KeNo's Housing and Economic Portal: Saturday January 8 Housing and Economic stories

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TOP STORIES:

NYT: Banks accused of illegally looting houses - (msnbc.msn.com) TRUCKEE, Calif. — When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks. When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert. The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand. In an era when millions of homes have received foreclosure notices nationwide, lawsuits detailing bank break-ins like the one at Ms. Ash’s house keep surfacing.

California house sales down 12% from one year ago - (www.firsttuesdayjournal.com) 31,403 new and resale homes closed escrow in California during November 2010, down 12% from one year ago when 35,860 sales closed escrow. Statewide, sales volume has continued to show its recent downward trend both in annual and monthly sales: home sales have dropped slowly but consistently since June of this year. Southern California (SoCal) home sales are trending downward slightly more quickly than Northern California (NorCal). [For more information on California home sales, see the first tuesday Market Chart, Home sales volume and price peaks.] Real estate owned (REO) resales accounted for 36% of all resales in the third quarter 2010— down from 39% of resales one year earlier. Declining REOs are good news, but the drop is not likely to continue into 2011, as delinquencies have recently been on the rise in California. [For our most current data on REOs statewide, see the first tuesday Market Chart, REO Resales.]

Evidence grows of house price 'double dip' - (www.ocregister.com) Are local home prices back into a "double dip" tumble? We frequently track year-over-year price comparisons to watch for bigger trends, since this data can eliminate the common seasonal swings from the math. Prices often rise during peak buying season in the spring and this year was no exception, thanks in part to some tax incentives to buyers. Yet it's obvious looking at numerous reports that prices have fallen since this year's traditional sales rush as the tax breaks faded away. Still, on our preferred year-over-year basis, it's been hard to confirm the negative price swing. But recently we found that a price index from CoreLogic showed Orange County home values falling at a 2.56 percent year-over-year rate in October. CoreLogic is the old data-collecting unit of title-insurance giant First American. October marked the second straight month of year-over-year declines in this local CoreLogic index following eight consecutive increases. Before that upswing, the CoreLogic index for Orange County had fallen 37 straight months on a year-over-year basis.

How Merrill Lynch Bankers Blew Up Own Firm With Mortgage Bonds - (www.propublica.org) Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank's own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating. Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank's money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them. The division creating the securities passed portions of their bonuses to the new group, according to two former Merrill executives with detailed knowledge of the arrangement. The executives said this group, which earned millions in bonuses, played a crucial role in keeping the money machine moving long after it should have ground to a halt. "It was uneconomic for the traders" -- that is, buyers at Merrill -- "to take these things," says one former Merrill executive with knowledge of how it worked.

Huge Unspoken Threat To Muni Finances: Falling Property Tax Revenue - (www.businessinsider.com) Thanks to 60 Minutes, the public is starting to understand a problem that's been discussed in financial circles for a long time, namely the horrible state of muni finances. But even within that discussion, one issue hasn't actually been discussed that much, and that's the effect of falling property prices on property taxes. WSJ noted that property tax changes generally lag housing prices by about three years, due to the timing of assessments. So we've seen big hits to housing that haven't even shown up yet in tax receipts for cities. Hedgeye charted the data, showing tax receipts against Case-Shiller, with a three-year lag.

Photos: Mom, Dad, baby live happily in 380 square feet - (www.latimes.com) A lot of families start out in small houses – just not this small. Kelly Breslin, Ryan Conder and their 9-month-old son, Thurston, live in a 380-square-foot 1950s house in Echo Park with living quarters built above the garage. The family also makes room for a mutt named Charlie. Conder and Breslin insist they prefer living small and don't let it cramp their style. The space is arranged for maximum efficiency but maintains the vibe of an artist's loft with a carefully edited selection of contemporary art and midcentury Danish and Italian furniture. We recently dropped in on Breslin and Conder, owner of the men's clothing storeSouth Willard. It wasn't an exhausting tour -- you're looking at about half of their home here -- but their designs for living (and parenting) were eye-opening.