The MSM Is Currently Feeding Us Dog Crap
Readers suggested a topic around the current “crisis” and the housing bubble. “I would like to see some discussion about the difference between “truth” and “conventional wisdom.” We are currently seeing revisionist history, by blaming subprime mortgages for the meltdown, while ignoring the 900 lb gorilla walking in the door (ALT-A resets/walk aways).”
“The MSM is currently feeding us dog crap, by saying that the latest plan will “stabilize” prices, and that current homeowners should be supportive, because it will stabilize prices at an artificially high level. But “gravity” says prices won’t stabilize until the demand for houses exceeds the supply (which IMO won’t be happening anytime soon).”
“Can artificially boosting “confidence” alter the laws of gravity? Everything I’m seeing with my own eyes has convinced me the bad news isn’t finished yet. Am I too pessimistic, or are the PTB pumping out happy gas to keep everyone from doing the final run for the exits?”
A reply, “When I keep seeing demand for many items, not just the purely discretionary, declining 10, 20, 30, 40, and sometimes 50+ percent on a YOY basis, it’s quite clear the bad news isn’t close to being over. The question for me isn’t whether this downturn will be severe, last for years, and affect many countries around the world, but what non-economic impacts will happen such as happened in the 1930’s?”
Another said, “Obama’s plan will NOT stabilize house prices. Even Obama, in his speech the other day, laid out a laundry list of people who would not be bailed out, like greedy flippers. Well I’m sorry Barack, all you need is ONE greedy FB to who is not helped foreclose and go BK. That will set your comp. The only way to stabilize home prices is the rescue them ALL, which is impossible.”
Mercury News. “The Obama administration unveiled a three-pronged plan to stop the nationwide slide in real estate values, saying it offers potential relief for struggling homeowners and a possible shot in the arm for an ailing economy. But it’s unclear how many in Silicon Valley will benefit since so many homeowners have big mortgages that may not qualify for one of the programs announced Wednesday.”
“Experts said the refinancing plan will help lower-middle-income borrowers in California, but may not do much for those with the large home loans typical in parts of the state, including Silicon Valley. That’s because the refinancings will be only for mortgages held or securitized by Fannie Mae and Freddie Mac, which only made loans under $417,000 in recent years. Slightly more than 60 percent of the home loans made in the state in 2006 and 2007 were over those loan limits, according to estimates by the California Association of Realtors, although in 2008, because of falling home prices, only 33 percent fell into that category. Also in 2008, the limit was raised to $729,750.”
“‘There are still a lot of people who can benefit from this,’ said Stanley Tseng, a past president of the Silicon Valley chapter of the California Association of Mortgage Brokers. ‘In the past year, we have encountered many, many cases of people who bought a home in the last three years who want to refinance but cannot.’”
The Sacramento Bee. “President Barack Obama unveiled a $75 billion foreclosure-prevention plan Wednesday, but it’s not clear whether it goes far enough to rescue California’s legions of distressed homeowners. Daniel Torres Jr. of Elk Grove, who works for the state Department of Corrections, is trying to avoid that fate, but said he and his wife are falling behind on their $3,600-a-month payments. ‘If they could just give us something that’s affordable,’ he said. ‘Just help us out on the payments.’”
The Atlanta Journal Constitution. “Getting better terms on their mortgage doesn’t do much good for someone who doesn’t have a steady income, said Mark Sulimirski, chief operating officer at Equity Depot. ‘It’s going to help some people, without a doubt,’ Sulimirski said. ‘But are they going to give a loan to someone who doesn’t have a job?’ ‘For the people who can’t make their payments regardless,’ he said, ‘it’s not going to make a difference.’”
The Review Journal. “The housing market is so down in Las Vegas, it’s got the analysts depressed. Dennis Smith of Home Builders Research and Larry Murphy of SalesTraq both reported 284 new-home sales in January, the lowest monthly total on record and a fraction of the number sold during the market’s boom in 2005 when nearly 40,000 new homes closed escrow. ‘They’re not good,’ Smith said of new-home sales. ‘I anticipated the number to be very low, but when you see the number, it’s very shocking.’”
“Homebuilders are not going to start new projects unless they can make a profit, which is difficult if not next to impossible in today’s business environment, Smith said. They have to compete not only with foreclosures, but with other builders selling homes for less than $100 a square foot.”
“‘I can’t wait for it to change because it will get better,’ Smith said. ‘I’m tired of talking to people who are losing their jobs. It’s depressing. I’m sure it’s astounding many economists how broad this recession is that started with housing.’”
“The resale median price is $155,000, the lowest price since January 2003, Smith said. ‘There’s a number that’s also shocking,” he said. “Anybody who stops and thinks about it says, ‘Holy cow, it’s a mess.’ Half the homes are priced under $155,000.’”
“Again, foreclosures are putting downward pressure on home prices. Murphy said a key statistic is that 67 percent of existing-home closings in January were bank-owned homes with a median price of $139,000. The remaining closings had a median price of $170,000.”
“Nevada Assemblywoman Barbara Buckley, D-Las Vegas, presented a plan to the Legislature to encourage banks to work with distressed homeowners. President Obama has announced a $50 billion package to help homeowners avoid foreclosure. Citibank is considering a 30-day moratorium on foreclosures. ‘Maybe there’s relief on the way, but I’m skeptical,’ Murphy said. ‘Everybody agrees that the first $350 billion we gave to the banks was used to shore up their balance sheets. They didn’t loosen lending and help stop foreclosures.’”
“Brian Gordon, a principal at Las Vegas business advisory firm Applied Analysis, said low home prices in Las Vegas are not sustainable in the long term. It’s a function of supply and demand, he said. ‘The market’s sitting on a ton of inventory that sellers are looking to unload,’ Gordon said. ‘New construction has all but halted. Their ability to compete in price is limited when you look at the resale market. Bank-owned prices are approaching $75 a square foot.’”
