Sales Up, Prices Down

The foreclosure bubble has hit the local market.

Home sales actually increased from this month last year by about 2,000. But the values continue to tumble. The culprit? Foreclosures. The number of foreclosed homes sold this past month were up 73% from last year.

Bottom line is that people are looking for deals. Banks have a large collection of foreclosed homes they need to get rid of. Put the two of them together and you will see an uptick in sales but a decrease in values as banks unload homes in their inventory.

Slow Housing Recovery

Most of you know that one of the subjects that I blog about is how the housing market is or isn’t doing.  For the most part the news has been a bit gloomy, but showing some sign of recovery, although very slowly.

But according to this clip from Breitbart TV, maybe the news isn’t so good. Link to video here.

I know that many will have the reaction that we need to get rid of the man currently occupying the White House, the sooner the better, but not all of the blame can be laid at his feet. Oh, I do blame him for the sluggishness that has taken hold of the entire economy. But the housing crisis and the slow climb out from the depths had its roots before the guy took office. Has he made it worse? Most certainly! Policies and decisions from the White House that has caused the economy to continuously falter impacts the housing market as much as the housing market impacts the economy. In a way, this is a vicious circle that, until someone does something to bump it off track, will continue for the foreseeable future.

Home Sales Up, Values Down

Once again the real estate market is providing us both good and bad news. Sales continue to show slight upticks and home values continue to be depressed.

Homes sales did show an increase, but some of that might have been brought on as investors are snapping up homes.

Home sales rose 1.4 percent in October to a seasonally adjusted annual rate of 4.97 million, the National Association of Realtors said Monday. That is below the 6 million that economists say is consistent with a healthy housing market and slightly ahead of last year’s sales – the worst in 13 years. (Source: The Oregonian)

On the negative side, values continue to slide.

Most economist say home prices will keep falling, by at least 5 percent, through the rest of the year. Many forecast don’t anticipate a rebound in prices until at least 2013.

The medium sales price dropped roughly 2 percent to $162,500 in October.

The high rate of foreclosures has made re-sold homes much cheaper than new homes. The medium price of a new home is roughly 30 percent higher than the price of one that’s been occupied before – twice the normal markup. (Source: The Oregonian)

For those of us who own homes, this news can be a bit unsettling. Many have been counting on the value of our homes seeing us through retirement down the road. Now it looks like it might be years before the value is returned. But on the bright side, at least sales are moving in the right direction, which eventually will put pressure on the values, pushing them upwards.

Opposing Forces

If we are extremely lucky these two pieces of news will be able to coexist.

Jobless claims dip:

Fewer Americans filed for their first week of unemployment benefits last week, marking continued – but still slow – improvement in the job market.

About 390,000 people filed for initial unemployment benefits in the week ending Nov. 5, the Labor Department said Thursday.  The number of claims fell 10,000 from the revised 400,000 in the prior week, and is now at the lowest level since April 2.

…

“The passing of some of economic weakness is starting to show in a better labor market,” said Michael Gapen, senior U.S. economist at Barclays Capital.

The four-week moving average if initial claims, used to smooth out volatility, is teetering exactly at 400,000. While not an exact science, that number serves as a rough estimate for economists, who say claims below 400,000 could mean job growth has finally become strong enough to start bringing the unemployment rate down.

In a report last week, the government said the unemployment rate dipped to 9% in October, down from 9.1% the month before. (Source: Yahoo News)

Home foreclosures increases:

The number of foreclosures climbed in October, as mortgage lenders started to work through the paperwork that had delayed new filings for much of last year.

…
 

RealtyTrac said one in every 563 U.S. home had either a default notice, a scheduled auction or a bank repossession filing during the month.

“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, RealtyTrac’s CEO. (Source: Yahoo News)

Considering that our economy is pretty much based on a health housing market, I am concerned these two numbers (declining unemployment and increasing foreclosures) are going to struggle against one another.  As long as unemployment stays high, people just aren’t going to buy homes. As long as people don’t buy homes because of fears the housing market still hasn’t reached bottom unemployment is going to have a difficult time recovering.

