Housing Rolling Along 2

Wonder where all the housing bulls have gone from this thread???

Check this property out, it last sold sold 11/09/2007: $571,500. Zillow estimated the highest value it attained was $660,000.

Look at the sale price now! This is a major neighborhood comp buster, or it may prompt the neighbors to walk away from their homes as well.


http://www.homesandland.com/Listing.cfm?RefererId=Zillow&ListingId=11775258

 

Yes, the bulls seem have disappeared.

It only seems yesterday when one of them was telling me to f off because I lived in another country and couldn't possibly understand the US housing market. And suggesting that other people just didn't own houses so they wanted it to go down. Funny that.

Every bubble ... "it's different this time."

In Australia they were saying "it's a US problem, China and India's demand will stop any of that affecting us."

It's always different

 

unbelievable!!!

how much would this thing rent for?

 

yeah, this thinking cracks me up. What happens when China implodes? Why do people think this can't happen? they are almost totally export dependent, and NEED 10% growth to keep everyone employed (or just make up jobs which they can do, but don't want to).

"Its always different this time" goes back decades at least. definitely the mantra during the Tech Wreck.

 

That's interesting as I was thinking of moving from Cal to Colorado!

Hones are definitely tanking here, but taxes are going up. Again. Massive tax increase next year to an already ridiculous tax regime.

I was raised in Cal, but I just can't stomach the taxes. I don't really care about home prices so much.

Now CO: 4.68% state income tax, AND really low property taxes. Durango here I come. I don't really like cities so much. Denver, even CO Springs is too big for me.

Jay

 

Outhere in the fly over state of Ohio, we don't have some of the issues some of you have. Nevertheless, I saw something in the real estate section the other day that almost made me fall out of my chair. To paraphrase: a home builder wrote this seemingly intelligent paragraph or two about his/her homes and why now is a good time to buy them. The ad said, sell your home in your old neighborhood even if it is in a loss. Why keep something in a declining neighborhood when you can move to a new home that will increase in value? Explain to me how a new home (nothing at all special about the neighborhood - except the commute will be longer) can go up in value, while a used one goes down. Both are in lower to upper middle class suburbs. The newer one is larger, probably less buyers if resold. Unbelievable.

 

As predicted much earlier in this thread, the home builders are starting to fail. They have taken many months to burn through cash on hand and now are facing the end. OWP

Aug. 4 (Bloomberg) — WCI Communities Inc., the homebuilder whose chairman is billionaire investor Carl Icahn, filed for Chapter 11 bankruptcy protection after failing to obtain new financing and losing 90 percent of its value in the past year.

Chief Executive Officer Jerry Starkey will leave the company and Chief Operating Officer David Fry, 48, will serve as interim CEO, Bonita Springs, Florida-based WCI said in a statement today. WCI is in talks to receive $100 million in debtor-in-possession financing from several lenders, the statement said.

WCI, which began developing master-planned communities in 1946, joins at least a dozen homebuilders that have sought bankruptcy protection since June 2007. Existing home sales in Florida, WCI’s biggest market, fell 5 percent in June to 11,700 and the median price tumbled 16 percent to $205,500, the Florida Association of Realtors said on July 24.

“The company, with all diligence, has attempted to avoid a bankruptcy filing,” Icahn said in the statement. “The filing became necessary because of the recent failed effort to obtain financing and the recognition that the company’s entire $1.8 billion of debt may soon be in default.”

 

And the $hitstorm grows ever more with no end in sight....OWP

The New York Times


August 4, 2008
Housing Lenders Fear Bigger Wave of Loan Defaults

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

The mortgage troubles have been exacerbated by an economy that is still struggling. Reports last week showed another drop in home prices, slower-than-expected economic growth and a huge loss at General Motors. On Friday, the Labor Department reported that the unemployment rate in July climbed to a four-year high.

While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.

Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets.

“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”

In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”

Delinquencies on mortgages tend to peak three to five years after loans are made, said Mark Fleming, the chief economist at First American CoreLogic, a research firm. Not surprisingly, subprime loans from 2005 appear closer to the end of defaults than those made in 2007, for which default rates continue to rise steeply.

“We will hit those points in a few years, and that will help in many ways,” Mr. Fleming said, referring to the loans made later in the housing boom. “We just have to survive through this part of the cycle.”

Data on securities backed by subprime mortgages show that 8.41 percent of loans from 2005 were delinquent by 90 days or more or in foreclosure in June, up from 8.35 percent in May, according to CreditSights, a research firm with offices in New York and London. By contrast, 16.6 percent of 2007 loans were troubled in June, up from 15.8 percent.

Some of that reflects basic math. Over the years, some loans will be paid off as homeowners sell or refinance, and some homes will be foreclosed upon and sold. That reduces the number of loans from those earlier years that could default. Also, since the credit market seized up last year, lenders have become much more conservative and have stopped making most subprime loans and cut back on many other popular mortgages.

