Some housing bubble news from Wall Street and Washington. Associated Press, "An industry group said Tuesday that pending U.S. home sales fell in February to the lowest reading since the index began. The National Association of Realtors' seasonally adjusted index of pending sales for existing homes fell to 84.6 from January's upwardly revised reading of 86.2. The index stood at 107.6 in February 2007. A reading of 100 is equal to the average level of sales activity in 2001, when the index started."

"The previous low was August's reading of 85.8, recorded at the height of the credit crunch."

"The PHSI in the Northeast remains 25.4 percent below a year ago. In the Midwest, the index is 17.4 percent lower than February 2007. The index in the South is 30.3 percent below a year ago. In the West, the index is 17.1 percent below February 2007."

From Bloomberg. "Bank holding companies including Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. have the thinnest safety cushion against losses in seven years. The margin may erode further in coming weeks. Credit ratings on $704 billion of bonds have been cut this year following the collapse of the U.S. housing market."

"As a group, regulated banks had a total risk-based capital ratio of 12.79 percent at the end of last year, according to data compiled by Bloomberg. The figure was the lowest since 2000, before the last U.S. recession. How much commercial banks have already cut back on lending will be known in mid-April when most report earnings."

"'All I know is the first-quarter reports are going to be pretty bad, and there's a lot more to come,' said L. William Seidman, who was chairman of the FDIC from 1985 to 1991. 'Our experience was that if the economy got in trouble, it took at least a year for the banks to get into trouble.'"

"'The important thing to remember about capital ratios is that they are minimums,' said Ralph Sharpe, who was director of the Office of the Comptroller of the Currency's enforcement and compliance division from 1984 to 1994. 'In good times everybody looks good, but when the tide goes out, you see who is not wearing their bathing suit.'"

The Times Online. "House prices in Britain plunged last month by the worst figure since the financial crisis in the early 1990s."

"Halifax, the country’s largest mortgage lender, revealed today that March prices dropped by 2.5 per cent, the biggest monthly fall for 15 years, beaten only by a 3 per cent fall in September 1992 when on 'Black Wednesday' John Major's Government took sterling out of Exhange Rate Mechanism."

"It appears to show that the rapid withdrawal of 100 per cent mortgage loans, with Abbey yesterday being the last lender to abandon such a loan, the demand for higher deposits and the raising of rates on mortgages has driven a sudden slowdown in the housing market."

"The data from the Halifax follows the Nationwide reporting that house prices fell by 0.6 per cent month-on-month in March, a fifth successive decline. Latest figures from the Bank of England show that mortgage approvals edged down to 73,000 in February from 74,000 in January. This was the second lowest level since current records began in 1999."

"Halifax's chief economist Martin Ellis said: 'Overall, we expect there to be a modest (low single digit) decline in UK house prices this year. Any declines, however, should be viewed in the context of the significant price rises over recent years.'"

"UK prices have increased by 171 per cent over the past ten years and by 51 per cent over the last five years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556,' he said."

This is Money. "While some of Britain's estimated 750,000 landlords are rich on equity built up in the past decade, others are recent investors who bought over-valued property, much of which - especially new-build flats in large, urban blocks - has proved difficult to let."

"Rosemary Jane, like thousands of other educated, middle-class homeowners, believed property investment was the sensible way to supplement her pension and finance a comfortable retirement. But her foray into buy-to-let has left her staring into a financial abyss where everything she owns, including her home in Portsmouth, is in jeopardy."

"And at 57, retirement is out of the question - probably for a long, long time."

"Rosemary bought three properties in 2004 whose values were questionable at the time and which are now falling. She easily found loans, but the repayments depended on her achieving high rents - which never materialised."

"Ideally, what Rosemary wants is for the property club that recommended the investments - to take the Manchester property off her hands and also release her from a pledge she made to buy another house in Florida, which has yet to be built."

"When complete, the US property is likely to be worth less than the $240,000 (£125,000) she promised to pay in 2004. But this is a moot point as she will never find a lender to offer her a mortgage."

