Home Prices Post Record 15.3% Drop

Prices in 20 cities fall for 21st month in a row. One sign of hope: Pace of decline eased in many areas.

U.S. home prices posted record declines in April, extending a painful losing streak for U.S. home prices.

The S&P/Case-Shiller 20-city Home Price Index fell to a record low of 15.3% on a year-over-year basis, and was down 1.4% from March. The 10-city index was down 16.3% year-over-year and 1.6% for the month.

The 20-city index is based on data going back 19 years, while the 10-city index is 21 years old.

There is one sliver of hope. Although every city surveyed posted year-over-year price drops, the month-to-month pace of declines did slow in many cities. And eight metro areas actually posted gains from March to April.

Bright spots
Hard-hit Cleveland was the biggest winner, with prices up 2.9%. Charlotte, N.C. posted a slight gain of 0.2%, up for the second straight month, while Dallas prices were up 1.1% in April, also up for the second month in a row.

"There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline," said David Blitzer, Chairman of the Index Committee at Standard & Poor's.

Indeed, there are anecdotal reports that investors have begun to snap up distressed Cleveland properties at very low prices, according to Dean Baker, Co-Director of the Center for Economic and Policy Research, a Washington-based think tank.

"The data suggests that Cleveland has found a bottom," he said, "although it's just one month's data and I wouldn't make too much of it."

Also on Tuesday, the Office of Federal Housing Enterprise Oversight (OFHEO) reported that its monthly house price purchase index was down 4.6% year-over-year in April.

While the closely-watched Case-Shiller index tracks the sale prices of the same homes over the years, OFHEO's index only tracks sales of homes with mortgages insured by Freddie Mac and Fannie Mae. These loans were for $417,000 or less, until Fannie and Freddie's loan limits were raised in early March.

The overall price declines reported by Case-Shiller have been remarkably consistent over the past two years. Prices on the 20-city index have dropped for 21 straight months, since July 2006. The 10-city index has fallen every month since June 2006.

Declines accelerating
What's more, recent drops have been particularly steep. The 20-city index fell 2.2% in March, 2.6% in February and 2.3% in January, and is now it down another 1.4%.

"In the bubble markets, we continue to see very rapid rates of price declines," said Baker. "If anything, it may be accelerating."

Las Vegas prices plunged 26.8% compared with April of 2007, the worst drop among the 20 cities Case-Shiller covers. Prices there fell 2% in April.

Other hard hit cities include Miami (down 26.7% year-over-year and 4.1% in April), Phoenix (25% and 3.4%) and Los Angeles (23.1% and 2.2%).

"Bubble markets are now trapped in a vicious negative cycle," said Mark Zandi, chief economist for Moody's Economy.com, "with foreclosures driving prices down, which leads to more foreclosures."

Foreclosures account for a much larger proportion of sales than they did a year ago, he said, and that pulls down the numbers. "But just because the average home in your market is down 25%," he said, "doesn't mean that your house is down 25%."

Still, plummeting prices could derail some of the foreclosure prevention efforts underway across the nation. As home prices fall, that wipes out home equity, often leaving homeowners underwater, with mortgages worth more than their homes.

Some 10 million homeowners are now underwater, according to Economy.com, and that number will continue to grow as home prices plummet.

Underwater borrowers have higher rates of foreclosure than those with some home equity, since they can't tap their homes for cash in case of an emergency. And some owners are simply walking away from homes that have lost so much value rather than continuing to make expensive payments every month.

The flood of foreclosures may be darkening an already bleak picture, said Zandi, "but the market is very bad right now."

If you feel poorer lately its not just a feeling it is a reality. We are facing an economic perfect storm that has the ability to wreak havoc for the next few years as we try to dig our way out of the mess left behind by the awful policies of this administration.

They allowed the financial industry to regulate itself and as usual the American people are left holding the bag while those at the helm of these financial firms walked away with millions. Once again the little guy gets screwed while the rich laugh all the way to the bank after robbing the middle and lower classes.

New Home Sales: Biggest Drop Ever

Weak December sales caps 2007's record slide, with prices for the month off sharply from a year earlier.

New home sales posted the biggest drop on record in 2007, according to the government's latest look at the battered housing market, as a year that saw a meltdown in the mortgage market and a drop in home values ended with yet more signs of weakness.

December sales came in at an annual rate of 604,000, the Census Bureau report showed, down from 634,000 in November, which was also revised lower.

The reading was well below the consensus forecast of 645,000, according to economists surveyed by Briefing.com.

The weak December sales left full-year new home sales at 774,000, down 26 percent from the 1.05 million sales in 2006. That was the biggest drop since the government started tracking new home sales in 1963, surpassing the 23 percent decline posted in 1980.

No bottom yet Adam York, an economist with Wachovia, said the report confirms fears that the housing market won't bounce back anytime soon.

"We're expecting sales to decline into at least mid-2008," he said. "We think housing still has a long way to go."

Its really amazing how much damage has been done to the housing market as a result of the subprime mortgage crisis. By giving loans to those that could least afford it, the price of homes remained artificially high and the resulting bubble has burst causing financially pain not only in the United States but around the world.

