The Housing Bubble

Republican calls for Fannie, Freddie to hike fees

WASHINGTON (MarketWatch) –- The government can reduce its role in housing finance by raising the fees that mortgage giants Fannie Mae and Freddie Mac charge for guaranteeing credit risk, a leading Republican lawmaker said Monday.

The call by Rep. Randy Neugebauer, the new chairman of the oversight and investigations subcommittee of the House Financial Services Committee, comes as the White House appears reluctant to come up with a single proposal on how to replace Fannie and Freddie in an upcoming, key report. See related story on White House on Fannie Mae reform.

But Neugebauer’s speech, given before a University of Maryland and New York University event, also suggests a realization among Republicans that the government’s role in housing finance is likely to continue.

The Texas Republican said increased fees levied by Fannie Mae and Freddie Mac would bring “parity” to housing finance. Fannie Mae and Freddie Mac purchase whole mortgages from banks and other direct lenders and package them into bonds and mortgage-backed securities. They charge investors a “guarantee fee” in return for backing the bonds they sell.

“With higher guarantee fees, people will start looking for return in the private market. They will give some basis points to get a bit more return and give up the federal backing,” he said. “We have to make sure Fannie and Freddie are not competing with private market.”

Turns out when I said my housing costs were $200 a month this year in the doublewide, I lied. Got my yearly property tax bill for it in the mail, my choice of two payments of $60 or as a high roller I can just pay the $120 all at once.

One caveat, market rate for lot rent around here is $500+ a month, I just get the $150/200/250 rate for 3 years as an incentive for newer units to be moved into the park (which mine was). The unfortunate thing is that location was a big part of my decision to live here and now that I got laid off I probably won’t be able to walk to the next job from here. I guess that’s the advantage of wheels on the house…I notice that a lot of jobs in my field are in the Bay Area, wonder if there are any good places to park it there?

Yesterday we revisited the “in the box thinking” arguments of the inflation/deflation/End of the world because of debt debate and I was wondering why we assume such an “out of the box” thing such as “money” would always follow rigid rules as if economics is physics or something. Let’s face it. Even since gold, money has always built on beliefs and confidence that it was actually worth something far more than the actual bits of metal or scraps of paper. The Fed being able to “print” a trillion dollars over night to bail out its friends is proof that there is something “funny” about money anyway therefore why get so worried about the debt of something that is so “funny”?

There is also something “funny” about our current national debt debate and it smells rotten in that its Glen Beck type solution is always framed to be born on the backs of average Americans while raising taxes on the rich or restructuring our crony-capitalism is hysterically framed as “socialism” and now even “communism” because the overuse of the word “socialism” has lessened its “terror”.

Don’t get me wrong, S might HTF but it need not be blood in the streets, starving and the end of the world and this is exactly WHY we have been conditioned to think SocSec will not be there for us and the average American needs face austerity. The uber-rich are mentally conditioning us to accept their final wealth grab but this final wealth grab is not pre-ordained if we have the guts to disallow it.

“But our dollar will crash!” Well Boo Hoo and Yawn. Are we surprised? Fiat currencies never last forever, why should ours be any different? The philosophical battle-lines being drawn now are not to save the value of the dollar per se, but to determine the outcome of the inevitable restructure of the debt and the system. Will that restructuring favor the average American or the uber-rich puppet masters?

I don’t know. It can go either way. But I do know currency crashes and restructuring need not be the end of life as we know it. Why should the crash of something “fake” like fiat money have to cause such great destruction? It need not but someone will pay the price more than others but who will that someone be? The already shafted middle-class or the looting richest of the rich?

Brazil is a good example of crashes of “fake money” sometimes being constructive. Since 1986 Brazil has had 3 currency collapses- the Crusero, Crusado, and the Cursado Novo. Gone. Poof. Did the society go poof? Did the country disappear? Heck no. In fact, since the 3 currency collapses Brazil has risen like a star and now has millions joining the middle-class, is energy independent and as a 8% growth rate and 5.6% unemployment. Brazil’s restructure was balanced and benefited the people more than it did the very rich who by the way are still way richer than they were 30 years ago. It’s just that the Brazilian rich are not 10 times richer after inflation than they were 30 years ago as the American uber-rich are now.

The point is that “money” is not totally real and “money” is a tool that can be used to benefit whoever we choose it to benefit. I think it is a mistake to benefit crony-capitalist, corporatist monopolies and the uber-rich over the true “small-capitalists”. I would much rather see money and the system favor small business the middle-class and local, made in America, honest capitalism.

Here’s part of an article that touches on some of the points made above about “money” and currency crash reconstruction:

Money—as represented by paper, real estate, gold, silver, salt, or giant hunks of limestone—has always been fiction.

The Brazilian finance team created a new currency that was artificially stable, and eventually everyone accepted it. The lesson, Joffe-Walt concludes, is that, like Dorothy’s way home in the Wizard of Oz, “For money…that’s all you need—people to believe in it.”

http://www.benzinga.com/11/01/796329/the-evolution-of-money-and-the-market#ixzz1C3PF4e3r

As a supporter of law enforcement, and an armchair real estate observer, this story cut across a few of my interests. The shooter holed up in the attic of the house — police demolished it. With respect to the fallen officers, I was unaware that police were able to do this. It’s obviously now a hot-button issue here.

“House where two St. Petersburg police officers fatally shot demolished”

http://www.tampabay.com/news/publicsafety/crime/house-where-two-st-petersburg-police-officers-fatally-shot-demolished/1147484

Bubble-era thinking is alive and well in the MSM, which reports decreases in housing affordability as “improvements,” as in, “San Diego was one of only four major metropolitan areas reporting improvements in the Case-Shiller/S&P index of home prices for November 2010.”

The Wall Street Journal
* ECONOMY
* JANUARY 25, 2011, 9:27 A.M. ET

Home Prices Move Down
By TESS STYNES

U.S. home prices fell in November, continuing a downward trend that began in August, according to the S&P Case-Shiller home-price indexes.

“With these numbers, more analysts will be calling for a double-dip in home prices,” David Blitzer, chairman of S&P’s index committee, said. Mr. Blitzer last month predicted that the double-dip for the housing sector had nearly arrived as six cities hit their lowest levels since home prices began dropping in 2006 and 2007.

The indexes, based on the three-month averages of home prices, turned lower in August for the first time in four months, a delayed response to housing-market weakness after federal home-buyer tax credits expired in April. Though home prices in November remained above lows in spring 2009, prices in eight markets — Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Ore., Seattle and Tampa — fell below those levels.

The Case-Shiller index of 10 major metropolitan areas fell 0.8% and the 20-city index fell 1% last month from October.

