Economics Topics

One key question looms as the country digests the events of the last several days: will the crisis wipe out a nascent housing-market stabilization?

Signs of slowing declines in home prices and bottoming home sales have gingerly emerged in recent months. Adding to the glimmer of hope, a report ...

Economists and others weigh in on the larger-than-expected drop in housing starts.

A bit of good news on the real estate front would be ideal right about now. Alas, today's update on the housing market are once more disappointing.

Housing starts for August posted another hefty decline, the Census Bureau reports. The 6.2% drop in annualized starts last month vs. July isn't ...

Robert Shiller of Yale University talks with EconTalk host Russ Roberts about the current housing mess and related financial market problems. Shiller argues that the decade-long run up in housing prices was a bubble where speculative fervor outweighed any economic fundamentals. He also discusses ...

U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said.

Owners of 303,879 properties, or ...

Wellesley College economist Karl Case, the “Case” in the widely followed S&P/Case-Shiller index of U.S. housing prices, thinks that the housing market may be near a bottom. If he’s right, financial firms may be able to breathe a sigh of relief.

At its most recent reading for June, the Case-Shiller ...

Dean Baker is right that the failure of Fannie and Freddie was due to the incentives that being private corporations gave them to take excess risk.

In the future, Fannie and Freddie can best serve their role of providing the stable anchor of the secondary mortgage market by ...

File under "strange bedfellows": over the weekend, both the Observer of London and Jim Cramer published desperate calls for the government to intervene to prop up the housing market.

The Observer's is the one with the weakest logic:

The financial system today has no spare capacity with which ...

Even though data Friday from the Mortgage Bankers Association indicated that U.S. foreclosures hit a record in the second quarter, that won’t necessarily translate into big declines in home prices.

A roundup of economic news from around the Web.

"People think that there is a strong historical uptrend [in home prices]. In fact, there is not. If you correct for inflation home prices in 1990 where the same as in 1890. That reflects the fundamental fact that housing is a manufactured good. It depreciates, by the ...

Fitch Ratings on Tuesday released a wide-ranging look at option ARMs that paints a decidedly negative picture for the mortgage markets over the next 36 months. In fact, the picture is a downright scary one: the bottom ...

NPR’s Morning Edition today commented on the fact that the mortgage crisis may just be warming up:

There is growing concern that the home foreclosure crisis may worsen next year as lenders are hit by a new ...

Yesterday, after the latest data on housing prices were released, there were many analysts saying we might be nearing the bottom of the housing cycle. I have a guest post at The Big Picture on whether housing is anywhere near bottom.

The bottom line is:

Are we near the bottom? Is ...

The LAT's Richard Schmitt knows how to write a startling lede:

WASHINGTON -- Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, ...

I have proposed a programme of “mortgage replacement loans” that I believe would stop the downward spiral of house prices. The basic idea is to provide an ...

The S&P/Case-Shiller home-price index, a closely watched gauge of U.S. home prices, showed price declines continued in June, but some moderation occurred as nine regions showed month-over-month advances. No area experienced year-over-year price gains in June, the third straight month that has happened.

According to the indices, home prices in 10 ...

The National Association of Realtors reported Monday that existing-home sales climbed in July, rising more than expected, but inventories expanded and prices kept dropping. The median home price was $212,400 in July, down 7.1% from a year earlier. Below, economists’ reads on the data, and what they mean for ...

I am otherwise jammed up, so I didn't get a chance to take apart the Housing Starts data -- but damn! if these two charts (via Merrill's David Rosenberg) don't tell the entire story:

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We’ve come a long way...� �

Mortgage rates fell last week, and yet that didn’t inspire more borrowers to apply for a mortgage, according to the Mortgage Bankers Association’s latest survey, released on Wednesday.

Application volume fell a seasonally adjusted 1.5% for the week ended Aug. 15, compared with the previous week. Volume was down 34.2%, compared ...

U.K. house prices posted the biggest annual decline since at least 2002 as banks choked off mortgage lending, deepening London's property slump, Rightmove Plc said.

The average asking price for a home fell 4.8 percent ...

House prices are finally falling in London:

Asking prices in London fell 5.3% in August, according to the Rightmove house price survey - equivalent to a £21,000 drop in a single month. Prices in some of the most sought-after suburbs are falling much lower. The average asking price ...

He did offer one suggestion: "The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said. The only sustainable way to increase demand for vacant houses is to spur the formation of new households. ...

Is housing near the bottom of the cycle?:

Home economics, The Economist: The American housing market has deteriorated so sharply in the past two years that it is easy to fall prey to profound pessimism. Recent weeks have brought yet more bad news. ...

Amid the despondency, however, supply and demand ...

It was hard to get people to take the housing bubble seriously in 2002, 2003, 2004, and 2005, but in 2008, even Alan Greenspan is able to see it. So, how can the NYT print a lengthy piece on the explosion of home equity loans without mentioning the role ...

U.S. Treasury Secretary Henry Paulson said in an interview broadcast Sunday on NBC’s “Meet the Press” that there are no plans to insert any federal funds into government-sponsored mortgage providers Freddie Mac and Fannie Mae.

Paulson was responding to a question on what the Bush administration would do to ...

John Hempton is doing an admirable job teasing out the dynamics of the US mortgage market, and asking whether the losses we're currently seeing are due to fraud or to broader economic stress. If it's mainly fraud, he says, that good news: the defaults come quickly, and then they're ...

Today the New York Times is reporting that we’ve only just seen the beginning of mortgage troubles. No sooner than you wrapped your mind around the subprime fiasco, enter the prime mortgage defaults. Time for the rest of us ...

No Collapse: Charles W. Calomiris, Stanley D. Longhofer and William Miles write in today’s Washington Post: “We conclude that declines in house prices are highly likely to remain small. Our analysis reveals, unsurprisingly, that foreclosures and home prices have negative effects on each other over time, but this does ...

The NYT reports that the delinquency rate on prime mortgages is rising. This is almost as predictable as the fact that the days get shorter after the summer solstice.

There are more ten million homeowners, most of them with prime mortgages, who now owe more than the value of ...

The Pfluegers are a bit lonely. Just one other family lives in any of the 28 new or unfinished houses on Foxboro Court. Up the street, a sign announcing "Elegant Homes" sits on a lot ...

Pressure to raise servicer spreads may have just gotten a little more intense on ...

The reason for asking is that the Washington Post is reporting that Greenspan believes the housing market is nowhere near the bottom. While I strongly agree with this assessment, it is worth pointing out to readers that Greenspan spent his tenure as Fed Chairman avidly denying the existence of ...

Home sales increased 17.5 percent in June in California compared with the same period a year ago, while the median price of an existing home fell 37.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Moderation in the monthly declines in home prices as measured by the S&P/Case-Shiller indices is being greeted by some as an indication that some stabilization may be returning to the market, but housing isn’t likely out of the woods just yet.

The S&P/Case-Shiller numbers ...

Wow, those house prices are looking dreadful, aren't they. Check out the headline on the front page of nytimes.com: "Home Price Index Down 15.8% in May" is the story. And the official press release from Case-Shiller is also very alarming: "Record Low Annual Declines Recorded in May 2008 ...

Bond fund manager Bill Gross of the giant fund family PIMCO writes in his recent commentary

Make no mistake, the current conundrum that must be solved is: how to make the price of 120 million U.S. barns stop going down in price and then to make them go up again. ...

More fallout from the McCain tax policy bait and switch...

Wonk Room » Holtz-Eakin On $2.8 Trillion Gap: Just Because McCain 'Said Things In Town Halls...Doesn't Mean It's Official'

McCain adviser Douglas Holtz-Eakin responded yesterday to a recent report by the Tax Policy Center, which found a $2.8 trillion gap between ...

William Poole and Larry Summers discuss whether a bailout of Fannie and Freddie is needed, and what to do with Fannie and Freddie in the future. Both agree action is needed to resolve the current crisis. Poole:

To permit the two mortgage giants to default would set off a worldwide crisis.

Summers:

Anyone ...