The final paragraph of the linked article on foreclosures says it best:

The best hopes for stopping foreclosures is an improvement in the overall economy, especially in the battered real estate and labor markets. But with so many foreclosed homes weighing on the market, and with unemployment still at 9% and consumer confidence low, even mortgage rates near record lows aren’t enough to fix the problem caused by the bursting of the housing bubble. (Source: Yahoo News)

Whodda Thought: A Good Idea From Romney

Wow, something from Mitt Romney that I could actually support.

Campaigning last week in Nevada, the epicenter of the housing bust, Mr. Romney was asked by the Las Vegas Review-Journal editorial board what he would do about housing and foreclosures. His reply:

“One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the house up. Let it turn around and come back up. The Obama Administration has slow-walked the foreclosure process that have long existed, and as a result we still have foreclosure overhang.

Number two, the credit [that] was given to first time homebuyers was insufficient and inadequate to turn around the housing market. I think it was an ineffective idea. It was a little bit like the cash-for-clunkers program, throwing government money at something which was not market-oriented, did not staunch the decline in home values anymore than it encouraged the auto industry to take off.” (Source: Wall Street Journal via TigerHawk Blog)

You have got to know that there are folks in the Obama Administration AND the leftist media (aka: Main Stream Media) that are going to be completely up in arms about what Romney said. “How dare Romney endorse throwing people out into the street without a roof over their heads. Doesn’t he know winter is around the corner?”

I know the democrats and progressive can trot out heart-rending stories about individual homeowners forced out of their homes because of the big, bad banks. And to tell you the truth, the stories can be heartbreaking.

But let’s look at this from another angle. For most of the progressive movement, it has always been about the collective, not individual freedom and responsibility. But on the matter of housing and foreclosures, for progressive and liberals it is all about the individual (certainly not about freedom and responsibility) homeowner. They want the government to save the individual homeowner so they can stay in their house. But with this stance, they have lost sight of what is good for everyone (the collective). If we continue in the direction we have headed over the past three years, home values will take years to even begin to climb, much less recover. Isn’t a faster recovery in the housing market good for everyone (the collective)? You’d think that liberals and progressive would support this.

All that is happening is the can is being kicked down the road. Romney is suggesting that we stop kicking the can down the road, man-up, take our lumps, let the market recover on its own. No amount of government intervention is going to save the housing market, it has to save itself and the sooner we allow this to happen , the better off we are going to be in the middle- and long-term. The role of government is not to control or run the economy, but to make it easier for the economy to function.

BTW: Still not a fan of Romney.

Local Real Estate Good News/Bad News

Here is a good-news, bad news story. In King County (Seattle), home sales were up in September and compared to September 2010. This is the good news, although tempered somewhat with the knowledge that last September sales were the worst in nearly a decade.

On the bad news side, values continue to decrease, down 8 percent from last September. On a positive note, it was unchanged from Aug.

PS: Sorry about the slow blogging. Came down with a touch of something. I have also been putting a lot of extra hours at a second job. My lovely bride went to visit our daughter in San Diego to attend her San Diego State University Nursing Program Induction ceremony. And my Oldest Son has decided to join the Marines, Since he is 17, his mom and dad have lots of paperwork to deal with. It has been a very hectic week around here.

(Source: Seattle Times)

Worst Housing Market in Decades

More bad news from the housing market front.

The home buying season was a bust.

March through August are typically the peak buying months. But this year, Americans bought fewer new homes in that stretch than in any six-month period since record keeping began a half-century ago.

Sales of previously occupied homes didn’t fare much better; they nearly matched 2990’s total for the peak buying months. And that was the worst since 1997.

Combined, total sales this spring and summer were the weakest on records dating back to 1963. The figures underscore how badly the housing market is faring and suggest that a recovery is years away.

