tag:blogger.com,1999:blog-45991601807478538322024-02-20T18:40:01.817-08:00The Housing Bottom Blog - Tracking The Bay Area's Real Estate Collapse and RecoveryYou deserve a honest agent. The Housing Bottom Blog discusses the causes and effects of the housing bubble, as well as the economics of real estate. Home prices will eventually find a bottom. We'll be ready for the opportunities that await.Unknownnoreply@blogger.comBlogger266125tag:blogger.com,1999:blog-4599160180747853832.post-91650642495148719752009-09-08T14:06:00.001-07:002009-09-08T14:06:58.137-07:00Blog Address Change<p>My Blog has moved.</p> <h4>I am now writing for <a href="http://housingstorm.com">http://housingstorm.com</a></h4> <p>See you there!</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-5534195182746495372009-08-03T09:06:00.001-07:002009-08-03T09:06:19.788-07:00Required Reading: Monday, August 3rd 2009<p><a href="http://www.sweet-juniper.com/2009/07/feral-houses.html"><strong>Feral Houses</strong></a><strong> – Sweet Juniper</strong></p> <p><a href="http://www.reuters.com/article/GCA-Housing/idUSTRE56U5YZ20090731"><strong>"Shadow" inventory lurks over U.S. housing recovery</strong></a><strong> – Reuters</strong></p> <p><a href="http://globaleconomicanalysis.blogspot.com/2009/08/weekly-unemployment-claims-portend.html"><strong>Weekly Unemployment Claims Portend Disaster</strong></a><strong> – Mish</strong></p> <p><a href="http://www.ritholtz.com/blog/2009/08/real-estate-trade-down-environment/"><strong>Real Estate ‘Trade-Down’ Environment</strong></a><strong> – The Big Picture</strong></p> <p><a href="http://www.ritholtz.com/blog/2009/08/real-estate-trade-down-environment/"><strong>Real Estate ‘Trade-Down’ Environment</strong></a><strong> – The San Francisco Chronicle</strong></p> <blockquote> <p>Oakland's McKinley Partners is betting that low-end foreclosed homes in eastern Contra Costa County will double in value in five years. </p> </blockquote> <p><a href="http://www.calculatedriskblog.com/2009/08/investors-buying-low-end-foreclosures.html"><strong>Investors Buying Low End Foreclosures</strong></a><strong> – Calculated Risk</strong></p> <blockquote> <p>I know investor groups doing the same thing, and they pay cash too. As far as these numbers - good luck. The numbers only make sense at the low end, and rents are falling quickly. It is very unlikely the price will double in five years - or even ten years. As the price increases, investors will be selling properties, keeping prices down.</p> </blockquote> <p><a href="http://www.calculatedriskblog.com/2009/08/july-economic-summary-in-graphs.html"><strong>July Economic Summary in Graphs</strong></a><strong> – Calculated Risk</strong></p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-63756276677247084222009-07-29T08:27:00.001-07:002009-07-29T08:27:21.333-07:00Required Reading: Wednesday, July 29th 2009<p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/27/BUD218VMTC.DTL&type=business#ixzz0MZS5YxFD"><strong>S.F. tower's owners will forfeit it to lender</strong></a><strong> – The San Francisco Chronicle</strong></p> <p><a href="http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/ernst-jec-oral-testimony.pdf"><strong>Testimony of Keith S. Ernst, Center for Responsible Lending Before the Joint Economic Committee of the U.S. Congress</strong></a></p> <blockquote> <p>Our most recent report on subprime mortgages shows that over 1.5 million homes have <br />already been lost to foreclosure, and another two million families with subprime loans are currently delinquent and in danger of losing their homes in the near future.1 Projections of foreclosures on all types of mortgages during the next five years estimate 13 million defaults (over the time period 2008Q4 to 2014).2 Right now, more than one in ten homeowners is facing mortgage trouble.3 Nearly one in five homes is underwater.</p> </blockquote> <p><a href="http://www.reuters.com/article/ousiv/idUSTRE56R6UH20090729"><strong>Subprime mortgage companies warn on U.S. foreclosures</strong></a><strong> – Reuters</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/few-comments-on-housing-reports.html"><strong>A Few Comments on Housing Reports</strong></a><strong> – Calculated Risk</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/study-using-home-atm-led-to-most.html"><strong>Study: Using Home ATM Led to Most Foreclosures in SoCal</strong></a><strong> – Calculated Risk</strong></p> <p><a href="http://www.businessinsider.com/miami-condo-glut-starts-to-ease-2009-7"><strong>Miami Condo Glut Starts To Ease</strong></a><strong> – Clusterstock</strong></p> <p><a href="http://www.nytimes.com/aponline/2009/07/28/business/AP-US-Mortgage-Aid-Pressure.htm"><strong>Feds Push Mortgage Companies to Modify More Loans</strong></a><strong> – The New York Times</strong></p> <p><a href="http://www.minyanville.com/articles/index/a/23746"><strong>Five Things: Housing Staggers Toward a Bottom...</strong></a><strong> – Minyanvillle, Kevin Depew</strong></p> <blockquote> <p>It's true, housing is staggering toward a bottom; but it's doing so on a treacherous path carved out between two lanes on an interstate highway. </p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-48608562912196092092009-07-24T11:59:00.001-07:002009-07-24T11:59:10.608-07:00All of our problems are solved!<object width="464" height="376"><param name="movie" value="http://embed.break.com/829947"></param><param name="allowScriptAccess" value="always"></param><embed src="http://embed.break.com/829947" type="application/x-shockwave-flash" allowScriptAccess="always" width="464" height="376"></embed></object> <br /><font size="1"><a href="http://www.break.com/index/genius-plan-to-fix-california-economy.html">Genius Plan to Fix California Economy</a> - Watch more <a href="http://www.break.com/">Funny Videos</a></font> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-72337077730534219592009-07-17T08:23:00.001-07:002009-07-17T08:24:52.539-07:00Required Reading: Friday, July 17th 2009<p><a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aqp2zuIdPmPA"><strong>Bank of America Posts Profit Drop, Sees Weak Economy</strong></a><strong> – Bloomberg</strong></p> <p><a href="http://www.contracostatimes.com/business/ci_12853433"><strong>East Bay's Watergate joins flood of foreclosures</strong></a><strong> – The Contra Costa Times</strong></p> <p><a href="http://www.nytimes.com/2009/07/17/business/global/17bank.html"><strong>Two Giants Emerge From Wall Street Ruins</strong></a><strong> – The New York Times</strong></p> <blockquote> <p>“One theme here is that Goldman Sachs and JPMorgan really have emerged as the winners, as the last of the survivors,” said Robert Reich, a professor at the University of California, Berkeley, who was secretary of labor in the Clinton administration.</p> <p>Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals’ weakness to pull in billions in trading profits. </p> </blockquote> <p><a href="http://www.mercurynews.com/business/ci_12851881"><strong>Cisco cutting up to 700 jobs in San Jose</strong></a><strong> – San Jose Mercury News</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/housing-sticky-prices.html"><strong>Housing: Sticky Prices</strong></a><strong> – Calculated Risk</strong></p> <blockquote> <p>If housing was a perfect market, prices would have fallen rapidly to the market clearing price. However housing prices are sticky downward - as I described in 2005 post: "[R]eal estate prices display strong persistence and are sticky downward. Sellers tend to want a price close to recent sales in their neighborhood, and buyers, sensing prices are declining, will wait for even lower prices.</p> <p>This means real estate markets do not clear immediately, and what we usually observe is a drop in transaction volumes."</p> <p>This doesn't mean prices are stuck - just sticky. Prices have been falling in most areas for three years, and will probably fall further.</p> <p>And this brings us back to the DataQuick article. Just because demand is picking up a little, doesn't mean prices have bottomed. Note: Ignore the median price in the article - that is rising because of the change in mix.</p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu_wkog-aQFx-i1kev_mLzZJ5b_vVJkjus3ORN1kNg_KaBsqerkUzhyphenhyphenjm3LdqJWVkfrj_ob1ZS8HwqQy-K7hBIR-8Rag8Ivug81WA0q8vBotIUINu2GVMbnAIB3puog2Gq6VkbJMksY7PP/s1600-h/HousingImperfectMarket%5B4%5D.jpg" target="_blank"><img style="border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px" title="HousingImperfectMarket" border="0" alt="HousingImperfectMarket" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhh2Nsfg1ZT1AU-lWaEl2aniHL3Is4OqS7uTEJbmPnYZnJXoKnS69g9fbfeQ4fCQ0vLS7FHIF29UOy5gqYNTqQW7D86sOzr0axWjiQwbCAJlj-QiVah92uz1vqA9uqxz2HngjiRydXAifq0/?imgmax=800" width="366" height="271" /></a> </p> </blockquote> <p><strong>Jon Stewart Takes On Goldman Sachs (finally)</strong></p> <p> <table style="background-color: #f5f5f5; font: 11px arial; color: #333" cellspacing="0" cellpadding="0" width="360" height="353"><tbody> <tr style="background-color: #e5e5e5" valign="middle"> <td style="padding-bottom: 0px; padding-left: 5px; padding-right: 1px; padding-top: 2px"><a style="color: #333; font-weight: bold; text-decoration: none" href="http://www.thedailyshow.com/" target="_blank">The Daily Show With Jon Stewart</a></td> <td style="text-align: right; padding-bottom: 0px; padding-left: 5px; padding-right: 5px; font-weight: bold; padding-top: 2px">Mon - Thurs 11p / 10c</td> </tr> <tr style="height: 14px" valign="middle"> <td style="padding-bottom: 0px; padding-left: 5px; padding-right: 1px; color: #333; font-weight: bold; text-decoration: none; padding-top: 2px" colspan="2" href="http://www.thedailyshow.com/watch/thu-july-16-2009/pyramid-economy" target="_blank" ><a ="<a">Pyramid Economy<a></a></td> </tr> <tr style="background-color: #353535; height: 14px" valign="middle"> <td style="text-align: right; padding-bottom: 0px; padding-left: 5px; width: 360px; padding-right: 5px; overflow: hidden; padding-top: 2px" colspan="2"><a style="color: #96deff; font-weight: bold; text-decoration: none" href="http://www.thedailyshow.com/" target="_blank">www.thedailyshow.com</a></td> </tr> <tr valign="middle"> <td style="padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px" colspan="2"><embed style="display:block" src="http://media.mtvnservices.com/mgid:cms:item:comedycentral.com:233154" width="360" height="301" type="application/x-shockwave-flash" wmode="window" allowFullscreen="true" flashvars="autoPlay=false" allowscriptaccess="always" allownetworking="all" bgcolor="#000000"></embed></td> </tr> <tr style="height: 18px" valign="middle"> <td style="padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px" colspan="2"> <table style="text-align: center; margin: 0px" cellspacing="0" cellpadding="0" width="100%" height="100%"><tbody> <tr valign="middle"> <td style="padding-bottom: 3px; padding-left: 3px; width: 33%; padding-right: 3px; padding-top: 3px"><a style="font: 10px arial; color: #333; text-decoration: none" href="http://www.thedailyshow.com/full-episodes" target="_blank">Daily Show <br />Full Episodes</a></td> <td style="padding-bottom: 3px; padding-left: 3px; width: 33%; padding-right: 3px; padding-top: 3px"><a style="font: 10px arial; color: #333; text-decoration: none" href="http://www.indecisionforever.com" target="_blank">Political Humor</a></td> <td style="padding-bottom: 3px; padding-left: 3px; width: 33%; padding-right: 3px; padding-top: 3px"><a style="font: 10px arial; color: #333; text-decoration: none" href="http://www.jokes.com" target="_blank">Joke of the Day</a></td> </tr> </tbody></table> </td> </tr> </tbody></table> </p> <p><a href="http://www.inman.com/buyers-sellers/columnists/stevebergsman/putting-short-back-in-short-sale"><strong>Putting the 'short' back in short sale</strong></a><strong> – Inman News</strong></p> <blockquote> <p>According to Thompson, a number of major servicers including Fannie Mae, JPMorgan Chase & Co., Citigroup Inc. and OneWest Bank Group (formerly IndyMac Bank) are putting systems in place to more easily identify which borrowers have attempted loan modification programs and failed or are well into the default process. Secondly, and this is a key point, they are going to give price certainty in the case of a short sale; the servicers will give price guidance, telling the agents a price range for the short sales.