The Housing Bubble

April 23, 2012
When Pigs Fly
The Housing Market Doldrums
by MIKE WHITNEY

The housing market is in terrible shape. Prices have dropped 35 percent from their peak, 1 in 5 mortgage holders is underwater, and another 2 million people will face foreclosure this year. And, as bad as things are now, they’re going to get a whole lot worse if the banks suddenly dump their inventory of distressed properties onto the market in 2012. If that happens, prices will plunge another 15 percent or so, millions of people will see their hard-earned home equity vanish overnight, and the economy will slide back into recession. Even so, there are experts who think “The Big Dump” is coming, and soon, too. Here’s how they summed it up over at CNN:

The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity. (“Flood of foreclosures to hit the housing market”, CNN)

… even though interest rates are at historic lows, mortgage applicants can still get financing with just 3.5 percent down via FHA, and prices on many foreclosures are below the cost of the materials; housing is still overpriced.

Did you ever think you’d see the day when you could nab a 15-year fixed-rate mortgage for 3.25 percent?

It’s unbelievable! If you adjust for the rate of inflation (currently over 2 percent); you’re only paying roughly 1 percent interest on hundreds of thousands of dollars. What does that tell you?

It tells you that the banks are desperate. They’re giving away money, but no one is standing in line. No one is borrowing, because the economy is dead, because people don’t trust the system anymore, and because housing has become an albatross. Isn’t that what’s happening?

Sure it is. They’ve screwed everything up and now no wants to play their game anymore. That’s why mortgage applications continue to drift lower 5 years after prices peaked. It’s a matter of trust.

The experts at CoreLogic, a California company that analyzes mortgage data, say shadow inventory is presently 1.6 million homes. but, of course, this vastly underestimates the number of people who are 90-days delinquent or in some stage of foreclosure and who will eventually lose their homes. A recent analysis by Bank of America puts the number at 6.6 million homes. Here’s a clip from the paper:

The foreclosure inventory pipeline that must be cleared in the next few years is very large. Our mortgage strategists forecast that another 6.6 million homes will need to be liquidated over the next five years. (“No Housing Recovery Until 2020 In 5 Simple Charts”, zero hedge)

Others say the housing overhang is much bigger. Laurie Goodman of Amherst Securities, who testified before congress, says there’s between 8.3 million to 10.4 million homes that will eventually have to be resold.

So, who’s right? How much supply is really out there? That’s what buyers want to know so they can make an educated decision about (what will probably be) the biggest asset purchase in their lives. But the banks don’t want people to know about the millions of homes that are presently in the pipeline, because that just undermines sales. They’d rather you listen to CNBC’s dyed-blond in the plunging neckline who keeps blowing smoke up your trousers every couple hours. While that may be entertaining, there is a downside, too, which is, that you could get lured into buying a house that’ll probably be worth 10 percent less in 2 years than it is today. Who wants that?

Now get a load of this from Comstock Partners:

The growing optimism on housing is not justified…..Foreclosures have generally declined over the past year as a result of the well-known robo signing scandal that caused banks to voluntarily stop most foreclosures pending some kind of settlement. This has now been accomplished by an overall settlement between the states’ attorney-generals and the major bank mortgage holders. As a result, the significant number of potential foreclosures that were held back by the scandal will now begin to be processed and show up in future inventories. It is highly likely that the vast number of distressed houses coming into the market will depress prices even more in the period ahead.

…..it will be some time before the massive number of actual and shadow inventories are cleared from the system. Until that happens, home prices will remain under continued pressure. (“The growing optimism on housing is not justified”, Comstock Partners, credit writedowns)

None of Obama’s wimpish mortgage refi operations (HARP, HAMP etc) have done anything to revive the housing market. Nor will the administration’s Foreclosures-to-Rental scam. The private equity (PE) boys and other bigtime institutional investors will soon discover that its much easier to make money swapping derivatives and loading up on oil futures, than it is managing property. (Property management requires too much elbowgrease) Oh yeah, they may go hog-wild and buy a million properties or so, (If Obama provides a generous financing package!) but that still leaves 6 or 7 million more to sell. So, no matter how you cut it, there’s a boatload of homes out there that have to be sold in the next few years. And, that’s going to keep prices in the doldrums for some time to come.
…

Not surprising at all.

