The Housing Bubble

Futures higher ahead of housing, confidence data
Stocks look to extend gains; investors await readings on home prices, consumer confidence ~ December 29, 2009

NEW YORK (AP) — Stocks are looking to extend their gains into a seventh straight day as investors anticipate positive readings on home prices and consumer confidence.

Overseas markets are also higher, while bonds and commodities are little changed.

U.S. stock futures are slightly higher as investors await the Standard & Poor’s/Case-Shiller October index of home prices. Later Tuesday, the Conference Board will release its Consumer Confidence Index for December.

The market continues to climb higher, adding to the big gains logged since March, amid improving economic data.

Dow Jones industrial average futures are up 14 at 10,501. Standard & Poor’s 500 index futures are up 2 at 1,125, while Nasdaq 100 index futures are up 3 at 1,878.

Home prices likely fell in October from year ago, but could post 5th monthly increase ~ December 29, 2009

NEW YORK (AP) — The latest reading on home prices is expected to show a decline from year-ago levels, but since June government programs to boost home sales have helped prices improve on a monthly basis.

The figures for October, which will be released Tuesday, should reflect the rush of homebuyers trying to complete their purchases before the original expiration of a federal tax credit. The Nov. 30 deadline was extended last month to April 30.

“The (tax) credit likely held the floor on prices for a time,” said Zach Pandl, an economist at Nomura Global Economics.

Economists predict the Standard & Poor’s/Case-Shiller home price index of 20 major cities fell 7.2 percent compared to October last year, according to Thomson Reuters.

The annual declines have been shrinking since the spring, so if the October reading falls far short of expectations it could “reopen the debate on whether prices have reached bottom or not,” Pandl said.

No moronic UHS will ever have to accuse me of being a “tire kicker,” as I don’t plan to even bother looking around until prices show signs of reaching post-mania levels…

* The Wall Street Journal
* PAGE ONE
* DECEMBER 29, 2009

A Picky Home Buyer Pursues An Epic Hunt for ‘the One’
‘Tire Kickers’ Drive Brokers Bonkers, but Lidia Pringle Is in a Class of Her Own

By JULIET CHUNG

TIBURON, Calif. — Bay Area real estate has always demanded patience on the part of buyers. Many spend months scouring listings in hopes of finding “the one.”

Then there is Lidia Pringle. The 58-year-old former reporter for United Press International became something of a legend in local real-estate circles for conducting one of the longest and most tenacious house hunts that brokers here can recall.

“I’ve always given 110% to whatever it is I do,” says Ms. Pringle. “If I’m looking for a dream house, of course I’m going to follow the same methodology.”

The National Association of Realtors says the average buyer visits 10 to 12 homes before buying. Over two-and-a-half years, Ms. Pringle personally inspected 298 homes in Marin County.

Collecting flyers along the way, she amassed enough data to fill a two-by-three-foot box. She looked at so many homes that real-estate brokers would sometimes ask for her opinion on new listings they hadn’t yet seen themselves.

House hunts have gotten lengthier as buyers have gotten choosier during the housing downturn. A recent survey of California home buyers by the California Association of Realtors found that buyers who used brokers, on average, spent 10.3 weeks searching for homes this year, compared to 8.7 weeks in 2008. National data show a similar pattern, with an average search time of 10 weeks during the second half of 2008 and early 2009, compared to eight weeks in 2005 and 2006.

Fussy buyers are called “tire kickers” or “fence sitters.” Brokers love to hate them. “I don’t know of any broker who doesn’t have one,” says Ron Phipps, president-elect of the National Association of Realtors. “The problem is, you don’t know” who will be one. “There’s no DNA for me to know that. There’s no psychological profile.”
…

Wake up with a start at 3:45 AM and throw on yesterday’s clothes.

Load up car with bathroom box, bedding, small electronics, framed posters, clothes, and teddy bear.

Drive down Rockville Pike before the traffic picks up.

Unload at the new place being extremely careful to not wake up new neighbors.

Drive back before 7:00 AM and go back to bed (no sheets) for a nap.

It may be the only way to let a landlord know they can’t get away with above market rate rents, but Lord, I hate moving.

