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Author: Subject: Housing hits 40 year low .. Las Vegas #1

Sublime Peach





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  posted on 1/26/2010 at 05:49 AM
By Renae Merle
Washington Post Staff Writer
Tuesday, January 26, 2010

Sales of previously owned homes took their biggest tumble in at least 40 years last month as the impact of a buying spree spurred by a tax credit for first-time buyers waned, according to industry data released Monday.

Those who rushed to meet the original November deadline to take advantage of an $8,000 tax credit for first-time home buyers caused a surge in sales earlier in 2009, but left the market wobbly by the end of the year. First-time buyers, who made up more than 50 percent of sales earlier last year, represented just 43 percent of the market in December. The shift also resulted in fewer sales of lower-cost homes, which first-time buyers typically seek.

After three months of increases, sales of existing homes, including condos and single-family residences, fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million in December compared with the previous month, according to National Association of Realtors data. That was a bigger drop than analysts had expected and the lowest sales rate since August. It was also the biggest monthly decrease on records that date to 1968, according to the industry group.

The December decline "was payback for the tax credit," said Patrick Newport, an economist for IHS Global Insight.

Congress extended the tax credit until April 30 and expanded it to more potential buyers, raising hopes among some analysts that sales will pick up in the spring. The surprisingly large drop in December raises questions about the strength of the recovery once the revamped tax-credit program expires, analysts said.

"Given that the tax credit appears to account for a good deal of the improvement in the housing market . . . we're becoming increasingly concerned that the housing recovery will falter once it is removed," said Paul Dales, economist for Capital Economics.

The weak sales come as a Federal Reserve program that has kept interest rates near historic lows is set to expire. If interest rates rise this year, it could make a home purchase too expensive for some buyers, analysts have said. The weak labor market and an expected uptick in foreclosures are also expected to weigh on the housing market this year, they said.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

New York
The largest real estate deal ever has failed.

On Monday, Tishman Speyer BlackRock, one of America’s largest commercial property owners, threw in the towel. They sent their $5.3 billion investment in 11,000 apartments in New York back to their bankers – the same way some homeowners are mailing their keys back to lenders.

The Tishman Speyer move involved two massive middle-class housing developments in Manhattan: Stuyvesant Town and Peter Cooper Village. The two complexes, consisting of 56 buildings, had been purchased in 2006 from MetLife. Since then, residents of both complexes had mounted intense legal and political opposition to Tishman Speyer’s attempt to raise rents and evict longstanding tenants.

The problems at Tishman Speyer, some analysts believe, are “symptomatic” of commercial real estate problems around the United States.

Many loans made to developers between 2005 and 2007 assumed rising rents and low vacancy rates. And developers believed that corporations – key tenants – would continue to expand their employment, not shrink it. So they erected new office towers. But many companies instead have laid off workers. Since a smaller workforce needs less space, these companies have tried to sublet their extra space. This has just added to the glut of space.

Moreover, some of the loans were for retail space. The developers of shopping centers never expected that the consumer would stop buying the latest fashion trends or new furniture for their homes.

"Not since the early 1990s have we observed this perfect storm of deteriorating rents and occupancies, deflating sales prices, and tight credit that's leading to a lot of defaults,” writes Victor Calanog, director of research at Reis, a New York-based real estate research organization, in an e-mail. “With close to $3.5 trillion of loans outstanding and at least 12 to 24 more months of rent declines, I expect to see more commercial properties defaulting on loans."

Of that $3.5 trillion, some $120 billion needs to be refinanced this year, according to the Mortgage Bankers Association. Normally, this wouldn’t be difficult. But now, there is far less income from the original loan to make the payments.

On top of that, lenders are more conservative – requiring much larger equity and no longer lending as much as 95 percent of the value of a property.

For example, as Mr. Calanog writes, in 2005, lenders were willing to lend up to 95 percent of the value of a property when dealing with a $100 million, five-year loan. That came out to $95 million.

But fast-forward to today: Now, the property is valued at $60 million, reflecting lower rents and occupancy. And lenders will no longer lend 95 percent, but rather 60 percent. That’s $36 million for the same property that they lent out $95 million in 2005.

“The difference between $95 million and $36 million is what we call the ‘equity hole.’ Because if the property really needs to borrow $95 million to keep things afloat, it will have to cough up the difference out of pocket, or from whatever pocket it can find,” Calanog says.

Yet the case of Stuyvesant Town is not a theoretical loan. Calanog estimates the total nominal outstanding debt at $4.4 billion, but the underlying property to be valued at only between $1.5 billion to $2 billion.

