help grow your business.  Not only is Facebook a great place to expose yourself to thousands of new customers, but Google is now using content from social media sites in their search results.  Once you have created a fan page, there are a few things you can do to ensure you get the most out of it.  Here are some tips and guidelines to use.

1. Entice people to become a fan

Once you have a fan page, how do you get people to become a fan?  Easy, by offering them an incentive!  This can be any type of freebie, reward or even a special offer which encourages them to do business with you.  It does not need to be expensive and can be something as simple as a $5 off coupon on any new purchase.

2.  Keep the content coming

You must give your fans a reason to visit your page frequently.  It does not have to require a lot of time.  You could occasionally post exclusive offers or talk about recent company events or news that is happening within the company.  It would also be a great place to mention any new products or service launches.

3. Create a personal connection

Dealing with people or companies on the Internet can feel very impersonal compared with face to face encounters.  Your goal should be to create a personal connection as much as possible.  How can you achieve this?  With pictures and video.    For pictures, you could post examples of your work, pictures of company events or an office tour.  With Video, it is only taking pictures one step further.  You could ask your employees to get involved to submit creative and cool content about the company.

4. Interaction is key

The entire social media environment is built around interactive communication, one person interacting with another.  Your fan page will not have any chance for success if you do not interact with your fans or customers.  Sitting back and waiting for it to happen will not work either.  You must initiate it and this can be done in several ways.  A few examples are:

  • Offer a contest that involves the users to interact with your company for a prize.  For example, look at what Chilis Restaurant did last Christmas.  They asked their fans to submit a video of their own version of the Baby Back Ribs Jingle.  The best entry would win $1,000.
  • Create a poll that asks for fan’s opinions on an important topic.
  • Offer games or puzzles that are themed around your business or brand.

5. Sneak Peek

What better way to earn your fan’s loyalty than by giving them a sneak peek of something new coming up.  You can use this opportunity to make your fans feel rewarded for participating while receiving feedback from them on your new product or service before officially launching it to the public.

Best of all, look at what your competitors are doing on their fan pages for more ideas.

Curtis Stevens helps small businesses accept credit cards.  Whether you need credit card terminals or a wireless credit card processing solution, he has a product for you.


Creative Commons License photo credit: laura padgett


This post originally came from Michael Gray who is an SEO Consultant. Be sure not to miss the Thesis WordPress Theme review.

Your Facebook Fan Page – 5 Ways to Make the Most of It

tla starter kit

Related posts:

  1. Don’t Put All Your Eggs in the Facebook Basket While Facebook may be a hot marketing tool right now,...
  2. Make Thesis Work Better With Digg and Facebook If you’re involved with social media sites like Digg, Facebbok...
  3. 27.3 Ways To Do 51 1/2 Things on WordPress, Digg, Twitter, Stumbleupn, Blogger, Pownce, Reddit, Hugg, Sk-rt, Propeller, SugarLoving, Mixx, Delicious, Blogger, Facebook, Google Reader, YouTube, Gmail, RSS, iPhone, Qik and Seesmic While I Optimize, Stategize, Customerize, Search Engine Optimise, Social Media Enable, SEO, SEM, PPC, LODLSM, for the Long Term in 2 weeks, 14 Day, 7 Hours, 2 minutes 19 seconds and 7 nano seconds while You Were Merging With Google, Yahoo, MSN, ASK and Plaxo There that should just about do it This post originally...
  4. Optimizing WordPress Page Titles, Post Titles and Page Slugs While wordpress is one of my favorite CMS platforms, out...
  5. Really Facebook You Still Don’t Get it Do You C’mon Facebook I really thought we had moved past this...

