Weak housing market weighs on job growth

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If not a recession, then probably a period of 'negative growth'...

How badly has housing hurt the economy?
Sept 7, 2007 - Recession still seems unlikely, but odds rising, analysts say

Friday’s report on the job market in August — showing the first monthly drop in four years — raised concerns that the recession afflicting the housing sector may be spilling over into the wider economy. The much weaker-than expected employment report puts added pressure on the Federal Reserve to cut interest rates at its next scheduled meeting Sept. 18. But it’s still too soon to assess just how much long-term damage will be caused by the downturn in housing prices and the mortgage mess that has rocked the financial markets.

Friday’s employment report was a stunner: Economists and market watchers had expected the report to show some 110,000 new jobs created in August. But the government tallied a net loss of 4,000 jobs, the first monthly drop since August 2003. The government also revised job gains reported earlier for June and July, cutting the numbers for those two months by 81,000 jobs. With the latest report, payroll growth has been averaging just 44,000 jobs a month over the past three months, well below the second-quarter average of 162,000.

As the economic numbers for August begin to roll in, the impact of the financial storm that hit global credit markets last month is slowly becoming clearer. An already-slowing economy seems to have weakened further. Most economists say it's too soon to forecast a recession, but the consensus view is that the odds of one are rising. “A recession is still avoidable in my opinion, but the Fed will need to act promptly and with authority to right this sinking ship,” said Scott Anderson, a senior economist at Wells Fargo Bank.

More How badly has housing hurt the economy? - Eye on the Economy - MSNBC.com

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The news seems to be getting worse. Are we headed for an economic recession?

Mortgage Crisis, Job Loss...Recession?
Sept. 8, 2007 - Following News of Job Loss, Economists Worry All Signs Point to an Impending Recession

In the wake of news that 4,000 jobs were lost in August, new fears are arising about the state of the economy. The job loss represents the first monthly decline in four years -- prompting speculation that we're headed for a serious economic slowdown, or even a recession.

For Jim Dell'Anno, who lost his job as a mortgage broker, the news is nothing new. Like millions of other Americans, he's living proof that the housing and credit crisis, which has roiled the financial world, has caught up with the real world. "It doesn't shock us at all when things like this happen," he said. It's not just the housing industry taking a hit. Manufacturing and construction, two of the biggest bellwethers in economic growth, have both been hit hard by job losses.

"This is a big deal," said Bill Cheney, vice president of John Hancock Financial Services. "The performance of the economy over the last few months is quite a bit weaker than we thought it was, even yesterday." The news all but guarantees that the Federal Reserve, which has steered clear of cutting interest rates, will be forced to make a move. It will need to be a move that will encourage consumers to borrow more money, and in turn spend more.

But it may be too little too late. For months, experts have been screaming for the rate cut. "We worry about a weak labor market sliding further into recession," Cheney said. Perhaps the most startling part of the job loss is that no one expected it. In fact, most expected 100,000 new jobs would be created.

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Watch out for the mortgage scams...

BBB warns of shady foreclosure rescue firms
Sept 12, 2007 - Companies claim they want to help, but many leave you in worse shape

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Scams on the rise

The Better Business Bureau has received complaints from across the country about foreclosure rescue companies. A majority of the companies are located in Colorado, Georgia and Florida, states with among the highest foreclosure rates.

In most cases, the pitch starts with a letter or postcard. “Stop the sale of your home,” they say. “We will keep you in your home — GUARANTEED!” The fee is usually about $1,200, but some victims have lost as much as $2,000.

“Unethical companies are seeing their chance to step in and make some money off of these troubled homeowners,” says Karen Nalven, president of the BBB in Clearwater. In the last 12 months her office received more than 325 complaints about these companies. The total amount of refunds requested is more than $600,000.

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Housing to push economy to edge of recession
Sept 12, 2007 - But UCLA forecast also notes growth in other areas should aid a recovery

Ongoing weakness in the housing market will push the national economy to the brink of recession, but growth in other areas should put the country back on a slow road to recovery by 2009, according to an economic forecast released Wednesday. The quarterly Anderson Forecast by the University of California at Los Angeles predicts growth in the gross domestic product of just over 1 percent for the fourth quarter of 2007 and first quarter of 2008.