‘Tainted,’ But Still Serving on Corporate Boards

“It may be surprising that the former chief of Fannie Mae still remains the director of a public company as prominent as Goldman Sachs and Target. But perhaps more surprising, many other executives who had tumultuous reigns are also board members of major public companies: Charles O. Prince III, the former chief executive of Citigroup, who resigned under pressure in 2007 amid huge write-downs at the bank, is a director of Xerox and Johnson & Johnson. E. Stanley O’Neal, the former chief executive of Merrill Lynch on whose watch the firm loaded up on subprime debt that almost bankrupted the company, is a director of the aluminum giant Alcoa.

And a number of other prominent executives could soon be added to that head-scratching list. H. Lee Scott Jr., the former chief of Wal-Mart Stores who was running the company during a bribery scandal at its Mexico unit that was recently uncovered by The New York Times, is a director of Goldman Sachs and continues to serve as a director of Wal-Mart. Another Wal-Mart executive, Eduardo Castro-Wright, who oversaw the Mexico unit and was identified by a former executive there, according to the Times article, as the driving force behind years of bribery, is a director at MetLife.”

http://finance.yahoo.com/news/tainted-still-serving-corporate-boards-100003085.html;_ylt=ApGJBZZQvBMKN

Realtors Are Parasites®

“There were incidents where investors and Realtors were in cahoots to buy and flip,” said Forbes

(No sh#t Sherlock)

South Florida third in U.S. with shaky mortgages

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 7:49 p.m. Monday, April 23, 2012

South Florida maintained its position in the top five markets nationwide for suspicious mortgage activity last year as lenders continue to uncover bad boom-time loans and federal examiners note an increase in dubious short sales.

Florida’s overall rank last year was third place per capita and second by volume. California was first in both categories.

“The report shows we’re seeing financial institutions spotting activity that appears to be fraud before it happens, and in the process, helping to prevent it,” said James Freis, director of the Financial Crimes Enforcement Network.

Rodney Forbes, broker for Forbes Realty of South Florida, said banks are taking more precautions to prevent short sale fraud, which can include a practice called “flopping.”

Flopping is where an artificially low appraisal is submitted to the bank, which accepts an offer based on the low amount. The home is then flipped by the new owner at or above the true market value, netting him a hefty profit.

“There were incidents where investors and Realtors were in cahoots to buy and flip,” said Forbes . “Now, before a short sale can close, there has to be an arms-length affidavit signed which states that the buyers, sellers and real estate agents are not related in any way.”

Last week, federal mortgage backers Fannie Mae and Freddie Mac announced stepped-up short-sale timelines for servicers, while Bank of America recently updated its short-sale process to increase efficiency.

Lenders such as JPMorgan Chase and Bank of America also have offered cash incentives to homeowners willing to do a short sale over a foreclosure,.

Despite precautions, short sales are a “Pandora’s box of potential fraud,” said Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach.

“You have to go through a lot of documents and investigation to determine who is involved in the deal,” McCabe said. “It’s so prevalent I believe they can only uncover a very small percentage of the fraud that is actually occurring.”

http://www.palmbeachpost.com/money/real-estate/south-florida-third-in-u-s-with-shaky-2321391.html -

Wow - another city destroyed by public unions…

Pretty soon cities will collect taxes JUST to pay for public union pensions.

Hey - Who wants to live in California and have a big bulls eye painted on your house?

——————–

Los Angeles insolvency predictable and preventable
OC Register | 04/23/2012 | Brian Calle

When the nation’s second largest city teeters on the verge of bankruptcy, local elected officials – and especially taxpayers elsewhere – ought to take it as a wake-up call and ponder the evident public policy blunders that laid the groundwork for such an unnecessary scenario.

Los Angeles’ potential bankruptcy and $238 million budget shortfall were predictable and preventable. So predictable in fact that former Los Angeles Mayor Richard Riordan warned of the looming crisis in a Wall Street Journal editorial in 2010. Now he says bankruptcy may be just a year away.

What underscores this municipal catastrophe is undue influence of public employee unions on city expenditures, irresponsible decisions by elected leaders and unsustainable benefit structures practically germane to the government sector.

A study released earlier this month by the Stanford Institute for Economic Policy Research estimated that each of the city’s three independent pension funds are unfunded by billions of dollars: the City of Los Angeles Fire and Police Pension System is $9.25 billion unfunded; the Los Angeles City Employees’ Retirement System is $11.32 billion unfunded; and the City of Los Angeles Water and Power Employees’ Retirement System is $6.59 billion unfunded. To put the numbers in context, L.A.’s 2011-12 operating budget is $6.87 billion, according to the city.

