The capitulation of the global financial markets in 2008 was considered to be the worst financial disaster since the Great Depression.  At the helm of the collapse of financials across the globe were all the assets tied to the U.S. real estate market.  The actual collapse of real estate markets actually occurred in mid-2007, as mortgage-backed securities lost all recognizeable value and ushered in the credit freeze of global financial banks.  Coupled with a rise in commodity prices and soaring consumer prices, and rising unemployment, sales of new and existing homes in the U.S. fell to multi-decade lows.

2009 wasn't much better for real estate.  Even with President Obama's multi-billion dollar stimulus package and new-home buyers tax credit, many economists do not see real estate returning to pre-collapse conditions for many years.  The 30-yr mortgage rate fell to a historic low during 2009 but has since recovered above 5% as we start the new year.  The Federal Reserve is widely expected to raise interest rates from rock-bottom levels at the first sign of sincere recovery in the U.S. economy.  What impact will that have on home buyers?  And has the residential real estate market truly recovered?

We will continue to search for answers to all these questions and hopefully a few more in 2010. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Francesca Levy, for
12.24.09, 04:00 PM EST

Homeowners should buck the conventional wisdom about selling in the spring.

Putting a home on the market in this grim real-estate climate might seem like lunacy considering how heavily the market favors buyers. Home prices are down 28% from their national peak in the second quarter of 2006, according to the S&P/Case-Shiller home price index, which tracks sales in 20 major housing markets. Still, listing a home during certain months can improve a seller's odds.

Late spring and summer are usually thought of as the best times to put a home on the market because buyer demand builds steadily through spring. Sales then peak during the warmest months, when it's easiest for families to move without uprooting their children from school. But this year, experts predict that the selling boom, which normally starts in spring, will hit at a different time than it has in the past. Sellers with flexibility should market their homes earlier in the year.

According to data from Zillow.com, an online real-estate database, the volume of home sales was highest in June, July or August every year since 2000. This year, however, an $8,000 credit for those buying their first home--that expires on June 30, 2010 and requires buyers to have closed on a home by April 30, 2010--will force buyers to speed up their decisions. Historically low interest rates also suggest that sellers will face a busier market as early as February.

“This year, we're anticipating sales will peak earlier,” says Nicole Hall, editor in chief of Lendingtree.com, an online mortgage comparison service. “The best time to get your house on the market will be February or early March, and maybe even earlier if you want to avoid competition.”

The Economy Upsets Seasonal Trends

House hunting may have traditionally sped up after March, but nothing about the last few years in real estate has been traditional. In 2008, sales failed to pick up with their usual gusto in late winter because the financial crisis cast a shadow of fear over buyers, and lending seized up.

“Between the fall of 2008 and March of 2009, there was a long dead period in real estate,” says Ken Shuman, spokesman for the real estate Web site Trulia.com. “You don't want to buy a house if you don't have job security, and a lot of people had jobs but didn't feel too secure about them.”

2009 didn't follow typical trends, either. Fall, when sales usually plummet, saw more sales activity than usual this year because of the introduction of the government's tax credit, which was initially set to expire on Nov. 30, 2009.

Improving the Odds

Granted, some sellers have no choice but to sell at a slow time of year. Job relocation and the need to free up assets are facts of life that can deprive families of the luxury of waiting until the peonies bloom to put their homes on the market.

But Hall says that there are ways to improve your chances of a sale if you have to list your home late in the year, like playing up holiday decorations and shoveling walkways to maximize curb appeal. She adds that selling at this point in the cycle isn't always the worst fate.

“Look at how you can turn it to your advantage. Maybe because you're forced to sell at a different time, there will be less competition,” she says. “Also, be realistic about your price. If you know you're selling at a tough time, it can be a tough call, but you might have to drop that price a little.”

Shuman and Hall agree that the season shouldn't be the only factor homeowners consider when getting ready to sell. Paying attention to the vagaries of the local real-estate market, where inventory and prices can fluctuate week to week, will offer more guidance to sellers than simple seasonal trends.

“Check out your local inventory,” says Hall. “Read the housing-market blogs, follow the local market really carefully, and look at the unemployment rate. That will make a big difference.”

For smart sellers, Shuman and Hall agree, taking a chance and starting the sale process earlier will reap distinct benefits in 2010.

“The beginning of the year is going to be make-it-or-break-it,” says Shuman. “If you're a seller, get your property listed as early in the year as you can.

The Best Time of Year to Sell A Home .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Amy Hoak, for
Jan. 7, 2010, 10:41 a.m. EST

CHICAGO (MarketWatch) -- Mortgage rates dropped this week, an about face after weeks of creeping up, according to Freddie Mac's weekly survey of conforming mortgage rates, released on Thursday.

The 30-year fixed-rate mortgage averaged 5.09% for the week ending Jan. 7, down from last week's 5.14% average. The mortgage averaged 5.01% a year ago. Fifteen-year fixed-rate mortgages averaged 4.50%, down from 4.54% last week and 4.62% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.44%, unchanged from last week and down from 5.49% a year ago. And 1-year Treasury-indexed ARMs averaged 4.31%, down from last week's 4.33%; the ARMs averaged 4.95% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point and the ARMs required an average 0.6 point.

"Mortgage rates eased slightly this week after rising consecutively through December," said Frank Nothaft, Freddie Mac chief economist, in a news release. "Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year."

ARM rates will rise as the economy strengthens and the Federal Reserve decides to raise its overnight target rate, Nothaft added. "However, the federal funds futures market does not anticipate any Fed action until the second half of 2010."

In a separate release on Wednesday, the Mortgage Bankers Association reported that applications for mortgages dropped during the week of Christmas, compared with the week before, and remained nearly flat the week of the New Year's holiday. See full story.