They were down 0.4% and 1.6%, respectively, from a year earlier. Adjusted for seasonal factors, the sequential declines were 1%.

In November, prices in one metropolitan statistical area covered by the index, San Diego, edged up 0.1% from October. Year-to-year, four metropolitan areas saw improvement: Los Angeles, up 2.1%; San Diego, up 2.6%, San Francisco, up 0.4% and Washington, D.C., up 3.5%.
…

———-
HONOLULU(AP) — A former B-2 stealth bomber engineer was sentenced to 32 years in prison Monday for selling military secrets to China… Noshir Gowadia, 66, would likely be in his late 80s by the time he is released.

Gowadia, who was born in India, was convicted in August on 14 counts, including communicating national defense information to aid a foreign nation and violating the arms export control act.

Prosecutors said Gowadia helped China design a stealth cruise missile to get money to pay the $15,000-a-month mortgage on his luxurious multimillion dollar home overlooking the ocean on Maui. They say he pocketed at least $110,000 by selling military secrets.

———–

As foreclosures rise, so do lawsuits
Borrowers, prosecutors complain that banks are using unfair tactics when seizing homes
By Dean Calbreath, UNION-TRIBUNE
Monday, January 24, 2011 at 5:06 p.m.

Despite federal loan modification programs and a wave of government investigations and homeowner lawsuits, banks foreclosed on a record number of homes last year and seem poised to seize even more this year.

But in places like San Diego County, which was one of the first areas to experience the real estate collapse, the foreclosure rate appears to be slowing.

In fact California, in general, seems to be slowly emerging from the foreclosure mess, even as other states fall deeper in.

Alan Nevin, economist with Market Pointe Realty Advisors, expects that local foreclosures will drop significantly this year, bringing more stability to the housing market.

Gary London, economist with San Diego’s London Realty Group, also feels that the local peak in foreclosures probably came in 2009 — although foreclosures this year will remain near record-setting highs.

“The numbers this year will probably still be higher than the peak that we hit in the early 1990s,” he said, referring to San Diego’s last housing dip, when the end of the Cold War led to high unemployment among defense workers. “It’s not a pretty picture, but at least it’s going in the right direction.”

That kind of drop would be good news for the local economy, since it would help stabilize the housing market, bolster the finances of existing homeowners, and eventually lead to more home building, which would create new jobs in the beleaguered construction sector.

“The restabilization of the housing market and the recovery of job growth are both interrelated,” London said.

But, he added, even though a drop in foreclosures seems likely, there is no way of knowing for sure. If the county’s jobless rate continues to hover in the double digits, it could keep foreclosures fairly high as jobless homeowners struggle to pay their bills. In addition, there are no solid estimates about how much “hidden inventory” is lurking in the shadows — foreclosed homes that the banks are holding in the wings or troubled homes that the banks have not yet begun to officially foreclose upon.

“A lot of the foreclosure inventory is hidden in the books of the banks,” London said. “We just flat-out don’t know how much there is and we never have.”

Nationwide, an estimated 1.8 million homes were foreclosed upon last year — averaging roughly three per minute — and that number could hit 2.1 million this year, according to Moody’s Analytics.
…

Foreclosure Probe Adding to Shadow Inventory
Monday January 24, 2011

December’s foreclosure rate was only 257,747 - down 26% from the year before. This is just a temporary pull-back, driven by the investigations by the Fed, FDIC and states banks’ robo-signer foreclosure process. Once the government clarifies the new rules, expect foreclosure rates to increase. RealtyTrac says as many as 250,000 foreclosures are in the pipeline, and will drive 2011 rate up higher.

The foreclosure rate started dropping in October, when banks such as GMAC, JPMorgan Chase and Bank of America announced they were halting any new foreclosures until they figured out whether they were processing paperwork correctly. The FDIC is calling for a Commission to apply penalties to banks that have cut corners.
…

HeHeHOHowHaHaBWaHAHAHAHAHAHAHAHAHAHAA!!!!!

One house, two banks: The property that sums up America’s mortgage nightmare
By Daniel Bates
Last updated at 6:51 AM on 24th January 2011

* Two banks lay claim to Staten Island house
* Homeowner caught in middle of foreclosure row

It is the one house owned by two banks that sums up the unintelligible mess that America’s mortgage system is in.

This detached suburban home on Staten Island in New York is at the centre of a bitter legal row between lenders Home123 Corporation and U.S. Bank.

Both have launched separate legal bids to take over the property and foreclose it, leaving the homeowner caught in the middle of a row which sums up the mess the mortgage system is in.
…

Home prices fall in major US cities

By ALEX VEIGA The Associated Press

LOS ANGELES — Home prices are falling across most of America’s largest cities, and average prices in eight major markets have hit their lowest point since the housing bust.

The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday fell 1 percent in November from October. All but one city, San Diego, recorded monthly price declines.

Some of the worst declines have come in cities hard hit by foreclosures.

As of November, average home prices in Las Vegas have fallen 57.2 percent from their peak in August 2006 and are back to where they were in late 1999. Another foreclosure hotbed, Phoenix, is down 53.9 percent from its June 2006 peak. Average home prices there are back to where they were in 2000.Miami has fallen 48.8 percent from its peak in December 2006, and is selling at late 2002 levels.
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Here is the story not being told.

Palm Beach County home prices back to 2002 levels
by Jeff Ostrowski

In December 2010, the median price for a single-family home in Palm Beach County was $212,900. The last December that was this meager came in 2002, when the median price was $215,100.

The median price for a single-family home in Palm Beach County was

$130,200 in 1997

$130,500 in 1999

$149,600 in 2001

$241,300 in 2003

$390,100 in 2005
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Home >> Florida Foreclosures >> Palm Beach County

Palm Beach County Search Results

Results 1 - 50 of 18,011
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Those 18,000 listed foreclosures in PB County today don`t include what has already been sold or what is still coming. Looking at houses over the last 3 years I have not found 1 distressed property that was purchased in 2001 or earlier, unless it was cash out refied of which I have found many more distressed properties than were purchased after 2001.

The ad at the top of today’s Bits Bucket is from Toll Brothers, telling us there’s never been a better time to buy a Toll Brothers home.

Why Affordable Housing Matters
Jan. 24 2011 - 12:45 pm

Joel Kotkin

Compared with the U.K. and Australia, the U.S. housing market is more hopeful, with a host of regions — notably Houston, Dallas, Austin, San Antonio, Phoenix and Kansas City — with affordability rates around three and under. Low prices by themselves, of course, are no guarantor of success; in economically challenged places like Detroit and Cleveland, out-migration and high unemployment have driven prices down.

