The Home Front
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Housing Market: No Bottom in Sight
Continue reading… 4 CommentsA pair of reports released Tuesday indicate that the housing market's painful declines are far from over:
Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 8.6 percent to a seasonally adjusted annual rate of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007…
Total housing inventory at the end of November rose 0.1 percent to 4.20 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.3-month supply in October….
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Fewer Americans on the Move, Study Says
Continue reading… 0 CommentsThere’s an interesting report out from the Pew Research Center. It looks like Americans aren’t relocating nearly as much as they once did:
From the Pew Research Center:
As a nation, the United States is often portrayed as restless and rootless. Census data, though, indicate that Americans are settling down. Only 13% of Americans changed residences between 2006 and 2007, the smallest share since the government began tracking this trend in the late 1940s…
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Barney Frank’s 2009 Congressional Playbook
Continue reading… 5 CommentsI spoke with House Financial Services Committee Chairman Barney Frank, a Democrat from Massachusetts, on Thursday about the issues he'll be working on in 2009. (Note: This interview took place before Treasury Secretary Hank Paulson said that lawmakers would need to release the rest of the $700 billion bailout funds.)
Here's what Frank had to say:
What issues will the House Financial Services Committee be working on next year?
"Well, obviously financial regulation. The first thing off the bat is the whole systemic risk issue. Hank Paulson has talked about it. Ben Bernanke has talked about it with Rahm Emanuel and Tim Geithner, and with Paul Volcker. We are in a terrible deleveraging crisis now, and while we deal with that, it is important that we prevent over-leveraging in the future."
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Sheila Bair: We Need Foreclosure Mitigation Now
Continue reading… 5 CommentsI spoke with FDIC Chairman Sheila Bair on Wednesday about her efforts to prevent foreclosures. Here's what she had to say:
Why have you been pushing so hard for increased foreclosure mitigation?
"Our view is that there are a lot of unnecessary foreclosures going on that are creating further downward pressure on home prices. Distressed foreclosure sales really are the market in several areas of the country. So you already have an overbuilt market, you are adding a lot more inventory through unnecessary foreclosures, you are dislocating people, you are creating vacant properties and eroding tax bases and there are a lot of other external costs involved with that. So, we really think that preventing unnecessary foreclosures has got to be a top priority. It's not by itself going to solve the problem, and loan modifications by themselves are not a silver bullet—it's hard work to get these loans modified. But that underscores even more why you need a systematic process to do it and you need some financial incentives to get it done quickly.
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Mortgage Rates Hit Multi-Decade Lows
Continue reading… 0 CommentsWhile their unprecedented measures to resolve the financial crisis have produced limited results, the Feds can certainly take credit for helping to move 30-year fixed mortgage rates to historic lows:
From The Associated Press:
Rates on 30-year-fixed mortgages dropped this week to their lowest levels in at least 37 years, as the Federal Reserve pledged to pour money into the mortgage market in an effort to spur the moribund U.S. housing market.
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Foreclosure Discounts By State
Continue reading… 1 CommentA recently released joint study by Trulia—a U.S. News partner—and RealtyTrac included the following map:
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Foreclosure Discounts by City
Continue reading… 0 CommentsA recently released joint study by Trulia—a U.S. News partner—and RealtyTrac included the following chart:
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Nouriel Roubini: The $700 Billion Bailout Isn’t Enough
Continue reading… 32 CommentsI spoke with the bearish—but prescient—economist Nouriel Roubini on Wednesday about what's in store for the economy, housing, and stock markets in 2009. Here's what he had to say:
What is your outlook for the length and depth of the recession?
My view is that that recession is going to continue at least through the end of 2009. It started in December 2007, so it's going to be 24 months long. It's going to be the longest we've had in the last 60 years. I expect a cumulative fall in output from the peak of 4 to 5 percent. Just to give you a sense, in the last recession, the cumulative fall in output was only 0.4 percent—this one is 10 times deeper. The unemployment rate will peak at above 9 percent sometime in 2010. And we're facing not just a U.S. recession but a global recession. There is a recession in all of the advanced economies, and now there is the beginning of a hard landing also in the emerging markets.