Amy Hoak is a MarketWatch reporter based in Chicago. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

by Henry Blodget for
Jan 14, 2010 10:44am EST

As many Americans begin to realize that it will be many years (if not decades) before their houses are worth what they owe on them, the idea of walking away from your mortgage is going mainstream.

Not surprisingly, the mortgage industry is doing everything it can to prevent this, including telling homeowners that they have a "moral obligation" to pay.

But do they?

Is it okay to walk away from your mortgage for no other reason that it doesn't make financial sense to keep throwing your hard-earned money away?

There's no universal answer here, but in most cases, the answer is "Yes, it's okay to walk away." Importantly, the reason is not that "Wall Street deserves it" or "We've got to teach the banks a lesson" or any of the other retribution logic being thrown around these days.  The reason is that you and your lender engaged in an arms-length transaction in which both parties balanced competing interests and spelled out their obligations in a clear, signed contract. And unless that contract states that you have a "moral obligation to pay," you don't have a moral obligation to pay.

Specifically, when you borrowed money to buy your house, you engaged in a business transaction. The bank or mortgage-lender evaluated the risk of the transaction and concluded that it would was a risk worth taking. To protect its money, the lender also required that you pledge the house as collateral, and it required you to have some equity in the house as an additional cushion. In the event that you didn't pay, the lender retained the right to seize the house, sell it, and pay itself off before you got your equity. The lender loaned you the money because it concluded that this was a smart business decision.

You, meanwhile, also made a business decision. You decided to borrow money to buy your house even though it meant risking your equity, home, and credit rating.

And now it turns out that both of you made a bad decision.

Fortunately, you don't have to fight about what happens next. The contract between you spells everything out: If you stop paying, the lender gets the house. That's it. Unless the contract specifically differentiates between a failure to pay based on hardship (involuntary) and a failure to pay based on a collapse in the value of the house (voluntary), there's no difference. If the lender thought at the beginning that you had a "moral obligation to pay," it would have specified that in the contract.

Now, compare this to a situation in which you DO have a moral obligation to pay: When you borrow money from a friend at no interest, for example, and you promise that friend that you will give him or her every penny back. THAT is a moral obligation to pay. In this case, your friend did not lend you money to make a profit. Your friend loaned you money to help you out--with no collateral or contract other than your promise to pay.

Just because you don't have a moral obligation to pay your mortgage, of course, this doesn't mean it's smart to walk away. That depends on the state in which you live (some states are "recourse" states, in which lenders can go after other assets), as well as many other considerations about your personal situation. You can learn more about that here.
.........................
Nemo liber est qui corpori servit. 
-- Seneca the Younger, Epistoloe Ad Lucilium (XCII)

If the recession that we are mired in is supposed to teach us something... I think we are doing it wrong. 

I was under the impression that among the lessons learned from all this (for the consumer) is to have the responsibility to live within their means, and know when they can and can't have something.  I thought that the Retail Sales numbers out today (Dec 2009 -0.3%) actually indicated to me that maybe that was the case.  Obviously not. 

I have to say, an article saying in no uncertain terms that the worst that can happen if you walk away from your mortgage is that you lose your house and credit as well as using business practice risk assesment to justify the comments is deliciously ironic.  Maybe this is a trend of the pundits making Main St. happy by using the same logic and big words that Wall St. would use if the position was reversed. 

In reality, however, there is some danger with this line of "thought" from the mainstream pundits.  One of the things that every generation normally takes away from the 'hard times' (read: recession) is a lesson in control of excess and knowing what is feasible to have, and the price often associated with earning it.  In short: Fiscal sensibility.  But stuff like this seems to indicate to me that, if this "logic" is at all popular, then there are three good reasons we really haven't seen the worst of all this.  1) We haven't really learned anything from the first time around.  2) the fallout from this would create a flood of non-liquid assets on back sheets, and cause current real estate problems to detonate. 3)  the fallout from banks tightening lending practices (actually doing to tightening this time) to the extent loans are very difficult to get.

Maybe I'm over reacting a bit to this... but the "logic" here is about as "logical" as a sociopath seeing an attractive member of the opposite at a funeral and decides that killing someone might bring that same person to another funeral. The effect might happen, but the cost is ridiculous.  .........................
Nemo liber est qui corpori servit. 
-- Seneca the Younger, Epistoloe Ad Lucilium (XCII)

Oh look!  It seems as if this might be the start of a good discussion!  We have a somewhat suspect article followed by intelligent comments from our financial community!

Insert


I like your logic (and your raincoat) here...but there's one underlying rule of thumb that I would like to interject:

Learning, especially from one's mistakes, takes time.

And frankly, the U.S. consumer hasn't had the appropriate time for all the critical lessons of the financial collapse to set in.

Why?  Well, mainly because the political and social powers that be simply can't afford to let the consumer get "down."  Not to mention the oversized, steroid-injected corporate arm of society (i.e., big business).

We've talked about it many times before:  66% of our economic output is dependent on the spending habits of blue-collar Joe Schmoe and his somewhat more affluent neighbor Mr. Market.  Therefore, there is marked institutional interest in keeping these two icons of the societal masses upbeat and, more importantly, spending. 


I can't go with you on this one.  Every generation definitely didn't take that away.  In fact, of the new era (post free banking era) only a few generations actually did.  The first that comes to mind, of course, is the generation of Great Depression survivors.  The main reason they had to adhere to the hard lessons of the recession is also a simple, yet insurmountable one:  scramble, save, and survive or perish.  And that's not necessarily a situation in which learning takes place as much as sheer adaptation takes over.

The second generation actually is just an extension of the Great Depression generation and that's the Great War generation.  The recessions that marked the period of 1949 - 1960 were mostly short in duration but spanned over a decade of economic turmoil due to a general instability in the U.S. economy.  Some, of course, could be attributed to the war, others to the economic policies (periods of hyperinflation, reactionary tightening, and general panic in spite of low unemployment).

But my point is not history just for the sake of history, but just to say that the Great Depression and World War II generations are arguably the last of the U.S. culture of "saver" generations.  They learned by means of sheer necessity that if you can't live within your means, you may just perish.  Since the onset of the economic booms in the 1960s, 1980s, and 1990s, the increased authority of the U.S. Federal Reserve and the bi-polar (pro business/pro-consumer) economic policies of the political regimes after 1960, the U.S. as a nation has not faced such severe threat as the generations passed.

My "logic" is that fiscal sensibility is not a cultural identity for Americans although most of us would argue in its favor.  It sounds good and patriotic to have fiscally responsible citizens in the U.S.; it feels even better to identify ourselves as such.  But in practice, fiscal sensibility is something that is generally forced upon its retainers in times of most dire need. 

Sure, there are some of us that pride ourselves in living within our means and spend prudently and save aggressively.  But that's definitely not my generation and maybe not even my parents' generation (the Baby Boomers).  To be sure, that isn't even me...with all my fancy financial learnin'.  And while my personal debt to equity ratio is much lower than most, it isn't because I've been the best saver; it speaks more to the fact that I learned to invest to increase my capital in-flows.  Stretching the numbers (aka, increased production) is how I've managed to stay above the curve...not necessarily balancing out-flows (expenses).


Of course it is.  And that's half the point of the game to convince Main St (the street where Joe Schmoe and Mr. Market both live) that they are fully justified in their actions.  However, here's a prediction;  there will be no breakthrough trend in people walking away from their houses in an attempt to buck authority.  Why?  Because while Joe Schmoe and Mr. Market live on Main St, good citizens such as you also live there.  Not to mention the fact that defaults on home loans will last on credit reports for nearly 7 years (81 months to be exact).  And since even before the free banking system was established, credit remains the lynchpin of American prosperity.

Is your credit worth sacrificing for 7 years in order to walk away from a bad (home) investment?  Not for most people. 

For your reading enjoyment:
List of U.S. Recessions .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Rex Nutting, for
Jan. 20, 2010, 11:55 a.m. EST

WASHINGTON (MarketWatch) -- Capping the worst year for housing since the end of World War II, U.S. housing starts fell 4% to a seasonally adjusted annual rate of 557,000 in December from 580,000 in November, the Commerce Department estimated Wednesday.

For all of 2009, an estimated 554,000 homes were started, down 39% from 2008's total of 906,000 and the lowest since 1945. Starts of single-family homes dropped 29% to 444,000 in 2009, the lowest on record, dating to 1959.

Housing starts of single-family homes, condominiums and apartments have been essentially flat over the past year, dipping one month only to rise the next. Compared with December 2008, starts are up 0.2%, the first year-over-year gain since early in 2006.

Painted in the starkest terms, starts are down about 75% from the peak in 2006.

"This extremely depressed level of new construction should allow inventories of unsold new homes to enter the key spring selling season at reasonably balanced levels," wrote economists for Morgan Stanley.

The December estimate of 557,000 was better than the 540,000-unit rate expected in the median forecast of economists surveyed by MarketWatch. Read our complete economic calendar and consensus forecast.

November's starts pace was revised higher, to 580,000 from 574,000 previously reported. Read the full report on the government's Web site.

The home-construction industry has been busy slashing production of new homes to work off a massive inventory of unsold properties. As of November, the number of new homes on the market had fallen about 60% to just 235,000 -- the fewest since 1971.

For their part, builders remain very pessimistic about a recovery, despite a generous tax subsidy for buyers.

In January, the home builders' sentiment index dropped back to a reading of 15 from 16. Builders face tough competition from foreclosures of existing homes, and prospective buyers remain cautious about the job market. See our full story on the home builders' index.

The adjustment in home building isn't over yet: The number of homes under construction fell 4% in December to a seasonally adjusted annual rate of 511,000, a record low, the data showed.

For all of 2009, the number of homes completed fell 29% to 796,000, also a record low.

Some reasons for optimism
Details of the December report showed a stronger rebound in the housing market, however. The number of building permits rose 10.9% to a seasonally adjusted annual rate of 653,000, far above the level of starts and the highest in 14 months.

In December, building permits for single-family homes rose 8.3% to a seasonally adjusted annual rate of 508,000, the highest in 15 months. Many economists consider the single-family permits figure to be the most reliable and important number in the release.

Over time, permits and starts are highly correlated.

Permits are less affected by unseasonable weather than starts are. This December was one of the coldest and wettest on record.

"Some of the decline in starts may owe to messy weather conditions in the month which tend to affect permits less," wrote Julia Coronado, an economist for BNP Paribas. However it is still the case that the momentum in building activity as fizzled in recent months."

Starts fell sharply in the Northeast and Midwest, rose slightly in the South, and were essentially flat in the West.

The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can't be sure whether starts increased or decreased.

In December, for instance, the standard error for starts was plus or minus 9.3%. Large revisions are common.

The standard error for monthly building permits data is much lower at plus or minus 2.4%.

It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 562,000 annualized, down from 568,000 in the four-month period that ran through November.

In a separate report Wednesday, the Labor Department said producer prices rose 0.2% in December, while core prices -- which exclude food and energy prices -- were flat. Read our full story on the PPI.

Rex Nutting is Washington bureau chief of MarketWatch. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Jan. 25, 2010, 10:00 a.m. EST

By Rex Nutting WASHINGTON (MarketWatch) - Sales of U.S. existing homes plunged 16.7% in December to a seasonally adjusted annual rate of 5.45 million from 6.54 million in November as a popular tax credit was set to expire, a national real estate trade group estimated Monday. The 16.7% percentage decline from November to December was the largest on record, the National Association of Realtors reported. The decline was larger than the 11% drop to 5.80 million that was expected by economists surveyed by MarketWatch. Sales in December were up 15% compared with December 2008. The median sales price rose to $178,300 in December, up 1.5% compared with a year earlier. It's the first year-over-year increase in prices since August 2007.
.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By DAVID STREITFELD for
updated 2 hours, 55 minutes ago

NEW YORK - In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

“We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury senior adviser.

