KeNo's Housing and Economic Portal: Wednesday October 12 Housing and Economic stories

Tuesday, October 11, 2011

Wednesday October 12 Housing and Economic stories

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TOP STORIES:

Shadow housing stock looms in mired market - (www.desmoinesregister.com) Used to be, when someone moved out of a house, Rob McGregor saw a “for sale” sign go up. The mail carrier has seen something different over the past couple of years. Houses along his route near Beaverdale Park on Des Moines’ west side go dark and stay that way. No sign, no Realtor’s phone number, just an empty house. “I do see that more than I used to,” McGregor said. The new normal is stagnant home prices, and one reason is the hundreds of thousands of homes either in foreclosure or repossessed by banks — a giant shadow inventory of homes waiting to go on the market. Already, more houses are for sale in America than people want to buy, and though sales of existing homes rose in August, the roughly 1.6 million homes in the nation’s shadow inventory promise to drag down home prices for years, experts say. In Iowa, 10,856 homes were in foreclosure or already owned by a bank, according to a July report from RealtyTrac, a national website that tracks such properties.

Prices collapsing in senior communities - (www.nctimes.com) North San Diego and Southwest Riverside counties have everything an incipient retiree could want: Steady sunshine, moderate temperatures, and plenty of cheap 55-and-up communities to live in. How cheap? Houses and condos in senior communities in the region have been losing value steadily since they peaked in 2005, now down 42 percent to a median price of $160,000 in 2011, a faster drop than the local housing market as a whole, according to data from the Multiple Listing Service, a real estate agent database. These communities, which restrict the age of purchasers, provide amenities such as pools and activities and the assurance of no screaming kids to retirees or people on the brink. As such, the communities anticipated a wave of baby boomers that has not materialized, as boomers have gotten caught in the vise of the real estate crash and a sluggish recovery marked by high unemployment. Unlike the family market, where lenders and hold-out owners can keep houses off the market, nature itself forces homes in senior communities onto the market at a higher than usual rate.

SEC Notice to S&P May Signal Enforcement Cases Against Credit Rating Firms - (www.bloomberg.com) Payback for downgrading US Debt Rating?? Seems like it as SEC should also be going after Moody's and others for high AAA ratings of mortgage securities.

Four years after defaults on U.S. home loans began to soar, regulators may be crafting their first case against a credit-rating firm for deeming mortgage-backed securities safe investments for pension funds and endowments. Standard & Poor’s, the world’s largest provider of credit ratings, could face claims by the Securities and Exchange Commission related to the top grade it gave in 2007 to a $1.6 billion collateralized debt obligation that was downgraded six months later, McGraw-Hill Cos., S&P’s parent company, said in a regulatory filing yesterday. “This was long overdue. They should have done this in 2007,” said Sylvain Raynes, a principal at R&R Consulting in New York and a former analyst at Moody’s Investors Service. “It’s not just a fishing expedition. They’re very serious about shaking up the ratings world and putting everyone else on notice.”

Europe's Banks Face New Funding Squeeze - (online.wsj.com) An extraordinary dry spell in the market for long-term European bank funding is amplifying pressure on policy makers to devise a solution to the Continent's banking crisis. For the past three months, European banks have been largely unable to sell debt at affordable prices to investors, who are wary of the banks' vulnerability to risky euro-zone government bonds and other loans. At $34 billion, the amount of senior unsecured debt issued by the Continent's financial institutions this quarter is on track to be the smallest of any quarter in more than a decade, according to data provider Dealogic. Most of those were bite-size deals of less than $500 million apiece. Traditionally, issuing such debt has been among the most popular ways for banks to finance themselves over the long term. Now market observers are worried that the funding freeze is going to continue and perhaps worsen heading into 2012, with potentially serious repercussions for the banking industry.

Greek Leaders Appeal for Support as U.S. Presses for EU Action - (www.bloomberg.com) Greek leaders appealed for support at home and abroad to avert default before key legislative votes as the U.S. criticized European leaders for moving too slowly to stem the debt crisis. Prime Minister George Papandreou traveled to Berlin two days before German lawmakers ratify an overhaul of the euro rescue fund, pledging success in a struggle to restore budget balance. Finance Minister Evangelos Venizelos promised “superhuman” efforts hours before a vote in Athens on an unpopular property tax needed to avoid default. President Barack Obama underscored the urgency late yesterday when he said European governments are “trying to take responsible actions, but those actions haven’t been quite as quick as they need to be.” His treasury secretary, Timothy F. Geithner, said Europe has “not very much time” to act.