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Tuesday, September 8, 2009
Monday, August 3, 2009
Required Reading: Monday, August 3rd 2009
Feral Houses – Sweet Juniper
"Shadow" inventory lurks over U.S. housing recovery – Reuters
Weekly Unemployment Claims Portend Disaster – Mish
Real Estate ‘Trade-Down’ Environment – The Big Picture
Real Estate ‘Trade-Down’ Environment – The San Francisco Chronicle
Oakland's McKinley Partners is betting that low-end foreclosed homes in eastern Contra Costa County will double in value in five years.
Investors Buying Low End Foreclosures – Calculated Risk
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.
July Economic Summary in Graphs – Calculated Risk
Wednesday, July 29, 2009
Required Reading: Wednesday, July 29th 2009
S.F. tower's owners will forfeit it to lender – The San Francisco Chronicle
Our most recent report on subprime mortgages shows that over 1.5 million homes have
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.
Subprime mortgage companies warn on U.S. foreclosures – Reuters
A Few Comments on Housing Reports – Calculated Risk
Study: Using Home ATM Led to Most Foreclosures in SoCal – Calculated Risk
Miami Condo Glut Starts To Ease – Clusterstock
Feds Push Mortgage Companies to Modify More Loans – The New York Times
Five Things: Housing Staggers Toward a Bottom... – Minyanvillle, Kevin Depew
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.
Friday, July 24, 2009
Friday, July 17, 2009
Required Reading: Friday, July 17th 2009
Bank of America Posts Profit Drop, Sees Weak Economy – Bloomberg
East Bay's Watergate joins flood of foreclosures – The Contra Costa Times
Two Giants Emerge From Wall Street Ruins – The New York Times
“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.
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.
Cisco cutting up to 700 jobs in San Jose – San Jose Mercury News
Housing: Sticky Prices – Calculated Risk
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.
This means real estate markets do not clear immediately, and what we usually observe is a drop in transaction volumes."
This doesn't mean prices are stuck - just sticky. Prices have been falling in most areas for three years, and will probably fall further.
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.
Jon Stewart Takes On Goldman Sachs (finally)
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Pyramid Economy | ||||
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Putting the 'short' back in short sale – Inman News
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.
DataQuick News: Bay Area Home Sales, Prices Rise
DQ News reports Bay Area home sales and median price rise
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.
A total of 8,644 new and resale houses and condos sold across the nine-county Bay Area in June. That was up 16.1 percent from 7,447 in May and up 20.4 percent from 7,178 in June 2008, according to San Diego-based MDA DataQuick.
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.
“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.
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.
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.
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.
Thursday, July 16, 2009
Required Reading: Thursday, July 16th 2009
BofA: Double Secret Probation – Calculated Risk
Weekly Unemployment Claims Decline Sharply – Calculated Risk
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.
Foreclosures in the Millions Midway through 2009 – RealtyTrac
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.
CIT Group’s ‘Capital’ Was All Talk, No Trousers: Jonathan Weil – Bloomberg
Kansas City Car Dealer Offers An AK-47 With Each New Truck Purchase – Clusterstock
Peak to Trough Case Shiller and CAR Home Price Declines – Mish
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".
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.
Study finds more millionaires in Bay Area – The San Francisco Chronicle
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.
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.
Henry Paulson testifies that Merrill Lynch sale helped stave off 'great peril' – The Los Angeles Times
World Bank warns of deflation spiral – Telegraph, Ambrose Evans-Pritchard
"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,"
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.
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.
Eurostat confirmed on Wednesday that the eurozone has slipped into deflation. Prices fell 0.1pc in June.
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