Owner: National Bubble URL:http://www.nationalbubble.com Join Date: Wed, 07 Nov 2007 11:32:17 -0600 Rating:0 Site Description: News and commentary about the Real Estate bubble and the greedy people behind it. Analysis of how the housing crash will hurt the U.S. economy. Site statistics:Click here
More Real Estate pain for 2008 2007-12-17 09:06:45 The Fed can keep lowering interest rates. The Treasure Department’s bailout plan won’t do much to stop the tide-wave of foreclosures. The areas where prices exploded back in the booming days of the Real Estate
bubble will suffer the most. These are some of the conclusions in this very interesting Bloomberg article.
As with most things in the financial world, home prices eventually had to regress to a historical rate of return. This realignment may eventually translate into a 15 percent nationwide decline, and even more in the markets with the highest appreciation and greatest supply.
Buried in the middle of the Office of Federal Housing Enterprise Oversight home-price report for the third quarter is an article on the relationship between areas that experienced the highest gains over the past half-decade and those facing higher-than-average foreclosures. Ofheo is the regulator of mortgage giants Freddie Mac and Fannie Mae.
As the U.S. housing market experienced its first qua
It is a National Real Estate Bubble 2007-12-16 12:53:35 It is not just California, Florida, Nevada, and Arizona. The Real EstateBubble
is bursting all over the place and very few parts of the country have been immune so far.
As stated by Delaware Online
The number of home sales is down by a quarter from the peak two years ago, homes are sitting longer on the market, and foreclosures, fueled by rising interest rates on subprime mortgages, are climbing. Prices are stagnant or rising only slightly — in some places, they are dropping.
Many potential sellers are staying out of the market to avoid selling their home at a loss. “There are few sales, so it’s not clear that prices are really holding up,” said Jim Butkiewicz, professor of economics at University of Delaware.
Home builders are dangling incentives — finished basements, porches, big-screen televisions, $5,000 gift cards, even cars — in an often fruitless attempt to lure buyers.
Economists say the housing bubble in Delaware is bursting, just as it is Read more:National
Mortgage resets is NOT the main reason for foreclosures 2007-12-14 16:15:34 The government, the media, and the economists might try to make you believe that the current tide of adjustable rate mortgage resets
is the cause of the soaring number of foreclosures, but like we have been documenting here for a long time, the main reason is that many people paid too much for their houses during the boom, taking too much risk, and they now find themselves in a vulnerable situation. Now that prices are coming down, if they lose their jobs, get sick, or get divorce, they have no equity in their houses to allow them to sell and therefore, they end up letting their houses go into foreclosure.
This article in the Sun Sentinel reports the same reasons we have been describing in this blog for a long time.
Data from Countrywide Financial Corp., the nation’s largest mortgage lender, backs up this point. The No. 1 reason its customers have been defaulting on mortgage loans is because their income was cut. That accounted for almost 60 percent of its loan defaults in the fi Read more:Mortgage
Greenspan is still not taking the blame for the housing bubble 2007-12-14 13:01:38 It is amazing that Alan Greenspan
keeps denying that he had anything to do with creating the Real Estate bubble in the US. The Fed cut rates down to 1% and injected lots of money into the system helping fuel the bubble. On top of that, the Fed did nothing to stop lenders from handing money out to anybody with a pulse. You have people without jobs buying houses with no money down and negative amortization mortgages. We are all now paying the price for all these ridiculous exotic mortgages.
AP via USA Today reports:
Greenspan again rejected criticism that his policy actions helped feed a housing boom that eventually went bust. Critics say Greenspan fed the boom by holding interest rates too low for too long after the 2001 recession.
To have prevented such euphoria in housing that fed a bubble in prices, Greenspan said the Fed would have had to jack up interest rates so high that it would have damaged the economy. “That would have broken the back of the economy, and brought the hou
No housing market recovery until late 2009 2007-12-14 12:48:48 That is what Fannie Mae’s president and CEO, Daniel Mudd said today.