Stanford’s study also found that “pension costs increased from 8.5 percent of total city expenditures in 1999 to 13.7 percent in 2011.” For fiscal year 2011-12, estimated pension costs look to be “15.4 percent of city expenditures.”

Got mattress money?

April 23, 2012, 4:46 p.m. ET

CREDIT MARKETS: Treasury Yields Hit 7-Week Low, Risk Sells Off
By DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Weak manufacturing data in China and the Eurozone collided with political uncertainty in France to create a global selloff from riskier assets Monday.

U.S. markets woke up to see a broad sell-off in European equities, setting the stage for the safest and most liquid bonds to outperform.

That appetite helped Treasury prices climb, with yields dropping to their lowest levels since late February. Munis benefited as well, but corporate bonds sold off across the board.

Markit’s CDX North America Investment Grade Index, a proxy for risk, weakened 1.3%, and negative sentiment prevented any company from attempting to issue any new debt.

Most of the market moves took place in the early morning and were followed by sideways movement the rest of the day. Aside from weak global economic data and political uncertainty, the Federal Reserve’s monetary policy meeting this week likely kept investors in a wait-and-see mode.

“Monday’s session offered little by way of new information other than to refocus the market on the political risks that continue to plague the European economy,” wrote Ian Lyngen, strategist at CRT Capital Group.

Treasury bonds and German bunds become market darlings on Monday as investors flocked to safe-harbor assets on fresh signs of troubles in the euro zone.

The flight to safety pushed down the benchmark 10-year Treasury note’s yield, which moves inversely to its price, to as low as 1.909%, the weakest level since late February. The yield is less than 25 basis points from a historic low set in September, a sharp turnaround from the selloff in March that sent the yield to as high as 2.399%.

Yields in German bunds, the benchmark for the euro zone’s debt market, dropped to fresh record lows. The five-year bund’s yield hit as low as 0.598%, while the 10-year bund’s yield touched 1.56%.

The strength of the two major government bond markets, despite meager yields, underlines the continued jitters over the euro zone’s sovereign debt crisis. Investors were jolted by fresh signs that stress, already hitting Spain and Italy, is spreading into the Netherlands and France. For now, investors care more about putting their money in a safe place instead of placing emphasis on returns.
…

What will become of homeowners who stop paying their mortgages in the hopes of qualifying for principal reductions, only to learn they don’t qualify?

Banks, GOP lawmakers fear top housing regulator moving to mortgage write-down
By Vicki Needham - 04/15/12 07:05 PM ET

The banking industry is concerned that Edward DeMarco, the nation’s chief housing regulator, is moving toward a plan that would allow some homeowners to walk away from their mortgages.

Industry groups say that cutting the principal for borrowers who are “underwater” and owe more than their homes are worth would further weigh down the housing recovery.

“Principal reductions create an incentive for a huge group of borrowers who have continued making their payments, despite lower home prices, to stop paying in hopes of principal forgiveness,” said Frank Keating, the president and chief executive of the American Bankers Association.

“A broad principal reduction program would result in fewer investors who are willing to lend for housing finance, increased borrowing costs and tighter credit availability,” Keating said.

DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), has come under pressure from Democrats and the Treasury Department to reduce mortgage principal. They argue the move would help struggling homeowners and save the government money in the long run.

But even with new data that back up those claims, DeMarco remains skeptical about the effects of implementing the program at Fannie Mae and Freddie Mac, the mortgage giants that the government has spent $150 billion keeping afloat.

Bankers argue that principal reductions through Fannie and Freddie would increase the liability for taxpayers and raise the cost of credit by creating incentives for borrowers to stop paying on their loans.

“The taxpayers’ cost for principal reductions generally exceeds the benefit created,” Keating said.

“Recovery in the housing market is extremely important, yet there are more cost-effective and efficient options other than principal reductions for borrowers and American taxpayers,” he added.
…

I’m sure this news will have no effect on home prices in or near Manhattan; Manhattan housing prices always go up.

BUSINESS
Updated April 23, 2012, 3:58 p.m. ET
Music Stops for Wall Street Bankers
By ANUPREETA DAS And GINA CHON

Several major U.S. banks are planning to trim investment-banking units that were built for an era of deals aplenty. Anupreeta Das has details on The News Hub. Photo: Bloomberg.

Wall Street’s latest problem: too many bankers and not enough deals.

Amid new regulation, lower profits and a dreary market for mergers and acquisitions, several banks are planning to trim investment-banking units that were built for an era of deals aplenty.

