Housing Bubble Bursting?

[Pamela Crowley (Florida)]

"Adding a credit toward closing costs still allows them to show the highest selling price they can,'' Moran said.

Don't see that admission very often!

D.R. Horton, with annual revenue of about $11 billion, and Hovnanian Enterprises Inc. now face the worst choice in the worst residential real estate slump since the 1930s. They're selling homes at any price they can get.

That is very scary!

 

[ZZGAMAZZ]

A Builder In The Victor Valley Region Of San Bernardino County Offered A "blow-out" $100,000 Discount On All New Homes Last Week-end. I Imagine That's A Minimum Discount Of 25%.

 

[Greg Bell]

Yet the stock market gains again on cooked employment data .Heres the real news from Roubini.....

Nouriel Roubini | Oct 05, 2007
110K jobs were created in September and the July and August figures were revised upward. So is it all rosy for the job market? Not really for several reasons

First, the August revision (+93k) was almost only goverment job which went from -28K to +57K (a +85K revision).

Second, employment in the private sector was only 73k and this has been its average for the last quarter; this is a weak figure for private sector job creation. 80% of job created in September were either in government or in health/education services.

Third, since the increase in the labor force is closer to 120k per month this 73k average private jobs for the last 3 months represents a relatively weak job creation.

Fourth, losses are continuing in housing (-20k in September), manufacturing (-18k) and retail trade (-5k), but the housing losses are still mismeasured as many undocumented workers do not show up in the employment statistics.

Fifth, the unemployment rate went up to 4.7% in September.

Sixth, the annual benchmark revision of employment figures up to March 2007 show 297k less jobs than initially estimated by the BLS, this is a significant downarward revision (25k per month between March 2006 and March 2007). Given the most recent weakening of the economy BED and annual benchmark revisions may further reduce in the future estimates of job creation between April and September.

Seventh, the year over year job growth has been falling for the last year and it is still falling in September.

So a stronger than expected employment report that has many elements of weakness once you look at the details.

 

[Terrel L. Shields]

The market is seizing on any good news it can and is bolstered by the fact most companies on the stock exchange are doing very well overseas, not so good here. The disconnect, as Greg points out, is pretty wide. Hardly a sign that housing is staged for a big comeback.

 

[23Degrees]

FDIC Chair Suggests Freezing Starter Rates

http://www.easybourse.com/Website/dynamic/News.php?NewsID=313885&lang=fra&NewsRubrique=2

If I read this right and it was reported right on the CNN trailer, she was suggesting that some lucky son of a guns keep the teaser rate in perpetuity.

Nice deal but what would the consequences of that be. Who ends up paying for lunch?

 

[Restrain]

23Degrees: Who pays? The end investor that purchased the loan on the basis of the overall projected interest payments over a typical holding period. It could be a foreign investor, a stock brokerage, or a retirement fund. Any large investor holding a loan buys the loan on the basis of ROI on the projected holding period. If the rate is frozen and not allowed to accellerate on an ARM, then the investor loses the income stream.


The unintended consequencies could be significantly higher interest rates and an inability to sell ARMS on the secondary market.

 

[MARK JOLLIFF]

Wouldn't that be nice if someone with a 520 fico ended up with a fixed rate lower than mine?

 

[Marcia Langley]

The market is seizing on any good news it can and is bolstered by the fact most companies on the stock exchange are doing very well overseas, not so good here. The disconnect, as Greg points out, is pretty wide. Hardly a sign that housing is staged for a big comeback.

I agree. The bad news keeps rolling in. Not only for the housing market in particular but for the credit/liquidity crunch of the financial sector in general. The market is stll trying to price in the next one or two Fed rate cuts so it rallys on bad news.

 

[Terrel L. Shields]

If the rate is frozen and not allowed to accellerate on an ARM, then the investor loses the income stream.

The solution was not to allow non-profitable interest rates be charged in the first place. That one factor alone would have prevented a crisis

 

[moh malekpour]

American Dream turns to a nightmare for some owners

http://www.azcentral.com/business/articles/1005biz-homes05-ON.html

Not long ago, builders were raising home prices here thousands of dollars week after week. Families camped out for lotteries to win the right to buy. Buyers gambled with loans whose risks were obscured by euphoria.

This is the tale of how America's real estate boom came to a seemingly ordinary subdivision called the Villages at Queen Creek, where the whipsaw of easy credit has led to some extraordinary times. They were the best of times, for a while. The empty homes, though, raise serious doubts about what comes next.

As the nation confronts skyrocketing foreclosures, what is happening here and in scores of similar neighborhoods is worth considering.

Because while the pressures at work in Queen Creek were extreme, the choices people made - and the consequences - are not so different from those faced by thousands of other homeowners and their neighbors.

"Honestly," says Joy Kessler, standing on the doorstep of the house she and her husband are surrendering to foreclosure, "if you were in this situation, what would you do?"