Florida Bankruptcy Filings & Mortgage Delinquencies 2nd Quarter 2009

 Florida

18,328,340 Population (2008)
25,415 Bankruptcy Filings Q2 2009
1.39 Filings per 1,000 Population
22.8% Percent Mortgage Loans Delinquent or in Foreclosure Process

Economy: The Good, the Bad, the Ugly

Housing prices rose 2.9 percent from the first quarter to the second – the first quarterly increase in three years, Standard & Poor’s reported Tuesday. Meanwhile, a business group announced Tuesday that amid signs of economic improvement, consumer confidence rebounded this month.

The S&P/Case-Shiller Home Price Index and the Conference Board’s consumer confidence index were the latest reports to suggest that the U.S. economy is staggering toward recovery. The progress is agonizing, and many ordinary people won’t see the payoff for a while.

The Congressional Budget Office expects unemployment to rise from July’s 9.4 percent and average double digits next year.

Long climb ahead

Even so, the economy is a long, long way from a full recovery. The Congressional Budget Office predicts economic output will fall 1 percent this year and unemployment will average 10.2 percent in 2010. Housing prices are still down 30 percent from their 2006 peak, household incomes are shrinking, employers are still cutting jobs and consumer confidence is struggling back from rock-bottom levels.

Unemployment fell unexpectedly last month, though partly because many discouraged workers stopped looking for jobs.

Industrial production rose in July for the first time in nine months.

Home prices rose in 18 of the 20 cities tracked by the S&P/Case-Shiller index from May to June. Month-to-month comparisons can be unreliable and overall prices are about where they were in early 2003. Still, “The numbers are telling us prices may have already hit bottom,” says Patrick Newport, economist at IHS Global Insight.

That helps by producing:

• More consumer spending. Rising home prices give homeowners more confidence to spend. They tend to tighten their belts if they owe the bank more than their house is worth.

• More buyers moving into the housing market. Rising prices may nudge more potential homebuyers off the fence.

• Fewer toxic assets on the books for banks. Rising home prices are an elixir for banks stricken with questionable mortgage loans and foreclosed property. “It improves the balance sheet of the bank. That will hasten the end of the credit crunch,” says Joel Naroff, of Naroff Economic Advisors. “Do I think it will happen very fast? No.”

Worries about winter

Moody’s expects the housing market to be depressed this winter when banks auction off foreclosed property. Lenders have delayed the sales, while trying to figure out how to qualify for a government program to modify troubled mortgages; eventually, the foreclosures will continue.

What's a Trillion Dollars between Friends? Too big for one column, that's for sure

Florida’s existing home, condo sales up in July

Florida’s existing home sales rose in July – the 11th month in a row that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). Statewide existing home sales in July also rose over the previous month’s sales level.

Existing home sales rose 37 percent last month with a total of 15,882 homes sold statewide compared to 11,595 homes sold in July 2008, according to FAR. Statewide existing home sales in July increased 0.2 percent over June’s statewide activity. Florida Realtors also reported a 48 percent rise in statewide sales of existing condos in July.

Florida’s median sales price for existing homes last month was $147,600; a year ago, it was $193,800 for a 24 percent decrease.

The national median sales price for existing single-family homes in June 2009 was $181,600, down 15 percent from a year earlier.

Several positive market factors are influencing the housing sector. Historically low mortgage interest rates, affordable home prices and a large selection are encouraging buyers who’ve been on the sidelines. Activity has been consistently much stronger for lower priced homes. We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions.

In Florida’s year-to-year comparison for condos, 5,035 units sold statewide compared to 3,396 units in July 2008 for a 48 percent increase. The statewide existing condo median sales price last month was $108,300; in July 2008 it was $168,700 for a 36 percent decrease. The national median existing condo price was $183,300 in June 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.22 percent last month, down significantly from the average rate of 6.43 percent in July 2008, according to Freddie Mac.

Senator Edward Kennedy Dies

Florida Delinquencies & Foreclosures - Scary #s

“Nearly 23 percent of residential loans in Florida were delinquent or in foreclosure in the second quarter, according to a survey by the Mortgage Bankers Association. Florida has the highest rate in the nation, followed by Nevada, Arizona and Michigan.”

Keys Homes are selling, but for less

Echoing trends around the region and throughout much of the nation, area real estate sales were up in the second quarter compared to the same period last year, though prices continued to decline.

From April 1 to June 30 there were 249 residential sales between Key West and Mile Marker 107 in Key Largo, up 20 percent from the last year. But the average home price dropped 24 percent, from $640,000 to $483,000.

Total Keys real estate sales, including commercial properties and boat slips, trended similarly during the second quarter. From Key Largo to Key West, 396 properties were sold in April, May and June, 11 percent more than last year. The increase was the first since the market peaked in 2005, but it came along with a 23 percent decline in the average sales price, to $480,000.

The news wasn't quite as good in Key West, where total home sales fell 5 percent in the second quarter of this year compared to 2008. However, that represents only six fewer home sales in the second quarter of 2009, dropping to 121 from 127 last year during the same three-month period.

The average sales price in Key West dropped 20 percent, from $651,000 to $519,000.

The majority of sales in Key West -- 73 percent -- have occurred on homes priced at $499,000 and under. Another 15 percent occurred among homes prices from $500,000 to $999,000. The other 12 percent was for homes prices $1 million and up, which accounted for 15 home sales.

Upper Keys residential prices remained higher over the spring than other parts of Monroe County.

The average residential sales price from April through June was $562,000, which is $82,000 more than the county as a whole, but off 21 percent from last year, according to the American Caribbean analysis.

The number of Upper Keys residential sales -- Ocean Reef not included -- increased from 90 to 109, with the gains spread across various types of properties, from open-water homes and dry lots to condos and mobile homes.

The average price of the 26 condos that sold, however, decreased 29 percent, from $526,000 to $373,000.

Drops in housing prices, and increases in the homes sold, extend beyond the Keys into the rest of Florida and much of the country. Nationwide, home sales were up 3.8 percent in the second quarter when compared to the first quarter of this year, according to the National Association of Realtors.

In Florida existing homes sales in June were up 28 percent over last year while prices dropped 28 percent. In addition to low prices, friendly interest rates and tax incentives have fueled demand, leading many economists to be optimistic that, though distressed home and foreclosure rates remain high, the housing market is beginning to right itself.

