« February 2007 | | April 2007 »

Credit & Debt: Bernanke Comes To Jesus On Easy Credit

OH, PLEASE, GOD, JUST LET ME GET OUT OF THIS WITH WHAT LITTLE HAIR I HAVE LEFT....

In a speech detailing the merits of the Community Reinvestment Act, Fed chair Ben Bernanke had some interesting comments:

Third, access to credit in lower-income communities is obviously much greater today than when the CRA was enacted. This greater access has had tangible benefits, such as the increase in homeownership rates (Joint Center for Housing Studies, 2006). However, recent problems in mortgage markets illustrate that an underlying assumption of the CRA--that more lending equals better outcomes for local communities may not always hold.12 Whether, and if so, how to try to differentiate "good" from "bad" lending in the CRA context is an issue that is likely to challenge us for some time. One possible strategy is to place more weight in CRA examinations on factors such as whether an institution provides services complementary to lending--for example, counseling and financial education.

This is as close as you probably will ever get to hearing Bernanke or anyone else admit that the ocean of credit extended to the subprime markets was a prime factor for inflating home purchasing in the last half-decade.

It's also a prime signal that banks and lenders are going to tighten things up for the foreseeable future. Less available credit = fewer new home buyers = fewer home sales = flattening market.

The Center for Responsible Lending has a new study out which indicates that even the saw about available credit increasing homeownership is false. Instead, they claim that the subprime market was chiefly targeted to refinancing existing loans rather than originating new ones. It makes sense when you think about it--how often did you hear and read about people swapping their fixed loans for fancy new interest-only products without much in the way of documentation or money down?

The housing boom and bust was a tremendous example of letting short-term thinking and the desire for easy profits trump responsibility, frugality, and accountability. Now we have a sagging, fragile economy, millions of homeowners in foreclosure or default, lenders going belly-up like dying whales, and the creeping fear that it will get worse before it gets better.

That Bernanke has his Jesus moment now is convenient, and not particularly impressive, to say the least.

Posted at 02:28 PM | TrackBack

digg this story

Subprime Delinquencies Speading to Higher-Income Areas

The following report from the Wall Street Journal (subscription required):

Posted at 04:33 PM | TrackBack

digg this story

Mortgage & Loan: Million-Dollar Mortgage Meltdown

It would seem that the mania that possessed people to buy homes far beyond their means is indeed not confined to the
"subprime" sector, as this Reuters story indicates:

In Troy, Michigan, Dorothy Guzek, a credit counselor since 1988, has also seen the changing face of foreclosure. Her clients, while predominantly poor and minorities, increasingly are neither. Nowadays, homeowners holding professional careers with six-figure salaries regularly drop by her office. More and more they come from upscale Michigan communities..."Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."

As I've said before, there tends to be very little sympathy for people caught in dire mortgage straits. Indeed, the reaction of many bloggers seems to be open contempt that these people got in so far over their heads. Now, to be fair, many of the people stuck with high mortgage payments are flippers, specuvestors, etc., but not everyone is a Casey Serin.

So, watch this ABC News/BBC clip and judge for yourself: Are these folks guilty of "house gluttony" and rampant consumerism, or did they just get dealt a bad hand?

For me, I say what I've always said: The American Dream of home ownership should not come at such a high cost that any misstep could mean a wreck for life. And the idea that your entire financial history and future should be tied so closely to a stupid three-digit-number is an idea only fit for the nuthouse.

Clip found courtesy of Housing Panic.

Posted at 01:31 PM | TrackBack

digg this story

Paying More for the American Dream

The Woodstock Institute is a national research group that studies mortgage lending in poor neighborhoods and develops and promotes ways to bring economic resources to lower-income and minority families and communities. They recently released a distressing report on the lending disparities between minority groups and white borrowers. A quote from the report:

demonstrates that African-American and Latino borrowers are paying more than their white counterparts for home purchase loans in six geographic areas: Boston, Charlotte, Chicago, Los Angeles, New York, and Rochester. This review of federal lending data shows dramatic disparities. For example, in New York, African-American borrowers were five times more likely to receive higher-cost home purchase loans than were white borrowers

It seems clear that while the overall numbers of foreclosures remain relatively low - less than 2% of all outstanding mortgages - the conditions in low-income, mainly minority nieghborhoods are detoriating rapidly due largely to the accerating foreclosures rates that can be directly associated with the higher cost home purchase loans these people were sold.

Click here, to read the full report.

Posted at 03:26 PM | TrackBack

digg this story

Credit & Debt: Bernanke: "The Economic Expansion Continues"

It seems that on Ben Bernanke's world, the interest rate is still 4%, home sales are on a permanent upward trend, and any damage you may have seen from the subprime implosion is nothing to worry about:

Even so, Bernanke stuck with the Federal Reserve's assessment that the economy is likely to grow at a moderate pace over the coming quarters. He also repeated the Fed's belief that inflation also should ease in the months ahead, but he warned that underlying inflation remains "uncomfortably high."...On the other hand, consumers, who proved "quite resilient" despite the housing slump and increases in energy prices, could continue to keep spending at a pace that would make the economy grow faster than currently expected, he said. And, there are other forces, including a still-good jobs market that is producing fatter paychecks, that could push up inflation.

Bernanke's formal comment on his hopes for consumer spending from his testimony:

The continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending, which increased at a brisk pace during the second half of last year and has continued to be well maintained so far this year. Growth in consumer spending should continue to support the economic expansion in coming quarters.

And just how is that working out?:

"Despite diminishing expectations, consumers' assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions. The recent turmoil in financial markets coupled with the run-up in gasoline prices may have contributed to consumers' heightened sense of uncertainty and concern. The direction of both components over the next few months bears watching to determine whether this decline is just a bump in the road or something more substantial."

The key phrase there is "diminishing expectations." People are realizing that the housing market is crumbling, that their paychecks are stretched to the max, and that they have no savings cushion if an emergency strikes. These are not the hallmarks of a bull psychology by any stretch. Bernanke better bet on something else to keep his helicopter blades spinning.

Posted at 01:01 PM | TrackBack

digg this story

Consumer Confidence Index Drops

NEW YORK (Reuters) - Consumer confidence weakened in March as higher gasoline prices and recent turmoil in financial markets made Americans nervous about the future, a report showed on Tuesday.

A separate report showed U.S. single-family home prices plummeted in January, the first annual decline in home values in more than a decade.

Read more on the Consumer Confidence Report.

Posted at 02:47 PM | TrackBack

digg this story

Buying & Selling: New Home Sales Continue To Tank

A few days ago, Corey from InfoHype wrote in asking if the bust was over yet. If today's news about decreasing home sales for February is any indication, I'd say the answer is "No:"

The Commerce Department reported Monday that sales of new single-family homes fell by 3.9 percent last month to a seasonally adjusted annual rate of 848,000, the slowest sales pace in nearly seven years. All regions of the country except the West experienced weakness last month.The February decline followed an even larger 15.8 percent drop in sales in January, which had been the largest one-month plunge in 13 years. The back-to-back declines provided evidence that the housing market is continuing to struggle with lagging demand and a glut of unsold homes.

There are simply too many factors working against a resurgence in home buying on a nationwide level. Too many people are maxed out on credit and loans, there's too much inventory available, and prices for median homes are still too high. Marketwatch took special note of the increasing backlog of unsold homes contributing to the slowdown:

Inventories of unsold homes rose 1.5% to 546,000, representing an 8.1-month supply, the largest inventory in relation to sales since January 1991, at the tail end of a recession. The inventory is up 27% in the past 12 months.
Inventories are probably understated, however, because they don't include homes thrown back on the market due to buyer cancellations.

And as you might expect, the stock market isn't responding too favorably to the news. So it looks like we have to ride this train for a few more months at least.

