America Shrinking FAST!!!!
June 13, 2008
– Comments (3)
Real Estate are CRASHING in California!!!!!!
The Retreat, a gated golf course community that boasted the Inland region's first million-dollar tract homes, has been hit by a tsunami of foreclosures, proving that even the most elite neighborhoods can't escape the devastation of falling real estate values....
The average asking price for homes in The Retreat plunged 46 percent from an estimated $1.3 million in June 2006 to $705,000 today, according to data recorded with a multiple listing service. Six resale transactions in the community this year averaged $675,916 on houses that sold for an average $1,123,000 at their peak, a decline of 40 percent.
And prices continue to drop, with about seven homes currently listed between $475,000 and $500,000, said Pat Patton, an agent with Re/Max Partners who has listings at The Retreat. As prices fall, the community is attracting bargain hunters. About 14 homes are in escrow.
http://www.pe.com/localnews/inland/stories/PE_News_Local_S_retreat13.40e4da7.html
This is just community in CA. As noted in a number of previous posts, in the last few months, the price declines have really accellerated. We have seen DH Horton and Standard Pacific liquidate at upto 50% off. Prices have gotten so low that builders have simply stopped building in unfinished communities leaving weeds growing where houses were supposed to be.
The contraction in housing has resulted in millions of jobs being lost accross the country.
Florida started 2007 with 86,000 licensed mortgage brokers. The number today, 55,000, is 36 percent lower. Even that understates how many brokers have left the field, says Ritch Workman, a Melbourne mortgage brokerage executive and president of the Florida Association of Mortgage Brokers.
Many retain their licenses but no longer count on brokering for their entire livelihood, Workman said.
http://www.heraldtribune.com/article/20080612/REALESTATE/806120496/1661
That is at least 30,000 jobs lost in Florida's mortgage industry alone in about a year....add in Real Estate Agents and we are probably looking at 100K jobs in one state in a little over a year. Multiply it around the country and we are probably looking at well over 1 million people in just Real Estate Sales and Mortgage business alone. Add in residential construction, mills, manufacturers, ect....and we are likely looking at some staggering numbers.
As a result of crashing prices and a slowdown in the economy, banks are losing billions and billions of dollars forcing some to cut dividends and even shut down.
Federal regulators are pressuring banks with sagging balance sheets to cut dividends and raise capital. And analysts are drawing up lists of which banks look most in need of cash.
Regional-bank stocks were broadly lower Friday as a number of analysts suggested that dividend cuts and capital raises are likely for several of the banks. Lehman Brothers Holdings Inc. warned that Wachovia Corp. could soon cut its dividend for the second time this year, while Fifth Third Bancorp plunged 14% as dividend-focused investors scurried to sell. Some analysts said the Cincinnati-based bank could be the next to announce it needs ...
http://online.wsj.com/article/SB121339899543273695.html?mod=hpp_us_whats_news
The problems are just beginning. The price decline phase is just kicking in. Those people who thought they were getting bargains last year at 30% are now realizing prices have fallen by as much as 50% more. This is just housing. Similar problems are now arising in commercial real estate with vacancies rising rapidly. As commercial loans start defaulting it will likely have an even harder impact on banks as most of those loans are contained within the bank's portfolio and not sold off like residential.
As the commercial tsunami moves forward and bank's balance sheets deteriorate further, expect lending to be constrained even further. I am already hearing about some sizeable projects that were supposed to start in the Summer and Fall that are now being delayed due to financing problems.
Real Estate and related business account for about 20% of GDP. Add in Airlines and Autos and their impact on the economy and we are probably approaching 30%. If you look at the economics of those businesses right now, and add in banking/finance.....and we could reasonably say that between 1/3 and 1/2 of America's economy is in or on the brink of being in a depression.
Pile the above on top of an unprecedented mound of debt, rapidly rising food and fuel prices, and increasing interest rates..............and it is not unreasonable to guess that we are on the brink of something very very ugly.
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