Wednesday, February 2, 2011

Even More On Housing - Sorry But It's Getting Worse...

In previous posts I have focused on supply, demand, employment levels, credit availability, and the still relatively high price of housing as the variables which would force home sales and values much lower for the foreseeable future.  Now the unlikely source of has brought to light yet another variable: the number of vacant homes.  Based on the latest census report on homeownership, the homeowership rate of the population dropped to 66.5% in Q4, down from the 2004 peak of 69.2%.  Even more startling was the fact that 11 percent of housing units are vacant. Here's the LINK  Think of it this way:  1 out of every 9 homes is sitting empty...

I think that the implications of that data really do not require commentary.  One more point.  I mentioned a 105% Fannie Mae refinancing program the other day.  I was mistaken about the specific details.  And the reality is that the program will make things even worse down the road than what I had originally thought. I heard the ad again yesterday.  The program allows people with "good" credit scores and who have 1st and 2nd mortgages to refinance 105% of the amount of the 1st mortgage - while leaving the 2nd mortgage in place - in order to "weather this storm and wait for the market to recover."  Quite horrifying if you ask me, as it enables a homeowner to basically take cash out of a home that is underwater, cramming down the 2nd mortgage, and add to the overall leverage on the house.  My question would be this:  if someone has good credit, why do they need "to weather the storm?"

It's getting worse by the day...


  1. "1 out of every 9 homes is sitting empty"
    Would like to see a breakdown showing the ratio of foreclosed homes that had been purchased by investors & speculators, vs. those that were bought by people who actually lived in them.

  2. I bet that data is available from the census bureau, although who knows how accurate it is. The more interesting data I would like to see is:

    1) the % of underwater homes using a TRUE market value to mortgage number

    2) the TRUE number of people who would like to sell but don't want to because either a) they think the market is "coming back or b) their house is underwater and they don't want to vacate and send the keys to the bank.

  3. Housing is deteriorating and thus stocks go up as they are the only thing the FED can point to as a success.

    I have pictures of my house inundated by all the snow as of late, looks more like Denver!

  4. I suspect the Banks are selling their toxic home loans with a 50% or more discount to a Shell Companies which the Banks created to secretly move loans off their books. And then use that loss to offset profits gifted by Fed Res. This is the same scam used after the 1989 Savings and Loan crisis to cleanup financial books. During that period the little guy could not buy a discounted house in a quality niegborhood. I know because I tried to buy with cash. Eventually, the properties were offered to the public by the Shell Companies, but not disounted. Nothing changes,

  5. here's a great article on the FNM/FRE refinancing

  6. As Dave pointed out yesterday all we have left is a USD printing press which is systematically destroying our unit of exchange. Everything else is a side show when compared to this one issue, and it appears Bennie has this one set in stone.

    Joe M.

  7. Yup. Print or die. It's that way for Europe and Japan too