</p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-87561426460542619082009-07-17T08:08:00.001-07:002009-07-17T08:08:27.115-07:00DataQuick News: Bay Area Home Sales, Prices Rise<p><strong>DQ News reports </strong><a href="http://dqnews.com/Articles/2009/News/California/Bay-Area/RRBay090716.aspx"><strong>Bay Area home sales and median price rise</strong></a></p> <blockquote> <p>La Jolla, CA.----Home sales in the Bay Area jumped to their highest level in almost three years, the result of improved mortgage availability and a perception among potential buyers that prices have bottomed out. The median price paid for a home increased month-to-month for the third month in a row, a real estate information service reported. </p> <p>A total of 8,644 new and resale houses and condos sold across the nine-county Bay Area in June. <font color="#ff0000">That was up 16.1 percent from 7,447 in May and up 20.4 percent from 7,178 in June 2008</font>, according to San Diego-based MDA DataQuick. </p> <p>Home sales have increased on a year-over-year basis the last ten months. June sales have varied from a low of 7,118 in 1993 to 15,735 in 2004 in DataQuick’s statistics, which go back to 1988. Last month was 16.1 percent below the 10,306 for an average June. </p> <p>“Getting mortgage financing this last year has really been an egregious process, especially for borrowers in the upper half of the market. We’re just now seeing the beginnings of more normal mortgage lending patterns. There’s still a long way to go, but it looks like the worst of the grind is over,” said John Walsh, MDA DataQuick president. </p> <p><font color="#ff0000">The median price paid for all new and resale houses and condos sold in the nine-county Bay Area was $352,000 last month, up 3.1 percent from $341,500 in May and down 27.4 percent from $485,000 in June 2008. It was the highest since $375,000 last October. </font></p> <p>The current median is 47.1 percent below the $665,000 peak reached in June 2007. It hit a low of $290,000 in March this year. About half the downturn appears to be price declines, the other half is the absence of of high-end home sales in the statistics, which pulls the median down. </p> <p>Financing with home loans above the old “jumbo” limit of $417,000 edged up to the highest level in almost a year. Last month 28.8 percent of all Bay Area mortgages were jumbos, the highest since 31.9 percent in August last year and well above the bottom of 17.1 percent last January. Two years ago jumbos accounted for more than 60 percent of all home purchase loans. </p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-39718332239987269352009-07-16T09:48:00.001-07:002009-07-16T09:48:06.480-07:00Required Reading: Thursday, July 16th 2009<p><a href="http://www.calculatedriskblog.com/2009/07/bofa-double-secret-probation.html"><strong>BofA: Double Secret Probation</strong></a><strong> – Calculated Risk</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/weekly-unemployment-claims-decline_16.html"><strong>Weekly Unemployment Claims Decline Sharply</strong></a><strong> – Calculated Risk</strong></p> <blockquote> <p>NOTE: The seasonally adjusted weekly claims numbers are being impacted by the layoffs in the automobile industry and other manufacturing sectors. Usually companies cut back production in the summer, and the numbers are adjusted for that pattern - but this year the companies cut back much earlier. This distortion is expected to last for another week or two.</p> </blockquote> <p><a href="http://www.foreclosurepulse.com/blogs/mainblog/archive/2009/07/15/foreclosure-filings-in-the-millions-midway-through-2009.aspx"><strong>Foreclosures in the Millions Midway through 2009</strong></a><strong> – RealtyTrac</strong></p> <blockquote> <p>A total of 1,905,723 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,528,364 U.S. properties in the first six months of 2009, a 9 percent increase in total properties from the previous six months and a nearly 15 percent increase in total properties from the first six months of 2008, according to the latest RealtyTrac U.S. Foreclosure Market Report. The report also shows that 1.19 percent of all U.S. housing units (one in 84) received at least one foreclosure filing in the first half of the year. </p> </blockquote> <p><a href="http://www.bloomberg.com/apps/news?pid=20601039&sid=aVs1sed7nqh8"><strong>CIT Group’s ‘Capital’ Was All Talk, No Trousers: Jonathan Weil</strong></a><strong> – Bloomberg</strong></p> <p><a href="http://www.businessinsider.com/in-kansas-city-buy-a-car-get-an-ak-47-2009-7"><strong>Kansas City Car Dealer Offers An AK-47 With Each New Truck Purchase</strong></a><strong> – Clusterstock</strong></p> <p><a href="http://globaleconomicanalysis.blogspot.com/2009/07/peak-to-trough-case-shiller-and-car.html"><strong>Peak to Trough Case Shiller and CAR Home Price Declines</strong></a><strong> – Mish</strong></p> <p><a href="http://globaleconomicanalysis.blogspot.com/2009/07/foreclosure-filings-hit-record-15.html"><strong>Foreclosure Filings Hit Record 1.5 Million; One in Eight Americans Delinquent; Obama's Mortgage Rescues Create ‘Confusion’</strong></a><strong> – Mish</strong></p> <blockquote> <p>Foreclosure prevention programs are going to continue to fail as long as home prices are sinking and unemployment is rising. Attempts to manipulate the market and/or prevent foreclosures will merely create "perverse incentives that distort the housing market". <br />The only real solution is time and price. Homes have to fall to the point of affordability and people have to have jobs before any house is affordable. This should be obvious but given the number of failed programs it must not be.</p> </blockquote> <p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/15/BUBM18P5VH.DTL"><strong>Study finds more millionaires in Bay Area</strong></a><strong> – The San Francisco Chronicle</strong></p> <blockquote> <p>The World Wealth Report, produced by Merrill and market research firm Claritas, found that the number of millionaire households across the nine-county Bay Area climbed to 136,120 last year, up 10.2 percent from 123,621 in 2007. </p> <p>In fact, all three regions surveyed in the Golden State (Los Angeles, San Diego and San Francisco areas) increased in wealth last year, in sharp contrast to national and global trends, said Mike Riherd, senior vice president of investments in the Walnut Creek office of Merrill.</p> </blockquote> <p><a href="http://www.latimes.com/business/la-fi-paulson17-2009jul17,0,5201447.story"><strong>Henry Paulson testifies that Merrill Lynch sale helped stave off 'great peril'</strong></a><strong> – The Los Angeles Times</strong></p> <p><a href="http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5836488/World-Bank-warns-of-deflation-spiral.html"><strong>World Bank warns of deflation spiral</strong></a><strong> – Telegraph, Ambrose Evans-Pritchard</strong></p> <blockquote> <p>"Japan is already back in deflation, and it is here to stay. This year the economy will shrink by around 7pc, dramatically increasing the output gap and intensifying deflationary pressures. Cash earnings are down 3pc in the last year," </p> <p>The Bank of Japan downgraded its growth forecast, predicting that the economy will contract 3.4pc in the fiscal year to next March. This follows a catastrophic fall in output at a 14.2pc an annual rate in the first quarter, the worst ever recorded. </p> <p>While industrial output has bounced over the summer, there are concerns that it may have been flattered by an "inventory rebound" as companies rebuild stocks. </p> <p>Eurostat confirmed on Wednesday that the eurozone has slipped into deflation. Prices fell 0.1pc in June. </p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-74306457550434647522009-07-16T09:20:00.001-07:002009-07-16T09:20:58.953-07:00DataQuick News: SoCal Sales and Prices Rise<p><strong>DQNews Reports </strong><a href="http://www.dqnews.com/Articles/2009/News/California/Southern-CA/RRSCA090715.aspx"><strong>Southland home sales highest since late ’06; median price up again</strong></a></p> <blockquote> <p>Southern California home sales rose in June to the highest level in 30 months as the number of deals above $500,000 continued to climb. June’s sales gain, plus another rise in the region’s median sale price, indicate buyers responded to price cuts on mid- to high-end homes and found it easier to secure financing for pricier abodes, a real estate information service reported. </p> <p>A total of 23,262 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 12.0 percent from 20,775 in May and up 29.0 percent from a revised 18,032 a year ago, according to San Diego-based MDA DataQuick. </p> <p>Sales have increased year-over-year for 12 consecutive months. </p> <p><font color="#ff0000">June’s sales were the highest for that month since 2006, when 31,602 homes sold, but were 17.7 percent below the average June sales total since 1988, when DataQuick’s statistics begin. June sales peaked at 40,156 in 2005 and hit a low last year. </font></p> <p>Foreclosures remained a major force in June, but their impact on the resale market eased for the third consecutive month. </p> <p>Foreclosure resales – homes sold in June that had been foreclosed on in the prior 12 months – <font color="#ff0000">represented 45.3 percent of Southland resales last month, down from 49.7 percent in May and down from a peak 56.7 percent in February this year</font>. Last month’s level was the lowest since foreclosure resales were 43.7 percent of resales in July 2008. </p> <p>As the influence of deeply discounted foreclosures in lower-cost areas has waned in recent months, sales in higher-cost housing markets have increased and accounted for a greater share of total transactions. </p> <p><font color="#ff0000">Resales of single-family houses priced $500,000 and above rose to 19.6 percent of all existing houses sold in June, up from 18.0 percent in May but still down from 29.2 a year ago.</font> The last time the $500,000-plus market made up more than 19 percent of sales was last October, when it was 19.9 percent. Sales of $500,000-plus houses dipped to as little as 13.4 percent of sales in January this year. </p> <p>The recent shift toward higher-cost markets contributing more to overall sales has put upward pressure on the region’s median sale price – the point where half of the homes sold for more and half for less. The median dived sharply over the past year not just because of price depreciation but because of a shift toward an unusually large share of sales occurring in lower-cost, foreclosure-heavy areas.