Because the economy is barely growing and unemployment exceeds 9 percent, many people see a home purchase as too big a risk. Some worry about losing their jobs. Others can’t afford the 20 percent down payment most lenders now require. (Source: Seattle Times)

Long Climb Out

This is certainly not welcome news. For those of us who were hoping to have our homes as a nest egg for retirement are going to be disappointed. This will be especially true for those who will be retiring for good in the next 10 years or so.

The pessimistic outlook on home values is really not all that surprising in my book. Serious damage to the real estate market has been done. Values in homes are as low as 2000 prices, and the market has yet to experience a serious glut in foreclosed homes. Couple the aforementioned reasons with a natural pessimism that I think people are going to have towards purchasing a home, home values increases are going to be stunted. There will be some markets that will recover nicely, most likely in areas that see economic recovery sooner.

I sometimes wonder if Barney Frank and other democrats who pushed banks to loan money to people who should have never been the market ever loses sleep over what he has wrought. If I were to hazard a guess, I’d say that he feels nothing. It would not surprise me if and when the market shows life once again, that he doesn’t try the same thing all over again.

A Glimmer of Hope in Housing Market

Some good news in our local real-estate market: sales are expected to outpace last year, even though last year there were federally assisted incentives. Values remain stagnant however.

Given the current state of unemployment in Washington State and across the nation (9.3% and 9.1% respectively), I am not holding my breath this is the beginning of the long slog out of the housing recession. Oh, is the recession over? Well, I think you should ask the 25 million folks who are either unemployed or under-employed whether they thing the recession is over.

It is possible that home values have more of less reached a point where they really can’t drop any further unless the economy takes an even more dramatic turn for the worse. We might have reached the point where those that can afford to purchase a house have finally decided the bottom has been achieved or is in sight.

July Home Sales Off

It is starting to look more likely that a double dip in the recession could be at hand. Home sales for the month of July took a dive, tumbling more than 3% from June sales. Tough lending policies and appraisals coming in under offers are reasons cited.

I think it is pretty clear to most folks that as long as home sales continue to lag, so will the economy. The crash in the housing market brought us in to this mess, and it will either bring us out, or it will keep us down. Right now, it is doing it’s dangest to keep the economy down.

I wonder if any the experts are willing to say that people are afraid of purchasing a home right now with the economy in turmoil. Consumer confidence, although up in recent weeks, is down pretty significantly over the past year.

California Pensions and Worthless Recovery (UPDATE)

A couple of posts worth a read over at one of my bloggers-in-arms, Doug, at Director Blue.

The first one is school administrator pensions being paid by the state of California to public school administrators. See more information on the state of spending in California at "UPDATE" below.

When I first look at the post, my eyes went directly to the chart. The thing that stood out to me was there were several retirees who are actually earning more in retirement than they earned while actually on the job.  Come to find out, once I read the text, that this situation is not uncommon: one third of the retirees are earning more than while employed.

I just hope that when this all comes crashing down, we all aren’t going to be held responsible for bailing out these ridiculous pension plans.

Make sure you click through the link to the full story provided by Doug. I have to give props to the Sacramento Bee, a notoriously left leaning publication, for running this expose.

The second post is a great summation of just how wonderful of an economic president Obama has turned out to be. NOT!

Many links provided that show just how bad this guy has done leading us out of the worst economic downturn since the Great Depression, and how his policies have actually stunted the recovery.

Quick look:

-Our debt will be 101% of GDP by 2021. This is Greece-like.

-By 2035 our interest payments will 9% of the entire economy, currently 1%. Where are the cuts or additional revenue going to come from? Talk about a killer to the economy.

-The glitch in Obama that adds 3 million middle class to the roles of Medicaid. I blogged about this the other day. I guess we have found out about the bill now that it is passed.

-The collapse of Medicare and Social Security. You know, a few years ago, President Bush looked at privatizing Social Security and was slammed by the liberal press and democrats. I wonder if people are starting to relook this. Yes, it is true that private investments are not a guarantee, but are you going to collect SS in 25 years if things don’t change?