Sorry for the repetition, but everyone should know that the Congressional Budget Office (CBO) projects that the new housing bill will only allow 260,000 homeowners to keep their home, not the 400,000 figure repeatedly cited in the media. CBO projects that 400,000 homeowners will enter the program, but ...

Edward Glaeser, Joseph Gyourko, and Albert Saiz construct a model of housing bubbles that is consistent with movements in housing prices and quantities during the two most recent housing bubbles (the current episode and the prior episode in the 1980s). Looking at the data, they note that areas with inelastic ...

Joseph Stiglitz says just say no to free lunches:

Fannie’s and Freddie’s free lunch, by Joseph Stiglitz, Commentary, Financial Times: ...The US government is about to embark on ... a partnership, in which the private sector takes the profits and the public sector bears the risk. The proposed bail-out ...

Economists and others weigh in on the larger-than-expected decline in existing-home sales for June.

This is not a grand philosophical question. Rather, it is a concrete question about how the media should talk about the housing bill.

It is standard practice to report that the bill will aid 400,000 homeowners facing foreclosure, based on the Congressional Budget Office's (CBO) estimate. However, CBO estimates that ...

In the last few weeks, several courts have issued opinions ruling that mortgage servicers' actions have harmed consumers. Some of you follow this issue closely, but if you need an introduction, I've previously posted a bit on the basics of mortgage servicing and why it's an important component of ...

Treasury Secretary Henry Paulson, aiming to create a new source of U.S. mortgage financing, wants banks to start issuing covered bonds without waiting for legislation from Congress.

Paulson is promoting the debt as an alternative to mortgage-backed bonds, ...

The role of subprime lenders in inflating the housing bubble, then bringing down the whole economy has received plenty of headlines.� But there has been little attention paid to the role of credit card lending and BAPCPA in the current home foreclosure crisis.�

A new academic paper, Bankruptcy Reform ...

Some thoughts about the role played by the GSEs in the run-up in mortgage debt and house prices.

Treasury Secretary Henry Paulson is asking lawmakers for unprecedented power in his plan to address the current crisis over Fannie Mae and Freddie Mac. And lawmakers, even if they may approve the proposal, don’t appear to be thrilled about handing over unlimited authority.

Fed Chairman Ben Bernanke may never be allowed to forget his onetime expectation about how the subprime housing mess would affect the broader economy.

Sen. Robert Menendez (D., N.J.), asking about the housing crisis during a Senate hearing ...

A government bailout of the GSEs should not be a surprise.� �After all, for a long time the markets have been predicting that sooner or later there will be a very expensive bailout.� What do I mean?� According to Freddie Mac (quoting the OMB)� "mortgage rates � are 25 – ...

Treasury Secretary Henry Paulson, after spending a weekend talking with top Federal Reserve officials, sent them a letter today putting their agreement on the record.

Mr. Paulson is seeking congressional approval for his three-part plan to shore up Fannie Mae and Freddie Mac with higher lines of credit ...

The irony of the "subprime" situation, it seems to me, is that we probably all would have been better off if the GSEs had gotten into it in a big way. If the GSEs had been able to create a market in "vanilla" subprime--fixed rates, no prepayment penalties, careful ...

First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the ...

The heck of it is that any option would be devastating to the already-suffering housing market. The reason this sector was so wildly inflated is that banks knew that Fannie and Freddie were capable of buying any mortgage debt created by the banking industry. Now, ...

Paul Krugman says Fannie and Freddie won't bring down the economy and are not responsible for the problems they are experiencing, but that doesn't mean they don't have problems such as under-capitalization:

Fannie, Freddie and You, by Paul Krugman, Commentary, NY Times: And now we’ve reached the next stage of ...

The latest turn in the Federal Reserve’s efforts to prevent a deeper economic crisis came with its vote Sunday to authorize direct lending to Fannie Mae and Freddie Mac. The central bank invoked powers established by Congress during the Great Depression to lend to individuals and companies, using a different ...

I see much to like about this.

It is becoming clear that the US is indeed facing its most serious economic crisis since 1932.  Last week it was the vast government-sponsored but publicly-owned pools of mortgage liquidity known as Fannie Mae and Freddie Mac that felt the ...

Hank Paulson is a tough guy. He's no pushover: just look at that phone call to Jamie Dimon, telling him that anything over $2 a share was altogether far too much money to pay for Bear Stearns. So what are we to make of his statement regarding Fannie Mae ...

John Jansen at Across the Curve:

More on the GSEs, by John Jansen: The financial press is replete with stories about meetings in Washington regarding the status of FNMA and Freddie Mac. The gist of the reporting is that the various parties to the conversations are busy discussing various funding ...

U.S. Treasury Secretary Henry Paulson signaled that a government takeover of Fannie Mae and Freddie Mac won't be necessary, saying they should continue as shareholder-owned companies with federal charters.

"Today our primary focus is ...

Today was the "oh shit" moment in the mortgage crisis. (Hey, this isn't a family-oriented blog...) Fannie Mae and Freddie Mac's shares crashed because of fears that they are overleveraged and even balance sheet insolvent on a mark-to-market basis. And the FDIC shut down IndyMac, the ...

John Berry has a relatively optimistic outlook:

Worst of Housing Crisis Is Behind Us -- Really, by John M. Berry, Commentary, Bloomberg: The intense pain caused by the bursting of the housing bubble is beginning to ease. Really.

That may be hard to believe, given the rapid increase in mortgage ...

Someone needs to tell that to the NYT. The NYT has an article on the current problems in the United Kingdom's economy in which it fails the connect the current problems with the housing bubble that laid its basis. At one point the article refers to the "the remarkable ...

U.K. default rates and related losses on mortgage lending rose more than expected in the second quarter and are expected to increase further in the next three months, the Bank of England said Thursday.

In its quarterly credit conditions survey, the bank also said that demand for secured lending ...

I suppose the NYT editorial writers don't read their editorials, or if they do, they have a hard time remembering them. How else can we explain the fact that such ardent opponents of farm price support programs are ardent supporters of a house price support program.

The arguments about how ...

The Washington Post still does not have a clue about the housing bubble. It continues to focus on the resetting of adjustable rate mortgages as the basis of the foreclosure crisis.

This is wrong. The basis of the foreclosure crisis is that people purchased over-valued homes at bubble-inflated prices. ...

HOME lending growth has suffered its biggest decline since the 1991 recession while inflation continues to soar, confronting the Reserve Bank with the dilemma of a slowing economy ...

The article in today's paper on the continuing collapse of the housing market never mentions the bubble. It is impossible to make any sense of the flood of foreclosures and the price declines without noting the bubble. In some metropolitan areas, like Atlanta, Cleveland, and Detroit, there is ...

As noted by Calculated Risk, global warming or no, the spring selling season for new homes never seemed to arrive this year.

Economists and others weigh in on the 2% increase in existing home sales amid declines in inventories and the median price.

Sales have now been on net about unchanged and have shown little month-to-month volatility over the past six months, further indicating that ...

Mortgages Ltd. filed for Chapter 11 bankruptcy Monday night, under pressure from a borrower that earlier had filed a petition seeking to liquidate the lender's assets.

The move by the Phoenix-based commercial real-estate lender comes three days after ...

The index shows show annual declines in the prices of existing single family homes across the United States continued to worsen in April 2008, with all 20 MSAs now posting annual declines, 13 of which are posting record low ...

The continuing mortgage crisis is now making itself felt in the private mortgage industry. Fannie Mae and Freddie Mac recently announced they would cease purchasing mortgages insured by Triad Guaranty, the smallest of the seven private mortgage insurers that make up most of the market. That ...

Economists and others weigh in on the declines in home prices recorded in both the S&P/Case-Shiller and Ofheo indexes.

Nick Timiraos has an important front-page WSJ article today on the reappearance of no-money-down mortgages. At 1,500 words, it's far too long - Robert Thomson clearly has a ways yet to go before he achieves the Murdoch dream of short and punchy articles. But if I were a ...

More thoughts on the home ownership versus renting question:

No time to blog, but hey, it's homeownership!, by Richard Serlin: With regard to Mark Thoma's June 23rd post, "Paul Krugman: Home Not-So-Sweet Home", there's really a lot I'd like to say, but I'll have to restrain myself. ... That said, some ...