In the Keys, the inventory of properties offered for sale was down 21 percent during the first half of 2008, a positive sign for a market that's been oversaturated with supply. The backlog of properties stood at 34 months, the lowest since 2006 but still way above the three to 10 months that presided from 2002 through much of 2005.

The Keys market is on a slow but steady course to recovery, but is still burdened by foreclosures and short sales as well as the tight lending market. Price stabilization is 18 to 24 months away given the current market and economic factors at play.

That would be more mortgage problems

If you want to believe the economy has hit bottom, don’t read any further.


OK, don't blame me.


Delinquencies and foreclosures set another record during the second quarter, as more homeowners lost their jobs. And, unfortunately, the evidence suggests that conditions are deteriorating on average.

More than 13 percent of American homeowners with a mortgage have fallen behind on their payments or are in foreclosure.

As shocking as that number is, the new bad news for the economy is that the mortgage meltdown has morphed into a new area—those borrowers previously considered safe.

The record-high numbers released Thursday by the Mortgage Bankers Association are being driven by borrowers with traditional fixed-rate mortgages, rather than the shady subprime loans with adjustable rates that kicked off the mortgage crisis. As of June, more than 4 percent of all borrowers were in foreclosure, while about 9 percent had missed at least one payment.

Loan delinquencies among borrowers with prime, fixed-rate mortgages grew from the first quarter to the second in all 50 states, with the biggest jumps in Wisconsin, Illinois, Utah and West Virginia.

And as America has so painfully found out this year, housing and unemployment problems can spread into many sectors of the economy.

Toxic Loans Topping 5 Percent May Push 150 Banks to Point of No Return.

So far this year, 72 lenders have failed, the most since 1992. But many more collapses lie ahead as increased loan defaults crush bank bottom lines. The Federal Deposit Insurance Corp’s (FDIC) confidential list of “problem banks,” stood at 305 during the first quarter. If these banks go, the FDIC will be snuffed out and taxpayers will be hit with another massive bill.

Banks with nonperformers above 5 percent had combined deposits of $193 billion. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter.

Like it or not, America is entering uncharted territory. The banking sector is the heart and core of America’s economy. It contains the pillars supporting the entire Anglo-Saxon economic model. And bad loans are tearing apart the banks. The outlook is grim. A second banking crisis could be on the way.

Which Home? Women decide quicker

Because a home is the biggest purchase most people make in their lifetime, International Communications Research (ICR) surveyed 1,000 individuals to discover how much men and women differ in the homebuying process.

Key highlights from the study:

Women may be inclined to make up their mind more quickly than menWhen asked how long it took before they knew a home was “right” for them, almost 70 percent of women had made up their mind the day they walked into the house, vs. 62 percent of men. Conversely, significantly more men needed two or more visits: (32 percent of men vs. 23 percent of women).

Women would rather live close to their extended family than their jobFifty-five percent of women find it more important to be close to their extended family than their job, compared to only 37 percent of men.

Couples say no one “wears the pants in the relationship” for major financial decisionsAlmost 70 percent of respondents living with their significant other said decisions are mutual. However, 23 percent think that they, themselves, wear the pants in the relationship, not their partner. More men than women said this (26 percent vs. 20 percent, respectively).

Men and women agree on how they would use a spare room, for the most partWhen asked how they would use an extra 12 x 12 room if it could be anything they wanted, men and women agreed on the top three responses:• Bedroom: 25 percent • Office/study: 15 percent • Family room/den: 11 percent

However, men want a “man cave”Out of the 8 percent of respondents who would turn that spare room into an entertainment center, a preponderance of men led the charge. Four times as many men as women said they would use the extra space for recreation/entertainment.

U.S. Seriously Delinquent Mortgage Loans by Type

Click on graph for larger image.

The graph shows the breakdown by type for loans that are either seriously delinquent (90+ days delinquent) or in the foreclosure process. There are about 3.6 million loans in this category.

Clearly subprime is disproportionately represented (much higher delinquency rate), but now over half the loans in this category are Prime - and the delinquency rate is growing faster for Prime.

This is now a Prime foreclosure crisis.

From our friends at the Calculated Risk Blog

How fast can the economy grow?

Click on graph to enlarge

The recession may be ending (and may, in fact, have ended, according to the majority of economists recently surveyed by the Wall Street Journal) but, the uncertainty about the course of future growth is far from resolved.

The most recent consensus forecast from the panel assembled for the monthly Blue Chip Economic Indicators does suggest a nice bounce back into positive growth territory, bringing to an end a four-quarter run of gross domestic product (GDP) contraction.

What remains interesting, however, is the range of disagreement about just how fast the recovery will be.

The upper and lower black lines in the chart above delineate the 10 most optimistic forecasts (the upper lines) and the least optimistic forecasts (the lower lines) among the Blue Chip panel's 51 economists. Most interesting is the fact that some collection of theses economists are, in any given quarter, guessing that growth will not break a 2 percent annual pace before we exit 2010.

LONGEVITY in the U.S.

U.S. life expectancy is now standing at nearly 78 years, according to the National Center for Health Statistics, part of the Centers for Disease Control and Prevention.

The United States continues to lag behind about 30 other countries in estimated life span. Japan has the longest life expectancy — 83 years, according to the World Health Organization.

Heart disease and cancer together are the cause of nearly half of U.S. fatalities. The death rate from heart disease dropped nearly 5% in 2007, and the cancer death rate fell nearly 2%, according to the report.

The HIV death rate dropped 10%, the biggest one-year decline in 10 years.

The diabetes death rate fell about 4%, allowing Alzheimer's disease to surpass diabetes to become the sixth leading cause of death.

World GDP Rankings

Just a quick snapshot about where we stand in the World in regards to Gross Domestic Product Rankings.

1) United States $13,841 Billion

2) Japan $4,378 B

3) Germany $3,330 B

4) China $3,253 B

5) United Kingdom $2,773 B

6) France $2,596 B

7) Italy $2,105 B

8) Canada $1,437 B

9) Spain $1,410 B

U.S. FORECLOSURES INCREASED 7% IN JULY

Foreclosure Heat Map from RealtyTrac - Click on map to enlarge.

Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 360,149 U.S. properties during the month, an increase of nearly 7 percent from the previous month and an increase of 32 percent from July 2008. One in every 355 U.S. housing units received a foreclosure filing in July.

July marks the third time in the last five months where there has been a new record set for foreclosure activity. Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, there is significant growth in both the initial notices of default and in bank repossessions.

Another Fed Agency Heard From - Pushing FHA Mortgage and Rehabilitation Combo Loans

The Office of the Comptroller of the Currency (OCC) wants more national banks to get involved in the FHA’s 203(k) lending initiative, which rolls government-backed financing for the purchase and rehabilitation of a home into one transaction.

In a recent issue of its Community Development Insights magazine, the agency underscores the role the program can play in fixing up foreclosed properties and nurturing neighborhoods.

“This product can be used by banks to develop new business, mitigate risk, enhance profitability, as well as assist in the revitalization and stabilization of neighborhoods negatively impacted by the current foreclosure crisis,” according to OCC.

The "Zimdollar" Dead, could US$ be Next?

The Zimbabwe dollar is officially dead. It was killed off in hopes of curbing record world inflation of billions of percentage points, and Zimbabwe has replaced it with the U.S. dollar and the South African rand.

Yet the role of the old Zimdollar, as it is known, remains in flux. It is still used, and has become another point of contention for the divided leadership of the country, now one of the poorest in the world.

A woman pays her bus fare with 3 trillion in old Zimbabwe dollars — the equivalent of 50 U.S. cents. The collector accepts the brick of neatly folded bundles of a trillion each without bothering to count the notes.

"No one seems to worry, and it works," said the woman, Lucy Denya, a Harare secretary who says she's seen police officers using old notes to board buses.

President Robert Mugabe has called for the return of the Zimdollar as legal tender, complaining that most Zimbabweans lack the hard currency needed to buy basic goods. The central bank under governor Gideon Gono, a Mugabe loyalist, has acknowledged printing extra local money to fund government spending that fueled inflation.

But Finance Minister Tendai Biti, who joined the government as part of a power-sharing agreement between his Movement for Democratic Change and Mugabe's ZANU-PF party, has declared the local dollar indefinitely obsolete. He has threatened to quit if a return to the local currency is forced upon him.

"We are putting the tombstone on the corpse of the Zimbabwe dollar," Biti told lawmakers in a midyear fiscal policy statement. In a speech to business leaders, he said, "We are no longer printing our own money."

1.5MM exhaust Unemployment Benefits by 12-31

States Ranked by 3 month average Unemployment Rates

Michigan 14.1%

Oregon 12.1%

Rhode Island 11.9%

South Carolina 11.8%

California 11.4%

Nevada 11.3%

North Carolina 11.0%

Ohio 10.7%

District of Columbia 10.5%

Kentucky 10.5%

Tennessee 10.5%

Indiana 10.4%

Florida 10.2%

Illinois 9.9%

Georgia 9.7%

Alabama 9.6%

Mississippi 9.3%

Washington 9.1%

Wisconsin 8.8%

Missouri 8.8%

New Jersey 8.8%

West Virginia 8.4%

Massachusetts 8.3%

Maine 8.2%

Alaska 8.2%

Arizona 8.2%

NewYork 8.2%

Minnesota 8.2%

Pennsylvania 8.1%

Delaware 8.0%

Connecticut 7.9%

Idaho 7.7%

Colorado 7.5%

Hawaii 7.2%

Vermont 7.2%

Maryland 7.1%

Texas 7.1%

Virginia 7.0%

Arkansas 6.9%

Kansas 6.8%

Louisiana 6.5%

New Hampshire 6.5%

New Mexico 6.4%

Oklahoma 6.3%

Montana 6.2%

Iowa 5.7%

Utah 5.4%

Wyoming 5.2%

South Dakota 5.0%

Nebraska 4.7%

North Dakota 4.2%

Puerto Rico 14.8%

Unemployment History & Forecast from Moodys

Click on graph to enlarge

Almost one-third of home loans under water

Note: But the number of negative-equity mortgages drops slightly from prior quarter

A slowing in the pace of home-price declines helped bring down the portion of home-loans with negative equity -- the situation where borrowers owe more on their mortgage than their home is worth -- according to data from First American CoreLogic.

More than 15.2 million U.S. mortgages, or 32.2% of all mortgaged properties, were in a negative-equity position on June 30, edging down from 32.5% at the end of March, according to the real-estate information company, which tracks data on about 90% of mortgage loans nationwide.

The aggregate property value for loans in a negative-equity position was $3.4 trillion.

Negative equity can occur because of a decline in property value, an increase in mortgage debt or a combination of both. Equity levels are important to people who can't make their mortgage payment since it affects their ability to sell or refinance, said Mark Fleming, chief economist for First American CoreLogic.

The slight drop in the portion of under-water loans reflects the recent flattening of home price changes, which is "great news" for the housing market as negative equity has been increasing for a number of periods, Fleming said.

Still, he stressed that this decrease is a quarterly comparison, not the yearly comparison typically used in house prices.

Negative equity is a strong driver of foreclosures, Fleming said, and the stunted growth rate in the second quarter is a positive sign that foreclosures may moderate in the future. First American CoreLogic made "very crude" estimates that the foreclosure rate will peak a bit higher than 4% in early 2010, he said.

Geographic concentration Distribution of negative equity is heavily skewed geographically. Just three states -- Nevada, Arizona and Florida -- account for about half of all mortgage borrowers in a negative-equity position, according to the company's data. Michigan and California round out the top five states.

In Nevada, 66% of the state's mortgages are under water; in Arizona, the portion under water is 51%; in Florida, 49%; Michigan, 48%; and California, 42%.

Nationwide, the total property value for loans in a negative-equity position was $3.4 trillion. California led states with $969 billion, followed by Florida with $432 billion, New Jersey and Illinois each with $146 billion and Arizona with $140 billion.

Looked at by city, Los Angeles topped the list with more than $310 billion of total property value under water, followed by New York with $183 billion, Miami with $152 billion, Washington with $149 billion and Chicago with $134 billion.

It's not over yet Though the decrease of negative equity is good news, it's by no means an end to the housing market's problems, Fleming said.

"The water is 4 feet deep in the living room, which is not good," he said. "But it has crested and it's not going toward 4 [feet], as indicated by that spring buying season and moderated prices."
Fleming said it's possible that overall affordability, government programs and the stimulus helped people jump off the sidelines into the housing market in recent months. He added that price declines might reappear in the fall and winter based on the housing market's seasonal cycle.