Will we learn anything from this situation and enact meaningful reforms to stop the next crisis from happening? History says no so let the buyer beware.

Home Sales Record First Drop On Record

The median price for a homes dropped 1.3 percent to $219,000 in 2007, while total home sales plunged by 13 percent for the year.

Prices of homes sold in December registered the biggest year-over-year decline on record, according to a report from an industry trade group, and 2007 is the first year on record that has seen a drop.

The National Association of Realtors (NAR) said on Thursday that the median price of homes sold in December fell nearly 6 percent from a year earlier to $208,400. The three biggest declines in prices ever recorded have now come in the last four months.

In addition to the December price decline, NAR reported the median price for all homes sold in 2007 fell 1.3 percent to $218,900, the first time that the annual price reading has shown a decline since the group started tracking that measure in 1968.

Now that we have definitive proof that the housing market has collapsed, what next for beleaguered homeowners? The problem is that this will effect all aspects of the economy. Do you think they will be building homes in Florida with foreclosures on every block? Do you think homeowners will be remodeling when their homes are declining in value?

What about those that lose their jobs as a result of this mess? How many of them will wind up in foreclosure? Do you understand now why this is bringing down the economy?

Home Prices Post Record Drop

Hey don't worry, the fools who caused this mess all walked away with millions while the average homeowner has been clobbered.

Home prices fell 6.7 percent in October, compared with a year ago, according to the S&P/Case-Shiller 10-city home-price index, a record drop as housing markets continued to deteriorate.

It was the largest drop in more than 16 years and marked the 10th consecutive month of price depreciation and 23 months of decelerating returns.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert J. Shiller, chief economist at MacroMarkets in a release.

Case-Shiller's 20-city index fell 6.1 percent. Shiller noted that 11 of the markets in the 20-city index posted a record fall.

Some economists are beginning to lower their expectations for housing markets, predicting a longer and deeper price slump than they had previously forecast.

Several factors are hurting markets: Inventories are high with an 11-month supply of homes already for sale; a spike in foreclosures has added to the supply; and there are many vacant homes on the market, which tend to have very motivated sellers, depressing prices more quickly.

This is the result of deregulation and greed. Unfortunately greed will always be present which is why we need more oversight not less. This idea that industry will police itself is insane and the proof as they say is in the pudding.

US Foreclosure Filings Up 68 Pct in Nov.

The housing market just continues to decline.

U.S. homeowners increasingly failed to keep up with their home loan payments in November, as the number of foreclosure filings surged 68 percent nationwide compared with the same month a year ago, according to a mortgage research company.

In all, 201,950 foreclosure filings were reported last month, compared with 120,334 in November 2006, Irvine-based RealtyTrac Inc. said Wednesday.

I predict the housing market and subsequent economic decline will be the number one issue in the 2008 Presidential campaign and that can only spell doom for the Republican nominee.

It is hard to run on failed economic policies and even harder when you still beleive in the same policies that got us into this mess.

New Home Prices Plunge

New home prices plunge but buying still lags.

The biggest plunge in new home prices in 37 years was not enough to revive October sales, according to the government's latest reading on the battered housing and home building markets.

The sales pace for October was well short of economists' forecasts. The Census Bureau's latest report also sharply cut back on its earlier estimates for sales in August and September, when a meltdown in mortgage markets kept many potential buyers from getting the financing they needed.

Also depressing sales and prices was a record 191,000 completed new homes on the market that have not yet been sold.

This report tells you that home prices have a lot more to fall. Even with the steepest price drop in 37 years, people are still not buying. Where is the bottom in this market and how much of the economy will it take down with it?

Consumer debt is at an all time high and the affordability index at an all time low. Together this is a toxic mix for the housing market. Fear will keep even those who can afford a home on the sidelines while this all shakes out. The economic worries for 2008 seem to grow by the day.

Next year should be so much fun.

Foreclosures Still Going Strong

With reports like this you have to wonder where the bottom is in this housing market?

Three states, California, Florida and Ohio, continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter, according to a new survey.

During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months, according to the latest report from RealtyTrac, an online marketer of foreclosure properties.

The three most affected states reveal the two main causes of mortgage payment problems: economic weakness, as exemplified by Ohio, and speculative excess that led to high home prices and unaffordable mortgages, as represented by California and Florida.

With states like Ohio and Michigan firmly entrenched at the top of the foreclosure lists you begin to realize that its as much economic weakness as it is the subprime mortgage mess. Our manufacturing base is gone and reports like this solidify that fact.

In the past few months, the foreclosure story has become a tale of two regions. Some of the hardest-hit states have traditionally been in the Midwest, where plant closings and job losses have hit the economy there hard.

The other region is the Sun Belt, which is showing even more significant foreclosure growth as out-sized price increases in the first half of the decade led to virtually unchecked real estate speculation.

According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes.

This report only makes my prediction of a recession stronger. The Federal Reserve will do all it can to ward off recession until at least the next administration takes office. I feel sorry for the next President. The mess they are inheriting will be monumental.