Advertisers:

  1. Text Link Ads - New customers can get $100 in free text links.
  2. BOTW.org - Get a premier listing in the internet's oldest directory.
  3. Ezilon.com Regional Directory - Check to see if your website is listed!
  4. Page1Hosting - Class C IP Hosting starting at $2.99.
  5. Directory Journal - List your website in our growing web directory today.
  6. Content Customs - Unique and high quality SEO writing services, providing webmasters with hundreds of SEO articles per week
  7. Majestic SEO - Competitive back link intellegence for SEO Analysis
  8. Glass Whiteboards - For a professional durable white board with no ghosting, streaking or marker stains, see my Glass Whiteboard Review
  9. Need an SEO Audit for your website, look at my SEO Consulting Services
  10. KnowEm - Protect your brand, product or company name with a continually growing list of social media sites.
  11. Scribe SEO Review find out how to better optimize your wordpress posts.
  12. TigerTech - Great Web Hosting service at a great price.

Daily Snapshot: Ask an Astronaut

The White House Your Daily Snapshot for
Thursday, September 16, 2010
 

Open for Questions with Dr. Sally Ride - Today at 4 PM EDT

Today, Dr. Sally Ride, former astronaut and first American woman in space, will be taking questions from students across the country on the importance of getting a strong education in science, technology, engineering and math (STEM) subjects and discussing how her education helped her in her career. Submit your questions for Dr. Ride via our webform and tune in at 4 PM EDT to watch the discussion on WhiteHouse.gov/live.

Photo of the Day

Photo of the Day - September 15, 2010

President Barack Obama holds open the door to the Oval Office for U.S. Trade Representative Ron Kirk, National Economic Council Director Larry Summers, and Treasury Secretary Timothy Geithner after his statement on the economy in Rose Garden of the White House, Sept. 15, 2010. (Official White House Photo by Pete Souza)

 View more photos.

Today's Schedule

In the morning, the President will deliver remarks at the President’s Export Council meeting in the East Room. In the afternoon, the President will make an announcement on the expansion of his "Educate to Innovate" initiative to improve science, technology, engineering, and math (STEM) education in order to better prepare students to lead in the 21st century economy. The President will be joined by leaders who are at the forefront of innovation in the world of science, technology, engineering, and math.

All times are Eastern Daylight Time

9:45 AM: The President delivers remarks at the President’s Export Council meeting WhiteHouse.gov/live

10:15 AM: The President and the Vice President receive the Economic Daily Briefing

10:45 AM: The President and the Vice President receive the Presidential Daily Briefing

11:15 AM: The President meets with senior advisors

12:15 PM: The President and the Vice President have lunch

12:45 PM: The President participates in an Ambassador Credentialing Ceremony

2:30 PM: The President meets with Senator Menendez and Representatives Velazquez and Gutierrez

2:30 PM: The Vice President meets with staff of the Middle Class Task Force and policy experts on the middle class

3:25 PM: The President will make an announcement on the expansion of his "Educate to Innovate" initiative WhiteHouse.gov/live

4:00 PM: Open for Questions: Dr. Sally Ride answers students' questions on science, technology, engineering and math education WhiteHouse.gov/live

4:05 PM: The President departs the White House en route Andrews Air Force Base

4:20 PM: The President departs Andrews Air Force Base en route New York

4:30 PM: The Vice President will meet with Senator Arlen Specter

5:15 PM: The President arrives in New York

6:15 PM: The President delivers remarks at an event for Connecticut Attorney General Blumenthal

7:45 PM: The President attends an event for the DNC

9:40 PM: The President departs New York en route Andrews Air Force Base

10:35 PM: The President arrives at Andrews Air Force Base

10:50 PM: The President arrives at the White House

WhiteHouse.gov/live  Indicates Events that will be livestreamed on WhiteHouse.gov/live.

In Case You Missed It

Here are some of the top stories from the White House blog

President Obama on Small Business Jobs & Tax Cuts: "We Don't Have Time for Any More Games"
Having just emerged from a Cabinet meeting focused on getting every agency doing all they can to help America create jobs, the President zeroed in on two major fights for the middle class.

Republican Tax Plan Doubles Nation's Deficit in Just Ten Years
Communications Director Dan Pfeiffer discusses the Congressional Republicans’ plan to explode the deficit with virtually no benefit to the economy.