From sister site MarketWatch.com: The housing slump, already shaping up to be the worst in a generation, still hasn’t run its full course, according to Harvard University’s annual report on housing.

And if job losses accelerate in coming months, it could take even longer for local ...

The NYT has a worthwhile article reporting on the sharp falloff in the homeownership rate in the last two years. It would have been useful if it has spoken to an economist who was not surprised by the crash of the housing bubble which led to this falloff.

One of ...

Martin Feldstein presents his plan to reduce mortgage loan defaults (previous):

A Home Price Firewall, by Martin Feldstein, Commentary, Washington Post: Home prices are down 20 percent from their peak in 2006 and are falling rapidly... Experts predict an additional 15 percent decline during the coming year...

The danger is ...

Wachovia Corp., which ousted its top executive after estimating it may lose more than $4.5 billion on adjustable-rate home loans, will start calling would-be borrowers to explain the risks of such mortgages.

Home building may not have found its bottom yet.

The Census Bureau this morning said housing starts fell 3.3% in May to a seasonally adjusted annual rate of 975,000 units. That’s the lowest level since March 1991, when the housing market was crawling its way out of an epic, five-year ...

A commenter named "Unsympathetic" makes a good point in my blog entry on Berkeley vs Oakland house prices. Yes, median Berkeley house prices are rising. But it's entirely possible for that to happen even if every single house in Berkeley is falling in value.

Berkeley, like any city, is made ...

The median home sale price in six Southern California counties was $370,000, down from $505,000 a year earlier, according to DataQuick Information Systems. DataQuick said that was the biggest annual decline it has recorded since it began tracking prices in 1988 ..

Given the column inches that the NYT has devoted to harshly denouncing the country's farm price support programs is is striking that it can be so strongly supportive of house price support programs. I would go back and quote their condescending comments among the economic illiterates who support farm ...

RealtyTrac, which assembles foreclosure data on a state and national basis, notes that one in every 483 U.S. households received a foreclosure filing during the month of May. This is the highest monthly foreclosure rate since they began tracking foreclosures in January 2005.

Here's the breakdown:

??? Lenders ...

Up until now, Robert Shiller has been spectacularly unsuccessful in (a) finding ways for investors to short the housing market, and (b) designing ETFs. So, naturally, he's now trying to do both at once!

Matthew Hougan explains the idea - as is usual for Shiller, it all ...

Reminiscent of a juvenile accepting a dare to do something stupid, the chairman of the Senate Banking Committee, Senator Christopher Dodd, crowed to reporters the other day that committee members had done what many thought would be impossible: the committee agreed to legislation that would rescue homeowners ...

Well, if the comments are any indication, Tuesday's post--where I discussed articles about problems with home equity lenders pulling their lines and errors in bond ratings--seems to have a struck a nerve.� Rather than reply to each, I will reply to all in a general way.

First, a number of ...

There are many things wrong with the mortgage market including "stated" income loans: ...

It was a madhouse in City Hall courtroom 676 yesterday.

There began day one of a court pilot program to help financially troubled homeowners avoid foreclosure by talking - talking directly to the lawyers who represent ...

The number of houses changing hands has "collapsed" to the lowest level in 30 years, an influential housing market survey shows today. Its report also says that gazundering, the controversial practice of buyers dropping their offer ...

The Post has a good article today reporting on how HUD encouraged Fannie Mae and Freddie Mac to buy up mortgage backed securities that were comprised largely of subprime loans. However, the article never mentioned that the primary problem was not the nature of the loans, but the fact ...

The Wall Street Journal reports that the sheriff of Philadelphia (no doubt an elected official) has refused to carry out foreclosures. If I lived there now in a mortgaged house, I'd quit paying right away. In fact, I wonder if one could acquire a mortgaged building there now, ...

The National Association of Realtors‘ index for pending sales of previously owned homes rose to 88.2 in April, up 6.3% from March, the industry group said Monday. The gauge is now at its highest level in six months, given a lift by bargain hunters. The data could signal that ...

According to the Mortgage Bankers Association's Delinquency Survey, 2.47% of 1-4 family residential mortgages are in foreclosure and 6.35% are delinquent. And Credit Suisse's prediction of 6.5 million foreclosures by 2012 still looms. Scary numbers.

This morning both Toll Brothers (TOL) and Pulte Homes (PHM) are presenting ...

"We've always said we were a home builder and not a land speculator. We probably got a little bit off our basics because we were being a little greedy."
Larry Seay, COO, Meritage Homes, June 1, 2008

There are 129 million housing units in the United States, comprising owner-occupied, ...

As a percent of all listed homes for sale, distressed properties were 38.7% of the market last week vs. 36.7% two weeks earlier ...

Lenders and investors in mortgages owned about 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic ... The April total works out to about one in seven previously occupied ...

- Encourage banks to use "covered bonds" to fund – and hold onto – the fixed-rate mortgages they ...

We tend to view credit card debt and mortgage debt in isolation, but its important to remember that the two are highly fungible. This means that when consumers leveraged up with mortgage debt in recent years, the were partially deleveraging their card debt. This means that but for ...

Cancellations: Of course, none of the new home sales data includes ...

Bring on the Alt-A downgrades: Standard & Poor’s Rating Services said Wednesday evening that it had slashed the ratings of 1,326 Alt-A residential mortgage-backed securities, after recent data is proving performance of Alt-A loans originated in ...

The downgrades affect an $33.95 billion in issuance value and affect Alt-A loan pools securitized in the first half of 2007 — roughly 14 percent of S&P’s entire Alt-A universe in ...

Standard & Poor's lowered its ratings on $34 billion of securities backed by Alternative-A mortgages, the firm's largest downgrade for the type of debt ...

Ratings on 1,326 classes of the ...

The Construction Industry Research Board reports ... that the estimated value of permits for non-residential construction fell nearly 40% this year so far from the same period in 2007. Permit values fell to just under $527 ...

People have posted some comments to the funky mortgage story and I wondered if anyone had any experience using the doctrine of unconscionability to help ward off foreclosure and keep people in their homes.

The Washington Post told us "new-home sales up 3.3 percent" in a headline to an article on the release of April data on new home sales. The article itself pointed out that the April figure was only up measured against a downwardly revised March sales number and that sales ...

It's not that people don't want homes, it's that they can't buy them under the stricter lending standards. . . .

Lenders are turning the clock back to 1975, requiring ...

The case for renting has been simple enough. House prices rose so high in the first half of this decade that you could often get more for your money by ...

While the housing market downturn has its downsides, one of the benefits is watching organizations like the National Association of Realtors try to talk out of both sides of its mouth. Here's what the organization said earlier this month regarding the need for the housing market to be given ...

I often have occasion to comment on the failure of the media to report on the housing bubble and the risks that it posed to the economy and to families’ personal finances. I have made the same complaint about reporting on the stock bubble. There were few stories in any ...

Tracy Warren is not surprised by the foreclosure crisis. She saw the roots of it firsthand every day. She worked for a quality control contractor ...

More outstanding analysis from Calculated Risk.

Foreclosure filings in 10 towns and cities within 10 miles of military facilities, including Norfolk, Virginia, home of the Navy's largest base, rose by an average 217 percent from January through April from a year earlier. Nationally, the rate was 59 percent in the same period, according to ...

Economists and others weigh in on the latest data from the Case-Shiller house price indices, which showed a drop in prices, and new-home-sales data, which showed an increase in sales and a jump in new-home prices.

The S&P/Case-Shiller home-price index, a closely watched gauge of U.S. home prices, didn’t disappoint doomsayers in its broad first-quarter release this morning. (See PDF.) Home prices tumbled 14% from a year earlier, according to the national indexes, representing the largest drop in the 20-year history of the indexes. ...

UBS, in the prospectus for its 16 billion-franc rights offer, said the bank's losses on non-U.S. residential and commercial real-estate securities ``could increase in the future.''
...
``UBS will have to fight against negative news flow for at least ...

"If [the ...

