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Bloomberg: Don’t Blame Banks for Mortgage Crisis

housing-prices

Did Congress cause the mortgage crisis by mandating loans to poor people? No.

Ruthless Rich Dumping Mortgages

monopoly-game

Those with million dollar plus mortgages are defaulting at almost twice the rate on those smaller loans. Are the rich more ruthless?

The Definition Of Insanity, Real Estate Edition

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Despite the fact that the housing market has not fully recovered from the collapse of the last speculative bubble, and notwithstanding the fact that thousands of home still go unsold for months at a time, there are signs that people are getting to make the same dumb mistakes all over again: LAS VEGAS — In […]

Two-Income Households and Lifestyle

workingwomen

One common refrain in the comments section of yesterday’s income inequality post is that much of the lifestyle gain made by Americans in the past thirty years is a result of dual-income families.  Whilst a man could earn enough to support his family in a middle class lifestyle in those days, they argue, that’s no […]

Housing as an Investment

housing-investment

The recent bursting of the housing bubble has made people think twice about the old notion of buying a house as an investment.  Felix Samon argues that it’s almost never a good idea. Real estate is pretty much never a good investment in a down market, no matter how granular and detailed your local knowledge […]

Breaking: Homeless Have No Homes

money-investing

An odd feature at NYT reports that homeless shelters are seeing a rise in former home owners who were foreclosed on. Only three years ago, foreclosure was rarely a factor in how people became homeless. But among the homeless people that social service agencies have helped over the last year, an average of 10 percent […]

Divorces Drop Along with Housing Prices

divorce-finger-ring

The financial crisis has had one silver lining: fewer divorces.  Josie Cox for Reuters: Fewer British couples are filing for divorce as the sharp drop in property prices makes it hard for couples to sell a joint home and the credit crunch dampens a desire to fund two separate households, according to a study on […]

Nothing But Houses!

monopoly-houses

Megan McArdle starts off a post by summarizing a column: James Surowiecki has a very interesting column arguing that this bubble was different because unlike the earlier banking booms, there was no point to the wild spending.  The bubble didn’t bring us railroads and electrification; it brought us . . . houses.  Lots and lots […]

Housing Foreclosure Map

foreclosures-map

A recent study seems to confirm a point that Dave Schuler has been making repeatedly for months:  the housing bubble is a narrowly targeted geographic phenomenon: Via  Andrew Sullivan [Yes, him again. -ed.], who summarizes, “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent […]

Brett Favre’s House

Brett Favre's House in Green Bay Photo, Outside View

A story in the print edition of Sports Illustrated on the sale of Brett Favre’s house in Green Bay captured my attention.  I can’t find it online but it appears to have taken its cue from an October 2 piece in the Green Bay Press-Gazette. There’s no “for sale” sign in front of the ranch-style […]

Financial Crisis and Moral Hazard

Moral Hazard Cartoon

Lance Paddock, in his best Mr. Rogers imitation, asks, “Can you say moral hazard?” Unfortunately, the notion of “too big to fail” means that those who behave badly often keep the benefits when things go well but pass off the negative consequences of failure. UPDATE: Via Greg Ransom, I see that Cato’s Gerald Driscoll has […]

Fannie Mae and Freddie Mac Bailout Debacle

Freddie Mac and Fannie Mae Logo

The widespread rumors of a government bailout of Fannie Mae and Freddie Mac have already had dramatic consequences, perhaps creating a self-fulfilling prophecy. Iain Dey and Dominic Rushe, writing for The Times of London, note that, “The two companies lost almost half their market value last week as rumours of a government bail-out swept the […]

Obama’s ‘Sweetheart’ Home Loan

money-investing

The Manufactured Outrage of the Day comes to us from Joe Stephens and his page A3 piece for today’s Washington Post, “Obama Got Discount on Home Loan.” Shortly after joining the U.S. Senate and while enjoying a surge in income, Barack Obama bought a $1.65 million restored Georgian mansion in an upscale Chicago neighborhood. To […]