New Plans Underway to Increase Contracts to Small Business
A look at the new recommendations, and new resources, on the government's small business contracting.

Get Updates

Sign up for the Daily Snapshot  

Stay Connected

 


 
This email was sent to e0nstar1.blog@gmail.com
Manage Subscriptions for e0nstar1.blog@gmail.com
Sign Up for Updates from the White House

Unsubscribe e0nstar1.blog@gmail.com | Privacy Policy

Please do not reply to this email. Contact the White House

The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111
 

 

Seth's Blog : Rehearsing is for cowards

[You're getting this note because you subscribed to Seth Godin's blog.]

Rehearsing is for cowards

Jackson Browne gave us that advice. He would rather have you explore.

Exploring helps you figure out what you can do the next time you present or perform or interact. Rehearsing, on the hand, means figuring out exactly what you're going to do so you can protect against the downside, the unpredictable and the embarrassing.

I'm not dismissing study, learning, experimenting or getting great at what you do. In fact, I'm arguing in favor of this sort of hard work. No, I'm talking about the repetition of doing it before you do it, again and again. Just drilling it in so you can regurgitate later. Better, I think,as they say, "...let's do it live."

A well-rehearsed performance will go without a hitch. An explorer seeks the hitches, because hitches are the fissures and chasms that help us leap forward.

  • Email to a friend

More Recent Articles

Don't want to get this email anymore? Click the link below to unsubscribe.


Click here to safely unsubscribe now from "Seth's Blog" or change your subscription or subscribe

Your requested content delivery powered by FeedBlitz, LLC, 9 Thoreau Way, Sudbury, MA 01776, USA. +1.978.776.9498

 

miercuri, 15 septembrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Empire State Manufacturing Activity Flattens; Huge Divergences Appear - What Does It Mean?

Posted: 15 Sep 2010 02:32 PM PDT

Inquiring minds are digging into details of the September Federal Reserve Empire State Manufacturing Survey for clues on the economy.
The Empire State Manufacturing Survey indicates that conditions held relatively steady in New York's manufacturing sector in September. The general business conditions index remained positive, although it slipped 3 points to 4.1. The new orders and shipments indexes were both up moderately for the month, at levels signaling stable activity. The prices paid index was positive and little changed from last month, while the prices received index edged up to just above zero. Employment indexes were positive, suggesting that employment levels and the average workweek continued to expand over the month. The degree of optimism about the six-month outlook continued to deteriorate, with the future general business conditions index hitting its lowest level since early 2009.

Business Activity Flattens Out

The general business conditions index remained above zero in September, but inched down three points from August. At 4.1, the index suggests that business activity was little changed over the month. Almost 35 percent of respondents said that conditions had improved over the month—up from the 30 percent who had said so last month, but the percentage that reported worsening conditions increased from 22 percent in August to 31 percent.
Selected Empire State Charts



Current Business Conditions


Expectations Six Months Ahead



Divergences

Current conditions have stabilized while future expectations continue to deteriorate, five consecutive months. Did we just see a "last gasp" in new orders and shipments?

Stabilization?

More interesting yet is the way in which the current conditions index has "stabilized".

A tip of the hat to reader "Ronald" who writes...
In the ten years of data they have on their website, this is the first time I have seen the percentage of businesses showing increases and the number of businesses showing decreases in general activity both increased 2 months running. Moreover, this is the 3rd lowest level of businesses conditions staying at the same level. Finally, when businesses showing deteriorating conditions reached 30 percent, it has typically been during recession and the index has historically been between 0 and -10.

I don't think this can continue and it looks to me like the number is going to break big up or down.
A quick check shows the following.

July: This month, 27 percent of respondents said that conditions had improved, while 22 percent said that conditions had worsened.

August: Roughly 30 percent of respondents reported that conditions had improved, while 22 percent reported that conditions had worsened.

September: Almost 35 percent of respondents said that conditions had improved over the month—up from the 30 percent who had said so last month, but the percentage that reported worsening conditions increased from 22 percent in August to 31 percent."