One owner's case

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure. For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

‘Tailor-made for fraud’

If short sales are about to have their moment, it has been a long time coming. At the beginning of the foreclosure crisis, lenders shunned short sales. They were not equipped to deal with the labor-intensive process and were suspicious of it.

The lenders’ thinking, said the economist Thomas Lawler, went like this: “I lend someone $200,000 to buy a house. Then he says, ‘Look, I have someone willing to pay $150,000 for it; otherwise I think I’m going to default.’ Do I really believe the borrower can’t pay it back? And is $150,000 a reasonable offer for the property?”

Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.

Last year, short sales started to increase, although they remain relatively uncommon. Fannie Mae said preforeclosure deals on loans in its portfolio more than tripled in 2009, to 36,968. But real estate agents say many lenders still seem to disapprove of short sales.

Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

‘In a perfect world ...’

Mr. Paul, the Phoenix agent, was skeptical. “In a perfect world, this would work,” he said. “But because estimates of value are inherently subjective, it won’t. The banks don’t want to sell at a discount.”

There are myriad other potential conflicts over short sales that may not be solved by the program, which was announced on Nov. 30 but whose details are still being fine-tuned. Many would-be short sellers have second and even third mortgages on their houses. Banks that own these loans are in a position to block any sale unless they get a piece of the deal.

“You have one loan, it’s no sweat to get a short sale,” said Howard Chase, a Miami Beach agent who says he does around 20 short sales a month. “But the second mortgage often is the obstacle.”

Major lenders seem to be taking a cautious approach to the new initiative. In many cases, big banks do not actually own the mortgages; they simply administer them and collect payments. J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan.

“This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.”

But even if lenders want to treat short sales as a last resort for desperate borrowers, in reality the standards seem to be looser.

Sree Reddy, a lawyer and commercial real estate investor who lives in Miami Beach, bought a one-bedroom condominium in 2005, spent about $30,000 on improvements and ended up owing $540,000. Three years later, the value had fallen by 40 percent.

Mr. Reddy wanted to get out from under his crushing monthly payments. He lost a lot of money in the crash but was not in default. Nevertheless, his bank let him sell the place for $360,000 last summer.

“A short sale provides peace of mind,” said Mr. Reddy, 32. “If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”

Mr. Reddy still lives in the apartment complex where he bought that condo, but is now a renter paying about half of his old mortgage payment. Another benefit, he said: “The place I’m in now is nicer and a little bigger.”

.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Rex Nutting for
March 23, 2010, 10:00 a.m. EDT

WASHINGTON (MarketWatch) - Resales of U.S. homes and condos fell 0.6% in February to a seasonally adjusted annual rate of 5.02 million, the lowest level in eight months, raising doubts about the durability of the housing recovery, the National Association of Realtors reported Tuesday. Sales of existing homes have fallen three consecutive months after rising steadily through the fall in response to a federal subsidy for first-time home buyers. The tax credit has been restored and expanded to repeat buyers, but there has been no increase in sales yet. Inventories of sales on the market jumped in February, rising 312,000 to 3.59 million, the highest since September. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Jeffry Bartash for
March 24, 2010, 10:01 a.m. EDT

WASHINGTON (MarketWatch) -- Sales of new homes in the U.S. fell slightly in February - the fourth straight monthly drop - to yet another record low. New-home sales slipped 2.2% to an annual pace of 308,000, seasonally adjusted, which is the lowest rate since the government began tracking the data in 1963, according to the Commerce Department. Economists surveyed by MarketWatch forecast annualized sales of 318,000. Sales for January were revised to a seasonally adjusted annual rate of 315,000, up from 309,000 as previously reported. The median price of a new home sold shot up 6.1% to $220,500 in February from January's revised level of $207,900.
_________________________________________________________________________________________________________________________________________________________________


I actually like these numbers.  In fact, I think we need to keep this record-breaking streak alive for a while.  Eventually (and I may mean some months or even years from now) Mr. Market and his merry brokers are going to have to face facts.  Unemployment is still a stone's throw from 10% and there's no reason for home prices to be up.  None whatsoever.  Companies are making money on skeleton crews at this point...and they should if they're solvent companies.  But we're really somewhere in a state of economic purgatory...and it's showing. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Alan Zibel, AP Real Estate Writer for
On Friday March 26, 2010, 10:36 am EDT

WASHINGTON (AP) -- After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.

The multifaceted effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. But it could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom. In addition, their existing mortgage companies will be able to receive incentives to lower their principal balances.

The program also includes assistance to help unemployed homeowners keep paying their mortgages.

But the administration cautioned that the plan isn't intended to stop all foreclosures or assist all troubled homeowners.

A Treasury Department document said, "investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes."

"Some people simply will not be able to afford to stay in their homes because they bought more than they could afford," the document said.

Mark Zandi, chief economist at Moody's Analytics, estimated the plan could help between 1 million and 1.5 million homeowners avoid foreclosure. That compares to 4.5 million that are already in foreclosure proceedings or 90 days delinquent on their mortgages, he said. There are another 10 million homeowners who owe more than their homes are worth, Zandi estimates.

"The changes are wide-ranging and significant and have the real potential for bringing the foreclosure crisis to a much quicker end," Zandi said.

The plan is the latest effort by the Obama administration to tackle the foreclosure crisis which has continued to grow under its watch. Home foreclosures have soared despite the administration's effort to prevent foreclosures, a complex and problem-plagued endeavor involving more than 100 mortgage companies. Only 170,000 homeowners have completed that process out of 1.1 million who began it over the past year.

