Dog Days of Summer Bite Home Sales
Home sales did worse than expected in August and signal that a housing market recovery could still be a distant dream rather than a short-term reality. Not only did existing home sales drop 2.2 percent, but the median existing home price fell 9.5 percent to $203,100, according to FinancialTimes.com.
Even more grim, the number of properties in a distressed sale is astounding,
“There has been no meaningful change in the level of activity since late last fall,” said Ian Shepherdson of High Frequency Economics.“The NAR estimates that 35 per cent to 40 per cent of all sales are of distressed property, so underlying private activity is weaker than the headlines and there is little sign of imminent improvement.”
Meanwhile investigations are underway into the cause of the subprime lending mess said to be the first domino to fall in the liquifying economy.
Federal investigators have expanded their investigation into the collapse of the subprime mortgage market to include Fannie Mae, Freddie Mac, Lehman Brothers and AIG - four companies at the heart of the market turmoil.
Enforcement officials are under growing pressure to hold companies and individuals responsible for the worst financial crisis since the Great Depression.
These investigations may help to satisfy some of the anger felt by many Americans over what appears to be a bailout for irresponsible financial management. No matter the fault, however, the rescue plan may not be enough to give housing the boost it needs for a strong recovery. MSNBC.com reports,
Despite the Bush administration’s historic and head-spinning $700 billion rescue of the financial industry, it will do little to ease lending standards so more homebuyers can qualify for loans, nor has it had much affect on mortgage interest rates so far.
Houses are sitting empty all across the country and the longer the homes remain dormant, the more value they lose. Vandals, gangs, and mother nature tend to turn neighborhoods with high foreclosure rates into blighted areas. The Christian Science Monitor recently told about a man arrested for building a new house made entirely of pilfered materials. The story went on to say,
As the housing dominoes fall far from Wall Street, growing urban “ghost towns” of vacant houses are resulting in a costly crush of weeds, trash, and dereliction on a scale unseen in American cities since the Great Depression, economists say.
With all this brewing, I’m wondering why there isn’t more talk about a moratorium on foreclosures - at least for a month or two to allow the government and investigators time to sort through the loans, to keep homes from being abandoned and empty, and to allow everyone to take a deep breath and settle down a bit.
