1 in 10 americans is delinquent on mortgage payments

[Ancalagon]

this isn't good for the recovery...

http://www.cbc.ca/world/story/2009/11/20/us-mortgages020.html



1 in 10 Americans delinquent in paying mortgage
Last Updated: Friday, November 20, 2009 | 10:34 PM ET Comments91Recommend47
CBC News



New statistics indicate one in 10 American homeowners is now delinquent by at least one mortgage payment and one in seven is now either delinquent or in foreclosure.

Jerome Williams of Washington, D.C., used to own his little house outright. It took him three jobs, but he did it. "Everything I was doing was working out well," he told CBC's The National in an interview.

But, like a lot of Americans, he took out one mortgage, and then another, and then another. He basically used his house as an ATM, and now, he owes more than his home is worth: $230,000 US.

He also lost two of his three jobs, which leaves him lots of time to stare at bank demands for $6,600 — three missed payments. "Just three months, and I can't catch it up," he said.

Williams's story is not uncommon these days as American homeowners by the millions just keep slipping under water.

"It's just a horror show in the housing market," said Mark Zandi, chief economist at Moody's.

And economists say it's no longer just a matter of people with bad credit who signed foolish loans. After 8.2 million job losses in two years, this nightmare has spread like a virus.

"People who aren't receiving a paycheque can't make a mortgage payment," said Michael Fratantoni of the Mortgage Bankers' Association.

That means more waves of foreclosures, and even lower housing prices, which means less spending, which in turn means more job loss.

"People lose their jobs, and of course they go into foreclosure and then you're off and running in this very, very dark cycle," said Zandi.

The government has tried fixes. People have lined up for Washington's cash rebates, but attempts to help those facing foreclosure have largely failed.

Williams see bankers being rescued, but not those who really need the help. "Here I am. I…got no help at all. Yet…I'm right at the brink, living day to day. But come on, you know?"

The administration of U.S. President Barack Obama isn't as activist as it once was and two years into the recession, government help is drying up.

Even Obama, the great optimist himself, is now warning this might be what he calls a double-dip recession.

[Limper]

Given that 2 in 10 shouldn't have been given a loan in the first place I'd say this is about correct.

A second pull back in the market would be kinda nice from my standpoint.

[Aloysius]

He also lost two of his three jobs.
One day, Americans will think about Wall Mart.

[Brynja]

Want to expand on that some Aloysius? I am not sure I follow you.

[DarwinOfMind]

Makes me feel much better about my morgage,

I'm dirt poor, always broke, and barely making it.

But my morgage is paid.

[Enk]

Given that 2 in 10 shouldn't have been given a loan in the first place I'd say this is about correct.

A second pull back in the market would be kinda nice from my standpoint.

The adjustment as home builders collapse is really painful, but as far as the long term goes, you are correct,

[Name Lips]

Meanwhile...


http://www.msnbc.msn.com/id/34105403/ns/business-real_estate/


Home sales rise to highest level in 2.5 years
10.1 percent increase beat analyst expectations by more than sevenfold

WASHINGTON - Home sales far exceeded expectations last month, surging to the highest level in two and a half years as first-time buyers rushed to take advantage of an expiring tax credit.

The National Association of Realtors said Monday that home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.
Story continues below ↓advertisement | your ad here

The Realtors report on October home sales reflect offers made before buyers knew the tax credit would be extended. "There was a lot of rush and hurry to complete sales" before the deadline, said Lawrence Yun, the trade group's chief economist.

But sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new deadline means that "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.

Sales, which were nearly 24 percent above last year's level, had been expected to rise to an annual pace of 5.65 million, according to economists surveyed by Thomson Reuters.

Median price falls 1.6 percent from September
The median sales price was $173,100, down 7.1 percent from a year earlier and off 1.6 percent from September.

In addition to lower prices, mortgage rates have been hovering around 5 percent since the spring, largely because of government intervention. That has helped restore housing affordability in large swaths of the country.

The inventory of unsold homes on the market fell about 4 percent to 3.6 million. That's a 7 month supply at the current sales pace, and close to a healthy stock of about six months.