"We remain dubious about government mortgage modification efforts," wrote Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. "So far none have lived up to expectations and we see little reason to believe the latest effort will turn out any different."

The plan announced Friday will also require the mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

It also includes three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans -- a problem that has blocked many loan modifications.

The four big holders of second mortgages -- Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. -- have now joined the government's program to modify second mortgages. That program was delayed for months but with Citi on board, the major players in the industry are now on board.

Critics have complained that the Obama administration has done little until now to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage are "under water" -- they owe more than their property is worth -- according to Moody's Economy.com.

AP Economics Writer Christopher S. Rugaber contributed to this report. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Wouldn't it be cool if the Fed was actually viewing The Forum?  For a moment I thought they might be.  But then again, I'm sure that we'd be shut down indefinitely should they take a concerted look at all the information here.

Nevertheless, no sooner than I made mention of it...the government sweeps in to take another pre-emptive strike at the housing market.  Of course, it would seem that this is all a good faith attempt to help the housing market get back to where it needs to be...wherever that is.  But to me--equity/real estate big bear supreme--I still think that many of the fixes the government has in store are really futile efforts.  And that's just not me being pessimistic; I honestly think it's a good move for the administration to do whatever it can to stave off this monster as long as possible.

Unfortunately, I don't think that the Fed nor the rest of the government has a sword big enough to slay the dragon at hand.  It just needs to die off.

But the administration is in a precarious situation.  The President got here on a so-called "grass roots" movement that focuses on the well-being of the constituents both far and near.  That's why I was absolutely confident that the healthcare bill would pass.  That 's also why I think the government is going to exhaust its resources trying to fix this problem.  But that, in turn, may become "the" problem.  And not to mention the rest of the naysayers.


When it comes to politics and the like, I think being correct takes a backseat to perception...at least until validation occurs.  Therefore, the lack of belief from the people on the sidelines (aka spectators, bka analysts) is not only to be expected, but may actually be an indicator of how the general public may come to feel about this.  And that's a pretty bad situation for the adminstration because it puts them in the proverbial Catch-22.

But in the end, I guess it boils down to action.  No matter if the plan works or not, it's so critical to do "something."  Can you imagine what it would be like if the government turned a blind eye to the real estate situation...and it does inevitably get worse?  I can't, but I'm sure President Obama and his policy makers can.  Again, it's just best to go down swinging, if you're going to go down.

Realistically though, I still look at the real estate market as an extension of the capital markets.  That, in turn, gives me the notion that there's not much that the government can do except fix the fires when they arise and hope for rain in the future.  I just personally feel that their efforts are rather futile against such a "natural" force as what has transpired in the real estate markets. 

We'll see though. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Editorial Staff for
Wed, 07 Apr 2010 13:15:00 ET
 
Nature's way of progression in this world appears to be -- 3 steps forward followed by 2 steps back -- repeatedly.

As far as we can tell, humankind's progress has always proceeded in this series. In fact, at Elliott Wave International, we've based an entire approach to studying the market on this progression -- it's called the Wave Principle. In Frost & Prechter's classic Elliott Wave Principle -- Key To Market Behavior, EWI's president Robert Prechter writes:

"What the Wave Principle says is that mankind’s progress ... does not occur in a straight line, does not occur randomly, and does not occur cyclically. Rather, progress takes place in a 'three steps forward, two steps back' fashion, a form that nature prefers. The stock market is no exception, as mass behavior is undeniably linked to a law that can be studied and defined. Order in life? Yes. Order in the stock market? Apparently."

The stock market is a reflection of man's progress, or productive enterprise, so we believe the 3-2 concept is reflected in charts of stocks and other markets. In other words, it's wise to realize that regress -- the "2 steps back" -- is part of progress. That's nature's way of eliminating the excesses; the washing away of all that may impede future growth. Applied to an individual's life, it would be akin to "learning from one's mistakes." In the same way, a fresh start is made when whole societies or nations learn from past errors.

A prime example of where "regress" has taken hold is the U.S. real estate market. The "regress" is correcting the build-up of easy credit:


Have real estate prices "regressed" far enough? Probably not.

"... before the final long, drawn-out, exhausting bottom arrives, [investors in residential real estate] will be selling out for 10 cents or less on peak-value dollars."

These are Robert Prechter's comments on residential real estate in the September '09 Elliott Wave Theorist. If you've kept up with real estate trends, you know that in many areas of the country, you can already buy properties at drastic discounts -- 50% of the peak value or more; commercial real estate is also "catching up." And, in an April 6 article "Foreclosures Are Rising," CNBC writes:

"The new foreclosure wave is here... We won't get the numbers until next week, but sources tell me they will likely be a new monthly record. Tens of thousands of loans have been hitting the 'notice of trustee sale' bin, and that means they are coming to foreclosure." The sub-heading which follows reads, "And this is just the beginning."

Regress may begin at different times for different assets. But, make no mistake, if excesses have occurred, the beginning of the corrective process is just a matter of time. If excesses have been building for a matter of weeks, the regress to follow will match accordingly. If progress took decades or even centuries, regress will be substantial, too. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Rex Nutting, for
April 23, 2010, 11:55 a.m. EDT

WASHINGTON (MarketWatch) -- Boosted by a soon-to-expire tax break, low mortgage rates and favorable weather, sales of new homes surged 27% in March to a seasonally adjusted annual rate of 411,000 after hitting a record low in February, according to Commerce Department estimates released Friday.

It was the largest percentage gain in sales since April 1963, the government said. It was the highest sales pace since July, and much stronger than the 335,000 expected by economists surveyed by MarketWatch. See our complete economic calendar and consensus forecast.

Sales are up 24% compared with March 2009, but are down 70% from the peak in 2005.

Government statisticians have low confidence in the monthly report, which is subject to large revisions, and large sampling and other statistical errors.

In most months, the government isn't sure whether sales rose or fell. The standard error in March, for instance, was plus or minus 21.1%. Read the full government report.