The reports actually show consecutive rises in improved conditions with a one month huge rise in deteriorating conditions.

Nonetheless, how long can a third of businesses report better conditions with nearly a third of businesses reporting worsening conditions?

In conjunction with future expectations falling 5 consecutive months to the lowest level since March 2009, I suggest "not long".

Look for these divergences to break to the downside, most likely in a strong way that will surprise the vast majority of economists who never bother to look at the details in these reports.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Home Prices Drop in 36 States; Beazer Warns on Orders; 8 Million Foreclosure-Bound Homes to Hit the Market; Prices to Stagnate for a Decade

Posted: 15 Sep 2010 10:53 AM PDT

The small upward correction in home prices from multiple tax credit offerings died in July. Worse yet, inventory of homes for sale as well as shadow inventory both soared. 8 million foreclosure-bound homes have yet to hit the market according to Morgan Stanley.

Home Prices Drop in 36 States

CoreLogic reports Growing Number of Declining Markets Underscore Weakness in the Housing Market without Tax-Credit Support
CoreLogic Home Price Index Remained Flat in July

SANTA ANA, Calif., September 15, 2010 – CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released its Home Price Index (HPI) that showed that home prices in the U.S. remained flat in July as transaction volumes continue to decline. This was the first time in five months that no year-over-year gains were reported. According to the CoreLogic HPI, national home prices, including distressed sales showed no change in July 2010 compared to July 2009. June 2010 HPI showed a 2.4 percent* year-over-year gain compared to June 2009.

"Although home prices were flat nationally, the majority of states experienced price declines and price declines are spreading across more geographies relative to a few months ago. Home prices fell in 36 states in July, nearly twice the number in May and the highest since last November when national home prices were declining," said Mark Fleming, chief economist for CoreLogic.

Methodology

The CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic industry-leading property information and its securities and servicing databases. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The CoreLogic HPI provides the most comprehensive set of monthly home price indices and median sales prices available covering 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all 50 states and the District of Columbia.
CoreLogic HPI Including Distressed Sales



See the above article for additional charts

Beazer Homes Warns on Orders

The Wall Street Journal reports Beazer Homes Warns of Order Miss
Beazer Homes USA Inc. said Wednesday it might miss order expectations for its fiscal-fourth quarter, as it also cut estimates for the year's land and development spending, reflecting the sector's weakness following the expiration of home-buyer tax credits.

Last month, Beazer reported that its fiscal third-quarter loss was little changed because of a prior-year gain, while it reported a 73% surge in closings as buyers raced to qualify for the tax credit. Orders fell 33%.
Inventory Soars

Bloomberg reports U.S. Home Prices Face Three-Year Drop as Supply Gains
The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.

Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody's Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.

"Whether it's the sidelined, shadow or current inventory, the issue is there's more supply than demand," said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. "Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year."

Sales of new and existing homes fell to the lowest levels on record in July as a federal tax credit for buyers expired and U.S.

Rising supply threatens to undermine government efforts to boost the housing market as homebuyers wait for better deals. Further price declines are necessary for a sustainable rebound as a stimulus-driven recovery falters, said Joshua Shapiro, chief U.S. economist of Maria Fiorini Ramirez Inc., a New York economic forecasting firm

There were 4 million homes listed with brokers for sale as of July. It would take a record 12.5 months for those properties to be sold at that month's sales pace, according to the Chicago-based Realtors group [National Association of Realtors].

"The best thing that could happen is for prices to get to a level that clears the market," said Shapiro, who predicts prices may fall another 10 percent to 15 percent. "Right now, buyers know it hasn't hit bottom, so they're sitting on the sidelines."

About 2 million houses will be seized by lenders by the end of next year, according to Mark Zandi, chief economist of Moody's Analytics in West Chester, Pennsylvania. He estimates prices will drop 5 percent by 2013.

Douglas Duncan, chief economist for Washington-based Fannie Mae, said in a Bloomberg Radio interview last week that 7 million U.S. homes are vacant or in the foreclosure process. Morgan Stanley's Chang said the number of bank-owned and foreclosure-bound homes that have yet to hit the market is closer to 8 million.