According to AP
Fannie Mae’s CEO told shareholders Friday he does not expect a housing market
recovery until late 2009, “at the earliest,” and that the mortgage-finance company is strong enough to ride out the downturn.
After posting a third-quarter loss of $1.4 billion, the largest U.S. buyer and guarantor of home mortgages recently cut its dividend and announced plans to sell $7 billion in preferred stock to raise capital to keep its cushion against risk within regulatory requirements.
Housing crash links of the day 2007-12-12 14:39:42 How the Housing
Bubble Turned Bust
Housing Crash: Why a ‘Soft Landing’ is Unlikely
Greenspan: How the credit crisis happened Read more:crash
, links
Is this a sign of desperation from the Fed? 2007-12-12 08:53:36 You’d better believe it. The financial credit markets are collapsing and the Fed is showing signs of desperation. Now, they have this new plan to work with the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank to try to unfreeze the credit markets.
Here is the Fed news release
Release Date: December 12, 2007
For immediate release
Today, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing measures designed to address elevated pressures in short-term funding markets.
Federal Reserve Actions
Actions taken by the Federal Reserve include the establishment of a temporary Term Auction Facility (approved by the Board of Governors of the Federal Reserve System) and the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank (approved by the Federal Open Market Committee).
Under the Term Auction Facility (TAF) program, the
More mortgage applications doesn't mean higher demand for housing 2007-12-12 08:39:19 Like this CNBC article explains, the numbers reported today that U.S. mortgage applications rose last week to the highest level since July 2005, don’t mean that the housing market is stabilizing. It actually mind mean that getting a mortgage is getting tougher out there.
The Mortgage Bankers Association’s index of mortgage applications rose by a seasonally adjusted 2.5 percent to 811.8 in the week ended Dec. 7, boosted by demand
for both purchases and refinancing loans.
The trade group’s index continues to be skewed by borrowers filing numerous applications in the hopes of getting one approved, analysts contend.
Lenders are much more stringent in extending credit after being stung by loans that had been doled out when practices were much looser. Last week the MBA reported record foreclosures as well as a record pace of loans entering the foreclosure process in the third quarter.
The spending party is over 2007-12-11 22:40:51 This is a very good in Fool.com article explaining why we think that our economy is in a credit/spending bubble.
These are some of the highlights but you have got to read the whole article to better understand it.
we’re coming up on a bend in the yellow brick road, and going ’round it could cause the party lights to go dark quickly. That could change everything about the way we and future Americans live. Sound scary? It is.
(more…)
Housing crash links of the day 2007-12-11 09:17:39 When will market hit bottom?
A Message to Borrowers
How this housing slide compares with past cycles
WaMu Shares Crumbles After It Slashes Dividend, Cuts Jobs and Plans Massive Stock Offering
H&R Block 2Q losses soar
Fannie, Freddie buying fewer bad loans
Mortgage Bailout: Good For Investor Psychology, Not Much Else
Tapped-out family’s home is at risk Read more:Housing
, crash
, links
Federal Reserve - Too little too late 2007-12-24 11:04:31 Very good analysis on SignOnSanDiego.com of the move by the Fed to regulate lenders.
After more than a year of watching the real estate bubble pop and spatter over the economy, the FederalReserve
finally decided to pull the reins in on the mortgage industry.
Under new guidelines set forth last week, borrowers will have to prove they’re making money before they can get a loan. What a radical concept! Lenders will be barred from making loans without first considering whether borrowers have enough money to pay them back. Amazing!
If the Fed had enacted those rules three or four years ago, many of our current problems could have been avoided. Tighter regulation by the Fed could have kept unqualified borrowers out of the market, which could have prevented real estate prices from skyrocketing to untenable heights.
These rules are about three years too late to do much good in fixing the current mortgage crisis. And in today’s lending environment, they seem hopelessly retro.
Spook Read more:little
Housing crash links of the week 2007-12-23 06:38:31 Single-family housing starts hit 16-year low
Southern California home prices tumble in November
Century 21 seeks overseas buyers of U.S. homes
One in 5 homeowners see house price drop: survey
Calif. home prices off 14.8%, worst in U.S.