Having already slashed bonuses, banks including Citigroup Inc., (C -1.89%) Goldman Sachs Group Inc., (GS -0.61%) J.P. Morgan Chase (JPM +0.30%) & Co. and Morgan Stanley (MS -2.86%) are preparing to cut dozens of jobs, including some held by senior bankers, according to people familiar with the matter. As they pursue this targeted round of trims as soon as next month, they and rivals are also revisiting profit expectations for their advisory businesses, people familiar with the matter said.

Until recently, Wall Street’s ax had largely fallen on trading desks, which shed thousands of jobs as business dried up due to regulations and lackluster markets.

But the cost-cutting focus is now expanding to deal makers and corporate advisers that have remained among Wall Street’s most high-profile professionals even as their contributions to banks’ bottom line has been dwarfed by traders. In addition to mergers-and-acquisitions advisory, investment banking includes raising capital through stock and debt.

“The whole paradigm of banking is changing so there is a lot of right sizing and that will continue throughout this year,” said Michael Karp, managing partner at Options Group, a financial-services industry executive search firm. All of the top firms “have overcapacity,” he added.

As is often the case in Wall Street’s Darwinian culture, the culling is expected to affect the old and the weak. The job losses will target underperforming bankers and those nearing retirement age, according to people familiar with the situation.

The goal is to remove people who aren’t “pulling their weight,” said one investment-banking head at a major bank, adding that “banks are overbuilt” in relation to the work available. As compared with years past, banks are less willing to keep those employees on board in hopes of a near-term recovery.
…

Origins of the Indebted American Homeowner
Equitable Mortgage Company
Source: Library of Congress Prints and Photographs Division
By R. Daniel Wadhwani
Apr 20, 2012 1:56 PM PT

Not long after the economic crisis began, the president’s landmark Conference on Homeownership reported that “down payments of 10 percent, 5 percent, and even nothing down” had become common practice in the home-mortgage market. Reliance on second mortgages and novel financing terms, the report noted, were also widespread.

Although these developments sound all too familiar, this Conference on Homeownership was held in 1931 and the president sponsoring it was Herbert Hoover, not George W. Bush or Barack Obama. We often think of the expansion of easy mortgage financing as a relatively recent development, but the growth of indebted homeownership has older and more complicated origins.

The rules and institutions for financing homeownership weren’t always as conducive to buying as they are today. In the 19th century, most Americans bought or built a home outright, or saved substantial nest eggs to make large down payments, because financial institutions either didn’t lend to average homebuyers or did so on relatively stringent terms. National banks were actually prohibited from lending on real estate and state banks typically limited mortgages to 50 percent of the underlying value of a property. Such loans also matured in a relatively short period, usually three to five years. These terms meant that buying a home often required years of saving and typically wasn’t an option for young families.
…

DOWN.

Investors eye housing data
By CNNMoney staff @CNNMoneyMarkets April 24, 2012: 9:17 AM ET

NEW YORK (CNNMoney) — U.S. stocks were poised for a mixed open Tuesday as investors turn their attention to two reports on housing and await Apple’s earnings after the close.

The Dow Jones industrial average (INDU) was poised for a slightly higher open, while the Nasdaq (COMP) futures were slightly lower and the S&P 500 (SPX) futures were pointed to little change. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

Futures moved lower after the S&P/Case-Shiller showed another decline in home prices for February just before the market open. The U.S. Census will release new-home sales at 10 a.m. ET.
…

Case-Shiller: U.S. Home Prices Fall Near Decade Low
Updated: Tuesday, 24 Apr 2012, 6:17 AM MST
Published : Tuesday, 24 Apr 2012, 6:16 AM MST
By MarketWatch

WASHINGTON - US home prices dropped sharply in February to hit the worst level in nearly a decade, according to a closely-watched index released Tuesday.

The S&P/Case-Shiller 20-city composite index fell 0.8 percent compared to January levels to take the year-on-year drop to 3.5 percent. The index is at its lowest level since October 2002.

Of the 20 cities measured, 16 had negative monthly readings, only three showed gains and one was unchanged.
…

The “bad” Case-Shiller numbers have set the table for the Fed to invoke mortgage-bond purchase QE3. Wait for it.

April 24, 2012, 9:18 a.m. EDT
Stock futures ease rise on home-price data
Netflix and Big Lots drop sharply; FOMC to convene
By Kate Gibson and Barbara Kollmeyer, MarketWatch

NEW YORK (MarketWatch)—U.S. stock futures wobbled Tuesday after an index had home prices falling sharply in February to their worst level since October 2002.

