America must do more to help its homeowners
By Mort Zuckerman
Published: March 4 2010 20:12 | Last updated: March 4 2010 20:12
America’s housing crisis has not gone away. If anything, it is getting more severe. Today, median single family house prices nationwide are down by slightly more than 30 per cent from their early 2006 peak. Fusion IQ, the research group, estimates that excess inventories will push prices down by a further 10 per cent. This is a critical issue because home equity was for years the largest asset on the balance sheet of the average American family.
The sheer number of empty homes overhanging the residential property market points to lower prices. There are an estimated 7m homes empty today, and an estimated 7.7m houses and condominiums behind on their mortgage payments. This is tantamount to a shadow inventory. More than 4m of those are now delinquent and going through some form of foreclosure or related procedures that will put them on the market in the next year or two. Fannie Mae’s 90-day delinquency rate is now roughly 5.5 per cent, double that of a year ago.
Home sales are depressed, too, by competition from some 6m rental vacancies, or 11 per cent of total rental supply. Median asking rents have been declining by an estimated 3.5 per cent over the past year – and that is accelerating.
There is no cheer in the new residential numbers either. January’s new home sales plunged by more than 11 per cent month-on-month to an annual rate of 309,000 units, the weakest on record. It now takes a record 14.2 months to sell a finished house. In the boom years, it took about three.
Even worse, the median price for new homes sold was $203,500, almost a seven-year low, and that for existing single-family homes fell 3.5 per cent month over month to $163,600, a new eight-year low. Inventories rose to a 9.1 month supply, which on top of the shadow inventory of unsold houses and those in the foreclosure pipeline does not bode well for homebuilders or housing. Neither does the sharp decline in mortgage applications to the lowest levels since May 2007 and the rise on the 30-year mortgage rates to more than 5 per cent.
Roughly one in four mortgages today exceeds the house’s value – approximately 10.7m homes. American Corelogic, the research provider, estimates an average deficiency per home of $70,700 or an aggregate of about $800bn. An additional 2.3m homes had less than 5 per cent equity. The remaining equity for many other homeowners is at historic lows. With declining prices beginning to hit the middle to higher ends of the housing market, we are looking at another foreclosure wave.
http://www.ft.com/cms/s/0/4582f4b6-27c5-11df-863d-00144feabdc0.html
Economists: Another Financial Crisis on the Way
Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.
http://abcnews.go.com/Business/economists-warn-financial-us-economy/story?id=9990828
Financially Speaking, What Type of Boomer Are You?
The people born between 1946 and 1964 have been lumped together as the Baby Boom generation their entire lives, but their values and outlooks differ greatly along that 18-year spectrum.
The oldest boomers are 64 this year, on the cusp of retirement. At the other end, those born in 1964 are 46 this year, typically at the peak of their earning years.
The 7 Words That Will Save America
“We expect you to repay your debts.”
Those seven words could save America. Let me tell you why.
Heads, I win …
Surely you’ve heard of the onslaught of people walking away from their homes because their property is worth less than the mortgage balance. Even borrowers who can afford their monthly mortgage payment are stopping, simply because it doesn’t benefit them anymore.
This is entirely legal in many states. After the house is forfeited, “non-recourse” laws prevent lenders from going after these borrowers’ assets or garnishing wages in an attempt to be made whole. It’s a one-way ticket: If the housing market works in your favor, enjoy the ride. If it doesn’t, that’s the lenders’ problem. Better luck next time.
http://www.fool.com/investing/general/2010/03/03/the-7-words-that-will-save-america.aspx
Inspirational movies from simple Truths
The Strangest Secret
Number One
Appreciation
http://www.c2itmedia.com/simple-truths.html
Detroit homes sell for $1 amid mortgage and car industry crisis
One in five houses left empty as foreclosures mount and property prices drop by 80%
Some might say Jon Brumit overpaid when he stumped up $100 (£65) for a whole house. Drive through Detroit neighbourhoods once clogged with the cars that made the city the envy of America and there are homes to be had for a single dollar.