Foreclosures Just Keep On Rising

Foreclosure filings rise with more on the horizon as interest rates jump on a record number of adjustable mortgages.

Foreclosure filings climbed during the third quarter of 2007 with no relief in sight, according to a report released Thursday.

The report by RealtyTrac, an online marketer of foreclosure properties, showed the number of filings rose 30 percent from the previous quarter and nearly doubled from a year earlier.

"Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," James J. Saccacio, chief executive of RealtyTrac said in a statement.

More than 635,000 foreclosure filings were reported nationwide - one for every 196 households. The filings include everything from default notices to auction sale notices to actual bank repossessions.

"August and September were the two highest monthly foreclosure filing totals we've seen since we began issuing our report in January 2005," said Saccacio.

There is not much to add to such a bleak housing picture except that the housing situation and the coming recession is the worst possible news for the Republican party. They have driven the economy into the ground and the American people are finally waking up and realizing that. They will be severely punished at the ballot box in 2008 and it could not happen to a nicer bunch of fools.

A Foreclosure Nightmare - A Real Story

This is the story of someone facing a mortgage foreclosure, someone who is trying desperately to work with the mortgage company to work out payment. The problem is the mortgage company is unwilling to bend at all. Let me give you the details.

My sister purchased a home in Spring Hill FL a few years back before her husband decided to get a drug problem and skip out on her and the children. This was her second marriage. Her first husband was killed by a co-worker some years back. Through two marriages she has 7 children. I know that is just insane and it is no ones problem but her own that she was so irresponsible to keep having children that she simply could not afford. That fact means very little in terms of this discussion. She has been making her mortgage payments every month but had not paid her taxes which she believed were part of her payments but her contract called for her to pay the taxes directly. This put her behind two payments. She was not aware of this fact until after the first year of non tax payment. The mortgage company paid the taxes and she had her payment increased to cover the tax escrow. They included the first years unpaid tax as well as escrowing for the second year. She began making the higher payments by taking on a second job but has been unable to get caught up. Each month she is late they continue to pile on late charges and they threaten her daily with foreclosure. Today she asked me to talk to them. I agreed to help her out financially to get her caught up. My conversation with Chase Mortgage Services was less than productive. In fact it was down right frustrating and disheartening.

I told them I was willing to help her get caught up and asked how much they had piled on in late charges. The late charges were close to $500.00. Since her pay periods are such that she can only pay at the end of each month late charges are assessed every month. I asked if they could change the due date so she could avoid all the late charges, that was refused. I asked if they could waive the late charges so that she would be able to get caught up more easily, that was refused. At that point I asked what I could do to get this matter resolved. I was told the only way to avoid her being sent to foreclosure was to pay $1200 immediately or it would progress to the next level. That would mean legal fees and additional charges and for sure this would lead to foreclosure. I offered to pay half of that immediately and then $500.00 monthly until the account was caught up. That would be in addition to the monthly payment that she has been making every single month. My offer was refused. I told them that the house would never be sold since there are foreclosures all over the area that she lives. I asked why they would want another foreclosed property on their books when they were receiving payments every month. My sister, in prior conversations with Chase Mortgage Services said that she would make up the entire balance with her tax refund that she would receive in February. Now remember she was making a monthly payment at the higher rate this whole time. In my discussions with Chase it was revealed that they were also charging her for homeowners insurance which she pays herself on a monthly basis and it is one bill that she is not behind on. This was an obvious Chase mistake and I pointed that out. Again I was told it didn't matter that they needed a payment of $1200 now or they would start foreclosure proceedings. We went to them willing to do what was necessary to get this mortgage caught up. All we asked was that they meet us half way. I told them my sister was a single mother with seven children and that meant nothing to them. The prospect of a homeless family fell on deaf ears.

My sister has two jobs and one doesn't provide health care and the second job the employee costs of the plan are too high and therefore unaffordable. She is one of the 47 million uninsured. Her children would benefit from SCHIP but she was recently told that she earned too much to have them qualify. Her children would have been covered under the bill vetoed by that moronic fool we call President Bush. Her story is certainly not unique. It is a story shared by millions while those at the top continue to gain an ever larger percentage of the pie. When will this madness stop? We are a country will a shrinking middle class an ever expanding deficit. We spend more on defense than all the nations of the world combined yet are losing two wars simultaneously.

If anyone knows of any legal recourse we have to stave off foreclosure that would not involve heavy legal fees please let me know. This situation has left me so angry I could spit nails. Here you have someone who is saying I am not avoiding paying what I owe I just need some flexibility to allow me to get the payments caught up and the flexibility is not there. Hell human decency doesn't even seem to be there on the part of Chase Mortgage Services. This situation seems like a perfect campaign issue for any of the Democratic hopefuls especially John Edwards who has made poverty a major focus of his campaign. If any member of the campaign staff happens to see this we would welcome the opportunity to take this story national. This is the type of situation that can happen to almost anyone struggling to make ends meet.

This incident has made me want to turn this site into a movement. My sister is one of tens of millions of working poor who are being destroyed by the corporate culture that permeates every part of our government. I want to build Save The Middle Class into a not for profit aimed at helping the middle and lower classes stand up to the systematic elimination that has been happening to them since the early 1980's.

