Archive for August 30th, 2010
Obama Plans Refinancing Aid, Loans for Jobless Homeowners, HUD Chief Says
Bloomberg
By Holly Rosenkrantz – Aug 30, 2010
The Obama administration plans to set up an emergency loan program for the unemployed and a government mortgage refinancing effort in the next few weeks to help homeowners after home sales dropped in July, Housing and Urban Development Secretary Shaun Donovan said.
“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said on CNN’s “State of the Union” program yesterday. “That’s why we are taking additional steps to move forward.”
The administration will begin a Federal Housing Authority refinancing effort to help borrowers who are struggling to pay their mortgages, and will start an emergency homeowners’ loan program for unemployed borrowers so they can stay in their homes, Donovan said.
“We’re going to continue to make sure folks have access to home ownership,” he said.
Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating. Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since the data began in 1963.
Sales of existing houses plunged by a record 27 percent in July as the effects of a government tax credit waned, showing a lack of jobs threatens to undermine the U.S. economic recovery.
House Sales Plummet
Purchases plummeted to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed last week. Demand for single-family houses dropped to a 15-year low and the number of homes on the market swelled.
U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale. The annual drop followed a 3.2 percent decline in the first quarter, the Federal Housing Finance Agency said last week in a report.
Donovan said on CNN yesterday that it is too soon to say whether the administration’s $8,000 first-time homebuyer credit tax credit, which expired April 30, will be revived.
“All I can tell you is that we are watching very carefully,” Donovan said. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”
Reviving the tax credit would “help enormously” in the effort to fight foreclosures and revive the economy, Florida Governor Charlie Crist said on the same CNN program. Florida has the third-highest home foreclosure rate in the country, with one in every 171 housing units receiving a foreclosure filing this year.
O.C. economy slowing, but no double dip
O.C.Register
August 26th, 2010 by Mary Ann Milbourn
After a spurt earlier in the year, Orange County’s economic recovery is slowing but it is unlikely to fall into a double dip recession, Wells Fargo Bank’s senior economist said today.
Scott A. Anderson told a Wells Fargo breakfast group in Irvine that he expects local employment to decline 0.2% this year — not good but better than the -7.4% in 2009.
Next year, however, he predicts hiring in Orange County will grow at a 1.6% pace, outperforming the state, which will see 1.1% job growth.
“The big drag in Orange County going forward is the state and local budget problems — you’re seeing some pretty big job losses,” he said.
Nationwide, Anderson said the recovery has slowed considerably. He expects second quarter gross domestic product growth to be revised downward on Friday to 1.2% to 1.5% from the previous 2.4%.
That’s a major pullback from the first quarter when the Bureau of Economic Analysis said GDP grew at 3.7% pace.
“We’re in a quicksand recovery,” said Anderson, noting the economy can’t seem to gain traction in jobs or other economic growth. “We keep getting pulled into this morass.”
He said the one thing he is watching now is whether people are simply pausing in the recovery or whether they are starting to revise their business plans. He placed the odds of a double dip recession at the national level at 25%.
The major problem is that the economy remains weighed down by the housing bubble, Anderson said. With foreclosures this year likely to approach 2009′s high levels, he expects home prices to drop another 6% over the next 12 months.
“Orange County won’t be able to avoid lower home prices,” he said, with a 6% drop likely here, too.
That means Orange County would give back most or all of the price gains homeowners have seen this year. Recent real estate surveys say local home prices were up 3% to 6% in July over July 2009.
Anderson noted that in the first half of the year, Orange County’s economy was showing some strength, with a net gain of 29,000 jobs through June. July’s loss of 10,300 jobs may have been an anomaly due to the layoff of temporary census workers, he said.
“Even with the monthly job loss in July, Orange County’s employment performance year-on-year improved to a positive 0.5%, while U.S. employment was unchanged from a year ago,” Anderson said.
Orange County has benefited from growth in leisure and hospitality jobs as Americans vacation closer to home.
“That’s a big driver for the economy in this community,” Anderson said.
Still the county has a deep hole to dig out of. He noted employment here dropped 10% from peak to trough during the recession, twice the national rate. Local employment in financial services and manufacturing both fell 25% and jobs in construction dropped 40%.
