The Home Front
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Housing Downturn Hammers the Economy
Continue reading… 0 CommentsIn Tuesday's S&P/Case-Shiller report, we learned that home prices are dropping at a clip that's even faster than expected.
Today, we got a better picture of just how damaging the housing bust has been to the overall economy. It ain't pretty.
While the first-quarter estimate of real growth in gross domestic product came in better than expected—at a 0.6 percent annual rate—the housing market was once again a piano on the economy's back.
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Drinking and Home Buying
Continue reading… 1 CommentMany thanks to Twist over at housingdoom—do yourself a favor and bookmark this site—for calling attention to this hilarious trend: Given the plummeting housing market, it seems that Realtors are doing everything they can to get people to buy condos, including—you got it—providing plenty of booze.
From the Wall Street Journal, via Yahoo News:
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Sasquatch? Perhaps. Housing Bottom? No Way
Continue reading… 0 CommentsYou've got a better chance of tracking down a sasquatch than locating a housing market bottom in a key report issued today.
The S&P/Case-Shiller Home Price Index came in worse than expected, showing the price of single-family homes (excluding new construction) in 20 major U.S. metro areas dropped nearly 13 percent in February from a year earlier. Of the 20 markets surveyed, 17 posted annual declines that mark record lows in the two decades that the index covers.
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Pressure Is Building for Industry Action
Continue reading… 10 CommentsWith the Bush administration's preferred industry-led solution to the housing crisis proceeding at a Department of Motor Vehicles-like pace, Treasury Secretary Henry Paulson met with key lenders this week to prod them for new ways to resolve the mess, the American Banker reports.
From the American Banker:
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Which L.A. ZIP Code Is Most Housing Busted?
Continue reading… 3 CommentsPeter Viles over at L.A. Land has put together a nifty new data tool enabling users to explore foreclosure trends by ZIP code in Southern California.
Judging from this preview, I recommend that Californians wait at least 30 minutes after their last meal before using it:
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As Housing Slumps, Rents Rise
Continue reading… 0 CommentsSeems like a pretty good time to be a renter, huh? While everyone else is sobbing over the free-falling value of their homes, renters can rest easy knowing that at least they haven't plowed money into a losing investment.
Not so fast.
As the good folks over at the Real Estate Bloggers point out, nonhomeowners are already facing higher rental prices, and things could be even worse by the end of the year.
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Backlog of Unsold New Homes Swells
Continue reading… 0 CommentsIt takes some pretty sour news to undercut the already gloomy expectations for the housing market. But today's government report on new-home sales did just that. March sales of new, single-family homes fell 8.5 percent from last month and nearly 37 percent from a year ago—well below consensus estimates. At the same time, the median price declined more than 13 percent from a year ago, "which is the single largest decline in nearly four decades," Joseph Brusuelas, an economist at IdeaGlobal, said in a report.
Another troubling statistic: The inventory of unsold homes increased to an 11-month supply. How big of a supply is that? Well, the last time we had a backlog that large, the film Raiders of the Lost Ark was packing in theaters and children were begging their parents for "He-Man" action figures (1981).
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Workouts Just Not Working Out
Continue reading… 0 CommentsRather than embrace a full-on, taxpayer-funded bailout, the Bush administration has preferred to address the housing crisis by encouraging lenders to get together with struggling borrowers to find arrangements—perhaps by modifying loan terms—to enable homeowners to avoid default.
These negotiations, known as loan workouts, are not formally associated with Richard Simmons—not yet, anyway. And although they provide an opportunity for struggling borrowers to stay in their homes, the process can be slow, since lenders have to go through one loan at a time. (And with the scope of the crisis building, the number of struggling borrowers is staggering.)
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Existing-Home Sales Fall...Again
Continue reading… 1 CommentSo what do you want first—the good news or the bad news? I think we could all use a little good news ...
The good news: Sales of existing homes increased in the Northeast and West last month, according to a National Association of Realtors report released today (although sales declined in the Midwest and South).
Need some more? Well, some markets—that means you, Des Moines, Iowa, Durham, N.C., and Austin—showed "healthy price gains."
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Honey, It's Not You—It's the Mortgage
Continue reading… 1 CommentOver the past several months, it has become painfully clear that the housing crisis is not just about housing. Rising defaults have led to turmoil in the credit markets. Banks have tightened their standards for lending to consumers, who are already snapping their wallets shut as the economy slows.
But more recently, the turmoil has spread to areas that would appear to have little, if any, connection to housing. We've even seen the crisis blamed—justly, I would argue—for fewer Botox treatments.
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Why Preston Should Have Stayed at the SBA
Continue reading… 0 CommentsTalk about a buzz kill.
There Steven Preston was, standing at the White House, with the decider at his side, wistfully daydreaming about his new job leading an obscure, corruption-tainted agency that's likely to play a leading role in a perilously complicated effort to pull homeowners out of the most terrifying crisis in a generation. But you just couldn't allow someone to enjoy his view from the top of the world, Rep. Nydia Velázquez, could you?
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Top 10 Foreclosure States
Continue reading… 15 CommentsThe bit plays out a lot funnier on David Letterman, but the good folks over at the Real Estate Bloggers have compiled this fascinating—but terrifying—top 10 list based on a recently released RealtyTrac report.
Overall, 1 out of every 538 U.S. households received a foreclosure filing last month.