</p> </blockquote> <p><strong>I would add that part of the “shift toward higher-cost markets” is the result of two factors: 1. More and more high-end homes have been forced to dramatically slash their price to attract buyers….so, the are finally selling, but at big discounts. 2. The statistical fact is that there are far fewer low-end homes available for sale as a result of recent moratoriums. Fewer low-end sales changes the mix.</strong></p> <blockquote> <p>The median price paid for all new and resale houses and condos sold in the Southland last month was $265,000, up 6.4 percent from $249,000 in May but down 26.4 percent from $360,000 a year ago. It was the second consecutive month in which the median rose on a month-to-month basis. Before May’s 0.8 percent increase over April, the median hadn’t risen from one month to the next since July 2007. </p> <p>Last month’s median was the highest since it was $278,000 last December, but it stood 47.5 percent below the peak $505,000 median reached in spring and summer of 2007. </p> <p>“The rising median should still be viewed mainly as a sign the market’s moving back toward a more normal distribution of sales across the home price spectrum. Sales in many higher-cost neighborhoods couldn’t have gotten much lower, so this recent uptick in activity should come as no surprise. The recession and problem mortgages are fueling more high-end distress, hence more high-end ‘bargains.’ What’s missing, still, is a wide-open financing spigot for the would-be buyers of these more expensive homes,” said John Walsh, DataQuick president.</p> </blockquote> <p><strong>Expect Bay Area Median Home Prices to rise as well, and probably stay higher for another few months. By September or October, we should see more foreclosures on the market, combined with a less-optimistic public, and median prices will fall again.</strong></p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-20473258925306111942009-07-15T10:58:00.001-07:002009-07-15T10:58:26.712-07:00Social Media Perspective<p><a href="http://site.despair.com/blog/2009/06/03/two-timely-new-tees/"><strong>From Dispair.com</strong></a></p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtAe6Z_0IrHmikbvxaZ_b7zUh_UTbD1vfRQKjwFCOITKExA28lbxLY5O5PNpOEzusX8QX765BaWlBRIWfX0MknjIOAc1EThCKT5BziP7eHMOyrOKGMMPOvEVE0H-r9HL6W1GE4_5U8aaI5/s1600-h/socialmedia%5B5%5D.jpg" target="_blank"><img style="border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px" title="socialmedia" border="0" alt="socialmedia" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTZOchuUqJ-RWEBnnPT_LHQqamRPIBZlPIGOUdgieGMHRobh53H9vf0vnzf_FaJew1R8TvgMCH7xPDnxPoJ-_WcrUjjF3L9wcrJPihLsoYI00qf18XFzzNWTKpY5heWUtUiOsMsPZQwdCG/?imgmax=800" width="423" height="253" /></a></p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-39273002350245193732009-07-15T10:56:00.001-07:002009-07-15T10:56:13.830-07:00Required Reading: Wednesday, July 15th 2009<p><a href="http://www.sacbee.com/business/story/2026511.html"><strong>Sacramento-area rents fall for third straight quarter</strong></a><strong> – The Sacramento Bee</strong></p> <blockquote> <p>A massive deflationary spiral that has pushed home values down by half or more from their housing boom highs is now destabilizing pricing at large apartment communities across the capital region.</p> </blockquote> <p><a href="http://www.minyanville.com/articles/USO-UNG-EXC-nrg-etr/index/a/23560"><strong>The New Energy Crisis</strong></a><strong> – Minyanville, James Quinn</strong></p> <p><a href="http://www.nytimes.com/2009/07/15/business/economy/15leonhardt.html"><strong>Part-Time Workers Mask Unemployment Woes</strong></a><strong> – The New York Times</strong></p> <blockquote> <p>It is a startling sign of the pain that the Great Recession is inflicting, and it is largely missed by the official, oft-repeated statistics on unemployment. The national unemployment rate has risen to 9.5 percent, the highest level in more than a quarter-century. Yet it still excludes all those who have given up looking for a job and those part-time workers who want to be working full time.</p> </blockquote> <p><a href="http://www.theatlantic.com/doc/200907/ideas-rent-home"><strong>Rent Your Own Home</strong></a><strong> – The Atlantic, Felix Salmon</strong></p> <p><a href="http://blogs.wsj.com/economics/2009/07/14/home-prices-play-big-role-in-americans-decision-to-move/"><strong>Home Prices Play Big Role in Americans’ Decision to Move</strong></a><strong> – WSJ, Real Time Economics Blog</strong></p> <blockquote> <p>This is a change from the past, when jobs were the primary economic driving factor behind state-to-state migration. The study helps explain why migration has fallen off so sharply in this recession — with the drastic fall in housing prices, many people are staying put not for work but because they are tied to a home they either cannot sell or refuse to sell at today’s prices. Some economists, including urban theorist <strong>Richard Florida</strong>, have used this slowdown in mobility to argue against government policies that subsidize home ownership — the argument being that increased home ownership hampers economic flexibility by making Americans less mobile.</p> </blockquote> <p><a href="http://www.businessinsider.com/obamas-zany-own-to-rent-mortgage-plan-would-create-legal-chaos-2009-7"><strong>Obama's Zany 'Own-To-Rent' Mortgage Plan Would Create Legal Chaos</strong></a><strong> – Clusterstock, John Carney</strong></p> <p><a href="http://www.reuters.com/article/marketsNews/idUSN1429265720090714?rpc=77"><strong>Obama mulls rental option for some homeowners-sources</strong></a><strong> – Reuters</strong></p> <blockquote> <p>Under one idea being discussed, delinquent homeowners would surrender ownership of their homes but would continue to live in the property for several years, the sources told Reuters.</p> <p>Officials are also considering whether the government should make mortgage payments on behalf of borrowers who cannot keep up with their home loans, tapping an unused portion of a $50 billion housing aid kitty.</p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-56393700892863124102009-07-15T10:48:00.001-07:002009-07-15T10:48:04.139-07:00Google Finally Starts it’s MLS<p>Google has recently introduced a “real estate” subsection to it’s Google Maps product, instantly creating what will become the most popular real estate site on the web. Why? Because anyone doing a Google-search for homes for sale will be presented with Google’s in-house data as the top search results.</p> <p><a href="http://www.maps.google.com/realestate">www.maps.google.com/realestate</a></p> <p>Private MLS’s days are numbered.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-30685973679700545232009-07-14T13:30:00.001-07:002009-07-14T13:30:05.419-07:00June ForeclosureRadar Report: A Surprising Drop In CA Notice of Defaults<p><strong>From </strong><a href="https://s3.amazonaws.com/CA_Foreclosure_Report/June+2009+CA+Foreclosure+Report.pdf"><strong>ForeclosureRadar</strong></a><strong>:</strong></p> <blockquote> <p>For the third consecutive month, foreclosure sales jumped significantly as lenders come off the moratorium. Foreclosure sales increased by 24.7 percent following a 31.9 percent increase in May, and a 35 percent April increase. <font color="#ff0000">Notices of Trustee Sale dropped by an unexpected 28.7 percent, with the timing of the drop indicating that it was in response to the California Foreclosure Prevention Act. This law was widely believed to have little or no impact on foreclosure filings, as it exempted the majority of large lenders that operate in the state.</font></p> </blockquote> <p>I’ve been talking with asset managers from different companies this week and the general feeling is that the big banks were all asked, by the Treasury/White House, to delay their foreclosure proceedings for 90 days, covering June, July, and August.</p> <p>I<strong> don’t believe that the California Foreclosure Prevention Act has much to do with the drop off because other states are experiencing the same thing.</strong></p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-76910559748029614842009-07-10T20:11:00.001-07:002009-07-10T20:11:06.271-07:00New Mortgage Disclosure Rules Will Delay Closings<p>The Housing and Economic Recovery Act amends the Truth In Lending Act and takes effect July 30th, 2009. Wells Fargo just issued a <a href="https://www.wellsfargo.com/downloads/pdf/mortgage/HERA_HOEPA_Retail_FINAL_E.PDF">fact sheet</a>. Here are the most important points:</p> <ol> <li>The earliest any home purchase transaction can close is 7 business days from when the homebuyer is issued their initial mortgage disclosures from their lender.</li> <li>Other than a credit report fee, no other upfront fees can be collected by the lender until the day after the homebuyer receives their disclosures. Effectively, this means that the appraisal will be delayed by 2-5 days.</li> <li>The homebuyer must receive a copy of their appraisal a minimum of 3 days prior to close of escrow.</li> <li>Any increase of more than 0.125% in the Annual Percentage Rate from the initial Truth In Lending Disclsoure requires a revised TIL Disclosure to be issued to the homebuyer at least 3 business days before closing.</li> </ol> <p>Basically, more 30-day escrows are likely to turn into 35-day escrows. Buyers need to make sure they are protected if closing runs late. Sellers need to expect unexpected delays…especially if they are trying to time the sale of their old home with the purchase of a new one.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-39832199267906461082009-07-09T18:00:00.001-07:002009-07-09T18:00:37.872-07:00Condo Association Bankruptcies Begin<p><strong>From the Daily Business Review </strong><a href="http://www.dailybusinessreview.com/Web_Blog_Stories/2009/July/Maison_bankruptcy.html"><strong>$1 million debt sends condo association into Chapter 11</strong></a></p> <blockquote> <p>In a move an increasing number of condo associations are expected to follow, the Maison Grande in Miami Beach has filed for bankruptcy.