The resetting of rates on adjustable mortgages, which was a big fear of many analysts in 2006 and 2007, has become less problematic because the short-term interest rates to which many of those loans are tied have fallen significantly as the Federal Reserve has lowered rates. The recent federal tax rebates and efforts to modify more loans have also helped somewhat, analysts say.

What will sting borrowers more than rising interest rates, analysts say, is having to pay interest and principal every month after spending several years paying only interest or sometimes even less than that. Such loan terms were popular during the boom with alt-A and prime borrowers and appeared appealing while home prices were rising and interest rates were low.

But now, some borrowers could see their payments jump 50 percent or more, and they may not be able to sell their properties for as much as they owe.

Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights.

“More delinquencies look like they are on the horizon because so few of them have reset,” Mr. Watts said about alt-A mortgages.

The wave of foreclosures is still rising in states like California, where many homeowners turned to creative mortgages during the boom. >From April to June, mortgage companies filed 121,000 notices of default in California, up nearly 7 percent from the first quarter and more than twice as many as in the second quarter of 2007, according to DataQuick, a real estate data firm based in La Jolla, Calif. The firm said the median age of the loans increased to 26 months from 16 months a year earlier.

The mortgage giants Freddie Mac and Fannie Mae, which own or guarantee nearly half of all mortgages, are trying to stem that tide. Last week, they said they would pay more to the mortgage servicing companies that they hire to modify delinquent loans and avoid foreclosures.

Delinquencies in prime and alt-A loans are particularly challenging for banks because they hold more such loans on their books than they do subprime mortgages. Downey Financial, which owns a savings bank that operates in California and Arizona, recently reported that 11.2 percent of its loans were delinquent at the end of June, a big increase from the 6.1 percent that were past due at the end of last year.

The bank’s troubles stem from its $6.2 billion portfolio of so-called option adjustable-rate mortgages, which allow borrowers to pay less than the interest owed on their mortgage in the early years. The unpaid interest is added to the principal due on the loan, so over time borrowers can owe more than the initial loan amount. Eventually, when loans grow by 10 percent or 15 percent, the borrowers are required to start paying both the interest and principal due.

Many borrowers who got these loans during the boom had good credit scores, but many of them owe more than their homes are worth. Analysts believe that many will not be able to or want to make higher payments.

“The wave on the prime side has lagged the wave on the subprime side,” said Rod Dubitsky, head of asset-backed research at Credit Suisse. “The reset of option ARM loans is a big event that will drive the timing of delinquencies.”

 

One Third of New Owners Owe More Than House Is Worth (Update1)

By Bob Ivry

Aug. 12 (Bloomberg) -- Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.

Negative equity and declining prices are making it difficult for homeowners to sell property for a profit. Almost one-quarter of U.S. homes sold in the past year were for a loss, Zillow said. That contributes to the foreclosure rate because some homeowners can't absorb the loss and end up surrendering their homes to the bank that holds the mortgage, said Stan Humphries, Zillow's vice president of data and analytics.

``For homeowners who need to sell, this is a gravely serious situation,'' Humphries said in an interview. ``It can also be harmful to communities where the number of unsold homes adds more to inventory and puts downward pressure on prices.''

The highest percentages of homeowners with negative equity were located in California. In four of the state's metropolitan areas -- Stockton, Modesto, Merced and Vallejo-Fairfield -- the number of homeowners whose mortgage debts exceeded the values of their properties topped 90 percent, Zillow said.

In five more California areas -- the Inland Empire (Riverside-San Bernardino), Bakersfield, Yuba City, El Centro and Madera -- the percentages were more than 80 percent.

Foreclosure Sales

In Stockton and Modesto, more than half the sales in the second quarter were of foreclosed homes, Zillow said. Almost 15 percent of sales nationwide were foreclosures, the company said.

Prices fell on a year-over-year basis in 140 out of 165 markets, Zillow said. Pittsburgh, Oklahoma City and Austin, Texas, were among the markets that saw rising home values, the company said.

The 9.9 percent decline in home values was the largest on a year-over-year basis in at least 12 years, Zillow said. The median home price of $206,919 was the lowest since the fourth quarter of 2004, the company said.

``Sellers are starting to adjust their expectations,'' Zillow Chief Financial Officer Spencer Rascoff said in a Bloomberg TV interview. ``More sellers accepting a loss is actually a sign of optimism. It means that the transactions might start happening. There are so many sales contingent upon the buyer selling their home.''

The Zillow Home Value Index is the median valuation for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period, the company said. The index at the national and metropolitan area levels is calculated using a weighted average of the median home value for each county, Zillow said.

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.

Last Updated: August 12, 2008 10:23 EDT

 

The UK housing market isn't strong, it's down 10% year on year and weak as hell. Mortgage financing has completely dried up and volumes have collapsed.