Continue Reading Add comment April 28th, 2009
The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program. Read more »
Continue Reading Add comment April 28th, 2009
I wrote a story last week saying that the California Association of Realtors were readying to announce the first monthly home price rise in two years (one of a handful of signs that home prices might be bottoming). Turns out the median California home price did, indeed, increase by 2.2% in March compared to February, the Realtors group said April 28. But the $253,000 median was down 39% from March 2008.
The increase is encouraging, but it will have to happen consistently before it is safe to call a bottom in California. The unemployment rate is rising and more foreclosures are expected in coming months. So, prices could easily head back down into negative territory.
Continue Reading Add comment April 28th, 2009
Guest blog from BusinessWeek Banking Editor Mara Der Hovanesian: We highlighted the problems that some small businesses are having with paying their mortgages in a recent issue of the magazine. Small business employs about half of all U.S. workers and creates well more than half of new jobs in any given year, according to the Dept. of Commerce. They have also so far accounted for half the 5 million jobs lost. According to Jim King, state director for the New York Small Business Development Center in Albany, many struggling business owners are holding out hope that they’ll get a piece of TARP to tide them over during tough times.
But so far, federal funding has yet to trickle down to the smallest companies. “The longer we go without access to capital, the worse it gets,” says King. “With the housing bubble bursting, you’ve got the collateral that’s backing some small business loans deteriorating rather quickly. It’s a double whammy on the small business person. Meanwhile banks have totally clamped up lending.”
That double-whammy is particularly acute in California, where exotic mortgages proliferated and where most of the resets to higher interest rates are poised to occur. My colleague Prashant Gopal cited new research that says the resets may not be as dire as originally predicted
but that doesn’t mean people aren’t already nervous and having a problem making ends meet now. “A lot of folks used their homes to finance their business and a good percentage of those folks overextended and are having trouble making their payments now,” says Darren Waddell, vice president of marketing at MerchantCircle, an online networking community of 750,000 small businesses nationwide. Waddell surveyed some 70,000 members in California to find out how they were handling the recession and housing bust. He says that many of his members are worried about higher rates on their mortgages: “Many don’t know how their going to pay once that resets, which speaks to this waterfall that is out on the horizon.” Here’s a link to the survey questions and the results
Continue Reading Add comment April 28th, 2009
This video came to use courtesy of two Kiwis, Hugh Pavletich, an urban planner in New Zealand, and Mike “Mish” Shedlock, a financial advisor. It shows brand new homes in California being torn down by the bank that foreclosed on them.
Mish’s Global Economic Trend Analysis: Extreme Home Makeover Depression Edition
This video from California illustrates how “extreme” the situation has got - as the massive housing bubbles are deflating. In this case – the residential developers have failed – leaving the (un named) Bank with the subdivision and the few houses.
These new houses are being torn down. The video suggests that the regulatory code violation costs are excessive – and it is therefore more cost effective to demolish the new houses and have a subdivision of clear lots available for sale. However – it is likely there is more to the story than this………………….
It would appear the new houses being demolished are rather large and totally unsuited to prospective low income buyers – and that a clear subdivision is likely more saleable to prospective developer / builders of more affordable housing. The subdivision appears to be in the middle of a desert.
What is therefore being torn down, could be described as “bubble housing” – where - as the California bubbles were inflating, existing home owners were using their “bubble equity” to leverage their way in to this larger more expensive housing. A false and obviously extremely risky market situation.
As the California housing bubbles have collapsed to half their bubble peak prices – this “bubble equity market” has now evaporated. In a normal market – this bubble housing would never have been built. There is likely to be considerable volumes of “bubble housing” in the United States and elsewhere where artificial regulatory housing bubbles have been created. Much of it is likely virtually unsalable.
This “bubble stock” should not be confused with normal surplus new housing stock of affordable markets where housing did not exceed three times annual household income (e.g. Dallas Fort Worth, Atlanta, Houston). California with its population of 37 million and residential stock of approximately 13 million units (with the United Kingdom) – currently has the worst build rate per thousand population in the English speaking world of around 1 unit / 1000 population per annum. Normal replacement requires about 2 to 3 units / 1000 population.
The California housing bubbles triggered the Global Financial Crisis.
Continue Reading Add comment April 28th, 2009
The lastest S&P/Case-Shiller Home Price Index numbers suggest, every so slightly, that the worse of the housing slump may be behind us.
The two indices, which include 20 cities and 30 cities, were both down 18% year-over-year in February. That was a slight improvement over January when both set new record, being down 19%. This was the first time in 16 months that the indices failed to post new record declines.
Overall the data shows home prices are back to their 2003 levels. Phoenix, Las Vegas and San Francisco remain the hardest hit. Dallas, Denver and Boston are holding up the best, although all were still down.
The Booby Prize winner? Phoenix, which has seen its average home price fall 50% since the peak in June 2006.
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The weak housing market continued to plague home sellers in February as home prices extended their losing streak to 31 consecutive months, according to a report issued Tuesday. Read more »
Continue Reading Add comment April 28th, 2009
Curtailed expansion plans and store closures seem to be the most common trend in the retail sector, yet a pair of large-scale retail projects marked milestones just a few miles and hours apart from each other. Muss Development L.L.C. disclosed that a 121,000-square-foot BJ’s Wholesale Club will open this November at Sky View Center in the Flushing section of Queens, N.Y.
Continue Reading Add comment April 28th, 2009
M.W. Ossola & Associates Inc. and Lee & Associates-LA North/Ventura have unveiled Patriot Commerce Center, Ventura County’s new premier business park. The 300,000-square-foot business park is located in Moorpark, Calif.
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