A former resident of Orange County, Calif., I always pay attention to my hometown — and what’s taking place in housing behind the proverbial “Orange Curtain” in southern California underscores the reality in many housing markets nationwide. In a word: foreclosures.
The Orange County Register’s Jon Lansner posted some data on the local housing market Monday afternoon, courtesy of local real estate agent Steve Thomas:
Distressed properties are a huge part of the real estate game. As a percent of all listed homes for sale, distressed properties were 40.1% of the market last week vs. 39.6% two weeks earlier.
Since Dec. 27, the number of distressed homes on the market has grown 2,195 while the non-distressed supply is 2,870 lower.
That sales bump reported by the NAR... more»
Thomas Friedman, Pulitzer-prize winning foreign-affairs columnist at the New York Times, weighs in with a point that the editorial team at HW has been hammering for months now: that housing, and the economy in general, will decide the outcome of the upcoming Presidential election. Not Iraq, or the War on Terrorism. Not Social Security, or Medicare. Not abortion, nor gun control.
Friedman’s thoughts on the matter:
It’s the state of America now that is the most gripping source of anxiety for Americans, not Al Qaeda or Iraq. Anyone who thinks they are going to win this election playing the Iraq or the terrorism card — one way or another — is, in my view, seriously deluded. Things have changed.
Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital... more»
Eric Hovde penned a piece this weekend that deserves a close read, especially if you happen to be a U.S. Senator — and I know that more than a few now read HW each week.
His point is one that our editorial team has been hammering since at least August of last year: that housing prices simply must fall, and a good chunk of homeowners must lose their homes.
Attempting to fight the forces of housing gravity now at work isn’t likely to end well. To wit:
… if homeowners are able to reset their mortgage balance to their home’s current fair market value, less a 10%-15% discount, the real probability exists that borrowers who have the ability to pay their existing mortgage will manipulate the system to receive a similar benefit.
Ask yourself this simple question: If your neighbor... more»
HW readers have heard us say again and again that there won’t be a magazine quite like HOUSINGWIRE Magazine when it launches in late August of this year.
To back that sort of talk up, we thought you might be interested see what we’re working to cook up for the very first issue. You’ll note that the focus is very different than the daily insight we deliver (for free!) online; and that’s by design. We’ll also be providing some cool data that isn’t really available elsewhere, thanks to the support of some amazing firms in both the primary and secondary mortgage markets.
If you haven’t already subscribed, click here to subscribe today! Or just click that huge button over there.
Right now, we’re offering a subscription through the end of 2009 —... more»
I don’t know if Angelo Mozilo knows the difference between a curve ball and a split-finger, but given that his 40-year reign as the head of Countrywide Financial is coming to an end, it seems appropriate to reflect on his career as well as his legacy.
While the Mortgage Banker’s Association doesn’t have a Hall of Fame for lenders, two years ago, Mozilo would have been a shoe-in as a first-round inductee if such a distinction existed.
By now, we all know the story: a Brooklyn-born son of a butcher who devoted his professional career to building the largest and most influential mortgage lending company in America. To those of us who’ve watched him operate over the years, it was hard not to feel a certain amount of envy. He always seemed to be one step ahead of the curve, instinctively... more»
Talcott Franklin, co-author of the “Mortgage & Asset Backed Securities Litigation Handbook,” on when we can expect to see a rebound in housing:
“If you look at the housing bubble that was contributed to by the subprime lending environment, you see the Mount Everest of housing bubbles, as opposed to every housing bubble we have seen before,” Franklin said. “It is unlikely that we will see a significant recovery in housing prices, given the size of the housing bubble.”
Via MarketWatch, Franklin said he expects recovery could be more than 14 years out, citing the S&L crisis as a baseline. To steal a phrase from a famous rock star: You wanted the most bearish? You got the most bearish!
Our very own Richard Bitner — managing director here at HW Publishing, and now, a burgeoning author, too — saw his memoir, Confessions of a Subprime Lender, get some big-time ink today over at the Wall Street Journal.
For those who don’t know, Bitner was the president of Kellner Mortgage Investments, a small subprime lender that went belly-up in March of 2007 amid the start of the subprime credit crisis. By that time, he had long since sold off his interest in the firm (he exited in 2005 when he grew uncomfortable with slipping credit standards), but his book is a telling insider’s peek into what really went wrong in the subprime lending boom.
From the WSJ:
Yes, borrowers … made poor decisions and needed to learn their lesson. But so did the lenders, brokers, rating... more»
Warren Buffett’s words tend to be ones to heed. So we’ve duly noted his comments on CNBC today, in an exclusive interview with the business news channel. Via MarketWatch:
The Fed should be concerned about both inflation and economic growth, a tough thing to do, [Buffett] explained. But inflation should be the Fed’s main concern right now, Buffett added. “Inflation is really picking up,” he said. “Whether it’s steel or oil… we see it every place. It’s exploding.”
Exploding inflation. Could that be the next buzz word in the financial markets?
Well, that didn’t take long. It’s not even been a month since the $60 billion bailout/refinancing effort was completed for Residential Capital LLC, the ailing mortgage lending arm tied to GMAC LLC, and already questions are being whispered over the company’s future.
Bloomberg gives those whispers some ink:
Whether [the $60 billion is] enough to ride out the worst housing slump since the Great Depression remains in doubt. Moody’s Investors Service cut GMAC’s credit rating one level to six rankings below investment-grade last week as ResCap burns through cash after losing $5.3 billion in the past six quarters.
“ResCap presents a very significant risk,” said Mark Wasden, the lead GMAC analyst at Moody’s. “There is no easy exit from their difficulties... more»
We’ve noted indicators of pending softness in CRE from time to time in the past here at HW, but today a feature at Bloomberg underscores just how soft the commercial RE sector really is:
Workers building the $3.5 billion Cosmopolitan Resort & Casino on the Las Vegas strip are getting used to their financiers from Deutsche Bank AG …
Since January, when New York developer Ian Bruce Eichner defaulted on a $760 million loan, Frankfurt-based Deutsche Bank has been cutting Perini a monthly check for $70 million to continue construction, now in full swing with 2,800 workers on site and a dozen cranes towering overhead …
Not far down the strip is the Tropicana Resort & Casino, whose parent filed for bankruptcy protection in May. Tropicana Entertainment LLC defaulted in April... more»