First American LoanPerformance Releases October 2007 House Price Index Read more:crash
, links
, Housing
Bush's subprime bailout plan won't help many in California - People are just walking away from properties 2007-12-23 05:36:25 Interesting article on Reuters.com
California
ns say mortgage freeze plan little help
STOCKTON, California (Reuters) - Inundated by a flood of home mortgage foreclosures, and bracing for more interest rate rises, many struggling Californian borrowers see little aid from a Bush administration-backed plan to help them keep their homes.
“We’re all just a paycheck away from being out on the street,” said Stockton resident Trudy Crawford, who said she can no longer afford payments on her two-year-old house since a recent death in the family.
More bad new for the Real Estate market 2007-12-23 05:30:07 Take a look at this housing market analysis from Jack M. Guttentag posted on Yahoo Finance.
This semi-paralyzed market will continue until investor confidence is restored. Key players are the investment banks and hedge funds who sold MBS when prices were high in expectation that they could buy them back later at lower prices. They have large short positions, and at some point they must go into the market to buy the MBS that they owe. They’ll do that when they decide that MBS prices have reached a bottom.
That won’t happen before we see the end of unpleasant surprises — large value write-downs by major U.S. firms, or revelations by some previously unknown foreign institution that they too bought subprime-contaminated securities and are taking a major hit. Since most firms everywhere come clean at year-end, hopefully the surprises will stop then. Read more:Estate
The housing bubble is bursting in California 2007-12-22 20:54:20 Even the Realtors have to admit: home sales and prices are dropping in California
According to the latest report from the California Association of Realtors
LOS ANGELES (Dec. 21) - Home sales decreased 36.2 percent in November in California compared with the same period a year ago, while the median price of an existing home fell 11.9 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
"While it is normal for sales to decline at this time of year, regional sales fell more steeply than usual because of the ongoing liquidity crunch and tighter underwriting standards," said C.A.R. President William E. Brown.
The median price of an existing, single-family detached home in California during November 2007 was $488,640, an 11.9 percent decrease from the revised $554,500 median for November 2006, C.A.R. reported. The November 2007 median price fell 1.7 percent compared with October's $497,110 median price.
"The large decreases in the statewide median price of th Read more:bursting
The upcoming real credit meltdown 2007-12-22 09:20:03 If you think that the Credit Crunch is bad, you ain’t seen nothing yet. Most experts believe that credit
problems will get much worse in 2008. The Wall Street Journal has an excellent piece about it.
So far, the potential losses look manageable compared with the savings-and-loan crisis of the 1980s and the tech-stock crash of 2000-02. But the housing debacle could yet take years to work out, thanks to the sheer complexity of it. Until the mess is cleaned up, investors will remain jittery and banks will likely hold back on all kinds of lending — a credit crunch that is already damping global growth and could tip the U.S. economy into recession.
(more…)
What goes up must come down 2007-12-21 10:30:40 Excellent article on Yahoo Finance
The housing collapse was a variation on the same basic theme. Prices kept going up primarily because people thought prices would keep going up. In many markets, real estate prices had drifted far above the inherent value of the property. How can we determine how much a “home” is worth? Fairly easily, it turns out.
You can do two things with a house or condominium: You can live in it, or you can rent it out. For rental properties, the purchase price should bear some relationship to the expected rental income. If rents are going up sharply (or are expected to in the future), then it wouldn’t be surprising for property values to be going up sharply, too.
But it’s a yellow flag for economists if real estate prices skyrocket while rents are flat. It’s similar to stock prices rising sharply without any increase in expected corporate profits. Why would investors pay more for the same expected stream of income? They shouldn&rsquo
California and the Housing Bubble 2007-12-21 05:55:46 Everybody wants to live in California
, right? Well, not exactly. A new report indicates that if it wasn’t for immigration and new births, California would have actually lost residents during 2007. Any way you slice it, the Golden State economy is suffering from the implosion of the housing bubble and it might go into recession next year.
