Banks take over record number of homes in August

By Lynn Adler

NEW YORK | Thu Sep 16, 2010 
 

(Reuters) - A record number of U.S. homeowners lost houses to their banks in August as lenders worked through the backlog of distressed mortgages, real estate data company RealtyTrac said on Thursday.

New default notices decreased at the same time, suggesting that lenders managed the flow of troubled loans and foreclosed properties hitting the market to limit price declines, the company said.

Root problems of high unemployment, wage cuts, negative home equity and restrictive lending practices persist, however, pointing to lingering housing market pain.

RealtyTrac sees a record 1.2 million repossessions this year, up from just under 1 million last year, with more than 3.2 million homes in some stage of foreclosure.

In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, California-based company.

"It really does look like we're seeing a slowdown of new foreclosures being initiated as part of a means to manage inventory levels on the market," RealtyTrac senior vice president Rick Sharga said in an interview.

Banks foreclosed on 95,364 properties in August, topping the May 2010 record by 2 percent. These repossessions, or real estate owned (REO) homes, jumped 3 percent in the month and 25 percent in the year.

At the same time, a similar amount -- 96,469 homes -- got a default notice. Defaults declined 1 percent from July and 30 percent from August 2009 after peaking at 142,064 properties in April 2009.

It will take about three years to work through the stockpile of distressed housing, Sharga said, resulting in a market that moves sideways.

"I don't think it gets any better really until the end of 2013," he said.
Total foreclosure actions last month, including notice of default, scheduled auction and repossession, were made on a total of 338,836 properties in August, up 4 percent from July and down 5 percent from August 2009.

The number of homes getting at least one notice topped 300,000 for the 18th month in a row.
One in every 381 housing units got a foreclosure filing last month.

Slowing home sales, after buyer tax credits of up to $8,000 ended in April, could tilt more owners toward foreclosure.

"Fewer buyers means it's going to take longer to clear out the distressed inventory, the longer you have that inventory the more price pressure there is on the overall housing market," said Sharga. "The more price pressure, the more homes are in danger of going into foreclosure because they're going to be upside down."

Homeowners that are upside down, or have a mortgage bigger than the home's value, often cannot sell or refinance.

Foreclosure auctions were scheduled for the first time on about 147,000 properties last month, up 9 percent from July and the second highest total in records dating back to April 2005.

Nevada, Florida, Arizona and California had the highest state foreclosure rates in August, with Nevada topping the list for the 44th straight month despite a 24 percent drop in foreclosure actions from a year earlier.

Idaho, Utah, Georgia, Michigan, Illinois and Hawaii were the other states with the highest rates of foreclosure.

The 10 metro areas with the nation's highest foreclosure rates had fewer actions for a second straight month.

"Some markets may have already peaked, but even with the decreased levels of activity they're still running at multiples of national averages," Sharga said. "In some cases it really is a matter of trying to keep inventory levels from overwhelming the local markets."

(Reporting by Lynn Adler, Editing by Chizu Nomiyama)

U.S.Housing Market

 

Newscribe : get free news in real time 

After reading this article, people also read:

• More sellers cut U.S. home prices for 3rd monthSep 15, 2010
• Austin ranked sexiest city in U.S.Sep 14, 2010
• Gold fever strikes mom and pop prospectors in US WestSep 15, 2010
• Tea Party Republican has big lead in FloridaSep 15, 2010
• Nevada economy faces extended losing streakSep 7, 2010

US economists oppose imposing punitive measures against China

Nobel Laureate economists on Wednesday urged American politicians to restrain from imposing punitive measures against imports of Chinese goods, calling it both unwise and useless.

"This is crude populism and represents the attempt of the two parties to win voters," said James Heckman, professor of economics at the University of Chicago, in an exclusive interview with Xinhua.

"What I do worry about is that there has been a lot of talking about taxing the Chinese and punishing them," said Heckman on the sidelines of a forum celebrating the opening of University of Chicago Center in Beijing.

The statement comes two days after 93 U.S. lawmakers signed a letter urging Democratic leaders in the House of Representatives to schedule a vote on a bill to get tougher with China.

The bill would allow the U.S. Commerce Department to slap countervailing and anti-dumping duties on "injurious imports from any country that persistently undervalues its currency."

The Chinese currency has seen increased volatility in the trading days since the People's Bank of China (PBOC), the central bank, announced on June 19 that it would increase the currency's exchange rate flexibility.

The yuan's central parity against the U.S. dollar has risen by 1.5 percent from the rate of 6.8275 per U.S. dollar, set a day before the PBOC's pledge to increase flexibility.

A more expensive Chinese currency would help, in some sense, but the key problem was in the U.S. economic policies which had proven to be ineffective, said Heckman, who won the Nobel Prize in Economic Sciences in 2000.

He said the current difficulties facing the U.S. economy in the form of high unemployment and a staggering deficit mainly stemmed from its own "unwise policies" that finance consumption and practice large tax cuts.