InfoPath looks like a good read, by the way. Check it out. :)

Posted at 01:00 PM | TrackBack

digg this story

Credit & Debt: Fed Holds The Course On Lending Rate; Stocks Party

As it seems everyone expected, the Federal Reserve voted to maintain the Federal Funds lending rate at 5.25 percent.

AP coverage here, and the predicted stock rally coverage here.

Quick refresher as to the importance of this from Wikipedia. Essentially, any change to the Federal lending rate will result in an adjustment to the prime lending rate, which will affect any loans you want to take out or already have in effect.

I tend to agree with Calculated Risk's parsing of the statement. It seems like they're saying the economy is slacking and inflation is on the horizon, but the stocks rallied on even the faintest hope of a cut, evinced by the more moderate language in the statement.

It always amazes me how much of the modern economic process is influenced by hunches, blind faith, and superstition. In this case, parsing every word of a four-paragraph-statement and making huge stock moves because of that. ;) They might as well consult runes and horoscopes. :)

Posted at 04:10 PM | TrackBack

digg this story

Buying & Selling: D.C. Doldrums,Revisited

The lovely Velvet in Dupont has composed a lacerating no-love note to Alan Greenspan for enjoying the irrational exuberance of his retirement while the market he propped up crashes around him:

Your intent in keeping the economy afloat was a wise foresight on your part. But, you should have stopped with the rate reductions at some point earlier than 2003. You should have also increased the rates at a much faster pace than you did. Since you are so good at shooting your mouth off, you should have also warned all those homebuyers: If they can’t afford a fixed rate mortgage, then they can’t afford that particular house. Of course, you didn’t though. You’re saying it now, but back then, you were happy that the homebuilding industry was keeping the economy afloat and that you looked like a hero. You can’t give stupid people a bunch of money and not advise them of some basic financial rules because everyone else has to suffer the fallout when those people mismanage their money.

It's ridiculous how right this is. Just read the whole thing, won't you?

By the way, did you know that the District's own subprime contaigon has spread all the way from Anacostia to Fairfax? Think about it--the richest and poorest alike are both trapped in subprime hell. The former because it was the only way they could afford a home in pricey, increasingly-gentrified D.C., and the latter because they were trying to buy million-dollar homes on five-figure-incomes. Urban Trekker has the whole thing catalogued, so again, read the whole thing.

Posted at 04:10 PM | TrackBack

digg this story

Moving & Relocation: The End Of Exurbanism

Progressive blogs such as Firedoglake and the American Prospect's TAPPED are tackling the issues of explosive population growth, the failures of mass transit, and the need for better urban planning and development in the wake of the foreclosure tidal wave and the collapse of the subprime market.

This is nothing but a good thing to me. With gas prices creeping above $3 a gallon again, consumer and food prices rising in tandem, and thousands (if not millions) of Americans facing the dark side of excessive sprawl, McMansionitis, and developers' push to build at any cost, the time is ripe for a major change in how we view home ownership.

The "housing nightmare" will push many people out of their shitbox homes in the middle of nowhere and force them to not only live with less, but to reassess what a lifestyle spent in pursuit of conspicuous consumption really means. Is it worth it to have that 3,000 square-foot palace when you can't afford to pay your bills, and your family eats Ramen noodles and sleeps on mattresses just to make ends meet?

We need housing close to the city centers that supports the people who keep our cities running--doctors, policemen, nurses, firemen, janitors, etc. Urban planning, smart use, and the like are absolutely no guarantee of solving the problems we face. But we need to look at housing and home ownership in a different way if we're going to escape the endless cycle of boom and bust that ensnares far too many and crushes their dreams.