Stock futures trimmed their gains after the S&P 500/Case-Shiller 20-city composite U.S. home price index fell 0.8% in February compared to the month before.
…

US home prices drop for 6th straight month

WASHINGTON (AP) — Home prices dropped in February in most major U.S. cities for a sixth straight month, a sign that modest sales gains haven’t been enough to boost prices.

1 month, 3 month and YOY Stats for DC:

Washington DC -0.80% -3.00% -2.34%

Something is not right here, prices only go UP in DC!

http://www.bloomberg.com/news/2012-04-24/home-prices-in-u-s-cities-fell-at-slower-pace-in-february-1-.html

U.S. home prices hit nearly decade low in February

http://www.marketwatch.com/story/us-home-prices-hit-nearly-decade-low-in-february-2012-04-24

Why buy a house when prices are falling? Buy later after prices crater for 65% less.

Welcome back to the 19th century!

http://www.cbsnews.com/8301-505144_162-57417654/jailed-for-280-the-return-of-debtors-prisons/

“Creditors have been manipulating the court system to extract money from the unemployed, veterans, even seniors who rely solely on their benefits to get by each month,” Illinois Attorney General Lisa Madigan said last month in a statement voicing support for the legislation. “Too many people have been thrown in jail simply because they’re too poor to pay their debts. We cannot allow these illegal abuses to continue.”

Realtor writes a spin article for the local news and quotes herself!

http://www.goblueridge.net/index.php?option=com_content&view=article&id=15643:high-country-real-estate-stats-up-&catid=1

Oh crap. It begins. (not good, not good at all. I remember the cities burning in the 1960s)

http://www2.wkrg.com/news/2012/apr/23/man-beaten-mob-critical-condition-ar-3659891/

“As the attackers walked away, leaving Owen bleeding on the ground, Parker says one of them said “Now thats justice for Trayvon.”"

There is more dire housing market news today than you can shake a stick at, yet the stock market is up, proving yet again that the U.S. economy has decoupled from housing. It is no longer necessary for housing to recover in order for the rest of the economy to come back.

Foreclosure crisis: halftime

Recent statistics show foreclosure activity is declining, but, reports Amy Hoak, the nation’s foreclosure problem is far from over. What’s more, the drawn-out foreclosure crisis has lasting consequences.
• Decade-low home prices | City-by-city breakdown | Shiller discusses data | New-home sales fall

Soros Says Bundesbank Guarding Itself Against Euro Break-Up
By Simon Kennedy and Patrick Donahue - Apr 12, 2012 7:45 AM ET
Bloomberg

Billionaire investor George Soros said financial markets are concerned other countries will follow Germany’s Bundesbank in girding against the end of the euro.

The Bundesbank is campaigning against the “indefinite expansion” of money supply and taking steps to limit the losses it would face if the euro splintered, Soros said in a speech in Berlin today.

“This is creating a self-fulfilling prophecy,” he said. “Once the Bundesbank starts guarding against a breakup everybody will have to do the same. Markets are beginning to reflect this.”

As the debt crisis stretches into a third year, Bundesbank President Jens Weidmann has begun warning that the European Central Bank’s emergency liquidity measures “create risks and have to be unwound” after the ECB balance sheet ballooned by about 30 percent since November.

If the ECB continued offering support for a few more years then a “break-up of the euro would become possible without a meltdown,” Soros said.

http://www.bloomberg.com/news/2012-04-12/soros-says-bundesbank-guarding-itself-against-euro-break-up-1-.html

April 24, 2012, 12:02 a.m. EDT
Dreaded IPO-crash signal flashes bear warnings
Commentary: Replay of ‘90s IPO mania blows new bubble
By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) – Yes, this really is the hottest IPO market since 2000. And that’s bad news. Very bad. Remember my last column back in 1999: I posted a list of winners, an unbelievable 19 funds had astronomical one-year returns between 179% to 323%! Yes, that hot!

Real bad news. On March 20, 2000 my headline read: “Next crash? Sorry, you’ll never hear it coming.” Never hear? Why? Investors hate bad news. Deny it. Tune out. No wonder Wall Street lost over $10 trillion of America’s retirement money in the 30-month recession that followed. It was so predictable.

