Zillow: Seven quarters of declining home prices so far

30% of homes sold for a loss over the past 12 months:

Home values in the United States posted their seventh consecutive quarterly decline, with nearly one-third of Americans who sold in the past year losing money, real estate website Zillow.com said Wednesday.

Home values fell 9.7 percent year-over-year in the third quarter to a Zillow Home Value Index of $202,966, according to the third quarter Zillow Real Estate Market Reports, which encompass 163 metropolitan areas.

Home values have dropped a total 12.8 percent since the market peaked in 2006. ...

Over the past 12 months, 30.2 percent of homes sold were sold for a loss, up from 23.7 percent at the end of the second quarter. ...

One in seven, or 14.3 percent, of all homeowners across the country has negative equity, and of homeowners who bought in the last five years, almost one-third, or 29.5 percent, are 'under water', the reports showed. ...

Foreclosures made up almost one in five, or 18.6 percent, of all transactions in the past 12 months and areas with the highest foreclosure rates are the markets with some of the greatest home value declines.

Bits bucket for Wednesday, November 12

Please post your thoughts, links, and MLS/Craigslist finds here.

Citigroup announces new foreclosure prevention program

The plan will affect $20 billion worth of mortgages:

Citigroup says it will expand its foreclosure prevention efforts and try to keep 130,000 troubled borrowers with $20 billion in mortgages in their homes. ...

The Citi effort, dubbed the Citi Homeownership Assistance Program, targets 500,000 Citi borrowers. CitiMortgages CEO Sanjiv Das said he expects that more than a quarter of these people, with mortgages worth about $20 billion, will take advantage of the program over the next six months.

"We're reaching out to borrowers in areas of steeper-than-usual falling prices and higher-than-average unemployment," said Das, including California, Michigan, Florida, Nevada, Ohio and Arizona. "These areas are where the concentration of at-risk mortgages are the highest."

The new initiative differs from Citi's existing mortgage mitigation efforts in that it's a much more proactive plan, said Eric Eve, Senior Vice President, Global Community Relations for Citi. ...

This new initiative is open only to borrowers who are still current on their loans but are at risk of defaulting — particularly those borrowers who owe more on their mortgages than their homes are currently worth. Additionally, their loans must be owned by the bank, rather than sold off to investors. ...

For borrowers who have yet to default, Citi will now aim to reduce their monthly mortgage payment, including property taxes and insurance, to 40% or less of their income. To do that, it will freeze or reduce interest rates, extend the lifetime of the loan or even reduce the loan principal.

Das said the new plan will be implemented immediately and the workouts will be handled in a very fast, streamlined fashion to aid as many homeowners as quickly as possible.

Economic predictions for the coming year

Economists predict the worst recession in 25 years:

The U.S. economy is expected to shrink 0.4% in 2009 compared with 2008, according to the monthly survey of 49 economists published Monday by Blue Chip Economic Indicators. ...

The economists' median forecast calls for U.S. gross domestic product to fall by 2.8% in the final three months of 2008 and by 1.5% in the first quarter of 2009. ...

"The consensus strongly suggests that the current recession will be deeper and last longer than those of 2001 and 1990-91," said Blue Chip editor Randell Moore in his commentary.

"Some of our panelists believe it may rival the 1981-1982 downturn, but that is not yet the consensus view," he added.

The nation's unemployment rate is expected to average 7.4% in 2009; it was 6.5% in October. ...

The consensus sees the consumer price index, which tracks inflation at the retail level, rising by 1.5% in 2009 after a 4.2% gain in 2008.

Note again that although this is the worst financial crisis since the Great Depression, it is not the worst economic crisis since the Great Depression. The early 1980s recession was significantly worse than the current one. The two recessions since then—1990-91 and 2001—were both mild by historical standards, so it's not surprising that this one is worse.

Several bozos in the mainstream press keep getting this wrong. (Yes, I'm talking about you, Wolf Blitzer!) These journalists keep treating "financial crisis" and "economic crisis" as if they are synonyms. They are not synonyms! Journalists' ignorance of the difference between a financial crisis (a crisis affecting the financial system) and an economic crisis (a crisis affecting the broader economy) is causing them to mislead and scare the public.

Flashback 2006: "There is no bubble in real estate"

From two years ago today, Rick Snyder denied the existence of a housing bubble:

You hear it in the morning news shows, on the cable networks, and in local news papers. Screaming so called investment professionals saying the housing bubble is bursting.

As a real estate professional, I am regularly asked how I am doing with the market so far down. My answer is, “what are you talking about”? I have been working with buyers and sellers the same now as BB (Before the Bubble). I would like to take this time to say that there is no bubble in real estate. The bubble was coined for the dot com industry that exploded when the paper stock could not be sustained. Real estate buying and selling is the life blood of the United States of America; it has always run the economy and always will. ...

Boise Idaho is a hot market that families from other parts of the nation want to live. We are going to continue to be that hot market. I am proud of our Home, and will continue to provide trustworthy guidance to my clients.

Bits bucket for Monday, November 10

Please post your thoughts, links, and MLS/Craigslist finds here.

A condensed version of I.O.U.S.A.

I.O.U.S.A., condensed to 30 minutes:

Job losses causing more foreclosures

According to CNNMoney, a growing proportion of foreclosures are being caused by job losses:

For years, bad loans and their aftershocks have been sending homeowners into foreclosure. Now it's lost jobs that are putting troubled borrowers over the edge.

As the economy tanks, unemployment is the major factor driving a much larger proportion of foreclosures now than in the earlier stages of the mortgage meltdown.

On Moral Hazard

Dumb books by dumb authors

Sometimes authors try to make money by selling books that make stupid predictions about the future. When the future doesn't turn out as planned, the authors look like the idiots they are.

Reading a post on David Lereah Watch got me thinking of some of the dumb prediction books out there. Here are a few noted offenders, in chronological order:

• The Great Depression of 1990 by Ravi Batra, 1987

• Dow 36,000 by James K. Glassman and Kevin A. Hassett, 1999
  

• Why the Real Estate Boom Will Not Bust — And How You Can Profit From It by David Lereah, 2006
  

• A Bound Man: Why We Are Excited About Obama and Why He Can't Win by Shelby Steele, 2007

If you think of any others, please add them to the comments.