San Diego Housing Bubble News and Analysis

From Bob's link:

Help might be on the way. The Obama administration announced a plan in March to provide $75 billion in incentive payments for the mortgage industry to modify loans to help up to 9 million borrowers avoid foreclosure. But the extent of the relief remains unclear, with questions lingering about how much the lending industry will cooperate in modifying loans.

After banks take over foreclosed homes, they usually put them up for sale at deep discounts. Nationwide, sales of foreclosures and other distressed properties made up about half of the market in the first quarter, the National Association of Realtors reported.
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Nothing irks me more than hearing idiots spout garbage like this. They claim that foreclosures drive down prices, when in reality, those are the only homes being sold at market value because the "non-distressed" sellers have their heads up their a$$es and think 2005 prices are "normal" -- instead of realizing that was the peak of one of the largest housing bubbles in history.

The foreclosures are the only homes real buyers are qualified to buy!

Funny how they think it's a problem when a major part of the market consists of foreclosures, but they did NOTHING to stop it when the majority of the market was based on fraudulent transactions where the borrowers were **guaranteed** to default if prices didn't rise to the heavens forever and ever...

Horrifying! GDP is already worse than during GD1. Foreclosures are the worst on record. Unemployment in areas of CA is the worst on record and credit card defaults are just starting to go parabolic.

Our biggest banks are insolvent by any reasonable standards and if not for allowing them to lie about the value of the assets they hold we would be seeing bank failures on par with GD1. 100 year old manufacturing giants, symbols of America are going BK.

Plan accordingly ;)

Similar story:

WASHINGTON (AFP) – US home foreclosures reached a record pace in April for the second consecutive month, underscoring the deepening crisis in the housing market, private data showed Wednesday.

Foreclosure filings, which includes home-loan default notices, auction sale notices and bank repossessions, were reported on 342,038 US homes in April, said RealtyTrac, an online firm specializing in foreclosure properties.

The record-high rate highlighted the problems homeowners are facing amid surging unemployment and tight credit as the world's largest economy struggles in its second year of recession.

The rise was less than 1.0 percent from the previous month but marked a steep 32 percent increase from April 2008.

Yet the April numbers showed a deceleration from March, when foreclosure activity jumped 17 percent from February and was up 46 percent from a year ago.

One in every 374 US housing units received a foreclosure filing in April, RealtyTrac said, the highest monthly foreclosure rate since the firm began issuing its report in January 2005.

"Much of this activity is at the initial stages of foreclosure -- the default and auction stages -- while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008," said James Saccacio, chief executive of RealtyTrac.

"This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria," he added, referring to government and private sector efforts to help at-risk homeowners keep their homes.

Nevada, Florida, California and Arizona, so-called "Sun Belt" states where home sales boomed before the real-estate bubble burst in 2006, had the highest foreclosure rates.

Those four states alone accounted for 56.6 percent of all foreclosures in the 50 states last month, RealtyTrac said.

Nevada remained the hardest hit, with one in every 68 homes receiving a foreclosure filing -- more than five times the national average.

Total foreclosure activity in Nevada was up 111 percent from April 2008.

Las Vegas, Nevada, continued to post the highest foreclosure rate in the country among metropolitan areas with populations of at least 200,000.

One in every 56 Las Vegas homes received a foreclosure filing during the month. That was almost seven times the national average.

US foreclosures hit record high for second month

Does that mean loans aren't getting reworked?

And on another note, the consequences of no more ATM HELOC:

WASHINGTON – Retail sales fell for a second straight month in April, a disappointing performance that raised doubts about whether consumers were regaining their desire to shop. A rebound in consumer demand is a necessary ingredient for ending the recession.

The Commerce Department said Wednesday that retail sales fell 0.4 percent last month. Many economists had expected a flat reading, and the April weakness followed a 1.3 percent drop in March that was worse than first estimated.

Retail sales had posted gains in January and February after falling for six straight months, raising hopes that the all-important consumer sector of the economy might be stabilizing. But the setbacks in March and April could darken some forecasts because consumer spending accounts for about 70 percent of economic activity.

The hope had been that consumers were starting to feel better about spending, helped by the start of tax breaks included in the $787 billion stimulus bill. Households had spent the fall hunkered down in the face of thousands of job layoffs and the worst financial crisis since the 1930s.

The latest retail data "are yet another illustration that, although the worst is now over, there is still no evidence of an actual recovery," Paul Dales, U.S. economist with Capital Economics in Toronto, wrote in a research note.

