Homebuilders sentiment is still low

Home builders stay grim in August | Reuters

WASHINGTON (Reuters) - Home builder sentiment was stuck at a record low in August, as stringent lending and a flood of foreclosed homes dragged on the real estate market, according to data from the National Association of Home Builders released on Monday.

The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.

The August figure matched the median forecast among analysts surveyed by Reuters. Readings below 50 mean more builders view market conditions as poor than favorable.

Despite the weak reading, the Washington trade group said its members hope a recently enacted home buyer tax credit will bolster housing appetite.

What will happen to San Diego Home prices and Real Estate if fannie and freedie go under --

The California Association of Realtors sent the following to my email.

GSES HAVE MORE OPTIONS THAN NATIONALIZATION
Contrary to recent news reports, nationalizing Fannie Mae and Freddie Mac is not the only option available to the two mortgage giants, according to a Citigroup analyst quoted in a recent "Reuters" story.

Adding that the GSEs are most effective in their current form and that nationalizing them is unnecessary, the analyst detailed other available options, including: policymakers emphasizing the benefits of the recently adopted backstop plan; the GSEs selling mortgage-backed securities to the Treasury; the regulator lessening capital surplus requirements; and/or all parties waiting until market conditions improve.

C.A.R. supports Fannie Mae and Freddie Mac in their current structure. Created to ensure that an affordable and stable flow of capital is available to lenders for home loans regardless of market conditions, the nationalization or elimination of the GSEs would have severe repercussions for homeowners and the economy, including:

- An instant shortage of capital to the mortgage market, leaving only FHA and VA as a stable source of capital for homebuyers.
- A rapid increase in interest rates on all non-government mortgage products, sinking the nation's housing market and quickly raising the costs of homeownership.
- Homebuyers being forced into exotic loans because of their inability to afford the initial high costs of non-conforming, fixed-rate mortgages.
- Many low- and moderate-income households unable to purchase homes because of the high costs of mortgage-financing.

Ca Home sales - media price falls 40 percent.

Just thought some day keeping this information in a blog would be interesting. San Diego seems to be experience the same type of split market.

C.A.R. July 2008 Sales and Price Report

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during July 2008 was $350,760, a 40.3 percent decrease from the revised $587,560 median for July 2007, C.A.R. reported. The July 2008 median price fell 4.5 percent compared with June’s revised $367,130 median price.

"Once again, the 40.3 percent year-to-year decrease in the median price of a home was an all-time record, surpassing the previous record set in June with a 37.9 percent decrease," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.

"Since the statewide median remained in the $585,000-$595,000 range through August of last year, the market will continue to experience significant year-to-year adjustments through August even if the median price holds steady over the next few months," she said. "The statewide median was last in the $350,000 range in early 2003."

It have been reported that Fannie and Freddie have serious financial trouble and loans. It had been hoped by many here in San Diego that lending standards were going to get a little easier to meet. It was reported on CNNmoney that standards are going get tougher.




The Big Picture | Uh-Oh! Bad Sign on Fannie & Freddie

Marketwatch reports that the government discussed a contingency plan in case the unthinkable happens, and Fannie Mae (FNM) and Freddie Mac (FRE) were to fail.

But don't worry -- the Bush administration DOES NOT expect the entities to fail. And, they note no rescue plan is imminent.

Rex Nutting says Uh-Oh! This is a major contrary indicator, and it suggests Freddie and Fannie are toast!

Why?

"Is there any surer sign of an impending disaster than a reassurance from the White House that it doesn't expect it to happen?"

Rex adds this short list of other things that the Bush administration didn't expect:

Terrorists to fly airplanes into buildings.

Saddam Hussein to have been telling the truth about not having any weapons of mass destruction.

Iraqis to object to a long-term occupation by a foreign power.

Hurricane Katrina.

People in New Orleans to object to the government's response to Hurricane Katrina.

The Democrats to take control of Congress.

The Democrats to cave in so easily on important issues after they took control of Congress.

California Home prices dropping

Bloomberg.com: News

Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.

``Half off in a decent neighborhood is close to the bottom,'' said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world's biggest bond fund. Property markdowns of 30 percent to 40 percent give the market ``price illumination if not sunshine,'' he said.

`Beginning to Happen'

California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to ``discounted distressed sales,'' with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said.

Is it time to buy or time to sell - Home prices down

Should you buy a home now? - Los Angeles Times

he drop in prices may mean it's time to jump in. Or is it too soon? Experts offer pros and cons.
By Peter Y. Hong, Los Angeles Times Staff Writer
August 3, 2008
Southern California median home sale prices are down about 30% from their peak. That's about as far as they fell in the 1990s real estate downturn, and enough of a decline to have many asking: Is it time to buy? ¶ Some are already answering with their checkbooks. In the inland areas where prices have crashed hardest, buyers are slowly returning. ¶ But many of those who study housing markets say the worst is yet to come for real estate. Buy now, they warn, and you'll regret it as prices continue falling. ¶ Others contend that prices are low enough that renters who aspire to own should buy now so they can start building their equity. ¶ Predicting price trends is a dodgy business, and there's no one right answer for everyone. But if you are thinking about buying now, here are some pros and cons to consider.

Home builders losing money as sales are weak in San Diego and inland empire

Home builders battle to survive - Los Angeles Times

he Ryland loss followed a report earlier this week that June housing starts were down 44% in California from a year earlier. "It's very bad, the worst I've seen," said Mick Pattinson, a 32-year industry veteran and chief executive of Barratt American, a private builder based in Carlsbad. "It's impossible to build anything today at a profit, so builders are either taking losses or have pretty much stopped building," he said.

Pattinson said his company, which builds in San Diego County and the Inland Empire, is down to 40 employees, from a high of 140.

"We're trying to stay alive," said Pattinson, whose company is scraping by with reconstruction work in fire-damaged parts of San Diego and a few custom home orders.

In addition to the 44% decline in housing starts last month, the California Building Industry Assn. said its latest figures on new-home sales showed a 51% drop-off in May from a year earlier.

Hopes for a recovery "have fallen apart" and that is "going to make the rest of 2008 a rocky ride for home builders," said Jonathan Dienhart, research director of Hanley Wood Market Intelligence, which prepared the builders group's report.

Home prices fall in San Diego - again

Home prices continue sharp descent - May. 13, 2008

San Diego-Carlsbad-San Marcos, CA $459,000 -22.9%