Posted at 07:15 PM | TrackBack

digg this story

Credit & Debt: Containing The Contagion

Much as worries about the housing bubble were met with a flurry of mainstream press assuring the public that "now was a good time to buy" and there was nothing to worry about, now we're seeing a ton of articles about how jobs will save the flagging economy, and how companies ranging from Countrywide to Bear Stearns are shrugging off the losses and showing increased earnings:

Countrywide is betting the mortgage malaise doesn't spread to prime and near-prime loans. Fears about contagion "are warranted," but mostly reflected in Countrywide's stock price, "leaving only relatively modest downside risk," wrote Merrill Lynch & Co. analyst Kenneth Bruce. He rates Countrywide "buy."...Bear Stearns wasn't the only one to try to assuage market fears on March 15. IndyMac Bancorp, Inc. (NDE) insisted that its exposure to subprime mortgages is small and it has been inappropriately categorized by many media sources as a subprime lender.

Not everyone is quite so sanguine, however. Take Jim Rogers, for instance:

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said..."When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.

I also have to point out that despite the claims of Rachel Beck, higher wages are NOT a guarantee the economy can weather the storm. Simply put, people are maxed out on credit, expenses, and can't rely on steady income from long-term gainful employment like they once did. When you have the Fed talking about your wages as the "primary pressure" on the economy, and CEOs who look at you as a cost on a balance sheet, is it any wonder that people still feel like they're falling behind?

Or that they would put themselves so far at risk just to preserve the American Dream?

Posted at 03:29 PM | TrackBack

digg this story

Mortgage & Loan: The Subprime Contagion Spreads

What was once considered "irresponsible speculation" on the part of certain wild-eyed bloggers is now literally making headlines across the country. Just take a look at what's on the front pages of the newspapers and Web sites today:

The New York Times: More Homeowners Unable To Make Payments.

USA Today: Subprime mortgages lift late payments; foreclosures hit record.

Yahoo News: Late mortgage payments reach high.

I've documented at length over the last two years as to why is this happening, but one question that hasn't gotten asked is what will happen next? Specifically, why did these huge, risk-averse banks take such a huge gamble on risky loans, and what will happen now that the entire market is crashing?

Sunday's NYT has a great look at how and why the pigs came to slop at the trough:

Owners of mortgage securities that have been pooled, for example, do not have to reflect the prevailing market prices of those securities each day, as stockholders do. Only when a security is downgraded by a rating agency do investors have to mark their holdings to the market value. As a result, traders say, many investors are reporting the values of their holdings at inflated prices...Wall Street, of course, was happy to help refashion mortgages from arcane and illiquid securities into ubiquitous and frequently traded ones. Its reward is that it now dominates the market. While commercial banks and savings banks had long been the biggest lenders to home buyers, by 2006, Wall Street had a commanding share — 60 percent — of the mortgage financing market, Federal Reserve data show...The issuance of mortgage-related securities, which include those backed by home-equity loans, peaked in 2003 at more than $3 trillion, according to data from the Bond Market Association. Last year’s issuance, reflecting a slowdown in home price appreciation, was $1.93 trillion, a slight decline from 2005.

I strongly urge you to read the entire article. Wall Street has built itself a fragile house of cards based on dubious monetizing of shady loans (and loan practices), and the end result will be the tightening of credit to such a degree that only the richest will be able to afford homes, mountains of unsold inventory, and a moribund economy overall.

You (quite literally) heard it here first. The contagion will claim many more before it runs its course, and there's no cure is sight.

Posted at 03:08 PM | TrackBack

digg this story

Buying & Selling: Photoshopping Listing Photos?

While searching Broadband Reports for some unrelated information, I came across a fascinating thread: The ethics of photoshopping listing photos. As you might imagine, the readers don't think too highly of it.

The forum linked to a Matrix post on the topic, wherein Jonathan Miller had this to say:

The physical marketing of a property includes showing a property at its best to influence the value, and this can include staging the home through furnishing, lighting and sounds. Those staging efforts don’t bother me because they help the buyer visualize the property potential. The new owner can effect change after purchase. However, the probability of the wires or a water tower being removed after purchase would be remote. That seems to be where the line should be drawn.

Honestly, I can't see any justification for altering photos of homes before listing. You're going to see the real deal in any case, and the idea that the seller would expect to get away with such crude fraud seems absurd on its face. Then again, I remember writing about people who bought plots of land via eBay completely sight unseen at the height of the housing boom, so maybe there's an audience for this sort of chicanery.