"Rosemary says: 'Nobody would give me a mortgage on the Florida property and it is unlikely I will ever be able to remortgage the Manchester flat away from Northern Rock either.'"

"David Sandeman (a) property research specialist , says the average flat built since 2005 is fetching about 26% less than its original price and more than 15% will not sell at all."

"'This is the tip of the iceberg,' he says. 'Everyone is just realising now what these properties are worth - and their values will be pushed down more. Investors are battling to refinance. They will go back to the brokers who found them mortgages in a flash three years ago - but there won't be any mortgages there now.'"

The Observer. "Location, location, location, the mantra of Britain's property owning classes, has turned into frustration, frustration, frustration."

"Cheap and easy mortgage loans have for the past decade fuelled a housing boom that has turned Kirstie Allsopp and Phil Spencer into TV stars and spawned a host of glossy 'property porn' mags and supplements encouraging us to fantasise about grander, more expensive homes."

"But the mortgage feast has turned into a famine because of an unwelcome American export: the credit crunch. 'There is no doubt this is a very difficult situation,' said one bank executive. 'Some borrowers will really feel the pinch, and repossessions will rise, though they are low at the moment. We are already seeing house prices begin to fall across the country.'"

"In the space of just one day last week, more than 300 mortgage deals vanished from the market, according to Moneyfacts. Almost 3,000 were withdrawn in March, taking the number of products available to fewer than 5,000. To put that in perspective, the figure stood at more than 15,000 before the credit crunch began last summer."

"Twenty-four-year-old Liam Tarry bought a house in Norwich 18 months ago but is now preparing for life as a tenant again because his mortgage has become unaffordable."

"Tarry bought the house with a friend who took on most of the mortgage. But a few months ago the friend moved out, leaving Tarry facing a remortgage of more than three times the size of his existing repayments."

"'My plan was to profit from house prices, which I suppose was foolish,' he says. 'But, then again, I could not have predicted that house prices would fall and that lenders would stop lending.'"

"Akira Mori, Japan's richest man, spent a record 231 billion yen ($2.3 billion) buying Tokyo's Toranomon Pastoral Hotel last September. He now says it's worth closer to 200 billion yen."

"'The boom we've enjoyed for the past few years is over,' said the 71-year-old CEO of Mori Trust Co. 'Investors were convinced that prices would keep rising, so in about six months, they'll probably rush to get out regardless of price.'"

"Global real estate financing has evaporated as defaults by U.S. homeowners saddled banks and securities firms with $232 billion of losses and asset writedowns."

"'People who bought properties last year at a very high price, they're in trouble,' said Toshio Masui, president of Japan operations for (a) Los Angeles-based buyout firm. 'Everybody was overpaying. People with a bunch of stuff in their portfolio are now running around trying to get refinancing, and they won't get it.'"

"'We should be prepared for another round of real estate deflation that may last for some time,' said Akiyoshi Inoue, president of Tokyo-based Sanyu Appraisal Corp."

"While total returns for real estate investments in Japan, including capital gains and rental income, have been positive since 2002...the housing market has been showing signs of strain. Condominium sales are set to fall for a third year in 2008."

"Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, reduced property loans by 7.7 percent as of Sept. 30 from a year earlier. Regulators have sought to prevent a bubble like the one that burst in 1991, leading to 15 years of falling land values."

"Japan's previous property boom lasted 16 years, making Mori's father Taikichiro Mori the world's richest individual in 1991, according to Forbes. When Taikichiro Mori died in 1993, the family's $15 billion fortune had been cut in half in just two years, Forbes reported."

"'Japanese investors suffered a severe shock when the last bubble burst, and because they lived through the crash, they're bound to be cautious now,' said Junko Miyakawa, a senior analyst at Tokyo-based Shinsei Securities Co."

