December 2009
32 posts
Huge Increase in Shadow Inventory
SOURCE: UPI Real Estate “The number of foreclosed and repossessed homes owned by lenders but not yet on the market is up 54 percent in the third quarter over a year ago. The 1.7 million homes currently in the “shadow inventory” significantly increases calculations of the inventory of homes for sale, according to a new report from First American CoreLogic. The current total...
Dec 30th
Real Estate Market Stalls in October
Source: Reuters | Real Estate “In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a rise of 0.2 percent according to a Reuters survey. September’s index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent. Only seven of the 20 cities in the composite index had...
Dec 29th
Did the Obama Foreclosure Plan Fail?
Source: The Moderate Voice “Since March when the Obama program began, 760,000 homeowners were offered loan modifications but only 31,000 were eligible. Of those, only 781 (less than 1%) were determined permanently enrolled. Those were “qualified” homeowners defined as having made at least one in three consecutive payments on time. Nationally, 14% of homeowners with mortgages are either...
Dec 29th
Urban Farming on Detroit's Empty Lots
Source: LA Times “There’s so much land available and it’s begging to be used,” said Michael Score, president of the Hantz Farms, which is buying up abandoned sections of the city’s 139-square-mile landscape and plans to transform them into a large-scale commercial farm enterprise. Large gardens and small farms — usually 10 acres or less — have cropped...
Dec 28th
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Texas & Wyoming See Population Growth
CLICK HERE for an interactive map of the results. Source: CNN Money | Real Estate “In the year ended July 1, Texas added more people than any other state, and Wyoming had the highest growth rate in the nation. The population of the United States has grown more than 9% to 307,006,550 since the 2000 census. The population grew 0.86% since last year’s estimates. Just three states...
Dec 24th
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Top 10 Upcoming Government Defaults
Source: Blogging Stocks “The new index is called the cumulative possibility of default (CPD). If, for example, a country has a 20% CPD, it has a one in five chance of defaulting in the next five years. Also included is their most recent credit rating. Here are the top ten countries, as ranked by CMA Datavision: 1. Venezuela: CPD 56.26%, credit rating BB- negative outlook 2. Ukraine: CPD...
Dec 23rd
Forbes: US Debt 840% of GDP
Source: Forbes Magazine “…the federal budget deficit will be $1.4 trillion. Just to make the size more visible, that’s $1,400 billion. Our colleague Rob Arnott, who always does terrific research, wrote in his recent report that “at all levels, federal, state, local and GSEs, the total public debt is now at 141% of GDP. That puts the United States in some elite...
Dec 22nd
California's "Shadow Inventory" is Growing
Source: OC Register “Banks and loan servicers are holding few foreclosures. That’s somewhat good news, because it shows buyers are taking foreclosures off the market. The ratio of bank owned properties (REOs) against all outstanding first mortgages in Orange County has fallen steadily since August 2008. It dropped as low as 0.27% at the end of October 2009, reports First American...
Dec 21st
Citigroup: 30 Days of No Foreclosures
Source: Christian Science Monitor “Starting Friday, Citigroup is giving some 4,000 homeowners 30 days without the threat of being evicted or foreclosed on. Both Fannie Mae and Freddie Mac are planning to announce a moratoriums on evictions for the holidays. Many other financial institutions are expected to follow suit in the days ahead. The holiday goodwill comes at a time when mortgage...
Dec 21st
Foreclosures Attract Mostly Single Buyers
Source: Realty Trac | Harris Poll 57 percent of U.S. adults ages 18-34 are at least somewhat likely to consider    purchasing a foreclosed home, compared to a little less than one-quarter    of those ages 55 and older (24 percent). Current renters (57 percent) are more likely to consider purchasing a foreclosed    home than current homeowners (38 percent). One in two U.S. adults (50 percent)...
