Home Prices to Fall 29% in 2009 – National Association of Home Builders
At building industry trade show in Las Vegas, David Crowe of the National Association of Home Builders said: "We have consumer confidence at or near a historic low, and it will probably deteriorate in 2009. The nation has an excess "overhang" of 6.2 million homes for sale, about 1.5 million too many." Crowe said he expects prices to fall another 29 percent this year and new home sales to decline 14 percent.
Also, Mr. Sullivan, chief economist of the Portland Cement Association said: "I see another full two years almost before a significant gain." Mr. Sullivan was one of the first industry economists to predict the current downturn. San Diego Realtors
San Diego Real Estate … Will Low Interest Rates Help?
Will historically low interest rates be the key to turning around or putting a bottom in place for the San Diego housing bust?
Mortgage rates are near their lowest levels in nearly 40 years. Plus, the government wants to offer new borrowers a 4.5% mortgage rate as an incentive.
Ivy Zelman, chief executive of housing-research firm Zelman & Associates, estimates that nationally, even with such a low rate, only about 67% of U.S. households can afford a house. Homeownership was nearly 68% in the third quarter, according to the Census Bureau, implying there is virtually no untapped demand for homes.
San Diego Real Estate Bust of 1945?
This is a must watch video, with a lot of solid points.
This real estate bust is NOT fair! Already the California legislature is considering a four month moratorium on foreclosures. In July, a new California law requiring lenders to try a number of times to contact homeowners prior to filing a notice of default has delayed the foreclosure process by 30 days. Plus, Obama is said to be in favor of a 90 nationwide foreclosure moratorium. With the average mortgage payments in San Diego running about $2,000 a month, who is paying for these moratoriums? Just one guess! To help, consider that the Government owns or will be buying these bad loans.
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Why not just cut to the chase, and give the poor, misguided, troubled homeowners the homes for free? After all, the Constitution guarantees happiness, which in these days can be construed only to mean a big house, new cars, and lots of cash for lavish vacations. The poor want nice stuff as much as the rich, and they should have it. The rich guys shouldn't be the only ones who have convertibles and summer homes. Everyone should have those things.
Why should troubled homeowners have to leave their homes and go back to renting? Why wasn't the government watching out for them? It is just because no one watched out for them that they are now in trouble. If the bank was willing to loan all that money, why should the borrower bear any responsibility? Why are only a few people allowed to have what everyone wants? It isn't fair that only those with money are allowed to have a nice life when everyone wants to have a big house and new cars.
San Diego troubled homeowners should hang on; the Obama administration will turn this mess around. It looks like a 90 day nationwide foreclosure moratorium is assured. That should be followed about 60 days later, with another 90 day moratorium extension. Plus, if this plays out right, California should have its 120 day moratorium in effect by then. To be fair, I would assume the California moratorium will be in addition to the Federal moratorium. Those projected foreclosure moratoriums will run to about November 2009. Naturally, the government would not want to spoil the holiday period, so, somehow the foreclosures will again be postponed until 2010!
I’m just kidding with the above scenarios. We all know the San Diego real estate market is really on the verge of an historic ‘V’ shaped market bottom. In San Diego, by mid-2009, most real estate values will be appreciating by double digits! It certainly feels good to go into a fantasy world when talking about the San Diego real estate bust!
Related San Diego real estate bust posts:
Home Mortgages – One in Ten Behind in Payments
Will The Government Bailouts Really Help?
Greenspan … Wrong On Regulation
#1 EZ Fix to The U.S. Housing Market
Emergency Rescue Package – The Devil’s in The Details
New Relief Program For Homeowners at Risk of Foreclosure
Effective December 15, Fannie Mae and Freddie Mac the government-controlled mortgage underwriters, are sponsoring various relief plans for homeowners at risk of foreclosure.
Fannie and Freddie hold almost 60 percent of all U.S. mortgages. With this kind of reach, the new programs should have a real impact. Government officials said the program said it wasn't likely to stem the housing downturn on its own, but said it could help hundreds of thousands of homeowners. Plus, banks will receive an $800 fee for every loan that is reworked.
Like most homeowner relief plans, there are requirements that borrowers must meet to qualify:
- Be at least three months behind on their mortgage payments
- Owe the bank at least 90 percent of what the home is worth
- Live in the home as a primary residence
- Not be in bankruptcy
- Be able to prove that they're not just trying to skip out on the loan
- Loan must have been written before Jan. 1, 2008
- Loan must be held by Fannie or Freddie, or investors agreeing to participate.
Lenders will adjust interest and the length of the mortgage — extending them up to 40 years — and even principal to bring payments within 38% of the household gross income of the homeowner. The principal will still be owed, but it won't accrue interest.
Cramer Calls the Bottom in Real Estate Market
A Record Number of Homeowners Avoid Foreclosure in the Second Quarter
Summary of the “Housing and Economic Recovery Act of 2008
President Bush Signs Historic Housing Bill
Second Home Foreclosure Tax Penalty
Goverment’s FHASecure Refinances 200,000th Mortgage
183,000 Homeowners Get Help To Stay In Their Homes
Real Estate Subprime Mortgage Five-Year ARM Freeze Announced
Subprime Loan Perspective – Interview with Former Golden West Financial CEO
Another view on the subprine home loan mess from an industry insider. This is a serious interview with the former head of Golden West (i.e World Savings) that was bought by Wachovia in 2006:
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Prior related posts:
Jumbo Financing and the Impact on The San Diego Real Estate Market
Home Builders Pushed 100% Loans to Move Properties
Housing Values Will Cause Hundreds of Banks Will Fail
Summary of the “Housing and Economic Recovery Act of 2008
President Bush Signs Historic Housing Bill
San Diego City Attorney Wants City To Be Foreclosure Sanctuary
Reworked Subprime Loans … 40% End Up Defaulting
Fed Approves New Rules For Mortgage Loans … Too Little Too Late
Housing Slump Will Go Continue at least To 2009
Nation’s Mortgage Lender Records Loss of $2.2 BILLION +$1.1 BILLION Charge Off
Govt. Bailout Profit?
A number of top government officials are implying that there is a possibility for the government to profit from the huge bailout. Do you really believe this?
Personally, I wonder if these same officials were saying how strong the economy was up to two weeks before everything hit the fan.
From a 2000 World Bank report entitled "Controlling the Fiscal Costs of Banking Crises," fiscal costs are systematically associated with a set of crisis management strategies. Our empirical findings reveal that unlimited deposit guarantees, open-ended liquidity support, repeated recapitalization, debtor bail-outs and regulatory forbearance, add significantly and sizeably to costs.
Do you recall the S&L crises of the 1980's? This crisis destroyed some 1,400 institutions and took another 1,300 banks with it between 1984-1991. Direct cost to the U.S. taxpayer? Some $180 billion, or three percent of annual economic output.
What about other bank bailouts: Norway's bank crisis of 1987 cost the government 8% of GDP, the Finnish bank crisis of 1991 cost 11% of GDP, and Japan's bank crisis from 1992 onwards cost a whopping 20% of GDP.
Some prior posts on the government bailout: