Gov't may soon back troubled mortgage finance giants Fannie Mae, Freddie Mac
(AP) -- Fannie Mae and Freddie Mac are expected to be taken over by the government as soon as this weekend in a bold move designed to protect the mortgage market from the risk the companies could fail, a person briefed on the matter said Friday night.
Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.
Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to take over the troubled companies in a process known as conservatorship.
August Foreclosures....Wow!
Cruising the BMIT site today I saw the foreclosure numbers for August were posted. All I can say is WOW!
In August there were 5893 foreclosures in Riverside County! That's 280 per day!
In August there were 5893 foreclosures in Riverside County! That's 280 per day!
Retail centers, the next ghost towns.
There was a good article in the LA Times today. It mirrors a similar article from the Press Enterprise from a few months back that spoke of the problems facing many of the new retail centers that have been built all over the IE. Interestingly both articles chose to single out the Dos Lagos center in South Corona as their poster child.
Dos Lagos is far from the only retail center that is in trouble. Many of these mega centers as well as many more smaller centers built in the last few years are finding customers are just not spending these days. What's going to happen to these centers? Well you need to look no farther than Moreno Valley to see what will happen. During the last boom several large centers were built. Many of those still sit empty. Right off the 60 Fwy is Canyon Springs center. Once home to a thriving retail center. When the bust hit in the early 90's roughly 70% of the stores moved out. What remained were discount shops or seasonal shops. Only Toy's R Us weathered the storm. Even well known eateries like Tony Roma's could not make it in an empty shopping center. Another example is the McKinley Center. That center is now deserted and a new center is being built right across the freeway. Just in time for the latest crash. Even worse is the new center they are building on the eastern end of MoVal. There is a new Target, WalMart, Kohls, Best Buy and I saw they are just finishing a Circuit City when I drove past a few weeks ago. That center is doomed. It was built in anticipation of several thousand new homes being built east of Lake Perris. Those homes aren't being built so who's going to drive way out there now? A year from now that center will be empty. Just like Dos Lagos and most of the other centers built on the edges of these former boom towns.
Here's the LA Times article
The Promenade Shops at Dos Lagos opened two years ago in Corona, aimed at serving the legions of people moving into upscale new housing tracts in the surrounding hills.
Discount center it isn't. This is where you go to find a $3,300 home espresso machine at Sur La Table, a $500 handbag at Coach or a $6 cup of Pinkberry frozen yogurt. Harder to find are paying customers. On a recent weekday afternoon, most stores had fewer shoppers than salespeople.
Outside the Starbucks, Melissa McVicar was selling sunglasses from a cart, $12 a pair. Five hours into her shift, McVicar had sold only six pairs. And most of her customers weren't paying cash.
"People are buying on credit, even if it's only $12," she said.
A year after the median home sales price in Southern California started to go down, Dos Lagos is a good example of how the housing slump is spreading into the broader economy. New housing developments were supposed to have brought thousands of big-spending residents to the area. But only a fraction of those houses were actually built and sold, leaving the rolling hills around the mall bulldozed and bare.
More Charts to start the new month
Cruising around this evening I ran across this report on Mish global economics site. It seems I'm not the only one that gets a dozen emails a day asking when I think the bottom will be. This article and attached charts echo my feelings. Prices will settle back to around 2000 levels give ro take a year. I also don't think we will see those peak 2005/06 prices again for a very very long time.
Here's the post.
Inquiring minds are wondering about California home prices. My friend "BC" pinged me recently with the following thoughts:
Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the '04-'06 levels for another 15-20 yrs., if then given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).
Seen another way, nominal SoCal median house prices will not bottom until prices return to the '99-'01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.
By the early to mid-'10s, CA mortgagees will have made no money in real terms on their real estate purchases for ~15-30 yrs. (worse when counting home-equity loans).
Well, that's another month in the bag. That's nearly the end of the traditional selling season. There will probably still be good numbers posting for the next month or two because of the 30 to 90 day lag to takes for sales to close. So the june/July sales should be closing in August making the numbers look good. Don't forget that last August we were already well into the sales freeze due to the credit implosion and the fact the word of the bubble popping getting out to more buyers. The year over year price declines will also start to level out a bit. After all you can only go dow 40% a year for so long before homes would be practically free (like in Detriot!).
Here's the post.
When Will Southern California Home Prices Bottom?
Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the '04-'06 levels for another 15-20 yrs., if then given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).
Seen another way, nominal SoCal median house prices will not bottom until prices return to the '99-'01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.
By the early to mid-'10s, CA mortgagees will have made no money in real terms on their real estate purchases for ~15-30 yrs. (worse when counting home-equity loans).
Well, that's another month in the bag. That's nearly the end of the traditional selling season. There will probably still be good numbers posting for the next month or two because of the 30 to 90 day lag to takes for sales to close. So the june/July sales should be closing in August making the numbers look good. Don't forget that last August we were already well into the sales freeze due to the credit implosion and the fact the word of the bubble popping getting out to more buyers. The year over year price declines will also start to level out a bit. After all you can only go dow 40% a year for so long before homes would be practically free (like in Detriot!).
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