</p> <p>Facing almost $1 million in claims by unsecured creditors, a troublesome recreational lease, and at least 100 unit owners delinquent on payments of their fees, the association filed a Chapter 11 petition last month in U.S. Bankruptcy Court in Miami. <br /> <br />As one of the first condo association bankruptcies of the current economic crisis, “it’s definitely cutting edge,” said attorney Mark Schorr, a solo practitioner in Fort Lauderdale who represents the Maison Grande association. </p> <p>…</p> <p>Kaye represents a Tamarac condo association that is considering bankruptcy. With half of its 280 unit owners delinquent on their maintenance fees, the association is in the red to the tune of $50,000 per month, he said. <br /> <br />Kaye also represents a Palm Beach County condo association that is likely to file for bankruptcy after losing a court case against a roofing contractor. <br /> <br />A judgment of $130,000 could grow to more than $300,000 after attorney fees and court costs are added, he said. <br /> <br />“They can’t afford that, and 20 percent [of 120 unit owners] already are delinquent in paying fees,” Kaye said. <br /> <br />These associations, which he declined to name — and many more — are likely to file for bankruptcy protection as they run out of funding options, he said. </p> <p>…</p> <p>Meanwhile, unit owners in foreclosure have no incentive to pay their association fees, said Miami attorney Douglas Snyder, a solo practitioner who represents the 220-unit Greenwich condo in North Miami in its Chapter 11 bankruptcy filed in March. <br /> <br />Snyder said the association had been sued by service providers for non-payment of about $750,000. The court ordered the association to begin making payments “and it was bleeding them dry,” he said. “This way, they can handle everyone at the same time.” <br /> <br />About 20 percent of the unit owners are in foreclosure. Association president Lidia da Cunha did not reply to an e-mail seeking comment. <br /> <br />The financial crisis that is pushing condo associations toward bankruptcy is only going to worsen, said Martinez Molina. </p> </blockquote> <p><strong>The situation is rough the the HOAs, but the dire situation for the condo owners is only going to get worse. With 15% or more of the HOA dues delinquent, Fannie, Freddie, and FHA will not make loans for purchases in the complex. When future sales now need to be cash-only, low prices will plummet much-much lower.</strong></p> <p></p> <p>Expect many condos to cut services, raise fees to existing payers, and for prices to plummet.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-76272469811107455932009-07-09T12:34:00.001-07:002009-07-09T12:34:23.117-07:00Foreclosure Moratoriums Helped 4%?<p><strong>HousingWire reports </strong><a href="http://www.housingwire.com/2009/07/09/foreclosure-freeze-hurt-not-helped-troubled-borrowers/"><strong>Foreclosure Freeze Had Little Impact: Report</strong></a></p> <blockquote> <p>Widespread foreclosure freezes that began in late last year and ran through the first quarter of this year appear to have done little to change the outlook for troubled borrowers — <font color="#ff0000">and may even have made things worse</font>, for everyone involved.</p> <p>A report released recently by due diligence and surveillance specialist <strong>Clayton Holdings, Inc.</strong> highlights the early returns of various moratoria put into place by servicers ahead of the Obama administration’s Making Homes Affordable (MHA) modification and refinance programs. A number of the nation’s largest servicers had released statements earlier this year announcing their intent to suspend foreclosure sales until details of the program were released, generally until the end of March.</p> <p>According to Clayton’s data, halting foreclosures did little to improve the outlook for most troubled borrowers: <font color="#ff0000">of the loans that the firm’s analysts estimated would have otherwise had foreclosure sales completed during the “freeze” period, 93% remained in foreclosure or were moved into REO status by April among those servicers that implemented a widespread moratorium on foreclosure activity. In comparison, among servicers that did not implement a large scale freeze on foreclosures, 89% of loans estimated to have progressed to foreclosure sale by the end of March either remained in foreclosure status or had been moved into REO.</font></p> <p><font color="#804040">…</font></p> <p>The data seem to illustrate just how little freezing foreclosures really helped matters: <font color="#ff0000">Among servicers implementing a moratorium, just 7% of borrowers facing imminent foreclosure were “helped,” either in the form of repayment plans, modifications, reinstatements, or short sales. That number actually grew to 11% among servicers that <em>did not</em> implement a foreclosure freeze — a result that is clearly at odds with reports in the popular press, which have painted the freezes as a needed step to help troubled borrowers</font>.</p> <p>Servicing executives that <em>HousingWire</em> spoke with suggested that the <font color="#ff0000">real problem is negative equity</font>, or borrowers who have seen the value of their homes drop precipitously in the most troubled housing markets. “Negative equity puts borrowers into a precarious situation,” said one servicing executive, who asked to remain anonymous. “Borrowers are over-leveraged, on homes, cars, and everything else, to begin with.”</p> </blockquote> <p>And, of those few who were actually “helped", an alarmingly high percentage has ended up back in default. Depending on time frames and the pool of properties in the study, I’ve seen figures in the 60-75% range.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-22217980975761383272009-07-08T05:42:00.001-07:002009-07-08T05:42:22.304-07:00Required Reading: Wednesday, July 8th 2009<p><a href="http://latimesblogs.latimes.com/laland/2009/07/la-county-may-default-rate-double-last-year.html"><strong>L.A. County's May default rate double last year</strong></a><strong> – The Los Angeles Times</strong></p> <blockquote> <p>May's 9.5% delinquency rate for L.A. County was up from 5% of mortgages late by 90 days or more in May 2008. First American bases its foreclosure analyses on public records.</p> </blockquote> <p><a href="http://www.latimes.com/business/la-fi-lazarus8-2009jul08,0,7497516.column"><strong>Credit card firms try end run around new federal rules</strong></a><strong> – The Los Angeles Times</strong></p> <blockquote> <p>The law would restrict interest rate increases unless a credit card has a variable rate. So at least two major lenders are switching their cards with fixed rates to -- you guessed it -- variable rates.</p> <p>"It's completely unfair," said Linda Sherry, a spokeswoman for Consumer Action. "It's an end run around the intent of the new law."</p> </blockquote> <p><a href="http://www.bloomberg.com/apps/news?pid=20601039&sid=aVVtkVUvfRXE"><strong>U.S. Housing Market Is Cursed by Brain Freeze: John F. Wasik</strong></a><strong> – Bloomberg</strong></p> <blockquote> <p>Our loss-aversion fears are so powerful that they override our logic circuits. We tend to ignore economic reality because we are emotionally anchored to our homes and values based on boom-era prices. It’s like holding on to a favorite stock long after it has tanked. </p> </blockquote> <p><a href="http://www.minyanville.com/articles/C-jpm-bac-wfc-gpm/index/a/23431"><strong>Banks Reject California's IOUs</strong></a><strong> – Minyanville, Andrew Jeffrey</strong></p> <p><a href="http://globaleconomicanalysis.blogspot.com/2009/07/battle-lines-form-over-son-of-stimulus.html"><strong>Battle Lines Form Over "Son of Stimulus"</strong></a><strong> – Mish</strong></p> <p><a href="http://globaleconomicanalysis.blogspot.com/2009/07/tell-wells-fargo-bank-of-america-jp.html"><strong>Tell Wells Fargo, Bank of America, JP Morgan, and Citigroup to Go to Hell</strong></a><strong> - Mish</strong></p> <blockquote> <p>Every one of those blood sucking banks was bailed out by taxpayers (California taxpayers too) and now will not take an IOU from the State of California for the citizens of California. This is disgusting.</p> <p>If you have an IOU that the big banks will not cash, I recommend closing your accounts and putting them someplace that will. Please tell Wells Fargo, Bank of America, JP Morgan, and Citigroup to go to hell.</p> </blockquote> <p><a href="http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2009/07/06/story1.html"><strong>Sale shows San Francisco property values in free fall</strong></a><strong> – The San Francisco Business Times</strong></p> <blockquote> <p>A downtown San Francisco office building that sold for $400 a square foot in 2006 has traded for just $172 a square foot, a 57 percent decline that industry experts see as an important milestone in establishing new, recession-era values for financial district property.</p> </blockquote> <p><a href="http://www.housingwire.com/2009/07/07/mortgage-insurer-expects-lower-housing-prices-in-2011/"><strong>PMI Expects Lower Housing Prices in 2011</strong></a><strong> – Housingwire</strong></p> <p><a href="http://www.nytimes.com/2009/07/08/us/08california.html"><strong>In California, Even the I.O.U’s Are Owed</strong></a><strong> – The New York Times</strong></p> <blockquote> <p>LOS ANGELES — The only thing worse than being issued an i.o.u. rather than a check from the State of California may be not getting the i.o.u. at all — at least in time to meet the deadline of your bank.</p> <p>But across California on Tuesday, many vendors who had been told they would receive the i.o.u.’s instead of actual money said they had not yet received them. And if they do not arrive soon, they may be hard to turn into cash.</p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-10134958425088694182009-07-06T21:43:00.001-07:002009-07-06T21:43:43.294-07:00Equity, Not Quality – A Re-Examination of the High-End<p>In the beginning that this was a “subprime” problem. Marginal buyers leveraged themselves into homes they couldn’t really afford, and then lost them as payment adjusted. <strong>These were the canaries in our very deep and complex mine of global finance</strong>.</p> <p>Payment changes were highlighted early on as the prime culprit. Certainly, payment shock for the least-qualified played a role in getting us where we are today, <strong>but that role may be less then previously believed.</strong></p> <p>First of all, Government-induced low rates have eliminated (for now) the impact of mass payment changes. For many, payments have actually gone down. </p> <p>Second, mass payment recasting (ex: a payment change for an option-arm loan) hasn’t really started yet. We’re another year or more away.</p> <p><font color="#ff0000">Economists assumed that homeowners would do everything that they could to keep their homes.</font> Policy so far has been focused on two main points:</p> <ol> <li>Keep rates low to help people refinance from adjustable to fixed mortgages, reduce payment-adjustment shock, and to encourage new buyers into the market. </li> <li>Modify existing loans to help people afford to keep their homes, even if it meant deferring payments or extending their loan terms. </li> </ol> <h4>Current Policies Have Failed</h4> <p>Policymakers rely on recommendations from economists. Economists rely on models. Models, apparently, believed that real estate prices could go up indefinitely, at a faster pace than incomes. Neither the economists nor the policymakers had the common sense to ask “What if these models are wrong?”</p> <p>Models cannot take into account geo-political conflict, currency collapse, Iceland or Latvia, Honduras. They can’t account for declining tax revenues or mass bankruptcies. They can’t account for changing social attitudes towards luxury goods and debt. <font color="#ff0000">And, they didn’t expect homeowners to actually want to walk away from their homes.</font></p> <p><strong>In the Wall Street Journal, Stan Liebowitz presents </strong><a href="http://online.wsj.com/article/SB124657539489189043.html"><strong>New Evidence on the Foreclosure Crisis - Zero money down, not subprime loans, led to the mortgage meltdown.