Archive for April, 2012

Pending sales are up, and economists who use pending sales in their calculations are proclaiming a price rally is in the works. There is one inconvenient fact holding back the bulls: record cancellations. Borrowers are unable to close the deal, and properties are falling out of escrow at increasing rates. Snags leading to more real estate contract cancellations April 01, 2012|By Kenneth R. Harney WASHINGTON — What's behind the unusually high rate of contract cancellations and settlement delays in the real estate market? With signs of recovery emerging in many parts of the country, shouldn't deals be zipping along with minimal complications? Apparently not. Nearly one-third of realty agents in a new national survey reported experiencing contract cancellations — purchases…[READ MORE]

Everyone seems to believe the market bottom is in. Investors are buying up cheap homes in beaten down markets, Calculated Risk called the bottom, sentiment among realtors has turned positive, and the mainstream media is flooded with optimistic spin about housing. But have we really hit the bottom? Grim Housing Data Shows We Have Not Hit Bottom By MICHELLE HIRSCH, The Fiscal Times -- March 29, 2012 A new string of grim housing data confirms what economists and analysts have long predicted: the housing market has yet to hit bottom, and once it does, it will be a long slog back to health and stability. The nation’s heap of completed foreclosures remained steep, barely budging to 65,000 in February compared…[READ MORE]

Part of living in California is deciding whether or not to play the California housing lottery. If you win, you could gain hundreds of thousands of dollars. If you play, you could spend hundreds of thousands of dollars and endure the consequences. If you lose, you could lose hundreds of thousands of dollars and end up homeless, destitute and bankrupt. But just like gamblers flock to the casinos, everyone believes they can be a winner, and now with our bailout culture, nobody believes they can lose either. In the Great Housing Bubble, I noted this about bubbles: Why should anyone care about financial bubbles? The first and most obvious reason is that the financial fallout is stressful. People buying into…[READ MORE]

Over the last five years of falling real estate values, the government and federal reserve has done everything in its power to prevent the price collapse. The FHA was pressed into service as a replacement for subprime lending, and it became the only financing available for first-time buyers with less than 20% down. The current FHA minimum down payment is only 3.5%, which effectively puts every buyer underwater when transaction costs are factored in. Since the FHA has originated over a trillion dollars in loans, most of which are underwater, and since prices are still falling, the delinquency rate on FHA loans has been steadily rising, and the loss severities are very high. It's no big secret that the FHA…[READ MORE]

In what can best be termed as delusional optimism, the lending cartel is cautiously optimistic they can control the flow of properties as the liquidate their shadow inventory. Based on what is happening today, lenders have reason to be optimistic. Collectively, they are withholding REO inventory and decreasing the supply of distressed inventory to force the market to bottom this spring. They don't have much to lose. If they keep putting properties on the market, prices will certainly continue to fall. They hope that by removing the inventory, they can get the markets to bottom and with the constant barrage of bullshit from the NAr, they may be able to ingnite a rally as everyone tries to time the bottom…[READ MORE]

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