Housing Doom Housing Bubble Blog

From Marketwatch this week:

Home prices fell 8.9% in 2007, the largest decline in the Case-Shiller home price index in at least 20 years, Standard & Poor’s reported Tuesday.

For the fourth straight month, nominal prices in all 20 Case-Shiller cities were lower than in the previous month.

The 20-city index fell 2.1% in December and 9.1% for the year. The original 10-city index fell 2.3% in December and 9.8% for the year.

Phoenix had the largest decline in December, falling 3.5%, followed by San Diego at 3.4% and San Francisco at 3.2%

The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values. Its major flaw is that it may overemphasize the coastal regions that had the biggest bubbles.

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It’s Op-Ed Friday, and I’m back in the Valley for a few days.  I plan on being away from the computer more than usual, so my apologies if Igor doesn’t treat you kindly- I’ll rescue your comment as soon as I can.

We especially appreciate your links, comments and stories while I’m out and about.  I’d also love to know if there’s any communities, homes or acts of real estate wierdness you think I should check out while I’m in town.  Doomers are always our best resources.

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Boston has been feeling the impact of rising foreclosures and abandoned homes.  Now they want the owners to pay:  [Thanks L!]

City officials are lining up an arsenal of new tax penalties and stronger regulations to help rid the Hub of the abandoned and foreclosed properties that are blighting neighborhoods as a result of the national mortgage crisis.

“It is a real scam and it’s happening in so many cities throughout America,” said Mayor Thomas M. Menino, who was updated yesterday on efforts to revive the foreclosure-ravaged Hendry Street area in Dorchester during a revved-up meeting with 20 city officials in a new “war room” at City Hall. “All the predictions are that the worse is yet to come.”

Menino yesterday filed a home-rule petition with the state Legislature that would slap a new levy on homeowners, mortgage lenders and mortgage servicers who leave properties vacant and abandoned for more than one year. The so-called “non-utilization” tax would be set at 10 percent of the property’s assessed value, said corporation counsel William F. Sinnott.

And if that’s not enough:

Another measure that targets the banks and mortgage servicers that assume ownership of foreclosed properties also received unanimous approval from the City Council, said Hyde Park City Councilor Rob Consalvo, who sponsored the new ordinance.

The regulation would require all vacant and foreclosed residential properties to be registered with city inspectors and be maintained by a local management company, Consalvo said. Owners who didn’t comply would be fined $300.

“We shouldn’t be footing the bill for that. It should be Deutsche Bank or World Bank, not the taxpayers of the city,” said Consalvo, who routinely fields complaints about unsecured swimming pools, unshoveled sidewalks and debris at foreclosed properties.

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Apparently even the rich and famous are calling their lenders to work out new terms to avoid foreclosure. At least Michael Jackson is:

Pop star Michael Jackson will avoid foreclosure on his Neverland Ranch property with a new loan, a Jackson insider told CNN Wednesday.

Documents show that Neverland Ranch in Los Olivos, California, is scheduled for a public auction on March 19 at Santa Barbara’s downtown courthouse.

But the Jackson source said that won’t happen.

"Michael Jackson’s ranch is not going to be auctioned off at the courthouse," the Jackson insider said. "The financing is all being worked out."

"There are plenty of lenders willing to work with him. The real estate market is very bad right now and Jackson is being affected just like many other Americans," the source said.

Congressman Brad Miller of of North Carolina stated:

Every foreclosure means a family is falling out of the middle class into poverty.

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James Lockhart of the OFHEO announced that as Fannie Mae and Freddie Mac are now filing timely statements, there would be some changes:

The federal regulator for Fannie Mae and Freddie Mac said on Wednesday it would lift an investment cap for the mortgage companies, in a move that will give them more flexibility to invest in the battered U.S. housing market.

The investment caps will be lifted on March 1, the Office of Federal Housing Enterprise Oversight said in a statement that cited the companies’ return to timely financial statements as one reason for its easing.

In other news today:

WASHINGTON (AP) – Fannie Mae on Wednesday said it lost nearly $3.6 billion in the fourth quarter of 2007 as home-loan delinquencies mounted. The company said it expects additional losses this year as the housing slump continues.

 The quarterly loss at Fannie Mae, the largest U.S. buyer and backer of home loans, contrasts with a profit of $604 million in the same period a year earlier.

Fannie Mae reported the late 2007 loss was equivalent to $3.80 a share. It earned 49 cents a share a year earlier. Thomson Financial said Wall Street analysts had expected the company to lose $1.24 a share in the latest period.

The government-sponsored company was forced to set aside billions to account for bad loans.

CNBC stated:

The companies are still under orders to hold strong reserves against possible losses, which will limit their ability to expand their mortgage holdings in the short term.