GM Plans Pontiac Fire Sale. WSJ

General Motors Co. is offering its dealers hefty incentives to move thousands of leftover vehicles from its discontinued Saturn and Pontiac brands. The unusual tactic could inflate the car maker’s December sales and cut the cost to car buyers by as much as 46% off the sticker price.

In what is equivalent to a year-end fire sale, GM sent letters to dealers Dec. 23 saying it would pay them $7,000 for every new Saturn or Pontiac on their lot that is moved to rental-vehicle or service-vehicle fleets operated by the dealers.

Is anyone else seeing quite a few homes coming back on the market over the last two weeks?

A fair number of houses that went under contract during the crazy days of “the stimulus is ending” are coming back on the market.

Better still, they have obviously gone through an inspection. They are coming on at a lower price and the listing has all kinds of good disclosures about basements,roofs and water….

Fishermen Sell Boats, Cut Inventory to Cope with Ban.

ST. AUGUSTINE, Fla. — In one week, there will be no more fishing for red snapper off the Southeast Atlantic coast. Already, those invested in the fishing industry are making changes to their businesses.

2010 will mark a milestone in Robert Johnson’s life. “My 30th year. I started out as a mate in 1980,” Johnson said.

With a heavy heart, Johnson surveyed repairs being made on his boat, the Jodie Lynn II. Since the future of his sports fishing charter business is unknown, he plans to save money by putting one of his two boats up for sale.

“Hopefully, I’ll make it through whatever comes. I’m not sure,” he said.

Johnson has a family of four to worry about, and said he’ll likely put his house on the market soon as well.

The red snapper ban which will take effect next week will cut his business, Jodie Lynn Sports Fishing Charters, to a fourth of what it used to be, he said.

“Part of me was afraid it was going to come to this and part of me was hoping clearer minds would prevail,” Johnson said.

For months, fishing captains and others invested in the industry have fought the ban, arguing that a ban on fishing for the popular red snapper would slow charters to the point that some people would no longer be able to afford their operations.

The South Atlantic Fishery Management Council passed the ban on Dec. 3.

Johnson said it is not only the fishermen, but the surrounding businesses — bait shops, marinas, fuel stations and hotels — that will be affected.

Just back from Indian River County (about halfway down the east coast of FL). My parents had bought a nice house new in the early nineties. Two bed, two bath, and a two car garage. I estimate it was about 1300/1400 sq ft. At that time in the early nineties they sold for about 115k, depending on what finishing touches you chose. They sold it in 2005 for $210k. I estimate that was about one year ahead of peak prices. While visiting the area this week I picked up the local real estate rag. One of the listing with “sold” across the photo was a house nearly identical and on the same street as what my parents sold for 210k. The price was shown as 135k. So HBBers, From 115k in 1992 to 135k in 2009. I would consider that the market has now corrected there. You can flame me if you please, but feel that many commenters here are waiting for unrealistic prices.

Sagging tourism forces ‘fiscal crisis’ for Hawaii.

SAN FRANCISCO (Reuters) - Hawaii’s meticulous tourism records are thick with minus symbols, the basis for a projected state budget gap of $1.23 billion that Governor Linda Lingle says is a “fiscal crisis” that cannot be closed with spending cuts alone.

While strains of “Mele Kalikimaka” greet tourists, Lingle’s proposal this week to balance Hawaii’s budget over its two-year cycle ending in June 2011 lacked similar Christmas season cheer because visitor numbers and spending are weak, Georgina Kawamura, Lingle’s director of budget and finance, told Reuters in a telephone interview on Wednesday.

“I can only remain hopeful that we are now at the bottom and will start to pick up,” Kawamura said.

For the current fiscal year, Hawaii’s budget is seen suffering a $721 million gap, followed by a projected $509.5 million deficit in the coming fiscal year.

“The stark reality of continuing declining general fund revenues means the state does not have sufficient resources to cover all expenditures,” Lingle said on Monday in a bluntly worded budget message to lawmakers.

She said it is possible Hawaii’s revenues may not recover to pre-recession levels until 2014.

Declining revenues are rooted in hesitant consumers. Fewer visitors are traveling to Hawaii and those that do are staying fewer days and spending less — all pointing to fewer dollars flowing into the state’s coffers.

Tourism is Hawaii’s primary economic engine and touched 74 percent of jobs in the state directly or indirectly in 2007, according to a report released in April by First Hawaiian Bank.