Dec 16th
Foreclosure Properties Find Fewer Buyers
Source: Agent Genius “Today, a new Harris Interactive poll shows the percentage of buyers at least “somewhat likely” to consider buying a foreclosed property fell from 55% in May to 43% in November. Is this a sign that the buyer pool is shrinking for foreclosure properties? On top of the news of an overall waning willingness to purchase foreclosures, buyers’ expectations are changing. 65%...
Dec 16th
Weyerhaeuser: From Paper to Real Estate
Source: Market Watch News “Weyerhaeuser said that by the end of the year in which it converts to a REIT [Real Estate Investment Trust], it must issue a special dividend to shareholders of its undistributed earnings and profits. In 2010, it projects earnings and profits just shy of $6 billion. Sterne Agee & Leach analyst Mark Connelly said in an interview that investors have been...
Dec 16th
Big Banks Bet on Short Sales in 2010
Source: Bloomberg | Real Estate News “Banks are beginning to go along with short sales in increasing numbers, three years into a U.S. housing slump that pushed the economy into a recession and cut resale values by 30 percent from the peak in July 2006. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier. Yet for each short sale, there...
Dec 15th
Bank Failures Accelerating in 2010
Source: Calculated Risk “…more bank failures in 2010 than 2009. This is primarily because many FDIC insured banks are overly exposed to Construction & Development (C&D) and Commercial Real Estate (CRE) loans. Bank failures will continue to accelerate into next year despite “some encouraging signs” that things are turning around for the battered industry, FDIC...
Dec 14th
How Goldman Sachs Took Down AIG
Source: Wall Street Journal “Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom… In Goldman’s biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one...
Dec 13th
Small Business Owners Losing Confidence
Source: Reuters | Entrepreneur News “It seems not even a modest increase in Black Friday sales volume was enough to boost morale among small business owners. “The biggest problem continues to be a shortage of customers,” NFIB chief economist William Dunkelberg said in a statement. Among the 825 respondents to the NFIB survey, just 16 percent said they planned to make any capital...
Dec 13th
Volcker Says 2010 Looks "Pretty Sluggish"
Source: Bloomberg | Real Estate “Former Federal Reserve Chairman Paul Volcker said imbalances in the structure of the U.S. economy pose a bigger challenge than the financial crisis and will impede economic growth for some time. “We have another economic problem which is mixed up in this of too much consumption, too much spending relative to our capacity to invest and to export,” Volcker,...
Dec 12th
Barry Ritzholtz Forecasting 2010
Source: The Big Picture Do stocks reliably forecast the real economy? “Bull****. There is no consistent correlation,” says Ritholtz. Where are stocks headed from here? “The data and historical trends suggest the 2009 bull rally is about 75% played out. After that, the market will roll over and saw-tooth sideways for a few years.”
Dec 12th
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Letting Judges Modify Mortgages?
Source: Market Watch “It’s going to be contentious,” said House Financial Services Committee Chairman Barney Frank, D-Mass., after being questioned about whether he believes it will pass. The cram-down measure, which was introduced by Rep. John Conyers, D-Mich., chairman of the House Judiciary Committee, would allow bankruptcy courts to extend repayment periods, reduce interest...
Dec 12th
The Global Threat of Sovereign Defaults
Source: Reuters | Global Economics “Concerns about potential government insolvencies took the spotlight after a debt crisis erupted in Dubai last month and after ratings agencies this week cut Spain’s credit outlook to negative and downgraded Greece’s credit rating. Sovereign concern, “for the next at least two to three years, will definitely be a risk factor in the...
Dec 11th
The Coming Chinese Financial Crisis
Source: Zero Hedge “In a very important respect, the deflationary infrastructure boom currently under way in China is a perfectly normal part of the industrialisation process. In the UK, we had an infrastructure overbuild in the form of a railway mania in the 1840s; the US had one in the 1850s and the 1860s; Germany had one in the 1860s too. So although it?s often said that ?bubbles...
Dec 11th
The Coming Tsunami of Bond Defaults
Source: Forbes Online “Expect many more unpleasant situations like that Dubai. Speculative-grade debt issuers are bracing for the default rate to hit 12% to 14% by the end of 2009, according to our projections at Bain & Company. The last time the U.S. economy experienced default rates of that magnitude was 28 years ago. The current long-term average default rate is 4.5%; as recently as...
