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Housing Downturn Hammers the Economy
Tweet Share on Facebook April 30, 2008 Comment (1)In Tuesday's S&P/Case-Shiller report, we learned that home prices are dropping at a clip that's even faster than expected.
Today, we got a better picture of just how damaging the housing bust has been to the overall economy. It ain't pretty.
While the first-quarter estimate of real growth in gross domestic product came in better than expected—at a 0.6 percent annual rate—the housing market was once again a piano on the economy's back.
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Drinking and Home Buying
Tweet Share on Facebook April 30, 2008 Comment (1)Many thanks to Twist over at housingdoom—do yourself a favor and bookmark this site—for calling attention to this hilarious trend: Given the plummeting housing market, it seems that Realtors are doing everything they can to get people to buy condos, including—you got it—providing plenty of booze.
From the Wall Street Journal, via Yahoo News:
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Sasquatch? Perhaps. Housing Bottom? No Way
Tweet Share on Facebook April 29, 2008 CommentYou've got a better chance of tracking down a sasquatch than locating a housing market bottom in a key report issued today.
The S&P/Case-Shiller Home Price Index came in worse than expected, showing the price of single-family homes (excluding new construction) in 20 major U.S. metro areas dropped nearly 13 percent in February from a year earlier. Of the 20 markets surveyed, 17 posted annual declines that mark record lows in the two decades that the index covers.
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Pressure Is Building for Industry Action
Tweet Share on Facebook April 25, 2008 Comment (10)With the Bush administration's preferred industry-led solution to the housing crisis proceeding at a Department of Motor Vehicles-like pace, Treasury Secretary Henry Paulson met with key lenders this week to prod them for new ways to resolve the mess, the American Banker reports.
From the American Banker:
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Which L.A. ZIP Code Is Most Housing Busted?
Tweet Share on Facebook April 25, 2008 Comment (3)Peter Viles over at L.A. Land has put together a nifty new data tool enabling users to explore foreclosure trends by ZIP code in Southern California.
Judging from this preview, I recommend that Californians wait at least 30 minutes after their last meal before using it:
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As Housing Slumps, Rents Rise
Tweet Share on Facebook April 25, 2008 CommentSeems like a pretty good time to be a renter, huh? While everyone else is sobbing over the free-falling value of their homes, renters can rest easy knowing that at least they haven't plowed money into a losing investment.
Not so fast.
As the good folks over at the Real Estate Bloggers point out, nonhomeowners are already facing higher rental prices, and things could be even worse by the end of the year.
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Backlog of Unsold New Homes Swells
Tweet Share on Facebook April 24, 2008 CommentIt takes some pretty sour news to undercut the already gloomy expectations for the housing market. But today's government report on new-home sales did just that. March sales of new, single-family homes fell 8.5 percent from last month and nearly 37 percent from a year ago—well below consensus estimates. At the same time, the median price declined more than 13 percent from a year ago, "which is the single largest decline in nearly four decades," Joseph Brusuelas, an economist at IdeaGlobal, said in a report.
Another troubling statistic: The inventory of unsold homes increased to an 11-month supply. How big of a supply is that? Well, the last time we had a backlog that large, the film Raiders of the Lost Ark was packing in theaters and children were begging their parents for "He-Man" action figures (1981).
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Workouts Just Not Working Out
Tweet Share on Facebook April 23, 2008 CommentRather than embrace a full-on, taxpayer-funded bailout, the Bush administration has preferred to address the housing crisis by encouraging lenders to get together with struggling borrowers to find arrangements—perhaps by modifying loan terms—to enable homeowners to avoid default.
These negotiations, known as loan workouts, are not formally associated with Richard Simmons—not yet, anyway. And although they provide an opportunity for struggling borrowers to stay in their homes, the process can be slow, since lenders have to go through one loan at a time. (And with the scope of the crisis building, the number of struggling borrowers is staggering.)
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Existing-Home Sales Fall...Again
Tweet Share on Facebook April 22, 2008 Comment (1)So what do you want first—the good news or the bad news? I think we could all use a little good news ...
The good news: Sales of existing homes increased in the Northeast and West last month, according to a National Association of Realtors report released today (although sales declined in the Midwest and South).
Need some more? Well, some markets—that means you, Des Moines, Iowa, Durham, N.C., and Austin—showed "healthy price gains."
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Honey, It's Not You—It's the Mortgage
Tweet Share on Facebook April 21, 2008 Comment (1)Over the past several months, it has become painfully clear that the housing crisis is not just about housing. Rising defaults have led to turmoil in the credit markets. Banks have tightened their standards for lending to consumers, who are already snapping their wallets shut as the economy slows.
But more recently, the turmoil has spread to areas that would appear to have little, if any, connection to housing. We've even seen the crisis blamed—justly, I would argue—for fewer Botox treatments.