-The continuing downturn in the housing market. The nest egg that people were counting on has nearly disappeared.

-Job creation has been pathetic. Here is a story from my local area. So many jobs have been lost since the start of this recession that it will take years to recover. Normal recoveries have a growth near 9%, we current stand a little less than 2%, which does not grow jobs.

I really hope the folks that vote this time around finally get their heads out of their rear ends and send this president packing. He is over his head and is not good for America, at least not a growing America.

UPDATE

Sister Toldjah has a great little post about how state employees continue to feed at the trough of taxpayer money despite the current financial crises besieging the state of California. Good video!

Now Might Be A Good Time to Buy A Home

While this story on home ownership at the Wall Street Journal reads a little like an advertisement, it is certainly worth your time to give it a once over.  The story breaks down the reasons why now might be a good time to purchase a home if you are currently renting and have a stable employment history.

Even during the tough times experienced by the housing market and prices over the last few years, there still remain some key benefits to owning a home over renting.

…long term benefits of homeownership remain very much intact.  For now, at least, you can deduct the mortgage interest on your taxes – a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord.  And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free.  Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with. (Source: Wall Street Journal Online)

Economic Recovery Still Dragging

A couple of stories about are economy.

First, the job news and economic recovery is not so good. Jobless claims are up again and the economy grew at a very anemic rate of 1.8% last quarter.

Second, the foreclosures are a HUGE drag on the economy. Some cities are seeing home values depressed as much as 50% due to the amount of foreclosures and short sales on the market. Until this issue has been fixed, our economic grow will be muted.

Weekend Links (I Know, A Little Late)

LOCAL:

1. Wear and tear may have caused 737 hole. The National Transportation Safety Board investigators say they have found that the rivet holes appear to be too big and misshapen from the 737 that tore open last month.

2. Housing market still struggling. Foreclosures, persistent high unemployment, and just overall uncertainty in the housing market continues to drive down home values. Seattle saw a January decrease of 1.9% which has dropped home prices below June 2004 values.

3. The Sierra Club, stick to the Wilderness. In what could be considered a changing paradigm, the Sierra Club is teaming with Seattle Mayor Mike McGinn to fight the waterfront tunnel as a replacement for the crumbling Alaskan Way Viaduct. Over the past several months McGinn has stated his primary reason for vetoing the City Council’s recommendations for the tunnel build was his concerns over cost overruns.  Turns out this former state director of the Sierra Club might have other reasons beyond costs for vetoing the tunnel.

Weekend Links

Weekend Links

LOCAL:

1. File this under the category of too dang bad. Please forgive if I seem a little harsh and unforgiving, but using the taxpayer’s dollars for any program for illegal immigrants gets my back up just a bit.

Currently the State of Washington is $5B in the whole and trying to cut the budget so it will be balanced. One of the first things on the chopping block is (and should be) aid to illegal immigrants. So far, state lawmakers, $59M has been realized by tightening up requirements to use certain state funded programs, mostly in the health care arena.  Before you get your knickers in a knot over this, please know that the state will still spend somewhere in the neighborhood of $300M for program that illegals can tap into such as health care for pregnant women and medical and dental coverage for children from low income families that can’t prove they are residents.

How Freddie and Fannie did What they Did.

A must read on Fannie Mae and Freddie Mac. It explains how Fannie and Freddie got so big by publicly denying they were backed by the government but privately saying something else.  Even good old Barney Frank, who now wants to be rid of Fannie and Freddie, said there was no government backing for the quasi-private companies.

“There is no guarantee. There’s no explicit guarantee. There’s no implicit guarantee.  There’s no wink-and-nod guarantee. Invest and you’re on your own. Nobody who invest in them (Fannie and Freddie) should come looking to me for a nickel. Nor anyone else in the Federal government.” (Source: NPR)

Of course we now know that Frank was talking out both sides of his mouth.  Good grief, Frank was romantically involved with a one time leader of Fannie. I don’t think anyone believes that there wasn’t so sort of pillow talk at one point of another.  This is the same Barney Frank that told President Bush to go away when Bush suggested we get out of the business of supporting Fannie and Freddie.  So far, the feds have given Fannie and Freddie over $100B dollars and it will probably be more before it is all said and done.