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Foreclosure Sales: 2009 Housing Head Wind
Continue reading… 2 CommentsWith home prices having dropped a painful 21 percent from their 2006 peaks, property owners everywhere could use a splash of good news in their New Year's Eve cocktails. But as a nasty recession is now part of the picture, the chances of an aggressive housing market rebound next year are dim. "A lasting recovery in the housing market?" says Mike Larson, a real estate analyst at Weiss Research. "I don't see it in the cards until the back end of the year—if that."
Here's a look at the factors that will be weighing down the housing market in 2009:
8. Foreclosure Sales A huge problem for the housing market in 2008, foreclosure sales will continue weighing down the market next year. "There was a surge this year," Zandi says. "But next year [there] will be even more." While that will give buyers an opportunity to go bargain hunting, it's bad news for sellers. "It puts more homes out there for sale at a very deep discount," Zandi adds.
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More Americans See the Downside of Foreclosed Home Buying
Continue reading… 2 CommentsWhile more foreclosed homes coming on to the market, Americans are growing increasingly wary of buying them, according to a recently-released joint study by Trulia--a U.S. News partner--and RealtyTrac.
The findings suggest that foreclosed home prices may need to go even lower in order to work through the inventory.
In the previous survey conducted seven months ago, 54 percent of all U.S. adults surveyed said they would consider purchasing a foreclosed home, whereas now 47 percent of U.S. adults would consider purchasing a foreclosure, a drop of seven percentage points in only seven months…
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HUD Chief Blames Congress for Hope for Homeowners’ Failings
Continue reading… 5 CommentsMore details on Hope for Homeowners' wildly underwhelming start: only 312 applications so far and--you guessed it--congress and the administration are blaming each other for its shortcomings.
From The Washington Post:
The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview.
"What most people don't understand is that this program was designed to the detail by Congress," Preston said. "Congress dotted the i's and crossed the t's for us, and unfortunately it has made this program tough to use."
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Sheila Bair: Stop Blaming the Community Reinvestment Act
Continue reading… 10 CommentsAlong with Fannie Mae and Freddie Mac, the Community Reinvestment Act has been fingered by a number of critics--mainly from the right--as a key cause of the financial crisis. But in a speech Wednesday, FDIC Chairman Sheila Bair--a Republican--called such logic a “myth.”
From Bair’s prepared remarks:
CRA as a scapegoat
I think we can agree that a complex interplay of risky behaviors by lenders, borrowers, and investors led to the current financial storm. To be sure, there's plenty of blame to go around. However, I want to give you my verdict on CRA: NOT guilty.
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Radioactive Effect: 2009 Housing Head Wind
Continue reading… 3 CommentsWith home prices having dropped a painful 21 percent from their 2006 peaks, property owners everywhere could use a splash of good news in their New Year's Eve cocktails. But as a nasty recession is now part of the picture, the chances of an aggressive housing market rebound next year are dim. "A lasting recovery in the housing market?" says Mike Larson, a real estate analyst at Weiss Research. "I don't see it in the cards until the back end of the year—if that."
Here's a look at the factors that will be weighing down the housing market in 2009:
7. Radioactive Effect Despite lower real estate prices and cheaper mortgage rates, the pain inflicted by the housing bust will frighten many would-be buyers away from the market next year, Larson says. "Enough of your 'average Joes' have been burned very badly and will be burned by the time this is all over that investment money is not going to flood back into the market," Larson says. "Any recovery—in my opinion—will be gradual and is going to take time."
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Housing Starts Hit All-Time Lows
Continue reading… 1 CommentThe government reported Tuesday that November housing starts plummeted nearly 19 percent from October and 47 percent from a year earlier. That’s the lowest level since the government began collecting such data back in 1959.
