KeNo's Housing and Economic Portal: Thursday February 25 Housing and Economic stories

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Growing Movement To Disband Police Departments - (Mish at http://globaleconomicanalysis.blogspot.com) In response to Hoschton Georgia Dissolves Police Department I received an email from "Adam" who writes .. Mish, The city of Pewaukee, Wisconsin voted to do the same towards the end of 2009. As of the new year, the department was eliminated. Police protection is now handled by the Waukesha country sheriff's department where the majority of the old officers now work. Of course, the union is suing to reverse the vote of the people. Please consider Waukesha Sheriff Takes Over in Pewaukee: The sign at the city hall building still reads the City of Pewaukee Police department but Friday there was a new sheriff in town...quite literally. "11 pm on December 31st Waukesha County took over," said Lt. Neil Dussault with the Waukesha County Sheriff's Department. But Dussault says if you weren't paying attention in Pewaukee, you may not have known about the take over. The squad cars, at least for now, still read Pewaukee Police, but driving them are deputies dressed in their brown uniforms with new Pewaukee arm patches.

Ken Lewis: If I'm Going Down, Paulson and Bernanke Coming With Me - (www.nymag.com) No WAY is Bank of America CEO Ken Lewis going to be the only one to answer for the acquisition of crappy Merrill Lynch and its crappy bonuses, "a person close to Lewis's defense team" (who may or may not be Ken Lewis himself) tells Charlie Gasparino today on the Daily Beast. NO WAY will he be a scapegoat, alone, for the people who twisted his arm to go through with the Merrill deal by telling him he would be fired if he didn't. "If this thing goes to trial you can expect both Paulson and Bernanke to be on the witness list." If he's going down, he's bringing them down, too. Bringing them down to Chinatown. Order in the court!

Sales of million-dollar-plus houses way down - (www.sfgate.com) Times are tough in the mansion market. Last year's sales of $1 million-plus homes in California were paltry compared to the boom days, according to a real estate report released Thursday. Tight credit, skittish buyers and sagging prices caused the number of homes changing hands for more than $1 million to fall 23.8 percent in 2009 compared with 2008, according to MDA DataQuick, a San Diego real-estate firm. A total of 18,621 California homes sold for more than $1 million last year. That's barely a third of the 54,773 such homes that changed hands in 2005. Even among millionaires, a new frugal aesthetic is at work. "In the same way you don't see many new Porsches driving around anymore, we don't market homes as trophy properties anymore," said D.J. Grubb of Oakland's the Grubb Co., which specializes in high-end homes in the East Bay. "We sell them as large homes, comfortable estates - it's a repositioning in marketing. Bragging rights are not as popular today as they were in 2005."

Phoneix Real Estate Prices Still Falling On Foreclosure Sales - (www.nuwireinvestor.com) n December 2009, Phoenix existing home sales rose to their highest level for a December in four years, but more than half of the homes sold were foreclosure sales. Median sales prices for existing homes, existing condos and new homes were down in December 2009, compared with December 2008. See the following article from DQNews for more on this. Sales of existing homes in the Phoenix region rose to the highest level for a December in four years as home price measures trended lower and investor activity rose. The percentage of sales involving a foreclosure held steady after declining for eight consecutive months, a real estate information service reported.
In December, 52.2 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, the same as in November but down from 61.9 percent in December 2008. Such foreclosure resales hit a high of 66.2 percent of all homes resold last March, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records. A total of 8,826 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in December, up 3.3 percent from November and up 30.5 percent from a year ago. A rise in sales between November and December is normal for the season. On average, sales have risen about 10 percent between the two months over the past 15 years.

Jumbo Mortgage Serious Delinquencies Rise to 9.6% - (www.bloomberg.com) U.S. prime jumbo mortgages at least 60 days late backing securities reached 9.6 percent in January from 9.2 percent in December, the 32nd straight increase for “serious delinquencies,” according to Fitch Ratings. “The trend line for delinquencies indicates the 10 percent level could be reached as early as next month,” Vincent Barberio, a Fitch managing director in New York, said today in a statement. The rate almost tripled in 2009, Fitch said. Soured debt across loans backing so-called non-agency securities ballooned last year amid new defaults caused by slumps in home prices and employment, and as the federal government pushed loan servicers to consider debt modifications and states moved to slow foreclosures, reducing property liquidations after borrowers stopped paying. The share of borrowers current the previous month and that then turned delinquent fell to 1.2 percent in the month covered by January bond reports, down from 1.3 percent as of December reports, Fitch said. The jumbo sector of the non-agency market was the only one in which so-called roll rates -- or the amount of loans turning delinquent -- rose from a year ago, according to the statement.

Rash of retirements pushes Social Security to brink - (www.usatoday.com) Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability. The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated. "Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we're going to be negative for a year or two." Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed.

Greek Ouzo crisis escalates into global margin call as confidence ebbs - (www.telegraph.co.uk) For the third time in 18 months the global financial system risks spinning out of control unless political leaders take immediate and radical action. Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity – while admirable in one sense – is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes. Barclays Capital says the net external liabilities of Greece are 87pc of GDP, or €208bn (£182bn). Spain is worse at 91pc (€950bn), and Portugal worse yet at 108pc (€177bn); Ireland is 68pc (€123bn), Italy is 23pc, (€347bn). Add East Europe's bubble and foreign debts top €2 trillion. The scale matches America's sub-prime/Alt-A adventure and assorted CDOs and SIVS of the Greenspan fling. The parallels are closer than Europe cares to admit. Just as Benelux funds and German Landesbanken bought subprime debt for high yield with AAA gloss, they bought Spanish Cedulas because these too had a safe gloss – even though Spain's property boom broke world records. They thought EMU had eliminated risk: it merely switched exchange risk into credit risk.