Yes thats right; housing prices continue to slump, but when will they begin climbing back up? Grab what you can while you can because prices like these will not last forever!

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Home Prices Continue Sharp Descent

NEW YORK (CNNMoney.com) — Single-family home prices dropped 7.7% in the first quarter in the largest year-over-year decline since the National Association of Realtors began reporting prices in 1982.

The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.

Lawrence Yun, the chief economist of NAR, attributed much of the record decline to liquidity problems dragging down high-priced markets.

“These are highly unusual results because there were very few jumbo loan originations in the latest quarter,” he said. “So sales are much slower in high-cost areas.”

Jumbo mortgages skew results

That sales slowdown changed the mix of houses sold.

In California, according to Yun, homes bought with jumbo mortgages - more than $417,000 - accounted for 40% of all sales before liquidity for these loans dried up during the summer of 2007. Since then only 10% of sales in California involved jumbo loans.

In February, Freddie Mac and Fannie Mae, the government sponsored enterprises that guarantee a market for conforming loans, have raised the $417,000 cap to include mortgages of up to $729,750, but lenders were still charging much higher rates for these “conforming jumbos,” between 1% and 1.5% more than ordinary conforming loans. The higher rates are discouraging sales in higher price ranges and so skewed NAR’s median price results.

Many of these same markets were also among the hardest hit by the subprime implosion, which forced many lower priced homes back on the markets, again dragging down NAR’s results.

That helped put many California and other Sun Belt cities, with their toxic combinations of both high prices and heavy proportions of subprime mortgages, among the biggest losers.

In California, Sacramento prices plummeted 29.2% to $258,500 compared with last year and Riverside prices fell 27.7% to $287,100. Prices in Las Vegas fell 20.2% to $247,600 and those in Phoenix dropped 15.4% to $222,200.

Some Midwestern cities, hard hit by factory closings, also suffered huge losses with Lansing, Mich., prices falling 26.9%. Saginaw, Mich., had the lowest median prices of any of the 150 markets studied; a median house in Saginaw sold for just $65,400.

“You have two themes: the weak industrial economies under increasing pressure by struggles of the Big Three automakers and the deflating of what were once the most prominent bubble markets,” said Michael Youngblood, an analyst with FBR Investment Management.

About of a third of the markets did show gains. The best performer in the nation was Binghamton, N.Y., where prices rose 11.8% to $109,700. Then came Peoria, Ill., up 10.4% to $119,000 and Spartanburg, S.C., where prices rose 10.2% to $130,300.

Regionally, in the Northeast, single-family home prices rose slightly, 3.2% to $280,000. But prices in the South dropped 7.5% to $164,200, in the Midwest they fell 7.9% to $142,700 and in the West they plunged 12.3% to $296,300.

Foreclosures put more homes in play

Hurting home prices were big rises in foreclosure rates over the past 12 months, which threaten to get even worse. Delinquencies more than doubled over that time and more than 155,000 lost their homes in bank repossessions during the first three months of the year. With many adjustable rate mortgages (ARMs) poised to reset this year to higher interest rates, defaults could go even higher.

“Yes, but I hasten to say it’s not merely the ARMs,” said Youngblood. “Fixed rate loans are performing poorly as well.”

All that foreclosure activity added to the glut of homes on the market. The total inventory has risen to an average of 10 months worth of unsold homes. In addition, a record number - 2.9 million - of vacant homes are up for sale, according to the Census Bureau.

The big inventory has led to aggressive price slashing and increased incentives by builders looking to sell homes. They’ve also cut way back on housing starts, which are at a 17-year low.

The pace of existing home sales, at about 492,000 a month, is about a third less than its peak during the summer of 2005.

Condo prices fared a bit better than single-family homes. The median price fell just 3% since early 2007. The worst hit market was the Sarasota area, where condos dropped 35% over the past 12 months to $268,500. Sacramento condo price cratered 33.4% to $147,200. In Miami, prices fell 26.4% to $176,100.

The best performing condo market was about as far from the madding crowds of South Beach as one can get: Bismarck, N.D., condo prices soared 36.4% compared with 12 months ago, to $124,900.

The price declines in falling markets may not have run their course. Some analysts point to low home prices in many Midwestern cities and assert there’s not much room for prices to fall but Youngblood disagrees.