Defaulted mortgages as of July took an average 469 days to reach foreclosure, up from 319 days in January 2009. That's an indication lenders -- with the help of the government loan modification programs -- are delaying resolutions and preventing the market from flooding with distressed properties, said Herb Blecher, senior vice president for analytics at LPS.

"The efforts to date have been worthwhile," Blecher said in a telephone interview from Denver. "They both helped borrowers stay in their homes and kept that supply of distressed properties on the market somewhat limited."

I disagree with Herb Blecher. I see little advantage stretching this mess out for a decade, and that is what the government seems hell-bent on doing. Everyone wants the government to "do something". Unfortunately tax credits stimulated the production of new homes, ultimately adding to inventory. Prices need to fall to levels where there is genuine demand.

The short-term rise in the Case-Shiller home price index and the CoreLogic HPI was a mirage that will soon vanish in the reality of an inventory of 8 million homes that must eventually hit the market.

Lost Decade
About 2 million houses will be seized by lenders by the end of next year, according to Mark Zandi, chief economist of Moody's Analytics in West Chester, Pennsylvania. He estimates prices will drop 5 percent by 2013.

After reaching bottom, prices will gain at the historic annual pace of 3 percent, requiring more than 10 years to return to their peak, he said.
Home Price Pressures

Last Bubble Not Reblown

After the bottom is found, remember the axiom: the last bubble is not reblown for decades. Look at the Nasdaq, still off more than 50% from a decade ago.

The odds home prices return to their peak in 10 years is close to zero. Houses in bubble areas may never return to peak levels in existing owner's lifetimes. Zandi is way overoptimistic in his assessment of 3% annual appreciation after the bottom is found.

Price Stagnation

I expect small nominal increases after housing bottoms, but negative appreciation in real terms as inflation picks up in the second half of the decade. Yes, deflation will eventually end. Alternatively the US goes in and out of deflation for a decade (depending on how much the Fed and Congress acts to prevent a much needed bottom). Either way, look for price stagnation in one form or another.

Thus, if you have come to the conclusion there is no good reason to hold on to a deeply underwater home, nor any reason to rush into a home purchase at this time, you have reached the right conclusions.

Hyperinflation? Please be serious.

When Will Housing Bottom?

Flashback October 25, 2007: When Will Housing Bottom?
On the basis of mortgage rate resets and a consumer led recession I mentioned a possible bottom in the 2011-2012 timeframe. See Housing - The Worst Is Yet To Come for more details.

Let's take a look at housing from another perspective: new home sales historic averages and housing from 1963 to present.

New Home Sales 1963 - Present

New home sales reached a cyclical high in 2004-2005 approximately 50-60% higher than previous peaks.This happened in spite of a slowdown in population growth and household formation as compared to the 1960-1980 timeframe.

From 1997-1998 and 2001-2002 to the recent peak, the average sales level was 1.1 million units, or 45-50% higher than the 40 year average. This translates to an average of 300,000-400,000 excess homes for nearly a decade, and arguably as many as 3-4 million excess homes.

Such excess inventory may require as many as 5-7 years at recessionary average sales to absorb this inventory.

Cycle Excesses Greatest In History

The excesses of the current cycle have never been greater in history. The odds are strong that we have seen secular as opposed to cyclical peaks in housing starts and new single family home construction. With that in mind it is highly unlikely we merely return to the trend. If history repeats, and there is every reason it will, we are going to undercut those long term trendlines.

There will be additional pressures a few years down the road when empty nesters and retired boomers start looking to downsize. Who will be buying those McMansions? Immigration also comes into play. If immigration policies and protectionism get excessively restrictive, that can also lengthen the decline.

Finally, note that the current boom has lasted well over twice as long as any other. If the bust lasts twice as long as any other, 2012 just might be a rather optimist target for a bottom.
When I wrote that in 2007, most thought I was off my rocker. Now, based on inventory, I may have been far too optimistic.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List