It is time to make our voices heard loud and clear. It is time that we say enough is enough and demand fundamental changes to our political process. It is time for us to say that we will no longer sit by and watch as everything we have worked for is gobbled up by the wealthiest among us. We will not exist solely to service the rich and be grateful for the scraps they wish to throw our way. We will not let the working poor replace the middle class in this country which is happening at an alarming rate. We must demand that our Presidential hopefuls pay more than lip service to the plight of the middle and lower classes. It is an issue that can be agreed upon by both liberals and conservatives. It is an issue where mutual cooperation could be achieved. Please recommend this story so that we can start the process of saving the middle class and taking back our country.

Mortgage Meltdown More Costly Than The Savings and Loan Debacle of the 90's

Reports Suggest Broader Losses From Mortgages

Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up.

Merrill Lynch said yesterday that it would take a charge for mortgage-related securities on its books that is $3 billion more than the $5 billion it expected just two weeks ago. And a report from the National Association of Realtors showed that sales of existing homes in September fell twice as much as economists had expected, to their lowest level in nearly 10 years.

Ask yourself a question - what are the similarities of these two events? With both it was trusted financial institutions conducting shady business with the customer holding the bag. Will we need to bail out the financial institutions this time as well?

At this juncture, economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion.

That is far more than the roughly $240 billion cost, adjusted for inflation, of the savings and loan crisis of the early 1990s, according to estimates of the combined financial toll of that crisis on both the federal government and private sector. The loss in total real estate wealth is expected to range from $2 trillion to $4 trillion, depending on how far home prices fall, according to several economists.

With numbers like this do you still think we can avoid a recession? This is what happens with a lack of regulation oh and of course a Republican administration that beleivves in letting industry police itself.

Home Builders: Worst Is Yet To Come

The battered markets for real estate and home building still have farther to fall, according to a range of economists who spoke Wednesday at a forecast conference sponsored by the National Association of Home Builders.

The economists agreed that the problems with home finance markets will continue to hit housing into next year, and that even when there is a recovery, it will be a slow process that will see weakness continue into 2009.

While most said they believed the overall U.S. economy can weather the housing downturn, several saw significant risk of a recession. Mark Zandi, chief economist of Moody's Economy.com, said that large areas of the country will fall into recession, if they haven't done so already.

The economists also admitted to being surprised by how bad the housing downturn has become, and all said that making forecasts of a recovery is difficult due to the problems in the credit markets.

"This time, we just don't know how it's going to pan out because the securities markets have become so much more important," said David Seiders, chief economist with the builder's trade group.

The economists were surprised at how bad it is? What world are they living in? The savings rate is negative, personal debt is at an all time high and home affordability at an all time low. Subprime loans were the perfect teaser to keep the housing market sizzling. The problem is too much sizzle usually leads to a burn. The housing market could be charred beyond recognition.

Dollar Hits New Low as Unemployment Claims Spike Upward

The euro reaches $1.4305 after U.S. jobless claims spike.

The dollar fell to a new record low against the euro on Thursday, with the 13-nation European currency breaking through the $1.43 mark for the first time after Washington reported a spike in jobless claims.

The euro rose to $1.4305 in early afternoon trading in Europe shortly after the U.S. Labor Department reported that applications for jobless benefits hit 337,000 last week - up 28,000 from the week before and the biggest one-week surge since claims jumped 42,000 the week of Feb. 10.

It settled back slightly, to $1.4290, but was still up more than a penny from the $1.4186 it bought in late New York trading on Wednesday and was higher than the previous record of $1.4282 set Oct. 1.

The jobless increase was four times the gain of 6,000 that economists had been expecting and was taken as a possible sign that the labor market is starting to weaken under the impact of a housing downturn and turmoil in credit markets.

Earlier this week, both Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke warned that the housing crisis was likely to last longer than had been expected.

Of course the housing crisis will last longer. Who exactly will buy all these homes after foreclosure? Real wages are down for six years under this administration and the savings rate is negative for the first time since the great depression. With new underwriting standards on loans less people will qualify. This all adds up to a disaster in the making.

This is what happens when you kill the middle class.

Builders' Confidence At All-Time Low

Home builders see weakest buyer traffic in 23-year history of trade group survey, outlook for future remains at record low as well.

The nation's home builders' confidence in the battered market for new homes fell further in October, and a measure of their outlook remained at a record low level, according to the latest industry survey.

The National Association of Home Builders/Wells Fargo Housing Market Index showed the overall confidence measure sank to 18, the worst reading on record for the 23-year old monthly survey.

The trade group's statement said the problems included decreased availability of subprime mortgages, a glut of new homes available for sale and reports about declining home values.

The builders' expectations for the market six months from now came in with a reading of 26, matching the lowest reading on record that was set in September. And their view of current buyers' traffic fell to a record low reading of 15.

"Builders in the field are reporting that, while their special sales incentives are attracting interest among consumers, many potential buyers are either holding out for even better deals or hesitating due to concerns about negative and confusing media reports on home values," said NAHB President Brian Catalde.