“If we’d had this discussion a year ago, we would have said the same thing - how much further can they fall?” he said. “But jobs are declining and people are moving out and you’re getting sharper home price declines than you ordinarily would.”

Also, according to Youngblood, the sheer volume of foreclosures takes a toll. “Recent studies report that foreclosed properties sell for an average of 20% less than comparable properties that have not been foreclosed on,” he said.

As for the bubble markets that have already lost 30% of their values, Youngblood thinks their declines are not over. He expects some to drop another 20% or so through February 2009.

The article below describes more in depth how severe and widespread the mortgage crisis has become. Each and every home will present an opportunity for an investor.

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More than 155,000 families have lost their homes to foreclosure this year; one out of every 194 U.S. households received a foreclosure filing.

NEW YORK (CNNMoney.com) — Foreclosure filings in the first three months of 2008 rose more than 112% over last year, according to a study released Tuesday.

Real estate information firm RealtyTrac reported that nearly 650,000 foreclosure filings - which include notices of default, auction sales and bank repossessions - were issued in the first quarter. That represents 1 of every 194 households and marks a 23% increase from the last quarter of 2007.

So far this year 156,463 families have lost their homes to repossessions.

“Foreclosure activity hasn’t slowed down yet,” said Rick Sharga, spokesman for RealtyTrac. “But I was a little surprised that foreclosure filings more than doubled since last year.”

Foreclosures increased in 46 states and in 90 of the nation’s 100 largest metro areas. Some regions that had been only marginally hurt by the mortgage meltdown recorded large increases in filings. In Connecticut, for instance, filings tripled compared with the first three months of 2007. Massachusetts recorded a 260% increase.

Nevada: Hardest hit

The worst hit states are still clustered in the Southwest; Nevada, California and Arizona lead the nation in foreclosure filings. Prices ran up rapidly in these areas during the bubble years as speculators snapped up single-family homes and condos as investments.

In the first quarter, 1 of every 54 homes in Nevada received some type of foreclosure filing - more than any other state. Its largest city, Las Vegas, had 1 out of every 44 homes go into foreclosure.

Stockton, Calif., had the highest foreclosure rate out of any U.S. metro area, with 1 out of every 30 homes receiving a notice - nearly seven times higher than the national average. The Riverside/San Bernardino region had the second highest rate in the quarter, with one of every 38 homes in default.

Only two metro areas in the ranks of the 20 hardest hit were outside the Sunbelt - Detroit, which ranked sixth in the nation with 1 in every 68 households in default, and Cleveland which saw 1 in every 105 homes go into foreclosure.

The news comes despite increased foreclosure prevention efforts by lenders and community organizations. Hope Now, the coalition of mortgage lenders, servicers investors and community groups, announced Monday that it helped over a half a million home owners avoid foreclosure during the first three months of the year.

And some local governments have stepped up their programs to help borrowers, according to RealtyTrac CEO James Saccacio.

“For example, in late March Philadelphia issued a temporary moratorium on all foreclosure auctions for April,” he said. “The city has since adopted a program that will delay foreclosure proceedings on owner-occupied properties until the owners have met face-to-face with lenders to attempt to create a loan workout plan that would prevent foreclosure.”

More trouble ahead

Additionally, lawmakers in Washington, D.C. are at work on several plans that would deliver foreclosure relief to distressed borrowers.

All of these foreclosure prevention efforts may not be able to stand up to the tsunami of foreclosures on the way. Sharga says that a record number of hybrid adjustable rate mortgages (ARMs) - worth $362 billion - will reset in 2008.

These so-called “exploding ARMs” usually have low introductory interest rates that reset much higher after two or three years, and then re-adjust as often as every six months after that. Unless these loans can be reworked, many will fail.

“We expect to see another foreclosure peak in the late third or fourth quarter of the year,” said Sharga, “because of the record number of resets coming.”

Don’t miss out on the once in a lifetime opportunity to invest in this market correction.

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Bargain hunters boost home sales in some markets
By Stephanie Armour, USA TODAY

Home prices are sinking. Banks are seizing properties from owners who can’t pay their mortgages. Yet for Amber Gilmore, the miserable housing market has never looked better.