The Left's Plans Continue to be Exposed (Long Post)

The one thing that is not scary about what the left has planned for us is that we now have the ability to see it and do something about it before they can put their processes in motion or at the very least intercept them before conclusion.

Most recently Steve Learner was giving a speech at a symposium hosted at Pace College and he talked about what can be done to destabilize the banking system in particular and the free market economy in general. (Transcript here, thanks Legal Insurrection)

“…and for example, 10% of homeowners, going back to the where you started, who are under, a quarter of all people who own a home are under water. Right? Their home is under water, they are paying more for it than it’s worth.  Ten percent of those people are now in strategic default, meaning they’re refusing to pay but they’re staying in their homes.  That is totally spontaneous.  Right? They figure out it takes a year to kick me out of my home because the mort, the foreclosure’s backed up. I’m going to say I won’t pay. It’s just what business does, it’s a good business decision. If you could double that number, you would make banks, put the banks on the edge of insolvency again.”

“And so the question would be, what would happen if we organized homeowners in mass to do a mortgage strike. Just say if we get, and , and, if we get half a million people to agree, we’ll all not, we’ll agree we won’t pay our mortgages, it would literally cause a new financial crisis.”

Weekend Links

LOCAL:

1. King County (Seattle) has seen a slight uptick in the unemployment rate from Feb to Mar. As goes King County, so goes the rest of the state.  Since our region was probably hit last in the “Great Recession” we’ll also probably be last to feel the slow economic recovery. Overall, the unemployment rate has improved slightly over the past year.

2. The Washington State Legislature has tried in vain for several years to raise taxes on us but have failed miserably every time as residents have defeated legislation efforts with initiative. But I think Olympia has finally found a way to raise some tax revenue that won’t upset the residents too much. They are going after the Canadians.

3. While this news is terribly surprising to me, the man arrested for attempting to bomb the MLK Day parade in Spokane earlier this year has ad links to a white supremacist group. Kevin William Harpham, a former Fort Lewis soldier, has been arrested by authorities in Spokane and has been linked to the Neo-Nazi group, the National Alliance.

Seattle Home Values Decline Yet Again

Looks like the Seattle area is going to catch up with the rest of the west coast when it comes to a depressed real estate market. The Seattle area saw its largest decrease in home values since the market took it biggest tumbles in 2009. From Feb 2010 to Feb 2011 values were down 11%. Some speculate the decrease has to do with distressed homes (foreclosures) bringing down the values even quicker with accounted for 37% of the homes sold.  Windermere Real Estate Co. President OB Jacobi said, “…if you take out the distressed sales for the February, the medium home price jumps from “334,000 to$390,000.”

Until the foreclosures are cleared out of the market, we will not be seeing home values increase any time soon. Too many people bought more house than they could afford and the whole region is paying for it. Plenty of blame to go around. Bankers with their fancy financing options, to homeowners taking on these loans and even possibility lying about their ability to cover the mortgage, to Congress, and Freddie and Fannie who could have done something about this early on but decided that the dream of homeownership needed to be passed along to those who shouldn’t be homeowners.

Local Washington State News

Here are a few stories from around the local (Washington State) area from the Seattle PI and the Seattle Times (occasionally I throw on a link to Crosscut, a kind of funky Seattle news site).

Gas Guzzler Tax

WA State resident may have to pay higher licensing fees if they own what is deemed as a “gas guzzler”. State legislators are floating ideas that could possibly increase the price drivers pay at the pump, or to register a vehicle, especially if that vehicle is larger. The extra taxes would go to support already heavily subsidized mass transit in King and Pierce counties.