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Wednesday, August 13, 2008

Housing/Subprime/Credit Roundup — August 13, 2008

Items of Interest:

$1 / One dollar foreclosed home sale in DetroitDetroit News:
Foreclosure fallout: Houses go for a $1 -- One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit.

The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities.

And it still took 19 days to find a buyer.

The sale price of the home may be an anomaly, but illustrates both the depths of the foreclosure crisis in Detroit and the rapid scuttling of vacant homes in some of the city's impoverished neighborhoods.

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else." ...

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Bloomberg:
U.S. MBA's Mortgage Applications Index Fell 1.5% Last Week -- Mortgage applications in the U.S. declined last week as higher interest rates hurt refinancing.

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 1.5 percent to 425.9 in the week ended Aug. 8 from the prior week. The group's purchase index was unchanged and its refinancing gauge fell 4.2 percent.

Rising borrowing costs and stricter loan rules are shutting out potential buyers, and others are holding out for steeper price declines. The worst homebuilding recession in a quarter century is likely to persist, depressing economic growth.

``I don't see a recovery in housing until next year,'' said Bob Moulton, president of Manhasset, New York-based Americana Mortgage Group. ``Credit is tightening up. People just don't want to overpay, so they're waiting for prices to fall further.'' ...

The average rate on a 30-year fixed loan increased to 6.57 percent last week from 6.41 percent, the Mortgage Bankers report showed...
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Wall Street Journal:
Bank Stocks Drop Anew Amid Worry Over Falling Home Prices -- Stuck with a growing glut of foreclosed houses, banks and investors are shedding them at increasingly steep losses, potentially adding to the banking industry's red ink this year.

Banks are selling foreclosed homes in some cases for less than half the price they fetched two or three years ago. The cuts are coming as the U.S. banking sector, slogging through its worst crisis in decades, bites the bullet out of fear that prices will keep falling.

Financial stocks fell sharply Tuesday, following J.P. Morgan Chase & Co.'s warning late Monday that it expects "a continued decline in U.S. housing prices." The dour assessment included a roughly $1.5 billion trading loss related to the largest U.S. bank's holdings of mortgage-backed securities.

J.P. Morgan shares fell 9.5% Tuesday, while Lehman Brothers Holdings Inc. and Wachovia Corp. fell about 12%. The declines marked a reversal in sentiment from recent optimism among some investors that the worst of the credit crunch might be over...
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Inventory of Houses for sale dips in July 2008 from JuneWall Street Journal:
Housing Inventory Drops As Some Sellers Retreat -- The number of homes listed for sale continues to edge lower in many metropolitan areas, though supplies remain ample.

The supply of homes available for sale in 29 major metropolitan areas in July was down 0.5% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The supply has begun to erode partly because some would-be sellers have given up and withdrawn their homes from the market for now...

Nationwide, about 4.5 million previously occupied homes were listed for sale at the end of June, according to the National Association of Realtors. At the current sales rate, that total is enough to last about 11 months, the trade group says. The market is considered roughly in balance between supply and demand when the inventory is enough to last around six months...
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Forbes:
Most Expensive Home Or Image Accessory? -- The real estate world is abuzz with news that a French Riviera home called the Villa Leopolda, built by King Leopold II of Belgium in 1902, has sold for $750 million to a Russian oligarch.

In the gossip-filled sewing circle that is high-end real estate, Russian tycoon Roman Abramovich was originally rumored as the buyer, though he has denied it. The rumor was difficult to believe anyway, as it was only last week that the Chelsea Football Club owner received permission from Kensington and Chelsea council to build his own $285 million dream home in that section of London. He's only worth $23 billion after all...
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