"Regulators at the Tokyo-based Financial Services Agency may have sought to curb lending to prevent a new bubble from forming, said Katsuya Takanashi, CEO of Secured Capital Japan Co., which manages about 550 billion yen of real estate assets."

"'The FSA doesn't want to repeat the bad-loan problem that trapped Japan's economy for such a long, long time,' he said."

From Conde Nast. "The former Fed chief is on the defensive and one of the biggest charges against him, WSJ's Greg Ip tells us, 'is his decision to slash interest rates to 1% in 2003 and wait to raise them until 2004, and then only slowly.'"

"Greenspan explains that policy makers were motivated by the specter of Japanese-style deflation which descended upon that country in the 1990's after booms in its stock and real estate markets the previous decade.'"

"The irony of course is that in keeping interest rates low after the tech-stock boom of the late-90's, Greenspan (implicitly or explicitly depending on who you want to listen to) encouraged both the consumer spending binge and the real estate bubble."

"In hindsight, it appears that in trying to maneuver around an outcome similar to Japan's 'lost decade,' Greenspan and his compatriots only succeeded in delaying it."

From Reuters. "In an interview in Tuesday's Wall Street Journal, Greenspan...has lashed out again at his critics, saying he was being blamed unfairly for the credit crisis and that he had no regrets about decisions he took while at the helm."

"Greenspan said rock-bottom interest rates actually went against his '19th century' aversion to easy money. 'My inner soul didn't feel comfortable,' he is quoted as saying."

"Critics say Greenspan, under whom U.S. rates went from 6.5 percent in late 2000 to 1 percent in mid-2003, eased policy too much and then took too long to tighten again. That, they say, spurred excessive mortgage borrowing and stoked the housing bubble that is now the root cause of the credit crisis."

"But Greenspan said the Fed cut rates to spur growth and prevent deflation and, at that time, dissenting votes on the policy committee were from those who wanted rates even lower."

"Analysts also blame Greenspan for failing to press for stricter rules for bank lending to consumers with weaker credit records, and for not anticipating the subprime mortgage meltdown."

"In the interview, Greenspan admits he was wrong about the improbability of a housing bubble. But WSJ reporter Greg Ip says Greenspan does not share some foreign central bankers' belief that their job is to defend against excessive asset-price inflation. No sensible policy, he maintains, could have prevented the housing bubble."

"'I am reasonably certain that I am right here,' Greenspan is quoted as saying. If proved wrong, he says, 'I will change. I do not have a vested interest in holding wrong ideas.'"

The Arizona Republic. "The recent rise in Phoenix's housing prices means that in some cases the cost of owning a house grew too high compared with the cost of renting one, says a new report from the Center for Economic and Policy Research, in Washington, D.C."

"The report says that when ownership costs exceed 50 percent, it indicates a bubble. Some 'extraordinary' gaps include New York City, where it costs 109 percent more to own a home than to rent; San Diego, 133 percent; San Francisco, 161 percent; and Los Angeles, 168 percent."

The Boston Globe. "Owning a home in Boston is about 70 percent more expensive than renting an essentially identical home. Therefore the government should stop trying to keep owners in homes and instead let more people return to renting. Those families could spend the extra money on other needs...says a new study from the National Low Income Housing Coalition."

"The study joins a growing chorus making the point that home ownership is a misnomer in many cases. Many 'homeowners' are people with little equity, no equity or even negative equity who are basically making monthly rental payments to a mortgage company."

"The group argues there is little long-term benefit to ownership because prices in cities including Boston likely will continue to decline...And even if they could, they'd be better off paying half as much and investing the difference in stocks."

From The Housing Bubble March, 14, 2005. "Think about this statement from Greenspan the next time he says there is no collapse looming. From the 1999 (FOMC) transcript, 'Owners’ equivalent rent is going to start to accelerate unless I misread how asset prices interact with consumer prices. The reason is that the ratio of owners’ equivalent rent to the value of housing has been going down continuously, and the implicit rate of return that that is suggesting cannot credibly be expected to continue.'"