Nationwide sales are up nearly 37 percent from their bottom in January, but are still off about 16 percent from the peak in autumn 2005.

Over the summer, the housing market started to rebound from the worst downturn in decades, aided by aggressive federal intervention to lower mortgage rates and bring more buyers into the market.

But experts forecast that prices will fall again. Most say they will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.

A record-high 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September, the Mortgage Bankers Association said last week. The worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.
Ends with the same stat quote as the initial post.

New and used home sales are up, much much higher than expected. This offsets the foreclosure rate to a certain extent, since presumably the banks have wised up and are loaning to people who can actually afford their homes now.

So on one end we have loans being foreclosed on that shouldn't have been given out in the first place, which isn't necessarily a bad thing long-term, combined with a rising influx of people buying houses who can afford them.

Also the unemployment rate seems to be bottoming out.

It's really hard to call, but I think by this time next year the economy will be in "slow recovery" mode instead of "holy fuck what a long recession" mode.

[Aloysius]

Makes me feel much better about my morgage,

I'm dirt poor, always broke, and barely making it.

But my morgage is paid.

Pile of debts and piles of jobless peoples. When your job has been outsourced to China, the only way for you to keep your standard of living is to increase your debts and to buy the cheapest stuff possible. Meanwhile, Walmart makes colossal amount of cash, that only benefit to a very small percentage of the population. The same guys who have benefited from 80% of the ten last years economic growth, making them so rich they don't know what to do with their money. Huh ! They can do something with it ! Buy sub-primes "AAA" stuff, so that the jobless guys can still buy stuff in Walmart. Rinse, repeat until the world is destroyed.
Do you see the loop ?
(of course, it's a metaphor. Walmart is not the only cause of the incredible trade deficit of the USA, nor of the outsourcing to China. It's just the n°1 offender)

[Name Lips]

"Very small percentage" is not quite accurate... they're one of our largest employers. And despite what people hear about their horribleness, they actually pay quite well. Several dollars above minimum wage, and more for night shifts.

[Utrecht]

Plus, there seems to be a discounting the value that Wall Mart brigns to peoples pocket.

Wal Marts estimate (so take it with a huge grain of salt) is that even if you dont shop with them - they save the average family $1500 (or so) per year due to downward pressure on costs.

[Northcott]

Given that 2 in 10 shouldn't have been given a loan in the first place I'd say this is about correct.

A second pull back in the market would be kinda nice from my standpoint.

You might get your wish. Harry Dent Jr. is predicting another downturn in 2010... bigger than 2008's. His analysis is that the 2008 reduction was merely the 'pre-shock', and that things haven't yet hit their worst.

Given what I've seen of the housing industry inflating their sales numbers to try and build confidence, I don't doubt it. Builders are struggling around here, close to the line, and K-W's fared among the best in regions across Canada. Yet contrasting reports abound about whether or not there actually are sales spikes. I'm expecting more ugliness to come.

[Aloysius]

Plus, there seems to be a discounting the value that Wall Mart brigns to peoples pocket.

Wal Marts estimate (so take it with a huge grain of salt) is that even if you dont shop with them - they save the average family $1500 (or so) per year due to downward pressure on costs.

How does this downward pressure on cost happens ? By outsourcing jobs or by exerting a downward pressure upon wages.
Can't you see that there is a problem when ever increasing debts (at states, individual or federal level) are the only way to keep the standard of living of a country ? You can't have a sound economy for long with trade deficits like those of the USA.

[Enk]

How does this downward pressure on cost happens ? By outsourcing jobs or by exerting a downward pressure upon wages.
Can't you see that there is a problem when ever increasing debts (at states, individual or federal level) are the only way to keep the standard of living of a country ? You can't have a sound economy for long with trade deficits like those of the USA.

Walmart doesn't get all of it's cost savings from downward pressure on labor costs (they are notorious in some region for keeping a massive part time workforce in order to save on benefits). They get a very significant chunk of savings from their supply chain. The economy of scale they can bring to bear during purchasing is staggering, and nets them the best deals in the world from their suppliers.

