Housing Prices Fall

The S&P Case-Shiller Home Price Index, measuring housing prices in 20 representative cities across America, fell for the 30th straight month in January, bringing house prices down to 2003 levels. And this time it actually set a record, falling 19% from January 2008. "There are very few bright spots that one can see in the data," said David Blitzer, chairman of the index committee at Standard and Poor's. "Most of the nation appears to remain on a downward path, with...nine of the MSAs (metropolitan statistical areas) falling more than 20% in the last year." According to Mike Larson, a real estate analyst with Weiss Research, home prices won't start advancing until the overall economy picks up. Home bargains galore In total, prices have plunged 29.1% nationally since they peaked during the second quarter of 2006, but that of course doesn't figure in individual cities, where prices are more varied. Dallas is the least affected at 4.9%, and Phoenix lost the most, at 48.5% from its peak. All 20 index cities were in negative territory, but the biggest losers are Las Vegas, Miami, Phoenix, San Francisco, and San Diego -- each losing more than 40%. The bad, and good, news is that the rate of decline has picked up recently. As Mike Larson, a real estate analyst with Weiss Research says, ""Arguably, that's just what we need to drive up sales activity and reduce inventory." Big boys ready to pounce Morgan Stanley is one of several early bird institutional investors getting ready to snap up real estate bargains -- it's close to raising $6 billion for a new global property fund: the Morgan Stanley Real Estate Fund VII Global. "I think these new real estate funds will look for distressed opportunities and they think they can bargain with developers who mismanage the balance sheets or have liquidity issues," said Laure Wang, managing director of Asia Alternatives, a private equity fund of funds. According to Paul Vosper, chief operating officer for real estate at Morgan Stanley's Alternative Investment Partners unit, the downturn in global property markets will create a period of strong returns. Consumer confidence down The Conference Board, a New York-based business research group, said its Consumer Confidence Index rose to 26 in March from a revised reading of 25.3 in February, but is still hovering around all time lows. Lynn Franco, director of the Conference Board's consumer research center, said apprehension about the outlook for the economy, the labor market, and earnings is largely responsible for low consumer confidence. The percentage of people who said they were going to buy a home over the next six months fell to 2.0 percent from 2.3 percent, and the auto industry doesn't have anything to celebrate either - the percentage of people who plan to buy a new car fell to 3.9 percent from 4.7 percent. The next wave...banks walk away? All over the US, banks are quietly declining to take possession of properties at the end of the foreclosure process, usually because the cost -- from legal fees to maintenance -- exceeds the diminishing value of the real estate. "It is what some of us think is the next wave of the crisis," said Kermit Lind, an expert on foreclosure law at the Cleveland-Marshall College of Law. In Buffalo, where officials said the problem had reached "epidemic" proportions in recent months, the city sued 37 banks last year for the deterioration of at least 57 abandoned homes, even though the banks had walked away from many more foreclosures. So far, five banks have settled. The problem is most acute at the bottom of the market -- houses that were inexpensive to begin with -- and with investment properties, where investors and banks want speedy closure by writing off bad loans as losses. And we thought it couldn't get worse...