Housing Bubble Bursting?

[Pamela Crowley (Florida)]

Fort Myers, Fla is NOT the only FL residential community they are losing it in!

 

[MARK JOLLIFF]

what's the over/under on amount of posts for this thread? My guess 4100!!!

 

[Couch Potato]

Too Low.

what's the over/under on amount of posts for this thread? My guess 4100!!!

Much too low, unless someone locks the thread. I figure it will get to at least 7,500 before the market shows clear signs of heading up from the bottom late this year or early next year. (Although that may be too optimistic on my part.)

 

[Randolph Kinney]

For Distressed Homeowners, Short Sales Stave Off Credit Ruin

http://www.voiceofsandiego.org/articles/2007/04/04/housing/933shortsale040407.txt

As a growing number of homeowners stare down the barrel of foreclosure, some are electing to negotiate with lenders to sell their homes at a loss, hoping to avoid the credit-marring implications of surrendering the home to the bank.


Lenders might take losses of tens of thousands of dollars instead of repossessing the home and putting it up for auction. The auction process would incur additional costs for the bank and may result in a meager selling price. Homeowners, in turn, avoid getting slapped with a seven-year black mark on their credit.

A larger number of homeowners find themselves upside-down in their homes -- owing more than their home could sell for -- than in previous years. And the number of them hoping to execute a short sale is also increasing. Some analysts say the phenomenon could mitigate the potential hazards ahead for the uncertain housing market. Fewer homes going to auction could help keep prices steady.

There were 1,065 new foreclosure filings in February, which includes notices of default, notices of auction sale and bank repossession, according to RealtyTrac. That's up from 881 such filings in February 2006, and 299 in February 2005.

Jim Supples is a Realtor focusing mostly in the neighborhoods from Scripps Ranch to Escondido. He said short sales are growing in prevalence -- not because they're the ideal situation for buyer or seller, but because they're becoming a necessity. Buyers who banked on the housing market continuing to increase are now unable to refinance loans while their payments balloon out of reach.

"People got into these situations, and then the market dips down," he said. "People are just getting squeezed out."

"Last year, it was negligible," Supples said of the short-sale phenomenon. "Two years ago? Nothing."

 

[hastalavista]

Much too low, unless someone locks the thread. I figure it will get to at least 7,500 before the market shows clear signs of heading up from the bottom late this year or early next year. (Although that may be too optimistic on my part.)

I'll take the over on the 7,500!

 

[Randolph Kinney]

Warning suggests subprime woes are spreading to other home loans

http://www.marketwatch.com/news/story/american-home-warns-spreading-subprime-mortgage/story.aspx?guid=%7B2CECF2CE%2DB6E0%2D43CC%2D8D89%2D97C1BF952242%7D

SAN FRANCISCO (MarketWatch) -- American Home Mortgage Investment Corp. cut its first-quarter and full-year profit forecast by more than 25% Friday after being hit by problems in the secondary market for home loans and mortgage-backed securities.


The company also said that it's stopped offering some types of so-called Alt-A mortgages because of the high cost of delinquencies on those loans.


The warning suggests that problems in the subprime-mortgage business have begun spreading to other parts of the home-loan industry.

"During March, conditions in the secondary-mortgage and mortgage-securities markets changed sharply," said Michael Strauss, American Home's chief executive, in a statement. "While the market may recover ... our working assumption must be that current market conditions will persist."


American Home also indicated that it continues to be affected by the high cost of delinquencies, especially on Alt-A mortgages, and that it's been forced to repurchase some of these loans.


The company announced that it's stopped offering certain types of Alt-A loans that have been particularly prone to rising delinquencies and repurchases. Those are loans where the homeowner borrows a relatively high portion of the value of a property and simply states an income, rather than documenting it.


American Home also said that it plans to raise the interest rates charged on mortgages.

American Home isn't a subprime lender. In early March, the company issued a statement to clear up any "confusion" about the type of loans it offers. Most are adjustable-rate mortgages and so-called Alt-A loans, which often require less documentation. American Home even offers conventional fixed-rate home loans. Subprime mortgage are less than 1% of its total loan portfolio.


Still, American Home said Friday that earnings will be lower because investors in the secondary-mortgage market and the market for mortgage-backed securities (or MBS) offered to buy its loans at "materially lower" prices.


Lower prices for AA-, A-, BBB-rated MBS and riskier bits known as residual-mortgage securities also triggered losses in American Home's investment portfolio, the lender added.