Now ask yourself, what’ll trigger the next crash? Today’s hot tech IPO mania? Bank risks? Politics? Oil? Euro default? War? Every crash has a unique profile, new trigger, different flashpoint. But the ancient cycle just keeps repeating like clockwork. Endless. A bubble. Then denial. Peak. Pop. Crash. Repeating for centuries. So inevitable. So obvious. Yet we never learn. Today, I’ll explain why.

Another example: Remember the 2008 cycle? That bubble and meltdown were so predictable. For several years ahead of the 2008 meltdown I reported on more than 20 key warnings of a “mega-bubble” building, a new crash that would take down the world economy, as Wall Street’s insatiable casino pushed the U.S. monetary system to the edge of bankruptcy.

Yes, obvious. Yet millions of Main Street investors were again in denial, ignoring the warnings. But in good company: Both Fed Chairmen Ben Bernanke and Alan Greenspan, plus Treasury Secretary Hank Paulson, all publicly dismissed warnings of a coming crash, till too late. Remember Paulson’s delusional claim in Fortune: “Best economy I’ve ever seen in my lifetime.”

Today’s hot IPO market smelling like 90’s dot-com mania
…

Shiller Discusses Latest Housing Data

Robert Shiller joins Markets Hub to discuss U.S. home prices, which continued to push Standard & Poor’s Case-Shiller home-price indexes down to new post-crisis lows in February. Photo: AP.

3.9% doesn’t sound like much until you apply it to the value of a new home in San Diego (”from the $700’s”):

That’s more than a year’s rent thrown away on ownership, before even considering PITI!

April 24, 2012, 11:08 a.m. EDT
City-by-city home prices from 20 top markets
By Steve Goldstein, MarketWatch

WASHINGTON (MarketWatch) — The following is the city-by-city breakdown of the cities followed in the S&P/Case-Shiller 20-city composite that was released Tuesday.

Nationally, prices hit a near-decade low in February. Weighed down by foreclosures, stubborn unemployment and tough credit conditions, home prices in 20 major U.S. cities sank in February to the worst level since October 2002.

• Atlanta: Prices down 2.5% monthly and 17.3% yearly. It was the worst annual rate of home value change in the 20-year history of the index.

• Boston: Prices down 1.1% monthly and 2.4% yearly.

• Charlotte: Prices down 0.4% monthly and 1.8% yearly.

• Chicago: Prices down 2.5% monthly and 6.9% yearly.

• Cleveland: Prices down 1.7% monthly and 4.4% yearly.

• Dallas: Prices were steady on the month and down 1% yearly.

• Denver: Prices down 0.9% monthly and up 0.5% yearly.

• Detroit: Prices down 1.3% monthly but up 1.5% annually. Prices in Detroit have dropped by nearly a third since January 2000, by far the worst movement of any of the major cities measured.

• Las Vegas: Prices down 0.4% monthly and 8.5% annually. Las Vegas home values are down 62% from the peak.

• Los Angeles: Prices down 0.8% monthly and 5.2% annually.

• Miami: Prices up 0.6% monthly and up 0.8% annually.

• Minneapolis: Prices down 1% monthly but up 0.4% annually.

• New York: Prices down 0.8% monthly and 3% annually.

• Phoenix: Prices up 1.2% monthly — the only city with back-to-back monthly gains — and up 3.3% annually. The Phoenix market has been helped by low inventories, employment growth and demand from Canadians. See WSJ.com story on Phoenix market.

Portland: Prices down 0.3% monthly and 3% annually.

San Diego: Prices up 0.2% monthly but down 3.9% annually.

San Francisco: Prices down 0.7% monthly and 4.1% annually.

Seattle: Prices down 0.8% monthly and 2.9% annually.

Tampa: Prices down 0.2% monthly and 2.9% annually.

Washington, D.C. : Prices down 0.8% monthly and 2.3% annually.

I see the realtor parasites are out in full force attempting to spin CS.

Excellent, relevant programming on PBS tonight. GD1, Origins of the WS Bailout, excellent interviews on Housing Bubble all week.

Newshour
American Experience
Frontline.

Oh, brother.

I just got off the phone with one of those “make money on the Internet” wannabes. Just when I thought they no longer existed.

Guy was under the impression that he could set up a website with affiliate program links and bring in $2,000-$3,000 a month. Yeesh. Where do these people come from?

I think I used the “Good luck!” sarcasm enough to get him off the phone. I also did a quick search and found a trail of crummy looking websites that appear to be abandoned.

Looks like this guy hippety-hops from one business “opportunity” to the next.

