Real Estate Ends Year with Mixed Bag

Home owners, sellers and buyers can choose the news they want to end 2009 on. Housing market and mortgage reports are all over the board for the end of the year.

The Standard & Poor’s/Case-Shiller home price index released Tuesday was off 7.3 percent from October last year.

“I’d be very surprised if we don’t go below the lows we hit this year,” Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning Washington think tank. “We still have a very glutted housing market.”

The index is now up 3.4 percent from its bottom in May, but still almost 30 percent below its peak in April 2006. Home prices in San Francisco have climbed for 6 straight months and posted the largest gain of the 20 cities followed in the index.

Fannie Mae’s & Freddie Mac’s future are on the line. Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac own or guarantee about $5.5 trillion of the $11.8 trillion in U.S. residential mortgage debt. They have financed as much as 75 percent of new U.S. mortgages in 2009.

The companies have lost a combined $188.4 billion in the past nine quarters. The federal government now holds almost 80 percent of the equity in each of the entities and key members of Congress feel that they need to address the Fannie/Freddie issue in 2010.

Any changes in Freddie & Fannie have a huge impact on home buyers and refinancing.

Home equity loans are getting harder to get

For the first nine months of 2009, only $40 billion in new home equity loans were made. The impact on the economy: close to zero.

“The home as ATM is yesterday,” says Keith Gumbinger, vice president of HSH Associates Financial Publishers, which publishes consumer loan information.  The days of tapping your house for easy money are gone.

Bank of America’s HELOC’s were down 70% in the first 3 quarters of 2009 and they’re still scaling back.

Loan Modifications are Going to Fail for Most

The federally funded Home Affordable Modification Program aimed at getting banks to rework mortgages for homeowners in order to slow the pace of foreclosures is failing. The government set a goal of modifying up to 4 million mortgages over the next three years. Since March, just 31,000 homeowners have won permanent relief.

About 2.2 million homes since July 2006 have gone through foreclosure.

• Read Part 1: The Home Pricing Issue

• Read: Part 2 – The Home Pricing Issue

• Read: East Bay Housing Forecast for 2010

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