The Home Front
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Mortgage Rates Dip, Freddie Mac Says
Continue reading… 0 CommentsThis week's average interest rate on a 30-year fixed-rate mortgage fell slightly, to 5.85 percent, from an average of 5.87 percent last week, according to Freddie Mac's survey.
"Long-term mortgage rates were mixed but relatively unchanged in the past week, as the latest economic indicators came in much as expected," Frank Nothaft, Freddie Mac vice president and chief economist, said in a press release. "For instance, the index of leading indicators continued to fall for the fifth straight month while consumer confidence reached a five-year low."
The news release is here.
You can see historical data here.
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Philadelphia Suspends Foreclosure Sales
Continue reading… 1 CommentAs lawmakers and administration officials wrestle over just how involved the federal government should become in the housing crisis, one big city, Philadelphia, is diving right in:
From the Philadelphia Inquirer:
With housing advocates predicting that the subprime mortgage crisis will hit the city hard in 2008, Sheriff John D. Green yesterday suspended sales of foreclosed properties for April and said he would seek court approval for an even longer moratorium.
His announcement came about 30 minutes after City Council unanimously passed a resolution calling on him to freeze sheriff's sales.
The full article is here.
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House Prices May Not Recover This Decade
Continue reading… 0 CommentsFrank Nothaft, the chief economist of housing finance giant Freddie Mac, said in a speech Thursday that it could be the turn of the next decade before home prices recover.
"I don't think we're going to see any improvement in the national house-price matrix until 2010," Nothaft said, according to McClatchy Newspapers.
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And You Thought Your Home Was Losing Value...
Continue reading… 1 CommentWhile recent reports on the national housing market have contained a glimmer of hope—albeit a tiny one—the real estate situation in California appears to be bleak and getting bleaker.
From the Los Angeles Times:
Statewide, median sales prices fell by a stunning 26% from year-ago levels in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed's interest rate-cutting campaign "will have little near-term direct effect on the housing market."
That's right, home prices in California are plummeting at a rate of $2,788 per week—well above the already scary national rate of $338 a week.
The full article is here.
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Homebuilder Lennar Loses $88 million
Continue reading… 0 CommentsLennar, one of the country's leading homebuilders, reported a first-quarter net loss of $88.2 million, after turning a $68.6 million profit in the same period last year. The results were not nearly as bad as some had expected, sending the company's shares more than 4 percent higher in late-afternoon trading.
The earnings report is here.
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New-Home Sales Down to 1995 Levels
Continue reading… 0 CommentsSales of new homes fell by 1.8 percent in February, from January, to levels not seen since 1995, according to a government report released this morning. The full report is here.
Here's the good news: "The rate of decline appears to be slowing after the plunge last fall," says Ian Shepherdson, the chief U.S. economist of High Frequency Economics. "There have been false dawns before, so it would be unwise to call the bottom at this point, but the leveling off in the [National Association of Home Builders] survey is consistent with this idea."
Still, Shepherdson warns the coast is certainly not clear yet:
The fly in the ointment though is the still-huge inventory overhang which, at 9.8 months, is enough to keep downward pressure on prices for the foreseeable future. The risk is that the bargain-hunters now in the market will get badly burned, sparking another downward lurch in sales from current levels.
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Home Prices to Bottom in 2012?
Continue reading… 0 CommentsBy adjusting the S&P/Case-Shiller home-price indices—which were released Tuesday—for inflation, financial bloggers at the site Calculated Risk suggest that home values may be years away from a nadir.
Look at the length of the housing bust in the early '90s. It took over six years from peak to trough in some cities. If this bust takes the same amount of time, prices will not bottom in some cities until 2012 (or there about).
You can check out the chart here.
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Good News: Home Prices Touch New Lows!
Continue reading… 1 CommentThere's no way around it, the latest housing numbers are awful. But in the cruel logic of the nation's worst housing crisis in a generation, the sudden evaporation of millions of dollars in real estate value may be just what we need to get out of this mess.
The S&P/Case-Shiller home-price index—a closely watched indicator of the housing market's health—shows existing single family homes in 20 major U.S. metro areas saw prices drop by a record 10.7 percent in January from the same period last year. Even worse, 16 of the 20 metro areas witnessed record declines, 10 dropped by double digits, while only one—congratulations, Charlotte, N.C.—reported improvement.
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Housing Help From Uncle Sam
Continue reading… 3 CommentsA week after restrictions were eased on Fannie Mae and Freddie Mac to allow them to gobble up at least $200 billon in mortgage-backed securities, the federal home loan banks have been freed to follow suit.
The FHLBs—12 cooperative banks established during the Great Depression to support mortgage lending—said today that the Federal Housing Finance Board had approved their purchasing roughly $150 billion of additional mortgage-backed debt.
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A Glimmer of Hope for the Housing Market?
Continue reading… 1 CommentSales of existing homes increased by nearly 3 percent in February—significantly stronger than the consensus estimate of a slight decrease. The upbeat figures were driven in part by an upswing in activity in the Northeast, where sales jumped more than 11 percent.