From Bloomibergi:

“Stay Union-Free” Pushed by Target, Michaels as Obama Law Looms

By Holly Rosenkrantz
Dec. 29 (Bloomberg) — Target Corp. retooled a training video to warn workers against a bill that would make union organizing easier. Michaels Stores Inc. told investors “our businesses could be impacted” by the measure. Enrollment in Jackson Lewis LLP’s “How to Stay Union-Free” seminars tripled.

Companies are rallying to fend off a so-called card-check law sought by labor leaders and backed by President Barack Obama. While the bill stalled in Congress this year as health- care legislation dominated debate, anti-union groups say they expect the president and Democrats to deliver next year on a compromise version of the legislation.

————-

I never belonged to a union, so I never did understand this card-check thing. There are some nasty labor practices out there (Wal-mart is a poster boy for this) which a union could prevent, but unions have a history of overplaying their hands. And these workers aren’t exactly rocket surgeons. Wouldn’t it be most effect to allow the union to strike, and then hire scabs from the ample pool of unemployed? You could train new employees in about an hour and a half.

NEW YORK (Reuters) - U.S. employers expect to hire more new workers in 2010 than they did in 2009, a sign the U.S. recession may be easing its grip, research showed on Tuesday.

One-fifth of employers plan to add full-time, permanent employees next year, up from 14 percent in 2009, according to CareerBuilder.com, an online jobs site that surveyed more than 2,700 hiring managers and human resource professionals.

Just 9 percent said they plan to cut head count in 2010, down from 16 percent in 2009, according to the nationwide survey.

“There’s definitely an uptick. The number of employers who say they’re going to add full-time workers is up from last year, and that is very good news,” said Michael Erwin, senior career advisor at CareerBuilder.

Yet 61 percent of employers said they do not plan to change staffing levels, showing a degree of caution, he said.

“Employers are waiting to see what the economy does and what the new year brings,” he said.

“I’ve never witnessed anything like it. It’s unprecedented,” said Sullivan, who has worked in the state’s assessment agency since the mid-1960s.

- Md. home assessments to fall an average 19.7% over three years.

http://www.baltimoresun.com/news/maryland/bal-md.assessments29dec29,0,1376713,full.story

And the squeeze continues…

While down here in Fort Worth I had my RE taxes go up 30% in 3 years while actual housing prices were flat +/- 2%. When I drive around town there are very few For Sale signs but they are 99% by realtors. I never see for sale by Owner anymore.

Well , we’ll have to go buy cat & Dog food today . Two houses where the Renters just went , and left their pets . Lucky it’s rural ,so they are outside.. No we won’t call animal control yet , because they put them ”down” almost immediatly. The Cats will leave soon because cats always leave if the People are not around . The dogs are more problemic because they tend to stay around and be hopeful ..Ah well , this hard-hearted landlord will just keep feeding ‘em .

Plan on donating? Consider Uncle Sam
Jeanne Sahadi, CNNMoney.com

You’ve probably heard about the country’s giant debt load - $12 trillion and rising.

Did you know you can help reduce it?

Under a little-known law enacted in 1961, Uncle Sam accepts tax-deductible contributions to pay down the country’s debt. Not that the Treasury Department does much to publicize the program. You can find it under the header “Accepting Gifts” in the U.S. Code. Or, if you’re not an avid reader of dusty legal books, you can check the FAQ section on the Web site of the Bureau of Public Debt, an agency within Treasury. Or flip to page 91 of the IRS’ 2009 Instruction Booklet for Form 1040.

Contributions made are typically small — under $100. But there have been a few humdingers over the years. The largest single gift ever made was in 1992 for $3.5 million, said Mckayla Braden, a spokesperson for the Bureau of the Public Debt. For fiscal year 2009, all donations totaled just over $3 million. That’s well more than what was donated in any single year in the decade prior. But it’s far less than the nearly $21 million collected in 1994.

The money credited to the “Gifts to Reduce the Public Debt” account in theory reduces the amount of money the government has to borrow to finance its debt. But the dent is not deep or lasting.
“We might have to finance a tiny bit less that week,” Braden said.