You find these houses among boarded-up, burnt-out and rotting buildings lining deserted streets, places where the population is shrinking so fast entire blocks are being demolished to make way for urban farms.
http://www.guardian.co.uk/business/2010/mar/02/detroit-homes-mortgage-foreclosures-80
Can you exit a debt crisis by adding even more debt?
| Investment Outlook |
| Bill Gross |
I haven’t gone to a cocktail party in over 10 years. Granted, perpetually watching Seinfeld reruns on Friday and Saturday nights makes for a dull boy, but the alternative is excruciating. Uh, which would I prefer – solitary confinement or water boarding? I lean strongly in the direction of a warm bed and peace as opposed to a glass full of tinkling ice cubes and a room resonating with high-decibel blather. I suppose the parties wouldn’t be so bad if there was something original to be said, or if “you” had a genuine interest in “me” as opposed to “you,” but let’s face it folks, no one does. The only reason any of us really cares about cocktail conversations is to quickly redirect someone else’s stories into autobiographies that we assume to be instant bestsellers if only in print. If not, if the doe-eyed listener seems simply fascinated by what you’re saying, you can bet there’s a requested personal favor coming when you finally shut up. “Say Bill, I was wondering if you knew somebody at…that could…” Yeah right! But, as my chart shows, 90 seconds into a typical conversation, no one gives a damn about you and your problems – maybe those shoes and that dreadful eye shadow you’re wearing, but not anything audible coming out of your mouth.
Many borrowers in default stay put as lenders delay evictions
It’s been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction.
A terse letter from a lawyer came eight months ago, telling them that their lender now owned the house. Three months later, the bank told them to pay up or get out by the end of the week.
Still, they remain in the yellow ranch-style home they bought seven years ago for $128,000, with its views of the San Jacinto Mountains. They’re not planning on going anywhere.
http://articles.latimes.com/2010/feb/27/business/la-fi-squatters27-2010feb27
College Grads: Which Ones Earn the Most?
Have you ever wondered if Stanford grads really do make the big bucks, or if a “party school” degree can still land you a high-paying job?Online salary database PayScale.com put together a 2009 College Salary Report that highlights which college graduates make the highest and lowest salaries right out of college and how that changes 10 years post-graduation.
While it may be no surprise that social work came in as the least well-paid major overall in PayScale’s report, you may not know that Dartmouth’s grads fare better financially 10 years after college than Harvard’s.
Whether you went to a small, liberal arts college or graduated from an Ivy League school, take a look at the list below to see if your alma mater made a top 10 earners list.
School Name / Starting Median Salary / Mid-Career Median Salary
1. Dartmouth College: $58,200 / $129,000
2. Massachusetts Institute of Technology (MIT): $71,100 / $126,000
3. Harvard University: $60,000 / $126,000
4. Harvey Mudd College: $71,000 / $125,000
5. Stanford University: $67,500 / $124,000
6. Princeton University: $65,000 / $124,000
7. Colgate University: $51,900 / $122,000
8. University of Notre Dame: $55,300 / $121,000
9. Yale University: $56,000 / $120,000
10. University of Pennsylvania: $60,400 / $118,000
http://hotjobs.yahoo.com/career-articles-college_grads_which_ones_earn_the_most-1103
Defusing the Debt Bomb
It can be done. Here’s how.
Everyone seems to be pessimistic about America these days. In poll after poll, Americans worry about their future. Pundits, myself included, write despairingly about the monumental challenges we face. Academics plan seminars on America’s decline.
So, perhaps more to cheer myself up than anything else, I decided to ask what it would take to fix the U.S. There is one problem that overshadows all else. Washington is taking on debt burdens that are huge and, as the baby boomers retire, look truly frightening. The Peterson Institute estimates that the U.S. government’s programs for Social Security and health care are al-ready $43 trillion in the hole. To cover this, the government would have to eliminate virtually all other spending and/or jack up tax rates into the 70 percent range. Foreigners would almost certainly demand higher interest rates if they lent money to the United States. And if we raised interest rates, the economy would stagnate—making the debt burden even more onerous.