Housing Doom

From yesterday’s Arizona Republic: [Thanks L!]

Valley home prices continued their year-over-year plunge in April, dropping a record 18 percent as the impact of foreclosures and other economic factors exerted even greater influence, according to an ASU report issued Tuesday.

The Arizona State University Repeat Sales Index, which tracks repeat same-home sales, reported an "off-the-cliff drop" in home prices due in large part to foreclosures, which made up 20 percent to 30 percent of all April home sales.

ASU real estate professor Karl Guntermann, who compiled the report, said the continued rise in foreclosures was significant, but that gas prices

"It’s not just one thing," he said. "That’s what’s so depressing, in a way."

In March, ASU reported a 13 percent drop in year-over-year home prices for the Phoenix metropolitan area, at that time the largest decline ever recorded.

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From our Commander-in-Chief this morning, speaking on the bailout, I mean assistance, for Fannie Mae and Freddie Mac:

"I don’t think it’s a bailout," said Bush, deflecting some criticism that the government should not rescue a private firm. "The shareholders still own the company."

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We were told in May that crisis was averted after the rescue of Bear Sterns.  Then yesterday crisis was averted again by the bailout of Freddie and Fannie.  Now we are hearing of rumblings of troubles in the Regional Banks:

Stocks of regional banks plunged Monday, a sign that jittery investors fear that the mortgage meltdown could push more banks into failure.

Washington Mutual (WM) led the sector’s decline, sinking 35% to close at $3.23 a share, after an analyst questioned the thrift’s financial viability. Investors also sold off other regional bank stocks, such as National City (NCC) of Cleveland.

The sell-off followed federal regulators’ seizure late last week of IndyMac, a California mortgage lender with $32 billion in assets. The action Monday was the latest sign of widespread anxiety, even panic, about the economy’s underpinnings.

"It’s not just the equity market that’s making investors nervous," says Greg McBride of Bankrate.com. "We’re talking about a real estate market that is making homeowners nervous, a job market that is making job seekers nervous."

First time poster "Kyutie" asked this question this morning:

After reading your articles about the Fannie, Indy Mac and Freddie mess, I started to get really concerned about my bank, Washington Mutual.  I know they are in deep trouble.  I am thinking of moving our money out of that bank to another bank. Which bank do you recommend?  I am thinking of either Wells Fargo or Chase.

Any recommendation is highly appreciated.  I am located in Tempe, AZ and thanks to you guys we did not buy a home in 2005/2006, instead we save our money.   Now we have 20% for a down payment and want to keep it protected just in case WaMu goes under.

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