Financial and psychological double dip for real estate – How new economic news will feed into lower home prices as incomes remain stagnant. Only 11 percent of recent loan volume in the first quarter dealt with purchases.
Housing Apocalypse Tomorrow – 675,000 homes in foreclosure have made no payment in over two years. The never ending pipeline of troubled real estate.
The lost generation and merging of credit bubbles – College graduates go into massive debt and enter a low wage job market. Median starting salary for the class of 2010 is $27,000. Student loan debt soaring while wages decline and delay a generation fro
FHA insured loans now cross a giant tipping point exceeding $1 trillion in book value at risk. The low down payment option with rising defaults that will require taxpayer bailouts of billions of dollars.
Between the March revision and the April decline, there has been effectively no job growth since February:
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Subprime colleges – Student loan debt now equivalent to 7 percent of U.S. GDP. For-profits claim Harvard bragging rights and that barbers can make $150,000 to $250,000 a year to lure students.
California Home Sales Down 6% in April
By DQNews.com 05/16/11 - 04:08 PM EDT SAN DIEGO (DQNews) -- An estimated 35202 new and resale houses and condos were sold in California last month. That was down 3.3% from 36417 in March, and down 6.1% from 37481 for April 2010. ...
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Eclipsing a terrible milestone as home prices fall harder than the 1928 through 1933 Great Depression Collapse: Lessons from the Great Depression Part 32. Housing prices continue to fall as other costs eat up disposable income.
Foreclosure homes for sale in various areas of the U.S. do not automatically get sold and their owners are not immediately turned out of their homes. On average, American homeowners are said to stay in their distressed houses for 18 months before they get evicted or their homes get sold as foreclosures. Within those months, majority of them do not bother paying their mortgages.
Housing industry analysts stated that a single family home or a townhouse for sale takes a long time to get sold at the current condition of the real estate market, leaving owners free to occupy these houses without payment for more than a year. This, in itself, sounds negative, but some economists claimed that this is actually benefiting the overall economy of the country.
According to them, empty and unsold bank owned houses do not do much for the economy, but a distressed home with occupants does have its benefits. Homeowners who have decided to stop paying mortgages and are staying in their distressed homes are usually able to rebuild their finances and spend the money that they would have used to pay their mortgages on other things. Consequently, this improves consumer spending all over the U.S. Consumer spending, economists explain, accounts for around 70% of the nation's economy and is the most important factor behind an economic recovery.
Economists also reported that the amount of extra income generated by the owners of foreclosure homes for sale who have stopped paying their loans and are currently staying in their unsold houses can reach up to $50 billion within 2011. This amount, they asserted, can provide consumer spending with a boost equal to 50% of the savings that can be generated from the payroll withholding cuts formulated in the bipartisan tax plan.
With a lot of homeowners living in their distressed homes free of rent, analysts stated that consumer spending can increase by around 2.8% this year. Moreover, the strategy is allowing a lot of homeowners to fix their financial situations and rebuild their credit records, which could help them purchase another home in the future. Deciding not to pay mortgages sounds bad, but some economists admit that it does help some homeowners save money and pay their other debts.
Economists stated that some live-in owners of foreclosure homes for sale have stopped paying their mortgages simply because they are unable to do so. Some have lost jobs, while others are facing financial emergencies. For others, particularly those with negative equity, the decision was consciously made.
Owners of Foreclosure Homes for Sale Contributing to Economy is a post from: Foreclosure Magazine - Read more about how does foreclosure work.
Southern California Housing Rebound Stalls
By DQNews.com 05/12/11 - 12:52 PM EDT SAN DIEGO (DQNews) -- --The prospect of a near-term resurgence in Southern California's housing market continued to wither last month as home sales fell to the lowest level for an April in three years. ...
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When the housing bubble pops again. California and the 1,700,000 homes with negative equity – 50 percent of Florida homes in negative equity yet bubble markets persist across the country.
The surge in the number of foreclosures in the whole U.S. resulted in record number of homeowners losing their homes, effectively eroding interest in homeownership and increasing people's fear over the idea of purchasing a residential property. It also drove Americans into rental housing which resulted in massive growth in the apartment and rental home sector.