The overall confidence reading reflects the eighth straight month in which that measure has declined. It has fallen sharply, and is down from a very strong reading of 74 only two years ago. A reading of 50 in any of the three measures indicates the number of positive responses from builders is equal to the number of negative responses.

The housing woes continue unabated with the worst still to come. The housing market correction will be very painful for millions but hopefully after the dust settles we will have a market that is both affordable and vibrant. This could not come at a worse time for the Republican party. What accomplishments can they point to over the past eight years? The rich got richer and the poor got poorer, not exactly a 30 second political commercial to sway the masses.

Home Ownership Declines Under Bush

This is what you call a successful Presidency.

For the first time since the Carter administration, homeownership in the United States is set to decline over a president's tenure. When President Bush took office in 2001, homeownership stood at 67.6 percent. It rose as the mortgage bubble inflated but is projected to fall to 67 percent by early 2009, which would come to 700,000 fewer homeowners than when Mr. Bush started. The decline, calculated by Moody's Economy.com, is inexorable unless the government launches a heroic effort to help hundreds of thousands of defaulting borrowers stay in their homes.

The foreclosure crisis is rooted in reckless and shamefully underregulated mortgage lending. Many homeowners, mainly subprime borrowers with low incomes and poor credit, are now stuck in adjustable-rate loans that have become unaffordable as monthly payments have spiked upward. Their predicament is not entirely of their own making, and even if it were they would need to be bailed out because mass foreclosures would wreak unacceptable damage on the economic and social life of the nation.

The relief efforts so far have been too little, too late. In August, the White House established a program to allow an additional 80,000 borrowers to refinance their loans through the Federal Housing Administration, on top of 160,000 who were already eligible. That's not enough. Foreclosure filings soared to nearly 244,000 in August alone.

Federal regulators and Treasury officials are urging mortgage lenders and mortgage servicers to do their utmost to modify loan terms for at-risk borrowers, but saying "please" hasn't worked. To be effective, modifications must reduce a loan's interest rate or balance or extend its term, or some combination of the three. Gretchen Morgenson reported recently in The Times that a survey of 16 top subprime servicers by Moody's Investors Service found that in the first half of the year, modifications were made to an average of only 1 percent of loans on which monthly payments had increased.

Does anyone still think the middle class is not an endangered species? This is the most destructive administration in our history.

When The Bubble Burst

This is what happens when the bubble bursts.

Out on Phoenix's suburban fringes, where cement mixers are fast colonizing hay and cotton fields, the day is winding to a close. The home hour has arrived.

But sundown gives away a troubling secret: Behind dark windows and unanswered doors, it's clear nobody is coming home.

They're empty, left behind by a rising tide of foreclosures

This is the story of one town on the outskirts of Phoenix but it could be many towns all across America as the roaring home prices have come crashing to the ground and brought with it the financial downfall of many middle class Americans. How did this happen? Stupidity, greed and the desire to live the so called American dream combined to create one of the biggest financial disasters in our nations history. The real problem is that the pain is just beginning.

Just last week banks and investment firms all across the country started reporting staggering losses as a result of these ill advised loan programs that were a disaster waiting to happen. So far firms have reported $20 billion in losses and it is just the beginning. What this all shows is that our economy is built on smoke and mirrors and when the smoke clears the devastation that will be felt by the middle class will be just another nail in its coffin.

The American Dream is overdue for revision.

"There's been a huge shift in the way people view their houses," says John Karevoll of DataQuick Information Systems. "Your house now can basically be used as an ATM."

The problem is that the ATM is out of funds and the economy will soon show the signs of this disaster in all areas. The trickle down theory of Reagan, that was called voodoo economics by the first President Bush but was embraced by the imbecile that currently occupies 1600 Pennsylvania Ave, is one that guarantees ever greater wealth to those at the top while those at the bottom wait for their scraps. Now we are seeing that theory in action and its not pretty.
When there is no middle class in America we will cease to be the beacon of hope that has attracted those to our shores. That shining beacon that was once the world's envy is now just a flicker and unless we fight to reignite the flame we will see the further erosion of the everyday person's standard of living while the rich will get ever richer.

Is this what you want for our future? It is time for the middle class to fight back and demand policies that benefit us all not just those rich enough to be able to make large campaign contributions. It is time for public financing of campaigns. Without it there is no chance for a different outcome.

Pending Home Sales At Record Low

Realtors report shows sharp drop in homes under contract, as mortgage lenders shut off financing needed to close deals.

The meltdown in the mortgage market in August dried up the supply of homeowners looking to sell, as an industry group reported the lowest recorded level of homes under contract.

The National Association of Realtors' pending home sales index fell to a record low of 85.5 from an upwardly revised 91.4 reading in July. That broke the previous low of 89.8 in September 2001, the period in which the terrorist attack shook buyer confidence. The trade group started the index in 2001.

This time the hit to home sales came from buyers having trouble finding the financing they needed to buy homes, coupled with the reluctance of some buyers to jump into the battered market.

"Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments," said a statement from Lawrence Yun, senior economist for the group. "The volume of activity we're seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can't because of the credit crunch."

