HELOCs Disappear, Bankruptcies Increase - Housing Tracker

Quote of the Day

"Housing activity, homes on the market and other leading indicators have stopped getting worse." - Keith Tufte, president and CEO of Longview Wealth Management in Eden Prairie. (Star Tribune, May 5th)

Macro Effects of the Housing Slump

Economy Not as Weak as Some Think. “There are so many reasons for crude [oil] to be higher: The global economy is strong. Demand is insatiable. Geopolitical issues are getting worse, not better. American economy is strong enough to support higher crude/gasoline… The overwhelming majority of experts say… the U.S. is in a recession… for sure. Despite this conventional wisdom, the stock market and several economic data points continue to belie the notion the country is in a recession. Moreover, even if a recession is a current reality, the stock market has given enough hints that it will be a short-lived recession, one that could actually already be over.” (Minyanville, May 6th)

Countrywide Takes Away Home-Equity Credit Lines in Las Vegas. “Countrywide Financial Corp. (CFC) has suspended the home equity credit lines of almost all its Las Vegas customers… Since January, Countrywide, Bank of America Corp. (BAC), Washington Mutual Inc. (WM) and IndyMac Bancorp Inc. (IMB) have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate-owned Web site that's fielding consumer complaints. The lenders are targeting borrowers in cities where property values are falling, including Las Vegas, Chicago and Los Angeles, he said… In February, taxable sales in Clark County, Nevada, which includes Las Vegas, fell 3.1% from a year earlier.” (Bloomberg, May 6th)

U.S. April Business Bankruptcy Filings Increase 49%. “Jupiter eSources LLC report based on court records: U.S. business bankruptcy filings in April increased 49% from a year earlier, the biggest gain so far this year, as the slowing economy prompted more companies to shut down. Business filings rose to 5,173 during the month… Total bankruptcy filings, including those by individuals, were up 31% from a year earlier to 93,096… Economic growth has slowed to its weakest pace since the last recession in 2001. The economy lost jobs in April for the fourth month in a row, for a total of 260,000 jobs cuts so far this year." (Bloomberg, May 6th)

How the Housing Bust Is Boosting Newspapers. “While newspaper executives have for years complained that online resources—like Craigslist—are cutting deep into their classified advertisement revenue, the foreclosure crisis has created a much-needed revenue stream for… the Washington City Paper. Foreclosure notices are filling in where condo sales and auto deals once held sway… On March 13, the Washington Post's classifieds section totaled 22 pages, approximately 14 of which were devoted to what are technically known as "trustee's sales." It turns out that local governments require foreclosure sale notices to be placed in "local newspapers with broad distribution." Listings on Craigslist do not satisfy those requirements, the City Paper reports.” (US News & World Report, May 5th)

Bear Stearns Layoffs Could Exceed 10,000. “Job cuts at Bear Stearns could exceed 10,000… as JP Morgan has begun writing to staff at the failed investment bank to inform them whether they have a new role or will be made redundant. Sources: More than 70% of Bear Stearns 14,000 employees will lose their jobs in the next months as the bank begins the process of merging it with its own investment banking business. As many as 1,500 JP Morgan staff could also lose their jobs as a result of the integration, according to one source, but the precise figure has yet to be decided.” (Financial News, May 5th)

Light At The End Of The Tunnel? “There's anecdotal evidence that a bottom is in sight for the housing market. Some industry analysts predict that it will take two years for buyers to sop up existing inventory on top of the human and neighborhood trauma of record foreclosures and abandoned houses... Keith Tufte, president and CEO of Longview Wealth Management in Eden Prairie: "Homebuilding stocks have started to outperform the overall stock market. Mortgage rates are down about 1 percent since last summer," Tufte said. "Housing affordability has improved significantly over the past six months [thanks to falling prices]. Home refinancings are up significantly. And applications recently jumped all the way back to the highest level since 2004." (Star Tribune, May 5th)

Property Taxes May Be Reduced On More Than 100,000 Homes. California: “More than 100,000 homeowners in Alameda and Contra Costa counties may see their property taxes fall this year as home values continue heading south… The reductions mean local governments could miss out on tens of millions of dollars in badly needed revenue. The assessed value on 30,000-40,000 single-family homes in Alameda County could drop this year… Alameda County Assessor Ron Thomsen: “We're probably looking at $2 billion in assessed values being removed from the assessment rolls — that equates to $20 million in taxes." Assessor Gus Kramer: Contra Costa County is anticipating 65,000-75,000 reductions, meaning a loss of roughly $40M.” (Mercury News, May 4th)

No Help Wanted. “Bureau of Labor Statistics employment report: Construction work is becoming harder and harder to find. The residential building sector lost another 10,700 jobs in April compared to the previous month. Overall, the (seasonally adjusted) number of such jobs has dropped 10.7% in a year, landing at 860,600. While the residential specialty trade contractor employment market is larger than residential building, it has also seen greater contractions in the housing downturn. The number (also seasonally adjusted) of residential specialty trade contractor jobs has fallen 22.4% y/o/y, to 2.1 million.” (Builder Online, May 4th)

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Comments

[no1pops]

California Mortgage Bankers Assn has released 3/31 commercial loan delinquency figures - near all time low - copies of report available from [e-mail].

[kurt walter]

Clark County, Nevada (Las Vegas) was the wild west when real estate was booming. Now, it is deadman walking.