The current data may help bolster consumer confidence, he added, because of the psychologically-driven nature of the U.S. economy.

"As long as the economy continues to pull itself out of the doldrums," Fleming said, people "will be much more likely to [buy] again next spring."

Emily Glazer, MarketWatch

Drop in homeownership likely to continue

The rate of homeownership is forecast to keep tumbling in the next decade to lows not seen since the 1980s, a trend that could redefine a key element of the American dream even after the housing market recovers.

The percentage of households that own homes hit a peak of almost 70% in 2004 and 2005. By the second quarter of this year, that slipped to 67.4%, according to the Census Bureau. Now, a University of Utah analysis projects it'll drop to about 63.5% by 2020 — the lowest since 1985.

"It will fall steadily by about half a point per year," says Arthur C. Nelson, director of the university's Metropolitan Research Center. "We'll have far more renters in the future."

Homeownership has long been viewed a key to building stable communities and middle-class families. Federal policy encouraged it with tax credits and government-backed mortgages. Now, demographic changes, strict mortgage rules, energy-saving policies and lessons learned in this housing crisis are driving more people to rent.

About 57% of the 30.3 million housing units added from 2005 to 2020 will be rentals, Nelson says. "So many of our federal and state and local policies are driven by the assumption that homeownership is inherently preferred over renting," he says.

The housing collapse may have an impact.

"We're returning more to what was normal in the 1960s," says Dowell Myers, housing demographer at the University of Southern California. "People didn't buy homes then as an investment. They bought them to raise families."

Renting also may be more appealing because:

• Households are smaller. The youngest of 79 million Baby Boomers will turn 56 by 2020 and many will be empty nesters who favor small homes. The 20-something millennial generation is at a peak age for renting. "What we used to think of as the typical American family — married couple with children — is really not typical anymore," says Mark Obrinsky, chief economist for the National Multi Housing Council in Washington, D.C.

•It's tougher to buy. The subprime mortgage crisis is tightening credit availability.

•Some are new to the USA. Most recent immigrants rent.

•Somewant to save energy. From tax credits to mass transit, going green is reshaping growth.

Homeownership is not inherently good or bad, Obrinsky says. "Let's give people the best set of housing choices. They want to be a renter, let them be a renter. If they want to be an owner and they can afford to be, let them be an owner."

Haya El Nasser, USA TODAY

Surprising Real Estate Stats and Facts?

Our friends at Campbell Surveys have published a recent report on the residential real estate market with some very interesting points.

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In part, the report covers: Market share of Bank Real Estate Owned (REO), short sales, and non-distressed properties. Market proportions of first-time homebuyers, current homeowners, and investors. Distinctions between the lower and upper ends of the market, and what is motivating home sellers or buyers to buy or cancell transactions.Current and potential government actions to increase & stabilize home sales.


Bullet points



*The market for home purchases can be divided into segments of 26% fordamaged REO, 23% for move-in ready REO, 14% for short sales, and 36% fornon-distressed properties.

*Forty-three percent of homebuyers are first-time homebuyers, 29% are current homeowners, and another 29% are investors.

*First-time homebuyers account for the majority of move-in ready REO sales while investors account for the majority of damaged REO sales.

*Current homeowners concentrate their home purchases on non-distressed properties and buy comparatively less damaged REO.

*Real estate agents expect appraisal issues to be the No. 1 reason for cancellations of signed purchase and Sales agreements over the coming summer months.

*Only 31% of non-REO home sale listings are unforced or optional; other major reasons for listings include financial stress (including short sales), long distance relocation, and divorce or estate sales.

*Homeowners are choosing to not list homes primarily because of “Falling prices”, followed by “Competition with distressed properties”.

*For first-time homebuyers, “Government incentives to buy (tax credits, mortgage deduction)” is the No.1 motivation to buy.

*For current homeowners buying homes, “Retirement relocation” and “job relocation” are the No.1 and No. 2 motivations to buy, respectively.

*“Sale of residence” is the No. 1 impediment to current homeowners seeking to buy another home.

*“Down payment for mortgage” is the No. 1 impediment to first-time homebuyers seeking to buy a home, followed by “Slow answers on short sale offers.”

*Seventy-six percent of first-time homebuyers accept a mortgage recommendation of the real estate agent, 68% of current homeowners accept a recommendation, and 53% of investors accept a recommendation.

*On average, mortgage servicers take 9.5 weeks to provide a “yes” or “no”response to an offer to buy a short sale property.

*According to real estate agent respondents, “Mandated one-week response time on short sales offers” is the No. 1 rated action that the government could take to increase home sales and stabilize prices.

*According to real estate agent respondents, “Provide consistent one-week ‘yes’or ‘no’ response to offers” is the No. 1 rated action that the mortgage servicers could take to increase short sales.

*According to real estate agent respondents, “Provide consistent one-week ‘yes’or ‘no’ response to offers” is the No. 2 rated action that the asset managers could take to sell REO properties with lower overall losses; the No. 1 rated action is“Turn on utilities for inspections.”

Mortgage Modifications Stalled to Increase Fees

Five months ago, the Obama Administration released a program that was supposed to reach up to 3 to 4 million at-risk homeowners by providing mortgage servicers with incentives to offer loan modifications.The Treasury released its Servicer Performance Report through July 2009, showing that out of an estimated 2,705,302 eligible borrowers more than 60 days delinquent on their home loans, only 9% or 235,247 have even received trial modifications. When you add in the number of eligible borrowers that are less than 60 days delinquent, presumably, the number would be even lower. Add in the number that have received final modifications, and well…you get the idea.

While that is just one theory as to why modifications are not being offered, the numbers in the newly released report don’t lie. Loan modifications are happening at an abysmally low rate. Foreclosures march on, the economy remains in shambles, and servicers collect fees. Democrats are rattling the sabers — by talking about reviving the cramdown bill. Article. Politicians talk, the industry does what it wants.

Mortgage companies, some of which are affiliated with the nation’s largest banks, are paid to manage pools of loans owned by investors. The companies typically collect a percentage of the value of the loans they service. They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases on delinquent loans.