The government says it can take up to five months to establish a statistically significant trend in sales. Over the past five months, sales have been on a 358,000 seasonally adjusted annual pace, up from 355,000 in the five-month interval through February and 356,000 in March 2009. It's the first time since January 2006 that the five-month average was higher than a year earlier.

Sales of new homes had fallen four months in a row before March's surprising boom. A federal tax credit for home buyers that expires soon seemed to have little impact on sales until March.

In order to qualify for the credit, a buyer must sign a sales contract before April 30, and must close before June 30. New-home sales are recorded at the time of the contract signing, not the closing, so April's sales figures would be the last to show any impact from the subsidy.

"We expect a further sharp rise in April sales then a sharp, though temporary, drop in May," wrote Ian Shepherdson, chief domestic economist for High Frequency Economics. "After that, much depends on whether Congress extends the tax break; we expect it will."

On Thursday, the National Association of Realtors said sales of existing homes rose 6.8% in March. Existing-home sales are recorded at the time of closing. See full story on existing-home sales.

Housing, which led the economy into recession, seems to be the last sector to recover. Earlier this month, Federal Reserve Chairman Ben Bernanke said, "We have yet to see evidence of a sustained recovery in the housing market."

Policy makers and investors will be watching the housing data closely over the next few months to see if the market can continue March's gains even after the tax credit expires and federal support for low mortgage rates subsides.

"We think that the second quarter will be a make-or-break quarter for the housing sector," wrote Ward McCarthy, chief financial economist for Jefferies Economics. "Our current view is that the housing sector is in the process of stabilizing on a national level. Recovery will be a slow and fitful process."

Fundamentally, housing starts are too low to meet the demand caused by household formation, noted Tony Crescenzi, strategist for Pimco. Ahead of the recession, about 1.2 million households were formed each year. Not all of those families will buy homes, but all of them need shelter. Many of them have been doubling up during the recession.

Details

Inventories of unsold homes fell by 5,000, or 2.1%, to 228,000, the lowest in 39 years. At the March sales pace, it would take 6.7 months to sell off the inventory. That's the lowest months' inventory since December 2006.

Home builders have been slashing their inventory of unsold homes for more than a year. The number of homes for sale that are under construction fell to a record low of 100,000.

Builders have cut back on production of new homes, but they still face headwinds from unsold existing-homes as foreclosures continue to mount up.

If a home isn't sold before it's finished, it's taking a record 14.4 months to sell it after completion -- a reflection of the mismatch between more expensively priced homes in the inventory and lower-priced homes that have been selling.

The median sales price of a new home sold in March was $214,000, up 4.3% compared with a year earlier. Cheaper homes were selling better than expensive ones. Just 12% of homes sold for more than $400,000.

Sales were up in all four regions: up 36% in the Northeast, up 4% in the Midwest, up 44% in the South and up 6% in the West, the government's data showed.

Rex Nutting is Washington bureau chief of MarketWatch.
.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Amy Fontinelle, for
04.23.10, 05:40 PM EDT

How to tell if the housing market is coming back.

Is the housing market on the verge of recovering? Is it recovering already? If you're not sure whether you believe the economists and pundits who think they can see the future, here are some tools that will help you make up your own mind.

Pending Home Sales

According to the National Association of Realtors, pending home sales, or the number of homes that are under contract and in the process of selling, rose by 8.2% in February (the most recent month for which data are available). The index is also an encouraging 17.3% over what it was a year ago.

Pending home sales are considered a leading indicator, meaning that they can forecast the direction the economy is headed. Leading indicators cannot truly predict the future, though, so they should be taken with a grain of salt.

The increase in pending home sales could be less indicative of a genuine improvement in the housing market, however, and more indicative of the pending expiration of the home buyer tax credit, which requires homes to be under contract by April 30.

Housing Starts

Housing starts are an important leading indicator of not just the housing market, but the economy as a whole, because people are more likely to start new residential construction projects when things are looking good. Housing starts don't look promising right now--the U.S. Census Bureau reported that privately owned housing starts in February were 5.9% below January and 0.2% above February 2009.

New- and Existing-Home Sales

New-home sales reached a record low in February with 308,000 sales, according to the National Association of Home Builders (NAHB ). In 2005 1,283,000 new homes were sold per month on average. The good news is that new home sales increased by 20.8% in the West, one of the regions hardest hit by the housing crisis.

More good news comes from statistics on existing-home sales. About 5 million existing homes were sold in February, up from about 4.7 million a year ago.

Compare these figures to 2007 averages, when a house cost $217,900, mortgage rates were 6.52% and median incomes were about the same at $61,173. While falling home prices aren't good, improved home affordability could help the recovery by putting home ownership within reach for more families, especially the first-time buyers, who have historically helped end housing slumps.

However, credit is still difficult to obtain, and unlike investors, most families can't buy homes without a mortgage. What's more, despite how far prices have fallen, there are still plenty of people in high-cost-of-living cities who can't afford to buy anything.

Home Inventory

Home inventory is another leading economic indicator. A greater supply of homes for sale indicates weak market conditions. The NAHB also reported that as of February 2010, there were 236,000 new homes, or 9.2 months' supply, on the market, the worst number since May 2009. There was also 8.6 months' supply of existing homes on the market, the worst number since August 2009. However, these numbers are better than those from a year ago, when the supply was 11.1 months for new homes and 9.7 months for existing homes.

Housing Affordability

The National Association of Realtors reports that in February 2010, the median price of an existing home in the United States was $164,300 and the average mortgage rate was 4.99%. With median family income at $60,498, a family's housing payment would only be 14.2% of its income, well below the 25% cap many financial experts recommend for keeping the monthly budget under control.