While anecdotal evidence suggests some improvement in sales in recent weeks, "to offset the plunge in wealth, the household saving rate still needs to double from the current rate of 4 percent," Dales wrote. "With falling employment hitting incomes, this can only be achieved by a further retrenchment in spending."

The jobless rate rose to 8.9 percent in April when a net total of 539,000 jobs were lost and 13.7 million people were unemployed, the Labor Department said last week.

Wall Street tumbled after the weaker-than-expected retail sales report. The Dow Jones industrial average lost about 130 points in morning trading, and broader indices also fell.

In a separate report, the Commerce Department said business inventories fell 1 percent in March, a decline that matched economists' expectations. It marked the seventh straight decrease, the longest stretch since businesses cut inventories for 15 straight months in 2001 and 2002, a period that covered the last recession.

Businesses are continuing to cut their stockpiles in the face of declining sales, a development that has intensified the current economic downturn. Still, the reductions in stockpiles held on shelves and in backlots eventually should help businesses get their inventories more in line with reduced sales. If that is the case, any strengthening in consumer demand should lead to increased production.

The April retail sales dip came despite a 0.2 percent increase in auto sales, which fell 2 percent in March. Excluding autos, the drop in retail sales would have been 0.5 percent, much worse than the 0.2 percent gain economists expected.

Sales outside of autos showed widespread weakness last month. Demand at department stores and general merchandise stores fell 0.1 percent and sales at specialty clothing stores dropped 0.5 percent.

Department store operator Macy's Inc. on Wednesday reported a wider loss for the first quarter due partly to restructuring charges. Still, the company expects to see an improvement in sales from its localization efforts beginning in the fourth quarter of 2009, and in the spring of 2010.

Liz Claiborne Inc. reported a first-quarter loss that was worse than Wall Street expected. The apparel maker said its quarterly loss swelled on restructuring charges and a drop in same-store sales stemming from lower consumer spending and an extra week of sales in the year-ago period.

Sales also fell in April at furniture stores, electronic and appliance stores, food and beverage stores and gasoline stations, according to the Commerce Department.

The performance at department stores and specialty clothing stores came as a surprise since the nation's big chain stores had reported better-than-expected results for April. Same-store sales, rose 0.7 percent last month compared with April 2008. It was the first overall increase in six months, according to the tally by Goldman Sachs and the International Council of Shopping Centers.

For April, some mall-based clothing stores saw their declines level off and Wal-Mart Stores Inc., the world's largest retailer, had reported its same-store sales rose 5 percent, excluding fuel, which beat expectations. Same-store sales, or sales in stores open at least one year, is considered a key metric of a retailer's financial health.

The chain store sales report last week showed that Gap, American Eagle and Wet Seal posted smaller sales declines at their established locations than analysts had forecast.

The Children's Place, T.J. Maxx owner TJX Cos. Inc. and teen retailer The Buckle saw bigger gains than expected. But luxury stores again were hard hit as their higher-end wares find fewer takers.

Consumer spending grew 2.2 percent in the first quarter of the year, after posting back-to-back quarterly declines in the last half of 2008.

Economists believe the overall economy, as measured by the gross domestic product, will show a decline of around 2 percent in the current quarter. That would represent an improvement from the steep declines of 6.3 percent in the fourth quarter of last year and 6.1 percent in the first three months of this year, the worst six-month performance in a half-century.

Retail sales drop unexpectedly in April

I agree with CA renter. I'm tired of hearing how REO's are "deeply discounted". They are actually the market. If they were worth more, people would be paying more.

In the boom times the total crap that is much of the old SD housing stock sold for above asking, seemingly regardless of condition. Buyers were anticipating further appreciation and discounting the amount of renovation necessary in order to "get in the real estate game".

But now when buyers look at these same properties, they aren't seeing potential appreciation as much as the long neglected maintenance. All of the sudden it is "in" to make the house liveable. How else can you explain a house built in the 1950s that in 2006 sold for 450K, now all of the sudden in 2009 being a 180K "fixer". The truth is that it was a fixer in 2006 as well but nobody cared.

The homes that are actually well maintained are few and far between in the areas I'm looking. Most of those must be owned by long term homeowners not in trouble with the mortgage. Too bad the responsible homeowners have their values dragged down by the irresponsible.

A well known San Diego real estate broker was quoted in the Union/Tribune saying the same thing about how foreclosures are deeply discounted. This guy went one step further and proclaimed that once all the foreclosures are off the market prices will rebound back to their previously high levels. Either this guy gets paid to spew this garbage, or he's just an idiot.