The opportunities for additional revenue in delinquency are considerable, confronting mortgage companies with a conflict between their own financial interest in collecting fees and their responsibility to recoup money for investors who own most mortgages.

“The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,” concluded a recent paper published by the Federal Reserve Bank of Boston.

Under the Obama administration’s foreclosure program, a servicer that modifies a loan for a homeowner collects $1,000 from the government, followed by $1,000 a year for each of the next three years. A senior Treasury adviser, Seth Wheeler, said these payments amounted to “meaningful incentives to servicers to help overcome the challenges and competing demands they face in considering and completing loan modifications.” He added that mortgage companies “are contractually obligated to the terms of this program, which require them to offer modifications to qualified borrowers.”

But experts say the administration’s incentives are often outweighed by the benefits of collecting fees from delinquency, and then more fees through the sale of homes in foreclosure.

When borrowers fall behind, mortgage companies typically collect late fees reaching 6 percent of the monthly payments.

Data on delinquencies reinforces the notion that servicers are inclined to let problem loans float in purgatory — neither taking control of houses and selling them, nor modifying loans to give homeowners a break.

From June 2008 to June 2009, the number of American mortgages that were 90 days or more delinquent soared from 1.8 million to nearly 3 million.

As a home slides toward foreclosure, mortgage companies pay for many services required to take control of the property and resell it. They typically funnel orders for title searches, insurance policies, appraisals and legal filings to companies they own or share revenue with.
Fees are embedded (under the radar) in complex sales.

Ultimately, the benefits of delinquency erode incentives for mortgage companies to dispose of troubled loans quickly, say experts, allowing distressed houses to decay and fall in value — a fact of little interest to the servicer.

At the end of the day, it doesn’t matter what the house sells for, because they don’t take that loss. Meanwhile, they are collecting all these fees.

Key West - too much fun for one column ;-)

Commercial Real Estate Danger Zone

(Picture) The John Hancock Tower in Boston was auctioned in March when its owners were unable to make debt payments on the property.

The collapse in commercial real estate is preventing Federal Reserve chairman Ben S. Bernanke from declaring the economy and financial markets are healed.

Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service.

That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls, and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale.

The industry is likely to be high on the agenda when Bernanke and his colleagues sit down in Washington today at the Federal Open Market Committee meeting on monetary policy. Lawmakers including Barney Frank and Carolyn Maloney are pushing the central bank to extend an aid program designed to restore the flow of credit.

Slump may keep interest rate low.

If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.

Commercial property is “certainly going to be a significant drag’’ on growth, said Dean Maki, a former Fed researcher who is now chief US economist in New York at Barclays Capital Inc., the investment banking division of London-based Barclays PLC. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.’’

The Fed is “paying very close attention,’’ Bernanke, 55, told the Senate Banking Committee on July 22, the second of two days of semiannual monetary-policy testimony before the House and Senate. “As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices, and so, more pressure on commercial real estate.’’

The pressure may be easing in other areas of the economy. Gross domestic product shrank at a better-than-forecast 1 percent annual pace in the second quarter after a 6.4 percent drop the prior three months, and residential housing starts rose unexpectedly by 3.6 percent in June as construction of single-family dwellings jumped by the most since 2004, according to data from the Commerce Department.

Commercial real estate is a “particular danger zone,’’ said Janet Yellen, president of the Federal Reserve Bank of San Francisco, in a July 28 speech in Coeur d’Alene, Idaho.

Rent, own, rent life cycle builder problems.

In the United States, it is customary for households to start off by renting; then buy a “starter” home; move up into large homes; and then, as they age, sell their homes and move into smaller ones, whether owned or rented.

As households age their propensity to rent decreases, while their propensity to buy increases. After about age seventy five, though, when they relocate, the propensity of households choosing to rent increases to nearly 60 percent. Because roughly 5 percent of all elderly households relocate annually, and as their numbers will nearly double between 2010 and 2030, the aggregate demand for rental housing serving this group is likely to more than double.

However as people age they tend to move less. So even though there is a shift to renting (for those who move), there are many older people who also stay in their large homes. The propensity to rent doesn't exceed the propensity to buy until after age 75.

Homeownership declines significantly after people turned 70 but still stays above 80% for those in the 70 to 75 age group.

Expect the homeownership rate to remain high for the boomer generation, (15 years or more) although there will probably be a geographic shift as the boomer generation retires (towards the sun states) and some downsizing.

There were over 2 million excess units in 2005. That needs to worked off first,then there will be a need for 30 million new housing units over the next 15 years (with many more single person households).

This has huge implications for builders. Home builders will only have to build about 800 thousand (on average) single family units per year through 2020 (after the excess is worked off). This is far below the 1.25 million per year seen in 2004 and 2005. That level of production is not coming back.

In 2007: Home Builders (With the rising homeownership rate) had the wind to their backs. Instead of 800K of new owner demand per year (plus replacement of demolished units, and second home buying), the homebuilders saw an additional 500K of new owner demand during the period 1995 to 2005. Not including the extra demand from speculative buying. Some of which was satisfied by condo conversions and owner built units.

Looking ahead, if the homeownership rate stays steady, the demand for net additional homeowner occupied units would fall back to 800K or so per year (assuming steady population growth and persons per household). However the homeownership rate is declining, and this is now a headwind for the builders.

It appears the rate is declining at about 0.33% per year. This would mean the net demand for owner occupied units would be 833K minus about 333K or 500K per year - about 40% of the net demand for owner occupied units for the period 1995 to 2005.

This means the builders have two problems over the next few years: 1) too much inventory, and 2) demand will be significantly lower over the next few years than the 1995-2005 period, and even when the homeownership rate stabilizes and the inventory is reduced, demand (excluding speculation) will only be about 2/3 of the 1995-2005 period.

Dramatic shift in housing coming

The period from 2010 to 2030 will see the most remarkable change in America’s built environment since the end of World War II.

The changes will be driven by monumental demographic shifts coupled by important changes in housing preference.

The landscape of the new American metropolis will be very different from the old one ... the end of the spatial expansion of metropolitan areas and a new era of infill and redevelopment. This will lead to a decline in the homeownership rate because of shifting demographics, changing preferences (more urban amenities) and changing lending standards.

On demographics:

The demographic profile of the United States is changing in several important ways, led by aging baby boomers and immigrants. The focus here is on the aging “boomers” and secondarily on broad changes in household types that will drive future housing demand.