Dec 10th
Toxic Titles and Local Real Estate
Source: Calculated Risk Communities with weak underlying economies are characterized by a long trend of population loss, gradual impoverishment, and strained municipal resources. For cities like Cleveland, Detroit, and Indianapolis the increase in foreclosures over the last few years has exacerbated a pre-existing vacancy problem. The increased rates of foreclosures and the related economic...
Dec 10th
Real Estate Market Stabilized in 2009?
Source: Reuters | Real Estate U.S. homes lost $489 billion in value during the first 11 months of 2009, significantly less than the $3.6 trillion lost during 2008, according to analysis of recent Zillow Real Estate Market Reports. Furthermore, 48 of the 154 markets tracked by Zillow, or nearly one in three, showed gains in home values during 2009. “Home values stabilized significantly...
Dec 9th
Foreclosure Activity Continues to Drop
Source: MSNBC Real Estate “Millions of borrowers are still being evaluated for the Obama administration’s foreclosure prevention effort. States are also trying to delay the foreclosure process, temporarily lowering foreclosure numbers. But the foreclosure crisis is likely to get worse before it gets better. “We don’t really believe the underlying problems have been...
Dec 9th
How to Fix the Shadow Banking System
Source: The Atlantic “The shadow banking system was built up alongside the traditional banking system, using some of these tools of modern finance we were just talking about like interest rate swaps and credit default swaps. The idea was to make credit cheaper for the ultimate borrower and more available, but also to separate the credit system from the payment system. A lot of the...
Dec 9th
The Shadow Banking System
Source: Wikipedia In a June 2008 speech, U.S. Treasury Secretary Timothy Geithner, then President and CEO of the NY Federal Reserve Bank, described the growing importance of the shadow banking system: “In early 2007, asset-backed commercial paper conduits, in structured investment vehicles, in auction-rate preferred securities, tender option bonds and variable rate demand notes, had a...
Dec 9th
Four Global Economic Scenarios for 2010
Source: Zero Hedge “This scenario is the most likely and suggests that we start to see gradual easing off the gas from the authorities but only as it’s proved that there is some momentum in the underlying economy. Under this scenario risk assets have a good year but returns are checked to some degree by rising bond yields and less stimulus being injected into markets. A satisfactory year...
Dec 8th
Does the Fed Control US Mortgage Rates?
Source: Bill Mews | ActiveRain “Wrong. Lawrence Yun explains: The Fed’s activities influence mortgage rates but don’t directly control them. What the Fed sets is a very short-term interest rate called the Federal Funds Rate. Mortgage rates are determined by global savings as well as credit spreads and inflationary pressures. Over the past two years, the Fed has raised the Fed...
Dec 8th
Pinto Speaks Out Against HAMP
Source: Wall Street Journal | Real Estate “The first shortfall is that the program doesn’t provide a clear process to triage the over 7.5 million delinquent loans. The second is that it doesn’t take into account that the primary reason borrowers default is “negative equity.” When a house is worth less than what is owed on it, making monthly payments seems like a...
Dec 7th
Obama's Economic "SWAT Teams"
Source: BusinessWeek “Zients and his team swoop in to put out fires—such as embarrassing delays in GI Bill payments and the Cash for Clunkers program. The “SWAT team” is how Peter R. Orszag, director of the Office of Management & Budget and Zients’ boss, refers to the trio. Policy experts from the right and left are skeptical Zients can make any substantial progress...
Dec 7th
RE/Max: 2010 is the Year of the Short Sale
Source: Denver Business Journal “Re/Max International Inc. of Denver expects “short sales” — sales of homes for less than the amount owed on the mortgage — to increase nationwide because of the federal government’s newly released guidelines for such sales. “Until now, the short sale process has been cumbersome for all involved, and took upwards of eight to 10 months for a transaction to...
Dec 6th