US banks have been steadily building their reserves to account for their losses in the commercial real estate market, says Fred Fraenkel, chairman of investment policy at Beacon Trust Co. in Madison, N.J.

“They have been increasing their loan losses by billions of dollars per bank per quarter,” he says.

In fact, the problems in the commercial real estate market will keep the economy from rebounding more strongly, Mr. Fraenkel thinks. And they will be a factor in the Fed’s decision on raising interest rates, he says.

Last year, Federal Reserve Chairman Ben Bernanke talked about the possibility that the Fed might have to supply up to $1 trillion to prevent the commercial real estate market and some other areas, such as the student-loan market, from collapsing
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

News Analysis: Will 2010 See Higher Levels of U.S. Home Foreclosures?
By Matthew Rusling

U.S. home foreclosures hit a record high in 2009 and could rise to even higher levels this year, some economists said.

"I would expect that unless conditions improve substantially, we will see a higher foreclosure rate in 2010," said John Makin, visiting scholar at the American Enterprise Institute.

A record 2.8 million U.S. properties were foreclosed in 2009, as many subprime borrowers -- high-risk borrowers with imperfect credit -- defaulted on their loans. This year, foreclosure rates could rise as more homeowners fall into delinquency.

One in 45 U.S. homes were given at least one foreclosure filing last year. That number was significantly higher in places hit hardest by the crisis, such as Nevada, with 1 in 10 homes, according to a report released Thursday by Realty Trac, an Internet marketplace for foreclosed homes.

Foreclosure figures are up from 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006, according to Realty Trac.

Rick Sharga, senior vice president at Realty Trac, believes 2010 foreclosures could top 2009 levels and surpass the 3 million mark.

The following year, 2011, will be a mix of good and bad -- good because foreclosures will likely drop from 2010 levels, but bad because it could look like 2009 all over again, although foreclosures are likely to decline in 2012, he said.

Homeowners foreclosing this year are a different breed than the mostly sub-prime borrowers who folded on their mortgages last year. They are prime borrowers whose finances have been battered by the recession and can no longer afford to pay their mortgages.

Many of those properties are valued around 250,000 dollars and up, and many are disproportionately located in states such as Florida, Nevada and California -- places that saw rapid price escalation at the peak of the pre-recession home buying frenzy, he said.

While sparsely populated states with relatively little real estate are escaping with less damage many in rural areas such as North and South Dakota, Wyoming and Montana -- virtually no state remains unscathed, he said.

Dean Baker, co-director at the Center for Economic and Policy Research, said foreclosure rates could worsen in 2010 for two reasons. First, unemployment is likely to peak around April 2010 and heightened jobless rates are making it difficult for homeowners to keep their houses. Savings are being exhausted and unemployment benefits, which last 26 weeks in most states but can be extended an additional 13 weeks, are running out and pushing homeowners into foreclosure.

Second, now homeowners with temporary modifications -- help from the federal government to stave off foreclosures will not all receive permanent modifications and some will be forced to foreclose.

In 2010 there may be some shuffling of the hardest hit U.S. states. Some may see a slight rebound, such as Detroit, one of the hardest hit mortgage areas because of a declining auto industry, Baker added.

Robert Bach, senior vice president and chief economist at Grubb & Ellis, a commercial real estate advisory firm, said, "The pipeline of the delinquent loans has increased and that is one of the headwinds that could hinder or delay a recovery of the housing market."






[Edited on 1/28/2010 by jerryphilbob]

 

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Zen Peach



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  posted on 1/26/2010 at 09:08 AM
I'm shaking as I'm close to lining up projects for 2011. Yes 2011, as I only need one more deal to cover Nov/Dec of this year.

Of course I'm blessed and give thanks everyday.

 

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  posted on 1/26/2010 at 09:29 AM
Been trying to sell my house for 8 months now. It's listed at 60% of what I paid when I bought it new in 2002. No offers. It doesn't help that it's in SE Michigan.
 

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  posted on 1/26/2010 at 09:38 AM
The collapse of the commercial side has been predicted for quite some time.

Foreclosures will continue until all the ARMs clear out, then add-on not only unemployment but underemployment. There's a ton of jobs that simply don't exist anymore and won't be coming back.

 

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  posted on 1/28/2010 at 08:41 AM
Las Vegas: Most foreclosures of any city in 2009

Las Vegas - call it Foreclosure City.

NEW YORK (CNNMoney.com) -- Cities in the so-called Sand States dominated the foreclosure rankings in 2009, with the 20 worst-hit metro areas residing in Nevada, Florida, California and Arizona.

