Archive for the 'Housing Bubble News' Category
Housing Bubble News, July 14, 2006
Date: July 14th, 2006, Filed under Housing Bubble News
I just noticed Terry Savage’s latest OpEd piece over at TheStreet. In Economic Issues Start Hitting Home, Miss Savage says some important things:1
Memories of recessions, job loss and home foreclosures are in the shady, distant past. Inflation, with soaring prices and interest rates, is thought of in historical terms. The word “stagflation” — a combination of inflation and higher rates, with a slowing economy — seems to have left our vocabulary.
She’s right. I talk with friends and customers each and every week who only complain about energy costs and don’t seem to realize that prices are going up all over the place, but wages are just not keeping up. I downsized my own lifestyle by over 80% in the past 2 years, but my living expenses are starting to edge up significantly over last year as a percentage of income. I have no idea how some of my friends can live with the costs of life — maybe it is home equity they’re secretly extracting.
I was also reading MoneyWeek this morning and felt like I was reading this website. In their article titled Which asset prices are heading for a correction? they cover some of the thoughts I’ve been talking about for months on the site and over a year in person:2
…the difference between mortgage borrowing and residential construction is the “largest ever” and shows by “how much housing has added to growth in recent years through mortgage borrowing (with over a third of that money flowing to non-housing spending) and construction… This is definitely true. I have at least a half dozen friends in my area who have had their homes on the market for over 6 months, with the homes totalling over US$3million to all sell. The homes were bought for about 30% less just a few years ago — but they’re not selling. On the same hand I have another dozen friends who are contemplating selling their homes based on market values they received about a year ago. I’ve explained to them that the housing market is cooling quickly, but they see many of their neighbors listing homes at the old price (and not selling).
Even the MoneyWeek article talks of the problems in the Midwest, which many analysts said were less prone to a housing market crash: In Illinois during the first three months of 2006 nearly 13,700 properties entered foreclosure, up 32% from the fourth quarter of 2005, according to an analysis by property tracker RealtyTrac Inc. The numbers are grimmer elsewhere in the Midwest. Michigan and Ohio, battered by automotive-related job losses, together recorded 45,000 mortgages entering some stage of foreclosure in the first quarter.
I’ve always said that bubbles don’t really go away — because bubbles are created by the Federal Reserve printing too much new money, that money still exists in the economy overall. Bubbles move from one market to another, with the first market bursting on the latecomers (the “suckers” in a given investment market). The Rocky Mountain News sets up the bump and set portion of this volleyball game in Denver market for commercial real estate hot:3
Investors, especially those from California, who recently have been accounting for 70 percent of the bidders, are willing to pay record prices for Denver office and retail buildings because they look cheap compared with buildings on the East and West coasts.
The spike portion of the game comes in another article, though, from NewsWire today titled Colorado Leads the Nation in Number of Foreclosures:4
Denver County tops the list with 2,703 pre-foreclosures, meaning homeowners are at least three months late paying their mortgage and there i
Housing Bubble News, June 27, 2006
Date: June 27th, 2006, Filed under Housing Bubble News
If you’re in trouble with your 30-year mortgage, why not take out a 40-year or 50-year mortgage or an interest only loan? That’s what a Newsday editorial is suggesting.1 Ugh! If you want to avoid having financial trouble, don’t buy a home bigger than you need. Note that I didn’t say “bigger than you want.” For most families, 3 bedrooms is fine — looking at the new 6 bedroom developments just miles from my home continues to shock me as my local banks report higher foreclosure listings than I’ve ever seen. Good job, Newsday.
MaineToday talks about a figure that shows that 21% of subprime mortgages issued in 1999 are in foreclosure or were foreclosed.2 Instead of going after the Federal Reserve for creating this market ripe for bubbling and crashing, they’re going after those who are loaning up the Federal Reserve’s cheap and easy credit. Why? If a bank loans you money, and you don’t pay, the bank is stuck with a home. Isn’t that punishment enough? Why do we need MORE local and national laws restricting the credit market — kids will learn when they’re parents lose their homes, and banks will learn when they go bankrupt from owning too many assets without mortgage payments.
eMediaNewswire says that 300,000 homeowners are facing foreclosure, and the end isn’t in sight.3 That’s a 72% increase from the year before! And some of us continue to believe the real estate industry when they say there is no bubble and no trouble ahead. Can anyone falling out of a 10 story window believe that they’ll witness a “soft landing?” I think not. If you’re one of those homeowners facing foreclosure, get out now. Move in with your parents or your siblings, get a second and third job, work your body to the bone for a few years and never/do/it/again.
I’ve always looked at Boston as the first city to collapse from the housing bubble, and it looks like it is heading that way. The Boston Globe says that houses in Massachusetts have fallen 4% as sales have fallen from lack of demand.4 The report also shows that condo prices and numbers have fallen as well in the same time frame. Even more interesting is that foreclosures in the region doubled since the last month, to over 1600 homes facing repossession by the banks.
Georgia ranks in second in terms of foreclosures in the nation, says RealtyTrac in a report covered by the Atlanta Business Chronicle.5 They’re showing one new foreclosure for every 537 households. I grew up in a town of 8000 houses, and to think of 15 families in my community losing their home at one time is just amazing. This number in the region has climbed 28% from one year ago, another shocker figure stated in the report.
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