"Negative absorption" in Santa Maria
Santa Maria, Calif., a city in northern Santa Barbara County, is facing five years of negative absorption for residential real estate, meaning it will need fewer homes as people leave to find jobs elsewhere, CalculatedRisk reports, citing a local land developer as a source.
The blog also cites a Los Angeles Times story detailing a couple’s purchase of a $412,000 home using a stated-income loan. Homes like it are now renting for $1,300 to $1,600 a month — putting the house’s current value at between $157,000 to $192,000, CalculatedRisk estimates.
"There is almost no bottom for prices in an area with negative absorption. Just ask the residents of Detroit," the finance and economics blog opined.
Fed official: Banks must raise capital faster
In testimony before the Senate Banking Committee, Federal Reserve Vice Chairman Donald Kohn said he expects to see weaker bank earnings and continued write-downs from both banks and home builders in the coming months as the credit and housing bust continues. He urged banks and home builders to build capital, and said he was disappointed that banks weren’t increasing reserves faster in the face of challenging conditions.
One has to wonder though — are they not raising reserves because they know the Fed is right behind them with a golden net?
–Morgan Brown, BlownMortgage
Mortgage experts see rates headed up
Predictions for conforming mortgage rates in the next 30 days from experts polled in Bankrate.com’s weekly Mortgage Rate Trend survey:
- 69 percent of participants predict rates will increase
- 25 percent of participants predict rates will decrease
- 6 percent of participants predict rates will remain unchanged
"I am predicting that rates will remain unchanged over the next 30 days, but that doesn’t mean you should necessarily follow my advice when choosing whether to lock a rate or float it. My advice may not be appropriate for your individual situation."
–Dan Green, The Mortgage Reports
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