What was really sad was how clueless and gullible he sounded. Like, on his very best days, his IQ came within shouting distance of triple digits.

LPS “First Look” for March delinquency data

http://www.lpsvcs.com/LPSCorporateInformation/NewsRoom/Pages/20120424.aspx

The same folks who foolishly divested out of Treasurys last year are now calling a housing bottom, even as the Case-Shiller Index keeps falling month-in, month-out.

Housing Declared Bottoming in U.S.
By John Gittelsohn and Prashant Gopal - Apr 24, 2012 9:01 PM PT
…
Foreclosure Supply

While the volume of sales has increased, prices still have a way to fall because as many as 6 million homes with delinquent mortgages and in the foreclosure process are likely to come to the market, Scott Simon, head of mortgage- and asset-backed debt at Newport Beach, California-based Pacific Investment Management Co., said yesterday on Bloomberg Television.

“We think we’d go down another 3 or 4 percent over the next 12 months, probably bottoming sometime next year,” Simon said on “Surveillance Midday” with Tom Keene. “One month doesn’t change anything.”
…

I guess it is easy to imagine away the shadow inventory if the REIC is buttering your bread. So many real estate experts seem eager to completely ignore the backlog of shadow inventory left behind by the robo-signing debacle. Some commentators suggest the number of foreclosures and other shadow inventory to work through over the next decade might be as high as ten million or so; besides maybe six million or more foreclosures that remain to work through, myriad baby-boomers will be looking for the exit from family-sized McMansion tract home housing. The future outlook for supply is high.

So much groundless optimism is enough to make a professed bear want to hurl.

Housing market may be on rebound at last
New data show price declines easing in big cities, sales of new homes improving nationally and foreclosures in California dropping to levels not seen since 2007.

Foreclosed home

A foreclosed home in Richmond, Calif., in April 2011. Banks still retain many foreclosed properties on their books. (Justin Sullivan, Getty Images / April 6, 2011)

By Alejandro Lazo, Los Angeles Times

April 25, 2012

The housing market’s long, cold winter may finally be heading into a springtime thaw.

New data show price declines easing in big cities, sales of new homes improving nationally and foreclosures in California dropping to levels not seen since before the start of the credit crunch nearly five years ago.

The easing of foreclosures is seen as key by many economists, since the glut of these properties being sold at a discount has been a significant drag on home prices.

“The foreclosure market is turning into a drought, not a wave, and that has resulted in a lack of inventory,” said Sean O’Toole, chief executive of the firm ForeclosureRadar.com. “If it continues, it will likely mean that we’ve either seen a bottom — or have passed a bottom — in prices because of limited supply and still strong demand.”

Home prices remain depressed from their peak in 2007, when the median-priced home in Southern California sold for $505,000. The median price last month was $280,000.

The economy overall has been improving, however, with unemployment, retail sales, corporate profits and other measures showing steady if unspectacular gains. Housing has been one of the last holdouts, but analysts note that prices have stabilized and sales volume has been gaining.

“What are important are sales and inventory, and those are pointing in the right direction,” said Christopher Thornberg, a principal at Beacon Economics who was one of the early callers of the housing crash. “I would say that by the end of the year, they should translate into better prices.”

Thornberg added, “The recovery is here.”
…

Even though layoffs are on the way at Wall Street investment banks, and New York State has a gazillion year supply of shadow inventory to work through, Realtors® assure us that the Manhattan and nearby housing markets have never looked better.

Morgan Brennan, Forbes Staff
I write about real estate markets, outrageous homes and cities.
4/24/2012 @ 10:35PM
How Wall Street Layoffs Will Affect The Housing Market

Investment banks including Goldman Sachs, JPMorgan Chase, Citigroup and Morgan Stanley may slash and burn dozens of jobs as soon as next month, as my colleague Halah Touryalai reports. And these positions may never be replaced. It’s the latest round of layoffs for Wall Street, which let thousands of workers, particularly traders, go in 2011.

Wall Streeters have already suffered some discouraging news this year, as cash bonuses for work done in 2011 were cut and capped. A February report estimated that Wall Street bonuses dropped 14% from 2010 to 2011. For staffers at firms like Bank of America and Citigroup, the cuts were as high as 30% and bonuses at Morgan Stanley were capped at $125,000.

All that cost-cutting has had repercussions that fan out past that eight-block swath of downtown Manhattan street where smocked traders scream in pits and analysts calculate risk. In years past, Wall Street has always affected Main Street. Literally.