Economists and others weigh in on the decline in existing-home sales and prices, while inventories surged.

The U.S. housing market weakened further in April, with a flood of homes coming on the market even as sales and prices declined, the National Association ...

Delinquencies in U.S. subprime debt and higher-quality mortgages known as Alt-A securities are continuing to increase, Standard & Poor's said on Thursday.

Delinquencies for Alt-A mortgages rated between 2005 and 2007 are climbing, with total delinquencies rising as high ...

Standard & Poor's cut or threatened to cut the ratings on almost $6 billion of securities backed by prime ``jumbo'' mortgages ...

Ratings on 125 classes of [prime-jumbo] bonds created in the first half of ...

Delinquencies for Alt-A mortgages rated between 2005 and 2007 are climbing, with total delinquencies rising as high as 17 percent in some cases, more than 6 percentage points higher than previous estimates, the ratings agency said in a report.

Lower-quality ...

No matter what housing gauge you look at, the first quarter was negative for home prices.

The Office of Federal Housing Enterprise Oversight reported this morning that U.S. home prices fell a seasonally adjusted 1.7% in the first three months of 2008 — its largest quarterly price decline ...

U.S. home prices fell in the first quarter of 2008 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.7 percent lower on a seasonally-adjusted basis in the first ...

It is popular to assume the increases in the bankruptcy filing rate are tied to the home mortgage foreclosure crisis here in the United States. Is that really the case? ...

But what concerns [housing advocate Maeve Elise] Brown even more was the way World ...

In April last year, the New York Observer declared the GM Building to be "the most valuable building in the world," and quoted Scott Latham of Cushman & Wakefield as saying it was worth more than $4 billion.

Today, the WSJ reports the GM Building is likely to be sold ...

Bay Area home sales edged up from a seven-month run of record lows last month, indicating that mortgage availability is improving and that an increasing number of fence sitters have decided they like today's lower prices, a real estate ...

The two top members of the U.S. Senate Banking Committee announced on Monday that they have a deal that will create a multi-billion dollar mortgage rescue fund and a new regulator for Fannie Mae and Freddie Mac.

This month more than 2,600 houses were on the market at less than $120,000 -- a 608 percent increase over the same period in 2005, according to the Minneapolis Area Association of Realtors. The inventory for all price ranges ...

"On the commercial side, best I can tell the problems are in all of it - offices, retail, hotels. I think we will see a prolonged decline."
Kermit Baker, chief economist for the American Institute of Architects, CNNMoney May 17, 2008

The consumer protection issue has been thrust into public attention by the housing debacle because many families have had lenders foreclose on their homes, while other home owners are in serious arrears on their mortgage payments. Ye neither consumer ignorance nor cognitive defects in consumer decision-making had much to do ...

Robert Shiller explains why the president should sign the mortgage relief bill:

The Scars of Losing a Home, by Robert Shiller, Economic View, NY Times: Across the United States, there were 243,353 foreclosure filings in April alone, nearly three times the total in the same month just ...

[W]e have some significant challenges ahead of us. And while some credit markets may be stabilizing, families, communities, and the economy continue to suffer.

Frankly, things may get ...

"In general, most markets are pretty tough. We're still seeing pricing pressure out there and I think for the foreseeable future we're still going to see it."
Beazer Homes CEO Ian McCarthy on conference call, May 16, 2008

"I don't think we're ...

Michael R. Crittenden reports on the housing market.

Federal policy makers need to “come to grips” with the reality of the housing market and embrace broader, more aggressive proposals to prevent the growing number of foreclosures, a top banking regulator said Friday.

“Frankly, things may get worse before they get better. As ...

Economists and others weigh in on the unexpected 8.2% increase in housing starts last month.

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 978,000. This is 4.9 percent above the revised March rate of 932,000, but is 34.3 percent below ...

"[T]he message is very clear: The single-family housing market is still deteriorating..."
NAHB President Sandy Dunn

"[T]he housing market has shown no evidence of improvement thus far. In fact, conditions have continued to deteriorate in recent times...”
NAHB Chief Economist David Seiders

U.S. home builder confidence retreated in May, another negative sign for the feeble U.S. economy.

The National Association of Home Builders, releasing results Thursday of a monthly survey of builders’ thoughts on market prospects, said its latest index for sales of new, single-family homes dipped to 19 from ...

U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as mortgage industry efforts to modify loans fell short.

More than 243,300 properties were in some stage ...

Analyst: Quick question on your direction in terms of housing price declines and the impact on credit costs. Have you looked at the impact of rising LTV's have on the projected credit cost. In other words, if people get close to and then get under ...

The Senate Banking Committee plans to vote on legislation Thursday that would create a new regulator for ...

Last month, I participated in an event on mortgage and housing markets with Alan Blinder of Princeton and Zanny Minton Beddoes of The Economist magazine.  The event was co-hosted by the Woodrow Wilson School and The Economist, and video from it is now available here.

The April total of foreclosure sales at auction -- 22,838 for the state -- represents a jump of 44% over March totals and the highest level ever in California, ForeclosureRadar reports.
...
It appears ...

Richard Florida thinks the Hamptons property market is about to crash:

It's clear as a bell that the tremendous run-up in housing prices in places like the Hamptons, Miami, Naples, Florida, or other similar high-end vacation spots had little to do with demand. We're talking speculation pure and ...

Richard Florida thinks the Hamptons property market is about to crash:

It's clear as a bell that the tremendous run-up in housing prices in places like the Hamptons, Miami, Naples, Florida, or other similar high-end vacation spots had little to do with demand. We're talking speculation pure and ...

[BofA] expects losses to top 2.5 percent of its $118 billion in loans linked to home values ... The bank [last month] projected a loss rate of between 2 percent and 2.5 percent.

[BofA] ...

That would not have been an entirely fair characterization of Senator Dodd's housing bill, but neither is it entirely fair to describe the bill as an effort to "rescue homeowners at risk of foreclosure," as the Post does today.

The bill would allow banks to substantially reduce their losses ...

Democrats may be risking a backlash at the polls in November by pushing hard to use taxpayer money to rescue homeowners who can no longer afford their mortgages in the face of stiff resistance from President Bush and ...

Sentiment in the housing market in England and Wales deteriorated to its weakest level in more than 30 years in April as the global credit crisis weighed on demand and reduced the number of transactions, the Royal Institution of Chartered Surveyors said Tuesday.

The latest RICS housing market survey found ...

For less than the price of a decent used car, you can buy a home in Atlanta today. Actually, real estate agents list a dozen choices for $10,000 or less. Step up in price to $20,000 ...

In the first three months of this year, banks have launched preliminary foreclosure actions - known as lis pendens proceedings - against a record 120 borrowers in East Hampton and Southampton towns.
...
"This problem didn't even ...

The NYT took a strong position on its editorial page today demanding that President Bush join its effort to keep house prices unaffordable for tens of millions of families. That's right, the NYT wants housing to be unaffordable.

They didn't use this term, but they complained that house prices were ...

In Southern Spain, bitter expats talk about "Helldorado" - paradise that has mutated into a nightmare. Tumbling property prices, a glut of new properties still flooding onto the market and rising Spanish ...

... the southwest corner of Riverside County may be showing signs of ...

Even as the housing foreclosure crisis deepens, legislation to rescue homeowners and their lenders appears to be in significant political jeopardy.

The bill, which passed the House on Thursday, is quickly becoming ...

The argument in this piece is that over time, a series of "opportunistic" changes in the statistics describing the economy have led to a biased and overly rosy view of the health of our economic system. You can read it for yourself, there's a link to the article below along ...

The number of people who are losing their homes because they cannot meet rising mortgage bills is set to double this year, experts said yesterday.
...
The number of repossession orders granted in England and Wales in ...

Bankers and housing market analysts are warning of a chilling new trend in the mortgage world: Homeowners voluntarily defaulting on their ...

Millions of Americans are “upside down” on their mortgages — they owe more on their homes than their homes are worth. So far, however, there is little evidence that people who ...

In a 266-154 vote ... lawmakers approved a proposal ... to let the Federal Housing Administration (FHA) insure up to $300 billion in new loans over four years if lenders agree to reduce the mortgage principal.