The baby boom generation, (children born between 1946 and 1964) will turn sixty-five between 2011 and 2029. For most years since about 1950, roughly half a million people turned sixty-five annually. By the late 1990s, for about a decade the number of people turning sixty-five fell to about a quarter million annually.

The period from 2010 to 2030 will see an average of 1.6 million turning sixty-five annually.

The share of households with children also will change. The baby boom era gave rise to suburbs and along with them modern planning and zoning control. In the 1950s, most households were raising children, by 2030, only about a quarter will be. Single-person households will surpass households with children by 2030, for the first time in the nation’s history.

Click on graph for larger image.

The graph shows the number of people turning 65 by five year periods (the dates at the bottom are the end of the five year period).

Professor Arthur C. Nelson, Director of the Metropolitan Research Center at the U of Utah

Banks Get Picky on Credit Cards

After years of mailing cards out to just about anybody, banks are suddenly freezing out all but the most creditworthy customers.

Those who do get cards have to jump through more hoops, such as sending in copies of their pay stubs. And they're being hit with higher rates and fees.

Banks always tighten credit standards in an economic slowdown. But the recently passed Credit Card Act of 2009 is forcing the industry to rewrite the play book it has used for years. The new legislation aims to limit fluctuating interest rates, ban some controversial practices and arm consumers with more information on their debts.

Banks have until February 2010 to comply with the act's key provisions, although some parts of the law have earlier deadlines. This month (August 09), for example, issuers have to start mailing bills at least 21 days before the due date and provide at least 45 days' notice before changing any significant terms on a card.

The result: Many banks are tightening things up now before many of the restrictions go into effect.

In recent months, banks including Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co., have raised interest rates and fees, switched customers with fixed rates to variable ones, and dropped credit lines and closed accounts.

Tighter LimitsBanks' response to legislative and economic changes include:

• Tightening standards for credit-card applicants, rejecting more people and offering smaller credit lines.
• Raising interest rates and fees and switching customers with fixed rates to variable ones.
• Enhancing rewards programs for a few customers but adding more fees.

Repricing Accounts

A spokeswoman for Bank of America, declined to comment on an individual account, noting that the bank periodically reviews individual accounts and may reprice an account for risk, based on the individual's performance and external credit-risk factors.

For consumers, this means that not only will it be harder and more expensive to get credit, but the average credit line that gets assigned up front will be less generous. That would have been true in any economic slowdown, but the legislative changes are exacerbating those trends. For example, the percentage of credit applications that are getting a "human look" is increasing, he says. Discover Financial Services, for one, says it has been doing more manual underwriting of new applications due to the economic environment.

In the short term, banks will focus on making up for lost revenue by getting existing customers to spend more mainly by offering targeted reward programs. Annual fees, including fees to redeem rewards points, will go up.

Chase's new rewards program, for example, features two cards: the Chase Freedom card, a no-fee card that earns 1% cash back on all purchases (with quarterly bonus opportunities), and a Sapphire Preferred card with enhanced rewards benefits for a $95 annual fee.

The Chase Freedom card also comes with an upgraded feature that lets customers earn a fixed 3% bonus for spending in grocery, gas and fast-food categories for a $30 annual fee.

Workers unemployed for 27 or more weeks

Click on graph for larger image

The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.

The Dept of Labor report shows seasonally adjusted insured unemployment at 6.3 million, down from a peak of about 6.9 million. This raises the question of how many unemployed workers have exhausted their regular unemployment benefits (Note: most are still receiving extended benefits, although this is about to change).

There are almost 5.0 million workers who have been unemployed for more than 26 weeks (and still want a job). This is 3.2% of the civilian workforce.

Notice the peak happens after a recession ends, and the of long term unemployed peaked about 18 months after the end of the last two recessions (because of the jobless recovery). This suggests that even if the current recession officially ended this month, the number of long term unemployed would probably continue to rise through the end of 2010.

Banks Aid Only 9% of Eligible Homeowners

The Treasury Department said on Tuesday that only a small number of homeowners — 235,247, or 9 percent of those eligible — had been helped by the latest government program created to modify home loans and prevent foreclosures.

A report released by Treasury officials identified lenders who had made slow progress in offering more affordable mortgages, naming Bank of America and Wells Fargo as among those failing to reach large numbers of eligible borrowers.

While 15 percent of eligible homeowners have been offered help through the mortgage modification program, the low rate of actual mortgage reductions has frustrated administration officials.

Michael S. Barr, the assistant secretary for financial institutions, said in a news conference that there were “significant variations” in performance and that some institutions had made “an infinitesimally small amount” of progress.

“I think it’s safe to say we’re disappointed in the performance of some of the servicers,” Mr. Barr said. “We expect them to do more.”

The release of data showing the progress of individual institutions is part of a Treasury effort to push banks to modify loans faster.

Under the $75 billion program, homeowners whose monthly mortgage payments are more than 31 percent of their gross income are eligible for modified loans, with interest rates as low as 2 percent.

Bank of America has modified only 4 percent of the eligible mortgages, and Wells Fargo has modified 6 percent.

Citimortgage, a unit of Citigroup, fared better at 15 percent, while JPMorgan Chase was among the most successful, modifying loans for 20 percent of eligible borrowers.

All four institutions received federal bailout money.

Since President Obama announced the mortgage modification program in February, mortgage holders have criticized the slow response by lenders. The Treasury Department hopes to reach as many as four million borrowers through the program in the next three years. Mr. Barr said he expected institutions to modify 500,000 loans through the program by November.

“We’re going to pay specific attention to making sure that the institutions that have been slow out of the block ramp up more quickly and more effectively,” he said.

Treasury Secretary Timothy F. Geithner met on July 28 with lenders who had signed agreements to participate and asked them to streamline the application process and improve customer service.

“For us the bottom line is, they need to reach the borrowers,” Mr. Barr said. “For some of them that means better training, for some of them that means ramping up capacity, for some of them that means treating people better in their call centers.”

The Treasury Department hopes the name-and-shame tactic will encourage banks to improve. In addition, Freddie Mac, the government-controlled mortgage buyer, will audit rejected applications.

Wells Fargo and Bank of America issued statements on Tuesday promising to comply with the program.