After searching for a home for more than a year, Gilmore and her fiancé found one in foreclosure. Once the bank cut the asking price by more than $100,000, the first-time home buyers eagerly sealed the deal for $230,000.

In about a month, the couple will move into the two-bedroom house in Chicago with a small fenced yard and garage. The previous owners invested in gleaming granite countertops and hardwood floors. Their loss, Gilmore says, is her gain.

“This is the best time to buy — so many homes are in foreclosure,” says Gilmore, 25, a news coordinator for Telemundo, a Spanish-language media company. “The market right now is, to us, a benefit.”

As home sales and prices drop across much of the USA, many potential buyers remain scared to jump into the market, and sellers are resorting to slash-and-burn prices. The national median price sank to $195,900 in February, down from $213,500 in February 2007. Foreclosures are up nearly 60% from March 2007, according to RealtyTrac.

But to a small but growing number of buyers across the nation, the grim housing recession offers a tantalizing upside: They can get a home at a fire-sale price. In some metro areas, price declines are galvanizing bargain hunters — especially first-timers, foreign investors and out-of-state buyers looking to rent properties they hope to sell later for a windfall.

Those shoppers are forming isolated pockets of real estate activity, especially in cities where foreclosure rates are high but jobs remain available to attract potential home buyers.

In some areas, such as Charlotte and Detroit, home sales are ticking upward, following a trend of upward sales as far back as 2006. In other markets, bargain-hunting activity is still too sporadic to fuel an overall rise in sales.

Few economists expect the sporadic purchases to signal a bottom to the housing market’s slump, but the bottom-fishing for home deals is a hopeful sign amid all the bad news about the troubled housing market.

National housing analysts say they lack hard numbers to quantify the degree to which investors and other bottom-fishers are affecting sales in many markets. However, “We’ve heard anecdotally that there are some investors looking to pick up these properties,” says Paul Bishop, the National Association of Realtors’ managing director of research. “That helps put a floor in some of these markets.”

Some real estate agents are trying to cash in by buying or renting buses and treating prospective buyers to tours — complete with free meals — of foreclosed homes in Las Vegas, Cleveland, Orlando and some parts of Michigan and California. In Auburn, Calif., potential buyers are ferried to bank-owned homes in style — via a 40-foot stretch limousine.

“There are people looking for deals, and the deals are out there,” says Patrick Lashinsky, CEO of ZipRealty. “People aren’t priced out of the market anymore. Two years ago, there was a stigma to buying foreclosed homes. Buyers felt like they were taking advantage of someone’s bad luck. That’s not there anymore.”

‘I’d almost call it a frenzy’

Ruth Ahlbrand, a Realtor in Las Vegas, began noticing new opportunities in the housing market last year, as banks that had seized homes began lowering the prices. In a market where casino projects promise plenty of job opportunities, she knew buyers could be found.

So she hatched a plan. Ahlbrand began training her agents to specialize in foreclosures, revamped her Internet marketing campaign to appeal to buyers intent on finding screaming deals and bought a 40-seat bus, which she spruced up with reclining seats and air-conditioning vents for each rider.

On Feb. 13, Ahlbrand put into service her foreclosure bus — a red, white and blue coach splashed with slogans such as “Hottest Bank Owned Homes!” to take potential buyers on three-hour tours. The tours include free meals after the ride and an agent with a microphone to point out the deals and explain how to buy a home in foreclosure.

So far, Ahlbrand says, more than 700 riders have taken the tour, and prospective buyers frequently drop in to see when the next tour is.

On weekdays, the bus rides up and down Las Vegas Boulevard, without passengers, to drum up more business. Sales have increased more than 10% since she began using the bus.

“It’s like a seminar on wheels,” Ahlbrand says. “Buyers are saving up to 30% or 50%. People are really looking for a deal. I’d almost call it a frenzy. We’ve hit the bottom, and Las Vegas is growing.”

In one sign of the trend, she says, more than 40% of the homes her agency sold in December and January were bank-owned at the time of purchase.

And Las Vegas is one metro area where prices are dive-bombing. After prices soared during the national real estate boom of 2005, the city has absorbed one of the sharpest drops in home prices in the USA, according to a price-index report from S&P/Case-Shiller.

