U.S. housing more affordable than other English countries: study

WASHINGTON ― Would-be American home-buyers can take heart: U.S. housing is more affordable than in other English-speaking countries, according to a study of metropolitan areas around the world.

The median home price in the United States as a whole was three times pre-tax household income in the third quarter of 2011, on the cusp of what Demographia, a public policy firm which conducted the survey, deems “affordable.”

In major U.S. metropolitan areas, the ratio was 3.1, down from 4.6 in 2007, before the worst of the U.S. housing market slump that dragged the economy into recession, and 3.3 in 2010.

Detroit, at 1.4 times, was the most affordable big city in any of the 325 areas surveyed in six countries and in the Chinese territory of Hong Kong.

In contrast, the index was 12.6 in Hong Kong, by far the priciest market. And Canada, despite being larger in size than the United States with just one ninth of the population, continues to grow less affordable.

A ratio of 3 or less is considered “affordable,” according to Demographia which surveyed 325 metropolitan areas in Australia, New Zealand, Ireland, the U.K., the United States, Canada and Hong Kong.

“The bubble is over ― prices have continued to decline. We have housing prices back to where they’re supposed to be,” said Wendell Cox, principal of Demographia which is based in Belleville, Ill.

Not everywhere in the United States is housing looking like a good deal: the most unaffordable U.S. markets were San Jose (6.9), San Francisco (6.7), San Diego (6.1), New York (6.1), Los Angeles (5.7) and Boston (5.3), according to the survey.

Cox blamed stringent land use regulations for choking supply in many of the “unaffordable” U.S. markets, driving up prices.

Signs have appeared in recent months that the U.S. housing slump may have touched bottom and economists mostly expect prices to remain flat in 2012 before small gains next year.

After Hong Kong, Australia’s major cities were the most expensive at 6.7 times pretax median household income, followed by New Zealand at 6.4 and Britain at 5.0.

Cities to see job gains in 2012, but many will struggle: report

WASHINGTON, D.C. ― Almost all U.S. metropolitan areas will see job growth in 2012, but for many areas it will still take years for employment to return to pre-recession levels, according to a report released on Wednesday by the U.S. Conference of Mayors.

All but three U.S. metro areas will have job gains this year, led by expected growth of 3 percent in Myrtle Beach, South Carolina, according to the forecast, which was conducted by IHS Global Insight for the mayors’ group ahead of its annual meeting in Washington this week.

Employment will likely shrink the most in Carson City, Nev., falling by 1.1 percent. It will also drop in Odessa, Texas, by 0.1 percent, and in Midland, Texas, by 0.2 percent, IHS forecast.

Health services, trade, transportation, utilities and business services will provide the biggest jobs boost, the report found.

“By the end of this year, the report forecasts that almost every one of our 363 metro economies will see job gains, and the nation will have gained back 48 percent of its lost jobs,” said Los Angeles Mayor Antonio Villaraigosa, who is also president of the Conference of Mayors. “But despite this progress, one thing remains clear: the recovery is slow and it’s uneven.”

In 2011, employment declined in 125 metro areas.

Automakers see slower U.S. sales growth in 2012 because of weak economy

DETROIT ― Automakers expect lower sales growth in the United States in 2012 because the economy remains weak, even though U.S. auto sales in December were strong.

General Motors Co’s. U.S. sales in December rose about 5 percent, while sales at Ford Motor Co. and Chrysler jumped 10 percent and 37 percent, respectively.

U.S. new-vehicle sales are an early indicator each month of consumer spending, and the United States is the world’s second-largest auto market behind China.

Automakers are headed for full-year 2011 sales of about 12.8 million vehicles, 10 percent higher than 2010. U.S. auto sales have been a relative bright spot, with many cash-strapped consumers forced to purchase cars and trucks to replace vehicles that have been on the road for a decade or longer.

GM, Ford and Volkswagen AG, which reported a 36 percent gain in December, all said growth would increase at a lower rate in 2012.

GM and VW expect 2012 U.S. sales in the range of 13.5 million to 14 million vehicles, which implies growth of between 5 and 9 percent. Ford sees a range of 13.2 million to 14.2 million, excluding medium and heavy-duty trucks.