According to the LA Times
The annual study by the Department of Finance showed that 89,000 more people moved out of California than moved here from elsewhere in the United States. California’s population did grow in fiscal 2007 — but the growth rested on births and the arrival of more than 200,000 immigrants from other countries.
(more…) Read more:Bubble
, Housing
Another nail in the coffin for the housing market: higher fees on mortages 2007-12-20 14:48:47 This is turning up to be the perfect storm. Another nail in the coffin
for a housing market
that is literally imploding. Now, lending are adding fees on mortgages and resurrecting lending rules that have not been used for years.
This is obviously going to make mortgages even more unaffordable and therefore, push home prices even further down. More bad news for the housing market.
According to Bankrate.com
Many borrowers will be socked with a fee that amounts to $250 for every $100,000 borrowed, just because the mortgage market has gone so bad. Other customers will take bigger hits because their credit scores are lower than 680 and they’re borrowing more than 70 percent of the home’s value.
The fees will be tacked onto mortgages guaranteed by Fannie Mae or Freddie Mac, the government-sponsored enterprises that help keep money circulating for home loans. The companies say they introduced the new charges to compensate for the risks inherent in guaranteeing mortgages in an era
Did anybody say Stagnation? 2007-12-20 13:14:45 According to Wikipedia, stagnation is “a portmanteau of the words stagnation and inflation and it is a term in general use within modern macroeconomics used to describe a period of out-of-control price inflation combined with slow-to-no output growth, rising unemployment, and eventually recession”.
Well, guess what? It looks like we are heading that way.
CNBC reports today
The economy is continuing to show further signs of weakness as well as rising inflation, according to the latest government reports.
Factory activity in the U.S. Mid-Atlantic region plunged to its weakest in over four years
in December, a survey showed, while jobless claims rose more than expected last week and a widely watched inflation gauge also was above forecasts.
Crash proof by Peter Schiff 2008-03-11 06:08:53 Peter Schiff
has been on all over the media for the past couple of years. The guy has a lot to say about our bubble economy and he has been right so far. He has a great book which I really recommend and the name is “Crash Proof: How to Profit From the Coming Economic [...] Read more:Peter
Mortgage rates are actually going up. 2008-03-08 16:12:42 The Fed can (and probably will) continue lowering short term interest rates but it is not doing much to bring down long term interest rates that dictate how much people pay on most mortgages. Look at what long term interest rates have done since the lows of mid January. This is definitely NOT good for [...] Read more:Mortgage
Don’t get too excited about the new conforming loans limits 2008-03-08 16:02:49 According to Bankrate.com these are some of the restrictions for these new loans under Fannie Mae’s guidelines:
Jumbo-conforming mortgages have rather strict loan-to-value limits. If you’re getting a loan to buy your principal home, you can’t borrow more than 90 percent of the home’s value if you get a fixed-rate loan, and you can’t borrow more than [...] Read more:excited
Housing mess in Florida 2008-03-08 05:49:01 This from the Miami Herald:
For all the turmoil that mortgage foreclosures are wreaking in global financial markets, some South Florida
homeowners are watching the worst of the downturn unfold in their backyards — much of it the result of wild speculation gone sour.
The homeowners on Alesio Avenue, in an upscale and otherwise stable Coral Gables [...] Read more:Housing
The U.S. lost 63,000 jobs in February 2008-03-07 08:26:29 First of all, I don’t enjoy reporting that people are losing their jobs. I guess I could say: “I told you so” but is irrelevant now. The more important point is for all of us to learn from our mistakes and avoid making this type of mistakes in the future.
As reported by CNBC:
U.S. employers cut [...] Read more:February
Increase in conforming loan limits doesn’t necessarily mean much lower rates 2008-03-06 17:45:57 The FUH released the new limits for conforming loans but before you get all excited about it, take a look at what others experts are saying.
According to Bankrate.com:
In the market for a superconforming loan? You might have to wait, depending on the lender you choose. “Fannie and Freddie have to get their mechanical processes organized to [...] Read more:necessarily
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