Thread: Roubini: Housing Is in Double-Dip

Roubini: Housing Is in Double-Dip

Tuesday, 01 Feb 2011 07:56 AM
By Christopher Ruddy

Home prices dropped 1.6 percent in the year through November, and residential real estate is in the midst of another recession, says star economist Nouriel Roubini.

“The housing sector is double dipping,â€

Census Department: 11 Percent of Homes Vacant

Tuesday, 01 Feb 2011 09:51
By Dan Weil

Data continue to mount showing that the housing sector remains depressed. First came news from the Standard & Poor’s/Case-Shiller index that home prices fell 1.6 percent in the year through November.

Now, the Census Department reports that vacant home totaled 18.4 million in the fourth quarter, meaning 11 percent of all housing units are vacant year-round, according to CNBC.

The country’s home ownership rate, after holding steady for months, dropped to 66.5 percent in the fourth quarter from 66.9 percent in the third quarter. That's the lowest level since 1998.

“Homeownership is falling at an alarming pace, despite the fact that home prices have fallen, affordability is much improved, and inventories of new and existing homes are still running quite high,â€

Shiller: Home Prices May Slide for Years

Monday, 31 Jan 2011 10:14 AM
By Julie Crawshaw

Yale economist Robert Shiller says housing prices could continue to fall for years to come. “The peak in the market was around 2006; it went down for three years and if it behaved the same way it had in the last cycle, it would continue going down for years more,â€

Housing Market News

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Tue Feb 1 2011

House Prices Sink Further (online.wsj.com)
US house prices slide into 'double dip' (latimes.com)
Nearly 11 Percent of US Houses Empty (finance.yahoo.com)
Banks still holding 70% of foreclosures off market (housingwire.com)
Banks grip on prime shadow inventory growing (housingwire.com)
Halsey Minor faces auction of property in foreclosure (drf.com)
Going, gone: Bank takes Kluge's Vineyard Estates (readthehook.com)
Even More Millionaires Defaulting on Mortgages (cbsnews.com)
Strategic default begins nearly one in four Nevada foreclosures (irvinehousingblog.com)
Phoenix-area real-estate market may face new reality (azcentral.com)
Despite price rebound, many DC area houseowners still face steep losses (washingtonpost.com)
Underwater and Not Walking Away: Middle Class Shame, Fear Means Bank Profits (papers.ssrn.com)
Hello Ben Bernanke, Meet "Stephanie" Whose Retirement You Screwed (Mish)
The Rich Splurge, Using Money They Took From You (businessweek.com)
House prices almost doubled but salaries did not (guardian.co.uk)
Increase in house prices does not benefit majority (smh.com.au)
Fundamentals haven't been addressed at all, says Davos economist (bloomberg.com)
Facebook, Twitter, and the Arab Revolutions (lewrockwell.com)
Egypt slides into class warfare. When will the Hamptons be looted? (nytimes.com)

Mon Jan 31 2011

It's still better to rent than buy in SF Bay Area (sfgate.com)
Shiller: House Prices Could Fall For Years (businessinsider.com)
Substantial Future House Price Declines Predicted By Goldman (zerohedge.com)
Foreclosure crisis far from over (youtube.com)
Downward Revisions Coming to Existing House Sales? (calculatedriskblog.com)
You Don't Have To Pay Real Estate Broker 6% Extortion (nytimes.com)
Business capital investment is far more productive than housing investment (theatlantic.com)
Feds need to get out of housing market (gosanangelo.com)
Banks enjoying homestead exemption intended for individuals (jacksonville.com)
Foreclosure losses picked up by taxpayers, investors (azcentral.com)
Never Again My Ass. Banks Are Bigger Than Ever. (economix.blogs.nytimes.com)
Scott Adams on How to Tax the Rich (online.wsj.com)
A Tale of Two New Yorks (thenation.com)
Living without money (timesonline.co.uk)
Egypt Closes Banks, Stock Market; Protests Spread (Mish)
Short Wave Internet Replacement (zetatalk.com)
Sometimes text spam is good (telegraph.co.uk)
Protest Blue Shield's Criminal Rate Hikes Tuesday in San Francisco (patrick.net)