Most lending institutions have raised the standards by which people can qualify for a loan. Those raised standards have made many people ineligible for the same loan that they could have qualified for during the rise of the housing market. The market which has a glut of homes will continue to see prices decline until this credit issue is resolved.

The pain in the housing industry is far from over and the indutries which rely on the houisng market will continue to face similar recessionary prewsures.

More Banks Could Join The Red-Flag Parade

After warnings by Citi and UBS, JPMorgan and others could follow with bad news of their own, though retail banking could lessen the pain.

Citigroup and UBS may not be the only banks breaking bad news to investors this month.

Analysts warn that other retail banks that report quarterly earnings in October, including JPMorgan Chase and Washington Mutual, could suffer similar pains.

Before Monday's opening bell, Citigroup warned that its third-quarter earnings could fall 60 percent because of its exposure to subprime-backed mortgage securities.

That announcement came just hours after Swiss-banking giant UBS said it would take a take a writedown of $3.4 billion and post a loss in the third quarter because of subprime-related losses.

The ones who will really get hurt by these results are the employees of these firms. I predict you will see layoffs at all these firms as they try to turn their financial results around. The workers who didn't create the problem will need to pay the price for the executive who knowingly created loans that they knew could not be paid back. As usual those who suffer most are those that deserve it least.

Bankruptcy 'tweak' could save 600,000 homes

Consumer group pushes for change to bankruptcy law; others worry about negative impact on mortgage-debt markets.

One consumer group estimates that 600,000 foreclosures could be avoided over the next two years by making a simple change to the bankruptcy code.

The Center for Responsible Lending (CRL) calls it a tweak, but it could be a significant change for homeowners and the market for mortgage-backed securities.

CRL's proposal - reflected in a House bill recently introduced - would make changes to the regulations for Chapter 13 bankruptcies, which don't wipe out debts, but rather establish a repayment plan.

Under current law, when a person files for Ch. 13 bankruptcy, judges cannot reduce mortgage debt owed on a person's primary residence, although they may modify mortgages on investment property or second homes.

Under the House bill, the bankruptcy judge would have the option of reducing what the homeowner owes the lender. Say a homeowner's property is worth less than what he owes. The judge could reduce the principal to match the home's current market value as well as reduce the loan's interest rate.

The rest of the original principal would then be treated as unsecured. That means it becomes a lower priority for repayment than the borrower's secured debt, such as the newly reduced principal on his home. Unsecured debts may be discharged.

This is exactly what should be done. The homeowner gets some reprieve on what is owed and can negotiate a better loan and the bank avoids a costly foreclosure. Look for the pro business crowd to scream loudly that this will ruin the market but what other options are available? They should have been screaming when these lending institutions were making loans to people without proper documentation. Its amazing how quiet the business community is when they are making huge profits off the backs of those that can least afford it. It is time for them to feel the same pain as those they tricked into these awful loans.

New Home Sales Hit 7 Year Low

Sales weaker than forecasts as lower prices can't clear out glut; pace of sales falls to levels not seen since June 2000.

The pace of new home sales fell to a seven-year low in August, according to a government report Thursday that showed the battered housing and home building markets even weaker than forecasts.

New homes sold at an annual pace of 795,000 in August, according to the Census Bureau, down 8 percent from the revised 867,000 sales pace in July.

It was the slowest pace of sales since June 2000, as buyers had trouble finding mortgages or selling their existing homes. Economists surveyed by Briefing.com had forecast that sales would fall to a pace of 825,000.

The report also showed the median price of a new home fell 7.4 percent from year earlier levels to $225,700 in the month, as prices were pressured by both the problems in mortgage finance and the excess supply of homes on the market.

The inventory of new homes on the market rose to an 8.2 month supply, as the glut of completed homes without a buyer was near a record high, with 180,000 completed homes listed for sale, just off the record high of 182,000 set in May of this year.

Can the entire housing market decline be blamed on just the mortgage meltdown or could it be that the affordability index, which is at an all time low, has played an equally important part of the housing market decline? In my area of New York it would be very hard to find many people who could afford their own home in today's market.

In the end it is all supply and demand and when the supply is overpriced the demand is low. How far will the prices fall? I believe in many areas you could see declines of 20% before this correction is over. The market needs to be affordable in order to grow. At present prices it is still unaffordable for most and this report on sales proves that point.

Home Sales Continue Spiral Down

Sales of existing homes drop for 13th consecutive month.

Housing markets continued to slump across the nation in August as the number of existing homes sold dropped for the 13th straight month, according to the latest report from the National Association of Realtors.

Sales fell 4.3 percent from July to a seasonally adjusted annualized rate of 5.50 million. Sales have fallen 12.8 percent since last August's pace of 6.31 million homes.

Lawrence Yun, senior economist for NAR, blamed much on the loss on the current credit crunch. "The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through," he said in a statement.

The slump pushed up the inventory glut to 4.58 million existing homes, the highest level in 16 years. There is now a 10-month supply of homes on the market at the present rate of sales.