Economic growth will remain “tepid” for the remainder of 2008 and return to 3 percent in 2009, said David Shulman, senior economist for the forecast. That growth is just above the traditional definition of a recession — two consecutive quarters of decline in gross domestic product.

“Of course, when the economy slows to a 1 percent pace, it runs the risk of falling into an actual recession, just as when an airplane’s velocity dips down to its ’stall speed’ and falls out of the sky,” Shulman wrote. The declining housing market could remain at the heart of the nation’s economic woes for some time.

More Housing to push economy to edge of recession - Real Estate - MSNBC.com

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Renters having a hard time finding affordable housing...

‘The cost of living is driving us out’
Sept 14, 2007 - Renters squeezed by lack of affordable housing; Shortage of affordable rentals in cities dwarfs issue of rising foreclosures

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On both coasts of the United States, and many cities in between, hundreds of thousands of renters face comparable plights. The home mortgage crisis has received far more notice, but experts say the ranks of renters with dire housing problems are growing faster than the ranks of defaulting homeowners.

The Center for Housing Policy reports that the number of working-family renters paying more than half their income for housing has soared from 1 million to 2.1 million since 1997. Overall, advocacy groups say there are 9 million low-income renter households and only 6.2 million units they can reasonably afford.

"These people spend huge portions of their income on their housing," said Sheila Crowley, president of the National Low Income Housing Coalition. "They don't do things that we all would like to do — save money to buy a house, or for college or retirement. It's a very day-to-day existence."

In the Stamford area, a breadwinner needs to earn more than $30 an hour to afford the rent of a typical two-bedroom apartment, the highest figure in the nation. San Francisco ranks a close second — placing immense burdens on residents such as schoolteacher Meagan Devine and retiree Jose Morales.

FULL Renters squeezed by lack of affordable housing - Real Estate - MSNBC.com

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Foreclosures getting worse...

U.S. Home Foreclosures Soar in August
Sep 18, 2007 - U.S. Home Foreclosures Soar in August, Up 36 Percent From July

The number of foreclosure filings reported in the U.S. last month more than doubled versus August 2006 and jumped 36 percent from July, a trend that signals many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid a national housing slump. A total of 243,947 foreclosure filings were reported in August, up 115 percent from 113,300 in the same month a year ago, Irvine, Calif.-based RealtyTrac Inc. said Tuesday. There were 179,599 foreclosure filings reported in July.

The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages. August's total represents the highest number of foreclosure filings reported in a single month since the company began tracking monthly filings two years ago. The national foreclosure rate last month was one filing for every 510 households, the company said.

"The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now," RealtyTrac Chief Executive James J. Saccacio said. The mortgage industry has been rocked by a surge in defaults, particularly among borrowers with subprime loans and adjustable rate mortgages that initially had attractive "teaser" interest rates but then can adjust upward, resulting in a payment shock.

Many of the loans, some of which adjust in as little as two years, were issued in 2005 and 2006 during the height of the housing boom. Lagging home sales and flat or decreasing home prices have also left homeowners unable to make their mortgage payments hard-pressed to find buyers. The latest figures also reflect an increase in the number of homes going into foreclosure that are not being picked up in estate sales and are ending up going back to lenders.

More ABC News: U.S. Home Foreclosures Soar in August

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Gonna be a buyers market...

Double-digit home price drops coming
September 19 2007: Three quarters of housing markets - many in crashing Sun Belt areas - face price declines over next few years.

Over the next few years, more than three-quarters of the nation's housing markets will suffer some decline in home prices. Many will experience double-digit hits in a forecast that has worsened considerably in recent months. According to an analysis conducted by Moody's Economy.com, declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 of the cities will experience price drops of 1 percent or more.

The survey attempted to identify the high and low points of housing prices in each of the markets, some of which started declining from their peak in the third quarter of 2005. All are median prices for single-family houses. Nationally, Moody's is projecting an average price decline of 7.7 percent. That's a jump from the 6.6 percent total price drop that the company was forecasting in June and more than twice that of last October's forecast of a 3.6 percent price decrease.

Many of the worst hit cities are in Sun Belt areas that experienced outsized home-price growth during the real estate bubble, according to Arnold Slesers, an associate economist at Moody's. The home price correction in many of these cities will be severe as unsold new homes and leaps in foreclosures add to already big inventories. The Stockton, Calif., metro area, where Moody's predicts a 25 percent price drop, will be the hardest hit among the 100 most populated cities surveyed.