Las Vegas had the largest number of foreclosure filings of any city last year, with 12% of its households receiving at least one during the year, according to RealtyTrac, the online marketer of foreclosed homes. That was more than five times the national average.

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Cape Coral, Fla., was a close second with 11.9% of its households; Merced, Calif., was third with 10.1%.

The good news is that all top 20 cities recorded declines in foreclosure filings in the last three months of the year.

The bad news is that the foreclosure plague is spreading beyond these usual trouble spots, according to RealtyTrac's CEO, James Saccacio. And, nationwide, foreclosures grew 21.2% during the year.

3 million hit with foreclosure notices in 2009
"Areas like Provo, Utah, Fayetteville, Ark., Portland, Ore., and Rockford, Ill., all posted foreclosure rates above the U.S. average in 2009," he said. "And markets like Honolulu, Minneapolis and Seattle saw foreclosure activity increase at more than twice the national pace over the past 12 months."

He added that the new foreclosure wave seems more grounded in traditional foreclosure causes, such as job losses, than those recorded in the Sand States, where they were much more "bubble related."

In cities such as Las Vegas, Phoenix, Miami and Bakersfield, Calif., soaring home prices of the mid 2000s drove homebuyers to desperate measures, such as taking on hybrid adjustable rate mortgages, also called toxic ARMS. These products only remained affordable as long as home prices grew; once prices stopped rising, borrowers began to default.

New hotspots
Some cites that had escaped the worst of the default demon in prior years saw foreclosure filings -- default notices, auction sales and bank repossessions -- soar. The Gulfport area of Mississippi recorded a year-over-year spike of 784%. Houma, La., recorded a 379% gain, and Roanoke, Va., filings jumped 352%.

Check the foreclosure rate in your state
Despite the big increases, however, the foreclosure rates for those cities ranked in the bottom third of the nation. For example, Gulfport was number 180 out of 203 metro areas listed.

Filings in Boise, Idaho, on the other hand, grew 103% but that was enough to put it 24th among cites, the highest ranking of any place outside the Sand States.

In contrast to the boom areas, cities where home prices never soared have endured far fewer foreclosures. The lowest rate of filings for any of the cities covered in the RealtyTrac report were found in Burlington, Vt., and Utica, N.Y, each of which had a miniscule 0.05% filing rate.

The housing boom, with its annual double-digit price increases, mostly bypassed areas like those, enabling buyers to escape the necessity of stretching their incomes to cover high housing costs.

America's most overvalued cities
In Burlington, the median home price has stayed under $230,000, and median home prices in Utica have been very cheap, not more than $120,000 at any time.

For cities like that, few foreclosures are caused by mortgage related issues and, as long as the local economies don't crash, defaults should remain well under national averages.

 

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  posted on 1/28/2010 at 11:22 AM
Nothing new here.

 

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  posted on 1/28/2010 at 11:24 AM
JPB, interesting that you've decided to focus your posts on this topic on this particular area of the country which doesn't happen to be your area of residence ...

http://rlv.zcache.com/obvious_man_invitation-p1618896207786500102diuo_400.j pg


[Edited on 1/28/2010 by lolasdeb]

 

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  posted on 1/28/2010 at 11:28 AM
quote:
JPB, interesting that you've decided to focus your posts on this topic on this particular area of the country which doesn't happen to be your area of residence ...




[Edited on 1/28/2010 by lolasdeb]



lemme help

 

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  posted on 1/28/2010 at 11:53 AM
No shot at Otie, I am sure he will take anything I post that way. Can't do anything about that?

The article was written today and I thought it applied to the economy. If it was from my area, I would have ran it anyway. It clearly backs up my earlier post and shows that the economy is clearly not recovering and the slow bleed continues.

Just like the jobless claims today back up that the economy is still in shambles and that the focus needs to change from transforming Amerika to saving America's economy.

We are lucky here in the midwest. I have said many times that we are fortunate and that others are suffering much more than we are. Granted things aren't all roses, but they are much better than some parts of the country.

They are even starting to throw the "bankruptcy" word around some California cities.

[Edited on 1/28/2010 by jerryphilbob]

 

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  posted on 1/28/2010 at 12:29 PM
I just must not understand it. The reason there are so many foreclosures is that supposedly these people shouldn't have gotten loans in the first place (or people that were trying to keep flipping homes to make a profit got caught in over their heads).

So, the bubble has burst, and now it's harder to get loans.

Seems to me unless the banks or owners want to get into renting, there aren't going to be enough people that can get loans to fill up all the available housing.

So I'm not exactly surprised that the housing market kinda sucks right now.....

Unless, of course, I am missing something.......maybe I should check youtube.....

 

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  posted on 1/28/2010 at 12:34 PM
I Belize I'm sinking down.

