KeNo's Housing and Economic Portal: Thursday August 18 Housing and Economic stories

Wednesday, August 17, 2011

Thursday August 18 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Are Ugly Houses Preventing a House Market Recovery? - (www.theatlantic.com) Maybe Americans aren't avoiding buying homes right now -- maybe they're just avoiding buying ugly homes. The housing market may be splitting into two sub-sectors: well-kept, good-looking homes and run-down, torn-up homes. Could the latter group be preventing the housing market from stabilizing? The separation of these two types of homes is mentioned in a blog post e-mailed to me on Tuesday by Jeff Lichtenstein, a North Palm Beach County, Florida realtor affiliated with the luxury-property network Christie's. He writes that demand is quite strong for nice properties; it's the ugly stuff that nobody wants. From his blog post: The Case-Shiller Report states that there is a ton of foreclosures and short sales coming and thus see a 10-20% drop in prices. Case-Shiller is correct on the never-ending short sales and foreclosures coming. However, what Case-Shiller fails to state is that there is a huge differentiation between 'good inventory' & 'bad inventory'. When a buyer gives me their wish list, it usually goes something like this.... I want open & airy, master on the first floor, updated, nice view. The shorts sales and foreclosures tend to be dark and dreary, closed-off floorplans, dated, unpampered, and ugly views. Therefore there is an excess of 'ugly homes' but not a lot of 'good looking' homes.

How To Avoid Unethical Behaviors And Dirty Tricks Of Realtors - (www.financenook.com)

The $1 Billion Armageddon Trade Placed Against The United States - (www.etfdailynews.com) Someone dropped a bomb on the bond market Thursday – a $1 billion Armageddon trade betting the United States will lose its AAA credit rating. In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world. The massive trade wasn’t placed in bonds themselves; it was placed in the futures market. The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01. The value of the trade was about $850 million dollars. In simple terms, if that was a direct bond buy, no one would be talking about it. However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio. You only do this if you see an edge.

Lenders delay foreclosures to slow a worsening house-price double dip - (www.irvinehousingblog.com) The number of Californians entering foreclosure dropped steeply in the second quarter to the lowest level since 2007, a sign the foreclosure crisis in the Golden State could be easing as the housing market stabilizes and regulators increase scrutiny of lenders. No, it is not a sign the foreclosure crisis is easing. First, there is no foreclosure crisis. There is the foreclosure cure which ailing lenders are avoiding. Second, a decline in foreclosures is not a sign lenders are running out of people to foreclose on. It isn't until the shadow inventory is gone that we can talk reasonably about the foreclosure cure having taken its effect.

Obscene Jumbo Mortgage Limits Should Expire On Schedule - (www.Used to be $417K though. WTF?) - (www.bloomberg.com) Limits on the size of mortgage loans backed by the U.S. government can return to pre-crisis levels without hurting the still-fragile housing market, Housing and Urban Development Secretary Shaun Donovan said. “We continue to be convinced that this is the right step to take now and that it’s not going to have a major impact on the market going forward,” Donovan said in an interview with Bloomberg Television’s “Conversations with Judy Woodruff,” to be broadcast this weekend. Mortgages worth up to $729,750 can be insured by HUD’s Federal Housing Administration and government-controlled mortgage companies Fannie Mae and Freddie Mac -- which together guarantee about 90 percent of all U.S. home loans. The cap, which was temporarily raised by Congress in 2008, is set to revert to $625,500 on Oct. 1.