They keep telling us the U.S. economy is healthy yet the housing market has collapsed, the Federal Reserve felt a rate cut was necessary to ward off inflation and the U.S. dollar continues its free fall. Now that is a good economy.

August Foreclosure Filings Highest Since Jan 05

Foreclosure filings rose 36 percent in August from July and 115 percent from a year ago, hit by declines in once-hot housing markets such as California, Nevada and Florida, according to a report released on Tuesday.

RealtyTrac's U.S. Foreclosure Market Report found the number of foreclosure filings in August -- default notices, auction sale notices and bank repossessions -- was 243,947, the highest since it began its monthly report in January 2005, just months before the housing boom peaked.

That translates into one foreclosure filing in August for every 510 households, also a high for the RealtyTrac report.

"The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now," James Saccacio, RealtyTrac's chief executive, said in statement.

Will the Federal Reserve rate cut help homeowners who are close to foreclosure? The answer is probably no since many banks have raised their underwriting standards and whatever equity these homeowners had has evaporated with the housing price decline. This will make many of them unable to qualify for any loan.

The Bloodbath in The Mortgage Industry Continues

Countrywide Cuts Foretell Loss of U.S. Mortgage Jobs

The worst U.S. housing slump in 16 years may lead mortgage companies to eliminate almost 100,000 jobs, more than double the number already cut this year.

As many as 20 percent of the nation's real estate loan officers and mortgage brokers will be fired, according to Josh Rosner, managing director at the New York investment research firm Graham Fisher & Co. That's in addition to the 10 percent reduction from December to July that thinned their ranks to 450,000 as investors stopped buying mortgages and lenders curtailed financing to avoid rising subprime defaults.

``Originations are going to decline dramatically,'' Rosner said. ``We are just at the front-end of seeing the large banks and investment banks start to cut their capacity.''

Countrywide Financial Corp. said Sept. 7 it will cut 10,000 to 12,000 jobs. Lehman Brothers Holdings Inc., the biggest underwriter of mortgage-backed bonds, and IndyMac Bancorp Inc., the second-biggest U.S. home-loan company, also announced job reductions last week.

At least 100 mortgage companies have sought buyers or halted lending since the start of 2006, according to data compiled by Bloomberg. A record number of Americans faced foreclosures in the second quarter, the Mortgage Bankers Association in Washington reported last week.

The housing bubble didn't just burst, it exploded all over the whole economy and will have chilling effects on many industries. Unfortunately the pain is just starting and could get a whole lot worse before it gets better.

Unexpected Job Dip In Aug. Jolts Stocks, Ups Recession Odds

The U.S. economy lost jobs for the first time in four years in August, raising the odds of a recession and making aggressive Federal Reserve interest rate cuts more likely.

Nonfarm payrolls fell by 4,000, the Labor Department said Friday, confounding Wall Street's forecast of a 110,000-job gain. It was the first decline since August 2003.

June and July payrolls were revised down by a combined 81,000.

The jobless rate held steady at 4.6%, near a six-year low, according to the separate household survey. But that was because 592,000 people left the work force.

"There's not a lot of sugar coating that can be done here," said Richard DeKaser, chief economist at National City Corp. (NYSE:NCC) "I think it's time for some aggressive action" by the Fed.

Payrolls at builders dropped by 22,000 in August after falling 14,000 the month before. More construction job losses are likely.

Pending home sales plunged in July to the lowest since September 2001. That was before lenders began tightening credit even further as Wall Street lost its appetite for buying mortgages.

Countrywide Financial cfc said late Friday that it will cut 10,000 to 12,000 jobs over three months, up to 20% of its work force. Earlier, IndyMac imb said it would cut 1,000 jobs, the latest in a slew of lender-related layoffs in recent weeks.

But labor weakness was widespread, one of the first clear signs that the housing and credit woes are hurting the broader economy.

Why was everyone so shocked at this report? Did anyone really think the bursting of the housing bubble would not eventually take down the entire economy? I have been saying since I started this site that a recession was coming. This report certainly makes that more likely. Who will really suffer? The poor and middle classes will bear the brunt of any downturn while those that helped cause it, with economic ponzi schemes like subprime mortgages, will weather the storm just fine.

Homes Entering Foreclosure At Record

The housing slump, Midwestern economic woes and resetting ARMs send late payments higher.

The delinquency rate for mortgage borrowers spiked higher in the second quarter and the number of homes entering the foreclosure process hit a record high, according to a report released Thursday.

Deliquencies hit 5.12 percent of all outstanding mortgages, up from 4.39 percent a year ago, the Mortgage Bankers Association (MBA) said in a quarterly survey.

Serious delinquencies, those 90 days or more late, jumped to 1.11 percent of all loans, from 0.98 percent in the first quarter.

The loans actually entering foreclosure proceedings stood at 0.65 percent, a rise from 0.58 percent in the first three months - and the highest rate in the MBA's 55-year history.

This disaster is the result of greedy mortgage brokers and banks which loaned money knowing damn well that the borrowers could not pay it. Where are the criminal charges against those that run these institutions?

Record Drop In Pending Home Sales

Index that measures contracts being signed for existing home sales drops to lowest level since 9/11 attack.