Fri Jan 28 2011

National Average: 492 Days From Default to Foreclosure (dailybail.com)
Foreclosure activity up across most US metro areas (finance.yahoo.com)
Satellite Tour Of America's Foreclosure Wastelands (businessinsider.com)
A Reservist in a New War, Against Foreclosure (nytimes.com)
TARP + HAMP FAILURE (trendocracy.blogspot.com)
High-end house prices are falling in Orange County (irvinehousingblog.com)
The housing bubble was global and the crash is global (businessinsider.com)
Forecast: Mortgage originations to drop 36% (freep.com)
Bernanke Says Fed Failed to See Broader Risks From Housing (bloomberg.com)
Federal Reserve openly aiming for inflation (mybudget360.com)
Don't Trust Gov't Inflation Numbers (online.wsj.com)
Financial Crisis Inquiry Commission Report (fcic.gov)
Totally Bullshit FCIC Commission Report (gonzalolira.blogspot.com)
Australian rental yields and vacancy rates (macrobusiness.com.au)
Japan's Credit Rating Cut First Time in 9 Years; S&P Cites Debt (Mish)
Fannie Corruption of Housing Finance Could Be Reduced (nytimes.com)
E-mails Suggest Bear Stearns Cheated Clients Out of Billions (theatlantic.com)
US healthcare to blame for poor US life expectancy rates, not obesity (bbc.co.uk)
Support HR 676 Conyers Healthcare Bill (guaranteedhealthcare.org)

Thu Jan 27 2011

New-house sales in 2010 fall to lowest in 47 years (news.yahoo.com)
Santa Monica MLS lists 1 foreclosure, yet 177 homes in stage of foreclosure (doctorhousingbubble.com)
In Nevada, 23 percent who lost houses to foreclosure could afford payments (lasvegassun.com)
To Default or Not to Default? (money.blogs.time.com)
More people suing banks over foreclosures (sfgate.com)
Churches Find End Is Nigh (online.wsj.com)
Boston won't build it, so they won't come (boston.com)
High Canadian Housing Costs Carry A Big Price (communities.canada.com)
The revenge of F(laherty) (greaterfool.ca)
Australian home-debtors brace for $200-a-month mortage rise (news.com.au)
England "standard of living to plunge at fastest rate since 1920s" (macrobusiness.com.au)
Future Bailouts A Possibility: TARP Fund Inspector (wtffinance.com)
Goldman Got Billions From Bailout of AIG For Its Own Account (huffingtonpost.com)
President and Congress publicly fellate billionaires (bloomberg.com)
Crony capitalism (en.wikipedia.org)
Tunisians revolt against crony capitalism; Americans fail to do so (nationalinterest.org)

Wed Jan 26 2011

House prices fall in nearly all major cities, heightening hope of double dip (washingtonpost.com)
Second Wave of Price Declines Improves Affordability in More Cities (abcnews.go.com)
US House Prices Keep Improving as Eight Cities Reach New Lows in November (calculatedriskblog.com)
US House Prices Get Better Again, Hitting New Lows (nytimes.com)
House prices are declining again, hurrah! (money.cnn.com)
Housing analysts expect house price declines through 2011 (housingwire.com)
A Look at Case-Shiller, by Metro Area (blogs.wsj.com)
House price double dip is forcing lenders to tighten credit standards (irvinehousingblog.com)
Countrywide Accused in Lawsuit of Massive Fraud (bloomberg.com)
Steve Keen Responds to "World Economic Forum Endorses Fraud" (Mish)
IMF Says US Must Move Quickly on a Housing Finance Overhaul (bloomberg.com)
House price expectations turn negative in Australia (theaustralian.com.au)
I Saw the Crisis Coming. Why Didn't the Fed? (old but good - nytimes.com)
Financial Crisis Was Avoidable, Inquiry Finds, Duh (nytimes.com)
Cartoon Explains Fed's Money Printing (zerohedge.com)
Creative methods of repackaging Fed's inflation (mybudget360.com)
How Public Unions Took Taxpayers Hostage (online.wsj.com)
California budget balancer (latimes.com)