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Thanks to L for this story out of Georgia last week:

ATHENS, Ga., Feb. 22 (UPI) — A gun-wielding man in a ski mask robbing a Georgia bank told a teller he wanted payback for losing his house to foreclosure.

The robbery occurred at a Regions Bank branch in Athens just before noon Thursday, the Athens Banner-Herald reported.

"You took my house, now I’m going to take your money," the robber told the teller as he pointed a gun at her, Police Capt. Clarence Holeman said.

Holeman said that the FBI, which is investigating the robbery, would probably check bank records. Bank officials said they could not remember anyone who had been especially upset about losing a house.

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Thank you L for sending us this podcast by Dick Gaylord, President of the National Association of Realtors. It is apparent from Gaylord’s comments that he feels that the NAR was instrumental in bringing about Bush’s economic stimulus package:

A few days ago, we achieved a remarkable accomplishment. NAR stood along side President Bush as he signed the economic stimulus package that includes increases in both the FHA and conforming loan limits. The new loan limits will be published by HUD within 30 days and will take effect immediately. [This differs from the transcript provided here.]

Gaylord discusses what he believes will be the benefits of this legislation:

Raising the FHA loan limits alone will help more than 130,000 new buyers enter the market, and more than 200,000 people will be able to refinance their costly mortgages. Increasing the GSE loan limits will result in as many as 500,000 refinanced loans and another 300,000 home sales. These are real numbers, with a real impact on our markets, consumers and – of course– our businesses. And, YOU made it happen!

These numbers are in fact rather optimistic estimates, not "real numbers", and whether Realtors "made it happen" is open to debate. Nevertheless, Gaylord makes a pitch for the NAR’s PAC for additional funds:

We must continue our full-court press on Congress to move FHA Reform out of conference, so that the President can sign it into law. We also must urge the Senate to pass the GSE Reform Bill and send it to the President before this session of Congress draws to a close. With the election on the horizon, it’s vital that we pass these two important bills this year. And, once again, YOU can make it happen. If you haven’t already contributed to RPAC, please go to realtor.org/rpac and donate whatever you can today – $20, $50,$100 or more. Every dollar will help ensure that Realtor issues remain a top priority at all levels of government – this year, and long after the election is over.

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Despite the Austin Statesman’s best attempt to put a positive spin on the local market, the Central Texas housing market is in trouble:

Sales of Central Texas homes fell 10 percent in January, the seventh month in a row that year-over-year sales dropped. But prices rose, and Austin’s market is in better shape than the nation overall.

The 1,321 sales last month were a two-year low, based on data from the Austin Board of Realtors. . The median price rose 7 percent to $187,000, contrary to a national trend of falling prices.

Nationally, homes sales fell 22.4 percent in January, and the median price was down 5 percent, according to the National Association of Realtors. And the market is glutted, with 3.7 million homes for sale. That’s up almost 20 percent in the past year. At current rates, it would take more than 10 months to sell everything.

The number of Central Texas homes on the market increased by 24 percent to 8,727 active listings, a 41/2 month supply.

With so much for sale and fewer buyers, it’s taking almost three months to sell a house.

Prices rising with sales falling is a typical pattern we have seen in other declining markets.  As prices become less affordable, first time buyers drop out, raising the median when "same house" appreciation has disappeared. For January in Central Texas:

The sales drop is sharpest for homes priced lower than $150,000. But sales rose for homes between $170,000 and $179,000 and between $250,000 and $500,000.

 Local agents are playing down the excess inventory:

With mortgage rates below 6 percent, the overall local market is good for buyers, said David Davidson, a broker at RE/Max Heart of Texas. "They have a good selection, and they can negotiate a little bit."

With builders cutting back on home starts, he said, buyers who might have bought a new home may turn to the resale market, helping "absorb that extra inventory rather quickly."

The reality is that starts are down because the homebuilders have a lot of inventory on the market already– homebuilders have been cutting prices and offering incentives in an attempt to move the backlog.

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From the Wall Street Journal this morning:

WASHINGTON — Existing-home sales fell for the sixth month in a row during January as consumers stood on the sidelines watching prices slide for property.

Home resales fell to a 4.89 million annual rate, a 0.4% decrease from December’s revised 4.91 million annual pace, the National Association of Realtors said Monday. Originally, the NAR estimated sales at 4.89 million in December.

 

The median home price was $201,100 in January, down 4.6% from $210,900 in January 2007. The median price in December was $207,000. Falling prices have kept would-be buyers from signing off on property as they wait in hope for still-lower price tags.

"Inventories are high, so it’s not surprising prices are declining," NAR economist Lawrence Yun said.

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It’s Monday, and you get the feeling that some folks are getting desperate when you find videos like this on YouTube:

So Doomers, it’s been awhile since we’ve had an open thread.  Any other finds for us– links, stories, videos, comments?

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