By the way, Adobe is apparently working on antifraud technology for Photoshop, but the commenters for that article aren't terribly impressed either. ;)

Posted at 05:22 PM | TrackBack

digg this story

Credit & Debt: Subprime Mortgage "Rot" Claims New Century Lending

The financiers behind subprime lender New Century are turning off the spigot after the company said it was increasingly unable to make good on its own loan obligations:

New Century said that it had received two letters from Bank of America, each dated Thursday, saying that certain New Century subsidiaries had failed to satisfy margin calls, among other issues. Citigroup and Barclays Bank Plc provided similar notices, New Century said. Investment bank Morgan Stanley (MS.N: Quote, Profile , Research), which last week agreed to lend $265 million to Irvine, California-based New Century, could force the subprime lender to repurchase up to $2.5 billion in loans, according to the filing.

CNN Money notes that the fall of New Century has potentially serious financial consequences for its many backers:

The company's SEC filing could shake up the entire financial sector. It mentioned financing agreements with many top Wall Street firms, including Morgan Stanley (Charts), Citigroup (Charts), Barclays Bank (Charts), Bank of America (Charts), and Credit Suisse First Boston Mortgage Capital, a unit of Credit Suisse Group (Charts), as well as the mortgage arm of Goldman Sachs (Charts). Shares of Goldman and Morgan Stanley each lost about 1 percent in early trading. Citigroup and Bank of America were narrowly higher at the open..."We know they didn't get their $8 billion by holding a bake sale. We knew it would touch other financial institutions; now we'll see how," said Art Hogan, chief market analyst at Jefferies & Co., about the impact New Century would have on the broader financial sector.

Despite the claims of economists, the Fed, and the business media, it seems that the market failure of the subprime sector is indeed spreading its "contaigon" not only to "grey" mortgage areas, but also to the backbone financial support necessary to get these companies off the ground in the first place. It's elegant in the irony, really--defaults and foreclosures because the homeowner can't make good on their debts to the lender, and possible bankruptcy because the lender can't make good on its debt to its backers.

Time will tell as to who ends up getting the easier ride out of debt hell, however.

Posted at 12:13 PM | TrackBack

digg this story

Mortgage & Loan: Mortgages--And Mortgage Fraud--Continue To Rise

If you believe the Fed, homeowners are continuing to set record levels of mortgage borrowing, albeit at a slower pace:

Homeowners increased their mortgage borrowing by almost $600 billion in the last quarter of 2006, an annual pace of 6.4 percent, significantly faster than the rise in housing prices, according to the Fed’s newest estimate of household and business balance sheets. Mortgage debt climbed more slowly in the fourth quarter than in the third quarter, though, reflecting the slowdown in home sales. But with prices creeping up slowly, homeowners dug deeper into their equity to keep up their spending. Owners’ equity as a share of the total value of their property edged down to 53.1 percent at the end of 2006, from 54.4 percent in the fourth quarter of 2005.

Of course, depending on who you ask, this could either be a sign of homeowners' increasing net worth or a sign that the hot times are coming to an end:

Households cut back sharply on the equity they extracted from their homes. By one simple measure calculated by Haver Analytics, the cash that homeowners took out from new mortgages dropped to a seasonally adjusted annual rate of $168 billion in the fourth quarter from about $266 billion in the third quarter.

This is clear evidence that homeowners are getting past the "home as ATM" trend that popularized so much of the housing boom years. Perhaps not coincidentally, the FBI announced it was stepping up efforts against mortgage fraud:

Suspicious activity reports regarding mortgage fraud schemes that included property "flipping" and inflated appraisals have more than doubled to 35,617 in the two years through 2006, the FBI said in a statement. The reports reflect losses of about $946 million, it said.

