by Calculated Risk on 5/12/2008 12:34:00 AM

Here are a couple of stories of transaction volumes increasing in some of the hardest hit areas of California.

From the North County Times: HOUSING: Signs of life appear in Southwest Riverside County (hat tip Tony)

... the southwest corner of Riverside County may be showing signs of recovery.

In April, the number of houses sold was higher than the year before for the fourth straight month, leaping 73 percent last month from a year ago.
...
The median home price ---- in which half the homes sell for more and half for less ---- in the region sank to $265,000 in April, a mammoth 36 percent off the $415,000 median in 2007 and 40 percent below the $439,900 level of 2006.
...
Meanwhile, North San Diego County's housing market is not showing similar signs of recovery. Its median price has fallen about 25 percent from its peak to $490,000, but house sales for the last 28 months have been lower than the same month the year before...

Rich Toscano, at Professor Pigginton's, adds some commentary on San Diego:

One really helpful puzzle piece was supplied by SD Realtor a couple weeks back. He posted some data showing that while volume has declined in many higher end areas, it is actually up quite substantially in some of the areas that have really been crushed (e.g. Eastlake).

His conclusion was that the price declines have gotten so bad in some areas that buyers are starting to creep back in. But where the prices have been stickier, demand remains quite weak. This is a sensible analysis and I tend to agree.

It sounds like volumes are only increasing in the lowest priced, and hardest hit areas. Transaction volumes are probably picking up because of all the REO sales in these areas.

This doesn't mean prices have bottomed - especially in real terms - but the increase in transaction volume might indicate that most of the nominal price decline has already occurred for some low end areas.

by Calculated Risk on 5/11/2008 09:32:00 PM

A video from CNN on a community in Las Vegas. (hat tip Harsh Realty) (2 min 35 sec)

by Calculated Risk on 5/11/2008 05:56:00 PM

From the O.C. Register: A three-hour tour of foreclosed homes.

This is a tour of coastal properties in Orange County, CA, with some homes over $1 million. Here is the video. Not exactly subprime.

Trivia: the longest "three-hour tour" (from the TV show Gilligan's Island) also left from Orange County!

by Calculated Risk on 5/11/2008 11:57:00 AM

David Streitfeld writes in the NY Times about the impact of the housing bust on self storage: Losing a Home, Then Losing All Out of Storage. There are several interesting sub stories in this article, like the trend toward "residential units":

Fred Reger, an auctioneer in Washington and its suburbs, is seeing two trends, which he calls “matching luggage” and “residential units.”

The first means that he often sees a bunch of over-stuffed plastic bags when he opens a unit. “People used to put their belongings in boxes,” Mr. Reger said. “But Hefties are a lot cheaper. These people came in under stress, which explains why they defaulted a few months later.”

A “residential unit” is one where the renter tries to illegally live in the unit. “We used to see one or two residential units a month,” Mr. Reger said. “Now I’m seeing 6 or 8 or 10. At one facility in D.C. the other day, we had three residentials.”

And there is this sad quote:

Bill Martin, a 50-year-old former manager in the technology industry, lost his house in the Southern California community of Lake Forest last August. ...

“Storage has my hopes in it,” said Mr. Martin, who sleeps on a foldout bed in his mother’s guest room. “I don’t tell anyone this, but at least once a week I go over and look at my couch, my refrigerator, my TV stand, my mattress and realize I did have a life, and maybe there’s a way to go back to it.”

Note: the byline might sound familiar - Streitfeld used to write for the LA Times, and he wrote a series of excellent articles on housing, as examples: from 2006, A loan that'll get ugly fast, from March 2007, A town right on the default line (about the Inland Empire), Blight moves in after foreclosures and Foreclosures may spur price drops.

by Calculated Risk on 5/11/2008 10:13:00 AM

From the Observer: HSBC to reveal $5bn of fresh write-offs

HSBC is expected to announce tomorrow that it is writing off a further $4.6bn (£2.3bn) against mortgages, credit cards and other loans to stricken US consumers, bringing the total over the last 15 months to almost $17bn.

The confessional is still busy.

by Calculated Risk on 5/11/2008 01:27:00 AM

Yes, this is Calculated Risk.

Best to all.

by Calculated Risk on 5/11/2008 01:21:00 AM

Here is a story of a city in Northern California devastated by the housing bust, from the San Francisco Chronicle: Brentwood the poster child for housing bust (hat tip rainyday)

This farming community on the eastern edge of the Bay Area absorbed an outsize portion of the region's growth during the prolonged housing and development boom, adding 40,000 residents in the past 16 years as subdivisions and strip malls overtook agricultural land. ... Now, Brentwood is suffering disproportionately from the bust.

