ON A recent Sunday afternoon on the west side of Manhattan, more than 5,000 bargain-hungry property investors crammed into the Jacob Javits Convention Centre for one of the biggest foreclosure sales in US history.
Hundreds of foreclosed properties went under the hammer.
A little beach house out in the Hamptons, the playground of New York’s rich and famous, was listed for $149,000 – a far cry from the $500,000 or $600,000 one would expect to pay for a summerhouse in such an exclusive neighbourhood.
It sold for around $300,000, still a bargain but a long way from the firesale price expected. The same was true for countless other properties.
The bidding was fierce and prices were higher than the auctioneers had imagined.
Foreclosure sales are ripping along at quite a clip all over the country – even in the most depressed markets of California and Florida.
The ferocity with which many Americans are snapping up foreclosed property is surprising some economists, and leading some to tentatively suggest we may be seeing the first shoots of recovery.
The economic crisis after all began in the US housing market when it collapsed way back in 2006, so this burst of activity is significant indeed.
US housing starts in February unexpectedly jumped too, breaking the longest streak of declines in 18 years – with a 22 per cent increase from January, according to the latest figures form the commerce department.
More than 70 per cent of the US economy is based in consumption.
A house, and all the things that go into it, are by far the greatest area of expenditure for ordinary families – one reason the housing market is such a key economic indicator and such a significant part of the economy.
Corporate activity has been much more buoyant than expected too.
Big deals so far this year include Roche Holdings’ $46 billion (€33.9 billion) acquisition of the 44 per cent of Genentech it doesn’t already own, Pfizer’s pending $68 billion takeover of Wyeth, and Merck’s proposed $41.1 billion acquisition of Schering-Plough.
And that’s just in pharmaceuticals. Elsewhere, IBM is in talks with Sun Microsystems about a possible $6.5 billion acquisition and there are myriad smaller deals doing the rounds.
All this bargain hunting is akin to the property investors splurging on foreclosures.
It also means that Wall Street banks will be getting more than $500 million in fees for cementing these deals.
That will help put the wheels back on the financial services sector.
Sadly, all those deals also mean more job losses; if the headline unemployment numbers are anything to go by, things are still looking very bad, with more than 600,000 Americans losing their livelihoods every month.
But an often disregarded number released this week points to yet another possible green shoot of recovery.
The labour department reported that weekly jobless claims fell by 12,000 to 646,000 for the week ending March 14th. Analysts were expecting 652,000 new claims.
This small dip, despite an otherwise gloomy jobs market outlook, is enough to lead some economists to believe that the jobs market too, may have hit the bottom and is poised to rebound.
