Ten housing analysts predict falling prices in 2012

 LAGUNA HILLS, NEWS
Feb 082012
 
Ten housing analysts predict falling prices in 2012

Pessimism pervades the housing market. Every major group with credibility that analyzes the housing market is predicting further price declines. The only group forecasting price increases is the the NAr (PDF of NAr forecast). What a surprise. The clueless shills at the NAr couldn’t bring themselves to give an accurate forecast, so instead they manipulated the numbers to come up with a tiny price increase in 2012. In addition to the eight groups projecting price declines (S&P Case-Shiller -3.7%, LPS -4.8%, FHFA -1.8%, FNC -4.6%, CoreLogic -4.3%, Radar Logic -7.1%, Clear Capital -2.2%, Zillow -4.6%), I have forecast a -1% [Read More...]

Obama’s housing policy has lead to unprecedented affordability

 FULLERTON, NEWS
Jan 272012
 
Obama's housing policy has lead to unprecedented affordability

Despite pockets of high pricing, under the presidency of Barack Obama, house ownership affordability on a monthly payment basis has hit an all-time low relative to rents and incomes. This should be cause for celebration. People no longer have to apply an onerous portion of their monthly budget to house payments and related expenses. If this condition persists, the economy will recover quickly from the stimulus of newly freed disposable income. However, rather than celebrating this tremendous achievement, people decry the failure of Obama’s policies. This is wrongheaded. High real estate prices are not desirable or beneficial to society. It [Read More...]

Principal reductions fail to reduce future default rates

 FOUNTAIN VALLEY, NEWS
Jan 232012
 
Principal reductions fail to reduce future default rates

Principal forgiveness is the worst policy option. Despite this fact, it’s so appealing to loan owners and politicians, reporters are keen to write about the prospect. However, the world is not comprised only of loan owners. Nearly 40% of households are renters, and of the remaining 60% who own homes, 90% of them are still paying their mortgages. Ninety-four percent of the population is asked to fix the problems of the 6% who are loan owners and the banksters who created the problem. Lenders and loan owners have problems. Lenders made loans their borrowers can’t repay, and now both parties [Read More...]

Homebuyers remain income-challenged, wealth-challenged, and debt-constrained

 NEWS, SAN JUAN CAPISTRANO
Jan 172012
 
Homebuyers remain income-challenged, wealth-challenged, and debt-constrained

Affordability in many markets is at record highs. Even here locally, houses are more affordable on a monthly payment basis than any time in the last decade. Yet, houses are not selling. Why is that? Income growth is stagnant due to the weak economy and job picture, the housing wealth of the entire nation has all but evaporated, and many potential home buyers have high debt burdens from a combination of student loans and rampant credit-card borrowing during the 00s. In short, everyone is tapped out. Last week I spoke of my disdain for most economists. Nouriel Roubini is another [Read More...]

Falling house prices increases strategic default

 NEWS, ORANGE
Jan 162012
 
Falling house prices increases strategic default

Borrowers who owe more on their mortgage than their house is worth and who are paying more each month than a comparable rental benefit financially from strategic default. Few dispute that. The arguments against strategic default appeal to ethics and morality, and the counter-arguments either deny there is a moral component or argue that the greater moral duty is to the family. There is one financial argument against strategic default: the house will go up in value, and by defaulting now, the borrower will not obtain that appreciation equity in the future. The appreciation argument is a fantasy. Prices are [Read More...]

REO inventory at the GSEs and FHA growing out of control

 FOUNTAIN VALLEY, NEWS
Jan 092012
 
REO inventory at the GSEs and FHA growing out of control

Three recent news stories strongly suggest the GSEs have too many REOs, and they are working feverishly to prevent their REO inventory from growing out of control. First, the federal reserve has identified markets to sell bulk REOs to companies willing to convert them to rentals and hold them until the market recovers to sell off their REO inventory in bulk. Second, the FHA has waived the anti-flipping rule again to help them clear out their REO inventory. Third, Freddie Mac has extended the forbearance for jobless borrowers so they don’t have to add to their REO inventory. These stories [Read More...]

Shadow inventory much larger than publicly disclosed

 MISSION VIEJO, NEWS
Jan 062012
 
Shadow inventory much larger than publicly disclosed

Today’s post comes out of the conspiracy theory vaults, but it supports a contention I have been making for the last few years: shadow inventory is much larger than most housing analysts believe. CoreLogic reports shadow inventory at 1.6 million units. With nearly 10 million loan owners underwater and prices falling, hope is fading for the middle class hanging on to their dreams of equity. Many of these people will strategically default, and if the featured article today is accurate, perhaps many of them already have. Michael Olenick: Is Shadow Housing Inventory Vastly Larger Than Widely Believed? By Michael Olenick, [Read More...]

