Wednesday, December 23, 2009

2009 Housing Market At Year's End: Massive Problems and Hard to Clean Up, Like the C'ville "Snowpocalypse"

The thing about being snowbound from an historic storm--see slideshows here and here--is that it gives time to catch up on recent national news in housing and the economy.  And while it's beautiful outside, the City and surrounding Counties have had terrible times getting things back to normal--six days out, and there's still lots of chaos.  Lack of tools and catastrophe planning.

Which, when you think about it, sounds a lot like what's going on out there in the broader economy: a terrible storm has come through America, and the response of the Fed, Treasury, and the Obama Administration has been awfully slow, ineffective, and incredibly expensive.

The following stories will  have legs far into 2010:

One in Four Homeowners is Underwater.
Owing more than the property is worth.  Usually can't refi, takes a loss if selling, no Home Equity Line of Credit.  Inhibits job mobility and consumer spending, the latter of which is 70% of GDP.  And the Underwaters are only going to grow.   What's your neighborhood likeRead.

The "Shadow Inventory" rose 55% from one year earlier.
Nationwide.  Rising unemployment, falling housing values, consumer credit lines vanishing.  And the "shadow inventory" is only going up.   Read. 

The Obama Mortgage Modification program: Fail.
The $75 Billion program was supposed to help 3-4 million mortgage debtors.  By Q3, about 700,000 mortgage holders had been enrolled but just over 31,000 permanent mods had been made.  You saw that correctly--31,000.  This is "extend and pretend" in all its glory.  Read. 

Here's why the Charlottesville Area will have more foreclosures and short sales.
Mark Hanson explains why foreclosures will rise...here and everywhere else in the US.  Up to 20 million more foreclosures.  Hanson looks at the numbers and explains why a 50% DTI mortgage is untenable, how loony notions of "affordability" are now out the window...looks at HAMP and the "culture of fraud" at Fannie and Freddie.  (Based on Hanson's data, plus the two previous links...you can see how it's going to become more socially and culturally acceptable to strategically default in 2010.)   Read. 

Speaking of fraud, your hardworking taxpayer dollars are being used to prop up Fannie, Freddie, AIG, GMAC. 
All the mortgage biggies are socialized.  Read.

Speaking of mortgages, Ben Bernanke recently re-fi'd at 5%.
Meaning he thinks a 5% fixed rate is a good deal...and rates are going up from here. Read. 

And here's what's waiting to kill the consumer...and the economy.
"The inflation bomb waiting on the Fed's balance sheet"...in the form of Mortgage Backed Securities.  The Fed plans to stop buying MBS at the end of March...and then what?  Not only will mortgage rates go up, but the handling of these is like a giant basket full of rattlers...unpredictable as to what investors will do.  Read. 

Existing home sales were up in November 2009...but that's the end of "good" news in housing for a long time....
....according to Calculated Risk.  Blame (or cheer) the tax credit...and then get back to the reality that existing home sales don't do much for the wider economy except give some real estate agents some fees and perhaps a few textiles and furniture sales.  Read. 

If you're still enjoying your morning coffee or evening scotch, DO NOT READ this next bit. 
Edward Harrison from Credit Writedowns via TBP:  "The Recession is Over But the Depression Has Just Begun."  Harrison makes you want to hoard cash, guns, and become a microfarmer.  He details the WwWwww shape of the Fake Recovery and clearly defines where the US may be headed in the next four years.  Hold tight. 

Just in case you didn't see this #1 most emailed Op-Ed, Tiger Woods: Person of the Year
The most famous golfer adulterer in the world as emblematic for everything wrong with America.  Read.

What'd we miss?

Coming soon: the C'ville Bubble Blog's "predictions" for 2010.  Whee.

Title refined after original post.

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