Housing Doom

Yahoo took their title this morning from yesterday’s Wall Street Journal- Banks to ask government to take bad loan risk: [Hat tip L!]

NEW YORK (Reuters) - The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government, according to a report in the Wall Street Journal on Thursday.

One proposal has been advanced by officials at Credit Suisse Group (VTX:CSGN.VX - News) and would let the U.S. Federal Housing Administration guarantee mortgage refinancings by some delinquent borrowers, said the report.

The Credit Suisse plan would open the way for nearly 600,000 sub prime borrowers, many of whom are delinquent on their mortgages, to refinance into loans backed by the FHA, said the Journal, which cited a Credit Suisse spokeswoman

The Wall Street Journal and the banking industry have chosen the wrong word when they say "risk."  "Risk" implies a "maybe it will, maybe it won’t"  character to a potential outcome.  The better headline would be Banks to ask government to assume bad loan losses- because they know good and well that massive defaults on these loans are an absolute certainty.

Read the rest of this entry »

Maricopa County is sending out property notices this week.  Most homeowners will note that the value of their homes has dropped, but their taxes haven’t: [Hat tip M!]

Homeowners hoping for an immediate property-tax reduction will be disappointed.

Property-tax statements lag valuations by 18 months in Arizona, so homeowners won’t see a drop in their taxes until late 2009. And if Valley municipalities raise taxes to offset budget shortfalls, there won’t be a drop even then.

The overall median value of homes in metropolitan Phoenix fell 13 percent, to $199,800 from $229,500, according to the assessor’s latest report, which covers the market from mid-2006 through the fall of 2007. About 94 percent of all Valley homes fell in value.

"The slide in residential-home values that we have seen over the past year or two is now being reflected in the notices all property owners will receive," Maricopa County Assessor Keith Russell said.

Next year’s valuations, which will reflect today’s price drops, are bound to fall even more.

Read the rest of this entry »

ASU’s Realty Studies has released Jay Butler’s report on the Phoenix housing market in January, and the report holds no surprises- the housing market continues to deteriorate.

Prices

The median home price opened the year at $230,000, which is below the $232,000 of December 2007 and last year’s $260,000. It represents a continuation in declining median price, which started at $265,000 in July 2007. This is the lowest monthly median home price since $221,000 in April 2005.

January’s median price is 12% lower than the median price in January 2007.  The median is the point at which half the homes sell for more, and half sell for less.  Not only have we seen "same house" appreciation decline, but a change in the mix of homes sold as well:

Read the rest of this entry »