The nuts and bolts
So who are the folks who send Uncle Sam money of their own volition? “Usually someone dies and leaves a gift. And many contribute regularly,” Braden said. “On average, we get five donations a week.” Sometimes, she said, a large donation is made by an estate but is paid out over a number of years. The names and addresses of the donors are not released. And blessedly, unlike most charities that reward you for giving by bombarding you with solicitations for more money, Uncle Sam will acknowledge your gift but then never bother you again.

There are two ways to give. One is to send a check directly to the Bureau of Public Debt, an agency within the Treasury Department. The address: Attn: Dept G, Bureau of the Public Debt, P.O. Box 2188, Parkersburg, WV 26106-2188. The other is to include a check — separate from any tax payment you make - with your federal income tax return. Hate writing checks? You soon may be able to donate online. “We are going to make it very easy in the future to make gifts to reduce the public debt through Pay.gov on a regular basis,” Braden said.

Would you give?
CNNMoney.com’s video team took to the streets of New York to ask random passers-by if they were aware of the program. No one was.
When asked if they’d contribute now that they know, the majority said that wouldn’t be happening. One woman put it this way: “They can use my tax dollars to do that and work it out.” One man was a little more blunt. “Hell no. Hell no.” But others weren’t so put off.
“I think I could give $10 to $20. And if everyone could do that it would make a good dent in the debt,” another woman said. Another man figured he could “help the government out” with a hundred bucks. Of course, with the national debt at $12 trillion, it would take more than a few $100 contributions to get back to even — 120 billion of them, in fact. Some lawmakers say ‘institutional insurrection’ is needed for Congress to deal with the debt.

Say it ain’t so!!

These stories of deprivation and decline just tear at my heart. How about we all organize a whip round for this struggling group of American heroes?

What we really need here is a latter day Dickens to document and articulate this abject misery and suffering………

http://www.bloomberg.com/apps/news?pid=20601109&sid=apRlVjdTDOLc&pos=15

I’ve lived in So Ca since I was 4, and this is the first year I’m going to see the Rose Parade floats (post parade display). The Metro was the deal maker. We’re skipping the chaos of 150,000 people on the 1st, and going on the 2nd.

This is completely repulsive. Please remove this man. We need to get normal people into politics and get these freaks out. We should vote them out? Liberman is an evil pig. I don’t like people like him.

Connecticut Senator Joe Lieberman, who began openly and aggressively angling for a war with Iraq just weeks after the September 11, 2001, terrorist attacks on New York and Washington, and who has been the most ardent advocate for expanding the U.S. occupation of Afghanistan, appears to be determined to use the thwarted Christmas Day attack on a Northwest Airlines flight as an excuse to launch another crusade for another war.

Lieberman, the neoconservative solon who wanted to be the Secretary of Defense in the administration of John McCain (his 2008 candidate for president) and who would gladly play the same role in the administration of a Sarah Palin or any other saber-rattling Republican, is proposing the launch of a new preemptive war on Yemen.

Umar Farouk Abdulmutallab, the 23-year-old Nigerian accused of attempting to explode a plastic device aboard a flight from Amsterdam to Detroit on Friday, has told authorities that he traveled to Yemen to link up with al-Qaida operatives.

Lieberman admitted that in a Fox New interview that he was “not sure” whether the Nigerian succeeded in making contact with the individuals he “reached out to” in Yemen.

But “not sure” is good enough for Lieberman

http://www.thenation.com/blogs/thebeat/509825/joe_lieberman_how_about_another_war

So - to follow up on yesterday’s post on the mysterious treasury purchases. That was in regards to a newsletter from Sprott Asset Management (will repost link in a minute).

To summarize - the newsletter presents how there’s been a rapid growth during 2009 in the “Other Treasury issues” line item for treasury holders. This is under the general “Household sector” heading, and is apparently just a general catch-all for treasury holdings that don’t fit into other categories. In essence, they’re purchases that are as yet unaccounted for, in terms of who holds the treasuries. These grew from $78.9 Billion at the end of 2008 to $609.2 Billion at the end of Q3; an increase of over $528 Billion - nearly half of our debt growth during the period.

I went back and looked at past z1 data (where this data comes from), and found that actually this line item has been that high in the past - in fact peaked above $700 Billion back at the end of 1996. The main difference is that back then the rise to that value took about 8 years, and was less of a rise (starting at a base of $180B in 1986, rising to almost $700B by 1994). So the rate of rise is the remarkable thing - about 10 times as fast in 2009. I’ll post a chart in a minute.