Housing experts stated that, even with bank foreclosed dwellings and HUD houses for sale being offered at less than half their original prices, a lot of people are still staying away from home buying and are opting to rent instead. This caused housing prices to tumble and single family home sales to dwindle. Meanwhile, in the rental market, apartment rents are surging near-historic highs, while investors who were able to purchase multifamily properties and apartment units are raking in the benefits provided by the housing downturn.
Even among foreclosures auctions, realtors reported that multifamily units and apartment buildings are getting most investors' attention; more so than single family residential properties. Real estate investors know that the money is now coming from the rental housing sector, with rents in the whole country rising to an average of $991 per month compared with the 2006 average rate of $930. Real estate analysts predict that this average rental rate will rise to around $1,025 by next year.
Analysts also stated that further increases in rental rates are almost sure to happen, given that available units have dwindled, even when foreclosures purchased by investors for residential purposes have been converted into rental dwellings. The huge demand for rental houses and apartments can be seen in the continuous drop in the nationwide vacancy rate. As of the 2011 first quarter, vacancy rate among apartments in the U.S. was at 6.2%, declining from the 8% recorded in the 2010 first quarter.
Since nationwide foreclosures are predicted to increase even further in the coming months, analysts believe that more people will be entering the rental market, with a huge percentage of them comprised by former homeowners who lost their homes to foreclosure, while others will be those who were disillusioned by the concept of homeownership. Demand for rental dwellings is expected to remain strong for a number of years, analysts further added.
According to them, apartments and rental dwellings will continue to thrive as long as foreclosures are at elevated levels and the job market remains weak. In addition, most young adults who are leaving their homes to get set up on their own are opting for apartments and rental houses instead of purchasing a home.
The 20 year Japanese bear market in real estate is making its way to the United States. Home prices in the U.S. are now in a double-dip and have gone back 8 years. Lower paying jobs, higher expenses, shadow inventory, and big government spending all ali
The number of young adults in the U.S. conducting a nationwide foreclosure search or looking for new houses has risen in the past few months. According to housing experts, millions of younger people in the country are moving out of their old family homes to live on their own. Household formation, experts further stated, has never been higher in the country.
A lot of these going-independent youth are reportedly purchasing low-priced houses in foreclosure, although there are also those who have the ability to buy a newly-built home or a condo. Experts revealed that, as millions of young adults leave their parents' houses in droves, household formation in the country recorded its fastest rate ever since the year 2007.
With a lot of cheap bank owned repossessions and with interest rates at historic lows, a big percentage of these younger people can afford to buy a home for themselves. For others, renting is preferable to buying. No matter what form of living condition they prefer, analysts stated that they are creating a shadow supply of residents and homeowners that may eventually boost housing starts in the U.S. If the current pace of household formation continues, analysts stated that the nation is looking at a possible 50% increase in housing demand by 2012.
Based on home purchases and nationwide foreclosure search activities, analysts estimated that up to one million additional households will be formed within this year. During the 12-month period that ended in March 2010, only 357 new households were created in the U.S., representing the lowest total on record, based on data from the U.S. Bureau of Census. Most housing market observers predict that numbers will rise even further before the year ends as the job market gets stronger and more people find employment.
A lot of these new households are reportedly seeking information on how to find distressed properties and newly-built homes located in areas that cater to their professional and personal needs. Experts revealed that the surge in home formation will benefit, not just the housing industry, but almost all sectors, particularly those related to home supplies. They predict that housing starts or new home construction activities can reach as high as 648,000 in 2011 based on the current pace of household formation.
Although a big number of new households are busy conducting nationwide foreclosure search, a bigger percentage is said to be keen on new dwellings in good locations which could boost housing starts all over the country. By 2012, experts predict that housing starts will probably reach around 900,000.
More People Conducting Nationwide Foreclosure Search in the U.S. is a post from: Foreclosure Magazine - Read more about how does foreclosure work.
The latest Standard & Poor's/Case-Shiller report showed that an oversupply of foreclosure homes for sale in the U.S. is still hurting prices of residential properties all around the country. The report covered 20 of the major cities of the U.S. and revealed that majority of them continue to experience tumbling prices.