It doesn't surprise me that the FBI and the MBA are pushing vigilance against mortgage fraud now, given that the housing sector is becoming less profitable overall. It's easy to paint the role of vigilant law enforcer once the profit motive is off the table. It's also worth noting that the opaque nature of the industry makes it nigh-impossible to seriously pursue fraud cases, as this AP article notes:

The FBI said mortgage fraud is difficult to track for a variety of reasons. For starters, the industry is not required to report fraud. Moreover, the sale of mortgage loans on secondary markets can "conceal or distort the fraud," thereby reducing the number of cases reported. "The true level of mortgage fraud is largely unknown," the agency's report said. The bureau said fighting mortgage fraud is a priority due to the impact of mortgage lending and housing on the broader economy.

A good start to improving the economy and extending homeowner wealth might be more transparent controls on the mortgage industry, no?

Posted at 12:12 PM | TrackBack

digg this story

Mortgage & Loan: Subprime News Everywhere

You can't click on a news Web site or read a paper these days without hearing about the collapse in the subprime market. Though one could easily say that this media attention comes too little and too late, if nothing else, the failures of this current market cycle may--finally--provide some decent laws and better education to forestall another collapse the next time this happens. Or--dare I hope--prevent it from happening again.

CreditBloggers' Emily Davidson has a quick dissection and summation of subprime issues. Perfect if you need a quick reference or have to explain it to someone who doesn't understand.

Public Citizen's Consumer Law and Policy Blog has a discussion of new subprime loan guidance being discussed by the Fed and the banking industry. Said guidance deserves its own entry from me, but I figured I'd point you towards an excellent reference I use on a regular basis.

Speaking of the Fed, Ben Bernanke is again urging greater regulation of Fannie and Freddie. Isn't it odd that Bernanke should be so completely laissez-faire about the private market, but continues to get all up in arms about the GSEs?

And meanwhile, foreclosure filings continue to soar, especially in Massachusetts, reports the Boston Globe. Kimberly Blanton's been on the housing beat for some time now, and does good work. By the way, did you know Deval Patrick was apparently shilling to save Ameriquest to Robert Rubin? Talk about closing the barn door after the tornado hits...

Posted at 10:07 PM | TrackBack

digg this story

Mortgage & Loan: Race, Class, and Lending

The mainstream coverage of the subprime lending sector's collapse has unearthed some interesting, and not unexpected angles--chief of which is the notion that tightening lending standards and reducing access to available credit will put the dream of homeownership out of the reach of middle-class, low-to-middle-income (chiefly Black and Hispanic) families.

But it was that very same "easy access to credit" that's ended up suckering thousands of new home buyers into taking on toxic mortgages. Take this article on increasing foreclosures from the Christian Science Monitor:

Investors profited from the high interest rates that consumers were paying. "Wall Street wanted the mortgage brokers to keep making loans even though they were riskier and riskier," says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, D.C. "They didn't care that ... people were getting loans they couldn't afford because there was so much money to be made."...And the market is already correcting itself, says Kurt Pfotenhauer, the MBA's senior vice president for government affairs. Investors are now requiring stricter standards and mortgage companies are weeding out overly aggressive brokers. "Government regulation of this market will result in fewer people having access to credit," he says. "If you care about people having access to credit you shouldn't regulate the market."

Now that the sector is no longer profitable, these people are being cut off. The spigot is closed and the very system that encouraged people to push their finances well beyond the breaking point is now punishing them for having the audacity to live beyond their means. The Washington Post's coverage has a similar tack:

But lenders warned that the new requirements would make buying a home more difficult for low-income, minority and first-time buyers. Subprime mortgages made up about one-fifth of all new mortgages last year, according to the Mortgage Bankers Association. "These are extremely valuable products to some consumers," said Steve O'Connor, senior vice president of public policy for that association.