 

[Randolph Kinney]

Housing Inventory Surges in March

http://www.marketwatch.com/News/Story/housing-inventory-surges-march/story.aspx?guid=%7B641E7750%2DB374%2D455C%2DBE66%2D6117341066EE%7D

A sharp increase in homes offered for sale last month suggests that home shoppers will find plenty of choices this spring.


The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of March increased 6.5% from a month earlier, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condominiums and town houses on local multiple-listing services.


Over the past 22 years, home inventories nationwide have increased an average of 1.7% in March from February, according to Credit Suisse Group. Supplies typically rise modestly in March as sellers pursue the many families with children who seek new homes in the spring, so they can move during summer vacations.


The big rise in the latest month may reflect sellers' expectations that it will take much longer to find buyers than it did during the housing boom of the first half of this decade, said Patrick Lashinsky , president of ZipRealty. Rather than waiting for April or May, he said, many people planning to move this summer put their homes up for sale in March. He added that many sellers are being cautious, waiting to sell their old homes before committing to buy new ones.


ZipRealty recorded the biggest increases in the metro areas of Los Angeles (12.8%), San Francisco (12.2%) and Washington, D.C. (9.4%). Miami, where a glut of unsold condos has been weighing on the market, showed a modest rise of 1.8% in the supply of all types of homes in March from a month before. But the Miami inventory was up 61% from a year earlier. For all 18 metro areas, the inventory at the end of March was up 35% from a year earlier.


Large inventories have caused prices to level off or fall modestly in much of the country over the past year or so. The recent surge in defaults on subprime mortgages -- loans to people with blemished credit records -- has prompted lenders to tighten credit standards. That tightening is expected to put downward pressure on home prices by removing many potential buyers from the market.

 

[Randolph Kinney]

Housing Slump Pinches States in Pocketbook

http://www.nytimes.com/2007/04/08/us/08housing.html?_r=1&th&emc=th&oref=slogin

State tax revenues around the country are growing far more slowly this year and in some cases falling below projections, a result of the housing market slowdown that has curbed voracious spending on real estate, building materials, furniture and other items.

New Jersey could face a $2.5 billion shortfall by mid-2008. In California, where income tax receipts in January were $1 billion less than forecast, a nonpartisan legislative analyst has urged budget cuts and warned that the state could have about $2 billion less in revenue this year and next. Nowhere is the downturn more apparent than in Florida, where tax revenue is projected to drop this year for the first time since the energy crisis of the 1970s.

New home sales nationally fell in February to the lowest rate in seven years, and homeowners who tapped into plentiful home equity and spent extravagantly during the real estate boom have started to cut back.

Those events not only threaten revenue streams for things like building materials and labor, but also affect spending on big-ticket items like cars and furniture, which many homeowners financed with home equity lines of credit.

In one hint of how much Floridians were relying on property wealth during the real estate boom, 16 percent of new car purchases here were being made with home equity loans in 2006, compared with 7 percent nationally, according to CNW Marketing Research, an automotive research firm in Bandon, Ore. In California, the percentage was even higher — about 30 percent, said Art Spinella, the firm’s president.

Arizona, California, Florida and Nevada, the chief beneficiaries of the housing rush, are also expected to suffer disproportionately from the slump. From late 2005 to late 2006, existing home sales fell by 21 percent in California, 27 percent in Arizona, 31 percent in Florida and 36 percent in Nevada, the steepest drop in the nation.

 

[Terrel L. Shields]

Today's paper indicates that Florida will see revenues to the state's coffers dropping for the first time in decades as building drops off. Our Fayetteville-Springdale-Rogers MSA indicates construction contracts have fell by over 40% BOTH commercial and residential (remember a few months ago when they said, "oh, housing is slowing but commercial is making up for it?") Permits in the same MSA has fell by 33%. Likewise, the NWA airport, Ft. Smith airport, and even Tulsa International it taking on fewer passengers than the previous year for Feb.

The fact that the slide is slow is not news. Imho, the slide is slow, and momenteum is like a barge or large ship. It slows slowly and takes a lot of time to get up a head of steam again.

 

[Randolph Kinney]

Bad news for Detroit

Terrel, I agree with your slow motion analogy. However, it is amazing that the news is very negative about housing. A 6.5% average increase from Feb. to March of homes for sale in 18 metro areas is not what I call good news. Where are the buyers?

The other impact of flat or falling home values is going to hit Detroit even harder because of the cash out refinance that was propelling new car purchases. 30% of the cars bought in California was from money extracted from home equity.

I would not like to be an investor holding any mortgage backed security from California - cars or houses. I wonder if any banks here in SoCal are holding any of the paper on cars or houses? Or do they repackage all those loans and sell them to the investors, directly or indirectly, in the secondary market?