Bo McCarver’s weekly housing news compilation – 6/23/2009

A surge of mortgage defaults is forecasted as the housing industry slowly sinks further into the general recession. The Texas market has been slower to react but now approximates national averages.

A new Harvard study suggests the “echo boomers,” children of baby boomers, will create new market demands and help lift the economy.

For a pdf version of the full stories, plus contextual articles in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.rr.com.

Worse than subprime? Other mortgages imploding slowly

By Kevin G. Hall   McClatchy Newspapers June 18, 2009

WASHINGTON — Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump.

The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.

Many experts had expected an explosion of defaults in the springtime on these roughly 564,000 outstanding mortgages. However, interest rates dropped to historic lows, and that delayed the detonation of what many housing analysts still see as a ticking time bomb.

“They’re probably going to default at a rate that makes subprime look like a walk in the park,” warned Rick Sharga, senior vice president for RealtyTrac, a foreclosure research firm in Irvine, Calif.

Mortgage rates fall back from 7-month high

Associated Press June 18, 2009

WASHINGTON — Rates for 30-year home loans fell back this week after soaring to the highest level in seven months a week earlier.

The average rate for a 30-year fixed mortgage was 5.38 percent this week, down from 5.59 percent a week earlier, mortgage company Freddie Mac said.

Rates had risen for three consecutive weeks after yields on long-term government debt, which are closely tied to mortgages rates, had been climbing as investors worried that the huge surplus of government debt hitting the market could trigger inflation.

But data released Wednesday suggested that inflation remains largely in check, and the yield on the 10-year Treasury note has fallen back from an 8-month high of 4.01 percent reached last week.

D-FW foreclosure postings hit new high

By Steve Brown   Dallas Morning News June 18, 2009

Dallas-Fort Worth area home foreclosure postings are hitting new highs, with more than 6,000 properties set for sale next month.

That’s a 62 percent jump from a year ago, according to Addison-based Foreclosure Listing Service.

The latest tally of foreclosure postings easily topped the last record of just over 5,500 filings for May’s auctions.

Austin area feeling the foreclosure bite

Filings lower than elsewhere, but they’re on the rise, and families are struggling.

By Jeremy Schwartz Austin American-Statesman June 21, 2009

GEORGETOWN — Alma and Adolfo Vasquez might not appear to be primecandidates for foreclosure. Their 3,100-square-foot home near two golf courses is appraised at nearly half a million dollars. They were far from irresponsible buyers, making a 20 percent down payment after selling their California home in 2006, just before the housing bubble burst.

But by early April, the Vasquez family, slammed by a double whammy of rising property taxes and tough times for Adolfo’s home-renovation business, were three days from losing their home at a foreclosure auction.

Home start surge could mean housing market has hit bottom

Building permits also increase more than expected, but inventories remain high.

By Jack Healy New York Times June 17, 2009

Construction of new homes rebounded in May after dropping sharply a month earlier, the government reported Tuesday, signaling that the housing and construction markets might be hitting a bottom.

In another report, the government said that prices received by producers for finished goods rose a smaller-than-expected 0.2 percent in May, hinting that Wall Street’s fears of inflation might be exaggerated.

Still, energy prices posted the largest increase since January, with gasoline prices up nearly 14 percent for the month.

Dallas-Fort Worth ranked 3rd best housing market in report

By Steve Brown   Dallas Morning News June 17, 2009

The Dallas-Fort Worth area is one of the top three housing markets in the country.

That’s according to a just-released economic report from the Brookings Institution.

In this comprehensive, nationwide study, the D-FW area, in this comprehensive, nationwide study, ranked third behind Houston and Buffalo among the metro areas that have been the least affected by the falling home prices.

‘Echo Boomers’ may anchor economy

By Lynn Adler   Reuters June 22, 2009

NEW YORK – The children of baby boomers will eventually resuscitate the pummeled U.S. housing market, Harvard University said on Monday, but in the meantime, limits on income and credit are sustaining the three-year bust.

The highest unemployment in almost 26 years, record foreclosures and rigid lending threaten to overcome emerging home sales progress despite unprecedented efforts by the Obama administration, Harvard’s State of the Nation’s Housing 2009 report said.

Echo boomers, the children of the post-World War Two baby boomer generation, offer a massive source of support for housing, the study said. The generation is entering the peak home buying and renting ages of 25 to 44 and numbers over five million people more than did their parents’ record-sized group in the 1970s.

Vancouver to boost building of low-cost rentals with stimulus plan

Developers to be offered everything from a fee holiday to permission to build super-small suites to bonus space

By Francis Bula   Vancouver Globe and Mail June 19, 2009

Vancouver will be offering developers everything from a fee holiday to permission to build super-small suites to bonus space if they build affordable rental units, as part of a mini-stimulus program meant to get construction going again in the city.

The program, which the city aims to start by July 6 and which will last until Dec. 15, 2011, is not just a first for Vancouver but for Canada, when it comes to a city pushing an affordable-housing agenda.

Indicted: San Antonio Housing Authority staffers, past and present

San Antonio Express-News June 18, 2009

Five current or former employees of the San Antonio Housing Authority have been indicted in a federal corruption investigation.

At least four suspects were arrested by the FBI on Thursday in connection with separate indictments alleging they took kickbacks from contractors vying to get work from the housing agency. They face charges of accepting something of value involving federal program funds.

Galveston Housing Authority hires design firm

By Leigh Jones   Galveston County Daily News June 17, 2009

GALVESTON — Galveston Housing Authority’s board of trustees on Tuesday hired Houston-based Civic Design Associates to create a plan to rebuild public housing at Cedar Terrace, Oleander Homes and Magnolia Homes.

But the company really will be acting as a facilitator in the process, project director James Hill said. “We’re not the ones who will be determining this master plan, it’s the community,” he said. “That’s the only way it will be successful.” Hill, whose firm has worked in Galveston for the past 20 years, said he understood how contentious the public housing issue had become on the island since Hurricane Ike flooded four housing authority developments and displaced 569 families.

Using a weeklong public design process, the firm hopes to get residents, business owners and public officials to come together and work out a plan that will be acceptable to the most people, Hill said.