“The finance sector plays a very large role in New York City and as a result of that, those people play an overall role in the residential real estate market,” explains Gary Malin, president of Citi Habitats, a New York City-based realty firm.

On a grand scale, we saw all too painfully how intertwined Wall Street and real estate were as the housing bubble deflated and the global economy plunged into a recession in early 2009. Locally, Wall Street residential enclaves like the Financial District and New Jersey’s Hoboken emptied out as finance folk packed their bags, newly out of work at companies where balance sheets were rapidly deteriorating and jobs disappearing. In the Tri-State area around the Big Apple residential projects stalled and homes fell into foreclosure.

Now less than four years later, as bonuses shrink and another spate of layoffs roll out, how will that affect the housing market? The answer, like all things in housing today, depends on location and a variety of factors.

In Manhattan, brokers remain positive about the housing market despite compensation woes on Wall Street. Malin, for example, explains that the market has become much more diversified since the days of Lehman Brothers and bankruptcy filings. Wall Street doesn’t represent the bulk of the buying base that it did a decade ago, he says. Foreign buyers have re-entered the market, clocking some of the priciest sales since the downturn, and burgeoning industries like tech have helped inject Manhattan’s residential market with income streams that aren’t tied to investment firms.

“We have been affected by Wall Street bonuses being lower, however, inventory is really low as well,” adds Jarrod Guy Randolph, a vice president at CORE Group. Randolph, who has represented developers’ new condo projects directly for the past decade, says the market has not only been recovering but booming, particularly for new higher-end apartments. He says these “premiere properties” have welcomed multiple bids, bids over asking price, even wait lists in recent months. “People still have to move…so it’s yet to be seen what the layoffs will do to the marketplace, if much.”

But while Manhattan agents remain confident in the city, the neighboring suburbs may be harder hit by labor pains felt on Wall Street. Take the so-called hedge fund capital of the world, Greenwich, Conn., where smaller bonuses are already affecting home sales this year.

“The recovering economy has given us a good real estate market if you are looking at houses under $2 million; but over $2 million, which is primarily the area of the market fueled by Wall Street bonuses, sales are significantly down,” says Mark Pruner, an agent with Prudential Connecticut Realty and author of the Greenwichstreets.com blog. He calculates that sales were up 39% for homes under $2 million and down 31% for pricier properties in the first quarter of 2012.

“What you are seeing is that people are getting smaller cash bonuses and being more conservative about spending them,” Pruner asserts. It has also meant that sales in the tony town often associated with Wall Street have been, like New York City, fueled increasingly by buyers hailing from other industries. He is seeing more advertising and consumer goods executives come to Greenwich — as well as foreign buyers. Pruner notes that 25% of his clients currently hail from Southeast Asia.

Other expensive ZIP codes where wealthy Wall Streeters have long taken up residence saw both sales and prices slip down last year. In February The Real Deal looked at home values in New York’s Nassau County and Westchester County, as well as New Jersey’s Bergen County and Connecticut’s Fairfield County. The real estate publication found that:

…The real estate markets in these wealthy tri-state area suburbs mostly softened in 2011 compared to 2010 in terms of prices and sales activity amid national and global economic turmoil.

Even so, realtors and economists believe these markets will continue to bottom and stabilize in 2012, even as bankers lose their jobs. Westchester County, for example, already welcomed a 28% increase in luxury home sales (priced $2 million or higher) in the first quarter, compared to the first three months of 2010, according to Houlihan Lawrence. The median sales price was down 10% and the majority of those sales remained under $5 million, a 5% decrease from last year.
…

We are all serial bottom callers now.

Except for me. I’m not going to even speculate on when a bottom will be reached until prices stop falling.

April 25, 2012, 12:02 a.m. EDT
Prices to bottom in these 19 markets in 2012
Significant price increases in Phoenix, Miami and Tampa: Zillow
By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Home prices in a majority of the markets covered in Zillow’s Home Value Forecast are set to bottom this year — if they haven’t already, according to a Zillow report released on Wednesday.

“From an economic perspective, the latter part of the first quarter is full of positive news as the spring selling season gets underway,” said Stan Humphries, Zillow’s chief economist, in a news release. “While it is unlikely that national home values continue to rise at this rate through the rest of the spring and summer, it is undeniable that we are seeing sparks of life in the housing market.”

Nineteen out of 30 markets in Zillow’s monthly report are expected to hit a bottom, in terms of home prices, at some point in 2012, according to the real-estate website.
…