Housing Doom Housing Bubble Blog

U.S. Home Auction is auctioning off 375+ homes in the Phoenix area tomorrow and Sunday:

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A big hat tip to The Big Picture for this laugh of the day:

Standard & Poor’s cut some of its credit ratings on investment bank Bear Stearns Friday following news of the bank’s cash crisis and emergency bailout.

S&P cut its long-term counterparty rating on Bear Stearns to "BBB" from "A" and its short-term rating to "A-3" from "A-1."

S&P said Bear Stearns’ need for temporary financing to continue operating normally led to the downgrade. Earlier Friday, Bear Stearns said it is receiving a financing line from JPMorgan Chase that is secured by the Federal Reserve Bank of New York.

The agency also placed the bank’s long- and short-term ratings on negative watch, meaning they could be downgraded in the next three months.

To Standard & Poor’s-

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From CNBC this morning:

Bear Stearns said its financial situation had "significantly deteriorated" during the past 24 hours and is receiving short-term financing from JP Morgan Chase to shore up confidence in its operations.

 J.P. Morgan will provide a secured loan facility for an initial period of up to 28 days, allowing Bear Stearns to access liquidity as needed. The move is being made in conjuction with the Federal Reserve Bank of New York.

J.P. Morgan also said it’s working with Bear to secure permanent financing or "other alternatives" for the brokerage firm.

"Our liquidity position in the last 24 hours had significantly deteriorated," said Bear CEO Alan Schwartz in a statement. "We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."

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It looked as though Lawrence Yun had started writing for Marketwatch this morning.  The headline was Consumer inflation moderates in February:

WASHINGTON (MarketWatch) — Led by a quirky decline in energy costs, U.S. consumer inflation moderated in February, opening the door for the Federal Reserve to keep cutting interest rates to support flagging economic growth.

The consumer price index was flat in February, the Labor Department said Friday. Wall Street economists had expected a 0.2% increase. Read the complete government report.

In addition, core prices — which exclude volatile food and energy costs — were also unchanged, below the 0.2% gain in retail-level inflation that economists surveyed by MarketWatch had been looking for.

This was the lowest core rate since November 2006.

I want to know what isolated enclave the producers of the CPI live in that their report is so very different than the world the rest of us live in.  I’m contemplating a move.

Doomers will appreciate the remark by LostintheOutback, a poster on Marketwatch’s site:

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According to CNN yesterday, tighter lending standards have made it more difficult, and more costly, for even the best borrowers to get loans:

The credit crunch has finally hit the traditional mortgage market.

Investors are now shunning mortgage-backed securities issued by government sponsored enterprises Fannie Mae and Freddie Mac, which have been critical in keeping the real estate market from completely falling apart.

Some fear this development will make it harder for people, even those with strong credit histories, to get a home loan.

"Even if you have good credit, you don’t know if they are going to give you a loan or not," said Joseph Mason, a senior fellow at the Wharton School of the University of Pennsylvania.

And for those who can still get a loan, the tremors in the mortgage-backed securities market has made loans more expensive for borrowers. As the prices of mortgage-backed securities have fallen, their yields have risen, leading to higher mortgage rates.

So what do you think Doomers? At a time when lenders need every Tom, Dick and Harriet to get out there and buy their REOs, Tom doesn’t have the downpayment, Dick doesn’t have the credit score, and even Harriet with her perfect payment history and great credit is having trouble.  How do you see banks managing this?

This is an open thread, so feel free to weigh in on this or any other housing related topic.

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According to BBC News, tent cities are now springing up outside of Los Angeles- filled with victims of the subprime crisis:

Certainly these are people who have been hit by economic woes, but from the interviews, it sounds more like unemployment, not foreclosure, is the real culprit.  The fully employed can rent.

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When this Craigslist ad from Laveen, AZ says "House in foreclosure, selling everything"- they aren’t kidding.  Here’s the picture with the ad:

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