“Despite our aggressive efforts to find solutions for homeowners in default, we must improve our processes for reaching those in need,” said Barbara J. Desoer, president of Bank of America Home Loans. She said that Bank of America completed 150,000 modifications through its own programs in the first half of 2009.

Mike Heid, a president of Wells Fargo Home Mortgage, said the company would now send eligible customers a trial modification agreement within 48 hours of their initial contact.

“Our company has been accelerating our use of HAMP,” said Mr. Heid, referring to what is officially the Home Affordable Modification Program. “We’re confident we can achieve our portion of the government’s goal to reach 500,000 HAMP trial modification starts by Nov. 1.”

But John Taylor, president of the National Community Reinvestment Coalition, said the government should not depend on voluntarily compliance from banks.

“There are other modifications that Wells Fargo and Bank of America would argue that they’re making,” he said. “But maybe they’re making modifications that are not as deep or consistent with the guidelines.”

Michael Calhoun, president of the Center for Responsible Lending, was also skeptical that banks had enough incentive to comply with the program. The Treasury Department offers $1,000 payments to lenders for each modified loan and pays lenders part of the difference between borrowers’ old monthly payments and their new ones.

“For over three years, leaders have insisted they can handle this crisis on their own, but today’s report shows that the time for voluntary action is over,” Mr. Calhoun said in a statement.
Kathleen Day, a spokeswoman for the center, said: “There’s still a lot of market reasons why they wouldn’t do it. Some may not have the warm bodies to do it. They may feel overwhelmed.”

That would change, she said, if banks knew judges could modify mortgages in bankruptcy courts.
By ANDREA FULLER NY Times

Welcome to the bottom: Part Five - Final

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, AP

The West

For years Las Vegas symbolized the boom, as mile after mile of desert gave way to three-bedroom homes and swimming pools. Then came the crash and it symbolized something else: a decade of speculation and excess.

Now, Las Vegas is one of the hottest housing markets in the region again. This city has always profited from others' misfortune, and the same can be said of the current housing market.
In Clark County, Nev., home to Sin City, one in every 11 homes had received at least one foreclosure-related notice in June, according to RealtyTrac. The glut of deeply discounted foreclosures has almost doubled sales activity for most of this year.

"In January the market was busy, and since that time, it's gone a little haywire," says Brad Snyder, an agent with ZipRealty in Las Vegas. "There's (sales) activity now that we haven't seen even since '04."

The situation is similar in California's Riverside, San Joaquin and San Bernardino counties, where one out of every 14 homes was in foreclosure.

After falling 18% in the second half of 2008, monthly home prices were flat in the first half of this year, on a seasonally adjusted basis, according to the National Association of Realtors.

Markets like these have seen a surge this year in all-cash buyers, many of them investors, scooping up the sharply discounted properties. It's not uncommon to see multiple offers on a single property, and that's helped slow the rate of price declines a little. The demand also has helped whittle down the inventory of homes for sale to the lowest level since the boom.

"We have seen such a steep decline in supply right now, that when a home comes on the market it's first day there could be seven or eight or 10 people there in a matter of hours," Snyder says.
To lure buyers away from foreclosures, homebuilders have slashed prices or are simply tearing down vacant homes. New-home sales jumped almost 59% in the first half of the year, while construction in these grossly overbuilt markets slid 12%.

In the Pacific Northwest and states such as Utah, by contrast, housing markets are on a different timer than the rest of the West. Home sales and values held up better and longer while markets in the Southwest were already in decline. These markets also haven't seen as many foreclosures wreaking havoc with home prices.

States in the region: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming

Data compares June vs. January and June 2008:

• Home resales: down 1%, up 12 percent
• Median price: $214,800, flat, down 25 percent
• New-home sales: up 59%, down 10 percent
• New home construction: down 12%, down 42 percent
• Mortgage delinquencies as of March: 12 percent

Regional outlook: The recession remains the region's wild card. Unemployment is at 10.2% in the West, but that could go higher if the economy worsens. If that happens, expect more foreclosures and a slower turnaround.

Welcome to the bottom: Part Four

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, AP

The Midwest

It's no surprise that the housing market and the auto industry are intertwined in Detroit, though, this is the first time anybody can remember that you can buy a home for less than the price of a new car.

But step out of devastated towns in Michigan, Ohio and Indiana and the housing market in the Midwest is showing some of the strongest signs of recovery in the country.

Thanks to places like the Dakotas, Iowa and Nebraska, the median sales price in the region rose almost 20% to an affordable $157,000 in June from January levels.

Sales of new homes jumped almost 38% in the first half of the year, which encouraged builders to get out their hammers. Construction, which was at a standstill in some communities, rose 86% on a seasonally adjusted basis, which accounts for typical variations in weather and other factors.

"New construction has been a good indicator for us in the past of what the general market is doing," says Chris Collins, president of the Kansas City Regional Association of Realtors. "Our new market is not what we've been used to but it's substantially better than other parts of the country."

The home resale market, however, remains weaker than the nation as a whole. That again can be blamed on the economy. The jobless rate in the Midwest is 10.2% compared with 9.5% nationally. And if you don't have a job you are not buying a house.

William Strauss, a senior economist for the Federal Reserve Bank of Chicago, cautioned that job cuts are still high in the region, and loss of income is the No. 1 reason homeowners default.

"We never got as bad as (other) states but nonetheless we still took a hit," he says, and the market remains "soft in the Midwest."

Midwest states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin

Data compares June vs. January and June 2008:

• Home resales: up 7%, down 2 percent
• Median price: $157,000, up 20%, down 9 percent
• New-home sales: up 38%, up 6 percent
• New home construction: up 86%, down 21 percent
• Mortgage delinquencies as of March: 11.5 percent

Regional outlook: "Before we can even talk about the housing sector materially improving, we're going to have to see these job losses get down quite a bit," said William Strauss, a senior economist for the Federal Reserve Bank of Chicago. Financial markets must also improve, he said, so more homebuyers can qualify for a mortgage.

Welcome to the bottom: Part Three

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, AP

The South

The real estate market in the South remains one of extremes.

On one end, are oil-rich cities in Texas, Arkansas and Oklahoma that nearly skirted the housing recession altogether. Tipping the scale on the other side are foreclosure-ridden areas in Atlanta and swaths in Florida where prices are still falling annually by double digits.

