Movie Attendance Drops to 1997 Level; Case-Shiller Home Prices Rise; Last Hurrah for Housing

Movie attendance is down but increased prices made up the difference for now. Bloomberg reports Summer Movie Box-Office Attendance Falls to Lowest Since 1997

Summer movie attendance fell to the lowest level since 1997, while soaring ticket prices produced record revenue for Hollywood studios and theater owners.

The number of tickets sold from the first weekend of May through the U.S. Labor Day holiday is expected to drop 2.6 percent to 552 million, Hollywood.com Box-Office said yesterday in an e-mailed statement. That would be the lowest attendance since summer moviegoers bought 540.3 million tickets in 1997.

“The movies just didn’t excite people the way they needed to,” Paul Dergarabedian, president of Hollywood.com Box-Office, said in an interview. “When you raise prices and perceive that quality goes down, you have a major problem.”

Summer box-office revenue will rise 2.4 percent to a record $4.35 billion in the U.S. and Canada as higher prices more than make up for the lower attendance, Hollywood.com estimates. The average ticket price will increase 5.1 percent to $7.88 from last year’s $7.50, the biggest gain since a 6.3 percent jump in 2000, Hollywood.com said.

The price-conscious majority appears to be overwhelmed by the price-insensitive wealthy, at least for the time being. How much longer this lasts with cheap movie rentals and another downturn in the economy remains to be seen.

Regardless, the results portray an increasing dichotomy between the "haves" and the "have-nots".

As long as Hollywood can get away with inceasing prices, they will do just that, even if it means an increasing percentage of customers are "priced out".

Last Hurrah for Housing

Case-Shiller Home Prices in 20 U.S. Cities Rise More Than Forecast

Home prices in 20 U.S. cities rose more than forecast in June from a year earlier, reflecting the influence of a government tax incentive and a sign the market was stabilizing before sales plunged in July.

The S&P/Case-Shiller index of property values increased 4.2 percent from June 2009, the group said today in New York. The median estimate of economists surveyed by Bloomberg News called for a 3.5 percent advance.

The Case-Shiller index is a moving three-month average, which means the June data are still being influenced by transactions in April and May that benefitted from the government incentive. A pullback in demand since the credit ended, mounting foreclosures and an unemployment rate near a 26- year high may weigh on prices in coming months.

Nationally, prices increased 3.6 percent in the second quarter from the same time last year and were up 2.3 percent from the previous three months.

San Francisco, San Diego

Fifteen of the 20 cities in the S&P/Case-Shiller index showed a year-over-year increase, led by a 14 percent gain in San Francisco and an 11 percent increase in San Diego.

Compared with the prior month, 17 of the 20 areas covered showed an increase on an unadjusted basis, led by 2.5 percent gains in Chicago, Detroit and Minneapolis. Two cities were little changed and Las Vegas fell 0.6 percent.

Builders such as KB Home and Lennar Corp. reported falling sales after April 30, the deadline for homebuyers to sign contracts to purchase a home to qualify for the extended tax credit. The deadline to close transactions by June 30 was later extended to Sept. 30.

Donald Tomnitz, chief executive officer of D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, said he welcomes the end of federal homebuyer tax credits that boosted sales earlier in the year.

Back to Normal

“I don’t want the tax credit to be re-enacted or be recreated or extended,” Tomnitz said on an Aug. 3 conference call with investors. “We want to get back to a normalized market.”

Foreclosures may be an obstacle for the market for much of the year. A record 269,962 U.S. homes were seized from delinquent owners in the second quarter as lenders set a pace to claim more than 1 million properties by the end of 2010, according to RealtyTrac Inc., an Irvine, California-based data company.

Last Hurrah for Housing

Case-Shiller is a backward looking index. The increasing number of foreclosures, the complete collapse in new home sales, a massive increase in inventory, and the end of tax credits all suggest we are near the end of the line for this bounce in home prices.

Interestingly, even the home builders are against another home tax credit. Is that reflective of the massive distortions caused by the credit, the realization the tax credit was useless, or the fact that homebuilders recognize there is little chance Congress will back another tax credit?

Regardless, here's the deal: New Home Sales Consensus 330K, Actual 276K, a Record Low. As a followup please see How Many New Home Sales Was That?

Expect to see new all time low prices in some cities later this year or next year as pent-up demand dries up along with incentives that merely brought that demand forward.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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