Interestingly, the value dropped rather dramatically from 1999 -> 2002, from $628B to $90B. The overall debt level itself though remained fairly flat - in fact was down some. So I looked to see if there was a corresponding rise in other categories. There was, in two categories mainly -

- “Rest of the world”, i.e. foreign holdings, rose by $230 Billion.
- “Monetary authority”, i.e. Fed purchases, rose by $151 Billion.

The rest of the line items (there are about 30) had a mixture of smaller numbers; I didn’t do all the calculations but presumably they add up.

This all seems to point to a couple of interesting things:

- It appears that maybe the Treasury or Fed just simply falls behind in accounting for who’s buying the securities, and until they do catch up, the ones that they know have been sold but haven’t yet been accounted for fall into this “Other Treasury issues” line item. This doesn’t really seem devious so much, however is very misleading and bad, because they’re publishing knowingly wrong numbers with a big fudge factor, rather than just delaying the publishing until they can count all the beans.

- It also appears that there is some straw buying going on perhaps. The Fed purchased $151 Billion back in the early 2000’s - this was known and advertised. However rather than this being a purchase of *new* securities - it was (for all intents and purposes) a purchase of existing securities; additional securities weren’t actually purchased, they just moved from the “unknown” bucket to the “held by the Fed” bucket.

- Specifically for 2009 - we have a rapidly-growing amount of these “unknown” in addition to the authorized and known Fed purchases (of $300 Billion). Perhaps these “unknown” holders are just foreign beans waited to be counted, or perhaps they’ll end up as future Fed purchases? It’ll be interesting to see. It’ll be particularly interesting since the level of debt will still be rising rapidly over the next few years; if this “Other Treasury issues” line item grows accordingly I’ll bet it’ll start really attracting a lot of attention.

P.S. Thanks to Professor Bear for the link yesterday. Where did you find that by the way? If it’s from some other blog, it may be worth adding some commentary back there.

“We’re at a meltdown point and have to find new ways to manage the situation.”

Florida Supreme Court orders mediators to be first step in foreclosure cases

By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 1:15 p.m. Monday, Dec. 28, 2009

Florida’s troubled homeowners and their lenders will increasingly meet at the bargaining table under a state supreme court order issued today that aims to reduce a foreclosure overload.

The administrative order written by Chief Judge Peggy Quince creates a statewide program that requires mediation on all homesteaded properties before a foreclosure hearing is held.

It guarantees homeowners will have an audience with their lender to discuss whether a loan modification or short sale is an option instead of foreclosure.

It also means lenders will be doing more work on the front end of the foreclosure process, and paying for it.

Today’s order makes lenders responsible for paying a maximum mediation fee of $750 per case, which would help pay for the mediator and cover administrative costs.

Judges hope the mediation requirement will reduce the thousands of foreclosure cases clogging the system — a situation called “horrifying” in an August report issued by Florida’s Task Force on Residential Mortgage Foreclosure Cases.

In Palm Beach County alone, more than 27,550 foreclosures were filed between January and November this year — nine times the amount filed in all of 2004.

“Right now, we have a court system that is going to break with the volume of foreclosures,” said Boca Raton real estate Attorney Marlyn Wiener. “We’re at a meltdown point and have to find new ways to manage the situation.”

Each circuit court will approve its own mandatory program, and will have some leeway in how it is managed.

The main parts of the order, however, are the same statewide.

Every residential homesteaded property foreclosure will be referred to mediation, unless the lender and borrower agree otherwise. There are also waivers in the event a homeowner cannot be located or refuses mediation.

The homeowner must be referred to foreclosure counseling prior to mediation.

The mediation must take place no earlier than 60 days and no later than 120 days after a foreclosure suit is filed.

And the mediation must be provided by a non-profit organization with mediators specially trained and court certified in mortgage foreclosure matters.

“We’re not interested in forcing people to settle, but there seems to be an inability to communicate between the borrower and the lender,” said 11th Circuit Court Judge Jennifer Bailey, chairwoman of the statewide task force.

Judges say they often hear homeowners complain they couldn’t reach their lender, or that their paperwork was repeatedly lost.

Court-ordered mediation may remedy that. But no one thinks it’s a final solution, and some aren’t even sure it’s a good idea.