Only in America is the notion of putting yourself in debt with a home you can't afford considered a valuable service. Luckily, the Los Angeles Times takes a different view, putting forth the notion that the subprime collapse and the housing slump will be a boon to Cali's middle class:

But high-end buyers and elite workers alone cannot sustain large-scale economies. Most companies require a broad range of workers, from highly skilled tradespeople to technicians and middle managers. These are the workers, especially if they live elsewhere or don't own a home here, whom executives frequently complain are difficult to recruit or retain in Southern California...This helps explain why between 10 to 14 condo developments downtown — and similar projects in other cities — have been mothballed or downsized. Yet here too, the bad news may prove to be good news. Lower condo prices might renew the attraction of the inner city for those — singles, young childless couples and artists — who started the back-to-downtown movement.

Dropping prices and encouraging "workforce housing" will bring people back to the cities and inner suburbs, buying more homes and putting more dollars in the community. Proper education of the risks of credit, and a focus on traditional fixed-loan products, as well as greater encouragement of savings and investing, will help keep the dream of home ownership in the hands of all Americans, and not just a product of entitlement for the idle rich.

Posted at 02:04 PM | TrackBack

digg this story

Home Improvement: Kendra Todd On Sprucing Up Your Home

Former Apprentice Kendra Todd is at it again. In a column for Yahoo Finance discussing five home improvement projects that will add more bang for the buck at sale time, Todd makes an interesting statement at the outset:

Read the real estate or business sections of the newspaper and you start seeing the stories: reliable government or economic officials talking about the beginnings of a recovery in the real estate market. With spring coming, the time is ripe to sell. However, don't assume that because home prices are out of free-fall that you can stab a For Sale sign in your lawn and be flooded with offers. This isn't 2003. If you want maximum buck for your property, you need to make sure it makes a bang when buyers see it.

Obviously, it would be too much to expect that a shill like Todd would actually come out and acknowledge that the so-called "recovery" is far from such, but I did like the semi-explicit acknowledgement that sellers are going to have to work much harder to make their homes appealing in this much more cautious market.

As far as the recommendations themselves, there are two old sayings that come to mind. One is "You have to spend money to make money," and the other is, "Throwing good money after bad never makes you any richer."

I'll let you be the judge.

I previously discussed Kendra's reliability as a gauge of home sales here.

Posted at 12:56 PM | TrackBack

digg this story

Moving & Relocation: Affordable Housing Gets A Victory

In the never-ending refrain of "affordable" housing units being carved up and resold as "luxury" condos (which usually involves just slapping a coat of paint on and boosting the asking price by 10x10 power), it's nice to see a break in the trend. In this case, HUD secretary Alphonse Jackson blocking the sale of Starrett City in New York:

Clipper Equity LLC, the real estate company that bid $1.3 billion to buy the 46-tower complex from Starrett City Associates, was told by HUD in a letter last night that the deal would not be approved, a source confirmed.Federal officials decided to stop the sale in part because the price led them to believe the complex could not remain affordable housing for its 14,000 tenants, the source said, reading from the letter.

Among the reasons for putting the hammer down on the deal was a pronounced sticker shock and the shady dealings of the major player in the deal, David Bistricer:

- Even in the hyperactive New York market, the proposed sale of Starrett City caused sticker shock. Jackson noted that in a neighborhood where apartments are valued around $95,000, Clipper Equity offered the equivalent of about $220,000 for each Starrett City unit. Clipper Equity partner David Bistricer already owns 71 other buildings with 8,792 outstanding violations. Since 1998, Bistricer has been under permanent injunction from offering or selling cooperative buildings and apartments - a statewide ban Cuomo said he intends to enforce.

The official HUD statement is here, with more coverage from Bloomberg here.

This is another coda to the housing boom era, in a way. It wouldn't have been so long ago that developments like this would have been rubber-stamped and sent on their way with nary a backward glance. It's nice to see government (particularly THIS government) doing its job and sticking up for the little guy for once.

Those who follow the trends of affordable housing would do well to check out Housing Finance, whose humble blogmistress Martha Bridegam has done a masterful job of chronicling the ups and downs of this sector for as long as I've been blogging here. ;)

Posted at 06:10 PM | TrackBack

digg this story