But in many, if not most, cases affordability has promoted economic and demographic growth. Generally speaking, affordable markets tend to draw migrants from overpriced ones, for example to Houston or Austin from Los Angeles or New York.

http://blogs.forbes.com/joelkotkin/2011/01/24/why-affordable-housing-matters/ - -

President Obama’s State of the Union Address to Encourage American Worker Competitiveness.BSht Daily, Washington DC, Jan. 24, 2010

President Obama is to address American worker’s need to be more competitive on a global basis. Although America worker productivity has risen 400% in the past 40 years, all of that benefit has gone to shareholders and upper management and the reason is, “Effort. It’s attitude and effort. The American worker needs to just give it a little more effort just as management and our financial backers have done” President Obama’s spokesman explained to me over an ominous looking chalkboard, tree-shaped diagram of the American economic system.

Manipulating two puppets in ethnic garb he then added. “Think Chinese, think Mexican. Double up. Hot bunk. Do Americans need a week off a year? Do we need it or do we just want it? We need to bring back the pride of the American minimum wage worker who has the unique American opportunity to compete in a global labor market and not only to compete in a global labor market but to compete in that global market while living in the richest country in the world. To be able to do that with pride and duty to one’s country and family while remaining healthy is a unique American opportunity”
Continued page 5.

The American worker is only non-competitive if you are judging the
situation from slave labor competition World wide without proper tariffs
and trade balances . To be competitive we would have to go down to a
dollar a hour ,but than how are we going to make our health care payments
of $1500 a month ? This debate has gotten absurd beyond belief ,but as
long as the PR machine controls the talking points to begin with solutions
are as absurd as the controlled talking points . Keep the people arguing over
the right to become rich while their Country is being stolen under their feet .

Unemployment rises in 20 states, falls in 15

WASHINGTON – The unemployment rate rose in 20 states last month as employers in most states shed jobs.

The Labor Department says the unemployment rate rose in 20 states and fell in 15. It was unchanged in another 15 states. That’s nearly the same as in November, when the rate rose in 21 states, fell in 15 and was the same in 14.

The report is evidence that the job market is barely improving even as the economy grows. Most economists expect hiring to pick up this year, although the unemployment rate will likely remain high.

http://news.yahoo.com/s/ap/20110125/ap_on_re_us/us_state_unemployment

In light of this dismal news on the jobs front, I sure hope Obama doesn’t pull that tired old “economy is improving” bullsh!t during his speech tonight, patting himself and his administration on the back for perceived successes steeped in fantasy. Here’s a hint, dude: It’s time for honesty, not dreamy hyperbole. You haven’t done jack sh!t. Start addressing the outsourcing of jobs, the importation of cheap, oftentimes illegal, labor, and bogus trade agreements. Get a f***ing spine and start standing up to bankers instead of being their little puppet. Quit appointing economic terrorists to your administration. Do something right for a change. Because you didn’t hold true on your “change” promise. It’s been more of the same. Disgusting.

260-room Jekyll Island hotel will close

The Jekyll Oceanfront Clarion Resort has notified the Jekyll Island Authority that it will cease operations on Monday.

No reason was given why owner Leslie Lurken is closing the hotel. Jekyll Island Authority documents show room revenue at the hotel declined by 10 percent from 2009 to 2010.

When Oceanfront Resort was remodeled in 2008, its plan relied on converting units to condominiums that would be sold.

Eric Garvey, a spokesman for the Jekyll Island Authority, says the authority is concerned about the property closing on such short notice. He says there are indications that the owner wants to sell the property and is optimistic that a new owner will take over.

Why Are Banks Withholding Highend Repossessions Over $300,000 From the Market?

Posted by Keith Jurow 07/20/10 8:00 AM EST

Miami-Dade County, FL

Most readers know that the collapse of the housing market in south Florida has been more severe than anywhere except perhaps Las Vegas. A recent REAL ESTATE CHANNEL article reported that banks have been repossessing south Florida homes at a rate of 4,000 per month in 2010. That would seem to suggest that the foreclosure debacle might soon stabilize. Let’s see.

According to RealtyTrac, on July 16 there were 10,858 repossessed properties in Miami-Dade County. More than 2,100 have been held by the banks for more than a year without having been placed on the market and 600 for more than two years. Over 1,400 of these foreclosed properties were listed at more than $300,000.

Out of 10,858 bank-owned homes, a mere 983 were listed for sale. Nearly all were very recently placed on the market — after June 1 of this year. Only 11 of the 1,400 homes listed for at least $300,000 were actually on the market. Same as in Cook County. The problem is very similar. Trulia posted 13,114 Miami-Dade County non-foreclosed homes for sale at asking prices of more than $300,000. Only 21% have lowered their asking price. As with Cook County, most just sit … and sit.

Banks in the Miami area are also very reluctant to dump these higher-priced homes onto a still weak market. But they have the same problem that banks in the Chicago area are facing. RealtyTrac listed 22,753 defaulted properties for Miami-Dade County as of July 16. All have been put into default since late January of this year. Over 500 were defaulted in one day - July 15. More than 1,500 of these defaulted properties were listed at more than $300,000. All of these defaulted properties will be coming onto the market either as foreclosures or short sales.

http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-home-buyer-tax-credit-federal-housing-administration-loan-guarantees-fha-realtytrac-home-foreclosures-highend-home-repossessions-bank-reo-sales-2868.php - 68k -

Home Prices Fell 4.3% in November From Year Earlier, FHFA Says

U.S. home prices dropped 4.3 percent in November from a year earlier as the housing market struggled to emerge from the worst crash in seven decades, according to the Federal Housing Finance Agency.

The decline was led by an 11 percent slump in the region including Colorado, Nevada and Montana, the agency said in a report today. National prices were unchanged from October.

Mounting foreclosures are depressing home values as unemployment above 9 percent saps real estate demand. The share of people who said they intended to buy a home fell to 1.7 percent in November, matching the level at the end of 2009 that was the lowest in more than four decades, according to the New York-based Conference Board.

“The more jobs there are, the more people you have who are willing to buy houses,” Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts, said in an interview before the report.

The unemployment rate rose to a seven-month high of 9.8 percent in November before dropping to 9.4 percent in December, according to the Bureau of Labor Statistics.

The FHFA measures transactions of homes financed with mortgages backed by Fannie Mae or Freddie Mac. The data are based on repeat sales transactions that compare prices of the same properties over time.

A separate report today showed home values in 20 U.S. cities fell 1.6 percent in November. The decline in the S&P/Case-Shiller index was the biggest in a year.

As measured by the National Association of Realtors in Chicago, the median home price was $170,200 in November, the period covered by the government report.