Sharon Bock, Palm Beach County’s comptroller and clerk of the circuit court, said she’s concerned that while it may alleviate judge workload, it could increase paperwork for her employees.

Foreclosure mediation has been optional in Palm Beach County for at least a year. Bock believes mandatory mediation isn’t a role the court should play.

“This process moves the courts from calling balls and strikes, from creating a level playing field, into the realm of a social service agency, picking sides,” she said.

Real estate attorney Wiener said the order does benefit the homeowner.

“It’s making a judgment call. Who do the courts want to help? If we are going to help, we’re going to help the homeowners,” Wiener said.

A handful of circuit courts began requiring foreclosure mediation earlier this year, including the 19th, which covers Martin, St. Lucie, Indian River and Okeechobee counties.

The Collins Center for Public Policy handles mediation for the 19th Circuit Court.

Of 2,850 mediations the center has handled, about 2,000 resulted in settlements reached out of court.

“I’m optimistic, but this is not a cure all,” said 19th Circuit Court Judge Shields McManus. “There are a lot of investment homes being foreclosed on and there are a lot of cases that don’t settle because the people simply have no way to pay the mortgage.”

Cook County RE assessments came out recently. Our property’s assessed valuation went down about 5 %. Wish I knew what (if anything) that might mean for the actual tax bill. We keep getting these letters from attorneys wanting us to hire them to dispute our property taxes. I used to think of property taxes as a necessity to keep the community nice and the schools good, but the longer you live in a place, the more boneheaded decisions and waste of tax dollars you see.

The biggest chunk of our taxes goes to the high school district. The local high school is a hopelessly antiquated “historic” facility near Lake Michigan. There is a vocal contingent of people who want to spend beaucoup bucks gutting and renovating these early 1900’s era buildings. The school district already owns a great property a bit further west (away from the lake) that houses the freshman campus and would serve quite well for a new high school. The current high school location would fetch a huge price if they sold off the property for housing, raising sufficient funds to offset a good part of the new high school construction. It’s going to be war between the traditionalists (aka snobs) and the pragmatists over this issue. Unfortunately I can’t bet on the pragmatists to win.

Yesterday the wife suggested that we drive up tp Philly to see the Princess Diane special exhibit at the National Constituion Center (a big new museum on Independence Hall square). The place was mobbed with thousands of women at $25 ticket. Even with prepurchased timmed tickets there was a long wait. While she went to that I walked across the street to the Philly Mint, and did the free tour. The mint is very automated and puts out millions of coins a day.

Then I walked across the street again to the Philly Fed Reserve. They had nice interactive displays explaining their function, and how they are constantly protecting the US/world economy. The exhibit was so good that it would have caused even the most stone cold anti-Fed HBBer to tear up.

Housing Recovery Fails to Bolster Broker Commissions (Update1)

Dec. 29 (Bloomberg) — A surge in home purchases by first- time U.S. buyers is doing little to help real estate agents and brokers who close the deals.

Commissions in 2009 fell to the lowest level in seven years, driven down by sales of low-priced homes to first-time buyers using the federal tax credit. Commissions through November dropped 6.2 percent from a year earlier to $40.6 billion, according to Bloomberg calculations based on the average commission rates from Real Trends Inc. and on home price and sales data from the National Association of Realtors.

The tax credit strengthened only the low end of the market and reduced agents’ pay, according to Steve Murray, president of Real Trends, a residential property research company. The tax benefit and foreclosure sales may lower the national median home price by a record 13 percent this year to $172,700, according to the Chicago-based Realtors’ group. Last month almost 75 percent of sales were for $250,000 or less, the Realtors said.

“The impact of the tax credit has been huge,” Murray said in an interview. “The average commission rate inched up this year and the number of real estate sales have gone up too, but the average price has dropped significantly because of the bulge of first-time buyers.”

I’m not sure people understood the “stories of deprivation and decline” the NJ Englishman referred to above.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aHqJCK.szfpU&pos=15

“Commissions in 2009 fell to the lowest level in seven years, driven down by sales of low-priced homes to first-time buyers using the federal tax credit. Commissions through November dropped 6.2 percent from a year earlier to $40.6 billion, according to Bloomberg calculations based on the average commission rates from Real Trends Inc. and on home price and sales data from the National Association of Realtors.”