Subsidizing Home Ownership

Subsidizing Home Ownership

Ezra Klein jumps on a growing meme the home ownership isn’t all it’s cracked up to be and that the government should stop subsidizing it. He points to Paul Krugman, who argues in today’s NYT that it’s time to rethink our decades-long bipartisan consensus that home ownership should be encouraged. While everyone stresses the advantages […]

President of the United States: Chief Job Placement Official

us-politics

It’s not change when he offers four more years of Bush economic policies that have failed to create well-paying jobs,… –Barack Obama, Remarks of Senator Barack Obama: Final Primary Night I heard that and the first thought that went through my head was, “Since when did the President of the United States become in charge […]

Economic Hysteria

money-investing

Alan Reynolds over at the Cato Institute puts the current financial crisis into perspective, and notes that the current financial crisis isn’t nearly as a bad as many people seem to thing. Media hysteria over the mortgage crisis is almost certainly misleading countless people about prospects for the real economy. The US economy is likely […]

McCain the Interventionist

money-investing

I’ve long thought that American politics and the fact that we have an activist/interventionist government when it comes to economic policy leads to a race to see who can pander the most to voters, or at least a sub-class of voters. John McCain’s new “plan” to bail out the greedy and stupid when it comes […]

Recession, Depression, or Neither?

Recession, Depression, or Neither?

There’s no doubt that the U.S. economy is in a downturn. The cost of petroleum has skyrocketed, creating all manner of ripple effects throughout the economy. The “housing bubble” has burst in several cities and the sub-prime mortgage industry has gone bust, leaving many people upside down in their houses or facing — or experiencing […]

Buyers Trashing Houses After Foreclosure

law-scales-justice-flag

A “significant” number of people are willfully destroying their homes before complying with eviction notices as a means of exacting “revenge” on banks for foreclosing on them. This, in turn, has created a black market cottage industry where bankers bribe people with cash payments for leaving peaceably. Megan McArdle doesn’t understand the pointless destruction, observing […]

ARMs for the Rich

money-investing

The NYT informs us today that, “The Affluent, Too, Couldn’t Resist Adjustable Rates.” They took out adjustable-rate mortgages at the peak of the housing bubble to buy homes they would otherwise not be able to afford. Or they refinanced existing mortgages to take cash out. And now, two or three years later, the day of […]

Was There a Housing Bubble?

Housing Bubble Graph

Alex Tabarrok has generated quite a buzz over his suggestion that the “housing bubble” might be a myth. He begins with this graph of housing prices from Robert Shiller published in the NYT: The clear implication of the chart is that normal prices are around an index value of 110, the value that reigned for […]

Recession Fears

money-investing

Well by now most of you have probably heard about the rather dismal jobs numbers from the BLS. The establishment survey indicates that 4,000 jobs were lost last month and made a major downward revision to July’s job numbers. Initially, July was reported at 92,000 jobs, but now the BLS is putting that number at […]

Stock Market Roller Coaster

money-investing

The stock market provided quite a roller coaster ride today. The Dow Jones Industrial Average dropped 300 points, recouped a large portion of that loss, then lost what was recouped, only to rally at the end of the day and close down about 55 points. I’m sure that part of the reason for todays wild […]

Does the Housing Market Matter?

money-investing

The recent turmoil on Wall Street has been linked to turmoil in the housing market, namely the serious problems in the subprime market. Over at Tech Central Station, Desmond Lachman argues why people who ignore the housing markets potential impact on the economy do so at their own risk. Wall Street optimists minimize the bursting […]

Dow Plunges 387 Points on Subprime Fears

money-investing

The Dow fell 387 points today amid mounting fears in regards to subprime loans in the housing market. Wall Street plunged again Thursday after a French bank said it was freezing three funds that invested in U.S. subprime mortgages because it was unable to properly value their assets. The Dow Jones industrials extended its series […]