Mortgage Applications

The Mortgage Bankers Association (MBA) issues its Weekly Mortgage Applications Survey that reports on the number of people applying to borrow money to buy a house. For the week ending April 9, mortgage applications declined by 9.6% over the previous week. The four-week moving average, which is helpful in smoothing out the ups and downs of the weekly figures, was down 6.2%. The MBA stated that an increase in mortgage insurance premiums for FHA loans, which are attractive to buyers because of their low down payment requirements, may have contributed to this decline.

Mortgage Interest Rates

For the week ending April 9, the MBA reported that the average contract rate on a 30-year fixed-rate mortgage was 5.17%. Mortgage rates have been at historic lows for months, wavering between 5% and 6%. Low mortgage rates help entice buyers, but they can't fix a bad housing market on their own. The Consumer Confidence Index, a survey of how optimistic or pessimistic people feel about the economy, has been up and down in 2010, and consumers still feel pessimistic about the job market. The thousands of Americans who are unemployed couldn't get a mortgage even if rates were 1%.

Real Estate Mutual Funds

According to Morningstar, real estate mutual funds returned 9.4% in the first quarter of 2010, one of the highest return of any mutual fund category. Over the last year, they have also led all mutual funds with a gain of 105.3%. Shares of Vanguard's REIT ETF (VNQ), which invests in a wide range of real estate companies, gained 10% in the first quarter of 2010 and over 69% in the last year. These returns show investor confidence in the overall real estate market.

REITs are not limited to investing in the residential housing market, however; VNQ's largest holdings, for example, include Simon Property Group, which owns numerous shopping malls; Vornado Realty Trust, the owner of many office and retail buildings; and Public Storage, a well-known storage unit rental company.

Mixed Signals

Major housing market indicators currently provide mixed signals about how the housing market is doing. High unemployment rates, the continued difficulty of obtaining credit and the pending expiration of the home buyer tax credit make it hard to tell where the housing market is headed at the moment. Keep an eye on these indicators and wait for clear and consistent signals to emerge before you consider the housing market to truly be recovering. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Rex Nutting for
May 18, 2010, 8:30 a.m. EDT

WASHINGTON (MarketWatch) - U.S. housing starts increased for the second straight month in April to an 18-month high, the government estimated, but building permits fell sharply, casting doubts on the momentum of the housing recovery. Housing starts rose an estimated 5.8% in April to a seasonally adjusted annual rate of 672,000 from an upwardly revised 635,000 in March, the Commerce Department reported Tuesday. However, building permits fell 11.5% to a seasonally adjusted annual rate of 606,000, the lowest in six months. Permits for single-family homes, considered by many analysts to be the number in the housing release, fell 10.7% to a 484,000 annual rate. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Amy Hoak for
May 19, 2010, 10:00 a.m. EDT

CHICAGO (MarketWatch) -- The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14.01% in the first quarter, down from 15.02% in the fourth quarter of 2009, the Mortgage Bankers Association said on Wednesday. But the seasonally adjusted delinquency rate for mortgages on one- to four-unit residential properties, which includes mortgages at least one payment past due but doesn't include those in foreclosure, rose to 10.06%, from 9.47%. Mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. "The issue this quarter is that the seasonally adjusted delinquency rates went up while unadjusted rates went down," said Jay Brinkmann, MBA's chief economist, in a news release. "Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement."
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It's kinda surreal to think that 14-15% of all mortgages (like 1 in 7) are delinquent or in foreclosure across the nation.  And whether we've dropped 1% or not due to seasonal factors, a 1-in-7 rate of delinquincy seems to speak of some still dire times in the residential housing market.  It also says something about the unevenness of the recovery that we've seen.  Sure people are spending more.  Sure economic indicators are improving.  But basic metrics like mortgage delinquincies and unemployment still just a tenth of a point from 10% nationwide still tells a somber tale despite any rose-colored tinting.

.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

June 10, 2010, 10:07 a.m. EDT

SAN FRANCISCO (MarketWatch) -- Freddie Mac (FRE ) said Thursday the 30-year fixed-rate mortgage average fell further to 4.72% with an average 0.7 point for the week ending June 10. In the previous period, the average was 4.79%, and the year-ago average was 5.59%. "Following a relatively weak employment report, bond yields fell this week and mortgage rates followed. Private payrolls rose by 41,000 jobs in May, less than a quarter of the market forecast consensus of an 180,000 gain. Interest rates on 30-year fixed mortgage hover near the record low set on December 3, 2009 in our survey; the Primary Mortgage Market Survey began in April 1971," said Frank Nothaft, Freddie Mac chief economist, in a statement. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

July 1, 2010, 10:00 a.m. EDT

WASHINGTON (MarketWatch) -- New sales contracts on existing homes fell sharply in May after a federal subsidy for buyers expired at the end of April, a trade group reported Thursday.

The pending home sales index plunged 30% in May after rising 23% between January and April, the National Association of Realtors reported. The index, which measures signed sales contracts on previously owned homes, was down 15.9% compared with the same month a year ago.

The pending home sales index is a leading indicator for sales of existing homes, which are recorded at the time of the closing.

The sharp drop in pending home sales mirrors the 33% drop in sales of new homes in May, which are also recorded at the time of the sales contract.

To qualify for the federal tax credit of up to $8,000, a buyer needed to sign a contract on the home by April 30 and needed to close on the sale by June 30. Congress passed legislation on Wednesday to give buyers until the end of September to close on the sale, after realtors and other groups complained about delays in closings.

Sales of existing homes held up well through May, with sales up about 13% compared with February. But everyone expects sales to fall off sharply in July and August with the expiration of the tax credit.

The tax credit was designed to spur sales and keep prices from falling further. Home prices have been roughly unchanged for the past 10 months, according to the Case-Shiller price index.

Many analysts believe the credit pulled sales forward that would have taken place any way.