</strong></a></p> <blockquote> <p>The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home. The accompanying figure shows how important negative equity or a low Loan-To-Value ratio is in explaining foreclosures (homes in foreclosure during December of 2008 generally entered foreclosure in the second half of 2008). A simple statistic can help make the point: although only 12% of homes had negative equity, they comprised 47% of all foreclosures.</p> <p>Further, because it is difficult to account for second mortgages in this data, my measurement of negative equity and its impact on foreclosures is probably too low, making my estimates conservative.</p> <p>What about upward resets in mortgage interest rates? I found that interest rate resets did not measurably increase foreclosures until the reset was greater than four percentage points. Only 8% of foreclosures had an interest rate increase of that much. Thus <font color="#ff0000">the overall impact of upward interest rate resets is much smaller than the impact from equity.</font></p> <p>To be sure, many other variables -- such as FICO scores (a measure of creditworthiness), income levels, unemployment rates and whether the house was purchased for speculation -- are related to foreclosures. <font color="#ff0000">But liar loans and loans with initial teaser rates had virtually no impact on foreclosures, in spite of the dubious nature of these financial instruments.</font></p> </blockquote> <p><strong>My thoughts: I would agree for reasons discussed above that these liar/teaser loans have had little impact. However, if interested rates were not artificially manipulated lower, their impact would be much greater. For some, temporarily-low rates may only serve to delay the eventual foreclosure.</strong></p> <blockquote> <p>Instead, the important factor is whether or not the homeowner currently has or ever had an important financial stake in the house. Yet merely because an individual has a home with negative equity does not imply that he or she cannot make mortgage payments so much as it implies that the borrower is more willing to walk away from the loan.</p> <p><font color="#ff0000">The difference in policy implications is enormous: A significant reduction in foreclosures will happen when and only when housing prices stop falling and unemployment stops rising</font> (see chart nearby).</p> </blockquote> <p><strong>My thoughts: House prices will stop falling and unemployment will stop rising when the bulk of the foreclosures are behind us. If people feel that their homes are likely to appreciate in value, then they are more likely to stick it out.</strong></p> <blockquote> <p>Although the government is throwing money -- almost $2 trillion and counting -- at the mortgage markets with the intent of stabilizing house prices, its methods are poorly targeted. While Federal Reserve actions have succeeded in reducing mortgage interest rates, low interest rates induce refinancings more than they do home purchases.</p> <p>…</p> <p>Other government policies are likely to be even less effective in reducing foreclosures. The Obama administration's "Making Homes Affordable" plan focuses on having the government help lower obligation ratios (the share of income devoted to house payments) down to 31% from levels somewhat above 38%. <font color="#ff0000">But my analysis finds that mortgages having such obligation ratios at closing did not later experience high foreclosure rates. This suggests that reducing these ratios is not likely to significantly improve the foreclosure problem.</font></p> <p>Understanding the causes of the foreclosure explosion is required if we wish to avoid a replay of recent painful events. <font color="#ff0000">The suggestions being put forward by the administration and most media outlets -- more stringent regulation of subprime lenders -- would not have prevented the mortgage meltdown regardless of their merit otherwise.</font></p> </blockquote> <p><strong>My thoughts: Nothing would have prevented the housing bubble from bursting other than it not having been inflated in the first place.</strong></p> <blockquote> <p>Rather, stronger underwriting standards are needed -- especially a requirement for relatively high down payments. If substantial down payments had been required, the housing price bubble would certainly have been smaller, if it occurred at all, and the incidence of negative equity would have been much smaller even as home prices fell. A further beneficial regulation would be a strengthening, or at least clarifying at a national level, of the recourse that mortgage lenders have if a borrower defaults. Many defaults could be mitigated if homeowners with financial resources know they can't just walk away.</p> </blockquote> <p><strong>My thoughts: Clarity of the legal process is always good. But people will still walk away because it becomes the economically prudent thing to do.</strong></p> <h4>On The Edge of a Cliff?</h4> <p>Much has been made of the disconnect between High-End and Low-End markets, with the low-end suffering the greater percentage drops so far. Now, there is much debate over the fate of the High-End.</p> <p>The disconnect is real. Here is the East San Francisco Bay, Low-End areas are off 60-70%, while some High-End areas may only be 25-30% below their peak.</p> <p>Over the last 18 months or so, sales velocity has shifted. Low-End areas are booming, while High-End areas are seeing very few transactions. <strong>Price follows volume</strong>…so, in the short term at least, we can see what communities are falling and which could be beginning to stabilize.</p> <p><strong>Here are two sample charts from </strong><a href="http://thehousingbottom.blogspot.com/2009/07/east-bay-housing-review-july-2009.html"><strong>July’s East Bay Housing Review</strong></a><strong>.</strong></p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJeRV4R9N81JWYz2dgUjrLEldokqWdfQ8PBvyi3LATjgX55RJhmcz5xIfDTllnnep0Wwj4Kx-RfEhWvu1U_GtUcTIfrKWKc3GO5ijmXx2XId1w3pxqjLXmK3CHAAPrPNqHfU3tAtas-XSI/s1600-h/high_end_july_1_copy%5B4%5D%5B4%5D.jpg" target="_blank"><img title="high_end_july_1_copy[4]" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="259" alt="high_end_july_1_copy[4]" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhC4KY2VEMDJZnpwuoGY95gtc9nI-Rxp-9DYwz1yf4-BJMTP43KFyg0tPC8hKXUxNSlVXPKZhxUq7Awv_dIA_E2Qb0i5eIYOPJw-cvCAYRMB-lsJ9eqSEagIob7JsjU20mhCjJwvByxEHDp/?imgmax=800" width="341" border="0" /></a> </p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiO1bJQEjJ6t_GXpd1Lk6mRlMRigiEBXD8DDglovo52nPGmQCpuolFsDTLSoJvv2elv2aIUYHtVcBItld87LDJgeARY6zNh5XV14eeRhI5VdPgHkIfAydNXD2sPj6AekYyB4QEY-wpB9qK6/s1600-h/lowend_july_1%5B5%5D%5B4%5D.jpg" target="_blank"><img title="lowend_july_1[5]" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="259" alt="lowend_july_1[5]" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt-qRzIzLvd7PbHBM_-rCRVVFBK6EaHQas0ieJMk0UzkPUFqJv0_wKXstNqQEicNp0OaJH9WB86yNtrjYltpNHNi9u9N7MvfE60E2BCberwvgZTLbogOyodNZVQX18n1wNgOVq23YiNvWT/?imgmax=800" width="341" border="0" /></a> </p> <p>If Stan Liebowitz is correct, then the classic mortgage reset charts that have been popular on this site and many others, carry less weight moving forward. </p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTE9CrXJWHlmebLWvK6YwtMlIR24I7HhRlJ9jaMOYiyqv3lM5KESFuo05ccT0VjTcIIaBRpTY-2XGD4BGQpyFlC95VteT9oNLVbB2nhggqWt6vaH6s5yK_VuFk1m0mb_PNVYH-8hwtLo7B/s1600-h/IMFresets%5B5%5D.jpg" target="_blank"><img title="IMFresets" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="313" alt="IMFresets" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0wlIl5tUSAA4uOxZ9yaw-PW2gKP0V2Fus4PWmFTa5ZJXQ_0GSXfyQSsuVlQEVLO8LEm_HsZc1Hkz2dbg6Zkq6AkheaZFIsMIOesIeVfp6LjUmbYt9eK0N8lHlQvh2HMmnAnLSxSQMZV2F/?imgmax=800" width="340" border="0" /></a> </p> <p><font color="#ff0000">Negative equity will induce some High-End homeowners to walk away, pushing down prices and creating greater negative equity for even more borrowers. As it becomes more common, walking away will become more socially acceptable. If that happens, then…look out below.</font></p> <h4></h4> <h4>Mass Principal Reductions</h4> <p>If one is going to attempt to “solve” this problem, then it is abundantly clear that The Powers That Be must come up with a plan to reduce the principal balances owed on homes in trouble. (Of course, then just about every homeowner would suddenly find themselves distressed and needing a reduction.)</p> <p><strong><font color="#000000">The problem we have is defining the “problem.” </font></strong></p> <p><font color="#000000"><strong>Falling house prices aren’t the problem, </strong><strong>they are the solution. </strong></font></p> <p><strong><font color="#000000">Foreclosures aren’t the problem, they are the solution.</font></strong></p> <p><strong><font color="#000000">Bankruptcies aren’t the problem, they are the solution.</font></strong></p> <p><strong><font color="#000000">Excessive debt is the problem and the only solution is to destroy it.</font></strong></p> <p>If The Powers That Be feel the need to regulate this debt-destruction process to make it orderly and defined…to avoid the chaos of a global financial meltdown…then this is the next logical step for them to take.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-88658618523063479202009-07-06T10:21:00.001-07:002009-07-06T10:21:00.814-07:00Field Check Group Update<p><strong>Mark Hanson discusses the disconnect between the high-end and low-end housing markets in </strong><a href="http://www.fieldcheckgroup.com/2009/07/03/6-19-may-ca-housing-update-mid-to-high-end-capitulate/"><strong>7-1 May CA Housing Update — Mid-to-High End Capitulate</strong></a></p> <blockquote> <p>…<strong>Here we sit again but this time with the mid-to-high end properties staring into the abyss. </strong>They (high end) have not fallen anywhere near what the low-end has mostly because high-end borrowers were given more exotic, high-leverage loan programs such as Pay Option ARMs, 5/1 interest only loans, and 100% HELOCs to live off of.  <font color="#ff0000">Arguably they have more reserves and better jobs, which have kept them paying for the depreciating asset much longer than with Subprime borrowers. </font>  The Alt-A and Jumbo Prime borrowers simply have loans that afforded them more time.  But that has all changed and defaults across this space are surging. Foreclosures are coming, but not before the market begins its slide that ultimately will take the mid-to-high end market down 50% to 70% from its peak 2007 levels.</p> </blockquote> <p><strong>Take a look at the high and low-end graphs from </strong><a href="http://thehousingbottom.blogspot.com/2009/07/east-bay-housing-review-july-2009.html"><strong>July’s Housing Review</strong></a><strong>. High-end volume is way down. To this, Mark adds:</strong></p> <blockquote> <p><strong>Remember, volume precedes price. </strong>Mid-to-high end sellers remain unrealistic about the values of their properties — likely because so many owe so much more than the homes are worth. But those with equity that are ok with the past 20-years of price appreciation or who know that they can steal a home in another area are accepting offers this selling season far below list prices. Others are opting for short-sales to which the banks are warming up. <strong>With rates down and prices down finally, two years of pent up demand in the mid-to-high end market is manifesting in more transactions. This is having the effect of pushing up median prices.</strong></p> </blockquote> <p>I would add to this that there are certainly a large number of would-be buyers (and their agents) who do actually believe that the housing bottom is near. With stocks up, a stories of multiple offers on properties, and a stimulus package about to start stimulating, many are feeling optimistic.</p> <p>However, with a huge backlog of foreclosures and rapidly-rising unemployment, this will likely prove to be a false-bottom. Fading optimism could lead to a bloody second half of 2009.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-42760249297751702542009-07-06T10:01:00.001-07:002009-07-06T10:01:07.337-07:00Required Reading: Monday, July 6th 2009<p><a href="http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine"><strong>The Great American Bubble Machine</strong></a><strong> – Rolling Stone, Matt Taibbi</strong></p> <blockquote> <p>Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression</p> </blockquote> <p><a href="http://www.creditwritedowns.com/2009/07/ubs-the-disaster-in-spain-will-continue.html"><strong>UBS: ‘The disaster in Spain will continue’</strong></a><strong> – Credit Writedowns</strong></p> <p><a href="http://www.voxeu.org/index.php?q=node/3734"><strong>The (mythical?) housing wealth effect</strong></a><strong> – VOX</strong></p> <p><a href="http://news.bbc.co.uk/2/hi/health/8132122.stm"><strong>Coffee 'may reverse Alzheimer's'</strong></a><strong> – BBC News</strong></p> <blockquote> <p><b>Drinking five cups of coffee a day could reverse memory problems seen in Alzheimer's disease, US scientists say.</b></p> </blockquote> <p><a href="http://www.telegraph.co.uk/travel/travelnews/5753477/Ryanair-to-make-passengers-stand.html"><strong>Ryanair to make passengers stand</strong></a><strong> – The Telegraph</strong></p> <blockquote> <p>The low-cost airline would charge passengers less on "bar stools" with seat belts around their waists.</p> </blockquote> <p><a href="http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5754447/US-lurching-towards-debt-explosion-with-long-term-interest-rates-on-course-to-double.html"><strong>US lurching towards 'debt explosion' with long-term interest rates on course to double</strong></a><strong> – The Telegraph</strong></p> <blockquote> <p>The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank.</p> </blockquote> <p><a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTKrn1jUJwdE"><strong>California’s Nightmare Will Kill Obamanomics: Kevin Hassett</strong></a><strong> – Bloomberg</strong></p> <blockquote> <p>The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat. </p> </blockquote> <p><a href="http://www.latimes.com/business/la-fi-foreclosure4-2009jul04,0,5145254.story"><strong>Another wave of foreclosures is poised to strike</strong></a><strong> – The Los Angeles Times</strong></p> <blockquote> <p>"Absolutely," Chase Bank spokesman Tom Kelly said when asked about an impending surge in foreclosures. Since April 6, Chase has approved modifying 138,000 loans under Obama's program. But an undisclosed number of other Chase borrowers didn't meet modification eligibility, and many of those homeowners face possible foreclosure.</p> <p>Separate from that group, Kelly said, Chase is proceeding to deal with an additional 80,000 borrowers in default whose foreclosure process had been voluntarily halted by the lender starting late last year.</p> </blockquote> <p><a href="http://www.nytimes.com/2009/07/06/business/06auto.html"><strong>Court Ruling Clears Path for G.M. to Restructure</strong></a><strong> – The New York Times</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/offices-rising-vacancies-falling-rents.html"><strong>Offices: Rising Vacancies, Falling Rents</strong></a><strong> – Calculated Risk</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/unemployment-rate-and-part-time.html"><strong>Unemployment Rate and Part Time Employees</strong></a><strong> – Calculated Risk</strong></p> <p><a href="http://www.calculatedriskblog.com/2009/07/second-stimulus-plan.html"><strong>A Second Stimulus Plan?</strong></a><strong> – Calculated Risk</strong></p> <blockquote> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFBNTQd4LbVkpoav7HAfBd1KfPXbCwzGxDeOuU138f5AlacumoUQ9WdZ4KycftXSVOLN8n9FRejT_3o7aOEnSeG3zO1WU9ROQx37ZGXRUqmzkKtK7zsgk1GsmwXWKUkwVqemz3hH16Jb-k/s1600-h/RecoveryJune2009%5B4%5D.jpg" target="_blank"><img title="RecoveryJune2009" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="205" alt="RecoveryJune2009" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEim1Qs9-QHZUgdPX6cT1RNSkP2dGGEIJhT1B8dHwWB3POiQURowmG3i4DwqVaaAXL1UY7Cjfrz9LgCnPk5h3k3mfcs6t6je4jaMpaI24uGW6JG5hML9gh6aFgJTv0rYG_hKB4Z747ydFoqE/?imgmax=800" width="313" border="0" /></a> </p> </blockquote> <p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/06/MNAP189P39.DTL&type=realestate"><strong>High-rises on hold: What to do with empty lots?</strong></a><strong> – The San Francisco Chronicle</strong></p> <p><a href="http://matrix.millersamuel.com/?p=4981"><strong>Lobster Prices And Subprime Lending</strong></a><strong> – Matrix</strong></p> <blockquote> <p>Basically, lobster prices have maintained a high price level for the past decade until the past year because a large portion of the catch was diverted to processing plants in Canada keeping supply of fresh lobsters restrained. These plants were mainly financed by Icelandic banks, who were ultimately driven under because of the subprime mortgage meltdown and now abundant production of lobsters are driving down the price for us.</p> <p><em>Sound familiar?</em></p> </blockquote> <p><a href="http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5742937/The-unemployment-timebomb-is-quietly-ticking.html"><strong>The unemployment timebomb is quietly ticking</strong></a><strong> – The Telegraph, Ambrose Evans-Pritchard</strong></p> <blockquote> <p><font color="#ff0000">The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2pc, counting the old-fashioned way.</font> The reason why this does not "feel" like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another <i>Grapes of Wrath</i>, but 20m US homeowners are already in negative equity (zillow.com data). Evictions are running at a terrifying pace. </p> </blockquote> <p><a href="http://www.minyanville.com/articles/WMT-bac-wfc/index/a/23410"><strong>A Brand-New Arbitrage Market for California's IOUs</strong></a><strong> – Minyanville, Scott Reeves</strong></p> <blockquote> <p>“If you are receiving a California IOU and need cash immediately, please contact me,” reads a posting on Craigslist. “I may be of assistance.”</p> </blockquote> <p><a href="http://www.minyanville.com/articles/C-jpm-bac-PTR-wfc-money/index/a/23404"><strong>Five Things: The Eventual Upside of Risk Aversion</strong></a><strong> – Minyanville, Kevin Depew</strong></p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-74164859321265140222009-07-02T07:11:00.000-07:002009-07-02T07:11:00.432-07:00Required Reading: Thursday, July 2nd 2009<p><a href="http://www.calculatedriskblog.com/2009/07/graphs-auto-sales-in-june.html"><strong>Graphs: Auto Sales in June</strong></a><strong> – Calculated Risk</strong></p> <p><a href="http://www.minyanville.com/articles/C-bac-aig-wfc/index/a/23377"><strong>Banks Balk at New Consumer Protection Agency</strong></a><strong> – Minyanville, Andrew Jeffrey</strong></p> <blockquote> <p>After ignoring repeated warnings about the looming dangers of predatory subprime-mortgage lending, turning a deaf ear to consumer complaints about obscenely high credit-card fees, and generally allowing the financial industry to run amok during decades of wild profiteering and debt-fueled excess, Congress is hastily piecing together a plan to protect consumers from Wall Street. </p> </blockquote> <p><a href="http://globaleconomicanalysis.blogspot.com/2009/07/gm-blames-bankruptcy-trade-in-programs.html"><strong>GM Blames Bankruptcy, Trade-In Programs, Man in the Moon for Latest Miss</strong></a><strong> – Mish</strong></p> <blockquote> <p>Any substantial increase in auto sales (if and when it comes) will probably be in clearing 2009 models at huge losses, and at the expense of 2010 sales and pricing power. Consumers want bargains, and bargains they will get.</p> </blockquote> <p><a href="http://www.nytimes.com/2009/07/02/business/media/02moneyball.html"><strong>Money Worries Kill A-List Film at Last Minute</strong></a><strong> – The New York Times</strong></p> <blockquote> <p>In a film production office here, at least a couple of employees were still hanging around on Monday, hoping in vain to score with their troubled baseball movie “Moneyball.”</p> <p>But they had swung, and missed.</p> <p>Just days before shooting was to begin, Sony Pictures pulled the plug on “Moneyball,” a major film project starring Brad Pitt and being directed by Steven Soderbergh. The last-minute demise of a prestige picture is a rare spectacle in Hollywood — one that is painful, expensive and damaging to all involved. This one is estimated to have cost Sony $10 million in script development and costs like scouting locations.</p> </blockquote> <p><a href="http://www.contracostatimes.com/ci_12734881"><strong>Part suppliers fret over NUMMI</strong></a><strong> – The Stockton Record</strong></p> <blockquote> <p>STOCKTON — General Motors Corp.'s decision to pull out of the New United Motor Manufacturing Inc. partnership not only endangers the employment of 4,600 assembly plant workers in Fremont, but upward of 1,200 jobs at auto parts suppliers in San Joaquin County.</p> </blockquote> <p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/01/BUBL18H901.DTL&type=business"><strong>S.F. has recession's 1st distressed office sale</strong></a><strong> – The San Francisco Chronicle</strong></p> <blockquote> <p>An undisclosed U.S. private equity firm bought the $40.8 million note on 250 Montgomery St. for <font color="#ff0000">about half its face value</font>, according to industry sources. The sale was about 60 percent below the previous price if improvements to the building are taken into account.</p> </blockquote> <p><a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/01/BUBL18HARK.DTL"><strong>Bank of the West to move to Bishop Ranch</strong></a><strong> – The San Francisco Chronicle</strong></p> <blockquote> <p>Bank of the West has inked easily the largest local office deal of the year, signing a lease for 240,000 square feet at Bishop Ranch that allows it to consolidate 1,600 employees now spread among seven East Bay offices.</p> </blockquote> <p><a href="http://latimesblogs.latimes.com/money_co/2009/07/the-obama-administration-today-eased-eligibility-rules-for-its-home-affordable-refinance-program-lifting-the-maximum-loan-to.html"><strong>U.S. raises home refi plan's loan-to-value ceiling to 125%</strong></a><strong> – The Los Angeles Times</strong></p> <blockquote> <p><strong>The new loan-to-value maximum of 125% means an eligible homeowner with a $375,000 mortgage could refi if his or her house is worth at least $300,000. But the borrower still would have to be able to afford the new loan, and income requirements are an increasing problem as unemployment soars and many workers are forced to take pay cuts.