To qualify, the lender would ...

More on the administration's opposition to the Democrat's plan to limit foreclosures and reduce the chances of a deep drawn out recession:

Keeping Families Above Water, by David Wessel, WSJ: The latest flash point in the debate over the nation's bursting housing bubble is this: Since ...

[The following chart] from Wellesley College Prof. Karl E. Case, one of the leading experts on the housing market in the country. And it suggests we may be at, or near, the bottom of the housing crash. ...

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March ...

"[I] just didn't realize the scope, the extent, the magnitude of the loose underwriting—not looking at incomes ...

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will ...

D.R. Horton's latest quarterly results included $834.1 million in pretax charges related to inventory impairments and land options it's walking away from.
...
Reflecting ongoing weakness in the residential market, D.R. Horton's net sales orders fell to 7,528 homes ...

Bernanke, in a speech in New York yesterday, also reiterated his call for lenders to forgive portions of mortgages for some struggling homeowners. He said proposals should be "tightly targeted" at borrowers at greatest ...

Traxis Partners MD Cyril Moulle-Berteaux argues the US housing downturn is all but over:

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), ...

In the April survey, domestic and foreign institutions reported having further tightened their lending standards and terms on a broad range of loan categories over the previous three months. The net fractions of domestic ...

Bank of America Corp is likely to renegotiate its deal to buy Countrywide Financial Corp down to the $0 to $2 level or completely walk away from it, said Friedman, Billings, Ramsey, [analyst Paul Miller] ...

Countrywide's loan ...

An economist, Professor Amir Sufi (University of Chicago), shifted our focus in the afternoon session from debtor, to lender, behavior. In discussing his paper, Lender Incentives, Credit Risk, and Securitization: Evidence from the Subprime Mortgage Crisis, Professor Sufi asks why lenders made such bad decisions when making subprime mortgages. He ...

The US housing market is quite clearly the single most relevant issue that will decide shape, depth, and length of the US economic downturn, and its spillover to the rest of the world – hence our continued interest in the subject. The best information source on the US housing ...

Eli Broad ... said he expects home prices to drop another 20 percent.

``I don't think we're anywhere near a bottom in housing,'' Broad told Bloomberg TV at the Milken Institute Conference in Beverly Hills, ...

Home sales decreased 24.5 percent compared with the same period a year ago, while the median price of an existing home fell 29 percent.

“Sales continue to be impacted by problems in the real estate finance ...

Robert Frank argues that as we decide who is responsible for the housing crisis, we shouldn't place too much blame on families who overextended themselves. They were, for the most part, trying to avoid sending their children to inferior schools:

Don't Blame All Borrowers, by Robert H. Frank, Commentary, Washington ...

It’s no secret the U.S. is undergoing a housing slump of historic proportions, as today’s new-home sales data reveal. Research by Goldman Sachs finds that in other housing busts throughout the OECD, “Not only did GDP growth typically fall sharply, but it stayed below trend for many years,” write economists ...

LIVONIA, Michigan (Reuters) - Realtors in many U.S. states say lenders are demanding excessively high prices before allowing distressed borrowers to offload their homes in "short sales," making the housing crisis worse.

In a short sale, a borrower dumps the home at below-market value and ...

Economists and others weigh in on the existing-home sales report, which showed a drop in resales and the median home price.

My buddy, Buce over at Underbelly, has a post up using the concept of option value to help explain why more people are not walking away from their underwater homes. By "underwater," we're not talking about Homer Simpson's imaginary home under the sea, but situations where the mortgage ...

Yale University economist Robert Shiller ... said there’s a good chance housing prices will fall further than the 30% drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15% ...

Bank of America said on Tuesday it plans to stop offering some riskier mortgage loans after it finishes buying Countrywide... the combined businesses will not offer "option" adjustable-rate mortgages ...

It also plans to "significantly curtail" other non-traditional mortgages, ...

Joan Shaffer is turning in the keys of the north Phoenix Tatum Ranch home she bought with her daughter in late 2005. They put nothing down on the home, took out a loan that let them ...

Here’s a lesson many Floridians have learned the hard way: All hurricanes have three parts—the front half, the eye and the back half. The eye is a deceiving ...

There was a post on IEB in December 2006, on whether there was a bubble in Indian real estate (Link), courtesy IEB reader Annamalai Veerapan.

16 months later, Annamalai is back with a follow up post on the real estate bubble. It is reproduced below in full –

__________________________________________
____________________

Who is owning ...

"Canada's six-year housing market boom is officially over," said Douglas Porter, deputy chief economist at BMO Capital Markets."

The Canadian Real Estate ...

Merrill will report $6 billion to $8 billion in new write-downs, according to a person familiar with the matter. The latest would bring its total since October to more than $30 billion ...

Riverside County, outside Los Angeles, may be the foreclosure capital of the country, with a rate close to six times the ...

A total of 12,808 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 18.8 percent from 10,777 the previous month but ...

DataQuick’s final count of Orange County home-buying activity last month shows the median selling price for all residences at $506,000 — the lowest since ...

The onset of spring did little to thaw Southern California's semi-frozen housing market: The seasonal boost in sales between February and March was less than half its normal level and a record low. The weak start to the ...

Several of the nation's major regional banks, from the Deep South through the Midwest, said on Tuesday that plummeting housing prices and other financial strains on borrowers are forcing large ...

U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes to lenders.

More than 234,000 properties were in ...

Well, not entirely. When it comes to housing, lower prices don’t inevitably cause sales to rise. Why? Because lower housing prices create the expectation of still lower prices later, causing buyers to wait for a better deal. Left alone, a weak market ...

The vacancy rate at U.S. strip malls rose to the highest level since 1996 in ...

``Given WaMu's disproportionate exposure to states'' where home prices are forecast to decline, Goldman expects losses between $17 billion and $23 billion, the analysts wrote. Washington Mutual may have a $14 billion provision charge in 2008 ...

Mortgage Guaranty Insurance Corp., for example, changed its ...

This morning, CBO released a new study on policy options for the housing and mortgage markets. The paper discusses the potential for federal intervention to ameliorate the situation, by encouraging and removing impediments to private mortgage restructuring or by providing federal financial support. (It does not, however, ...

Barbosa says she was ...

... finally, tighter credit and overstretched household budgets are pulling prices down.

A collective shudder ran down the spines of British homeowners on Tuesday April 8th when Halifax, a part of HBOS and the country’s biggest mortgage lender, revealed that house prices ...

Henry J. Pulizzi reports from the White House.

The expansion of the Bush administration’s FHASecure program announced Wednesday isn’t a cure-all for the ailing housing sector, the White House acknowledged.

White House spokeswoman Dana Perino said the expanded program will bring the number of people helped by FHASecure to 500,000 by ...

[W]e believe median home prices will decline 20% from the peak in 2006. By contrast, the forecasts we used in November 2007 assumed a decline of 11%.

When we resolved the ...

What were economists saying about housing bubbles and regulation of mortgage markets nearly three years ago? I just came across this post from Jim Hamilton from June 18, 2005:

Another argument that's sometimes raised (for example, by Kash at Angry Bear) is that some of the buyers of homes at ...

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, slipped 1.9 percent to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4 percent ...

“[C]onsistent with the company’s retail focused strategy, WaMu has made the very difficult decision to exit the Wholesale lending business.”

Washington Mutual will announce later today they are backing ...

Federal Deposit Insurance Corp. Chairwoman Sheila Bair said Monday policy makers needed to consider a more “activist” government response to prevent an escalation of foreclosures even if such measures aren’t “politically popular.” In a speech to the Equipment Leasing and Finance Association at a Washington hotel, Ms. Bair said policy ...

International banks are scrambling to sell their holdings of Spanish mortgage debt at a steep discount, fearing that the country may be sliding into the worst economic downturn in its modern history.

Deals to buy O.C. existing homes and condos are now above year-ago levels for the first time since Sept. 22, 2005, says the math of Steve Thomas at Re/Max Real Estate Services ...