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Katrina Victims Say Mortgage Lender Misled Them
September 19, 2007 - Thousands of homeowners devastated by Hurricanes Katrina and Rita are accusing their mortgage lender of recanting on its promise to suspend their mortgage payments in the immediate aftermath of the hurricanes.

In what they now consider a deal too good to be true, homeowners say Countrywide Home Loans promised they wouldn't have to make payments on their mortgages for three to six months. From its corporate headquarters in California, the country's largest mortgage lender issued a press release about the offer and put it in writing to homeowners, adding, "Late charges will not be assessed."

"There would basically be a freeze on our payment, and our payments would be put on the back end," Donna Hellmer of Hammond, La., told ABC News. Donna and her husband Andrew didn't make the payments. But then Countrywide sent them a notice of default, demanding the missed payments plus late fees in a lump sum, a total of $4,300 due in 30 days. "They basically told me this was the deal, 'You pay the lump sum, or you're going to be foreclosed on,'" recalled Hellmer, who, along with her husband Andrew, had to take out a new loan to pay Countrywide and keep their home.

The story is one Chad and Rebecca Goodwin of Houston, Texas, know all too well. They too faced foreclosure and are now suing Countrywide after capturing on tape what their lawyers say is an important admission by a Countrywide representative: "What they promised me was that it would be tacked on to the end of my loan," Chad says on the call, according to the recording. "A lot of people were told that, but it wasn't the case," the Countrywide employee says. "Unfortunately, what happened is we were hoping our banks would let us do it, and they wouldn't."

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Data security at Amro...

Mortgage data leaked over file network
Fri Sep 21, 2007- Three spreadsheets containing more than 5,000 Social Security numbers and other personal details about customers of ABN Amro Mortgage Group were inadvertently leaked over an online file-sharing network by a former employee.

Tiversa Inc., a Pittsburgh company that offers data-leakage protection services, traced the origins of the ABN data to a Florida computer with the BearShare software installed. BearShare, LimeWire and scores of other programs are designed to distribute and find songs, movies and other files over the Gnutella file-sharing network.

Tiversa Chief Executive Robert Boback said file-sharing programs are commonly misconfigured to share documents their owners never intended to make public. With such peer-to-peer sharing systems, files are obtained directly from another user's hard drive rather than a central hub like traditional Web sites. As a result, once a file begins to circulate, copies can sit on computers all over the world, ready to be grabbed by other users.

Boback said Tiversa had yet to perform a full analysis to see how far the data had spread worldwide, but found evidence the files already had moved beyond the former employee's computer. "There is no question in my mind that ... identity thieves have these files, and if they haven't already, they will be acting on them very soon," Boback said Friday.

Earlier this month, a Seattle man was arrested in what federal authorities described as their first case against someone accused of using file-sharing computer programs to commit identity theft. Gregory Thomas Kopiloff has pleaded not guilty to charges of using such programs to troll other people's computers for financial information that he then used to open credit cards for an online shopping spree.

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US housing finance industry suffers record layoffs
September 22, 2007 - IN a reverberation of the US housing market's decline, a record 5,126 workers in the real estate credit industry and a record 1,864 mortgage and nonmortgage loan brokers were laid off last month, according to a Labour Department report.

Those were the most people filing claims for unemployment from the two industries since the department began tracking mass layoffs in 1995. A mass layoff is defined as 50 or more people let go from one company. While the Labour Department seasonally adjusts the country's total number of mass layoffs, which dropped in August to 118,120 people from 124,835 in July, it does not adjust the industry breakdowns.

"Real estate credit and mortgage and nonmortgage loan brokers from the credit intermediation industry had the third and seventh highest number of mass layoff initial claims, respectively, in August," the department said. A department spokesman said the last time the number of layoffs in real estate credit came close to August's high was in April, when they reached 1,884. There was only one other month when the layoffs in that sector totalled more than 1,000, he said, which was June, when they were 1,035.

Monthly layoffs of loan brokers are rarely more than 200, and the highest number before August was 359, also in April. Temporary help services, which saw 8,621 people lose their jobs in August, bus transportation, discount stores, movie production, professional employer organisations, payroll services, employment placement agencies, and department stores rounded out the top ten list of industries with the largest number of layoffs.