Should You Worry About Sub-Prime Mortgages?

money-investing

The housing market really isn’t my thing, but James Hamilton does have a pretty good post that looks at a potential problem with sub-prime loans. Still, you are interested in such things, head on over and check out that post. Here is the main conclusion, The ultimate discipline, then, must come from these final holders […]

Bubbles Great for the Economy

money-investing

Slate and NYT columnist Daniel Gross has written a book, Pop! Why Bubbles Are Great for the Economy, due out next week. Financial Times has a reportedly reviewed it quite favorably but, alas, said review (“A heresy wise investors might embrace”) is behind a subscriber wall. Tyler Cowen pronounces it a “stimulating book, worth your […]

Is It Better to Buy or Rent Your Home?

money-investing

David Leonhardt observes that, contrary to the hype from real-estate agents, it probably doesn’t make sense to buy a house right now unless you intend to remain in it for a long time. With the spring moving season under way, The New York Times has done an analysis of buying vs. renting in every major […]

Housing Bubble Bursting for Alt-A’s?

Fester warns that, just when you thought that the bursting of the housing bubble was confined to those who took on risky “sub-prime” loans, news comes out that there may be a problem with with the “Alternative A” or “Alt-A” loans, which “account for about 21 percent of loans outstanding and 39 percent of mortgages […]

Houses Cheaper than Cars in Detroit

money-investing

You can buy a house in Detroit for $4000! It’ll be a fixer-upper, though. As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property. It also stands as a case study in the economic pain from a housing bust as analysts […]

Subprime Borrowers

A little earlier today James posted on the problems that subprime lenders are experiencing and there was a comment on that post to the effect that people who bought older homes were more likely to be “subprime borrowers” than those who bought “McMansions” and that got me to thinking. That’s not my intuition. My intuition […]

Crisis in Home Mortgage Market?

money-investing

It appears that the long-forecast burst of the housing bubble may be upon us, as several companies who made risky home mortgage loans are in trouble. Hanging in the balance is the nation’s housing market, which has been a big driver of the economy. Fewer lenders means many potential homebuyers will find it more difficult […]

Greenspan Warns of Recession

money-investing

Former Fed Chairman Alan Greenspan is warning that by the end of the year that the economy could slip into recession. “When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign,” Greenspan said via satellite link to a business […]

Talking Down the Economy?

money-investing

Over at Econbrowser, James Hamilton points out that some of the recent fretting about the economy is misplaced. The gloom is apparently about the modest rise in retail sales. WASHINGTON Sep 14, 2006 (AP)— Retail sales posted only a modest gain in August as worried consumers got hit anew with sticker-shock at the gasoline pumps. […]

Housing Bust?

money-investing

Matthew Yglesias has just rented a posh new DC pad and offers some anecdotal ruminations on the purported housing bust leavened with a pinch of cunning logic. This was the third time I’d looked for a new place in Washington, DC and there was something . . . different about House Hunt 2006. An extremely […]

Bernanke To Run Fed Free of Politics

money-investing

In an article the other day Ben Bernanke, the nominee to take Allan Greenspan’s place as head of the Federal Reserve, has vowed to run the Fed free of politics. “I assure this committee that, if I am confirmed, I will be strictly independent of all political influences and will be guided solely by the […]

Housing Bubble Bursts in D.C. Area

movie-popcorn-filmstrip

The long-predicted housing bubble may have finally burst in the D.C. metropolitan area, according to some recent trends. Or has it? Housing Market Cooling, Data Say (WaPo, A1) New data released yesterday show that in the past year, home sales in the Washington region have declined sharply, the inventory of unsold homes is up significantly, […]

Federal Reserve Raises Interest Rate 12th Quarter in Row

money-investing

The Fed raised the federal funds rate another quarter point for the 12th quarter in a row, to 4 percent. Federal Reserve Boosts Key Interest Rate (AP) The Federal Reserve, still concerned about inflation, raised a key interest rate on Tuesday to the highest level in more than four years and signaled more increases are […]

