Housing Bubble Bursting?

[moh malekpour]

http://www.bloomberg.com/apps/news?pid=20601109&sid=a1j5tU4dy4.s&refer=home

What happens in Las Vegas doesn't stay in Vegas when it comes to the city's housing market.

Tumbling home prices in the gambling Mecca will show how far and how fast U.S. property values will fall in 2008 as the housing decline enters its third year, said William Wheaton, an economics professor at the Massachusetts Institute of Technology in Cambridge, outside of Boston.

``Las Vegas is an important barometer for where the rest of the nation's home prices are going because it's going to show us how quickly the investors head for the doors,'' Wheaton said. ``It will put the floor under the housing correction.''

http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vNSLM_fTD0L0.asf

 

[Alison Swain]

Cramer's on CNBC right now blasting the NAR for blasting him. NAR had a fit because Cramer was on The Today Show yesterday and said, "Do not buy a home right now. You WILL lose money."

He asked how long the NAR has been saying "this is a good time to buy." 3 years longer than they've been in existence, he guessed. He compared the NAR to Pravda.

Mentioned that appraisers are being told by the banks to do tight appraisals because they really don't want to fund these loans.

Total beeatch slap to the NAR.

 

[Randolph Kinney]

Where the money comes from and where the money goes to

The Mideast Money Flows

The growing influence in the financial world of Dubai and its neighbors is raising political concerns among U.S. lawmakers.

The investment attention on the Middle East comes at a particularly delicate moment. Lawmakers in the United States have increasingly questioned the public-policy implications of pension fund investments.

Pension funds have become a crucial source of money for buyout firms as they the funds have increasingly allocated more to private equity and hedge funds in search of higher returns.

The politics has not stopped the buyout firms. Carlyle, which owns Dunkin’ Donuts, is raising $1 billion for a fund for acquisitions in countries like Egypt, Jordan, Kuwait and Saudi Arabia. Ripplewood Holdings, a New York private equity firm that owns Reader’s Digest, spent $200 million for a controlling stake in Egypt’s largest bank. And Colony Capital, a property buyout firm, has bought control of Libya’s largest oil company. Calpers, the California Public Employees’ Retirement System, among other pension funds, is planning to invest in Carlyle’s Middle East fund and is also an investor in Ripplewood.

Last week, the Borse Dubai, the government-controlled exchange, agreed to take a 19.9 percent stake in the Nasdaq and buy Nasdaq’s 28 percent stake in the London Stock Exchange. And the Qatar Investment Fund said it had acquired 20 percent of the London exchange. On top of that, Abu Dhabi government bought a 7.5 percent stake in Carlyle.

 

[Randolph Kinney]

IndyMac attempting to stay profitable

IndyMac Downsizing with Voluntary Severance Packages


IndyMac said it would offer the voluntary severance packages in an effort to shed 1,100 employees, and would follow those attempts with layoffs.

 

[Karl]

IndyMac Downsizing with Voluntary Severance Packages


IndyMac said it would offer the voluntary severance packages in an effort to shed 1,100 employees, and would follow those attempts with layoffs.

ANYONE not taking the package in todays market should get laid off cause they're apparantly not bright enough to read.

 

[Randolph Kinney]

PMI going down - toilet flushing catches insured mortgages

Defaults on Insured Mortgages Rise 30% in August, Industry Says

Sept. 28 (Bloomberg) -- U.S. homeowners defaulted on 30 percent more privately insured mortgages last month over the year-earlier period, an industry report showed.

The number of insured borrowers more than 60 days behind on their payments climbed to 58,441 in August, Washington-based Mortgage Insurance Companies of America said today on its Web site.

 

[moh malekpour]

http://www.ft.com/cms/s/0/8b86afc6-6d36-11dc-ab19-0000779fd2ac.html

Richard Syron, chief executive of the government-sponsored mortgage company, said the credit squeeze had left some parts of the US housing market “literally frozen”. This was a “substantial depressive to the overall economy”. He forecast the Federal Reserve would make another “material” cut in interest rates.

 

[Randolph Kinney]

5.1 million homes for sale - more vacancies


Glut: 5.1 million homes for sale

A major homebuilder warned this morning of the growing problem of "surplus inventory" as another month of weak sales of new homes left the inventory of unsold new homes at 529,000, and the total number of homes for sale in America at a staggering 5.1 million

 

[hastalavista]

http://www.ft.com/cms/s/0/8b86afc6-6d36-11dc-ab19-0000779fd2ac.html

said the credit squeeze had left some parts of the US housing market “literally frozen”.

(My bold)

Just a general comment:

I find the descriptive term "frozen" to be accurate in one context and inaccurate in another-
In the context that it has slowed (or froze) housing transaction activity (purchases as well as mortgage refinancing), I'll accept it.
In the context that it has stopped the pricing of homes at a point (everything has frozen up, including market price movement) I disagree.

There are three types of heat that will unfreeze the situation:
A) Availability of credit/financing with a return to more liberal terms (I don't advocate this; the lack of liberal financing is what has seized-up the transaction engine, IMO).
B) A reduction in prices that is consistent with the market environment (I do advocate this).
C) A significant change in investor perception (this is slightly different from "A") such that there is a willing buyer pool for non-agency MBSs.

 

[Restrain]

In today's paper, Centex is adding $20-30K in outdoor amenities (arbors, outdoor kitchens, pools, etc) at no charge to the buyer to move their product. Other builders are cutting prices $30-40K. This is about 10-15% of sales price. Some builders have admitted to having 80-90% reductions in profits, with others losing money this year. The local papers are routinely quoting builders as taking a hit on lots purchased, but being returned as they don't want to build on them.

The only good thing in the DFW market is that there wasn't a big run-up in prices, so prices are flat to slightly declining in most areas as opposed to the hits in other markets. Further, it will probably recover faster due to the overall strength of the local economy. Also, it seems that half the US is trying to move to the DFW area because of cheap housing and jobs.