</strong></p> </blockquote> <p><a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/07/01/AR2009070104044.html"><strong>GM Says Approval of Restructuring Is Urgent</strong></a><strong> – The Washington Post</strong></p> <blockquote> <p>NEW YORK, July 1 -- General Motors mounted a final push for its historic restructuring plan, arguing before a federal bankruptcy judge Wednesday that the <font color="#ff0000">U.S. government would cut off funding -- in effect risking liquidation of the automaker -- unless it won quick approval for the turnaround proposal. </font></p> <p>The government has "no intention to further fund this company if the sale order is not entered by July 10," said Harry Wilson, a member of the Obama administration's auto task force who oversaw the government's day-to-day dealings with GM. </p> </blockquote> <p><a href="http://blogs.reuters.com/felix-salmon/2009/07/01/california-the-haves-and-have-nots/"><strong>California: The haves and have-nots</strong></a><strong> – Felix Salmon</strong></p> <p><a href="http://sacrealstats.blogspot.com/2009/07/deutsche-bank-sacramento-resale-market.html"><strong>Deutsche Bank Sacramento Resale Market Analysis</strong></a><strong> – Sacramento Real Estate Statistics</strong></p> <p><a href="http://www.sacbee.com/business/story/1990986.html"><strong>Obama sends his consumer protection plan to Congress</strong></a><strong> – The Sacramento Bee</strong></p> <blockquote> <p>WASHINGTON – The Obama administration sent Congress a detailed plan Tuesday to create one of the most ambitious parts of the president's proposed overhaul of financial regulation, a consumer financial protection agency.</p> <p>The proposal would gather consumer protection powers spread among many bank regulators and place them under a single roof.</p> <p>For ordinary Americans, the most important feature is that the agency would have the sole mission of consumer protection. One lesson of the financial crisis is that the several agencies that shared that responsibility made it a lower priority than their other missions. </p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-27218722514483974082009-07-01T13:03:00.001-07:002009-07-01T13:07:29.673-07:00East Bay Housing Review July 2009<p>Trends from the last few months continue to accelerate. Many of the escrows that closed in June were able to take advantage of sub-5% mortgage rates. This is the time of the year when home sales peak. This, coinciding with reduced inventory, has lead to a <a href="http://thehousingbottom.blogspot.com/2009/07/case-shiller-update-with-april-2009.html">strengthening of prices</a>. </p> <p><font color="#ff0000">Expect this trend to continue through the end of July, before seasonal sales volume declines in the face of rising distressed inventory this fall.</font></p> <p><font color="#000000"><strong>Here is a graph showing Inventory, REO, and Sales levels for the East Bay:</strong></font></p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWLTf7ACn36Z5voEsfh9xsPL1t6_XSozSoSEnaOQGQjEDKjFACxcXObJQ5B2u8FkU_Q1psl9JEnDbAvoworR2Pm0ljxXw4aeFUxRWUeNTCzVmmvbOa4Or9quFz6XVl_jxnQ20iMX4un1gK/s1600-h/inventory%20chart%20july%201%5B5%5D.jpg" target="_blank"><img title="inventory chart july 1" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="312" alt="inventory chart july 1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicI2F_ZbURSoKFGb2ndTgpQaQr5ucWND5nNeVHGbXM_cYk8TYWJQXYUjiTLbzWrhxoIJEjMunvFCdMz4otXhJX8FzGLxQ9igigxUq5Y10cmw9-pQLG40LM7tvZaDcQz0oe6dw8gE4t0G4g/?imgmax=800" width="410" border="0" /></a> </p> <p><strong>Here is a graph showing the same data from a sample of higher-priced communities:</strong></p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0Icj20uRVZjYS2K2GC5AVlHLlCnKeK-Nj0_TtvSCRHfN6W1cPWV3Z0r4edWae0A5aEBCnX7J4L7_vvd0dxoCgSRWBGu6dZAm5fOjGH_4aEdGigPBT_l2h5OYBUm44izr7qYMHxLqXsaFh/s1600-h/high%20end%20july%201%20copy%5B4%5D.jpg" target="_blank"><img title="high end july 1 copy" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="313" alt="high end july 1 copy" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcQ0TQ3ZL06LaGC9zTyBx155qSiDe8NJqFJzPkcA2boIVyWjkItaJ97_BNSNQMOhihQrhxcG_QbBO_q58HBAd_3C41isCO-8xWLiq64RNtu-dseRA4r4pngjPTEZGfY3qc_xcMCSLW4_LN/?imgmax=800" width="411" border="0" /></a> </p> <p><strong>Here is a graph showing the same data from a sample of lower-priced communities:</strong></p> <p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJcPGnpIdGrM_mUFSb8jq1jk972DELW_YaB6vJqhfIFYY_SOfVZRsh1jQFu7-eOMB_Iaj8c0-QW8bRKirsBMFsnqMrCrn2Qv0iJZl6ysRVVXKPwsw6Qp_wPoPhvJV28XMj9WMagV3Iqh_Q/s1600-h/lowend%20july%201%5B5%5D.jpg" target="_blank"><img title="lowend july 1" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="323" alt="lowend july 1" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHPUYnyx8yp1qNZRgVmIvaadaxZ4k_zdjoEnmHgOsCsv0Pc1s-zn51Kza7wIW_pmcM9R1uyAlYKegxDt53TzWOUgqDZTYs0CgEq37F2gJwNuha9njnXMVZyoD1mw3Q3XPeyJogz986SPst/?imgmax=800" width="422" border="0" /></a> </p> <p>As you can see, the tale of two market continues. REOs for sale increased in some of the lower-priced communities, though, overall, the numbers continued to fall from previous months.</p> <p><strong>Here are the stats showing inventory levels from all communities:</strong></p> <table cellspacing="0" cellpadding="0" border="0"><tbody> <tr> <td width="128">7/1/2009</td> <td width="99">MLS Active</td> <td width="141">MLS Sold Last Month</td> <td width="118">Months Inventory</td> </tr> <tr> <td>Alameda County</td> <td>2881</td> <td>1141</td> <td>2.52</td> </tr> <tr> <td>Contra Costa County</td> <td>3294</td> <td>1261</td> <td>2.61</td> </tr> <tr> <td>Alamo</td> <td>132</td> <td>11</td> <td>12.00</td> </tr> <tr> <td>Antioch</td> <td>262</td> <td>171</td> <td>1.53</td> </tr> <tr> <td>Berkeley</td> <td>88</td> <td>47</td> <td>1.87</td> </tr> <tr> <td>Blackhawk</td> <td>76</td> <td>6</td> <td>12.67</td> </tr> <tr> <td>Brentwood</td> <td>196</td> <td>73</td> <td>2.68</td> </tr> <tr> <td>Castro Valley</td> <td>111</td> <td>30</td> <td>3.70</td> </tr> <tr> <td>Clayton</td> <td>51</td> <td>14</td> <td>3.64</td> </tr> <tr> <td>Concord</td> <td>220</td> <td>117</td> <td>1.88</td> </tr> <tr> <td>Danville</td> <td>227</td> <td>51</td> <td>4.45</td> </tr> <tr> <td>Diablo</td> <td>19</td> <td>1</td> <td>19.00</td> </tr> <tr> <td>Discovery Bay</td> <td>67</td> <td>37</td> <td>1.81</td> </tr> <tr> <td>Dublin</td> <td>93</td> <td>46</td> <td>2.02</td> </tr> <tr> <td>El Cerrito</td> <td>28</td> <td>16</td> <td>1.75</td> </tr> <tr> <td>El Sobrante</td> <td>31</td> <td>12</td> <td>2.58</td> </tr> <tr> <td>Emeryville</td> <td>52</td> <td>8</td> <td>6.50</td> </tr> <tr> <td>Fremont</td> <td>361</td> <td>142</td> <td>2.54</td> </tr> <tr> <td>Hayward</td> <td>343</td> <td>150</td> <td>2.29</td> </tr> <tr> <td>Hercules</td> <td>67</td> <td>34</td> <td>1.97</td> </tr> <tr> <td>Lafayette</td> <td>113</td> <td>19</td> <td>5.95</td> </tr> <tr> <td>Livermore</td> <td>205</td> <td>82</td> <td>2.50</td> </tr> <tr> <td>Martinez</td> <td>129</td> <td>45</td> <td>2.87</td> </tr> <tr> <td>Moraga</td> <td>58</td> <td>11</td> <td>5.27</td> </tr> <tr> <td>Newark</td> <td>70</td> <td>31</td> <td>2.26</td> </tr> <tr> <td>Oakland</td> <td>868</td> <td>312</td> <td>2.78</td> </tr> <tr> <td>Oakley</td> <td>148</td> <td>49</td> <td>3.02</td> </tr> <tr> <td>Orinda</td> <td>83</td> <td>17</td> <td>4.88</td> </tr> <tr> <td>Piedmont</td> <td>22</td> <td>13</td> <td>1.69</td> </tr> <tr> <td>Pinole</td> <td>33</td> <td>14</td> <td>2.36</td> </tr> <tr> <td>Pittsburg</td> <td>171</td> <td>109</td> <td>1.57</td> </tr> <tr> <td>Pleasant Hill</td> <td>69</td> <td>20</td> <td>3.45</td> </tr> <tr> <td>Pleasanton</td> <td>232</td> <td>74</td> <td>3.14</td> </tr> <tr> <td>Richmond</td> <td>294</td> <td>142</td> <td>2.07</td> </tr> <tr> <td>Rodeo</td> <td>14</td> <td>10</td> <td>1.40</td> </tr> <tr> <td>Rossmoor</td> <td>174</td> <td>21</td> <td>8.29</td> </tr> <tr> <td>San Leandro</td> <td>146</td> <td>78</td> <td>1.87</td> </tr> <tr> <td>San Pablo</td> <td>78</td> <td>60</td> <td>1.30</td> </tr> <tr> <td>San Ramon</td> <td>198</td> <td>90</td> <td>2.20</td> </tr> <tr> <td>Union City</td> <td>91</td> <td>62</td> <td>1.47</td> </tr> <tr> <td>Walnut Creek</td> <td>246</td> <td>58</td> <td>4.24</td> </tr> </tbody></table> <p><strong>Here are the REO and Short Sale stats from all communities:</strong></p> <table cellspacing="0" cellpadding="0" border="0"><tbody> <tr> <td width="126">7/1/2009</td> <td width="84">MLS Active</td> <td width="88">SHORT SALE</td> <td width="62">REO</td> <td width="84">% Distressed</td> </tr> <tr> <td>Alameda County</td> <td>2881</td> <td>834</td> <td>444</td> <td>44.36%</td> </tr> <tr> <td>Contra Costa County</td> <td>3294</td> <td>984</td> <td>532</td> <td>46.02%</td> </tr> <tr> <td>Alamo</td> <td>132</td> <td>10</td> <td>4</td> <td>10.61%</td> </tr> <tr> <td>Antioch</td> <td>262</td> <td>136</td> <td>79</td> <td>82.06%</td> </tr> <tr> <td>Berkeley</td> <td>88</td> <td>5</td> <td>7</td> <td>13.64%</td> </tr> <tr> <td>Blackhawk</td> <td>76</td> <td>6</td> <td>0</td> <td>7.89%</td> </tr> <tr> <td>Brentwood</td> <td>196</td> <td>87</td> <td>39</td> <td>64.29%</td> </tr> <tr> <td>Castro Valley</td> <td>111</td> <td>16</td> <td>10</td> <td>23.42%</td> </tr> <tr> <td>Clayton</td> <td>51</td> <td>12</td> <td>2</td> <td>27.45%</td> </tr> <tr> <td>Concord</td> <td>220</td> <td>94</td> <td>56</td> <td>68.18%</td> </tr> <tr> <td>Danville</td> <td>227</td> <td>29</td> <td>5</td> <td>14.98%</td> </tr> <tr> <td>Diablo</td> <td>19</td> <td>0</td> <td>0</td> <td>0.00%</td> </tr> <tr> <td>Discovery Bay</td> <td>67</td> <td>27</td> <td>10</td> <td>55.22%</td> </tr> <tr> <td>Dublin</td> <td>93</td> <td>23</td> <td>8</td> <td>33.33%</td> </tr> <tr> <td>El Cerrito</td> <td>28</td> <td>6</td> <td>2</td> <td>28.57%</td> </tr> <tr> <td>El Sobrante</td> <td>31</td> <td>13</td> <td>3</td> <td>51.61%</td> </tr> <tr> <td>Emeryville</td> <td>52</td> <td>11</td> <td>5</td> <td>30.77%</td> </tr> <tr> <td>Fremont</td> <td>361</td> <td>76</td> <td>25</td> <td>27.98%</td> </tr> <tr> <td>Hayward</td> <td>343</td> <td>187</td> <td>75</td> <td>76.38%</td> </tr> <tr> <td>Hercules</td> <td>67</td> <td>39</td> <td>20</td> <td>88.06%</td> </tr> <tr> <td>Lafayette</td> <td>113</td> <td>9</td> <td>6</td> <td>13.27%</td> </tr> <tr> <td>Livermore</td> <td>205</td> <td>64</td> <td>30</td> <td>45.85%</td> </tr> <tr> <td>Martinez</td> <td>129</td> <td>28</td> <td>20</td> <td>37.21%</td> </tr> <tr> <td>Moraga</td> <td>58</td> <td>5</td> <td>1</td> <td>10.34%</td> </tr> <tr> <td>Newark</td> <td>70</td> <td>38</td> <td>13</td> <td>72.86%</td> </tr> <tr> <td>Oakland</td> <td>868</td> <td>242</td> <td>205</td> <td>51.50%</td> </tr> <tr> <td>Oakley</td> <td>148</td> <td>61</td> <td>50</td> <td>75.00%</td> </tr> <tr> <td>Orinda</td> <td>83</td> <td>5</td> <td>2</td> <td>8.43%</td> </tr> <tr> <td>Piedmont</td> <td>22</td> <td>0</td> <td>0</td> <td>0.00%</td> </tr> <tr> <td>Pinole</td> <td>33</td> <td>15</td> <td>10</td> <td>75.76%</td> </tr> <tr> <td>Pittsburg</td> <td>171</td> <td>92</td> <td>48</td> <td>81.87%</td> </tr> <tr> <td>Pleasant Hill</td> <td>69</td> <td>18</td> <td>5</td> <td>33.33%</td> </tr> <tr> <td>Pleasanton</td> <td>232</td> <td>29</td> <td>5</td> <td>14.66%</td> </tr> <tr> <td>Richmond</td> <td>294</td> <td>125</td> <td>80</td> <td>69.73%</td> </tr> <tr> <td>Rodeo</td> <td>14</td> <td>9</td> <td>3</td> <td>85.71%</td> </tr> <tr> <td>Rossmoor</td> <td>174</td> <td>2</td> <td>2</td> <td>2.30%</td> </tr> <tr> <td>San Leandro</td> <td>146</td> <td>67</td> <td>25</td> <td>63.01%</td> </tr> <tr> <td>San Pablo</td> <td>78</td> <td>33</td> <td>26</td> <td>75.64%</td> </tr> <tr> <td>San Ramon</td> <td>198</td> <td>56</td> <td>13</td> <td>34.85%</td> </tr> <tr> <td>Union City</td> <td>91</td> <td>48</td> <td>18</td> <td>72.53%</td> </tr> <tr> <td>Walnut Creek</td> <td>246</td> <td>34</td> <td>12</td> <td>18.70%</td> </tr> </tbody></table> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-90881430569124090182009-07-01T10:41:00.001-07:002009-07-01T11:13:11.148-07:00Spreading Rumors: Another 90-Day Foreclosure Moratorium<p>From the mouth of an REO asset manager at one of our biggest banks, the White House has requested that banks continue to delay foreclosures for another 90 days.