Recently in Housing Market Category

 

Now that some economists are saying our almost 2-year-old recession is over, I think it's time we name it something. You know, like we name hurricanes...Katrina, Andrew...Rita.

 

Maybe we should even have a national center that names them - like the National Hurricane Center names hurricanes -- we could have a National Recession Center to do the job.

 

Each year, the center could put out a list of names in alphabetical order. If that year has a recession, we just check a name off that list.

 

Students reading about economic history would have an easy way to remember the worst recession since the Great Depression. Government leaders, policy makers and businesses would have a ready made reference point to separate all the recessions we've had.

Psychologically, by putting a name on it, maybe it would be easier to box up and leave behind.

 

Turns out, there may be some value in that.

 

"(A name) would have a different meaning for each person," said Joann Moran, a cinical psychologist who teaches a class in San Marino with her husband on coping with the financial crisis.

People would rename it to be "less overwelming, where they can frame it in the context of something they have some power over."

And maybe the name could even have some accountability built into it, she said.

 

Some ideas come to mind.

Howabout Subprime Recession , after institutions that ran wild with adjustable rate and low-documentation loans that led to the housing meltdown, which in turn led to the fall of the financial system?

 

Howabout Recession Lehman - for the fall of Lehman Bros., the biggest bank failure in history?

 

Recession Greenspan?

Hmmm.

I don't know. I guess the name depends on who you are talking to.

What we do know is that this is the worst recession since the Great Depression.

That's why a lot of people are calling it the Great Recession, said Jack Kyser, founding economist for the Los Angeles Economic Development Corp.

It's not quite a depression, but it's the worst of the recessions, he said.

 

That works for me. Only one problem...Nothing about 12.7 percent unemployment - over 15 percent in some valley areas - is particularly great...not great at all.

But anything, anything to look back during better times and to give the last two years a name.

It's not so much so that we can remember it. It's more about putting a name on something that has harmed us, so we can beat it back, punch it, beat it and hope to God we learn from it and never see anything like it again.

 

By the way, if you've got any ideas for a name, feel free to pass them along...just make sure they are something that we can publish in a family paper.

The economy is not out of the woods when it comes to foreclosures.

Here's a press release I received on an upcoming event that may help:

Rep. Napolitano, Assemblywoman Norma Torres to hold foreclosure
prevention fair in Pomona.

Rep. Grace F. Napolitano and Assemblywoman Norma Torres will hold a
foreclosure prevention fair in Pomona on Saturday, Aug. 29,
featuring talks by Napolitano, Torres, and Attorney General Jerry Brown,
one-on-one foreclosure and credit counseling in both English and
Spanish, workshops on buying homes and avoiding fraud, and booths
hosted by the Department of Housing and Urban Development, the Department of
Consumer Affairs, the cities of Norwalk and Montebello, and other
organizations. The fair will run from 8:30 a.m. to 12:00 p.m. at the
Village Conference Center, 1444 E. Holt Ave, Pomona. The fair is
completely free and open to the public. Those interested in attending
should register by calling (909) 984-7741 or going to
www.assembly.ca.gov/torres, and bring along mortgage and financial
documents with them if they are looking for a consultation.

If you're interested in an early version what various cities wanted from $787 billion in federal stimulus money, try out this site: http://www.stimuluswatch.org/

But a quick word of caution. Pasadena, for instance, is not going to get more than $88 million in federal money for its wish list of stimulus projects. What you'll see are early versions of what cities wanted late last year, before President Obama signed the American Recovery and Reinvestment Act. 

 

 

 

Banks are sooo yesterday. Now  you want to saddle up to the Senate or House for that easy credit and low-interest loan.

Tie risky mortgages to bonuses paid out to the people who actually lent the money. Not bad: "Swiss bank Credit Suisse will link payouts for its top investment bankers to illiquid assets in an innovative new bonus system that may set an example for others in the industry."

It must be a good time to buy a home...