Hundreds of families have lost their homes to foreclosure since the beginning of last year, and in a sign of more to come, at least 1 out of every 16 households has received default notices.
...
"Brentwood is kind of the poster child for what's going on in the housing market," said Howard Sword, the former community development director. "We were so active in the years where the subprime finance creative tools got rolled out, we were issuing like 1,400 to 1,600 building permits a year."

This year, the city has issued nine permits for single-family homes. It expects to collect $21.3 million less in permit and impact fees than it did two years ago, said Pamela Ehler, director of the finance and information systems. Brentwood's total general budget is about $40 million.

"This was a complete meltdown," she said.

by Calculated Risk on 5/10/2008 08:09:00 PM

From The Times: Home repossessions to double this year for mortgage defaulters

The number of people who are losing their homes because they cannot meet rising mortgage bills is set to double this year, experts said yesterday.
...
The number of repossession orders granted in England and Wales in the first three months of the year climbed to levels not seen since the early 1990s, reaching 27,530.
...
Experts also urged a sense of perspective, pointing out that the present level of repossessions remains considerably below the peak of 75,540 homes seized during 1991, at the peak of the last recession. About 142,900 repossession orders were made that year.

Hmmm ... 27 thousand foreclosure orders in the first quarter is a 108 thousand annual pace. And the problem seems to be getting worse each quarter. I'm not sure the present level of foreclosure activity is that far below 1991 in the UK.

by Calculated Risk on 5/10/2008 02:23:00 PM

A follow up to Tanta's post this morning, from Michael Hiltzik at the LA Times: In mortgage meltdown, ‘walkaway’ homeowners may be suburban myth (hat tip Dagny)

Bankers and housing market analysts are warning of a chilling new trend in the mortgage world: Homeowners voluntarily defaulting on their loans even though they can actually afford to make the payments.
...
At Fannie Mae, the government-chartered company that owns or guarantees billions of dollars in home mortgages, Senior Vice President Marianne Sullivan conceded that there was growing "folklore" about residential walkaways but said that the phenomenon was more likely connected to investors than people who live in their homes, or "owner-occupants."
...
Bruce Marks, CEO of Neighborhood Assistance Corp., a Boston-based nonprofit agency that helps strapped homeowners, says flat out that the notion that legions of borrowers are simply deciding not to pay is an "urban myth" that largely reflects the mortgage industry's desire to blame homeowners, rather than their lenders, for the surge in problem loans.

I nominate Michael Hiltzik honorary UberNerd!

P.S. and kudos to Tanta: Let's Talk about Walking Away

by Anonymous on 5/10/2008 10:53:00 AM

In the New York Times, too! I think we're going to have to make Vikas Bajaj an honorary UberNerd.

Millions of Americans are “upside down” on their mortgages — they owe more on their homes than their homes are worth. So far, however, there is little evidence that people who have the means to pay are walking away from their homes as values sink.

The blogosphere is full of tales of homeowners who supposedly are choosing to mail the house keys to their lenders rather than keep their depreciating homes. And yet “jingle mail,” the term for those tinkling packages of keys, appears to be far rarer than many seem to think.

I think this is my favorite part:

Jon Madux, a founder of the site YouWalkAway.com, which helps borrowers leave their homes, said a majority of the site’s clients default because of financial hardships. But in the Southwest and Florida, more of its customers are investors who bought multiple condos or houses and are now not able to find renters or sell for more than they owe.

Speculators always cave in quickly in a declining market, especially when they weren't required to make a down payment and the rents were never realistic. This, we always knew. It does not constitute a "sea change" in borrower behavior, whatever the hoocoodanode crowd wants you to believe.

The interesting question is why this insistence that walk-aways are widespread is being, apparently, pushed by real estate brokers (they and some mortgage brokers seem to be the sources for most of the claims I've read in this regard).

“These markets are driven by psychology,” Mr. Barry [the real estate agent] said. “If people see that the market will continue to decline and they are already in the hole by 50 to 100 grand” they will leave.

Is it just the salesperson's preference for "psychology" as the all-purpose explanation? Classic projection? An attempt to spook the banks into negotiating with borrowers who wouldn't, typically, qualify for a workout? I'd really like to know.