It was the first time existing-home sales have risen since last July.
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Bernanke: Mission Accomplished?
Continue reading… 0 CommentsThis is what Bernanke would look like if he did.
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The Crisis Hits Home for Bernanke
Continue reading… 1 CommentLooks as though the housing downturn may have cost Ben Bernanke more than $250,000 in home equity. "Bernanke lives in Washington's Capitol Hill area in a four-bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000," Bloomberg reports. Despite a likely run-up in value before the housing bubble burst, Bloomberg adds, "almost four years later, it may not be worth any more, according to real estate records and local agents."
From Bloomberg:
"Even though he's the Fed chairman, he's going to get hit—but I think [a] lot of people will in Washington,"' said William Wheaton, an economist at the Massachusetts Institute of Technology. The value of Bernanke's home "probably went up to $1.1 million and it's probably back down to $840,000," because prices in Washington just a couple years ago "got out of control," Wheaton said.
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You Can Save Bear but You Can't Save Me?
Continue reading… 3 CommentsDavid Wessel makes a great point in today's Wall Street Journal about how JPMorgan's government-assisted deal for Bear Stearns may have changed the political dynamics of a broader bailout for struggling homeowners:
No matter the merits or intellectual distinctions, it is nearly impossible for a politician to explain the following: Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson were willing to risk as much as $30 billion of taxpayer money—without congressional approval—so that J. P. Morgan Chase could buy Bear Stearns cheap at an auction in which it was the sole bidder. But a taxpayer-backed rescue of homeowners whose mortgages are worth more than their homes is unwise and unwarranted.
Full article is here.
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Real Estate, the Bargain of the Century?
Continue reading… 2 CommentsSo says analyst Dick Bove of Punk Ziegel in a research note released this morning (bold is mine):
Every study I have read is convinced that housing prices will continue to drop for an extended period. This is as dead wrong as the reports that argued some years ago that housing prices would keep rising for an extended period. Think of this:
- Money supply is growing rapidly;
- Commodity prices are soaring;
- The dollar is falling sharply; and
- Real estate prices are falling.
Does this last line make sense? When was the last time real estate prices fell in a general period of commodity inflation?
I cannot think of such a time. I live in Florida where foreigners can and are buying prime real estate at deeply depressed prices with very, very cheap dollars. This may turn out to be the bargain of the century and I mean century.
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Roland E. Arnall, Founder of Former Subprime Giant Ameriquest, Dies at 68
Continue reading… 0 CommentsFrom today's Washington Post:
Once the nation's largest subprime mortgage lender, Ameriquest was shadowed by accusations that it engaged in improper practices that included lying about borrowers' income to qualify them for loans they couldn't afford. Ameriquest advertised heavily on television, sent blimps soaring above stadiums bearing the company's name and Liberty Bell logo and sponsored a Super Bowl halftime show and a Rolling Stones tour.
Former employees said Ameriquest ran "boiler rooms" of loan agents who socked borrowers with hidden fees and higher-than-promised interest rates while steering customers into loans they couldn't afford.
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A Housing Rescue in the Works?
Continue reading… 1 CommentIt was only last month that Treasury Secretary Paulson steadfastly rejected the government-funded housing rescue plans being kicked around by lawmakers, economists, and community groups, telling the Wall Street Journal: "I don't think I've seen any scenario where the American taxpayer needs to be stepping in with more taxpayer dollars."
But after the recent implosion of Bear Stearns and continued turmoil in the credit markets, it seems the Treasury Department has softened its position:
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Fannie: That Pricey Ski Chalet Can Now Be Yours!
Continue reading… 2 CommentsTo everyone in well-to-do America putting off buying a new house because jumbo mortgage rates are way too high, take heart!
Thanks to the recent passage of the economic stimulus package—which includes a provision raising the limits on loans backed by mortgage giants Fannie Mae and Freddie Mac—folks in places like Vail, Colo., Washington, D.C., and Hawaii can look forward to interest rates that match those for cheaper houses.
Amid the credit crunch, rates on jumbo loans (which until today were defined as any mortgage over $417,000) jumped as high as a full percentage point above those that conformed to Fannie and Freddie's standards. That is, if you could secure one at all. Without a ready market for big-dollar mortgages, the jumbo market seized up last August as secondary-market buyers of such mortgages all but disappeared.
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The Next Shoe to Drop: Commercial Real Estate
Continue reading… 8 CommentsI try to stay ahead of the curve.
Which is why, nearly two years ago, I wrote a piece on the impacts of the housing bust on the job market.
In short, I noted that all those millions of people who chased the real-estate boom—the newly minted real-estate agents, the mortgage brokers, the developers, and the construction workers—had added more jobs to the economy than had any other industry, at its height accounting for about 1 in every 10 jobs: a record, according to Moody's Economy.com. (In California alone, the number of real-estate brokers rose to more than half a million workers—more than the total number of homes sold in the state last year.)