FORECLOSED HOMES ON THE MARKET

as of July 16, 2010

Location
Repossessed Homes
Repossessed Homes on the Market
Repossessed Homes Over $300K on the Market

Cook County, IL
28,829
1,292
29

Miami-Dade County, FL
10,858
983
11

Orange County, CA
6,270
227
85

Bergen County, NJ
615
31
4

Cincinnati, OH
2,914
184
1

Seattle, WA
946
51
8

Nashville, TN
1,350
102
1

Denver, CO
2,782
223
10

St. Louis, MO
2,323
312
2

Phoenix, AZ
10,613
1,144
16

Why Are Home Prices Still Falling?
Posted by Stephen Gandel Tuesday, January 25, 2011 at 12:40 pm

Employment is rising again. Consumers spent more in December than they have ever done before. And perhaps most importantly, for the first time in three years there seems to be a broad confidence that the economy will recover in 2011. So why are housing prices still falling?

On Tuesday, one of the most reliable readings of the housing market, the Standard & Poor’s/Case-Shiller 20-city home price index, showed that the housing market is still headed in the wrong direction. Overall, the index showed that home prices dropped 1.6% in November in major US cities. More depressing was that in eight of the cities house prices are at their lowest level since the start of the recession. It seems clear that whatever momentum the housing market got from the home buyer tax credit stimulus spending is long gone. What is also clear is that housing prices don’t seem to be getting much of a lift from the emerging economic recovery. Here’s why:

I have argued a number of times that I think housing prices are set to rebound. Based on incomes and interest rates, houses are generally rather affordable these days. And the economy is improving, so you would think that home prices would slowly start to rise again. But that hasn’t happened. So why is the housing market taking longer to thaw than the rest of the economy, or than you would think? There are a number of possible reasons.
…

Home prices fall again: Eight keys to the housing market future

US home prices fell 1 percent in November compared with the previous month, according to a widely followed 20-city index released by Standard & Poor’s Tuesday. It’s the latest sign that, five years after home prices peaked, the housing market remains an important weak link in the economy. Still, housing experts say 2011 could be a pivotal year when home prices bottom out and a more stable environment begins to emerge. Here’s a look at the key issues.

- Mark Trumbull, Staff writer
…

Bergen County, NJ

Finally, let’s take a look at the Northeast. Bergen County is made up of fairly affluent communities which are located in northern New Jersey just west of the George Washington Bridge. Although home prices have dropped rather substantially since the peak, it has not been nearly as bad as in California or Florida.

RealtyTrac listed 615 repossessed properties as of July 16. Roughly 120 have been owned by the banks for more than a year without having been placed on the market. Two-thirds have been repossessed since the beginning of 2010.

Similar to the three other counties we have reviewed, many of the foreclosed properties in Bergen County are expensive homes. More than 100 are listed on RealtyTrac for $500,000 and above. More than 350 of these homes are listed for at least $300,000.

Are the banks withholding most foreclosed properties from the market as banks have in the other three counties? Absolutely. On July 16, there were only 31 repossessed homes on the market. A total of four were listed higher than $300,000. That is four out of more than 350 foreclosed homes in Bergen County that are listed on RealtyTrac for more than $300,000.

Bank Withholding of High-End Foreclosures from the Market is Nationwide

The four counties which we have looked at reveal a clear pattern on the part of banks to withhold most repossessed homes from the market and nearly all of those listed on RealtyTrac for more than $300,000. Is this occurring throughout the nation? Take a look at the following table and judge for yourself.

FORECLOSED HOMES ON THE MARKET

as of July 16, 2010

Location
Repossessed Homes
Repossessed Homes on the Market
Repossessed Homes Over $300K on the Market

Cook County, IL
28,829
1,292
29

Miami-Dade County, FL
10,858
983
11

Orange County, CA
6,270
227
85

Bergen County, NJ
615
31
4

Cincinnati, OH
2,914
184
1

Seattle, WA
946
51
8

Nashville, TN
1,350
102
1

Denver, CO
2,782
223
10

St. Louis, MO
2,323
312
2

Phoenix, AZ
10,613
1,144
16

Will this bank strategy keep the market for homes over $300,000 from imploding? Not a chance.

Fannie Mae (FNM) now requires an average down payment of 30% for securitized loans which it purchases or guarantees. According to Fitch Ratings, mortgage delinquencies for prime jumbo mortgages soared to 10.3% in May as underwater owners walked away in droves. That spells serious trouble for the five states which account for 2/3 of all outstanding jumbo loans – California, Florida, New Jersey, Virginia and New York. The problem goes well beyond these states, however. Housing markets throughout the United States for $300,000+ homes are in for rough sailing and prices are extremely likely to be headed for a real plunge.

The source of this article is the Real Estate Channel™ at http://www.realestatechannel.com. It is reprinted with their permission.

Official: Obama to call for 5-year spending freeze

WASHINGTON (AP) — A White House official says President Barack Obama will call for a five-year freeze in non-security, discretionary spending during his State of the Union address.

The official says the proposal will be part of the president’s plans to reduce the deficit that he will outline in Tuesday’s primetime address. The official says Obama will also call for lawmakers to back a five-year plan put forth by Defense Secretary Robert Gates to save $78 billion in defense spending.

Obama is under pressure from the public and lawmakers to cut spending. Several Republican lawmakers have proposed cutting $100 billion from Obama’s budget for the current year.

The official spoke on the condition of anonymity because he was not authorized to speak publicly ahead of the president’s speech.

Does the REIC pay serial bottom callers to make stopped clock predictions for rising home prices in the near-term future?

U.S. Home Prices Now `Flat,’ May See First-Half Rise, Economist Case Says
By Kathleen M. Howley - Jan 25, 2011 9:13 AM PT

Home Prices in U.S. Dropped

Residential real-estate prices dropped in November by the most in a year, signaling housing has yet to join the U.S. rebound. Photographer: Jim R. Bounds/Bloomberg

U.S. home prices have reached a bottom and may be set to rise in the first half as buyers take advantage of increased affordability, said Karl Case, the economist who co-founded the S&P/Case-Shiller home price index.

“Prices have gone flat, bouncing around at what I think is essentially a bottom,” Case, a retired professor of economics at Wellesley College, said in a radio interview today on “Bloomberg Surveillance.” “We’re really going to have to wait to see what the spring market brings.”
…

The next leg down after the end of the $8K tax credit fueled dead cat bounce in housing is just beginning to show up in the Case-Shiller/S&P Index data. Given QE.1, QE.2, …, QE.n, it may be hard going forward to parse out real housing price declines against a backdrop of Fed-funded inflation.

