KeNo's Housing and Economic Portal: Saturday February 27 Housing and Economic stories

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TOP STORIES:

Housing Crisis Getting Uglier in 2010 - (www.cbsnews.com) Nearly 6 Million Foreclosures in Past 3 years - 3 Million More Expected in 2010. CBS News correspondent Ben Tracy report the American Dream is now a nightmare for many of the 75 million Americans who own a home. The housing report card is ugly. In the past two years, the housing market has lost an estimated $4.9 trillion dollars, as 59 million homes have declined in value. Nearly 1 in 4 homeowners -- 10.7 million households nationwide -- are underwater on their mortgages. They owe more than their home is now worth. The housing market is so bad in California, that a bank demolished 16 nearly completed homes - because it was cheaper to knock them down, than to finish them. Home building across the country is almost non-existent. In 2005, 2 million housing units were built in this country. Last year, that number dropped to nearly a quarter of that. That's left former boom towns like Las Vegas with a lot of roads to nowhere, as builders ran out of money and buyers for the homes they once planned to build here. Then, there's foreclosure. Nationwide, nearly 6 million households have been taken back by the bank in just the past three years - pushing down home values, and leaving some neighborhoods looking like warzones. People are still losing their homes, preventing a housing market recovery. "Disaster is not too strong a word and crisis is not too strong a word," said Michelle Johnson of Consumer Credit Counseling Services. All of those risky loans that banks gave to homeowners are still wreaking havoc.

China military officers urge sell-off of Beijing's U.S. Treasurys - (www.marketwatch.com) Several high-ranking Chinese military officers want Beijing to sell off U.S. Treasurys as a part of measures to punish Washington for its recent approval of new arms sales to Taiwan, according to a report Wednesday. A U.S. sovereign-bond sale was part of broad retaliation measures under study by military personnel at the National Defense University and Academy of Military Sciences, according to a Reuters report citing interviews with the officers that appeared in the state-run Outlook Weekly. The Chinese weekly cited comments by three military officers -- two of major general rank and one senior colonel (the Chinese equivalent of a brigadier general) -- with a sell-off of U.S. bonds among an array of retaliation moves, also including stepped up military spending and troop deployments focused on Taiwan. China's military has no direct role in setting policy for the management of the nation's foreign-exchange reserves, however, and it's not believed that Chinese policy makers are seriously considering dumping their U.S. Treasury holdings.

The Transfer of Risk from Wall Street to Main Street - (www.mybudget360.com) How the Bailouts Shifted 3 Gigantic Risks from Wall Street in Housing, Banks, and Jobs to Average Americans. There is a false security in our current economy. The belief that the current banking industry is now healthy simply because the government supports it is misguided in valuing the real risk inherent in back stopping Wall Street. Or the idea that deposits are safe up to $250,000 in commercial banks because the FDIC seal is on the door. Keep in mind the FDIC insurance fund is now insolvent. Or the notion that jobs are no longer needed for a recovery. This of course is all false. What has occurred under the veneer of stabilizing the banking sector is that the ultimate risk has now been transferred to the American taxpayer. It has already been made clear to Americans that no too big to fail bank will fail. Yet does this somehow fix the trillions in toxic assets that still remain? It doesn’t but what it does do is shifts the risk to the average American.

False Profits: We Will Be Suffering from Fed's Ineptitude for a Long Time - (www.alternet.org) An $8 trillion housing bubble fostered by the Federal Reserve has burst, and with it much of the wealth of America's middle class. As the nation struggles to recover from the worst economic downturn since the Great Depression, the people who got us here are desperately working to rewrite history. The basic story of this economic collapse is very simple. The Federal Reserve Board, guided by its revered chairman, Alan Green span, allowed an $8 trillion housing bubble to grow unchecked. Arguably, the Fed even fostered the bubble's growth, seeing it as the only source of dynamism in an economy that was suffering from the aftershocks of the collapse of a $10 trillion stock bubble. Greenspan repeatedly insisted that the housing market was just fine, even as a small group of economists and analysts raised concerns about the unprecedented run-up in house prices. He also dismissed concerns about the questionable mortgages the banks were issuing on a massive scale during the bubble years. In fact, he even encouraged people to take out adjustable-rate mortgages (ARMs) at a time when fixed-rate mortgages were near a 50-year low.

Las Vegas apartment market deteriorates in fourth quarter - (www.lvbusinesspress.com) Southern Nevada's apartment market continued its deterioration in the fourth quarter with dropping rents and rising vacancies, CB Richard Ellis reports. Job losses, shadow rental homes and new apartment deliveries fueled a market decline that could cause property loan defaults. Southern Nevada's influx of apartment-using new residents has diminished amid the recession and fewer boom growth opportunities. The Las Vegas Valley now has a 13 percent unemployment rate, the Nevada Department of Employment Training and Rehabilitation reports. The state has borrowed $200 million to cover unemployment benefits thus far; the Nevada Division of Employment Security recently announced the need to borrow up to $1 billion more to cover the growing number of unemployed. Construction and hospitality had long been the region's top two economic drivers. Together, they shed a combined 44,200 jobs in 2009. "Much of the market recovery depends upon employment growth," said CB Richard Ellis Senior Vice President Spencer Ballif, who specializes in multifamily properties. "Things are still going to get worse but they aren't going to be at the same pace of decline as 2009."

Fitch Says Prime Jumbo RMBS Near 10% Delinquent - (www.housingwire.com) The performance of US prime jumbo loan performance within residential mortgage-backed securities (RMBS) slipped again in January as serious delinquencies (60+ days past due) rose for the 32nd consecutive month and edged closer to 10%, according to the latest market commentary from Fitch Ratings. Prime jumbo loan delinquencies began to rise in Q207 but accelerated since then. In 2009, the rate of delinquency nearly tripled during the year. The serious delinquencies rose to 9.6% in January from 9.2% in December. “The new year has brought no relief from declining jumbo loan performance,” said Fitch managing director Vincent Barberio. “The trend line for delinquencies indicates the 10% level could be reached as early as next month.”