“The tax credit strengthened only the low end of the market and reduced agents’ pay, according to Steve Murray, president of Real Trends, a residential property research company.”

They are trying to make up for lower prices by increasing commission rates as a share of the sales price.

Bad news for housing: Prices flattening

NEW YORK (CNNMoney.com) — Home price gains earlier this year flattened out in October, according to a report issued Tuesday.

The S&P/Case Shiller Home Price index, covering 20 of the largest metropolitan areas in the nation, was unchanged in October, after four consecutive months of gains. The index is down 7.3% from 12 months earlier.

“The turnaround in home prices seen in the spring and summer has faded,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s, in a statement. “Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip,” he said.

Just seven of the 20 cities recorded gains from a month earlier.

The modest gains earlier this year were in part propped up by government initiatives.

“We’ve seen recent stability because of low interest rates and the impact of the first-time homebuyers tax credit,” said Pat Newport, a real estate analyst with IHS Global Insight.

Prices are down from their all-time highs set in 2006 by 29% for the 20-city index.

If you’re a long time homedebtor with tons of HELOC debt, why couldn’t you take advantage of the government expanded tax credit? What’s stopping you from purchasing a new lower priced home, mailing in the keys to the upside down one, and adding to the shadow inventory?

What’s more, does that qualify as some kind of debt jubilee for savvy debtors?

Heck, couldn’t you arbitrage the deal even if you don’t have a HELOC? Why couldn’t you get a HELOC and buy that cheaper said second house with the HELOC proceeds and then bail on the indebted primary? It might be good opportunity to downsize — free and clear.

This is too easy. There must be a flaw.

Local tax coffers fall lower nationwide.

WASHINGTON (CNNMoney.com) — In another ominous sign for state budgets nationwide, state and local governments reported another drop in overall tax revenue on Tuesday.

General sales tax, individual income tax and corporate income tax were all down in the third quarter of 2009, resulting in an overall 6.7% drop in total tax revenue, compared to the same quarter in 2008, according to the U.S. Census Bureau.

This is the fourth consecutive quarter in which tax revenue collection has fallen.

The one bright spot was property tax collection, which showed a slight increase of 3.5%, compared to the same quarter in 2008.

Total taxes collected in the third quarter were $266.5 billion compared to $285.6 billion during the same quarter in 2008.

States are wrestling with some of the worst budget deficits since the Great Depression. Rising unemployment has wreaked havoc on their vital revenue streams of personal income, corporate profits and sales taxes.

Though governors and lawmakers are reluctant to raise taxes, particularly in bad economic times, the current fiscal situation has prompted some to turn to such measures.

Hundreds More Laid Off by U.S. Fidelis

WENTZVILLE, MO (KTVI-FOX2now.com) - US Fidelis says it plans to lay off hundreds of workers due to economic hardships. In a statement release Tuesday said a rise in the number of people canceling their warranties has forced the company to eliminate jobs. US Fidelis, a Wentzville-based company, is like a broker for extended vehicle service contracts. Just two weeks ago, the company announced a layoff that would affect 15 to 20 percent of its workforce.

U.S. Fidelis has also recently come under scrutiny receiving an “F” from the Better Business Bureau. The BBB has received 1,700 complaints about the company over the past 36 months. One of the complaints is for misleading sales tactics.

Indiana slashes $297 million from K-12 schools.

Just days before the start of 2010, school administrators are finding out that the state is reducing kindergarten through 12th-grade funding by $297 million, beginning with the January payment.

A press release from Gov. Mitch Daniels’ office says those cuts will be evenly applied to all school corporations in the state using the current funding formula, which means 3.5 percent less state money for districts.

This comes after the governor ordered 20 percent spending cuts at state agencies and 6 percent from higher education. If the new revenue forecast proves accurate, the K-12 reductions, coupled with the previous cuts and use of most, if not all, of the state’s rainy-day reserves, will keep Indiana in the black through the 18 months remaining in this budget cycle, according to the governor’s office.

“We reduced everything else first, and much more deeply, but K-12 education is half the entire budget, and it became unavoidable for it to become part of the solution,” Daniels said in a press release.

X-GSfixr’s Helpful Hint of the day…….