Tue Jan 25 2011

Sacramento houses selling for the price of a car (blogs.sacbee.com)
Increased vacancy continues to ravage California neighborhoods (firsttuesdayjournal.com)
US Housing Market Slow to Recover From Collapse in Prices (voanews.com)
Why Affordable Housing Matters (blogs.forbes.com)
Unaffordable land stunts new generation of small farmers in California (mercurynews.com)
Bailout List: Banks, Car Companies, and More (bailout.propublica.org)
Fannie and Freddie Leave Legal Bills to the Taxpayers (nytimes.com)
Shadow inventory threatens housing recovery (money.cnn.com)
Judge temporarily delays loan document shredding (reuters.com)
Who is on the Federal Reserve Board? (gonzalolira.blogspot.com)
World Economic Forum Endorses Fraud (Mish)
Housing more affordable in New York than Auckland, New Zealand (tvnz.co.nz)
Australian houses among world's most expensive (au.finance.yahoo.com)
Interview with Nouriel Roubini (forbes.com)
With Retirement Savings, The Last Double Is Everything (nytimes.com)
In unlikely event of loss in profits, bailout funds will drop from panel above your head (dailybail.com)
Flier beats TSA video recording charge in court (boingboing.net)

Mon Jan 24 2011

FBI looks into bid rigging at courthouse auctions (sfgate.com)
San Francisco Bay Area House Prices Fall as More Foreclosed Properties Sold (bloomberg.com)
Co-op Houseboats in Sausalito (baycitizen.org)
California house prices continue slide (thecalifornian.com)
It's not over yet: foreclosures dominate Arizona housing market (gvnews.com)
Rich and famous and in foreclosure (finance.yahoo.com)
Socialite Patricia Kluge Faces Foreclosure (blogs.wsj.com)
Why prices will continue to fall (patrick.net)
Economists predict rough year for US housing starts (plasticsnews.com)
2011 Demographia Housing Affordability Survey (macrobusiness.com.au)
State bankruptcy option sought, quietly (nytimes.com)
Good or bad? Government Interference in Housing Finance (theatlantic.com)
Fannie, Freddie's $24 Billion Property Glut Imperils Recovery (businessweek.com)
Economic Recovery? Housing Shows There Is No Economic Recovery (usawatchdog.com)
State of the Union: What the President Should Say (robertreich.org)
Justices' conflict of interest in approving corporate campaign finance (latimes.com)
Corporate bribery of new Republican leaders in House surges (washingtonpost.com)
Protectionist group's plan to bring jobs back to America (jobsback.com)
Socialism vs Capitalism explained (dvorak.org)

http://patrick.net/housing/crash.html

Jan. 30, 2011

Even More Millionaires Defaulting on Mortgages

Homeowners with Loans of More Than $1 Million Default More Often than Owners with Loans Worth Less Than $1 Million

12 Comments
By John Blackstone

(CBS) The RealtyTrac organization predicted earlier this month that home foreclosures in 2011 will likely exceed the record 3.8 million reported in 2010.

CBS News correspondent John Blackstone reports one group of mortgage defaulters seems to be bucking the trend. In wealthy communities like La Jolla, Calif., living near the ocean is a privilege that many homeowners are willing to pay millions for.

For Darren Thomas that ocean view was quickly losing its value. He says, "I bought it for [$1.385 million]. It is worth less than [$800,000], maybe less."

Thomas bought his townhome in 2006 but after seeing its value drop steadily he stopped paying.

"I haven't made a payment in two years," he says. "It was business decision. It was an easy decision. I have a property worth six or 700,000 less than when I bought it. I was making payments of 10,000 a month."

Thomas has gone into strategic default. He could make payments but is refusing to put more money into a home that is worth less than his mortgage. Among luxury homeowners he is not alone.