Automotive Sales Down and the Prospect of a Recession

money-investing

Prof. Hamilton notes that car sales are way down for the most part. GM’s North American division has lost $1.2 billion in the second quarter, Ford has seen sales decline 20% with sales of SUVs down 50%. Now that is bad for GM, Ford and other automotive companies, but Prof. Hamilton also notes that bicycle […]

Bush’s Poll Numbers Up

us-politics

Proving once again that what goes down must come up, President Bush’s poll numbers have rebounded from the low point they reached in the immediate aftermath of Hurricane Katrina. Bush’s poll numbers up (CNN) President Bush’s standing with the public improved over the previous week as he made a highly visible effort to manage the […]

Housing Bubble? What Housing Bubble?

money-investing

Despite months of talk about an impending housing bubble, home sales remain at record level despite a glut of homes on the market. U.S. resale housing market keeps getting hotter (Globe and Mail, B14) U.S sales of previously owned homes surged unexpectedly in August, and prices reached a record high, defying predictions that the housing […]

Housing Bubble in D.C. Area Bursting?

money-investing

While still torrid by national standards, the housing market in the D.C. area has cooled off compared to recent years. D.C. Area Housing Market Cools Off (WaPo, A01) YahooNews Washington area temperatures may be sizzling, but the once-torrid real estate market seems to be cooling off as houses stay on the market longer and the […]

Housing Bubble a Trillion-Dollar Bet

money-investing

The media’s potential self-fulfilling prophecy continues with yet another story on the potential housing bubble in today’s New York Times. The Trillion-Dollar Bet (NYT | RSS) American homeowners have made a trillion-dollar bet that mortgage rates will remain near record lows for at least a few more years. But with some interest rates already rising, […]

The Housing Bubble and Government Spending

money-investing

When it comes to the real-estate market, the mainstream press has focused primarily on (1) whether a bubble exists, (2) whether the bubble will soon burst, and (3) how widely such a downfall will extend. Among macroeconomists, the debate has touched on whether the Federal Reserve’s post-dotcom moves paved the way for this “side effect.” […]

Interest Only Mortgages ‘Risky’

money-investing

Interest only mortgages, which are becoming increasingly popular, are “risky,” economists warn. Many Buyers Opt for Risky Mortgages (WaPo, A1) More than a third of the mortgages written in the Washington area this year are a risky new kind of loan that lets borrowers pay back only the interest, delaying for years repayment of any […]

Housing Bubble Versus Tech Bubble

money-investing

Steven Taylor has an excellent discussion about the breathless coverage recently of the coming bursting of the “housing bubble” and various comparisons with the dot-com bust of the late 1990s. [T]here are important differences. I have no doubt that there will be, at some point, a considerable cooling in the marketplace, but most of the […]

Google Searches

These are the top google searches for the year.

Housing Bubbles and Rent Ratios

money-investing

Bruce Barlett observes that the Fed’s recent increases in the discount rate will increase the likelihood that the so-called “housing bubble” will burst. As the Federal Reserve moves to raise short-term interest rates once again, flags are raised about the effect on housing prices. With housing being the largest household asset — and one that […]

Real Estate Bubble Economy?

money-investing

U. S. News has a fascinating feature article entitled, “The red-hot housing market reminds some of the latter days of the 1990s stock market. How will it end?” After one of the broadest and longest run-ups in housing prices ever, most homeowners are sitting pretty. But there is a growing angst about how much longer […]

The Housing Bubble?

money-investing

Benjamin Wallace-Wells has predicted the impending bursting of the housing bubble and has both Kevin Drum and Matthew Yglesias convinced. I’m a bit more skeptical. Indeed, Wells doesn’t provide much proof. The most convincing bit is: One index of housing inflation is the difference between house prices and rents. In a healthy market, driven by […]