Dolores Conway, an associate professor at USC's Lusk Center for Real Estate, told me she knew of an investor who recently bought 1,000 homes in the north San Diego and Orange County areas, in order to rent them out.

Wow. That's a lot of homes.

 

 

 

It sounds like good news, but apparently not. Prices for groceries, clothing, entertainment and other goods and services fell in October. While some economists were quick to say the worries of inflation are over; others say deflation is  now possible. sheesh. Meanwhile housing prices continue to fall and new home construction fell to its lowest rate since 1959.
In Washington D.C., automakers continue to beg.
And the Dow Jones this morning at 11 a.m. ET is down more than 100 points.

And some vaguely familiar character says, Let Detroit eat cake

Home prices in Los Angeles County continued their steep fall last month, tumbling 35 percent compared to the same period last year, according to an industry report released Thursday.

The median price for a single-family home in the county stood at $394,870 in August, down 35 percent compared to last year, according to the California Association of Realtors. Year-over-year sales were off 28.6 percent. 

L.A. County's numbers mirrored those statewide, which also saw a large drop from last year.
At $350,140, the median price of a single-family home in California was 40.5 percent lower than August 2007.

Statewide, sales spiked 56.7 percent compared to August of last year when 313,310 homes were sold, and they spiked 1.8 percent from July, reflecting the large numbers of foreclosures on the market, CAR reported.

"While sales appear to have turned the corner, the median will experience additional downward pressure as we move into the off-peak season in the coming months, and will continue to face pressure from distressed sales," said CAR Vice President and Chief Economist Leslie Appleton-Young. "Sales are just one of the variables that must fall into place before we see real improvement in the market."
 

Federal officials announced today a takeover of Fannie Mae and Freddie Mac. In a statement this morning, Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director Jim Lockhart outlined a four-pronged plan to stabilize the two struggling mortgage giants.

"We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection," Paulson said.

The plan:

1. FHFA will take over Fannie and Freddie via conservatorship. The CEOs of both companies will be dismissed, and federal officials will assume control..
2. Treasury and FHFA have established contract agreements under which the Treasury Department will ensure both companies remain solvent while protecting taxpayers as much as possible. Under these "Preferred Stock Purchase Agreements," Treasury will receive senior preferred equity shares. Common and preferred shareholders will suffer losses before the government.
3. Treasury has established a secured lending credit facility for Fannie Mae, Freddie Mac, and other federally backed banks in order to lend money to agencies in need.
   
4. Treasury is initiating a temporary program to buy mortgage-backed securities in order to stabilize rates and ease the market. The program will end in December 2009, when Treasury's expanded power over government-sponsored enterprises such as Fannie Mae and Freddie Mac expires.
   

Federal officials said the takeover was necessary to safeguard the U.S. economy and to protect taxpayers.

"Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Lockhart said. "This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement."

Treasury Department press release and fact sheets here.

Fed Chairman Ben Bernanke approves: "These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets. I also welcome the introduction of the Treasury's new purchase facility for mortgage-backed securities, which will provide critical support for mortgage markets in this period of unusual credit-market uncertainty."

From today's Associated Press story:

The Bush administration's seizure of troubled mortgage giants Fannie Mae and Freddie Mac is potentially a $200 billion bet that it will help reverse a prolonged housing and credit crisis.

The historic move announced Sunday won support from both presidential campaigns, but private analysts worried that it may not be enough to stabilize the slumping housing market given the glut of vacant homes for sale, rising foreclosures, rising unemployment and weak consumer confidence.

(snip)

Mark Zandi, chief economist at Moody's Economy.com predicted that 30-year mortgage rates, currently averaging 6.35 percent nationwide, could dip to close to 5.5 percent. That's because investors will be more willing to buy the debt issued by Fannie and Freddie -- and at lower rates -- since the federal government is now explicitly standing behind that debt.

"Effectively, the federal government has now become the nation's mortgage lender," he said. "This takes a major financial threat off the table."