Alan Greenspan says to quit blaming the Fed for the housing bubble:

The Fed is blameless on the property bubble, by Alan Greenspan, Commentary. Financial Times: I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 ...

The apparent froth in housing markets may have spilled over into mortgage markets. The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other, more-exotic forms of adjustable-rate mortgages, are developments that bear close scrutiny. To be sure, these financing ...

[Brent] Meyers began his landscaping project in January, expecting to draw on his home equity loan to pay [the landscaper $75,000 for the project].

When ...

Here is an interview with me on CNBC on the housing market situation in western Europe and the US.

This post from Economics of Contempt looks at the relationship between price bubbles and regulation in housing markets, and poses an hypothesis about how regulation could have influenced the housing bubble. The argument is that regulation causes larger and more sustained swings in prices, and, on the upside of the ...

A year ago, the Mortgage Bankers Association was thrilled to sign a contract to buy a fancy ...

Apparently not, given the discussion of plans to have the government buy up or guarantee large amounts of home mortgages. I hate to be picky, but you cannot -- repeat CANNOT-- have a serious analysis of these proposals without discussing the housing bubble.

The reason is simple. In bubble inflated ...

Consider this troubling question: Do mortgage lenders have any obligation to take over a property that has defaulted on its mortgage?

The short answer, it appears, is no:�

I hadn't previously considered this, ...

The March employment data was much worse than expected: NonFarm Payroll down 80,000, Unemployment Rate 5.1%, all prior revisions worsen than previous releases.

Let me be blunt: There is no way to spin these numbers, though that won't stop the usual syncophants and junkies from trying. Only the

Yesterday, we discussed Lender-Abandoned, Non-REO Foreclosures.

That started a robust discussion, leading to a follow up piece by Bob Ivry of Bloomberg: Lenders Buried By Foreclosures Let Late Borrowers Stay in Homes.

According to Ivry:

"Banks are so overwhelmed by the U.S. housing crisis they've started to ...

Everyone knows that housing markets are crashing and burning all over the place: the US, the UK, Spain, and many more besides. But that's not happening here. Here is a graph of housing starts in Canada and the US:

Mullins: Let's look at a specific area. What's happening in Denver, where ...

Ed Glaeser speaks much good sense in his column appearing in today's Boston Globe.

Much has been made in the news about the role of interest rate resets in ...

How far will house prices fall? Implications from the latest WSJ survey.

New York City's residential real estate market is showing the first signs of fallout as U.S. banks and securities firms cut the most jobs in seven years.

Manhattan apartment sales fell in January ...

What's really going on? What's going on is that perhaps $6T of mortgages with a duration of a decade that had been priced at a 1% per year chance of default (with a 1/3 value haircut in the event of default) are now being priced at a 4% per year chance of default. That's ...

What is the source of foreclosures, interest rate resets or falling prices? In this post, I said:

It's easy to explain how interest rate resets could increase foreclosure rates since the monthly housing payment will change as a result of the reset, but why do falling prices cause ...

Alan Blinder gives details on how to structure a modern version of the depression-era HOLC program to help reduce the number of foreclosures and stabilize financial markets:

How to Cast a Mortgage Lifeline?, by Alan S. Blinder, NY Times:

The financial markets are downright scary. And ...

After hitting a record in 2006, sales of vacation homes declined last year as would-be buyers held off purchasing retreats, the National Association of Realtors said.

Vacation-home sales fell 31% to 740,000 in 2007, from 1.07 million in 2006, according to the group’s annual Investment and Vacation ...

“Our industry continues to confront a growing oversupply of new and resale homes, tight mortgage lending conditions and a highly competitive pricing environment. These conditions drove down sale prices and further compressed margins in the first quarter of 2008, prompting ...

One of the reasons that we're sitting here in a recession, facing the worst financial crisis since the Great Depression (according to Alan Greenspan) is that most reporters never reported on the housing bubble as it grew to ever more dangerous levels. The most cited source on real estate markets ...

U.S. home prices are unlikely to recover until at least 2010, [Frank Nothaft, the chief economist for government-sponsored mortgage buyer Freddie Mac] said Thursday, adding that home building this year is likely to ...

Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, "Market conditions have remained challenged and continued to deteriorate throughout our first quarter of 2008. The housing industry continues to be impacted by an unfavorable supply and demand relationship, which restricts the volume ...

Like the policeman in Casablanca, who pretended that he was "shocked, shocked" that gambling was going on, El Pais professes surprise that Europe's miracle economy has a housing crisis. Who would have thought that? Housing sales were down 27% annually in January, the Euribor to which ...

The slowdown in Spain’s real estate is a fact. Recent data released by the INE (National Statistics Institute) confirm the trend most foreign investors acknowledged in recent months. The figures are concerning: a drastic decrease of the sale and purchase of apartments, down 27.1% in January 2008 over the ...

It was clear the moment the Federal Reserve, for the first time since the Depression, last week opened its direct lending window to institutions other than conventional banks that the rules of regulation had to change. The Main Street banks to which the Fed traditionally lends — the ones that ...

Charles Evans, president of the Federal Reserve Bank of Chicago, today became the first Fed official to speak since the central bank lowered interest rates by 0.75 percentage point to 2.25%. Mr. Evans told the New York Association for Business Economics that he expects “weakness” in economic output ...

The final Guidance addresses the handling of decreases in the house ...

After the number of failed home loans hit a record in 2007, foreclosure filings in Cook County are on pace to top last year’s total by another 35%, based on the first two ...

Home prices in 20 major U.S. metro areas have plunged a record 10.7% in the past year as prices continued to decelerate, Standard & Poor's said Tuesday.

The 20-city Case-Shiller home price index fell a record 2.4% ...

Single-family home prices in 10 major metropolitan areas in January were down 11.4% from a year earlier and down 2.3% from December, according to the S&P/Case-Shiller home-price indexes. The Case-Shiller data aim to track the price path of single-family homes located in a particular metropolitan area by matching price pairs ...

NPR told us that there was good news in the increase in existing home sales reported last month. Sales did in fact rise, although it is reasonable to wonder about the extent to which weather was responsible. Sales in the Northeast rose by 11.3 percent. Since the weather for ...

I am serious. Steven Beard, an analyst interviewed on Market Place this morning, said that the data on existing home sales, which showed a modest increase in sales in February, could mean that the crisis in mortgage backed securities is over.

Excuse me, but do the "experts" on Market Place have ...

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January, ...

More confirmation that the slowdown in housing has spilled over to manufacturing.

As the speculative froth of the housing boom dissipates, which markets are stuck with the most unfilled housing stock? Census Bureau data on annual homeowner vacancy rates in the 75 largest U.S. metropolitan areas help to fill in some of the blanks. Census numbers point to areas in and around ...

Builders' problems ...

Many contracted buyers, spooked by falling home prices or suddenly unsure of their financial state, are fleeing before closing. The average cancellation ...

Back in August of 2007, we looked at the The Ongoing Impact of the Housing Sector.� �

At the time, I had assigned blame for all of the problems in the credit market to a variety of institutions and people. The blame went as follows:

� � * Federal Reserve (FOMC)

Subprime is so yesterday as people up and down the income ladder are defaulting on their mortgages in record numbers. After all, why pay off a $400k mortgage on a home that is worth $300K?

I thought that everyone understood this point by now. The problem is the collapse of the ...

Barry Ritholtz doesn't like Alex Tabarrok's"happy talk". Is he talking about this?

If the financial markets can predict where and when house prices will stabilize, then credit conditions can quickly return to normal, the economy can expand and house prices will indeed stabilize.
But ...

Beyond all the news on the causes of, and policy responses to the current US economic crisis focusing almost solely on financial markets, it's worth paying more attention to causes and policy responses for households.� One household-level cause fits with the implications of a host of other evidence about credit ...

On Sunday, Treasury Secretary Henry Paulson, who has been eerily silent as this crisis unfolded, made the rounds of the morning talk shows. It was not reassuring to see this former titan of Wall Street recite his ...