The meltdown in the mortgage market caused the biggest drop on record in July for pending home sales, taking the index down to the lowest level since the month that included the Sept. 11, 2001 terrorist attack.

The National Association of Realtors' pending home sales index, which measures contracts to buy existing homes, fell 12.2 percent to a reading of 89.9.

It is the second lowest reading on record for the seven-year-old index, trailing only the 89.8 reading in September 2001. Economists had been looking for only about a 2 percent decline in the latest reading.

"There's bad reports and then there are truly awful ones. This is clearly the latter," said Mike Larson, real estate analyst for independent research firm Weiss Research. "Even I'm shocked by a 12 percent decline."

Now I really do think we will be headed into a recession very soon. The housing market has been what has propelled the economy for the past few years as homes prices skyrocketed.

This report is just the latest in a long string of reports that shows our housing market is collapsing around us. If this trend does not stop look for foreclosures to be even worse than expected. Also look for layoffs in construction and industries that rely on a vibrant housing market. The worst is yet to come and this could not be worse news for the Republicans.

July Construction Drop Largest In 6 months

Construction activity plunged in July by the biggest amount in six months as spending on homes fell for a record 17th straight month.

The Commerce Department reported Tuesday that construction spending dropped 0.4 percent in July, compared with June, the weakest showing since a 0.6 percent fall in January.

It was a bigger drop than economists had been expecting and underscored the continued drag the severe slump in housing is having on building activity.

The worst is yet to come in the housing market as more families are forced into foreclosure and the glut of homes on the market grows. The more that grows the less construction activity will be needed. This will cause layoffs in the construction industry and and other industries connected to the housing market. I still think the worst is yet to come and that the housing market will not see significant improvement until the affordability index comes back to reasonable levels.

The lower and middle classes are hurting as a result of the housing bubble and the pain will continue to be felt until after the Presidential election.

Housing Troubles Worsen For The Poor

The numbers of low-income families devoting high levels of income to housing costs are soaring according to a new study.

The housing boom may have ended, but even at its peak, it left legions of low-income, working families worse off in its wake.

According to a new study from the Center for Housing Policy (CHP), an affiliation of the National Housing Conference (NHC), the percentage of low income households forced to spend more than half their earnings for housing needs exploded as housing prices boomed.

This report does not come as a shock. In NY many of the normally poorer area were gentrified as the middle class sought out less expensive areas in which to live. Many times gentrifying areas inhabited by the poor who were then not able to afford their own areas.

The median price of a single family house soared by about 86 percent from 1997 to 2005, according to statistics from the Office of Federal Housing Enterprise Oversight. Housing prices hit their peak in 2005, when they jumped almost 13 percent for the year.

"Home prices went up far faster than any wage growth," said Lipman, "especially among low income families, whose real wages have either risen anemically or actually fallen."

As usual it is the poor who will suffer the most as the rich get an ever bigger slice of the pie and the rest of us are left to fight over the scraps.

Home Prices Continue To Slide

Who will be buying a home in this current market?

Home prices have shown few signs of any turnaround, and a new report sees the downward slide continuing.

On Tuesday, Standard and Poor's said its nationwide S&P/Case-Shiller Home Price Index fell 3.2 percent in the second quarter, compared with a year ago. For the three months ended June 30, prices dropped 0.9 percent from the first quarter.

Major housing markets showed worse declines. The Case-Shiller index covering 20 top metro areas for the month of June fell 3.5 percent, and the 10-city index dropped 4.1 percent year-over-year.

"The pullback in the U.S. residential real estate market is showing no signs of slowing down," Robert J. Shiller, Chief Economist at MacroMarkets LLC said in a statement. "The year-over-year decline reported in the 2nd quarter of 2007 for the National Home Price Index is the lowest point in its reported history, which dates back to January 1987."

That sucking sound you hear is the price of your home going down the toilet. Look for more foreclosures as people owe more than the home is worth and will be unable to sell the home to get out of rising ARM rates.

Banks will be bailed out by the government when its revealed that the subprime mess has severely damaged their operations, but the homeowner who took out the subprime mortgage will just get ruined credit and financial hardship.

Poll: Subprime Big Threat to Economy

The risk of massive defaults on subprime mortgages and heavy debts now poses a bigger threat to U.S. economic prosperity than terrorism, a panel of U.S. business economists said on Monday.

"The combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the U.S. economy," the National Association for Business Economics said.

The conclusion was based on a survey of 258 NABE members conducted between July 24 and Aug. 14 and updates one done in March.

Only 20 percent of members said terrorism was now their top concern, compared with 35 percent in March.

"Meanwhile, 18 percent of those surveyed pointed to the effects of the subprime debacle as their biggest concern, and the related issue of 'excessive household and/or corporate debt' was cited by another 14 percent," NABE said.

I have said it for months, the subprime mess will bring about recession. Who is to blame? I would say it is the financial institutions that loaned money knowing full well the borrower was not qualified to repay. Who will the government bail out when the shit hits the fan? It will be the financial institution while the homeowner is left in ruins.