by Calculated Risk on 8/17/2009 08:51:00 PM

From Carolyn Said at the San Francisco Chronicle: More share space to shave costs in recession

Facing layoffs, pay cuts and furloughs, more people have turned to shared housing to help make ends meet. Craigslist ... says that its roommate-wanted postings over the past 12 months are up 60 percent for the Bay Area, and up 85 percent within San Francisco.

While young singles sharing digs to save money is nothing new, this new brand of "recession roommates" includes more families and couples who are sacrificing their privacy as a way to cope with the economic downturn.
...
The Census Bureau's American Community Survey showed a jump in cohabiting in 2007, the most recent survey year. In California, the number of "family households" with a roommate stood at 228,500 in 2007, up 9.6 percent from 2006. In "nonfamily households," 674,000 reported having roommates in 2007, a 9.4 percent increase from the previous year.
...
During the Great Depression, plenty of people rented out spare rooms to cope with hard times, said Los Altos resident Don McDonald, 91, whose family in Ohio took in boarders regularly. ... "(Boarders) always ate with us and were, in effect, part of the family. The old family photo album shows several of them over those years."

It is common in a recession for households to double up by moving in with a friend or family member. However I'm not sure if taking in boarders is common in a recession ... although from the stories I've heard, it was very common during the Depression.

by Calculated Risk on 8/17/2009 06:32:00 PM

Here is some national data on buyer motivations in Q2. This is from a survey by Campbell Communications (posted with permission).

Credit: Summary Report--Real Estate Agents Report on Home Purchases and Mortgages, Campbell Communications, June 2009

Click on graph for larger image in new window.

This graph shows the motivation of non-REO home sellers.

From Campbell Survey:

We told respondents, “Please think of the number of non-REO listings you currently have and then specify the number of home sellers by motivation. If more than one motivation applies, please select the single motivation that is most important; skip any motivation that does not apply.” Significantly, we found that unforced or optional listings account for only 31% of non-REO listings. Financial stress (including short sales) account for over a quarter. Other significant motivations include long distance relocation and divorce or estate sales.

A previous survey question on home purchase transactions found that 51%, or approximately half, of the home purchase market is non-REO transactions. Combining the above question’s results with this data, we can impute that only 16% of the agent-sold residential real estate market—REO and non-REO properties—is a result of unforced or optional listings.
emphasis added

See Distressed Sales and Types of Buyers for a breakdown of REOs, short sales, and non-distressed buyers.

by Calculated Risk on 8/17/2009 04:00:00 PM

First the market ...

Click on graph for larger image in new window.

The first graph shows the S&P 500 since 1990.

The dashed line is the closing price today.

The S&P 500 is up 44.8% from the bottom (303 points), and still off 37.4% from the peak (585 points below the max).

The S&P 500 first hit this level on Oct 7, 1997; almost 12 years ago.

Instead of comparing the markets from the peak (See: the Four Bad Bears), Doug Short matched up the market bottoms for four crashes (with an interim bottom for the Great Depression).

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

From Reuters: Guaranty bid deadline Tuesday, Corus Sept 3-sources

A U.S. regulator has extended a deadline to bid on Guaranty Financial Group assets to Tuesday, while bids for another troubled lender, Corus Bankshares Inc, are due Sept. 3, sources familiar with the situation said on Monday.

Guaranty Bank (Texas) had about $14.4 billion in assets as of Q1, and Corus had $7.6 billion. See the current Problem Bank List (unofficial).

These will be the 2nd and 4th largest failures of the year. Colonial had $25 billion in assets, and BankUnited had $12.8 billion in assets when they failed.

by Calculated Risk on 8/17/2009 02:42:00 PM

The Federal Reserve reports that delinquency rates rose in Q2 in all categories.

Click on graph for larger image in new window.

This graph shows the delinquency rates at the commercial banks for residential real estate, commercial real estate and consumer credit cards.

Commercial real estate delinquencies (7.91%) are rising rapidly, and are at the highest rate since the early '90s (as delinquency rates declined following the S&L crisis).

Residential real estate (8.84%) and consumer credit card (6.7%) delinquencies are at the highest levels since the Fed started tracking the data (since Q1 '91).

Although there is credit deterioration everywhere, the rise in these three categories is especially significant. There was also a significant increase in C&I delinquencies (commerical & industrial) and Agricultural loans.

Note: The Fed defines commercial as "construction and land development loans, loans secured by multifamily residences, and loans secured by nonfarm, nonresidential real estate", and many of the problems are probably in the C&D loans. These are the loans that will lead to the closure of many more regional banks.

Also check out the charge-off rates. The charge-off rate for residential real estate increased from 1.81% to 2.34%, and for consumer credit cards from 7.64% to 9.55%!

Ouch!!!

by Calculated Risk on 8/17/2009 02:00:00 PM

From the Fed: The July 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices

The July 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, loans to businesses and households over the past three months. The survey also included two sets of special questions: The first set asked banks to rank the causes of declines this year in commercial and industrial (C&I) lending, and the second set asked banks about their expectations for lending standards going forward relative to the average level over the past decade. The results reported here are based on responses from 55 domestic banks and 23 U.S. branches and agencies of foreign banks.

In the July survey, domestic banks indicated that they continued to tighten standards and terms over the past three months on all major types of loans to businesses and households, although the net percentages of banks that tightened declined compared with the April survey. Demand for loans continued to weaken across all major categories except for prime residential mortgages. The fractions of domestic banks reporting additional weakening in demand in this survey were slightly lower than those in the April survey for C&I loans and home equity lines of credit, approximately the same for commercial real estate (CRE) and nontraditional residential mortgages, and slightly higher for consumer loans.

In response to a special question, domestic banks pointed to decreased loan demand and deteriorating credit quality as the most important reasons for declines in C&I lending this year. In response to a second special question, most banks reported that they expected their lending standards across all loan categories would remain tighter than their average levels over the past decade until at least the second half of 2010; for below-investment-grade firms and nonprime households, the expected timing is later, with many banks reporting that standards for such borrowers will remain tighter than average for the foreseeable future.
emphasis added

Click on graph for larger image in new window.

Of particular interest is the increase in tighter lending standards for Commercial Real Estate (CRE) loans. This graph compares investment in non-residential structure with the Fed's loan survey results for lending standards (inverted) and CRE loan demand.

Note that any reading below zero for loan demand means less demand than the previous quarter. The slump in CRE investment is just getting started ...

More charts here for residential mortgage, consumer loans and C&I.