Here’s what Patrick Newport, US Economist with IHS Global Insight, had to say about the figures in a report of his own:
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6 Things to Know About the Fed Rate Cut
Continue reading… 16 CommentsThe Federal Reserve on Tuesday cut its federal funds target rate by more than three-quarters of a percentage point to a range of between 0 and .25 percent. The decision signals that Fed Chief Ben Bernanke is more concerned with the rapidly deteriorating economy--which has been mired in a recession since December of last year--than the prospect of stoking inflation. “Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined,” the rate-setting Federal Open Market Committee said in its statement. “Financial markets remain quite strained and credit conditions tight.”
Here’s how the Fed’s actions affect you:
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Household Formation: 2009 Housing Head Wind
Continue reading… 1 CommentWith home prices having dropped a painful 21 percent from their 2006 peaks, property owners everywhere could use a splash of good news in their New Year's Eve cocktails. But as a nasty recession is now part of the picture, the chances of an aggressive housing market rebound next year are dim. "A lasting recovery in the housing market?" says Mike Larson, a real estate analyst at Weiss Research. "I don't see it in the cards until the back end of the year—if that."
Here's a look at the factors that will be weighing down the housing market in 2009:
6. Slowing Household Formation At the same time, the pace of new household formation is slowing, which further chips away at housing demand. Richard Moody, chief economist at Mission Residential, says the development is linked to three factors: More singles are moving in with each other, young adults are returning to live with their parents, and fewer immigrants are entering the country. "For those three reasons, you are seeing a slowdown in the rate of household formation," Moody says. "And to the extent that the economy and the labor market remain weak this year—which I think they will—then that's going to continue."
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Builder Confidence Is Still at All-Time Lows
Continue reading… 0 CommentsThe National Association of Home Builders/Wells Fargo Housing Market Index (HMI) remained at record lows in December:
Builder confidence in the market for newly built single-family homes held at a record low in December as deepening economic turmoil, a deteriorating job market, and an ongoing flow of foreclosed homes onto the market continued to negatively impact sales conditions. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) did not budge this month from November’s all-time low reading of 9, with two out of three component indexes losing further ground.
“The crisis continues,” said NAHB Chairman Sandy Dunn, a home builder from Point Pleasant, W. Va. “While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures. Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective foreclosure relief programs if we are to end this negative spiral that is weighing so heavily on our national economy.”
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Doug E. Fresh: Rapper Facing Foreclosure
Continue reading… 1 CommentThe recent wave of celebrity housing problems has ensnared another high-profile victim: Rapper Doug E. Fresh.
From the New York Post:
Rap icon Doug E. Fresh - best known for his '80s hit "The Show" - has been socked with three foreclosure actions by banks looking to collect more than $3.5 million in unpaid mortgages on a trio of his Harlem homes…
The golden-voiced rapper, whose real name is Douglas Davis, grew up in Harlem. After his skill at vocally imitating drumbeats and percussion sounds made him famous in the 1980s, he stayed in the neighborhood, investing in local real estate and raising five sons.
He fell behind in payments and, according to a foreclosure suit filed in Manhattan in late August, 2008, he now owes more than $1.73 million.
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Mortgage Mess on 60 Minutes
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The 5 Best (and Worst) Housing Markets of 2008
Continue reading… 3 CommentsZillow's recent report also outlined the housing markets that had performed the best—and the worst—in 2008 so far.
Thirty of the 163 metropolitan statistical areas (MSAs) covered in the Zillow Real Estate Market Reports showed gains in the Zillow Home Value Index, or median value of all homes in the area, over the first three quarters of the year, with the Jacksonville, N.C. region seeing year-over-year appreciation of 4.9 percent. The change in value was calculated by averaging the year-over-year change in each of the first three quarters of the year.
Also performing well were the Winston-Salem, N.C. and Anderson, S.C. MSAs, with year-over-year increases of 4.1 percent and 3.5 percent, respectively, over the first three quarters of the year.