</p> <p>Timing would put this unofficial moratorium ending around the middle of September perhaps. If, of course it isn’t extended again.</p> <p>I don’t know if this is true or not, because I can’t confirm it. I can say that most of the REO departments and servicers aren’t all that busy. And, they certainly should have been after the last official Fannie/Freddie moratorium ended March 1st.</p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-36239405244651634572009-07-01T10:35:00.001-07:002009-07-01T10:35:24.815-07:00Obama to Offer 125% Loan-to-Value Home Loans<p><strong>Clusterstock is reporting </strong><a href="http://www.businessinsider.com/obama-expands-homeowner-bailout-to-cover-homeowners-deeper-underwater-2009-7"><strong>Obama Offers Bailout To Homeowners Deep Underwater</strong></a></p> <blockquote> <p><font color="#ff0000">Obama is expanding the homeowner bailout so that underwater homeowners with a 125% LTV ratio can refi more easily through Fannie and Freddie.</font></p> <p>Before your LTV ratio could only be 105%, because, well, as we've learned, fat loans relative to value are more likely to go bad.</p> <p>As many have described it, Obama's solution to the housing crisis is: more subprime loans.</p> <p><strong><em>Like the original subprime loans, they're really only going to work out if home prices grow rapidly over the next few years, otherwise you're looking at the perpetuation of people living underwater in their homes.</em></strong></p></blockquote> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-21073160693720408462009-07-01T09:52:00.001-07:002009-07-01T09:52:01.347-07:00California To Issue IOUs<p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQPjLnMGUrcSI3svTC3i0ScylzUhQ-piQp55k-wcdP-LIAGveCUltGZRiOPkECs1DJzkPm1Lg9tVBDFeEei5XhsoZPhM09A298BLY0FpxaYl2W8JUmHA9SVz333EibWHiLfN8yfsu9yo3K/s1600-h/schwarzenegger%5B3%5D.jpg"><img title="schwarzenegger" style="border-right: 0px; border-top: 0px; display: inline; border-left: 0px; border-bottom: 0px" height="324" alt="schwarzenegger" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghAvX5UNMR0WKfTKMepHPBtO-F-KWHKMK24Grg3sDUANHqz6B-BZYPASbqkyDslmfphfLFb5rVKY2uW1JaI7XaNiJ1xbwdsjV-zD0tJelVASVALEKuFwNAQ_CzDgKTjFBmrjE5pcwhRGo4/?imgmax=800" width="419" border="0" /></a> </p> <p><strong>The Sacramento Bee Reports </strong><a href="http://www.sacbee.com/topstories/story/1991386.html"><strong>Governor, lawmakers blow deadline as budget hole deepens</strong></a></p> <blockquote> <p>By allowing the fiscal year to end without trimming $3.3 billion from the 2008-09 education budget, lawmakers and Schwarzenegger lost the chance to cut spending in a manner considered crucial to bridging the $24 billion deficit.</p> <p>Instead, Senate Republicans, Democrats and the GOP governor remained in a political standoff over other parts of the budget, particularly how much to slash health and welfare programs. </p> <p>Without the education cut, state leaders face a more difficult challenge because they must find billions in new solutions after virtually exhausting their bag of budget tricks over the past year.</p> <p>Tuesday's failure to cut education spending and shift redevelopment funds expanded the deficit overnight because of the way school funding formulas are calculated.</p> <p>Schwarzenegger plans to declare a new state of fiscal emergency today, launch another special session and propose additional program cuts to solve the larger deficit problem, spokesman Aaron McLear said. <font color="#ff0000">The new deficit number will be roughly $26.3 billion, about $2 billion higher than the governor's May budget, according to Schwarzenegger's Department of Finance.</font></p> <p><font color="#000000">…</font></p> <p>Absent a significant budget deal today, state Controller John Chiang has warned he must take <font color="#ff0000">the next step of issuing IOUs on Thursday to vendors who do business with the state, local governments and people who are owed tax refunds</font>. Chiang said IOUs are necessary to preserve enough cash to meet constitutionally mandated obligations to schools and state bondholders in July.</p> </blockquote> <p><strong><em>"That's as good as money sir. Those are I.O.U.s" – Lloyd Christmas</em></strong></p> <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/7GSXbgfKFWg&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/7GSXbgfKFWg&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> <p></p> <p><strong>Andrew Jeffrey writes for Minyanville </strong><a href="http://www.minyanville.com/articles/GOOG-ORCL-Budget-qcom-DNA-schwarzenegger/index/a/23359"><strong>California Finally Runs Out of Cash</strong></a></p> <blockquote> <p>Lawmakers appear blindsided. It's almost like the state went broke all of a sudden and they haven't had time to properly prepare a solution. Not true: The state has been in and out of financial crisis for more than a decade.</p> <p>…</p> <p>California politicians are a woeful bunch. Despite being home to some of the most profitable and innovative companies in the world, the state is perennially short of <a href="http://www.minyanville.com/articles/GOOG-ORCL-Budget-qcom-DNA-schwarzenegger/index/a/23359#">cash</a>. <b>Oracle</b> (<a href="http://finance.minyanville.com/minyanville?Page=QUOTE&Ticker=ORCL">ORCL</a>), <b>Google</b> (<a href="http://finance.minyanville.com/minyanville?Page=QUOTE&Ticker=GOOG">GOOG</a>), and <b>Genentech</b> (<a href="http://finance.minyanville.com/minyanville?Page=QUOTE&Ticker=DNA">DNA</a>) all hail from the San Francisco Bay Area, while San Diego remains a mecca for biotechnology research and is home to mobile-communications giant <b>Qualcomm</b> (<a href="http://finance.minyanville.com/minyanville?Page=QUOTE&Ticker=QCOM">QCOM</a>). </p> <p>The state has vast natural-resource reserves, has a booming agricultural industry, is a popular tourist destination, and has some of the most heavily trafficked ports in the world. Good weather and generally high quality of life has made California the destination for dream-seekers for more than 150 years. </p> <p>Yet, despite everything it has going for it, California's political process is a complete disaster. In an attempt to allow voters to play a more direct role in governance, the state's referendum system allows citizens to collect signatures and get measures onto statewide ballots. Enough votes on election day and any Californian can see his or her whimsical dream become law. </p> <p>This has created a patchwork of legislation, rules, and special interests that have hogtied what would be the seventh-largest economy, were it to be a sovereign nation. </p> </blockquote> <p><a href="http://www.minyanville.com/articles/C-bac-fre-fnm-gm-wfc/index/a/23366"><strong>Minyan Peter</strong></a><strong> adds:</strong> <em>“I don't profess to know how this one will resolve itself. As an interim step, California has announced that it will be meeting its obligations using script -- IOUs. I don't know how long employees and vendors are willing to work for nothing more than a promise. But I do know that it's entirely unsustainable.”</em></p> <p><strong>Mish has long-offered: <a href="http://globaleconomicanalysis.blogspot.com/2009/06/how-to-balance-california-budget-you.html">How To Balance The California Budget - You Decide</a></strong></p> <p><strong><a href="http://www.businessinsider.com/iou-2009-7">Clusterstock</a> begs: <em>“</em></strong><em>Please, please, please let there be an after-market in these IOUs. We'd love to see how they're valued and how businesses will conduct exchange using them.”</em></p> <p><strong>What would a $100 IOU from the State of California trade for on the open market? $50? $25?</strong></p> Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4599160180747853832.post-66740082188509452132009-07-01T09:06:00.001-07:002009-07-01T09:06:09.230-07:00NAR: Pending Home Sales Index Rises<p><strong>From The National Association of Realtors </strong><a href="http://www.realtor.org/press_room/news_releases/2009/07/record_fourth"><strong>Pending Home Sales Record Fourth Straight Monthly Gain</strong></a></p> <blockquote> <p>Washington, July 01, 2009 </p> <p>Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the National Association of Realtors®.</p> <p>The <a href="http://www.realtor.org/research/research/phsdata">Pending Home Sales Index</a>,<sup>1</sup> a forward-looking indicator based on contracts signed in May, increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004.</p> <p><a href="http://www.realtor.org/research/chief_economist_bio">Lawrence Yun</a>, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing. <font color="#ff0000">“Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”</font></p> <p><embed src="http://c.brightcove.com/services/viewer/federated_f8/1465406675" bgcolor="#FFFFFF" flashVars="videoId=28181829001&playerId=1465406675&viewerSecureGatewayURL=https://console.brightcove.com/services/amfgateway&servicesURL=http://services.brightcove.com/services&cdnURL=http://admin.brightcove.com&domain=embed&autoStart=false&" base="http://admin.brightcove.com" name="flashObj" width="486" height="412" seamlesstabbing="false" type="application/x-shockwave-flash" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></p> <p>The Pending Home Sales Index in the Northeast rose 3.1 percent to 80.9 in May and is 6.8 percent above a year ago. In the Midwest the index slipped 1.3 percent to 89.2 but is 11.4 percent above May 2008. The index in the South declined 1.7 percent to 92.6 in May but is 7.9 percent higher than a year ago. In the West the index rose 2.2 percent to 96.9 and is 0.7 percent above May 2008.</p> <p>…</p> <p>The first-time buyer tax credit also is benefiting the market. “Strong activity by entry level buyers is helping to absorb inventory and allow some existing owners to make a trade,” Yun said.</p> <p>Existing-home sales should trend up through the end of the year, with normal local market differences. “<font color="#ff0000">The big question is how much the appraisal issue will impact the ability of contracts to go to closing,” Yun said. “We are currently conducting a study to assess the degree to which new appraisal rules are impacting home sales.”</font></p> </blockquote> <p><strong>NAR is on a PR mission to discredit the new appraisal rules. It’s true that the new rules aren’t perfect…in fact it’s a huge mess…but there are other problems out there that are having a bigger impact (like jobs, and the fact that homes are still not affordable).</strong></p> Unknownnoreply@blogger.com0