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Speed of subprime bust surprises lenders
Les Christie, CNN Money
The subprime mortgage meltdown has been a shock to industry insiders, but now they say it’s hitting harder and faster than expected – even to those who predicted the crisis in the first place.
That was the message Monday from a panel of leading industry executives on the state of the mortgage lending industry at the Mortgage Bankers Association’s National Secondary Market Conference & Expo in New York.
(23 May 2007)
Breaking: housing prices collapse
Jerome a Paris, Daily Kos
This is not quite the headline in today’s WSJ, but a quick look at the numbers buried in the article show some stunning trends:
New Home Sales Soared 16% As Prices Declined in April
WASHINGTON — New-home sales soared in April, an unexpected surge marking the biggest climb in 14 years, according to a report that showed declining inventories and signaled hope for the long-suffering housing sector.
This title and lede probably deserve a prize for “most misleading journalism”… because the article says this:
Sales of single-family homes increased for the first time in four months, rising by 16% to a seasonally adjusted annual rate of 981,000, the Commerce Department said Thursday. March new-home sales decreased 1.4% to an annual rate to 844,000, a figure revised down from an earlier estimated 858,000. Sales fell 3.8% in February and 13% in January. Year-to-year, new-home sales were 11% lower than the level in April 2006.
i.e. this is just a temporary upward blip in a long downward trend, and sales this April were quite a bit lower than one year ago, a comparison that provides as much, if not more, information than the monthly variations.
…So, a big drop in prices. Is it just a blip? Could be. But what makes it worrying is actually precisely what the WSJ spins as positive news: the growing volumes. This means, in fact, that more people are accepting the reality of lower prices when selling, and make is unlikely that the trend will change.
(24 May 2007)
Related in NY Times: Home Prices and Sales Fell in April:
By all measures, April was a bad month for anyone with a “For Sale” sign in the front yard.
Sales of previously owned homes declined last month as the supply of unsold properties on the market ballooned and prices declined compared with those a year earlier.
…The report came a day after a government report on new home sales showed that prices dropped last month by the largest amount on record. While that report also showed sales posting their biggest monthly jump in 14 years, many economists dismissed the number as a fluke.
Couple Learn the High Price of Easy Credit
John Leland, NY Times
…Ms. Moellering, and her husband, Mark, 39, earn average salaries for their age (together about $66,000 a year), live in an average-priced home and have an average cost of living. But like many other households these days, they have found that their day-to-day economic life has come to depend not just on how much they earn or spend, but also on how well they shuffle what they owe among a broad array of credit cards, home equity loans and other lines of credit.
Americans spent one in seven of their take-home dollars on debt payments last year, up from one in nine in 1980. Experts say few consumers are able to calculate the true costs of such payments.
Behind closed doors, the decisions families like the Moellerings make about their debt – when to pay it off, when to shuffle it to lower-interest sources and when to let it revolve and build – can determine how much their salaries are worth. Like many others, the Moellerings have run up avoidable penalties and occasionally spent themselves into more debt or higher interest rates, even as they have tried to juggle other balances to bring down their monthly payments.
(19 May 2007)
The End of the Dream
Kevin Drum, Washington Monthly
Everyone knows that income inequality has been widening dramatically in the past three decades, as the rich get (lots) richer and the working class mostly stagnates. But hey – this is America! At least we still have lots of social mobility, right? People here go from rags to riches all the time, unlike those stagnant European hellholes where…..um….what? Oh:
There is little available evidence that the United States has more relative mobility than other advanced nations. If anything, the data seem to suggest the opposite. Using the relationship between parents’ and children’s incomes as an indicator of relative mobility, data show that a number of countries, including Denmark, Norway, Finland, Canada, Sweden, Germany, and France have more relative mobility than does the United States (see Figure 3).
Well, Horatio Alger died a long time ago, I guess. Still, at least things are getting better. Maybe middle class kids aren’t becoming CEOs, but at least they’re doing better than their fathers. Right?
In a word, no. American kids used to do better than their fathers, but not anymore. The economy might be growing at a healthy clip, but men today actually make less than their dads did in 1974
(25 May 2007)