Its analysis this morning did not include any comments from economists who think the Fed made a mistake in allowing an $8 trillion housing bubble to grow unchecked. It did include comments from WSJ reporter David Wessel, who apparently thinks that having the government buy up mortgages -- a system ...

Alex Tabarrok says things might not be so bad:

Home Sweet Investment, by Alex Tabarrok, Commentary, NY Times: Fear is ruling the financial markets. ... How low will house prices go? If prices continue to fall, mortgage defaults will move well beyond the subprime sector. ...

Mortgage performance data show a strong correlation between adverse house price changes and subsequent increases in mortgage delinquency and foreclosure (Avery, Brevoort, and Canner, 2007; Gerardi, ...

Former Treasury Secretary Robert Rubin said “the risks are serious enough to call for substantial additional action in the mortgage arena,” probably requiring public money.

A total of 3,989 new and resale houses and condos sold in the nine- county Bay Area in February. That was up 11.2 percent from 3,586 in January, and down 36.7 percent from 6,305 for February 2007, DataQuick Information ...

Something that I had been wondering about re: the mortgage meltdown has been home equity loans.� We've all been focusing on home mortgages (starting with sub-prime, but slipping up to Alt-A and conventionals), but what I was curious about was home equity lines: are those going into default too?� The ...

The median price for a Southland home last month was $408,000, down 17.6% from a year ago, according to DataQuick Information Systems. Area home prices have now fallen 19% on average from their ...

Those looking for relief from the housing downturn shouldn’t get their hopes up for any recovery soon, according to economists in the latest Wall Street Journal forecasting survey.

The majority of respondents say the U.S. is currently in a recession, and one of the major drags ...

Speaking to analysts on a conference call, CEO Richard Syron estimated that housing prices, from peak to trough, have dropped only a third as far as he thinks they're going to. The McLean, Va.-based company's expecting a peak-to-trough ...

Here comes another headache for banks suffering from the mortgage downturn: Losses on home-equity loans are soaring ...

"These losses ...

The Post has a column today calling for housing price supports. This makes three in the last week by my count in the country's big three newspapers (NYT, WSJ, and WAPO).

The range of diversity in the views presented on this issue in these papers is about what we ...

The JPMorgan report included a revised bleaker forecast for subprime-related home prices. The bank now sees prices falling 30 percent, from its prior 25 percent forecast. Those prices have declined 14 percent since ...

The federal government would lend each participant 20% of that individual's current mortgage, with a 15-year payback period and an adjustable interest rate based on what the government pays on two-year Treasury debt ...

Martin Feldstein has a bright idea: allow homeowners to refinance 20% of their mortgage balances with the government, where the new loans amortize over 15 years and reset every two years at the interest rate on 2-year Treasury bonds (currently 1.6%).

Mark Thoma worries that participation won't be ...

Jingle Mail?

Forget that! Its so 2007.

For 2008, let's try a little reverse financial engineering: Squatting in $3 million dollar waterfront mansion in Florida and paying nothing.�

At least, that's a new and growing problem we learn of via MW in South Florida. MW is a local developer, ...

The hallucinogenic spin-meisters over at the National Association of Realtors are once again, misstating what their own data indicates:

Flat Existing-Home Sales Likely Before Gradual Recovery
The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the ...

Yields on agency mortgage-backed securities rose to a new 22-year high relative to U.S. Treasuries as banks stepped up margin calls and concerns grew that the Federal Reserve may be unable to curb the credit slump.

The difference ...

"These rating actions reflect our expectations for a more severe residential mortgage credit cycle than we had ...

"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," said Doug Duncan, MBA's Chief Economist said in a prepared statement.

The percentage of mortgages that were in foreclosure hit a record high in the fourth quarter, while mortgage delinquencies rose to a 23-year high, the Mortgage Bankers Association said Thursday. A record 2.04% of U.S. mortgages were somewhere in ...

Merrill Lynch (MER) said today that it is discontinuing mortgage origination at its First Franklin subsidiary in the United States and will explore the sale of Home Loan Services, a mortgage loan servicing unit for First Franklin. ...

Thornburg Mortgage, Inc. (the “Company”) has entered into reverse repurchase agreements, a form of collateralized short-term borrowing, with various counterparties.

The Company received a letter from JPMorgan Chase Bank, ...

The Federal Reserve’s latest beige book, gauging economic conditions across the Fed’s 12 districts, paints a continued bleak picture of housing markets. The report said sales and demand are low, inventories are high and prices are falling. The one upside: Manhattan.

The ...

Over the past year and a half, mortgage delinquencies have increased sharply, especially among riskier loans. This development ...

Housing is in its "deepest, most rapid downswing since the Great Depression," the chief economist for the National Association of Home Builders said Wednesday, and the downward momentum on housing prices appears to be accelerating.

The NAHB's latest forecast calls for new-home sales to ...

University of Rochester Steven E. Landsburg presents the "case for foreclosure" ...

NPR had a piece on Morning Edition that discussed proposals to help out people who are facing foreclosure. It focuses on a proposal by Mark Zandi, one of the economists who missed the housing bubble, which would have the government buy up bad mortgages through a complex auction mechanism and ...

If you have a servicer who is doing a lot of repayment plans, and the MBA data suggests we have that, then you're going to see a lot of delinquency statuses going "in reverse," and you're also going to see, unfortunately, a lot of ...

Today, 93 percent of American homeowners – 51 million households - pay their mortgages on time. Many are ...

Lower interest rates from the Federal Reserve may be helping some homeowners and buyers, but they’re not doing much to revive the depressed housing market. One key reason: Many potential home buyers are staying on the sidelines because they expect home prices and interest rates to decline even more.

That’s raising ...

The Washington Post had an editorial today in which came out squarely against using taxpayer dollars to “rescue” the housing market. Of course its rationale is not exactly right – these bailouts are far more about helping banks and investors than homeowners, but the Post still ends up in ...

First, many in Washington and many financial institutions have been floating proposals for a major government intervention in the housing market, with U.S. taxpayers assuming the costs of the riskiest mortgages. Today, 93 percent of American homeowners – 51 million households - pay their mortgages ...

The ... lender's annual filing with the Securities and Exchange Commission ... showed a big increase in late payments on option adjustable-rate mortgages, known as option ARMs. ...

As of the end of 2007, payments were at least 90 days overdue ...

Robert Shiller was one of the few economists to actively warn of the housing bubble. However, unlike me, he is prepared to absolve Alan Greenspan of the charge of unbelievable negligence for failing to take steps to combat the housing bubble.

In an NYT column today, Shiller argues that Greenspan ...

The Yale prof writes in today's NY Times.

Floyd Norris has a very nice column in the NYT today comparing foreclosures with home sales. It points out that in the areas hit hardest by the collapse of the housing bubble foreclosures now exceed homes sales.

Of course not every foreclosure results in a home being put up ...

Our story is as follows. While the mortgage credit ...

The NYT had a good piece today on the rapid growth in the number of people who simply turn over their homes to the bank because the mortgage exceeds the value of the home. One of the experts interviewed for the article was Nicholas P. Retsinas, director of the ...

In 1998, Paul Krugman explained why housing and stock bubbles occur. The answer? "Me want mammoth meat!":

The Ice Age Commeth, by Paul Krugman: The more I look at the amazing rise of the U.S. stock market, the more I become convinced that we are looking at ...

Fannie Mae said Wednesday that it lost $3.6 billion during the fourth quarter as credit ...

Housing downturn leads to Freddie Mac losses The weakened U.S. housing market took a toll on Freddie Mac's bottom line in the fourth quarter and for 2007 as a whole, the mortgage-finance giant said Thursday as it reported worse-than-expected financial results.

Richard Syron, Freddie Mac's ...

Tomorrow, the Senate is expected to vote on the Foreclosure Prevention Act of 2008, Title IV of which would permit bankruptcy courts to modify home mortgages in certain ways if the loan and the debtor met specified criteria. We've described that idea before, but the bill has crucial ...

The delinquency rate for a wide range of home loans that provide the payments for mortgage bonds has spiked in the past year, Standard & Poor's said Wednesday.
...
S&P examined how dependably people are repaying their debt for ...