 

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  posted on 1/28/2010 at 12:34 PM
quote:
Unless, of course, I am missing something.......maybe I should check youtube.....
LOL Please do. And could you get back to us on this?

 

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  posted on 1/28/2010 at 12:47 PM
quote:
I just must not understand it. The reason there are so many foreclosures is that supposedly these people shouldn't have gotten loans in the first place (or people that were trying to keep flipping homes to make a profit got caught in over their heads).


Your only missing that these new wave of forclosures are due to the job losses in America. They are not the subprime loans that you speak of, but the mortgages that were sound when the paper was originally written. On top of that, there is a new wave of arms coming due and that will also drive the forclosure rates up.

You will see rentals popping up and even those rates will continue to drop. The people that saved for the future and own their own homes are getting hammered by decreasing housing values and watch out when inflation starts to kick in, the silent tax.

Not a perfect barometer, but it will give you an idea of the market in your area.
www.zillow.com




[Edited on 1/28/2010 by jerryphilbob]

[Edited on 1/28/2010 by jerryphilbob]

 

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  posted on 1/28/2010 at 01:03 PM
How much have you lost since the peak of the housing boom? Just because you didn't sell at the top, doesn't mean you didn't lose that opportunity.

I have ZERO debt. I owned debt, not a home. I now have my equity safe. I don't own a depreciating asset, like you do. My landlord just replaced my dryer at no cost to me. They own a depreciating asset at a fixed rate. The silent inflation tax must be factored in as well.

Your home is only an investment if you are getting a return on it every month. I don't know, maybe you are renting out rooms? If not. It isn't an investment.

You are losing money as your investment depreciates? Why don't you understand that?

In fact, I have made money on the equity that I extracted from the sale of my home. If I had stayed there, I would have been trapped with the debt and would have lost all of my equity.

Quit playing by the old rules of money.
http://www.youtube.com/watch?v=qCpEsKtObzs&feature=related

 

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  posted on 1/28/2010 at 01:07 PM
People can rail on the banks or the Federal government or borrowers or whoever. The real "brokenness," the real enabler of the whole mess was at the state regulatory level.

 

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  posted on 1/28/2010 at 01:10 PM
How were the states responsible? What did they do or not do to enable the problem?

 

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  posted on 1/28/2010 at 01:43 PM
quote:
How were the states responsible? What did they do or not do to enable the problem?


That's a set of posts I've been working on for about two years now (maybe a book even if the company I worked for would go completely out of business, which they haven't). I have a ton of answers but it's complicated.

Long and short of it...the regulatory and licensing measures in place at the state level could not handle the massive size of the mortgage and lending business during that 10 years in any way, shape or form. They had victories here and there (Ameriquest, Ocwen) but overall it was a joke.

 

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  posted on 1/28/2010 at 02:41 PM
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.

 

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  posted on 1/28/2010 at 02:43 PM
quote:
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.


Wonner if he would rent me a room?

 

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  posted on 1/28/2010 at 02:51 PM
quote:
quote:
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.


Wonner if he would rent me a room?


that'd be funny considering what his neighbors think of Tennesseans ...

 

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  posted on 1/28/2010 at 02:54 PM
quote:
quote:
quote:
quote:
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.


Wonner if he would rent me a room?


that'd be funny considering what his neighbors think of Tennesseans ...




The biggest a-hole on the street is from Kansas. I don't hold it against Jerry.


At least he doesn't live here any more...

 

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Zen Peach



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  posted on 1/28/2010 at 02:58 PM
quote:
quote:
quote:
quote:
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.


Wonner if he would rent me a room?


that'd be funny considering what his neighbors think of Tennesseans ...




The biggest a-hole on the street is from Kansas. I don't hold it against Jerry.


for sh!ts and grins, you can forward jpb's assessments to him and see how he reacts ...

 

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  posted on 1/28/2010 at 03:10 PM
quote:
quote:
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.


And he likes to forget that he pays rent every month.


Well, I don't believe in the "renters throw their money away" thing as being applicable to everyone. Every situation is different.

 

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  posted on 1/28/2010 at 03:38 PM
quote:
quote:
quote:
quote:
The thing that JPB always leaves out of this is that Otie's house is paid for. It's a key component.


And he likes to forget that he pays rent every month.


Well, I don't believe in the "renters throw their money away" thing as being applicable to everyone. Every situation is different.


He talks about every dollar you spend is an investment. He claims mortgages are a bad investment because you don't get a good return. However, he claims that rent is a good investment and it really is not.


Ah, yes. OK. Rent is not an investment. It's rent.

 

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