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Another Painful Month for Housing
Continue reading… 1 CommentMarch housing starts dropped nearly 12 percent from February and more than 36 percent from a year earlier, the Census Bureau reported today. At the same time, "permits dropped 5.8 percent to 927,000, also far below the consensus, 970,000, and the lowest level since April 1991," Ian Shepherdson, the chief U.S. economist at High Frequency Economics, said in a report. He called it "further evidence, as if it were needed, of the catastrophe in the housing market."
Still, despite the dismal report, a decline in home-building activity should help reduce the bloated inventory that is punishing the market.
"The drop in starts combined with falling prices will help pare the overhang of unsold homes that will eventually set the stage for a rebound in homebuilding later this year or early in 2009," David Resler, chief economist at Nomura Securities, said in a report.
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Ron Paul Sees Bailout Writing on the Wall
Continue reading… 68 CommentsWith momentum building for some form of taxpayer-funded housing rescue, what better time to check in with one of the most ardent bailout opponents, Republican Rep. Ron Paul of Texas? Excerpts from an interview:
What is the likelihood that Congress will pass some form o f large-scale government intervention aimed at stemming the tide of foreclosures?
Oh, I think they will. [Rep.] Barney Frank [a Massachusetts Democrat who is chairman of the House Financial Services Committee] would support that. It's interesting. Barney Frank is a good friend of mine. He and I support things that allow and permit personal risk, like Internet gambling and smoking marijuana. But economic risk is supposed to not be permitted? So I needle him a bit about that. I say, "How come we can't have economic risk?" I want people to take their own risk, and then you wouldn't have these kinds of problems that we are facing today. -
Foreclosure Filings Up Sharply
Continue reading… 0 CommentsRealtyTrac's March 2008 U.S. Foreclosure Market Report shows that foreclosure filings nationwide increased 5 percent from the previous month and 57 percent from a year earlier. All told, 1 out of every 538 households received a foreclosure filing in March, the report says.
"The March numbers show that overall foreclosure activity so far this year continues to run nearly 60 percent above the levels we saw last year," said James J. Saccacio, chief executive officer of RealtyTrac. "On a year-over-year basis, default notices were up nearly 57 percent and bank repossessions were up nearly 129 percent, but auction notices were up only 32 percent, indicating that more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender. This deed-in-lieu-of-foreclosure process allows the lender to take possession of a property without putting it up for public foreclosure auction."
Press release here.
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Fannie and Freddie Go After Jingle Mailers
Continue reading… 4 CommentsOne of the many curiosities to accompany the mortgage crisis is the growing number of struggling borrowers who have elected to simply walk away from their homes instead of launching an all-out effort to prevent foreclosure. The sharp drop in home prices—which has put millions of Americans "underwater," meaning they owe more on their mortgages than their homes are worth—is one factor behind the trend. Meanwhile, since most mortgages are packaged and sold to investors, rather than held by a local banker, it may be easier for homeowners to justify walking away and sending their house keys to the lender—so-called jingle mail.
In addition, a number of companies have emerged on the Web that present foreclosure as an attractive alternative for cash-strapped borrowers.
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Bill Clinton on the Mortgage Crisis
Continue reading… 3 CommentsWith the housing crisis becoming an increasingly central campaign issue in the race for the White House, former President Bill Clinton provided his two cents on the issue while stumping for his wife in North Carolina.
From the Wall Street Journal:
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Brokered Subprime Loans Cost More
Continue reading… 0 CommentsSubprime borrowers who use brokers pay "significantly more" than those who go directly to the lender, according to a study by the Center for Responsible Lending.
The research—the first to empirically examine the effect of broker compensation on a broad spectrum of borrowers—reveals troubling patterns. The most important is that, for borrowers with weak credit, brokered mortgages carry higher interest rates than the same loans obtained directly from a retail lender. On a typical loan of $166,000, a subprime borrower with a brokered mortgage will pay $5,222 more in the first four years of the loan. Over the 30-year span of a loan, the cost difference grows to almost $36,000.
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Administration’s Mortgage Fix Is Criticized
Continue reading… 2 CommentsRight on cue, Democratic lawmakers are sharply criticizing the Bush administration's plan—announced Wednesday—to expand help to about 100,000 mortgage holders. Democrats say the plan does not go far enough, and they are continuing their efforts toward devising a large-scale, taxpayer-funded housing bailout.
"I have serious questions as to how a substantial number of more homeowners could be helped through [the Federal Housing Administration] without an infusion of government funds," Rep. Carolyn Maloney of New York, a senior Democrat on the Financial Services Committee, told the Wall Street Journal.
Article here.
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It Takes One to Know One...
Continue reading… 0 CommentsLooks as if some of the folks who helped create the housing mess have had a change of heart.
From NPR:
Some out-of-work mortgage brokers have now found their way to nonprofits like this one. The [Neighborhood Assistance Corp. of America] is working with borrowers facing foreclosure all over the country, refinancing or restructuring their unaffordable subprime loans.
Bruce Marks heads up NACA and now helps retrain former subprime loan brokers. Who better to untangle these unaffordable loans than the brokers who helped set them up, he says. The former brokers understand the "exploding ARM loans" and the "pick-a-pay loans," Marks says. "They are the experts, because they were a part of that industry, and they know that business inside and out."
Full story here.
