In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Tuesday, October 27, 2009

Report: GMAC in Talks for Bailout, and Summary

by Calculated Risk on 10/27/2009 08:23:00 PM

A busy day ... here is a summary:

  • From the WSJ: GMAC Asks for Fresh Lifeline. The WSJ is reporting GMAC is in "advanced" talks with Treasury for another bailout: "The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into [GMAC], on top of the $12.5 billion that GMAC has received since December 2008 ... "

  • The Home Buyer tax credit has apparently been extended, and eligibility expanded to include some move-up buyers. Details:
  • Income eligibility for first-time home buyers stays at $75,000 for individuals, and $150,000 for couples.
  • For move-up buyers, income eligibility is $125,000 for individuals and $250,000 for couples.
  • There is a minimum 5 year residency requirement - in their current home - for move-up home buyers.
  • The tax credit is the lesser of $7,290 or 10% of the purchase price.
  • The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow)
  • Expect bill to be signed by Friday, packaged with the unemployment benefit extension.
  • From Dow Jones tonight: Office Landlords Cut Rents, Up Concessions To Stave Off Vacancies
    Boston Properties Inc. ... reported Tuesday ... that gross rents declined 17% when comparing what new tenants are paying with the rent that had been paid by old tenants occupying that space. ... The results follow similar releases Monday by SL Green Realty Corp. (SLG), one of New York's largest office landlords, and Liberty Property Trust (LRY), of Malvern, Pa., which owns 700 properties including offices and light manufacturing.
    Earlier I posted some interesting comments from the Liberty Property Trust conference call.

  • The Case-Shiller Home Price Index showed an increase in August. Here is a repeat of the graph:

    Case-Shiller House Prices Indices Click on graph for larger image in new window.

    This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

    The Composite 10 index is off 32.5% from the peak, and up about 1.0% in August.

    The Composite 20 index is off 31.3% from the peak, and up 1.0% in August.

    Prices increased in 16 of the 20 Case-Shiller cities.

  • House prices are well above the bank stress test scenarios, see: House Prices: Stress Test and Price-to-Rent