American Dream 2: Default, Then Rent

Housing Starts in U.S. Climb 8.9% to 574,000 Pace
December 16, 2009, Bloomberg

Builders in November broke ground on more U.S. homes, a sign the recovery in homebuilding may carry through into 2010. Housing starts rose 8.9 percent to an annual rate of 574,000, the Commerce Department said today in Washington. Building permits, a sign of future construction, climbed to the highest level in a year.

Southern California Home Prices and Sales Improve in November
December 16, 2009, Los Angeles Times

Southern California's real estate industry, decimated by the mortgage meltdown and housing bust, is stirring to life again — even making hiring plans — as home prices bounce back. Data released Tuesday showed the Southland housing market gaining strength in the traditionally slow month of November. The median price paid for a Southern California home increased 1.8% in November from October, to $285,000, according to MDA DataQuick, a San Diego real estate research firm. It's the seventh consecutive month in which prices have improved or held steady.

American Dream 2: Default, Then Rent
December 15, 2009, Wall Street Journal

Thanks to a rare confluence of factors -- mortgages that far exceed home values and bargain-basement rents -- a growing number of families are concluding that the new American dream home is a rental. Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That's freeing up cash to use in other ways. Analysts at Deutsche Bank Securities expect 21 million U.S. households to end up owing more on their mortgages than their homes are worth by the end of 2010. If one in five of those households defaults, the losses to banks and investors could exceed $400 billion. As a proportion of the economy, that's roughly equivalent to the losses suffered in the savings-and-loan debacle of the late 1980s and early 1990s.

Shrinking Pool of Foreclosure Buyers?
December 15, 2009, Inman News

The latest results of a periodic national survey by Trulia.com and RealtyTrac show reduced appetite for foreclosure purchases, but also more realistic expectations. The November survey found 43 percent of the 2,203 adults surveyed would be at least somewhat likely to consider buying a foreclosed home in the future, compared with 55 percent of adults surveyed in May. “Unfortunately, prices may well decline, so that's a realistic view. And there are significant hidden costs. The process takes longer (for foreclosures) and the cost of improvements is also a factor," said Rick Sharga, senior vice president of RealtyTrac.

Loan Resets Projected to Cause Mortgage Crisis in 2010
December 12, 2009, DSNews

As many exotic adjustable rate mortgages (ARMs) are set to recast in 2010, the Consumer Mortgage Audit Center (CMAC) is projecting a mortgage crisis in 2010 as large as the subprime. “We’ve spoken to Florida attorneys who sit at the forefront of the U.S. foreclosure crisis and have learned that 53 percent expect recasting ARMs to present a mortgage crisis as large as subprime and 61 percent expect to work on more loan modifications in 2010 than they did in 2009,” said Sylvia Alayon, VP of operations for CMAC “The New Year is going to hold very rude awakenings for some homeowners, but there are things you can do to analyze your situation and get help if you need it.”