The Atlantic Home
Tuesday, January 25, 2011
The Great Housing Reset Continues
Jan 25 2011, 12:30 PM ET By Richard Florida

Richard Florida is director of the Martin Prosperity Institute at the University of Toronto and author of the forthcoming The Great Reset and also Rise of the Creative Class. He is founder of the Creative Class Group.

U.S. housing prices are continuing to reset according to the latest Case-Shiller housing price figures.

Chart via Calculated Risk

Overall housing prices were down in November (based on a three month average that includes September and October) and eight cities — Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland (OR), Seattle, and Tampa saw their lowest housing price levels since the 2006-07 peak. The chart below charts the declines across the 20 cities covered by the Index.
…

Note that Channel News Asia article does not refer to rising U.S. housing prices as “improvements.” I guess that terminology is something the U.S. REIC propagandists introduce?

US home prices still falling in November
Posted: 26 January 2011 0105 hrs

A ‘For Sale’ sign stands outside an existing home in Pasadena, California.

WASHINGTON: US home prices dropped in November for the fifth straight month after appearing to have bottomed out from mid-2009 to mid-2010, according to the monthly S&P/Case-Shiller index released on Tuesday.

The index, which maps prices in 20 key urban areas, fell 0.5 percent from October on a seasonally-adjusted basis, after a 1.0 percent fall the previous month.

It was also off 1.6 percent from the year-earlier figure.

All but four of the 20 metropolitan areas covered in the index fell. Prices rose in Washington, San Diego, California; and Charlotte, North Carolina, while in hard-hit Las Vegas they were unchanged.
…

Check out how writer for The Economist tries to spin the Case-Shiller/S&P data to explain why real estate may already be going up again. It seems more likely to me that we have had a few more months of falling prices since then, but then I am a confirmed bear.

The Economist
Your monthly Case-Shiller PSA
Jan 25th 2011, 15:00 by R.A. | WASHINGTON

THIS morning, the latest data on American home prices from the S&P/Case-Shiller index have come out, which means that it’s once again time to remind everyone what the Case-Shiller data are actually telling us. The new figures show a drop in prices of 0.5% in November, for a year-on-year dip of 1.6%. And this is generating headlines.

But recall, first, that these figures are from November, while it is very nearly February. Then remember that the Case-Shiller figures are a three-month moving average, which means that the latest numbers include sales from September, October, and November. And then think back to the fact that the data are for closed sales, and are included in the dataset at the time they’re made available to the public. That means that buyers may have submitted contracts for these sales as early as June.

What the latest figures capture is a general sense of the housing market in the early autumn, at which point the American economy was looking fairly soft. That doesn’t mean these numbers are illegitimate; it simply means that they should be understood in the appropriate context. They do not reflect poor housing conditions now, though housing conditions could be poor now. But in fact, other datapoints suggest that housing markets have turned up a bit since the autumn swoon.

One fast emerging issue in our somewhat historic mayoral race (no not Rahm’s eligibility to run) is that residency requirements for city employees are being openly questioned and seriously debated for the first time in a long time.

Considering the inventory and price situation in the city proper, a change in the residency policy could indeed shift the trajectory of future price performance. Yes, it is too early to say for sure but this strikes me as an ominous development - largely because of my experiences growing up in the city during the 70s. And esepcially because muni employees are amongst the best paid and the most likely to sop up the inventory. Meanwhile, the pension and school issues look to lead to considerable tax hikes.

Lastly, it’s also worth noting that in this city’s history - suburbanization was borne out of the desire to escape higher taxes (and stricter building codes - such as indoor plumbing believe it or not!). That is why this region has so many suburbs, more than any other American city.

Taco Bell Sued Over Meat That’s Just 35 Percent Beef ~ FoxNews.com

Taco Bell might want to change it’s “Think Outside the Bun” campaign to “What’s Really in That Taco?” after a class-action lawsuit filed against the fast-food giant claimed its taco filler doesn’t, um, “meat” federal standards.

The suit against the YUM-brands chain also has a “beef” with the company’s advertising, charging its claims of using “seasoned ground beef” or “seasoned beef” in its food products is false.

According to the suit filed by the Alabama law firm Beasley, Allen, Crow, Methvin, Portis & Miles, the YUM-brands owned chain is using a meat mixture that contains binders and extenders, and does not meet the minimum requirements set by the U.S. Department of Agriculture to be labeled as “beef.”

Attorney Dee Miles said the meat mixture contained just 35 percent beef, with the remaining 65 percent containing water, wheat oats, soy lecithin, maltodrextrin, anti-dusting agent and modified corn starch.

The suit was filed on behalf of Taco Bell customer and California resident Amanda Obney, who is not seek monetary damages, but instead wants a court to order Taco Bell to be honest in its advertising.

“We are asking that they stop saying that they are selling beef,” Miles said.

Polish board game recalls communist hardship
Jan 25, 2011 - Associated Press - Monika Scislowska

WARSAW, Poland – You won’t get to build hotels or collect rent in a new Polish board game reminiscent of Monopoly. In fact, you may be lucky even to get a pair of shoes.

Poland’s state-run National Remembrance Institute has created the new game — called “Kolejka,” which means queue or line — to help young Poles understand the hardships of life under communism.

In the game, players are tasked with buying a number of goods, but a lack of deliveries, shortages and the connections competitors have to communist authorities turn the task into a string of frustrations.

“We want to show young people and remind the older ones what hard times these were and what mechanisms were at play,” said Karol Madaj, the game’s creator.

Players try to buy basic goods but food supplies run out before they reach the counter. If a bed is needed, they may be offered stools instead. Players needing the shop’s last pair of shoes can get edged out by someone holding a “mother with small child” or “friend in government” card.

“We want to show how it was when you lost your chance because someone with high connections jumped the line,” said Madaj, a 30-year-old who still remembers spending long hours with his mother in lines.

Hatch Act penalties call for violators, at most, to be removed from their government positions, so the report would appear to have no impact now that the Bush administration has been out of office for two years.

(Yawn)
Cheney-Shrub Shadow effects come into “public domain” …years later.

Associated Press / Pete Yost, Associated Press – Mon Jan 24, 2011

WASHINGTON – The White House Office of Political Affairs during the George W. Bush administration violated the law by giving briefings to political employees, concludes a government report issued Monday.

Motto for the “Untouchables / Indemnified!”: “See ya!”

GoldenmanSucks Inc.
Countrywide Inc.
Feddy&Ginny&FancyMac Gov’t/Inc.
Wall St. “TrueFinancialCult™” Inc.
Medical Industrial Complex Inc.
Military Industrial Complex Inc.

Where’s the “punishment”?

“You sir, what say you?”:

http://www.youtube.com/watch?v=koY6kXhQDQo

Uh-oh. WSJ reports that houses of worship are having trouble paying their mortgages too.

