KeNo's Housing and Economic Portal: Monday August 1 Housing and Economic stories

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Realtors overreported Chicago house prices - (www.chicagotribune.com) The Illinois Association of Realtors said Monday that the median price it reported for home sales within the city of Chicago was inflated in May and mistakes in its reports may go back more than three years. Errors in the reports can wrongly inflate consumer confidence in a housing market that has been struggling to recover for the past 4 1/2 years. It also can undermine the credibility of the real estate organizations that compile and disseminate the statistics. The Tribune and other media outlets report that data as part of regular coverage of the housing industry because it provides a pulse of the market. The state Realtors' group acknowledged the errors after the Tribune, acting on a tip, questioned the accuracy of the May report. The group believes median prices for both condos and detached single-family homes sold within the city contain errors. "It's not just May," said Mary Schaefer, a spokeswoman for the Illinois Association of Realtors adding that the mistakes appear to go back at least through January. "We're trying to figure out where the bug occurred. We should have caught it. We pride ourselves on having accurate data. We want to make sure there is 100 percent clean data." The size of the Realtors' errors is statistically significant, at least based on the May median price for condo sales wtihin the city. In its official report that has now been discredited, the trade group previously said that the median price of an existing condo sold in Chicago in May was $299,000, compared with $271,150 recorded in May 2010. In fact, the median price was $243,000, compared to a year-ago price of $265,000, according to data from Midwest Real Estate Data LLC, the multiple listing service for the Chicago area.

Real estate investors behind many foreclosures - (www.jacksonville.com) While only 25% of Duval homes are owned by investors, they are responsible for 75% of foreclosures. The four-bedroom house on the bank of the St. Johns River was nice. Built in 1990, the two-story, 3,200-square-foot home at 3782 Wayland St. was on a well-kept University Park street. In its backyard a raised boardwalk led to a boat slip. Previous owners could watch dazzling sunsets over the river from the balcony deck on its gazebo. It sold for $715,000 at the height of the real estate bubble in 2006. Since then, the home was partially burned in a mysterious fire, a next-door neighbor said. Then it was abandoned and subsequently condemned, according to city records. On April 6, a city-contracted crew tore it down as an unsafe structure, while it was listed for sale by a bank for $295,900. Now nothing remains but the boardwalk, gazebo and an empty dirt lot crisscrossed by tire tracks. The house's story is one of more than 10,200 Duval County single-family home foreclosures in 2008, 2009 and 2010. Of those foreclosures, most — possibly more than two-thirds — were investor-owned when the bank took them, a Times-Union review has found. Only about 29 percent were owner-occupied as evidenced by the fact they were homesteaded at the time foreclosure became final, according to Duval County Property Appraiser's Office and Tax Collector's Office property records.

Newest Line of Business for Big Banks: Slumlording - (www.dailyfinance.com) The nation's biggest bailed-out banks have unintentionally entered a new line of work: slumlording. In some cases, major banks have created whole neighborhoods of abandoned and deteriorating foreclosure properties -- and a blight on local municipalities. Now, Los Angeles has decided to do something about it, by naming the German banking giant Deutsche Bank(DB) the city's biggest slumlord. L.A. is suing the lender, claiming that it has illegally evicted tenants and allowed foreclosed homes to deteriorate. The city's also considering suingUS Bancorp(USB), BNY Mellon (BK), and HSBC(HBC) for not keeping up their own foreclosed properties.

Myth of the Texas "Miracle" - (www.bloomberg.com) The June jobs report released today shows how hard it is for the U.S. to shake free of persistently high unemployment. The meager numbers -- only 18,000 new jobs, far less than forecast, were created and the unemployment rate rose to 9.2 percent from 9.1 percent -- should intensify the search for pockets of growth. That search will inevitably lead to Texas, one of the few spots in the country where people are finding work. It’s easy to be charmed by Texas, but it would be a mistake to think the state might serve as a national model. Texas created almost 250,000 jobs in the past two years, nearly as many as the other 49 states combined. Texas leaders, including Republican Governor Rick Perry, credit that success to low taxes and a business-friendly regulatory approach. Yes and no. Those factors played a role. To a sizable degree, however, the state’s booming payrolls are the result of hard-to-duplicate factors, such as a fast-growing population, and unusually low wages.

Low downpayment directly related to higher mortgage delinquency rates - (www.doctorhousingbubble.com) I’m a bit perplexed why so many people think that a low down-payment has very little to do with mortgage delinquencies. Aside from the actual facts that show a low down-payment does correlate with significantly higher defaults rates, it also makes logical sense. I believe part of this mentality stems first from not knowing the facts, but also believing that this shifts blame from the financial industry or government backed system we currently have for purchasing mortgages. On this front I do agree that the financial industry is the prima causa of the financial crisis and there is plenty of blame to go around.