One in seven homeowners with loans over $1 million are seriously delinquent compared to one in 12 with mortgages below $1 million.

The more you owe, it seems, the better off you may be. Darren Thomas continues to live in his home because banks are often slower to foreclose on million-dollar homes.

"Banks are less willing to take those homes back because they are harder to move on the market, harder to sell and much more of an up-keep," says You Walk Away Real Estate's Chad Ruyle. "These properties come with maintenance costs."

In Huntington Beach, Calif., realtors say banks can be slow to foreclose on luxury homes because an empty house can be bad for everyone's bottom line.

"An empty $2 million home hurts the inventory around it," says realtor Rob Magnotta.

For those who have stopped paying their million-dollar mortgages it's just an investment that didn't work out.

"As negative equity took place and drove the value down it became an investment not worth holding onto," says Corelogic's Mark Flemming. "Not much different than a regular stock you would sell."

"People like myself, business people, are going it is silly to throw good money after bad," says Thomas "The loss is not mine. The loss is the banks."

When it comes to real estate, the rich are different. They can be just as ruthless as the bankers.

http://www.cbsnews.com/stories/2011/01/ ... ontentBody

Housing Armageddon: 12 Facts Which Show That We Are In The Midst Of The Worst Housing Collapse In U.S. History

February 1st, 2011
25 comments

We are officially in the middle of the worst housing collapse in U.S. history - and unfortunately it is going to get even worse. Already, U.S. housing prices have fallen further during this economic downturn (26 percent), then they did during the Great Depression (25.9 percent). Approximately 11 percent of all homes in the United States are currently standing empty. In fact, there are many new housing developments across the U.S. that resemble little more than ghost towns because foreclosures have wiped them out. Mortgage delinquencies and foreclosures reached new highs in 2010, and it is being projected that banks and financial institutions will repossess at least a million more U.S. homes during 2011. Meanwhile, unemployment is absolutely rampant and wage levels are going down at a time when mortgage lending standards have been significantly tightened. That means that there are very few qualified buyers running around out there and that is going to continue to be the case for quite some time to come. When you add all of those factors up, it leads to one inescapable conclusion. The "housing Armageddon" that we have been experiencing since 2007 is going to get even worse in 2011.

Right now there is a gigantic mountain of unsold homes in the United States. It is estimated that banks and financial institutions will repossess at least a million more homes this year and this will make the supply of unsold properties even worse. At the same time, millions of American families have been scared out of the market by this recent crisis and millions of others cannot qualify for a home loan any longer. That means that the demand for unsold homes is at extremely low levels.

So what happens when supply is really high and demand is really low?

That's right - prices go down.

Hopefully housing prices don't have too much farther to go down. Ben Bernanke and the boys over at the Federal Reserve are doing their best to flood the system with new dollars in order to prop up asset values, but you just can't create qualified home buyers out of thin air.

Many analysts are projecting that U.S. housing prices will decline another ten or twenty percent before they hit bottom. In fact, quite a few economists believe that the total price decline from the peak of the market in 2006 will end up being somewhere in the neighborhood of 40 percent.

But whether prices go down any further or not, the truth is that the housing crash that we have already witnessed is absolutely unprecedented.

The following are 12 facts which show that we are in the midst of the worst housing collapse in U.S. history....

#1 Approximately 11 percent of all homes in the United States are currently standing empty.

#2 The rate of home ownership in the United States has dropped like a rock. At this point it has fallen all the way back to 1998 levels.

#3 According to the S&P/Case-Shiller index, U.S. home prices fell 1.3 percent in October and another 1 percent in November. In fact, November represented the fourth monthly decline in a row for U.S. housing prices. Many economists are now openly using the term "double-dip" to describe what is happening to the housing market.

#4 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.

#5 According to RealtyTrac, a total of 3 million homes were repossessed by mortgage lenders between January 2007 and August 2010. This represents a huge amount of additional inventory that somehow must be sold.

#6 72 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009.

#7 According to the Mortgage Bankers Association, at least 8 million Americans are at least one month behind on their mortgage payments.