(This might give Crissy Cox indigestion if he receives this news while eating a lobbyist’s lunch at an undisclosed location in “Facist’s Island”, Newport Beach, CA.)

SEC Gives Shareholders Vote on Pay for Companies’ Top Executives
By Jesse Hamilton

Jan. 25 (Bloomberg) — The U.S. Securities and Exchange Commission gave shareholders the right to weigh in on pay packages for top executives to increase scrutiny of compensation practices blamed for fueling Wall Street risk-taking.

SEC commissioners voted 3-2 today to enact the say-on-pay measure that will subject compensation plans to non-binding shareholder votes as often as once a year.

* From Kitco News

Paul dropped the news in the interview, indicating that the bill still does not have an official name yet but will be unveiled at the start of the new U.S. Congress.

“If there was no question, you’d think they would be very anxious to prove to us that the gold is there,” he said.

This is not the first time the congressman has made his pitch. “In the early 1980s when I was on the gold commission, I asked them to recommend to the Congress that they audit the gold reserves – we had 17 members of the commission and 15 voted not to the audit,” said Paul. “I think there was only one decent audit done 50 years ago,” he said.

Though Paul did not say whether there is any truth to claims that there is no gold in Fort Knox or the New York Federal Reserve, he said, “I think it is a possibility.”

“If we ever get around to deciding we should use gold in relationship to our currency we ought to know how much is there,” said Paul. “Our Federal Reserve admits to nothing and they should prove all the gold is there. There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit?” he said.

The gold audit follows his crusade last year looking to audit the Federal Reserve, which he says is the chief culprit behind the economic crisis.

“I don’t think the Federal Reserve should exist – it would be best for congress to exert their responsibilities and that is find out what they are doing”’ said Paul. “It is an ominous amount of power they have to create money out of thin air and being the reserve currency of the world and be able to finance runaway spending whether it is for welfare or warfare; it seems so strange that we have been so complacent not to even look at the books. If we knew exactly what they were doing, who they were taking care of, there would be a growing momentum to reassess the whole system,” he told Kitco News.

I never heard of this lady but she’s very dangerous. She tells poor people to vote and for the unemployed to protest and stuff. What a nuttball. Good thing we have patriots targeting her free speech nonsense. And who they callin’ pseudo-populist right? Like as if I know what that is.

Glenn Beck Targets Frances Fox Piven

http://www.thenation.com/article/157900/glenn-beck-targets-frances-fox-piven

DIE YOU C&%T. It was not the first piece of hateful e-mail Piven had gotten, nor would it be the last. One writer told her to “go back to Canada you dumb bitch”; another ended with this wish: “may cancer find you soon.”

Piven was unnerved but not surprised. These are not pretty e-mails, but they appear positively decorous compared with what has been written about her by commentators on Glenn Beck’s website, The Blaze, where she’s been the target of a relentless campaign to demonize her—and worse. There, under cover of anonymous handles, scores of people have called for Piven’s murder, even volunteering to do the job with their own hands. “Somebody tell Frances I have 5000 roundas [sic] ready and I’ll give My life to take Our freedom back,” wrote superwrench4. “ONE SHOT…ONE KILL!” proclaimed Jst1425. “The only redistribution I am interested in is that of a precious metal…. LEAD,” declared Patriot1952. Posts like these are interwoven with ripples of misogyny, outbursts of bizarre anti-Semitism and crude insults about Piven’s looks (she’s actually a noted beauty) and age (she’s 78).

This fusillade was evidently set off by Piven’s recent Nation editorial calling for a mass movement of the unemployed ["Mobilizing the Jobless," January 10/17]. But Beck has had Piven in his cross-hairs for some time.

…In Beck’s telling, because Piven and her comrades on the left support civil disobedience in some circumstances, it is they—not the heavily armed militias of the radical right—who threaten Americans’ safety.

It’s tempting not to dignify such ludicrous distortions with a response. But in brief: Piven, throughout her career as an activist and academic, has embodied the best of American democracy. It has been her life’s work to amplify the voices of the disenfranchised through voter registration drives, grassroots organization and, when necessary, street protest. The way economic injustice warps and erodes our democracy has been a central preoccupation. But passive lament has never been her game. Recognizing the leverage that oppressed groups have—and working with them to use it—is her special genius.

It’s perhaps not surprising, then, that the pseudo-populist right finds her so threatening.

Just read on Marketwatch that gold closed at three month low.

http://www.marketwatch.com/story/gold-futures-resume-downward-path-2011-01-25

The next story posted says that Obama is going to propose some sort of spending freeze in his speech tonight (like Nixon?)

http://www.marketwatch.com/story/obama-to-propose-spending-freeze-in-speech-2011-01-25

What do you suppose this will do to the price of gold? Professor? Ben?

=j.

It’s the next big shoe to drop in the robo-signing foreclosure scandal. Call it part two.

We already know some banks halted foreclosure sales nationwide in October when it was discovered that servicers took short cuts, so-called “robo-signing” in the foreclosure sale process in judicial foreclosure states - about half the country.

Now it appears they may have done the same thing in a different part of the process, the Notice of Default, which takes place in the other half - i.e. the non-judicial states - this happens before the foreclosure sale.

Those Robot signers really made a mess

More green shoots on the home front?

Zillow’s Monthly Real Estate Report for Mesa, AZ

According to Zillow’s Real Estate Market Reports for November 2010, Mesa home values were down 2.5% compared to October 2010 and down 17.9% compared to November 2009.

Egypt protester stares down a water cannon in Cairo

csmonitor(dot)com/World/Backchannels/2011/0125/Egypt-protester-stares-down-a-water-cannon-in-Cairo-video

Apparently Tunisia as been inspiring…

For eight years after the United States resumed running large budget deficits in 2002, China was the largest lender, buying a fifth of the new Treasury securities sold

But over the last year, China has been a net seller of Treasury securities, according to figures released this week by the American government. If that is true, it would be extraordinary, considering the size of the bilateral trade deficit, and there has been speculation that China has been purchasing Treasuries through accounts in other countries.

The Treasury Department estimated that China reduced its holdings of Treasuries by nearly $11 billion in November alone. For the 12 months through November, as the accompanying charts indicate, China reduced its holdings of Treasuries by more than $36 billion.

For the first 11 months of 2010, American banks, institutions and individuals bought about three-fifths of the $1.5 trillion of additional Treasury debt, while China sold some and other foreign jurisdictions bought the rest.

It is not easy to see how the Chinese government managed to keep its currency from rising more rapidly against the dollar if it did not continue buying Treasuries in 2010, and there has been speculation that it shifted purchases to accounts managed by British money managers.