“The momentum coming out of the fourth quarter gives us confidence that the low end of that forecast is less likely,” Ford economist Ellen Hughes-Cromwick said on a conference call.

Industry research firm TrueCar.com expects 2012 U.S. auto sales to reach 14 million vehicles.

That is still much lower than the nearly 17 million in U.S. annual auto sales averaged in a 10-year period through 2007. In 2008, recession began to take hold and a year later GM and Chrysler filed for bankruptcy.

“Over the course of the fourth quarter of 2011, clear signs emerged that U.S. consumers are more confident and that other underpinnings of our economy are either stable or slowly improving,” GM U.S. sales chief Don Johnson said in a statement.

“It’s now clear that auto sales should continue to grow in 2012, barring a shock to the system,” he added.

Pace of economic growth seen waning into 2012: Reuters poll

NEW YORK ― An acceleration in the pace of U.S. economic growth in the second half of this year is expected to ebb as 2012 gets underway, although the odds of another recession have receded to one-in-four, a Reuters poll showed on Wednesday.

Encouraged by a recent pick-up in economic data, the consensus from more than 60 respondents showed a better view on the final three months of the year and 2011 overall.

But the pace of is expected to wane from an annualized 2.5 percent in the third quarter, and growth is not expected to get back to that rate again until the final quarter of next year.

More fiscal restraint, uncertainty surrounding the euro zone sovereign debt crisis and lackluster consumer sentiment and spending are all seen taking some of the steam out of growth early next year.

“We have positive momentum to carry us through to the early part of next year, but the headwinds are still going to cap the pace of growth,” said Scott Brown, chief economist at Raymond James.

Apart from a raging euro zone sovereign debt crisis that has a chokehold on global financial markets and that is now gripping Italy, uncertainty over U.S. fiscal policy also clouds the outlook for the start of 2012.

A payroll tax holiday and federal unemployment benefit program are set to expire, while a special committee of lawmakers is meeting to reach a deal on reducing the federal deficit.

“There are a number of things coming together with regards to fiscal policy that makes early next year look very iffy,” said Mark Zandi, chief economist at Moody’s Analytics.

Barring unforeseen shocks, economists believe the economy should avoid another recession, though growth will be slow.

Gross domestic product growth is seen at an annualized 2.3 percent in the fourth quarter, up strongly from the 1.9 percent forecast in the October poll. The Reuters consensus for the year was raised to 1.8 percent from 1.7 percent.

Fitch Ratings affirms U.S. at AAA, outlook is stable

NEW YORK  ― Fitch Ratings said on Tuesday it affirmed the United States’ top-notch credit rating at AAA, giving the world’s largest economy a reprieve after it was downgraded by Standard & Poor’s little more than a week ago.

Fitch said the outlook for the rating was stable.

However, it warned that the United States was falling behind its peers among the AAA-rated nations on fiscal matters and the country had to show tangible results in its efforts to reduce the budget deficit.

It said it would review its fiscal projections at the end of November and medium-term economic outlook by the end of the year.

“The affirmation of the US ‘AAA’ sovereign rating reflects the fact that the key pillars of U.S.’s exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base,” Fitch said in its statement.

“Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to ‘shocks’.”

Financial markets showed little reaction to the news, which also coincided with the release of industrial output data.

U.S. government bonds pared some price gains slightly and the dollar edged up to the day’s highs against the yen.

However, Fitch warned the outlook for the rating depended on the economy and the ability of the political process in Washington to reduce the public debt.

“S&P had a very specific basis for their concern which was that there was no long-run plan for budget control,” said Pierre Ellis, senior economist, Decision Economics, New York.

“Fitch certainly is correct with respect to the breadth of the United States’ potential revenue sources…it is putting a little more faith in the common sense of Congress and the Administration with respect to getting the budget situation under control.”

Fitch said an upward revision to medium- to long-term projections for public debt either as a result of weaker than expected economic recovery or failure of the joint committee to agree on at least $1.2 trillion in deficit reduction would likely put the United States on negative outlook.

“The rating action would most likely be a revision of the rating Outlook to Negative, which would indicate a greater than 50 percent chance of a downgrade over a two-year horizon. Less likely would be a one-notch downgrade,” the statement said.