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February 2008

There are 9 blog entries for February 2008.

What will Washington do about the Subprime Crisis in 2008?

Friday, February 29th, 2008 at 11:39pm. 1,489 Views

The subprime crisis still rocking and rolling these days.  In terms of the crisis' primary component, it is expected to actually grow in scope during 2008:  The number of subprime-related foreclosures expected to occur this year will actually outpace the numbers from 2007.

The bottom line for the economy, in many ways, is that while the markets finally recognized the scope of the problem in 2007, the actual direct damage from the economy in 2008 will be considerably worse.  Hence why Congress actually worked together on the stimulus package.  And hence why a little progressive legislation might actually be produced by the supposedly left-of-center 2006-08 Congress. 

If it's going to happen anywhere, it will probably come out of Senator Chris Dodd's…

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2008 Home Sales in Austin Texas Could Be Much Worse

Thursday, February 28th, 2008 at 9:39am. 1,617 Views

The number of homes sold in Austin Texas in 2008 compared to the same time period in 2007 from January 1 thru February 28 is down 35% and homes taken off the sale block is up 52% in 2008 when comparing the same time periods.  In 2007 there were 1,690 homes sold from February 1 thru February 28 with 336 homes withdrawn from the market.  In 2008 there have been 1,099 homes sold from February 1 thru February 28 with 696 homes withdrawn from the market.  With that said, the median home sold price during the same period in 2007 was $205,000 ($119 per square foot) with an average 59 days on the market.  During the same period in 2008 the median home prices have risen slightly by 4% to $213,986 ($123 per square foot) with an average of 69 days on the market. 

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What the Fed Will Do with Interest Rates?

Wednesday, February 27th, 2008 at 8:34pm. 1,473 Views

“Whirlwind of activity” is a favorite cliché of journalists.  During most economic upheavals the press likes to use the phrase to describe what's been going on at the Fed.  It's descriptive, and it gives a certain sense of excitement that “bureaucrats held a lot of tense meetings” just doesn't seem to communicate. 

But if a “whirlwind of activity” describes the normal busy time at the Fed, then “it's tornado season” is just about the only phrase that would work for what's been going on there recently in the wake of all the subprime-related madness. 

Indeed, Bernanke has been a busy man recently.  He initially tried to lay low and hold tight on rates to convince the markets of his inflation street-cred.  Soon, however, he faced a withering storm of

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Federal Reserve’s Residential Real Estate Report about Credit Market

Saturday, February 23rd, 2008 at 9:44pm. 1,563 Views

With US housing foreclosures making headlines the world over, it should come as no surprise that banks have tightened their lending guidelines for the residential real estate market. 

That being said, the Federal Reserve's recently-published survey of bankers that specialize in residential real estate reveals some interesting information about the credit market that feeds the residential real estate market. 

Over half – 55% – of the executives that were interviewed have tightened lending standards on just subprime loans, but on prime mortgages as well.  This number was up from about 40% in the October survey, and shows that banks are taking the possibility of a economy-wide downturn very seriously. 

While the 55% number is a dramatic change, over

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US Government Passes Stimulus Package including Tax Rebates

Thursday, February 21st, 2008 at 8:02pm. 1,894 Views

During 2007, it was the real estate market that seemed to be determining the fate of the economy.  A number of events gripped the economy during the year.  There were the write-downs that much of the financial industry was forced to endure due to subprime loans that ended up being securitized into a liquid form of debt that almost instantly became as illiquid as, well, a house.  Then there was the plummeting housing prices that ended up making up the worst year for the national market since the Great Depression. 

With the exception of oil prices, the US economy's story in 2007 was largely the story of the real estate market.  In 2008, however, the reverse has become true:  Analysts are looking with watchful eyes at the macroeconomy itself in order to

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Mortgage Application Numbers Take a Dive

Thursday, February 21st, 2008 at 7:59pm. 1,635 Views

Weekly numbers are hardly ever reliable.  Whether its for sports, economics, or politics, it's always hard to spot a trend using statistics from just one week.  There's usually too much “noise,” or random movement of data to spot a genuine trend.  That's why markets rarely react to weekly unemployment or housing numbers with the same vicissitude that they do with the monthly numbers. 

So, last week, when the number of mortgage applications actually saw an increase, there was little reaction from the market.  Commentators reacted with guarded optimism.  Hopefully, it was said, the numbers represent the market responding to the Fed's recently strong actions.  It was too early to tell, but perhaps, just maybe, next week's numbers would show the beginning

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February Home Sales Update for Austin Texas Real Estate

Sunday, February 17th, 2008 at 8:20am. 1,742 Views

The number of homes sold in Austin Texas in 2008 compared to the same time period in 2007 from January 1 thru February 16 is down 29% for the time period beginning January 1 and ending February 16.  In 2007 there were 775 homes sold in January and 446 homes sold from February 1 thru February 16.  In 2008 there have been 614 homes sold in January and 256 homes sold from February 1 thru February 16.  So far this year 870 homes have sold in Austin Texas compared to 1,219 homes sold during the same time period in 2007, which is a 29% decline.  February home sales are down 43% for the time period from February 1 thru February 16th 2008 compared to 2007.

If you are a buyer looking to buy a new home or Austin Texas real estate, this is a good time to start

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2007 4Q Commercial Real Estate Industry Numbers Not Looking Good

Saturday, February 9th, 2008 at 3:06am. 2,766 Views

While final numbers on the value changes in the national commercial real estate market during the fourth quarter are not yet in, MIT has released an important study on the subject.  The Transaction-Based Index follows the values of the nation's major pension funds' Commercial Real Estate holdings.

In the third quarter of 2007, MIT reported that values declined 2%.  During the fourth quarter, this trend accelerated to 5%. 

The director of the MIT center that conducted the study, David Geltner, claims that “This is evidence that the commercial property market continued to fall, and at an accelerated rate, through the last quarter of 2007, no doubt due to the effects of the credit crunch.”  A survey by the Federal Reserve, however, recently found that

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Tighter Credit Market Reported for National Commercial Real Estate Industry

Thursday, February 7th, 2008 at 11:47pm. 2,906 Views

The Federal Reserve recently completed its “2008 Senior Loan Officer Opinion Survey on Bank Lending Practices.”  It is a much-awaited quarterly survey of the opinion of banking executives that specialize in lending for the real estate market. 

While the results were expected to suggest a tightening of loan requirements throughout the industry, the results for commercial real estate were particularly stark.  “About 80 percent of domestic banks,” according to the survey, “reported tightening their lending standards on commercial real estate loans over the past three months.”

Roughly about forty percent of foreign banks and fifty-five percent of domestic banks reported requiring higher debt service coverage ratios and lower loan to value ratios than in

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