If so, such purchases would show up as British purchases. As it turns out, Britain is estimated to have been the largest purchaser of Treasuries over the 12-month period, adding $356 billion to its holdings. That made it by far the largest buyer, followed by Japan. The only other major seller during the period was Russia, according to the government estimates.

businessinsider.X com/is-china-secretly-buying-us-treasuries-through-the-uk-2011-1#ixzz1C54dVdY6

Google plans to hire more than 6,200 workers this year in company’s biggest expansion yet

SAN FRANCISCO (AP) — Google plans to hire more than 6,200 workers this year in the biggest expansion yet by the Internet’s most profitable company.

While President Barack Obama is expected to encourage more hiring by businesses during his State of the Union address Tuesday night, it is not yet clear how investors will react.

Google Inc. work force grew by 23 percent last year and some investors may be leery of expansion plans that could crimp earnings.

The company outlined its plans Tuesday with The Associated Press without providing specifics beyond its pledge to hire more people than it did 2007 when it added 6,131 workers. Google began this year with 24,400 employees.

Is it Better to Rent or Buy a Home?
By Mike Schuster January 25, 2011 11:18 AM

Let’s face facts: We’re no spring chickens anymore. We can’t keep hobnobbing or rubbing elbows with the neighborhood youngsters forever. In fact, those teens and twenty-somethings seem more grating with each passing year.

It might just be time to relocate to a quieter town. Leave the hustle and bustle of a large city to the saplings and maybe settle into a suburb. The slower pace and lack of subterranean sardine cans would probably do wonders for one’s lifespan.

But the question remains: “Should I rent or buy?”

With the housing market still on shaky ground, one might assume that there are some pretty amazing deals out there. But that doesn’t necessarily mean buying is the best option.

Real estate search site Trulia crunched some numbers and developed a web app which breaks down the Rent vs. Buy question for America’s 50 largest cities.

As you can see from the map, there’s virtually no logical reason why someone should be buying in New York City. However, you’re much better off buying a two bedroom apartment or condo in Miami.

Trulia derived its system by comparing the median list price and the median rent in each of the 50 cities. If the list price was more than 20 times a year’s worth of rent, your best option is to rent. If it was less than 16 times, you may want to consider buying. Based on the map, ol’ Gotham is the worst place to buy and Las Vegas was the worst place to rent.
…

“The American worker is only non-competitive if you are judging the
situation from slave labor competition World wide without proper tariffs
and trade balances . To be competitive we would have to go down to a
dollar a hour ,but than how are we going to make our health care payments of $1500 a month ? Keep the people arguing over the right to become rich while their Country is being stolen under their feet.”

What is it Ben says about foreclosing on those who cash-out refied or HELOCed? As far as he is concerned, they sold their house to the bank.

Same thing with trade. If we didn’t collectively cooperate by going deeper and deeper into debt, the only way we could get the Yuan and Yen and Euros and Pesos to import was by exporting goods and services of equal value. We might import less, and we might export more. But without debt it would have to balance.

We are collectively selling our country, not having it stolen. It’s just that some of us don’t agree with the deal.

What is the reason for the recent surge in volume in VXX, with little change in the price?

I’d love to be on this jury. The SEC has either willfully colluded with fraudsters like Madoff (and the TBTF banks) or are criminally incompetent. My guess is the former.

http://www.bloomberg.com/news/2011-01-25/madoff-ponzi-victims-allege-sec-negligence-in-suit-against-u-s-government.html

Madoff Ponzi Victims Sue U.S., Alleging SEC Negligence

Victims of Bernard L. Madoff’s Ponzi scheme sued the U.S. government, alleging negligence on the part of the U.S. Securities and Exchange Commission.

The lawsuit filed today in Manhattan federal court by nine investors in Bernard L. Madoff Investment Securities LLC follow similar suits also assailing the SEC, which failed to detect Madoff’s multibillion-dollar fraud until he turned himself in.

“The SEC must be held accountable and responsible for its own negligent actions and inactions that directly and proximately caused the loss of billions of investor funds,” the complaint says.
Kevin Callahan, a spokesman for the SEC, didn’t immediately return a call.

The case is Applestein v. U.S., 11-cv-521, U.S. District Court, Southern District of New York (Manhattan).

UPDATE 1-BofA’s Countrywide sued, accused of massive fraud
Tue Jan 25, 2011 6:38pm EST

* TIAA-CREF, NY Life, others allege “massive fraud”

* Plaintiffs say they were misled about risk

* Bank says will review complaint (Adds comment from Mozilo lawyer)

NEW YORK, Jan 25 (Reuters) - Bank of America Corp’s (BAC.N) Countrywide mortgage unit has been sued by investors claiming they were victimized in a “massive fraud” when they bought mortgage-backed securities.

The lawsuit was filed on Monday in a New York state court by 12 plaintiffs including the TIAA-CREF fund family, New York Life Insurance Co and Dexia Holdings Inc.

According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were “conservative, low-risk investments.”

The investors said Countrywide misrepresented the securities’ safety in offering documents and elsewhere, and compromised their investments by ignoring its underwriting guidelines.

As a result, the complaint said, most of the securities now carry “junk” credit ratings rather than the “triple-A” ratings they once had, resulting in “significant losses.”

The plaintiffs want compensatory and punitive damages.

Bank of America spokeswoman Shirley Norton said in a statement that the lender would review the lawsuit, “but on first glance these sound like large, sophisticated investors who now want to blame someone for the fact that the declining economy caused their investment to lose value.”

Other defendants include several former Countrywide officials, including longtime Chief Executive Angelo Mozilo.

David Siegel, a lawyer for Mozilo, said the lawsuit has no basis in law or fact.

“We expect to prevail against these plaintiffs as we have against other sophisticated MBS investors,” Siegel said.
…

http://www.bloomberg.com/news/2011-01-25/new-york-prosecutor-seeks-mandatory-prison-sentence-in-securities-frauds.html

Manhattan District Attorney Cyrus Vance Jr. said he wants harsher penalties, including mandatory prison time, for people convicted of major securities fraud in New York.

Vance said in a speech at New York City Bar Association in midtown Manhattan today that he will call on the legislature to change the Martin Act, New York’s securities fraud statute. He said he will seek prison sentences of as long as 8 1/3 years to 25 years for frauds involving more than $1 million. The crime now carries no minimum prison sentence, regardless of the money involved.
“The flexibility of the Martin Act and its utility in the battle against criminal fraud is marred by its overly lenient penalties,” Vance said in the speech, titled “White Collar Crime in 2011: The Martin Act, Cybercrime and Beyond.”

A great idea, but nothing will come of it. The Republicrats will see to that.