With bank foreclosures and Freddie Mac foreclosures remaining elevated in majority of markets, the report from S&P did not surprise a lot of analysts. According to most of them, the presence of cheap distressed homes will likely continue to drag prices down for the rest of the year. In February, 19 of the 20 major city markets tracked by S&P showed month-over-month price declines. It also marked the seventh month in a row that the price index has fallen from the previous month.
Housing experts explained that plummeting housing prices are caused by several factors, including huge amounts of foreclosed and repo properties in the market, record levels of unemployment in various regions, difficulties encountered by potential homebuyers in securing financing and fear among would-be buyers that prices will decline further in the coming months. Experts also stated that what is even more worrying is that the U.S. housing market is set for another deluge of foreclosures.
According to them, foreclosure homes for sale are likely to surge in the coming months as lenders pour the distressed properties they are putting on hold into the market. Industry experts claimed that a lot of foreclosures and even non-foreclosed houses are still in the pipeline as some sellers are not putting them into the market in the hope that they will have a better chance of selling at higher prices in the coming months.
The report from S&P showed how much impact a list of bank owned properties for sale has on housing prices, analysts noted. The report revealed that in Atlanta, Chicago, Charlotte, Tampa, New York, Portland, Seattle, Miami, Phoenix and Las Vegas, prices have dipped in February 2011 to their lowest levels since the period 2006 or 2007. The report also showed that the biggest drops in prices between January and February of this year were recorded in the cities of Chicago, Miami, Minneapolis and San Francisco.
A survey from the University of Michigan further emphasized the impact of foreclosure homes for sale on prices and sales of regular houses. Around 90% of the respondents to the survey stated that right now is a bad time for home sellers.
Foreclosure Homes for Sale Continue to Hammer U.S. Residential Prices is a post from: Foreclosure Magazine - Read more about how does foreclosure work.
The number of vacant foreclosed houses and empty non-foreclosed homes has been estimated to be over three million. According to a report by Goldman Sachs, residential vacancy in the U.S. is way above normal seasonal figures. However, housing formation is showing signs of increasing, albeit at a very slow pace.
With so much single family and multi family homes for sale remaining unsold, housing market analysts stated that it is not surprising that vacancy levels have escalated in the past few years. The report from Goldman Sachs estimated that the number of vacant housing units in the country stands at around 3.5 million. Reports have revealed that the estimate was based on the data presented by the U.S. Census Bureau.
However, other reports put the estimate at a much lower number. According to several other reports, the number of excess vacant homes in the U.S. as of April 2011 stands between 1.45 million and 2.45 million. Analysts who favor this lower estimate claimed that even with huge amounts of existing properties offered at foreclosure auctions, the housing stock of the nation will likely decline within a year since very few residential units will be added within 2011. They predict that excess stock of residences in the U.S. will dip within the range of 750,000 to 1.7 million by April of next year.
If the lower estimate is to be used as gauge, the U.S. will then be able to get rid of its excess supply of non-foreclosed and foreclosed houses by 2014 at the earliest and 2016 by the latest. Under the Goldman Sachs estimate, current stock is much higher, but the firm's report also provided a higher estimate when it comes to household formation.
According to the report, the recovery of the single family homebuilding sector will be very slow, owing mainly to the huge amount of distressed houses that are still in the market. However, housing starts is still expected to add another 600,000 by next year. The figure will be coming from the additional units of 475,000 recorded last year. Although housing starts are projected to increase, analysts believe that it will take years before they return to the healthy yearly average of 1 million units.
With foreclosed houses and bank-owned properties still at elevated levels, most housing market observers predict that normal conditions in home construction will not occur until 2015 or even 2016. They also asserted that the rest of 2011 will remain a difficult time for housing, with minor improvements expected in 2012.
Vacant Non-Foreclosed and Foreclosed Houses Estimated at Over 3M is a post from: Foreclosure Magazine - Read more about how does foreclosure work.
Financial land of perpetual bubbles – California technology, real estate, and now higher education bubbles. In 1980 the median California household income would have purchased 17 UC bachelor’s degrees. Today it can barely purchase one UC degree.
The processing of bank foreclosed homes in the U.S. is set for a major revamp. Recent reports revealed that banks have been given until the middle of June 2011 by regulators to develop plans that will polish their foreclosure procedures and mortgage servicing processes, while an additional two months were provided to implement these plans.