OC Republican John Campbell successfully lobbies for more government handouts

 HUNTINGTON BEACH, NEWS
Dec 202011
 
OC Republican John Campbell successfully lobbies for more government handouts

The loan limit on FHA loans is now $729,750. The venerable FHA which was founded to provide loans for low to middle income Americans is now being used to subsidize the mortgages and the house prices of high wage earners in places like Irvine. The government should get out of the housing market. Even the government knows this, but when removing its support causes house prices to weaken, so does the resolve of those in government to get out of the housing market. Obama signs extension for higher FHA loan limits by JON PRIOR — Friday, November 18th, 2011, 10:21 [Read More...]

realtors admit they blew it, revised data coming 12-21

 NEWS, SEAL BEACH
Dec 152011
 
realtors admit they blew it, revised data coming 12-21

The National Association of realtors has a credibility problem. Everyone already distrusts them because the sales techniques they advocate rely on falsehood and manipulation to cajole buyers into closing deals. But their problems go deeper than that. The association provides market data which purportedly is objective, but it certainly appears as if they manipulate this data to make the market look stronger than it is. Is this an “honest” mistake? Back in February I noted that the National Association of realtors caught lying about home sales. I contended that “The NAr wanted to dupe buyers into thinking the market was [Read More...]

Mortgage delinquencies expected to rise into 2012

 LAKE FOREST, NEWS
Dec 142011
 
Mortgage delinquencies expected to rise into 2012

Mortgage delinquency rates will likely decline in 2012 as lenders foreclose and remove the loan from the delinquency pool. Unfortunately for lenders, the delinquency rate is expected to rise for the first quarter of 2012 as declining prices and a weak economy prompts more borrowers to strategically default. 2012 mortgage delinquencies seen dropping sharply By Eileen Aj Connelly NEW YORK – If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion. Mortgage delinquency rates — the ratio [Read More...]

Delinquent mortgage squatting time sets new record

 IRVINE, NEWS
Dec 082011
 
Delinquent mortgage squatting time sets new record

Some lenders may be increasing the rate of foreclosures, but overall, the time it’s taking banks to foreclose is increasing. The foreclosure time now stands at a record 631 days. Foreclosures don’t take forever, but they certainly do take a very long time. Foreclosure used to be a deterrent to prevent borrowers from becoming delinquent on their loans. Now that the process takes so long, the prospect of two years of free housing is actually becoming an inducement for strategic default. Average Foreclosure Time Sets New Record Published: Thursday, 1 Dec 2011 — 9:30 AM ET By: Diana Olick CNBC [Read More...]

50% of mortgage holders are unable to move without a short sale

 IRVINE, NEWS
Nov 222011
 
50% of mortgage holders are unable to move without a short sale

To be underwater with a cost of ownership exceeding a comparable rental is to be trapped in a debtor’s prison. Loan owners in these circumstances have few good options. If they move and rent the house, they lose money each month until rents rise enough to allow them to break even. In a weak economy with stagnant wage growth, it may be a very long time before these owners get back to even on a payment basis. If they sell, it will be a short sale. They will endure a decline in their credit score, and they may have to [Read More...]

Fannie Mae and Freddie Mac should be dismantled in favor of private lending

 NEWS
Feb 172011
 
Fannie Mae and Freddie Mac should be dismantled in favor of private lending

Should the government provide loan guarantees to subsidize home ownership? The arguments in favor of government subsidies all come down to putting people into homes they cannot afford in a free market. The theory is that homeowners care more for their properties and community and are less likely to cause social unrest. There is no real evidence to support this idea, but expanding home ownership has been the cornerstone of government policy since before the Great Depression. The arguments against are summarized below. Ten Arguments Against a Government Guarantee for Housing Finance By ANTHONY RANDAZZO From the Reason Foundation — [Read More...]

Lowering GSE and FHA loan limits will lower house prices

 NEWS
Feb 162011
 
Lowering GSE and FHA loan limits will lower house prices

During the housing bubble rally, the grass was greener and the light was brighter. At higher prices with boundless hope, we reached the dizzying heights of real estate wealth, a dreamworld of unlimited appreciation and personal spending power. Currently our housing market is completely supported by and dependent on government loan guarantees. By offering to assume all risk of loss, the federal government though the GSEs and the FHA is underwriting loans at historically low interest rates. This caused money to flow into mortgage lending at a time when proper risk management was to flee. This kept some of the [Read More...]