“The worst of the recession is over…” Barack Obama 1/25/11

“Gentleman, you have come sixty days too late. The depression is over.” - Herbert Hoover, June 1930, after post-crash stock market rally of 48%

Mentions of “housing” in State of the Union speech = 1; mentions of “foreclosure” = 0.

P.S. There is actually a good reason to put the management of salmon at sea under the jurisdiction of a different federal agency than riparian salmon. The management issues are vastly different on land than at sea.

Transcript: Obama’s State Of The Union Address
January 25, 2011
…
We live and do business in the information age, but the last major reorganization of the government happened in the age of black and white TV. There are twelve different agencies that deal with exports. There are at least five different entities that deal with housing policy. Then there’s my favorite example: the Interior Department is in charge of salmon while they’re in fresh water, but the Commerce Department handles them in when they’re in saltwater. And I hear it gets even more complicated once they’re smoked.
…

Who is buying now in San Diego? I have to guess it is mainly investors, as there is no jobs recovery and would-be end-user buyers are generally broke.

U.S. home prices slide into ‘double dip’
After rebounding last year with help from tax incentives, home sale prices fell in November — the fourth month-to-month decline in a row — according to the Case-Shiller Index.

By Alejandro Lazo, Los Angeles Times
January 26, 2011

A “double dip” in home prices appears to be underway in the nation’s biggest cities, jeopardizing the tepid U.S. economic recovery.

The widely followed Standard & Poor’s/Case-Shiller Index, which tracks the real estate market in 20 major U.S. cities, showed that prices dropped 1.6% in November from the same month a year earlier, the second consecutive year-over-year decline. What’s more, the index fell 1% in November from October, marking the fourth consecutive monthly decline.

Last year, a recovery in housing prices seemed to be on track. But analysts now say that that improvement was juiced by home-buying tax credits that have now expired. In addition, unemployment has remained stubbornly high and millions of Americans are still at risk of foreclosure.

A second slide in home prices would act as a drag on the economic recovery — and stand in sharp contrast to other downturns. During the real estate crash of the 1990s, for example, prices slowly but steadily improved from their bottoms.

“It is going to be a rocky bottom, where we bounce around,” said Stan Humphries, chief economist at Zillow.com, a real estate information site. And, after that, “it is likely that real estate appreciation won’t keep up with inflation.”

The Case-Shiller Index, released Tuesday, showed that nine cities — Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, Portland, Seattle and Tampa — hit fresh bottoms, falling to the lowest levels since prices peaked in 2006 and 2007.

California’s coastal cities and the nation’s capital were the only apparent bright spots in the report, with Los Angeles, San Diego, San Francisco and Washington showing year-over-year gains. But when measured month to month, the index declined for every city except San Diego, which inched up 0.1% in November from October.
…

Housing Crisis Hurts Home Owners and the Economy
Tuesday, January 25, 2011

TOM HUDSON: Home prices continue their slump, Susie. Today’s S&P Case Shiller index shows overall housing prices were down in November.

SUSIE GHARIB: Tom, housing is surely still one of the big trouble spots in the economy. Here are a few key takeaways from today’s report. Home values dropped by 1.6 percent between November of 2009 and last year. Home prices fell in 19 out of 20 cities tracked by the index. San Diego was the only city to show a price increase. Eight cities hit new post-bubble lows in November. We’re talking here about Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Seattle and Tampa.

HUDSON: This is not just bad news for home owners. As Erika Miller explains tonight, some fear it threatens the economic recovery.
…

New cracks appear in U.S. housing
JEREMY TOROBIN
OTTAWA— From Wednesday’s Globe and Mail
Published Tuesday, Jan. 25, 2011 10:47AM EST
Last updated Tuesday, Jan. 25, 2011 6:46PM EST

The world’s biggest economy is gathering steam, but the housing sector at the heart of the U.S. financial meltdown more than two years ago is still lagging far behind.

In some cities, it’s never been worse. In nine markets, prices fell in November to new lows from their peaks in 2006 or 2007. Sixteen of 20 cities tracked by the closely watched S&P Case-Shiller index saw year-over-year declines. In Atlanta, for example, prices plummeted almost 8 per cent. Over all, U.S. housing prices fell 1.6 per cent from the same month a year earlier, the sharpest 12-month drop since December of 2009.
…

It was different in California during the last recession — no housing bottom until 1996 or 1997.

U.S. housing prices likely to keep on dropping
Jan 25, 2011 16:05 EST
By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

U.S. house prices are down 31 percent from their peak. But they may have plenty further to fall. The 1993 low for the Case-Shiller 10-city index was almost another third below the current level in real terms. Lenders had better hope that inflation outpaces rising interest rates, lessening future declines.

The bottom of the last housing recession was in October 1993. At that time, the Case-Shiller 10-city index had declined a mere 8 percent from its peak in March 1990, and substantial price falls had occurred only in Southern California. The overall economy was emerging from a recession that was shallower than the one just experienced. The unemployment rate, for example, topped out at 7.8 percent then, against the recent high of 10.1 percent. However, interest rates were higher. The 30-year mortgage rate in October 1993 was 6.8 percent compared with 4.3 percent in November 2010.

Real incomes have risen about 15 percent since 1993, but because of the deeper downturn just experienced, it’s feasible that inflation-adjusted house prices could decline close to their 1993 lows — particularly if mortgage interest rates rise to where they were then. If that happened, it would mean house prices falling a further 27 percent. Among the metropolitan areas included in the Case-Shiller data, the pain would be worst in Boston, New York and Los Angeles.

This scenario doesn’t, however, necessarily give home buyers a reason to delay a purchase. If mortgage rates rise and house prices decline as outlined, the monthly payments on a 30-year mortgage to buy a given property would be only 4 percent lower than today. The effect on banks’ mortgage portfolios, by contrast, would be severe. High rates of foreclosure in the worst affected areas could drive house prices down even further.

Inflation may come to the rescue. If consumer prices overall rise by 20 percent over the next, say, five years, a mere 12 percent fall in house prices would bring them down to the inflation-adjusted low of 1993. For lenders, the future health of their portfolios may depend on the result of the race between inflation and interest rates.

* JANUARY 25, 2011, 4:20 P.M. ET

UPDATE: BofA Resumed Default Notices Last Year After Brief Halt

(Updates with more details from company statement, closing share price.)

By David Benoit
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Bank of America Corp. (BAC) confirmed Tuesday that during its nationwide moratorium on foreclosures last fall, it also stopped delivering notices to delinquent homeowners that typically inform borrowers the bank is starting foreclosure.

The bank resumed foreclosures it had halted, along with notices of disclosure, in December.
…