#8 It is estimated that there are about 5 million homeowners in the United States that are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone.

#9 Deutsche Bank is projecting that 48 percent of all U.S. mortgages could have negative equity by the end of 2011.

#10 Some formerly great industrial cities are rapidly turning into ghost towns. For example, in Dayton, Ohio today 18.9 percent of all houses are now standing empty. 21.5 percent of all houses in New Orleans, Louisiana are standing vacant.

#11 According to Zillow, U.S. home prices have already fallen further during this economic downturn (26 percent) than they did during the Great Depression (25.9 percent).

#12 There are very few signs that the employment situation in the United States is going to improve any time soon. 4.2 million Americans have been unemployed for one year or longer at this point. While there has been some nominal improvement in the government unemployment numbers recently, other organizations are reporting that things are getting even worse. According to Gallup, the unemployment rate actually rose to 9.6% at the end of December. This was a significant increase from 9.3% in mid-December and 8.8% at the end of November.

But even many Americans that do have jobs are finding out that it has become very, very hard to qualify for a home loan.

In an attempt to avoid the mistakes of the past, banks and financial institutions have become very stingy with home loans. While it was certainly wise for them to make some changes, the truth is that perhaps the pendulum has swung too far at this point. The U.S. housing industry will never fully recover if they can't get their customers approved for mortgages.

Congress is talking about passing even more laws that will make it even more difficult to get home loans. Even though they give speeches about how they want to help the U.S. housing industry, the truth is that Republicans and Democrats are both backing proposals that would make home mortgages much more expensive and much more difficult to obtain as a Bloomberg article recently explained....

Government officials and lawmakers want to make the market less vulnerable to another credit crisis, and all the options lead the same general direction: Borrowers will need larger down payments than in the bubble years, have higher credit scores, and pay extra fees to cover risks and premiums for federal guarantees on government-backed mortgage bonds.
While all that may sound reasonable, the truth is that the U.S. middle class has become so cash poor that the vast majority of them cannot afford homes without the kind of mortgages that were available in the past.

Not that we should go back and repeat the mistakes of the past 20 years. It is just that nobody should expect the U.S. housing market to "bounce back" in an environment that has fundamentally changed.

The housing market is not like other financial markets. It is difficult to artificially pump it up with funny money. If the U.S. housing market is going to rebound, it is going to take lots of average American families getting qualified for loans and going out and buying houses. But they can't do this if they do not have good jobs. Today, only 47 percent of working-age Americans have a full-time job at this point. Without a jobs recovery there never will be a housing recovery.

In fact, there are all kinds of warning signs that seem to indicate that the U.S. economy could get even worse in 2011. Many economists are now openly using the word "stagflation" for the first time since the 1970s. Back in the 70s we had both high unemployment and high inflation at the same time.

Well, we have already had very high unemployment, and thanks to the relentless money printing of the Federal Reserve, it looks like we are going to have high inflation as well.

Middle class American families are going to be spending even more of their resources just trying to survive, and this is going to make it more difficult for them to purchase homes.

In fact, in recent years average Americans have been getting significantly poorer. Over the past two years, U.S. consumers have withdrawn $311 billion more from savings and investment accounts than they have put into them. That is very troubling news.

Now the price of food is soaring and the price of oil is about to cross $100 a barrel again. So what is going to happen if we have another major financial crisis and we witness another huge spike in the unemployment rate?

The Federal Reserve is trying to smooth all of our problems over with a flood of paper money, but it isn't going to work. Yes, increasing the money supply will produce some false highs on the stock market and some false economic growth statistics for a while, but the tremendous damage that will be done to the economy is just not worth it.

In any event, let us all hope that we see some really great real estate deals over the next couple of years, because in the times ahead land will be something very good to own. In fact, down the road it will be much better to own land than to have your money sitting in the bank where it will continuously decline in value.

Use your paper money wisely. It will never have more value than it does today.

So what do all of you think? Is the "housing Armageddon" almost over, or do housing prices still need to decline a bit more? Feel free to leave a comment with your opinion below....

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