Taken as a whole, home resales in the 17-state region rose 10% in the first half of this year on a seasonally adjusted basis, and are off just 4% from June of last year, according to the National Association of Realtors.

"Generally speaking, the rate of decrease, both in sales and prices, has started to bottom," says the University of North Carolina's Cumbie. "But that doesn't mean it's going to come roaring back."

Mass layoffs at Bank of America and Wachovia, for example, have taken their toll in their home state of North Carolina. Home price declines in Charlotte accelerated this year, and home resales in June were off nearly 30% from last year.

Home and apartment construction, a key economic engine, will also vary widely across the region. Parts of the South, notably Florida and Atlanta, were vastly overbuilt during the housing boom. So construction in the region rose a meager 7% in the first half of the year, the lowest of the four regions, according to the Commerce Department.

There was little reason for builders to start laying new foundations. New-home sales fell 2% from January to June, the only region in the country to post a decline.

"In the longer term, I'm confident that the real estate market is going to shift where buyers are coming out not only because of attractive interest rates and low prices, but because more people are getting jobs," says Les Simmonds, president of L.G. Simmonds Real Estate Corp. in Longwood, Fla. an Orlando suburb. "But, as we speak, it's not right. It's going to take more time."

Southeast states: Alabama, Arkansas, Delaware, D.C., Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia.

Data compares June vs. January and June vs. June 2008:

• Home resales: up 10%; down 4 percent
• Median price: $163,200 up 14%; down 12 percent
• New-home sales: down 2%; down 34 percent
• New home construction: up 7%; down 44 percent
• Mortgage delinquencies as of March: 12.7 percent

Regional outlook: The southern market has several characteristics that could help it recover, Cumbie says. The population continues to grow and businesses continue to move into the region. But the weight of foreclosures and job losses stretching into next year could delay any meaningful recovery.

New Media (Interactive & On Demand)

Welcome to the bottom: Part Two

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, AP

Northeast states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

After home on Long Island sat on the market for four months recently, the sellers' real estate agent told them to drop the price from the mid-$600s to $599,000. The house sold the next weekend.

In Merrick, about 30 miles east of New York City, homes are starting to sell "as long as they're priced right," the agent said.

In January, with the ground and financial markets still frozen, few would have believed that the worst of the housing crisis in the Northeast would turn around within six months.

But the evidence is clear: home resales in the region in June hit a seasonally adjusted pace of 820,000, up 28% from the beginning of the year. Sales of new homes were also up slightly and construction in the region more than doubled.

Even the median sales price of $249,400 in June was up 10% from January and was off just 6% from year-ago levels, according to the National Association of Realtors.

"We certainly had our share of problems, but overall the severity of what happened here was far less" than what happened elsewhere, says Michael Lynch, an economist with IHS Global Insight.
Pittsburgh has the region's strongest home market in terms of sales and prices because the city saw less of a housing bubble and the area has 7.7% unemployment rate that is below the national rate.

One of the weakest markets, by contrast, was Providence, where a jobless rate of 12% exacerbated the city's foreclosure crisis. Too many residents took out risky subprime loans they couldn't afford when the interest rates spiked within a few years. Today, more than one in 10 homeowners with a mortgage in the state is at least one month behind or in foreclosure.

The Northeast, more than any other region, felt the full force of the credit crisis that reshaped Wall Street. Manhattan's real estate market, long immune from price declines, tanked this year as tens of thousands of people lost their jobs.

Prices of for-sale apartments plunged in the second quarter by the largest amount in decades.

Prices have fallen, on average, between 13 and 19%, according to four reports published recently by real estate firms.

Regional outlook: The region should experience "a nice rebound in home construction" over the rest of the year, according to IHS Global Insight, an economic research firm. Sales for new and existing homes are likely to rise. Just don't expect your home's value to shoot up. Rising unemployment will lead to more foreclosures, and that will keep a lid on prices.

Welcome to the bottom: Part One

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, Associated Press

It was — note the past tense — the worst housing recession anyone but survivors of the Great Depression can remember.

From the frenzied peak of the real estate boom in 2005-2006 to the recession's trough earlier this year, home resales fell 38% and sales of new homes tumbled 76%. Construction of homes and apartments skidded 79%. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.

A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath and exhale. The worst is over.

By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9% from January, on a seasonally adjusted basis. Sales of new homes have climbed 17% during the same period. And construction, while still anemic, has risen almost 20% since the beginning of the year.

Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.

"The freefall is over," says Dean Baker of the Center for Economic and Policy Research.
The problem is that, Baker, like many economists, expects the housing market will "be bouncing around the bottom" for the second half of the year.

There are also real threats that could poison this budding recovery. The unemployment rate, which is 9.5%, is expected to surpass 10%, leaving even more homeowners unable to pay their mortgages. Mortgage rates could rise, making homeownership less affordable. And the federal tax credit for first-time homebuyers, which as lured many into the market, is set to expire on Nov. 30.

"As long as jobs are being lost, regardless of all the federal programs out there to help the borrowers, you're still going to have problems in the housing market," says Steve Cumbie, executive director of the Center for Real Estate Development at the University of North Carolina's Kenan-Flagler Business School.

True, but when you've got bidding wars for foreclosures in places like Las Vegas, Phoenix and Los Angeles, it's time to call the bottom.

BizWiki.com launch - Small Businesses Wiki-power

CHICAGO, Aug. 1 /PRNewswire/ -- Bizwiki.com launched across the USA today, promising to change the way local search works by enabling its users to build up the most detailed and up-to-date index of business in the United States.

In a break with traditional Yellow Pages websites, Bizwiki invites business owners and representatives to get involved in adding and improving their records with everything from contact details to prices and opening hours, completely free of charge.

"An early Alpha-version of Bizwiki.com was tested on the web in December 2008, and several hundred thousand people are already using it each month," said Bizwiki co-founder Matt Aird.

"There is definitely a strong demand for the sort of information a Web 2.0 business site can deliver, and the increasing amount of users on the site provides a compelling motivation for businesses to get involved in adding and editing their listings."

"Bizwiki blends an 'anyone-can-edit' approach to empower users with robust functionality developed specifically for businesses. The result is that Bizwiki.com is built in a consistently structured format, allowing us to rapidly scale-up the amount of information available and provide a better search experience for users."