by Calculated Risk on 5/12/2008 01:17:00 PM

Update: from Reuters: Long slump may follow crunch: JPMorgan CEO

Chase & Co Chairman and Chief Executive Jamie Dimon on Monday told bank investors ... the economy may face a longer-term challenge even as financial markets begin to function again, the "slower burn" of a recession that may rival the severity of the 1982 contraction, he said.

These challenging conditions, marked by tighter bank credit, new rounds of mark-downs, further capital infusions and asset sales by banks, could last through next year and into 2010, he said.

Earlier: Just some headlines from CEO Jamie Dimon on the wire for now.

by Calculated Risk on 5/12/2008 11:01:00 AM

From the Radian conference call this morning:

“We continue to see the poorest relative performance in our Alt-A book and California and Florida continue to heavily influence overall portfolio performance. 60% of the increase in defaults in Q1 was attributable to Alt-A loans and 50% of the additional 1st lien reserves can be attributed to California and Florida . We estimate the peak to trough national price declines in a range between 8-13% using the OFHEO index. That would be in line with the Case Shiller approximated range of 16-26%. We could clearly see declines in areas of California and Florida that are twice the national rate.”

by Calculated Risk on 5/12/2008 09:59:00 AM

From the New York Post: Trouble in Paradise (hat tip blogenfreude)

In the first three months of this year, banks have launched preliminary foreclosure actions - known as lis pendens proceedings - against a record 120 borrowers in East Hampton and Southampton towns.
...
"This problem didn't even exist before," said John Brady, a broker with Coldwell Banker in East Hampton. "They used to pop up once in a while, and you wouldn't even pay attention. Now you expect to see new ones every week."

The Atlanta Journal-Constitution: Tax assessors boggled by housing dip (hat tip James)

For less than the price of a decent used car, you can buy a home in Atlanta today.

Actually, real estate agents list a dozen choices for $10,000 or less.

Step up in price to $20,000 and your choices expand 10 fold.

The prices seem absurd but they are part of a real estate market suffering with rampant foreclosures, mortgage fraud, abandoned investor properties, a collapsing mortgage industry and other ills.
...
Wayne Flanagan, a RE/MAX agent who sells bank-owned properties, said in zip codes like 30310 and 30315 values have taken a nosedive faster than public officials can account for.

"There are some price ranges like $20,000-$80,000 where 90 percent of the properties on the market are foreclosures," Flanagan said. "You've got one bank competing against another. It's a spiraling situation, downward."

Let me know when houses in the Hamptons are selling for the price of used car! The foreclosure problem is everywhere.

by Calculated Risk on 5/12/2008 09:39:00 AM

From Bloomberg: MBIA Posts Loss of $2.4 Billion as CDO Slump Deepens

MBIA Inc. ... posted a net loss of $2.4 billion as the slump in mortgage securities deepened.

The beat goes on.

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.