Housing Bubble Bursting?

[Austin]

Church Business is Booming

Could this be a sign of the new economy with a new bubble forming. The last appraisal I did in 2007 was a large church. The first appraisal I received in 2008 is a large church. Both with construction projects.

There will never be a church bubble for a good reason. Church loans are based on ability to service the debt. They typically raise a good portion of the money they need and finance the remainder. They must verify that they have a budet history sufficient to service the debt or names on the note to cover the debt. God is held to a higher credit standard and as a result the supply and demand for His houses of worship are always in balance with stable prices. Most loans paid off far in advance of maturity too. Maybe the Fed Rev Bank should try this model on the general public.

 

[Randolph Kinney]

The start of big builders going bankrupt

[FONT=times new roman,times, sans serif][SIZE=-1]With Builder in Bankruptcy, Buyers Are Left Out

[/SIZE][/FONT]The collapse of Levitt, the first big home builder to fail in the current slump, illustrates how the turmoil in real estate is spreading far beyond subprime borrowers who cannot pay their mortgages. Levitt had a fabled brand, decades of experience and enthusiastic customers with good credit, but none of that was enough to save it.

 

[Randolph Kinney]

NAR 2007 forecast - wrong! wrong! wrong! 2008?

How They Got Housing Wrong

The National Association of Realtors made a forecast a year ago that was far more optimistic than those by Wyss and many other economists. The Realtors expected only a 1 percent drop in the pace of existing home sales, and a 1 percent gain in median prices. Instead, 2007 will likely end with a12.5 percent plunge in the pace of sales, and nearly a 2 percent drop in prices, the first such decline on record.

The group's current forecast for 2008 calls for a 0.5 percent increase in the pace of sales, and a 0.3 percent rebound in prices. But Lawrence Yun, chief economist for the trade group, said that making forecasts is even tougher this year than it was a year ago.

Yun forecasts essentially flat prices in 2008. Yet, he also believes there's at least a one in four chance that prices will fall more than they did this year, and about the same chance that prices could rebound by 3 percent or more.

Robert Shiller, a Yale economist who had argued for years that a bubble was forming in real estate prices, points out that one group was on target about where prices would go - investors in a real estate futures market that he helped set up on the Chicago Mercantile Exchange.

Starting in May 2006, the CME set up futures contracts for 10 metropolitan real estate markets, allowing investors to bet whether prices would go up or down and by how much.

By the end of 2006 those futures were pointing to real estate price declines between 5 percent and 7 percent in those markets, Shiller said. That ended up in line with the 6.7 percent annual decline in the October reading of S&P/Case-Shiller home price index, which was the largest drop recorded in that 20-year-old price measure.

Those futures today are far more bearish about future housing prices than most current economists - foreseeing an additional 4 percent to 14 percent drop in prices over the next year.

I wonder when the public and the press will come to a conclusion that NAR cannot be trusted?

 

[Dee Dee]

I wonder when the public and the press will come to a conclusion that NAR cannot be trusted?

I beg to disagree.
They can always be trusted to promote their own interests.
Woe to the appraisers who didn't figure that out a looooong time ago.

 

[Randolph Kinney]

States reel from falling tax revenues - borrowing costs jump

California Leads Borrowing Cost Rise on Housing Slump

Jan. 4 (Bloomberg) -- From Sacramento and Albany to Boston and Tallahassee, politicians in state capitals across the U.S. are wrestling with the biggest increase in borrowing costs in three years as they struggle to shore up budget deficits widening on the national housing slump.

The cost to borrow for roads and schools is rising as property values drop and consumers cut spending, reducing sales- tax revenue that funds about one-third of state budgets. Thirteen states face cash shortfalls totaling $30 billion next fiscal year, the Center on Budget and Policy Priorities, a Washington research group, said in a Dec. 18 report.

Officials in 24 states said the housing slump is cutting tax receipts, according to a survey released last month by the National Conference of State Legislatures. Respondents in 18 states said they are concerned the trend may continue through the middle of 2008, three times as many as a year earlier.

Home prices in 20 metropolitan areas fell 6.1 percent in October from a year earlier, the biggest decline in at least six years, according to the S&P/Case-Shiller home price index released in December. Americans who fell behind on their mortgages rose to a 20-year high in the third quarter, while new foreclosures hit a record for the second consecutive quarter, the Mortgage Bankers Association said in a report last month.

"States are going to be challenged by the economic slowdown, the housing downturn and the amount of impact it will have on revenue while spending needs continue to grow,'' said Richard Raphael, who follows state credit ratings for Fitch Ratings in New York.

A government report released today showed U.S. payrolls rose by 18,000 in December, the least since August 2003, while job gains for all of 2007 were the fewest in four years.

 

[Randolph Kinney]

Housing decline pronounced "NO PROBLEMO!"

Spin and denial survive the global credit crunch

It all served as an ironic reminder of how many banks and investment houses are now facing the music of easy money, risky lending and massive write-downs - and how disconnected the present gloomy picture is from the upbeat gloss being spread by economists, politicians and other pundits.

And while 2007 may be remembered as the year of credit crisis and bursting real-estate bubbles, 2008 may go down as the year when all players in the financial markets - from chief executives down to individual investors - had to face the music about formerly safe bets like hedge funds, real estate and the U.S. economy.

