Eighth Straight Month of Decline

Is Lawrence Yun, chief economist for the Realtors serious? Read this quote.

Yun said he believed the drop in sales, which left activity in October 20.7 percent below the level of a year ago, was nearing its end. He said a greater willingness of lenders to start offering jumbo loans again and the use of Federal Housing Administration-insured loans in place of subprime mortgages will help generate a rebound. Read the full story here.
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Home Prices Drop In Third Quarter

This is a clear sign the housing decline has not reached the bottom. There is another wave of adjustable rate mortgages set to reset in Q4 of 2007 and Q1 of 2008.

Los Angeles home prices declined 7 percent year over year.

Read the full story here.

Mortgage Melt Down Video

PBS has a very well done video piece on the Mortgage Crisis. You can check out the video here.

The Synopsis:
This week, NOW travels to North Minneapolis to investigate the mortgage meltdown that has left the city scarred with boarded-up and abandoned houses. What’s happened in communities like this one has investors everywhere shaken. Wall Street firms are stumbling and markets around the globe are nervous. Economists worry the mortgage bust may lead to a recession.

NOW connects the dots to see the extent to which recklessness, corruption and greed created this subprime mess that now threatens to undermine our entire economy. David Brancaccio talks to Rep. Keith Ellison, who grew up in North Minneapolis and who has pushed legislation to address the crisis. He also talks to Ameriquest whistleblower Mark Bomchill, who explains the competitive “boiler room” culture that encouraged brokers to aggressively push mortgage products they knew clients would be unable to repay.

Iran Calls the Dollar Worthless

Lead by Iran, the OPEC cartel has expressed interest in converting their cash reserves into currencies, other than the U.S. dollar. Iran’s President calls the U.S. dollar a worthless piece of paper.

The Euro could be the choice currency if we keep seeing the dollar in a free fall.

Los Angeles 40% Price Decline

CNN/Fortune is predicting Los Angeles will face a 40% decline in home pricing in the next 5 years. They are using historical relationships between home prices and rent to make this prediction.

I agree with this prediction. If you do the math, there is no way for the average Joe to afford homes at their current pricing. Tighter loan underwriting, and expanding inventory will force prices down.

Renting is not a bad option for the next couple of years. Save your money for a down payment and wait for the market to bottom out.

Los Angeles has Fallen

All counties are now in negative pricing territory. Los Angeles, the last county in California to have a positive year over year median price, ended last month (October 2007). The median price in October 2006 was $520,000. The median price for October 2007 is $500,000. This is a drop of 3.8%.

“LaLa land” is now in line with all other counties in California. The wave of bad news in the real estate market is now taking it’s effect on the consumer and thus the real estate market.

Riverside County had the largest pricing decline. They showed a 15% decline from last year. The current median is $350,000 versus last year, $412,146. Riverside is facing a foreclosure crisis. They are in the top three highest areas in the country in terms for foreclosures.

They keep company with Stockton which is reporting one foreclosure filling for every 31 households!!!

With credit restrictions making mortgages harder to come by and an exploding inventory (sales down 45% from last year), pricing will give way. Home pricing and incomes will need to align before the decline is over. Housing pundits say we are near to the bottom of this down market. Don’t fool yourself, we still have a long way to go.

Black Christmas

JC Penny cuts it’s forecast for the fourth quarter. This announcement comes on the heal of a 9% drop in profit during the third quarter.

This is an ominous sign for the retail sector. You can bet the retailers will focus on discounts this season to limit loss. With sky high gas prices, housing bust, and over all credit issues, this might be one of the worst holiday seasons in decades.

Foreclosures Reach An All Time High

I am back. I took some time off to finish other projects, but now it’s time to really get serious about this site. My last post was on April 26, 2007. In that post I talked about the high foreclosure rates and the need for strict lending guide lines.

Wow, a lot has happened since the last post. The Real Estate market has collapsed and the United States is facing a major recession.

Here are a few notable items.

- The value of the dollar is at an all time low.
- Gold is at an all time high.
- Real estate market has collapsed. We have not seen the bottom yet.
- Foreclosures are at record levels
- Credit Card default is looming
- Foreign governments are moving away from U.S. dollar backed investment
- Oil is over $98 a barrel
- Los Angeles has $4.00 a gallon gas
- Major CEOs of large financial companies are resigning
- The NYSE is loosing major value, daily
- Credit is hard to come by
- Large inventory of homes nation wide

Foreclosures Nearly Double From Year Ago,” reads The New York Times.

California, Florida and Ohio are leading the charge in foreclosures. Stockton California has the dubious honor of leading the country in foreclosures.

Foreclosures mean empty houses, and empty houses means more crime… read this story from the AP regarding several communities facing increased crime due to high foreclosure rates.

The party is over and like any bad hangover only time will make it better.

Footnote: This site will be a mix of real estate news, U.S. market trends, economy commentary, and actual foreclosure listings you can, research, and purchase.