Just had lunch with one of my buddies. We had a blizzard here on Christmas Eve…….he related the story of how he was hijacked into being the family taxi driver for the family get together, as he was the only one that had a properly equipped 4×4. Had to drive 30 miles each way to pick up Aunt Bessie way out in the middle of Bumf##k, Egypt.

The solution? When a blizzard is forecast, start hitting the Jack as soon as the the first flakes hit the ground.

His new “Plan A” for New Year’s Eve.

Higher-End Homes Face Price Pressure.

Though the cheapest houses on the market may not get much cheaper, more-expensive homes still have further to fall, which will likely slow the broader housing recovery.

The Standard & Poor’s/Case-Shiller home-price indexes for October are due on Tuesday morning. Economists estimate the index tracking prices in 20 major cities was down 7.7% from a year ago.

That would mark the smallest year-over-year decline since November 2007.

From the transcript of a lengthy interview with veteran commentator Doug Casey comes this:

“Deflation is not only not a bad thing, it can be a very good thing. In a deflationary environment, the purchasing unit the dollar becomes worth more. That rewards people who have saved dollars, the prudent middle class upon which so much in modern society depends, and makes them prone to save more. Inflation makes people very loathe to save because what they’re saving is going down in value. And the solution to this depression we’re entering is not more spending, it’s not more consumption, it’s just the opposite of what these morons in Washington are saying: it’s less consumption and more savings. Savings are capital accumulation, and that’s what’s needed to start new businesses, create more jobs, and so forth in a sustainable way. Creating phony make-work jobs with more debt only serves to make things worse, come reckoning day.”

People keep asking how Calpers could be so ignorant of the market. It’s not ignorance it’s criminal activity.

Calpers board members must refer any communication regarding current or potential investments to the fund’s chief investment officer, according to a statement today. Board members are prohibited from advocating any course of action on a particular investment outside of board meetings.

The decision follows disclosure by the pension fund that former board member Alfred Villalobos earned more than $50 million in a five-year period acting as a middleman between firms seeking stewardship of some of Calpers $200 billion in assets and the fund’s board and staff.

Similar to Larry Summers earning millions on Wall Street after handing Wall Street access to Harvards endowment. These endowments would be better off putting the money in index funds, and indexed bond funds, then getting rid of most of the board and financial advisors. Big money draws the most dedicated criminals.

Maybe it may be a coincidence, but I’m finally seeing clear signs of distress on our local CL listings…a short sale near me, a whole subdivision for sale, prices SLASHED!!11! by the builder…these on top of all the unsold condos.

It’s not different here.

It has been long predicted on the HBB that the tail end of the housing bust will hammer the high end. As I have often noted, the lower end will drop further as well, since nobody is ever going to pay more for a crappy house than for a nice one.

* The Wall Street Journal
* AHEAD OF THE TAPE
* DECEMBER 29, 2009

Higher-End Homes Face Price Pressure

* By MARK GONGLOFF
…
The worst of the subprime-mortgage defaults has likely passed, most analysts agree. That could explain why low-end homes are decreasing as a percentage of total foreclosures, while middle- and high-end homes are taking bigger shares, according to Zillow.com data.

That shift suggests price declines will prove more pronounced in middle and higher-end housing brackets, which haven’t yet fallen as far as the broader market. In San Francisco, high-end prices are down just 25% from their peak, compared with 39% for the broader regional market, according to Case-Shiller data.

Monthly payments for adjustable-rate mortgages, which helped many buyers afford more-expensive homes, could rise next year, either due to payment resets or rising interest rates. That trend threatens more defaults on higher-priced properties, which would weigh on prices.

Further government aid could ease the sting, but may not be enough to offset market fundamentals—it couldn’t stop prices from falling this year.

* The Wall Street Journal
* DECEMBER 30, 2009

GMAC Set for Another Cash Infusion
U.S. Expected to Lend Firm $3.5 Billion to Help Cover Mortgage Losses; Aid Bill Already at $12.5 Billion

BY DAN FITZPATRICK AND DEBORAH SOLOMON

GMAC Financial Services is close to getting approximately $3.5 billion in additional aid from the U.S. government, on top of $12.5 billion already received since December 2008, according to people familiar with the situation.

The announcement, expected within days, will coincide with GMAC taking additional steps to absorb losses related to its mortgage operations, these people said. The cleanup is designed to return the Detroit-based finance company to profitability in the first quarter of 2010, according to one of these people.
…