Las Vegas reported a 19.3% decline in home prices in January, compared with January 2007. And the median home price sank from $314,950 in March of 2006 to $243,169 in March 2008, according to the Greater Las Vegas Association of Realtors.

While overall home sales are showing their steepest declines in more than a decade, the allure of low prices to bargain-hunters offers a glint of light in an otherwise bleak real estate landscape.

Boston, Cleveland, Detroit, Sacramento and San Diego have all seen sales increases recently after a period of price declines, according to a March report by Radar Logic, a real estate data and analytics firm. In Detroit, sales of homes and condos rose 12.8% in February compared with a year ago, according to Realcomp.

That doesn’t necessarily mean prices are rising, too: In January, Boston still posted a 3.4% price decline over last year, according to the S&P/Case-Shiller index.

A risk-taker’s market

Joel Naroff, chief economist with Naroff Economic Advisors, says bargain buyers are moving in but some may be getting into deals in which they are expecting too much bang for their investment.

Among the bargain shoppers:

•Investors. Single-family home prices in 10 major metro areas tumbled 11.4% in January — the steepest decline since such figures were first collected in 1987 — according to a March report by the S&P/Case-Shiller composite index.

One result: mouth-watering opportunities for some investors, some of whom are buying multiple properties with plans to rent them out until the housing market picks up and prices rise again.

Alison Diboll, a marketing executive in San Francisco, closed a deal in March on the first of four homes she’s buying in Charlotte and Dallas. She bought the homes, which were previously in foreclosure and have been rehabilitated, for about $100,000 each.

She plans to rent them out for five to seven years and sell them once the market rebounds.

Diboll is so confident that her four homes are a shrewd buy that she hasn’t bothered to see any of them and is having them managed by a third party.

That sort of breezy approach toward buying a home without having seen it firsthand conjures up memories of the risk-taking by buyers during the real estate bubble. But Diboll insists her investment is safer than it would be in the stock market.

“With the stock market as volatile as it is, it’s not a good idea for me,” Diboll says.

“Real estate is the great American Dream,” she adds. “I read that the people who made money during the Great Depression were those who had money and took a risk.”

•Foreign buyers. International investors also are eyeing the U.S. housing market. Thirty-three percent of international buyers from April 2006 through April 2007 were from Europe, according to a 2007 report by the NAR.

Buyers from Asia and North America (outside the USA) were also active, accounting for 24% and 23% of international clients during that same time period.

Sales to international buyers have been turbocharged by the steady drop in the value of the U.S. dollar relative to other currencies. Lawrence Yun, chief economist with the NAR, says the dollar’s dwindling value means that foreign buyers can get U.S. real estate at a relative average discount of 30%. (That percentage can run lower or higher depending on the buyer’s home country.)

Agents are trying to reach out to some of these far-flung buyers, many of whom are seeking vacation homes. Ralph Haverkate, a broker at Tarbell Realtors in Palm Springs, Calif., is dangling an unusual inducement: Buyers from Canada are reimbursed for their travel and hotel expenses — up to $1,750 — if they close on a home. The home doesn’t even have to be one that his agency is selling, but they do have to use his firm as their representative. The agency is now offering the same sort of deal for European buyers, initially targeting Switzerland, Germany and the Netherlands.

“We’ve had buyers flying in back-to-back,” Haverkate says. “My partner and I literally have three or four couples a week coming in, and we take care of them. Prices are low, and if you combine that with the currency exchange, the savings are really big. The market is suffering — but for them, it’s good.”

Economists say the international interest is a hopeful sign in today’s market.

•First-time home buyers. First-time home buyers who found themselves priced out of the real estate market during the frenzied market of 2001 to 2005 are among those who are now tentatively starting to buy properties in some areas where prices have plunged.

In November 2007, about 39% of purchasers were first-time home buyers, up from 36% in 2006, according to the NAR.

Buyers who find a price they can afford still face other obstacles in the current economic climate, says Patrick Newport, an economist with Global Insight.

“It’s still hard to get credit,” he says. “Banks are being careful and requiring bigger down payments. But there are people jumping into the market, including investors, who are hoping to make a killing.”

And buying a home through foreclosure or an auction can be problematic, with properties often sold “as is,” or with potential buyers unable to arrange for a full inspection.

