The House of Representatives has passed the Economic Stimulus bill, and our own Tom Perriello voted in favor. No Republicans voted for the bill; 11 Dems demurred as well. The 5th District Congressman has a statement about the "American Recovery and Reinvestment Act" here.
Some of the highlights include:
- Unprecedented Transparency and Accountability: See recovery.gov.
- Helping Workers Hurt by Recession: extends/increases unemployment benefits thru 12/09; increases food stamp benefits 13%; provides a 65 percent federal subsidy for COBRA.
- Education and Workforce Development: 5th District localities alone are expected to receive nearly $85 million over the next two years for education.
- Transportation and Infrastructure: Virginia is expected to receive more than $1B.
In other economy news, the Federal Reserve is taking action to modify mortgages. Fed Reserve Chair Ben Bernanke wrote lawmakers that his purview will help to "avoid preventable foreclosures" on residential mortgage assets that are held, owned or controlled by the central bank. These include mortgage assests previously owned by Bear Stearns, which the government seized in March 08, and AIG, which the Fed bailed out in September.
According to the WSJ, "The Treasury Department, working with the Fed and other agencies, is expected to unveil broader housing-relief efforts in coming weeks."
Will the Fed help to lower mortgage rates, as it did in November? Will there be new legislation on auto loans and credit cards? Will a "Bad Bank"--one which takes away all the toxic assets--be created? Will the banks be nationalized? What will the changes be?
Housing Prices and Sales
As the economy has suffered, the housing bubble correction has continued, bringing inflated prices closer to historically affordable levels. Prices are now at the 2004 level (nb: though not in this area).
Nationwide, existing home sales declined 13.1% in 2008, according to NAR. In the Cville area the number is about 11%, but in Albemarle and the Region, the numbers are much higher.
Nationwide, December home prices declined double digits--15+%--and sales in the South, which includes this Commonwealth, dropped 7%.
45% of all sales nationwide were foreclosures.
According to the AP:
Existing home sales in Southern states fell nearly 7 percent in December compared to the same month last year, while the median sales price slid 8 percent to $158,600, the National Association of Realtors reported Monday.
This article features a prospective buyer in the Richmond MSA.
But the rising defaults on the part of affluent homeowners will further trouble the economy--and this area. About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December; the rate was up sharply from 2.6% a year earlier. Defaults and foreclosures have moved from Subprime to Alt-A to Prime.
The economy will get worse before it gets better. Over at The Big Picture, Barry Ritholtz quotes the Harvard economists Reinhart and Rogoff:
"[there are] defining elements of the aftermaths of severe financial crises.... On average, for instance, real housing prices plunge 35%, and the agony stretches out over six years...."
For the short version of these economists' view, go here. For the longer explanation, go here.
The Senate votes on the Stimulus plan on Monday, February 2. Announcements about a "bad bank" or "nationalization" are anticipated next week, as well.
As President Obama said, "We don't have a moment to spare."