At the Bear Stearns bash in Paris, the music and merrymaking followed a speech by David Malpass, senior economist at Bear Stearns, which is being scrutinized for some of the worst excesses of the subprime securities mess. Malpass's message minimized the impact of both the ongoing U.S. housing recession and the credit crunch.

To an audience of guests representing top French financial institutions like BNP Paribas, Calyon and Natixis - all of which have been singed by the subprime crisis - Malpass sided with what appears to be a majority of U.S. economists in predicting that the U.S. economy would skirt the current crisis without falling into a formal recession.

One factor in which he took comfort, he said, "is that people are getting a lot of bad news and exaggerating the losses."

In this bad-news-is-good-news scenario, Malpass argues, nonperforming mortgage loans were a problem that is "not very large," but only appears so because "people are counting this multiple times." Malpass maintains that the only real losses are foreclosures minus recoverable housing assets. A good part of the rest of the world, he contends, is adding in write-downs on securities like collateralized mortgage obligations and other mortgage-backed securities and write-downs at financial institutions.

Those write-downs, which Malpass and others contend are exaggerated, have already reached nearly $100 billion and will by all accounts increase through January as 2007 earnings reports are published.

Malpass sounds strangely like someone else who frequents the AF and works for a bank.

All these write downs of securities held by banks, Wall Street and hedge funds are merely accounting losses, not "real" losses. Just wait until they sell them; they become real losses.

Oh, they can't sell them with out creating additional losses since there is very little demand for these securities.

 

[Dee Dee]

Remember Holden Lewis with Bankrate.com? His 2008 predictions

http://www.bankrate.com/brm/news/mortgages/mortgage_update.asp

It's hard to get a mortgage with less than 5 percent down. Later this year, it will be hard to find a mortgage wth less than 10 percent down. The exception will be mortgages insured by the Federal Housing Administration. People will clamor for FHA-insured loans with 3 percent down. The FHA won't be able to handle the demand, and purchase deals will go bust when loans can't close on time because of FHA delays.

The Democratic presidential nominee will wade into this mess first, demanding investigations into dumb lending practices, dishonest appraisals and FHA delays. At first, the Republican nominee will say that the foreclosure crisis demonstrates that the market is efficient, and will point to the FHA's problems as evidence that the government can never do anything right. Driven by polls, the Republican nominee will change his tune, blaming the foreclosure crisis on illegal immigrants and pledging to privatize the FHA.

 

[Riick]

.......Driven by polls, the Republican nominee will change his tune, blaming the foreclosure crisis on illegal immigrants and pledging to privatize the FHA.

That's just absolutely wonderful, I can see it now:
"Look at all the homes in El Paso owned by a Mr. Jimenez, obviously these are fraudulent purchases of 88,372 homes by the same person between 1937 and today."
Yes.... To maximize efficiency, we will Privatize FHA, and we will make FNMA and GNMA Public institutions

 

[Ty Yu]

US Housing Propaganda Continues

Greetings & salutations my friends.
May you all enjoy a great New Year of prosperity, health and wealth.

I couldn't help but notice that people in the United States government and
the media are still attempting to convince America that our economy is great.
Maybe President Bush gets his economic information from the "NAR".

Bush Says Markets are Strong, Economy Solid / Jan 5, 2008
http://www1.pressdemocrat.com/article/20080105/WIRE/801050368/1036/BUSINESS01

Let us examine another opinion that is closer to the truth than what is being circulated today by the media circus.
The Dow just lost another 256 points on January 4, 2007 and is down to 12,800 from over 14,100 points less then two months ago.
The Dow Jones may lose another 5,000 to 8,000 points and housing will begin to recover in 2025.
Meanwhile, house prices will lose 60-80% of their value.
In 2009 the new housing market may start offering, buy one, get one free
since not enough buyers are responding to the gimmicks of endless upgrades, new cars, paying closing costs, free vacations, etc.
Americans will continue to build the military of Communist China through
buying all of their merchandise sold at retailers throughout the U.S.
Americans stopped caring a long time ago where things are made as long as they can get merchandise cheap.
Since America hardly makes anything anymore, the recovery cycle will take much longer since there are very few decent paying jobs created each month. To hide how many manufacturing jobs were/are lost to China, statistics may now show that every fast food place in America is a manufacturer since "they" are technically making taco's, burger's, sandwiches, etc.
Just like the cost of gas and food are not included in the rate of inflation.
We need to help wake up America, the hard times aren't coming…
The hard times are here.

Here are a few of articles to add veracity to my posting.
China boom: The Future is Now / January 6, 2007
http://news.cincinnati.com/apps/pbcs.dll/article?AID=/20080106/BIZ/801060350/-1/CINCI

The Death of American Manufacturing
http://www.thetrumpet.com/index.php?page=article&id=1955

Job Slump Latest Omen of Recession / January 5, 2008
http://www.latimes.com/business/car...2057.story?coll=la-headlines-business-careers

 

[Terrel L. Shields]

The Levitt bankrupcy is a sad chapter. "Levittown" was builder to the Vets of WWII...the suburbia dream was born with them literally.. "Build a road and they will come."

The people who have put deposits down likely have lost their money or most of it. I don't think they are considered to be "secured" debtors. Further, those thinking the courts will approve them to move into those homes are probably going to be disappointed. You can thank the Bankruptcy laws for that. It protects the banks first, the lawyers second, the applicant third, and the rest of you get to suck hind teat.