Housing Doom

Trading of IndyMac has halted:

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Surprisingly, this isn’t a big headline today, but certainly big news.  Fannie Mae and Freddie Mac are seeing huge drops today: [Thanks John for catching this one!]

NEW YORK (CNNMoney.com) — Shares of mortgage financing giants Fannie Mae and Freddie Mac both plunged Monday as fears deepened about the credit crisis and housing meltdown.

In midday trading, shares of Fannie Mae (FNM, Fortune 500) were down 20% and Freddie Mac (FRE, Fortune 500) shares were down more than 22%.

Fannie Mae and Freddie Mac are government sponsored enterprises that help the mortgage market function by purchasing pools of loans and packaging them into securities.

With more than a million Americans facing foreclosure and home prices sinking, the two companies have been hit hard.

The companies bought securities backed by risky subprime mortgages when the housing market was booming, but as the housing market has buckled under credit crisis pressures, concerns have grown about their need for more capital. Some analysts have even suggested that a government bailout of the two may be necessary.

Both stocks are off their session lows currently, but still down big on the day.  To give you an idea of how these stocks have been faring recently, here’s the five-year FNM chart from Yahoo:

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This story is a tough one for animal lovers:

As the number of home foreclosures escalates, many distressed homeowners are left with one more difficult task - giving up their pets.

People often find themselves in smaller rental homes or apartments after losing their home, and many of those rentals do not allow pets.

Many owners take their animals to shelters, hoping their pets will find new homes. Others simply move without their pets, leaving them behind in the backyard or abandoning them on the side of the road.

Before would-be renters take that "no pets permitted" sign too much to heart- here’s my recommendation:  ASK.

When I sold my home in 2005, I was worried that finding a suitable rental for a family of seven with a bunch of pets would be a problem.  My short list of desirable properties consisted of two properties that both said "no pets" on the listing.  The rental market was glutted though, so not only did my landlord agree to the pets, but they agreed to a rent 20% lower than their asking price just to get the place rented out.

The current landlord also had a "no pet" policy. He initially said no to our two dogs, cat, rabbit, hermit crabs and fish– but a substantial deposit allayed his worries.

The current rental market is soft in many areas of the country.  Good renters [or any renters] are often hard to come by. Many landlords will accept additional deposits, or letters from friends/family/landlords that your pets are in fact housebroken and don’t tear the house up.

Additional note:

IF YOU CANNOT KEEP YOUR PET- DON’T WAIT UNTIL THE LAST MINUTE TO MAKE ARRANGEMENTS FOR IT.

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When the pundits were saying that there would be no "subprime contagion", Doomers were saying "This is only the beginning". Sadly, we were right- the bad news just keeps on coming.  Rising vacancy rates have expanded from residential real estate to retail:

U.S. store closings and cutbacks turned the second quarter into the worst for strip mall owners in 30 years, as budget-conscious consumers flocked to low-cost warehouse-style grocery centers, according to a report by real estate research firm Reis.

Strip malls, which are usually anchored by grocery or drug stores, saw average vacancies spike 0.5 percentage points to 8.2 percent, a level unseen since 1995, according to the report released on Monday.

With more new space coming on, expect this situation to get worse:

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It’s Monday, and in the interest of full disclosure, I thought I would mention that I purchased a custom built house for which I paid cash.  Here’s a photo:

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The Greater Las Vegas Association of Realtors (GLVAR0 has released their report for the month of June.  The median price has dropped from $305,000 in June 2007 to $225,000 in June 2008, for a drop of 26.2%- the largest YOY decline since the market started to decline:

Lower prices however, have indeed brought more sellers back into the market.  2,226 single family homes sold in June, a 51% increase over last year:

A couple of things to note–

Sales typically peak around June, so this may be the busiest month of the year- sales typically decline in the second half of the year.  Note that although sales are up year-over-year, they remain below the levels of recent years.  Inventory currently stands at 23,338 - a slight 1.1% decline over last year’s inventory. 

Month’s supply has declined to 10.5 months, the lowest level since December 2006.  This remains, however, a slow market, and high levels of foreclosures and inventory will continue to put downward pressure on prices.

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