In recent months, subprime, or less credit-worthy, borrowers have been defaulting on their home loans at an expanding pace as their mortgage interest rates reset higher. This is hurting lenders and has set off a wider credit scare in financial markets that reached a fever pitch in August. Earlier, HSBC Holdings said it would close its US subprime unit Decision One Mortgage, putting the jobs of 750 people in jeopardy.

US housing finance industry suffers record layoffs | NEWS.com.au Business

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Housing market still struggling...

Home sales thud to 5-year low point
September 25 2007: Realtors say sales of existing homes dropped for sixth consecutive month, to lowest level in 5 years; separate report shows steepest price drop in 16 years.

Housing markets continued to slump across the nation in August as the number of existing homes sold dropped for the sixth straight month to their lowest level in five years, according to the latest report from the National Association of Realtors. Sales fell 4.3 percent from July to a seasonally adjusted annualized rate of 5.50 million. Sales have fallen 12.8 percent since last August's pace of 6.31 million homes.

Lawrence Yun, senior economist for NAR, blamed the current credit crunch. "The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through," he said in a statement. The slump pushed up the inventory glut to 4.58 million existing homes, an all-time high. There is now a 10-month supply of homes on the market at the present rate of sales.

Some positive news from NAR was that prices broke a 12-month decline. The national median existing-home price for all housing types rose 0.2 percent to $224,500 in August from a year ago, when the median was $224,000. The report clashes with other sources that have reported falling prices for most of the nation. The latest figures from the S&P/Case-Shiller index show prices fell between July 2006 and July 2007 in all 10 major housing markets covered by its main index. The average decline was 4.5 percent. Of the 20-city Case-Shiller index, 15 cities suffered declines.

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Worst market since change of administrations...

Mortgage crash hits new home sales
September 27 2007: Sales hit 7-year low as lower prices can't clear out huge glut, new government report shows.

The mortgage bomb hit the demand for new homes even harder than expected in August, leaving the nation's builders with their weakest level of sales since the summer of 2000, when the nation was struggling with a stock market collapse, rising interest rates and a looming recession. And the government's latest snapshot of the battered housing market, released Thursday, may actually be understating the problem: It does not account for the rising cancellation rates or sales inducements that builders have reported in recent months.

According to the Census Bureau, new homes sold at an annual pace of 795,000 in August, down 8 percent from the revised 867,000 sales pace in July. It was the slowest pace of sales since June 2000, as legions of buyers had trouble finding mortgages or selling their existing homes. Economists surveyed by Briefing.com had forecast that sales would fall to a pace of 825,000.

The report also showed the median price of a new home fell 7.4 percent from year earlier levels to $225,700 in the month, as prices were pressured by both the problems in mortgage finance and the excess supply of homes on the market. The inventory of new homes on the market rose to an 8.2 month supply, as the glut of completed homes without a buyer was near a record high, with 180,000 completed homes listed for sale, just off the record high of 182,000 set in May of this year.

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Housing Slide Yet to Hit Bottom
Sept. 28, 2007 - It's a Buyer's Market but Some Buyers are Struggling to Qualify for a Mortgage

The latest evidence of a decaying real estate market came in a government report Thursday that new-home sales in August hit their lowest point in seven years. But for a more vivid illustration, look at Akron, Ohio. In 10 of that city's hard-hit neighborhoods, a report given to the city council this week said 79% of all homes sold from February to August this year were unloaded by lenders for a fraction of their value. In Akron, as elsewhere in the USA, the dumping of foreclosed homes on the market has squeezed both builders and sellers who must compete against additional properties.

Last month, as builders slashed prices and held "deal of the century"-style blow-out sales to move unsold inventory, the median-price new home fell to $225,700, a 7.5% decline. That was the largest percentage drop in 37 years. "This is just hideous," said Ian Shepherdson of High Frequency Economics. "Housing is nowhere near bottom; neither is its wider impact."

With a bloated eight-month supply of new homes for sale, it's clearly a buyer's market. Yet, many would-be buyers are having a harder time qualifying for a mortgage. The average rate on the 30-year fixed-rate mortgage crept up to 6.42% this week, according to Freddie Mac. Loans for people with tarnished credit have virtually vanished. Lenders are demanding higher down payments and more proof of income and assets. And rates for "jumbo" loans -- those above $417,000 -- are hovering near 8%.

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