"Without the tax credit, there will be more aggressive price negotiations between buyers and sellers," said Lawrence Yun, chief economist for the NAR. "The key test on whether the housing market can stand on its own without stimulus medicine will depend critically on private-sector job creation in the second half of the year."

Rex Nutting is Washington bureau chief of MarketWatch. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Amy Hoak, for
July 15, 2010, 10:55 a.m. EDT

CHICAGO (MarketWatch) -- The 30-year fixed-rate mortgage averaged 4.57% for the week ending July 15, unchanged from last week when it hit a record low, according to Freddie Mac's weekly survey of conforming mortgage rates, released on Thursday.

The mortgage averaged 5.14% a year ago, and is now at the lowest level it has been in the history of Freddie Mac's 39-year survey.

The 15-year fixed-rate mortgage averaged 4.06%, down from last week's 4.07%. The mortgage averaged 4.63% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.85% in the survey, up from 3.75% last week. The ARM averaged 4.83% a year ago.

One-year Treasury-indexed ARMs averaged 3.74%, down from 3.75% last week; they averaged 4.76% a year ago. The ARM is the lowest it has been since Freddie Mac began tracking it in 1984.

To obtain the rates, all mortgages required payment of an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Refinance applications have been making up the lion's share of total applications, said Frank Nothaft, vice president and chief economist of Freddie Mac, in a news release.

"Over the past month, about four out of five conventional loan applications and more than one-half of FHA and VA loan applications were for refinance. Compared to the recent peak in 30-year fixed interest rates 13 months ago (week of June 11, 2009), current rates are a full percentage point lower."

Home buyers would also greatly benefit from the lower rates. Still, application volume for mortgages to purchase a home was at a 14-year low last week, according to the Mortgage Bankers Association. See story on mortgage applications.

"With today's rates, homebuyers would save about $1,500 in payments each year on a $200,000 loan compared to rates last June," Nothaft said.

Amy Hoak is a MarketWatch reporter based in Chicago. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Rex Nutting for
July 22, 2010, 10:00 a.m. EDT

WASHINGTON (MarketWatch) - Resales of U.S. homes fell 5.1% in June to a seasonally adjusted annual rate of 5.37 million after a federal subsidy for home buyers ended, the National Association of Realtors estimated Thursday. Economists surveyed by MarketWatch were expecting sales to fall about 10% to a 5.10 million annual pace. Inventories of unsold homes increased 2.5% to 3.99 million in June, representing an 8.9-month supply, the highest since August 2009. In coming months, the supply is expected to rise above 10 months, putting downward pressure on prices, said Lawrence Yun, chief economist for the real estate agents' lobbying and advocacy organization. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By
July 22, 2010, 10:58 a.m. EDT

CHICAGO (MarketWatch) -- The housing market is like a seriously ill patient who was being given extraordinary treatment in the hope that it would be strong enough after a time to recover on its own. Only the patient ran out of insurance. And the treatment stopped. And housing is sinking into a coma.

Housing's extraordinary treatment was a tax credit, first directed solely at first-time buyers and later expanded to all qualified home buyers. It provided up to $8,000, money that could be made available at closing, thus providing light-on-savings first-timers with the means to a down payment and related transaction costs.

Much like the situation in which the government found itself when big banking institutions were on the brink, the decision to prop up a faltering housing sector seemed justified at the time on the reasoning that the collapse of such a vital industry would spell doom for the economy overall and surely trigger a second Great Depression.

You can argue now whether that philosophy in either case was flawed. But when it comes to housing, what has clearly been shown is that all the tax credit has done -- besides cost the Treasury a good chunk of billions of dollars -- is pull sales that might otherwise have occurred later into the time frame when the tax credit was available.

There isn't anything wrong with that on the surface. Housing represents a huge portion of the U.S. economy, maybe 15% or more when you consider all the ancillary purchases and services that go along with it. With the economy in deep recession, any boost to housing is going to help.

But what if we had let housing go, let it slip into that coma two years ago? Yes, the bottom would have been a lot deeper. Maybe millions of us would be selling apples and pencils on the street today. But instead of this relapse into intensive care, it's quite possible that housing would have begun to recover on its own -- slowly, to be sure -- but at least the trend line now would likely be up.

The medicine housing really needs is jobs. People who are unemployed, or underemployed as so many who do have jobs are, don't have the financial wherewithal, let alone the confidence, to enter into a housing purchase. Tax credits never fixed that, only bandaged it over. But there was no healing under the bandage.

Imagine, that we had poured all those resources not into banks or houses, but into job creation. We might all still be selling apples to each other on the street. But just maybe we would instead have a healthy housing sector, and something more permanent in the way of economic security, to show for it.
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"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Greg Robb for
July 26, 2010, 10:01 a.m. EDT

WASHINGTON (MarketWatch) - U.S. new home sales rebounded in June after falling to all-time low in May, the Commerce Department estimated Monday. The increase in new-home sales to a seasonally adjusted annual rate of 330,000 was well above the 316,000 pace expected by economists surveyed by MarketWatch. New-home sales in May fell a revised 36.7% in May to a record low 267,000 level compared with the previous estimate of a 32.7% fall to 300,000. New-home sales are down 16.7% compared with a year ago. The months' supply of homes on the market fell to 7.6 months in June from 9.6 months in May. Median sales prices have fallen 0.6% in the past year to $213,400.
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"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Greg Robb for
July 27, 2010, 9:09 a.m. EDT

WASHINGTON (MarketWatch) -- The prices of single-family homes in 20 major cities rose a seasonally-unadjusted 1.3% in May, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. Prices have moved up 4.6% in the past year. Prices rose in 19 of the 20 metropolitan areas tracked by Case-Shiller in May compared with April. This is the second increase after six straight declines. David Blitzer, chairman of the index committee at Standard & Poor's, said the positive May report is a bit misleading. "A broader look at home price levels over the past year still do not indicate that the housing market is in any form of sustained recovery," Blitzer said. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand