Archive for July, 2009
Prime Foreclosure Sales Greatly Outpace Sales from Subprimes
Two-thirds of the 93,924 foreclosure sales in June were originally financed with prime mortgage loans, according to figures released this week by the HOPE NOW Alliance. It was the first time since HOPE NOW began collecting data that prime foreclosure sales outpaced subprime sales by two-to-one.
Foreclosures involving subprime mortgages have subsided over the past year. HOPE NOW’s survey data suggests the peak in subprime foreclosure sales occurred during the second quarter of 2008. The largest gain in foreclosure sales backed by prime loans occurred in the recently ended second quarter of 2009
Congress Gives Renting a Boost as a Solution to Foreclosure Problems
Congress unanimously passed a bipartisan plan last week to let FDIC-member banks lease real estate-owned properties back to foreclosed homeowners-a move that legislators hope will protect both mortgage lenders and borrowers from the worst effects of the foreclosure crisis.
The Neighborhood Preservation Act “will give struggling families an opportunity to stay in their homes while riding out the housing crisis, and will be instrumental in alleviating the overall crisis in the housing sector,” said Rep. Gary G. Miller (D-California), author of the measure. Rep. Barney Frank (D-Massachusetts), chairman of the House Financial Services Committee, is a co-sponsor of the bill.
Under the bill-which the House approved in a voice vote-banks may lease properties acquired through foreclosure or a deed-in-lieu for a term of up to five years. Rent-to-own options are also encouraged under the measure, which would apply only to leases signed in the next two years.
Where does it stop ?
FHFA: HVCC Not Causing Market Problems
The regulator of the government-sponsored enterprises has moved to clear up “misinformation” about the Home Valuation Code of Conduct that the GSEs adopted three months ago and counter criticism that the new appraisal code is causing problems in the real estate market.
The code was designed to shield appraisers from inappropriate pressure from lenders, borrowers and brokers. But critics are complaining that the code has slowed the appraisal process, led to lower appraisals and the use of unqualified appraisers.
“FHFA believes that the code is serving the intended purpose and will continue its oversight role both as to the implementation of the code by the enterprises and its market impact,” the agency said.
Yea-right !
The Housing Crash Isn’t Over: Here’s How to Profit
The Housing Crash Isn’t Over: Here’s How to Profit
The US housing market has not hit bottom and, depending on which view you take, has quite some room to move down further. The truth is that we are still in the middle of a historic crash. However, as with such market dislocations, there are very attractive opportunities to invest and make profits if one has capital, patience, expertise, and a good plan in place.
Using data, I feel the people that are calling for a bottom are the soon-to-be victims of a massive head fake; why the nightmare has a long way to go; and how you might be able to profit from it.
Why Everyone Is Wrong – This Isn’t a Bottom
There are four items in place that are tricking people into calling a bottom, when in fact three of these items are temporary. The result is an artificial restriction of supply and artificial pumping of demand.
1) It’s the seasonally strongest buying season
2) There’s a foreclosure moratorium about to end
3) Federal tax credits offered for 1st time homebuyers
4) Historically low mortgage rates (this may or may not change soon)
Why More Foreclosures Are Coming – A Lot More
Foreclosures will continue to come as long as the job market does not get better. Also, borrowers who have Alt-A loan products will have those coming due in the next couple of years and many of the loans will not qualify for the current values resulting in their homes being foreclosed on. The result is that the market will be flooded with new supply, and without artificially increased demand, prices will continue to drop.
So How Do You Profit?
There are a few places to fish to take advantage of these trends, depending on how you see things playing out. One school of thought says that all those people being foreclosed on will have to live somewhere, and that may mean that apartment buildings see higher demand. But you’d be barking up the wrong tree. Apartment rental rates are going down. More likely, people who need a house to live in and get foreclosed upon still need a house to live in. So house rental rates will be fine. In this case, apartment REITs in the big housing bubble cities might be one thing to short.- Larry Meyers
No recovery in California until 2011, forecast says
Unemployment in California and Los Angeles County will increase well into 2010, continuing to exceed the highest levels since at least the end of World War II, according to a local economist whose projections for the Southland economy are among the most negative to date.
Continued sluggishness in key industries such as construction, retail, international trade and hospitality will keep the state from a full recovery until 2011, said the report, released by the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp.
“Most people haven’t experienced anything like this in their lifetimes,” said Jack Kyser, founding economist of the Kyser Center.
California’s jobless rate, which was 11.6% in June, will average 12.6% next year, according to Kyser, who also projected that Los Angeles County’s unemployment rate will be even higher, averaging 12.8% in 2010. The county’s jobless rate was 11.3% last month.
Home construction will continue to fall, and the commercial real estate market will go through more distress as vacancies climb, the report predicts. As a result, it says, Los Angeles County will lose 168,000 jobs this year, led by the manufacturing sector, which is projected to shed 38,800 positions.
Some areas outside Los Angeles County are expected to fare even worse.
In San Bernardino and Riverside counties, where unemployment already tops 13%, the jobless rate will climb next year to an average of 14.7%, the forecast said.
“The Inland Empire will experience a longer and deeper recession than the rest of Southern California,” the report said. Escalating foreclosures and falling home values have created the region’s “worst-ever economic crisis.”
Data show housing market starting to recover
The U.S. housing market has started to recover from the most far-reaching crisis since the Great Depression, data released Thursday show.
Sales of previously occupied homes rose for the third month in a row in June, the National Association of Realtors reported. That hasn’t happened since early 2004, during the boom. “The turnaround in the housing market appears finally to be here and indeed may be gaining some speed,” wrote Joel Naroff, president of Naroff Economic Advisors Inc.
Stocks jumped on the news, with the Dow Jones industrial average rising above 9,000 for the first time since early January.
Home sales rose 3.6 percent to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Sales were up in all four regions of the country. It was the highest level of sales since last October and beat economists’ expectations. Sales had been expected to rise to an annual pace of 4.84 million units, according to Thomson Reuters.
In another encouraging sign, the share of foreclosures on the market is shrinking. About one out of three homes sold in June was foreclosure-related, down from nearly half earlier this year. And the glut of homes up for sale dwindled to 3.8 million. That’s a 9.4-month supply at the current sales pace and another important sign of a recovery. When the market balances at a 7-month supply prices should begin to stabilize, the Realtors’s group said.
That probably won’t happen until next year because of a backlog of foreclosures that have yet to come on to the market. The median sales price was $181,800 in June, down 15 percent from year-ago levels but up slightly from $174,700 in May.
Nevertheless, prices have risen for three straight months in about half of the 55 major metropolitan areas tracked by the Associated Press-Re/Max Housing Report, also released Thursday
Not !
Debt reduction pushes Ford to $2.3B 2Q profit
Helped by a lightened debt load, Ford Motor Co. posted a surprise second-quarter profit of $2.3 billion Thursday, following the worst loss in company history a year earlier. Shares rose 10 percent in morning trading.
Unlike GM and Chrysler, Ford avoided bankruptcy and government loans, mainly by borrowing or setting up credit lines totaling $23.5 billion in 2006 and 2007 to prepare for an economic downturn. Since then the company has cut costs and rolled out new vehicles, mitigating its sales decline in the worst auto sales market in more than a quarter-century.
NJ woman’s bake sale helps make mortgage payment
TEANECK, N.J. – A New Jersey woman’s bake sale has helped her forestall foreclosure.
Angela Logan raised the $2,559.54 due Sunday under a federal program to help homeowners in financial trouble.
The divorced mother of three sons in Teaneck wanted to sell 100 “mortgage apple cakes” at $40 each. But as of Tuesday, she had more than 500 orders, including one from Hong Kong .
Teaneck’s health officer notified Logan that it was against state law to use her house as a commercial kitchen.
But the Hilton Hasbrouck Heights has allowed Logan to cook in the hotel’s kitchen, where she can produce up to 10 cakes at a time.
Logan tells The Record of Bergen County she won’t stop baking until people stop ordering. ___
Information from: The Record of Bergen County, http://www.northjersey.com
California pension funds hammered
• CalSTRS portfolio loses 25 percent • CalPERS drops 23.4 percent
The Great Recession has hammered the values of the portfolios of the nation’s two largest public pension funds – the California Public Employees Retirement System (CalPERS), and the California State Teachers Retirement System (CalSTRS).
CalSTRS says it has a preliminary loss in value of 25 percent or $43.4 billion in its investment portfolio, putting the market value of its assets at $118.8 billion, as of June 30.
CalPERS says its portfolio lost $56.2 billion in value or 23.4 percent.
“These extreme economic conditions challenge even the most sophisticated investor. We have taken proactive steps at the height of the crisis,” says CalSTRS Chief Investment Officer Christopher Ailman.
CalSTRS says it has a long-term benefits funding shortfall of $22.5 billion as of June 30, 2008. While investment earnings are the single largest source of funds to pay benefits, the historic market declines show investments alone cannot close the funding gap., it says.
Closing the gap will require legislative action in the future to increase contributions made by the school districts and the state.
CalPERS is the nation’s largest public pension fund; CalSTRS is the second largest.
