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20. November 2008 by Ana Connell.
Image by Getty Images via DaylifeThe National Association of Home Builders issues a monthly survey to it’s members where they are asked to rate the economy and general market conditions. The housing market index is a weighted average of present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes.
Home builders are having an extremely difficult time this recession, reflected in the national home builders’ housing market index which plummeted to 9 in November, under October’s 14 which had until now been the record low.
Data on new and existing home sales for October will be released at the end of the month and so far, including this report and the pending home sales index posted earlier in the month, things point to a reversal of September’s higher numbers.
Declining home prices tied to foreclosure and short sales and swelling supply are apparently not yet attracting buyers in many areas. The credit squeeze is still an issue for many buyers.
In the Burbank/San Fernando Valley real estate area I have seen alot of activity and multiple offers in the200k-400k range. There are qualified buyers and investors out there that will bid on properties, if the price is right. Lots of questions remain, including whether the banks will work with home owners facing foreclosures and short sales.
We also need to factor in the length of the current credit squeeze and the employment situation for the Los Angeles area. If all of these factors align positively then we’ll start to come out of the current market condition, either way we’re in for a prolonged recovery, it’s just a question of how fast we can come out of it.
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26. September 2008 by Ana Connell.
Recap:
It looks like further negotiations are needed to come to an agreement on how to handle this mess as the meeting/photo op at the White House today was unsuccessful in building a consensus. Secretary Paulson provided a 2 1/2 page outline of what he and Chairman Bernanke would like to do, which included little to no oversight, no accountability and a $700 billion price tag.
Congress is asking for:
Much critical thinking and brainstorming will be needed to solve this mess.
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26. July 2008 by Ana Connell.
New York and Chicago also reported that buyers had increasing difficulty getting mortgage financing. The survey said tighter credit standards are hurting commercial real-estate activity.
The Congressional Budget Office estimates the program would cover about 400,000 homeowners with mortgages totaling $68B.The bill includes:
–A $7,500 tax credit for first-time home buyers.
–A $500 to $1,000 deduction for 2008 property taxes for people who don’t itemize deductions on their tax returns.
–Higher limits, up to $625,000, on mortgages insured through Fannie and Freddie. A temporary limit of $729,750 until Dec. 31 would remain in place.
Here in Burbank and the San Fernando Valley we are experiencing pockets of good news, but overall it’s not an optimal situation. Foreclosures are up and continue to challenge current inventories. Expect things to continue this path until next year.
The Economic Week Ahead:
Have a great weekend!
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14. July 2008 by Ana Connell.
Lots of news last week and most of it was on the sobering side. We started off the week with a report from a Lehman analyst that FNMA and Freddie Mac will both need to raise a substantial amount of capital, 46 billion for FNMA and 29 billion for Freddie Mac, due to future pending write downs. Although this could be a non event, given the situation with IndyMac(see below) it is very troubling. Fed Chairman Ben Bernanke said he was opening the discount window to both institutions in order to provide “liquidity”.
The big news for the week came late on Friday. After market close, it was announced, that IndyMac Bank, a leader in “Alt-A” loans, had been seized by the Office of Thrift Supervision, due to a run on deposits. This made IndyMac Bank the 2nd largest federally insured financial institution to be seized by US regulators. The largest failure, if you are curious, was in 1984, Chicago’s Continental Illinois Bank and Trust. A successor institution, IndyMac Federal Bank FSB, will open next week. About now I’m remembering two years ago, when many prominent individuals were talking about how the subprime situation was under control said it would produce minimal fallout.
What caused all this was the huge number of defaults on mortgage loans made to, well, people who could not afford them. More troubling is the fact that there has clearly been little to no oversight of these institutions. The why is easy, everybody seemed to be making money, investors were making money and more people were given the ability to buy property, so it seemed like a win win for all. Problem is that if it seems too good to be true, it probably is. IndyMac managed to acrue $900 million in losses. So now depositors are left with the grim reality that only $100,000 on deposit with Indy Mac Bank will be insured.
What’s even more troubling about all this is that the FDIC has 90 institutions on it’s troubled bank list and Indy Mac Bank was not one of them. So this begs the question of how many more might fail. The clean up for this failure alone is expected to run between $4 and $8 billion.
The Federal Reserve is expected to issue new lending rules on July 14th that limit what’s termed as “exotic” mortgages. Too little too late for many and especially those with Indy Mac.
Market open tomorrow should be very interesting!
The Economic Week Ahead:
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27. June 2008 by Ana Connell.
Of Note:
Rough week again! The Dow ended the week at 11,350 with the price of oil front and center amid inflation worries.
For the record, I’m actually an optimist but I also think you have to put the rose colored glasses aside every now and then and sober up to the fact that it’s rough out there! Our net worths have been significantly eroded by falling prices both in real estate and the stock market. Add to that the prices at the pump and it can look pretty grim.
On the positive side I do think this market represents a huge buying opportunity! Remember the old adage “buy low, sell high”? Most of us panic when things are low because we think they will go lower. So as easy as it is to say it, it’s much harder to take action and buy when prices are low.
On that note , have a great week!
The Economic Week Ahead:
I’ll post the July 7th week as well as there may not be as much to talk about next week:
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