"There is an issue that China and the rest of the world has to be worried about -- How much will America continue to live beyond its means and whether America has the political will to solve the problem?"

He called upon the U.S. leadership to wake up to a deeper understanding of the nature of the deficit problem and look to a much longer-term solution, and deemed the proposed action as pure politics.

"Every serious person in economics said we have to deal with the deficit, but the government has not listened to it," Heckman said.

He said America's soft money policy and its consumption patterns were not sustainable and had to be adjusted, but "We don't even have a serious discussion about the nature of the deficit problem in America."

"It is easy to attack China, and so many people in the US will say it is the Chinese who are responsible for the lack of jobs, but they don't look at the deep structural questions," Heckman said.

"I don't believe that any American with any integrity would advocate this kind of punitive policy toward China, which is pure politics."

Echoing Heckman's words, another Nobel Laureate economist present at the opening ceremony, Gary Becker, said it was the U.S. who should take significant responsibility for its problems.

"The U.S. has a very low savings rate which has contributed in a very important manner to its current difficult situations and the global financial crisis, as well," said Becker, a professor of economics and sociology at the University of Chicago.

Heckman and Becker called for caution, as some economists suggest China sell down its vast holdings of U.S. Treasuries, which makes up some two-thirds of its 2.45 trillion U.S. dollars in international reserves.

"If China dumps a lot of U.S. dollars, that would be unwise, because that would create a currency crisis in the currency market," he said.

Source: Xinhua
Newscribe : get free news in real time

UCLA Anderson Forecast predicts 'very sluggish growth' accompanied by high unemployment

  By Hilary Rehder
 

In its third quarterly report of 2010, the UCLA Anderson Forecast predicts "very sluggish growth" for the foreseeable future as the U.S. economy continues to recover from the recession. As for the California economy, the state is looking at a difficult period ahead as it attempts to regenerate not only the 1.3 million jobs lost during the recession but also create additional jobs needed for new entrants into the job market over the past two-and-a-half years.

 

The National Forecast

In a report titled "The Uncertain Economy," UCLA Anderson Forecast senior economist David Shulman offers two explanations for the ailing national economy. The first is the "balance-sheet hypothesis" put forth by the Forecast nearly two years ago, which is analogous to the work done by economists Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University. These economists noted that recoveries from the bursting of debt-fueled financial bubbles are invariably slow and are associated with high unemployment rates and rising government debt. Given that, Shulman suggests that a quick recovery is not likely.

Shulman also writes that, "the recovery from the balance-sheet recession is being exacerbated by an extraordinary increase in policy uncertainty, which is amplifying the usual economic uncertainties associated with recessions." Simply put, he believes that the nation's businesses are unsure of the implications of their investments — whether new hires or new computers — given the uncertainty surrounding tax, environmental, energy, financial, labor and health care policies.

"At present," Shulman said, "business firms can only make the wildest guesses as to what corporate and individual taxes will be next year, and, for that matter, three years from now what the cost of health care will be, whether or not there will be a revived cap-and-trade policy with respect to carbon emissions or whether the Environmental Protection Agency will step in with regulations of their own absent a statute, and whether it will be easier or more difficult to hedge risks with financial derivatives."

Given these factors, the Forecast expects very sluggish growth accompanied by high unemployment.
"As time passes," Shulman said, "the economy will naturally heal and the policy uncertainties will resolve themselves to allow growth to return to a 3 percent path, causing unemployment to begin a long-awaited downward trajectory. We forecast that these more ebullient trends will become noticeable by 2012."
The Forecast predicts the national unemployment rate will be 9.7 percent by year's end and 9.5 percent in 2011.

The California Forecast

Considering the California economy, UCLA Anderson Forecast senior economist Jerry Nickelsburg writes that "all the evidence suggests that California is ever so slowly coming out of the recession … but slow growth means that while the groundwork for faster growth is being put down, there is not a lot or perceptible change."

The Forecast implies that the weak growth will continue in the absence of any imminent changes in consumer or business behavior. According to the report, the very slow growth period will remain until next year. The recovery from the recession will be driven by education, health care, exports and technology and, to a lesser extent, growth in the battered residential construction sector.

On an annual basis, the expectation is that California employment will contract by -0.7 percent in 2010 and that once employment growth returns in 2011, employment will begin to grow faster than the labor force, at a 1.9 percent rate, and the unemployment rate will begin to fall.

Real personal income growth is forecast to be 0.6 percent in 2010, 2.2 percent in 2001, and 4.1 percent in 2012. The unemployment rate — currently at its high point of 12.6 percent — is expected to fall slowly through the balance of 2010 and average 12.2 percent for the year. The unemployment rate won't fall below double digits until 2012.

More information: http://uclaforecast.com/
Provided by University of California Los Angeles (news : web)

Newscribe : get free news in real time