Financing needs to be secure, because homes bought at an auction often require closing within 30 days. And some buyers intent on snatching up low-priced bargains they plan to sell quickly could end up being burned if the housing market remains stuck in the doldrums for years to come.

Meanwhile, foreclosure tours — some in double-decker buses or swanky limos — represent part of a trend that analysts say could help prop up the real estate market in some areas.

“If you have any interest in real estate at all, you can’t ignore the hype about foreclosures,” says Nikki Holmes, a Realtor at Keller Williams Realty in Auburn, Calif., who has begun conducting Saturday-morning tours in a white stretch limo to showcase foreclosed homes to prospective buyers.

“Buyers are getting very savvy and educated,” Holmes says.

“People are saying, ‘It’s a really sad story we have this huge mortgage bust, but it’s an opportunity for me.’ When something fails, something else comes along to take its place, and that will re-energize the economy.”

More bad news for the global credit crisis and economic outlook below. Remember, someones loss is another’s gain and the time is now to capitalize on those losses. We have seen recent cash infusions for large banks like Countrywide, Washington Mutual, and Lehman Brothers alerting the global markets of faith in the financial system. Remember, this is a price adjustment and will not last long; get out there and make some deals!

Full Article: http://news.yahoo.com/s/afp/20080408/bs_afp/imfeconomyfinanceproperty

US mortgage crisis may cost $945 billion worldwide: IMF
by Veronica Smith Tue Apr 8, 3:58 PM ET

WASHINGTON (AFP) - The International Monetary Fund said Tuesday the worldwide losses stemming from the US subprime mortgage crisis could hit 945 billion dollars as the impact spreads in the global economy.

The IMF, in a particularly stark report, said that falling US housing prices and rising delinquencies on the residential mortgage market could lead to losses of 565 billion dollars.

Combined with other categories of loans originated and securities issued in the United States related to commercial real estate, the consumer credit market, and corporations “increases aggregate potential losses to about 945 billion dollars,” it said.

“The crisis is spreading beyond the US subprime market — namely to the prime residential and commercial real estate markets, consumer credit, and the low- to high grade corporate credit markets,” the IMF said in releasing its semiannual Global Financial Stability Report.

While the US remains the epicenter, “financial institutions in other countries have also been affected, reflecting the same overly benign global financial conditions and to varying degrees — weaknesses in risk management systems and prudential supervision.”

It was the first time the multilateral institution has made an official estimate of the global losses suffered by banks and other financial institutions in the credit squeeze that began eight months ago in the US, amid rising defaults on subprime, or high-risk, home loans.

The staggering 945 billion dollar estimate of losses, made in March, represents roughly 142 dollars per person worldwide and represents four percent of the 23.21-trillion-dollar credit market.

The IMF said that global banks likely will shoulder about half of the losses — at 440 billion dollars to 510 billion.

Last month, Standard & Poor’s estimated global banking firms would likely write off 285 billion dollars in various securities linked to US subprime real estate, with more than half the losses already recognized. Some analysts have put the figure higher for the subprime market and related losses.

“Leading indicators point to a tightening of credit conditions across many economic activities,” Jaime Caruana, head of the IMF’s Monetary and Capital Markets Department, said at a news conference.

Caruana said the losses “suggest a potentially large impact on US economic growth,” and that Europe may also see tightening conditions and slowing credit growth under the global financial strain.

The IMF releases its biannual World Economic Outlook on Wednesday and already has said it would slash a half percentage point off its forecast of 2008 global economic growth, to 3.7 percent.

The Global Financial Stability Report cautioned that loss estimates were imperfect and could go higher.

The unusually precise and harsh report comes ahead of the IMF and the World Bank spring meetings Saturday and Sunday in Washington.

The IMF, whose core mission is to promote global financial stability, said there was “a collective failure to appreciate the extent of leverage taken on by a wide range of institutions — banks, monoline insurers, government-sponsored entities, hedge funds — and the associated risks of a disorderly unwinding.”

“It is now clear that the current turmoil is more than simply a liquidity event, reflecting deep-seated balance sheet fragilities and weak capital bases, which means its effects are likely to be broader, deeper, and more protracted,” it said.

The report criticizes the “excessive risk-taking” and “weak underwriting” undertaken by under-capitalized institutions and recommends measures including ratings systems reform and a change in compensation schemes for managers of financial institutions.