We have experienced increased mortgage loan delinquencies and credit losses, which had a material adverse effect on our ...

A leading Democratic lawmaker on Tuesday called for $20bn in public funds to be made available to the Federal Housing Administration to purchase and refinance pools of subprime mortgages. . . .

Mr Frank said “we can do it through an ...

Mark Zandi, chief economist at Moody’s Economy.com, endorsed proposals made by private economists and some in Congress that a public agency be set up to purchase defaulted mortgages. The cost, he said, would be up to $250 billion, but probably lower.

Is it consumers’ recession fears — or seeing their reflection in a deflating bubble — that is keeping home buyers away?

Robert Toll, chairman and chief executive of luxury homebuilder Toll Brothers, says it’s both. But mostly the recession fears — and that everyone’s talking about it.

“Ceaseless talk ...

That's gonna leave a mark: Data through December 2007 for the Case-Shiller Home Price Index shows broad based declines in the prices of existing single family homes across the United States. This marks 2007 as a full year ...

Today we received updates on U.S. house prices from two different sources. The OFHEO national house price index recorded a 1.3% decline in the price of a typical U.S. home during the fourth quarter of 2007, while the S&P/Case-Shiller home price index registered a 5.7% decline during the ...

Too good not to post:

Home Price Plunge Accelerates, Floyd Norris, NY Times, Feb. 26: The S.&P./Case-Shiller indexes for December, out this morning, show the following price changes for the fourth quarter of 2007, annualized:

San Diego -31.9%
Phoenix -30.1%
Los Angeles -30.0%
San Francisco -29.4%
Las Vegas -28.9%

U.S. home prices fell in the fourth quarter of 2007 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.3 percent lower on a seasonally-adjusted basis in the fourth quarter than ...

First, remarkably, bankruptcy laws currently provide that almost every form of property (including business property, vacation homes and those owned for rental) except an individual’s principal residence cannot be repossessed if an individual has a suitable court-approved bankruptcy plan. The ...

Existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 0.4 percent to a seasonally adjusted annual rate1 of 4.89 million units in January from an upwardly revised level of 4.91 million ...

I've been catching up on some reading and again found the statistic that 30% to 70% of early payment defaults on home mortgages can be linked to significant misrepresentations borrowers made on their loan applications. This most recent time I saw the statistic cited as coming from the U.S. ...

At least they didn't bother to mention it in this article on bailout plans that would have the government guarantee or buy up bad mortgage debt. Given that house prices are now falling at their fastest rate since the Great Depression, it might have been worth considering this possibility.

--Dean ...

I know that no one believed this was possible two years ago, but since prices have been falling across most of the country, and quite rapidly in many markets, reporters might have come to realize that it is in fact possible for house prices to fall. But, apparently falling house ...

The NYT has one of its big 2,000-word pieces on the housing market today, this time concentrating on the phenomenon of negative equity. The estimate the article cites is very high, and was greeted with some skepticism by Calculated Risk:

With the collapse of the housing boom, nearly 8.8 ...

Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million ...

I really like this idea from the Office of Thrift Supervision: it looks like it can reduce foreclosures and help provide liquidity to struggling mortgage lenders at the same time. Here's how it works: take a borrower who's underwater, with a mortgage for more than their house is worth. ...

A rapidly deteriorating U.S. economy will cause home prices to drop by 20 percent peak-to-trough, a leading economist said on Wednesday.

Mark Zandi, chief economist and co-founder of Moody's Economy.com, said he also expects a recession in the first ...

U.S. savings and loans posted a record $5.24 billion loss in the fourth quarter of 2007 as housing-market distress continued to take a toll, the industry's regulator said.

The loss stemmed from $4.07 billion in ``goodwill'' writedowns and $5.12 ...

Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,048,000. This is 3.0 percent below the revised December rate of 1,080,000 and is 33.1 percent ...

"... the Case-Shiller price index — ...

Historically, median home prices and median incomes have always shared a close relationship. From the mid-1970s to 2001, the historical ratio of median housing value vs. median household income was consistently between 2.6 and 3.0.

What ...

Thanks to CreditSlips for inviting me to be a guest blogger and to share my views on credit and the economy.

By now, it's obvious that the housing crisis is dragging down the economy. For the past eight quarters, the declining activity in the housing market dampened growth on average by ...

Homeowners are being advised that it would be cheaper to walk away from big mortgages than incur further losses on their household budgets, increasing the chances that more high-end real estate transactions will collapse.

This advice from lawyers contrasts ...

Georgia banks reported the highest number of problem loans, with 4.74 percent of banks' loans either past due or foreclosed, the highest level of any state in the ...

Homeowners are being advised that it would be cheaper to walk away from big mortgages than incur further losses on their household budgets, increasing the chances that more high-end real estate transactions will collapse.

This advice from lawyers contrasts ...

Earlier this week, I explained why real estate prices, rather than interest rates or credit workouts, are the critical determinant of how bad the foreclosure problem is going to become. Today I discuss some of the alternative measures of real estate prices that we might look at, illustrated ...

In the most ominous indicator yet of the Sacramento region's struggling housing market, January saw nearly as many people lose their homes as buy them.

January's 1,815 ...

Bay Area home sales plunged below 4,000 transactions for the first time in over 20 years last month as the market remained hamstrung by the credit crunch and uncertainty among buyers, sellers and lenders. Price declines ...

Alex Tabarrok has generated quite a buzz over his suggestion that the “housing bubble” might be a myth. He begins with this graph of housing prices from Robert Shiller published in the ...

The Mount Rushmore state was the lone state to show a sales increase in the most recent quarter, according to data out this morning from the National Associations of Realtors. Existing home sales there rose 8.9 % from the same quarter a year ago.

The NAR ...

McLean, VA – Freddie Mac (NYSE: FRE) today announced it is temporarily changing its Private Mortgage Insurer Eligibility Requirements [PDF 160K] in order to increase the claims-paying and capital retention capacities of its mortgage insurance counterparties during the ...

Some refreshing ‘bubble’ skepticism from Alex Tabarrok:

So if the massive run-up in house prices since 1997 was a bubble and if the bubble has now been popped we should see a massive drop in prices.

But what has actually happened?� House prices have certainly stopped increasing and they ...

Salgado, 40, is one of many renters who have found themselves homeless after their cash-strapped landlords stopped making mortgage payments and their houses or apartment buildings were foreclosed upon.

The California Apartment Assn., the state's ...

San Diego County median home prices fell last month to their lowest level in four years with nearly half of existing homes selling at a loss in the face of mounting foreclosures, DataQuick Information Systems reported ...

The Treasury Department has yet another voluntary plan to fix the mortgage meltdown.� This one gives families an extra thirty days to pack their belongings before they lose their homes to foreclosure.� For the 2 million families estimated to go into foreclosure this year, the mortgage industry, backed by ...

The conventional wisdom is that there was a housing bubble which has now popped.� The data, however, tell a different story.� Remember, that the evidence for the bubble was that real house prices had increased tremendously since around 1997 leading to prices that were far above any seen in the ...

... the really bad news is that, even after a year of misery and falling prices, homes ... remain wildly overvalued compared to average personal incomes.

There is a strong long-term correlation between the two ...

The credit crisis is no longer just a subprime mortgage problem.

Who would have thought?

--Dean Baker

This paper provides the first rigorous assessment of the homeownership experiences of subprime borrowers. We consider homeowners who used subprime mortgages to buy their homes, and estimate how often these borrowers end up in foreclosure. In order to evaluate these issues, we analyze homeownership experiences in Massachusetts over the 1989–2007 ...

Richard Green says that some worries about the subprime crisis such as the risk that mortgage rate resets will bring about higher foreclosure rates may be misplaced:

Is Everything we Know About Subprime Wrong?, by Richard Green: Yesterday I saw a great talk by Paul Willen of the Boston Fed. ...

In an article comparing the collapse of the U.S. housing bubble to the collapse of the Japanese stock and housing bubbles in 1990, the NYT notes that house prices have fallen by 10 percent and "most economists expect a further decline of 10 to 15 percent."

It is worth ...

Just an anecdote, but an interesting one.