If anything, their procurement division has a bigger impact than their labor costs.

[Utrecht]

Walmart doesn't get all of it's cost savings from downward pressure on labor costs (they are notorious in some region for keeping a massive part time workforce in order to save on benefits). They get a very significant chunk of savings from their supply chain. The economy of scale they can bring to bear during purchasing is staggering, and nets them the best deals in the world from their suppliers.

If anything, their procurement division has a bigger impact than their labor costs.

Exactly - that coupled with the pressure that Wal Mart puts on manufactures/suppliers. I.e. if you want to play ball with Wal Mart, you better come in the cheapest with comperable quality.

This forces Manufactures to find ways of being more efficient.

Not everything (and in this case, very little) is about jobs.

[Enk]

Now you can make the argument that Walmart's tactics indirectly put downward pressure, as their suppliers (in, say, China) have to depress wages in order to meet Walmart's demands, which in turn causes US employers to reduce wages in response (or, more often, lose manufacturing bids).

I usually counter that by reminding people of the billion or so workers in China that keep wages low regardless of what we do in the states.

[Name Lips]

And for all the "Made in China" noise, there ARE "Made in America" products at Wal-Mart. They're the ones that look and function more or less the same but cost 25% more. The problem isn't that Wal-Mart sells cheap foreign sweatshop goods, the problem is that people buy them. Like any successful business, Wal-Mart sells only what people are willing to pay for.

[The Theocrat of Poon-Tang]

How does this downward pressure on cost happens ? By outsourcing jobs or by exerting a downward pressure upon wages.
Can't you see that there is a problem when ever increasing debts (at states, individual or federal level) are the only way to keep the standard of living of a country ? You can't have a sound economy for long with trade deficits like those of the USA.

I'm shocked, Aloysius. An anti-Wal Mart rant and I don't see one "they're driving mom and pop stores out of business!!!" comment.

For shame, sir. For shame.

[Freedom Canadian]

I'm shocked, Aloysius. An anti-Wal Mart rant and I don't see one "they're driving mom and pop stores out of business!!!" comment.

For shame, sir. For shame.

I guess that theory lost favor somehow when it turned out all those Walmarts didn't drive mom and pop stores out of business. :D

[Northcott]

And for all the "Made in China" noise, there ARE "Made in America" products at Wal-Mart. They're the ones that look and function more or less the same but cost 25% more. The problem isn't that Wal-Mart sells cheap foreign sweatshop goods, the problem is that people buy them. Like any successful business, Wal-Mart sells only what people are willing to pay for.

Which is where I think it's the duty of government to step in. I'm all for relaxing trade barriers, but only with nations who have a comparable policy on human rights, workplace safety, and a similar standard of living. It's fucking insane to open up and make vulnerable our labour-driven industries by having them compete with the pricing in nations where slave labour exists either in fact, or even in tacit practice. There is no way that our people can compete without utterly throwing our ethics out the window... and as our society won't allow that, we drive our own industries to relocate to where they can profit.

Sure, we could wait for market forces to correct this, but that's likely to involve horrid economic conditions here while other nations grow and prosper -- and I think that's about as goddamned stupid a path to take as one can possibly choose.

We lost the textile industry long ago. Clothes manufacturing itself is now a rarity. The auto industry is slowly leaning that way. Technology's started the process as well. We cannot exist as a society based upon the service industry.

[Aloysius]

It's fucking insane to open up and make vulnerable our labour-driven industries by having them compete with the pricing in nations where slave labour exists either in fact, or even in tacit practice. There is no way that our people can compete without utterly throwing our ethics out the window... and as our society won't allow that, we drive our own industries to relocate to where they can profit.


I may add that there is no way you can compete with a country whose currency is artificially under-evaluated by 50%.
The main problem is : "how can we (we = the world) allow developing nations to develop without screwing those that are already developed ? The policy until now has been "let the market forces decide". This is like "let them kill each others, the winner takes the prize". I think we can find something more civilized than the law of the jungle.

[Enk]

...I think we can find something more likely to maintain the status quo than what we've been doing.

FIFM.