The demand for change was prompted by allegations that emerged last year that a big number of properties under residential and commercial foreclosure listings were processed using faulty documents and signed by robo-signers. The changes that were recently demanded by regulators will reportedly cost banks around $1.1 billion, a cost that is related to order of consent, while yearly expenses are estimated to be around $35 million.
Aside from instructions to iron out lenders' procedures, federal regulators, along with government-sponsored enterprises Freddie Mac and Fannie Mae, also presented plans that will promote successful loan modifications in the country. The move, analysts reported, is meant to control the continuous increase in the number of repossessed houses and foreclosed fixer upper properties for sale that are hammering the prices of residential properties all around the country. Under the loan modification plan, mortgage servicers will be required to approach homeowners earlier and more often than before following the initial delay in mortgage payment.
Moreover, mortgage firms will also be required to pay higher fees to servicers and satisfy certain benchmarks and timelines covering the processing of bank foreclosed homes and loan modification actions. Regulators have also demanded that banks provide a single contact point for borrowers to avoid getting them passed from one employee to another, a usual occurrence during the height of the foreclosure crisis which resulted in confusion and in most cases, outright foreclosures for a big number of homeowners.
Another change that is being required from banks is the addition of more employees who have enough knowledge when it comes to dealing with foreclosures and house repossessions for sale. According to some housing experts, most of the errors committed during the housing industry crisis were due to shortage of staff among banks and mortgage servicing firms. This shortage was also part of the reason why a lot of institutions opted to use robo-signers, analysts further added.
Regulators are hoping that the changes will make it easier for both banks and homeowners to deal with foreclosure issues. They also expect improved practices to result in fewer bank foreclosed homes and repossessed properties in all areas of the country.
Changes in Processing Bank Foreclosed Homes Set to Cost Lenders a Lot is a post from: Foreclosure Magazine - Read more about how does foreclosure work.
Reports revealed that U.S. Federal Reserve Chief Ben Bernanke have cited the oversupply of foreclosure homes and the high number of jobless people as the main factors hindering U.S. recovery. Bernanke reportedly mentioned these factors during a speech delivered in Arlington, Virginia. The Fed Chairman also reportedly claimed that the nation's economy is currently experiencing a moderate recovery, but is still far from the level where it should be.
According to various housing market reports, the number of foreclosed and repossessed homes in the country is likely to increase further in the coming months as CoreLogic estimated that around 1.8 million homeowners were either in foreclosure or delinquent in their payments as of March of this year. In addition, the nation's shadow inventory, or those distressed properties not yet in the market, is expected to expand the already 3.5 million homes that are already available as of the first quarter of 2011.
To help alleviate the problems caused by house foreclosure auctions, the Federal Reserve has committed to coordinating with businesses and community associations to provide data, research and other support to the housing market. The agency also reportedly claimed that it will keep steady its balance sheet after it has completed the purchase of Treasury bonds. Bernanke, during his speech in Virginia, also discussed efforts exerted by community associations to prevent foreclosures and assist small businesses in acquiring loans.
The Federal Reserve has also earlier expressed a willingness to maintain stimulus programs aimed at addressing home market problems caused by the massive amount of foreclosure homes. The agency will reportedly continue the initiatives after it has completed the purchase of Treasury bonds in June of this year worth around $600 billion.
Meanwhile, economists claimed that the problem with the high level of foreclosure bank owned auctions will not be resolved until the unemployment issue is addressed. Data showed that joblessness is particularly high among minority groups, younger people and less-educated individuals. The unemployment rate of the country as of March 2011 stood at 8.8%. Although this is lower than the record high 9.8% posted in November of last year, officials from the Federal Reserve stated that this is still way too high compared with the government's target of 5.6%.
Government officials also stated that, aside from the flood of foreclosure homes, the housing market is also suffering from the huge amount of underwater mortgages which have eroded property values in almost all parts of the country. However, most of them believe that things will start to get better for the housing market come 2012.
Unemployment and Foreclosure Homes Hindering U.S. Economic Recovery is a post from: Foreclosure Magazine - Read more about how does foreclosure work.