KeNo's Housing and Economic Portal: Friday January 15 Housing and Economic stories

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TOP STORIES:

Foreclosures Weigh on Home Appraisals‎ - (www.abcnews.go.com) It wasn't the first time that Katherine Scheri ruined a real estate agent's day with a low property appraisal. Scheri, a real estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller. The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price. Then he tried good old-fashioned guilt, telling Scheri her appraisal was going to ruin the buyers' shot at the American Dream. "That's what he laid on me," Scheri recalled. "And I said, 'Don't you care they could be potentially spending $30,000 too much for a house?" Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals. The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to botched appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it's not fair to compare distressed properties to brand-new homes. And that gets to the heart of the problem. Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they've hit more than 50 percent.

State budget pictures bleak as lawmakers head back - (news.yahoo.com/s/ap) If you thought state budgets were in bad shape last year, just wait: 2010 promises to be brutal for lawmakers — many facing re-election — as they scramble to find enough money to keep their states running without raising taxes. Tax collections continue to sputter. Federal stimulus dollars are about to dry up. Rainy day funds have been tapped. And demand for services — like Medicaid, food stamps and unemployment benefits — is soaring. As lawmakers head back to state capitols this month, budget woes range "from bad to ridiculously bad," said David Wyss, chief economist at Standard & Poors in New York. "There are some states, those hit particularly hard by the recession, that I don't think can cut spending enough. They're running out of things to cut." Typically, the worst budget years for states are the two years after a recession ends. Across the nation, budgets are already lean after several rounds on the chopping block. And unless lawmakers increase taxes or fees — unpopular moves in an election year — most will need to cut even more as they grapple with the steepest decline of tax receipts on record. Services ranging from higher education to programs for the elderly could be in jeopardy. The crunch could also mean new tolls to fund road projects, more prisoners being released early to trim corrections budgets, and the end of welfare programs that don't bring federal matching dollars. The Center on Budget and Policy Priorities offers a bleak forecast: State budget shortfalls are likely to reach a whopping $180 billion for the coming fiscal year, double the size of Texas' annual budget.

California's scary sneak preview - (www.washingtonpost.com) The next likely item on that list is not a happy one, however. California is in a total fiscal crisis. It's had to slash state services to the bone and will have to cut further. It's gutted the University of California and lost its credit rating. David Paterson, the governor of New York, casually mentioned that he thinks California might default on its debt. That's bad enough, as it could drag down the national recovery. But what's worse is that this picture is probably coming to a theater near, well, all of us. California's fiscal crisis will look sadly familiar to close watchers of the national checkbook. That's because California is not having a fiscal crisis so much as a political crisis. The trigger may have been the recession, but the root cause was written into the state constitution, and it was visible long before the housing boom went bust. In California, passing a budget or raising taxes requires a two-thirds majority in both the state's Assembly and its Senate. That need not pose a problem, at least in theory. The state has labored under that restriction for a long time, and handled it with fair grace. But as the historian Louis Warren argues, the vicious political polarization that's emerged in modern times has made compromise more difficult.

Real Estate in Cape Coral, Fla., Is Far From a Recovery - (www.nytimes.com) FELLOW adventurers, refugees from winter and armchair archaeologists, we are here on this shiny green tour bus to embark on a safari of sorts. We’ll be exploring the local habitat, as upended and reconfigured by an epochal real estate fiasco. Our guide, Marc Joseph, stalks wildlife of the white-elephant variety. A real estate agent, he specializes in houses that proved financially disastrous for someone — the banker, the homeowner, the American taxpayer, often all three. Mr. Joseph’s bus is emblazoned with red letters spelling the name of this thrill ride: ForeclosureToursRUs.com. As we navigate this speculator’s paradise turned financial wasteland, Mr. Joseph stands at the front of the bus in a green polo shirt, highlighting specimens like this one: a white stucco house fronted by palm trees and topped by a Spanish tile roof on a canal emptying into the Gulf of Mexico. It last sold in 2005 for $850,000. Yours today for $273,000. “How much cheaper does it have to go before you say, ‘Well, that’s just craziness,’ ” Mr. Joseph beseeches as our tour group — mostly retirees from up North, basking in Bermuda shorts on another December day stolen from winter — examines the swimming pool and the Jacuzzi. “I’m telling you now, your opportunity is banging at your door.”

World’s tallest tower to open in debt-hit Dubai - (www.ft.com) Dubai will on Monday open the world’s largest tower as the city seeks to revitalise its economy after 2009’s annus horribilis was capped by a debt crisis and a second $10bn bail-out loan from neighbouring Abu Dhabi. The government hopes the unveiling of the 160-plus storey structure will pierce the cloud that has lingered over Dubai since it was forced to accept further financial support from the capital of the United Arab Emirates and investors turned their backs on the city, once the darling of international finance. Sheikh Mohammed bin Rashid al-Maktoum, after navigating the worst crisis in his four years as ruler of Dubai, will lead a day of celebrations to unveil the residential, hotel and office building, which offers views across the Gulf to Iran. For a city founded on superlatives, the achievement of delivering Burj Dubai’s half-mile high tower in six years is triggering a wave of hyperbole that has not been silenced by last month’s crisis of confidence over the city’s $100bn debt mountain. The official news agency called it “another unique achievement by Dubai to be added to the pages of humanity’s modern history”. Shares in Emaar, the tower’s developer, rose almost 8 per cent to Dh4.16 on the optimistic sentiment, helping Dubai’s bellwether stock recover to pre-crisis levels after plunging to Dh2.56 a month ago.

OTHER STORIES:

New year, old worries for U.S. stocks - (www.reuters.com)

For Stocks in the Developed World, It Was a Decade of Zeros - (www.nytimes.com)

Uncle Sam Gave Bonds a Leg Up - (online.wsj.com)

Commodities set to rise on back of global growth - (www.ft.com)

Firms Fight Banks Over Billions in Frozen Notes - (online.wsj.com)

FDIC considers proposal to get piece of failed-bank buyers' stock gains - (www.washingtonpost.com)

U.S. Loan Effort Is Seen as Adding to Housing Woes - (www.nytimes.com)

Liu Says China Banks Have Enough Capital, Urges Consumer Loans - (www.bloomberg.com)

Chinese banks find their credit in high demand - (www.washingtonpost.com)

Fruitful Decade for Many in the World - (www.nytimes.com)

For Some in Japan, Home Is a Tiny Plastic Bunk - (www.nytimes.com)